UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 40-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2019 Commission File Number 000-55607
FIRST MINING GOLD CORP.
(Exact name of registrant as specified in its charter)
British Columbia, Canada
(Province or other jurisdiction of incorporation or
organization)
1040
(Primary Standard Industrial Classification Code
Number)
Not Applicable
(I.R.S. Employer Identification Number)
Suite 2700 – 1188 West Georgia Street,
Vancouver, British Columbia V6E 4A2, Canada
(604) 688-3033
(Address and telephone number of Registrant’s principal executive offices)
National Registered Agents, Inc.
1090 Vermont Avenue N.W., Suite 910
Washington, D.C. 20005
(202) 371-8090
(Name, address (including zip code) and
telephone number (including area code) of
agent for service in the United States)
---------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class:
None
Trading Symbol(s)
N/A
Name of exchange on which registered:
None
Securities registered pursuant to Section 12(g) of the Act: Common Shares, no par value
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this Form.
☒ Annual information form ☒ Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
591,997,138
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒Yes
☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
Registrant was required to submit and post such files).
☒ Yes
☐ No
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
☒ Yes
☐ No
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use
the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐ Yes
☐ No
EXPLANATORY NOTE
First Mining Gold Corp. (the “Company” or the “Registrant”) is a Canadian issuer eligible, pursuant to Section 13 of the Securities Exchange Act, to file its
annual report on Form 40-F pursuant to the multi-jurisdictional disclosure system of the Exchange Act. The Company is a “foreign private issuer” as defined in
Rule 3b-4 under the Exchange Act. Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act
pursuant to Rule 3a12-3.
FORWARD-LOOKING STATEMENTS
This annual report on Form 40-F and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking statements,
which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to the future price of commodities, the
estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of
production, reserve determination and reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forward-looking
terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be
taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking
statements, including but not limited to: fluctuations in the price of commodities; risks related to mining and exploration operations including risks related to
fluctuations in the price of the primary commodities mined at such operations, actual results of mining and exploration activities, economic and political risks of the
jurisdictions in which the mining and exploration operations are located, changes in project parameters as plans continue to be refined; and differences in the
interpretation or application of tax laws and regulations; as well as those factors discussed in the section entitled “Risks that can affect our business” in the
Company’s annual information form (the “AIF”) for the financial year ended December 31, 2019. Forward-looking statements are based on assumptions
management believes to be reasonable, including but not limited to: no material adverse change in the market price of commodities, that the mining and exploration
operations will operate and the mining projects will be completed in accordance with their public statements and achieve their stated production outcomes, and such
other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially
from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. The
forward-looking statements and forward-looking information contained or incorporated by reference in this annual report on Form 40-F are included for the purpose
of providing investors with information to assist them in understanding the Company’s expected financial and operational performance and may not be appropriate
for other purposes. The Company does not undertake to update any forward-looking statements that are included or incorporated by reference herein, except in
accordance with applicable securities laws.
NOTE TO UNITED STATES READERS – DIFFERENCES
IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Company is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare this annual report on Form 40-F in accordance
with Canadian disclosure requirements, which are different from those of the United States. The Company prepares its financial statements (the “Audited Financial
Statements”) in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).
The AIF filed as Exhibit 99.1 to this annual report on Form 40-F has been prepared in accordance with the requirements of the securities laws in effect in Canada,
which differ from the requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are
Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the
Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council,
as amended. These definitions differ from the definitions in the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 (“SEC Industry
Guide 7”) under the United States Securities Act of 1933, as amended. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required
to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or
report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and
required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports
and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be
converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred
mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without
reference to unit measures.
Accordingly, information contained in this annual report on Form 40-F and the documents incorporated by reference herein containing descriptions of the
Company’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations thereunder.
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Unless otherwise indicated, all dollar amounts in this annual report on Form 40-F are in Canadian dollars. The functional currency of the Company, the parent
entity, is the Canadian dollar and for the Mexican and US subsidiaries, the functional currency is the United States dollar. The financial statement presentation
currency is the Canadian dollar. The expenditures of our Canadian operations where incurred in currencies other than Canadian dollars are translated at the
exchange rates in effect at the date of the underlying transactions. Differences arising from these foreign currency transactions are recorded in the consolidated
statement of net loss.
CURRENCY
The AIF is filed as Exhibit 99.1 to, and incorporated by reference in, this annual report on Form 40-F.
ANNUAL INFORMATION FORM
AUDITED ANNUAL FINANCIAL STATEMENTS
The Audited Financial Statements for the year ended December 31, 2019, including the report of the independent registered public accounting firm with respect
thereto, is filed as Exhibit 99.2 to, and incorporated by reference in, this annual report on Form 40-F.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Company’s management’s discussion and analysis of results of operations and financial condition for the year ended December 31, 2019 is filed as Exhibit 99.3
to, and incorporated by reference in, this annual report on Form 40-F.
See Exhibits 99.4, 99.5, 99.6 and 99.7, which are included as Exhibits to this annual report on Form 40-F.
DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
CERTIFICATIONS
As of the end of the period covered by this annual report on Form 40-F, an evaluation was carried out under the supervision of, and with the participation of, the
Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure
controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based upon the results of that evaluation, the CEO and the
CFO have concluded that as of the end of the period covered by this annual report on Form 40-F, the Company’s disclosure controls and procedures were effective.
Disclosure controls and procedures include controls and other procedures that are designed to ensure that (i) information required to be disclosed by the Company in
reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the appropriate time periods specified in
applicable rules and forms and (ii) information required to be disclosed by the Company in reports filed under the Exchange Act is accumulated and communicated
to the Company’s management, including the CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
-3-
Management’s Report on Internal Control over Financial Reporting
The Company’s management, with the participation of the CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Company’s internal control over
financial reporting includes policies and procedures that:
● maintain records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;
● provide reasonable assurance that transactions are recorded as necessary for preparation of financial statements in accordance with IFRS;
● provide reasonable assurance that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the
Company’s Directors; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could
have a material effect on the Company’s consolidated financial statements.
Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect misstatements. Additionally, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, based on the criteria set forth in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included
review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this
evaluation. Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective and no material
weakness was identified as at December 31, 2019.
Attestation Report of the Registered Public Accounting Firm
This Annual Report on Form 40-F does not include an attestation report of the Company’s registered public accounting firm because the Company qualified as an
"emerging growth company" pursuant to Section 2(a)(19) of the Securities Act of 1933 during the year covered by this Annual Report on Form 40-F, and this
Annual Report on Form 40-F is therefore not required to include such an attestation report.
Changes in Internal Control over Financial Reporting
During the period covered by this annual report on Form 40-F, no change occurred in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations of Controls and Procedures
The Company’s management, including the CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will
prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-
making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
-4-
Audit Committee
AUDIT COMMITTEE
The Company’s board of directors has a separately designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act.
The members of the Company’s audit committee are identified on pages 137 to 138 of the AIF, filed as Exhibit 99.1 and incorporated by reference herein. The
Company’s board of directors has determined that all members of the audit committee are independent (as determined under Rule 10A-3 of the Exchange Act and
the rules of the New York Stock Exchange) and are financially literate.
Audit Committee Financial Expert
The Company’s board of directors has determined that Raymond Polman is an audit committee “financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K
under the Exchange Act, in that he has an understanding of generally accepted accounting principles in Canada and financial statements and is able to assess the
general application of accounting principles in connection with the accounting for estimates, accruals and reserves. Mr. Polman also has experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements (or actively supervising another person who
did so). Mr. Polman also has an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr.
Polman has experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor.
CODE OF ETHICS
The Company has adopted a written Code of Business Conduct and Ethics. A copy of this code is available on the Company’s website at
http://www.firstmininggold.com or to any person without charge, by written request addressed to: First Mining Gold Corp., Attention: General Counsel & Corporate
Secretary, Suite 2700 – 1188 West Georgia Street, Vancouver, British Columbia V6E 4A2, Canada 1.844.306.8827, or by email (info@firstmininggold.com).
PricewaterhouseCoopers LLP served as the Registrant's principal accountant (the “Principal Accountant”) for the year ended December 31, 2019.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees billed and expected to be billed by the Principal Accountant for the fiscal years ended December 31, 2019 and 2018, for professional services
rendered by the Principal Accountant for the audit of the Company’s annual financial statements or services that are normally provided by the Principal Accountant
in connection with statutory and regulatory filings or engagements for such fiscal years were $164,430 and $121,931, respectively.
Audit-Related Fees
There were no audit-related fees billed by the Principal Accountant for the fiscal years ended December 31, 2019 and 2018.
-5-
Tax Fees
The aggregate fees billed by the Principal Accountant for the fiscal years ended December 31, 2019 and 2018, for professional services rendered by the Principal
Accountant for tax compliance, tax advice, tax planning and other services were $29,715 and $34,545, respectively. The Tax Fees predominantly relate to the
general tax advisory services under Canadian and US tax regimes.
All Other Fees
There were no additional fees billed by the Principal Accountant for the fiscal years ended December 31, 2019 and 2018.
Audit Committee Pre-Approval Policies and Procedures
Since the enactment of the Sarbanes-Oxley Act of 2002 on July 30, 2002, all audit and non-audit services performed by the Registrant’s outside auditors are pre-
approved by the audit committee of the Registrant.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, or
relationships with unconsolidated special purpose entities.
The information provided under the heading “Management’s Discussion and Analysis – Financial Instruments – Liquidity Risk” contained in Exhibit 99.3 as filed
with this annual report on Form 40-F contains the Company’s disclosure of contractual obligations and is incorporated by reference herein.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Not applicable.
MINE SAFETY DISCLOSURE
UNDERTAKINGS
The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when
requested to do so by the SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file
an annual report on Form 40-F arises; or transactions in said securities.
The Company filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the
obligation to file this annual report on Form 40-F arises.
CONSENT TO SERVICE OF PROCESS
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Exhibit
99.1
99.2
99.3
99.4
99.5
99.6
99.7
99.8
99.9
99.10
99.11
99.12
99.13
99.14
99.15
99.16
99.17
99.18
99.19
99.20
99.21
99.22
99.23
101.INS
101.SC
101.CAL
101.DEF
101.LAB
101.PR
EXHIBIT INDEX
Description
Annual Information Form of the Company for the year ended December 31, 2019
Audited consolidated financial statements and related audit reports of the Company, for the year ended December 31, 2019 are exhibits to and
form a part of this annual report
Management’s Discussion and Analysis for the year ended December 31, 2019
CEO Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
CFO Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Consent of Dr. Gilles Arseneau, Ph.D., P.Geo., of SRK Consulting (Canada) Inc.
Consent of Grant Carlson, P.Eng., of SRK Consulting (Canada) Inc.
Consent of Bruce Andrew Murphy, P.Eng., of SRK Consulting (Canada) Inc.
Consent of Neil Winkelmann, FAusIMM, of SRK Consulting (Canada) Inc.
Consent of Mark Liskowich, P.Geo., of SRK Consulting (Canada) Inc.
Consent of Michel Noël, P.Eng., of SRK Consulting (Canada) Inc.
Consent of Michael Royle, M.App.Sci., P.Geo., of SRK Consulting (Canada) Inc.
Consent of Dr. Mauricio Herrera, Ph.D., P.Eng., of SRK Consulting (Canada) Inc.
Consent of Laurie Tahija, MMSA-QP, of M3 Engineering and Technology Corporation
Consent of Todd McCracken, P.Geo., of WSP Canada Inc.
Consent of Mark Drabble, B.App.Sci (Geology), MAIG, MAusIMM, of Optiro Pty Limited
Consent of Kahan Cervoj, B.App.Sci (Geology), MAIG, MAusIMM, of Optiro Pty Limited
Consent of B. Terrence Hennessey, P.Geo., of Micon International Limited
Consent of Michael P. Cullen, M.Sc., P.Geo., of Mercator Geological Services Limited
Consent of Hazel Mullin, P.Geo., of First Mining Gold Corp.
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
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Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this
annual report to be signed on its behalf by the undersigned, thereto duly authorized.
SIGNATURES
Date: March 30, 2020
FIRST MINING GOLD CORP.
By: /s/ Daniel W. Wilton
Daniel W. Wilton
Chief Executive Officer
Exhibit 99.1
CONTENTS
Important information about this document
Reporting currency and financial information
Caution about forward-looking information
Examples of forward-looking information in this AIF
Material risks
Material assumptions
National Instrument 43-101 definitions
Glossary of units
Glossary of elements
Cautionary note to US investors
About First Mining
Vision and strategy
General overview of our business
Major developments
Recent developments
Significant acquisitions
Corporate organization
Our projects
Material Properties
Springpole
Technical report
Project description, location and access
History
Geological setting, mineralization and deposit types
Exploration
Drilling
Sampling, analysis and data verification
Mineral processing and metallurgical testing
Mineral resource estimates
Mining methods
Processing and recovery operations
Infrastructure, permitting and compliance activities
Capital and operating costs
Exploration, development and production
Recent developments
Goldlund
Technical report
Project description, location and access
History
Geological setting, mineralization and deposit types
Exploration
Drilling
Sampling, analysis and data verification
Mineral processing and metallurgical testing
Mineral resource estimates
Recent developments
Cameron
Technical report
Project description, location and access
History
Geological setting, mineralization and deposit type
Exploration
Drilling
Sampling, analysis and data verification
Mineral processing and metallurgical testing
Mineral resource estimates
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Pickle Crow
Technical report
Project description, location and access
History
Geological setting, mineralization and deposit types
Exploration
Drilling
Sampling, analysis and data verification
Mineral processing and metallurgical testing
Mineral resource estimates
Recent activities
Recent developments
Hope Brook
Technical report
Property description, location and access
History
Geological setting, mineralization and deposit types
Exploration
Drilling
Sampling, analyses and data verification
Mineral processing and metallurgical testing
Mineral resource estimates
Non-material properties
Risks that can affect our business
Types of risk
Exploration, development, production and operational risks
Financial risks
Political risks
Regulatory risks
Environmental risks
Industry risks
Other risks
Investor information
Share capital
Common shares
Preferred shares
Security-based compensation and convertible securities
Material contracts
Market for our securities
Trading activity
Our team
Audit Committee information
Interests of experts
Legal counsel
Additional information
Appendix A – Audit Committee Charter
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Important information about this document
This annual information form (“AIF”) provides important information about
the Company. It describes, among other things, our history, our markets, our
exploration and development projects, our mineral resources, sustainability,
our regulatory environment, the risks we face in our business and the market
for our shares.
Throughout this document, the terms we, us, our, the Company and
First Mining mean First Mining Gold Corp. and its subsidiaries, in the
context.
Information on our website is not part of this AIF, nor is it incorporated by reference herein. Our filings on SEDAR are also not part of this AIF, nor are they
incorporated by reference herein.
Reporting currency and financial information
The reporting currency of the Company is Canadian dollars. Unless we have specified otherwise, all dollar amounts (“$”) referred to in this AIF are in Canadian
dollars. Any references to “US$” mean United States (US) dollars.
Caution about forward-looking information
This AIF includes statements and information about our expectations for the future. When we discuss our strategy, business prospects and opportunities, plans and
future financial and operating performance, or other things that have not yet taken place, we are making statements considered to be forward-looking information or
forward-looking statements under applicable securities laws. We refer to them in this AIF as forward-looking information.
Key things to understand about the forward-looking information in this AIF:
● It typically includes words and phrases about the future, such as expect, believe, estimate, anticipate, plan, intend, predict, goal, target, forecast, project,
scheduled, potential, strategy and proposed (see examples listed below).
● It is based on a number of material assumptions, including those we have listed below, which may prove to be incorrect.
● Actual results and events may be significantly different from what we currently expect, because of the risks associated with our business. We list a number
of these material risks on the next page. We recommend you also review other parts of this AIF, including the section “Risks that can affect our business”
starting on page 2, which discuss other material risks that could cause our actual results to differ from current expectations.
Forward-looking information is designed to help you understand management’s current views of our near-term and longer-term prospects. It may not be appropriate
for other purposes. We will not update or revise this forward-looking information unless we are required to do so by applicable securities laws.
Page4
Examples of forward-looking information in this AIF
● statements regarding future acquisitions of mineral properties
● statements relating to our vision and strategy
● our intention to eventually pay a dividend to our shareholders
● our intention to de-risk our material assets through exploration, drilling, calculating resource estimates, conducting economic studies and other activities
● our intention to utilize our management team’s expertise to successfully permit and construct producing mines at our material assets
● statements relating to the criteria we will use when assessing potential acquisitions
● our belief that we will continue to be able to locate and retain professionals with the necessary specialized skills and knowledge
● statements regarding our intention and ability to select, acquire and bring to production suitable properties or prospects for mineral exploration and
development
● our ability to raise the capital necessary to fund our operations and the potential development of our properties
● statements regarding future share issuances under our at-the-market equity program
● our ability to obtain the resources to conduct exploration and development activities on our properties
● our belief that the policies and procedures implemented by our executive management team provide a safe working environment for all of our employees,
consultants, contractors and stakeholders
● statements regarding shifts in gold demand
● our ability to work with the various Indigenous communities in relation to the development of our projects
● our intention to construct a low-profile, resource access road to connect the Hope Brook Project to the Burgeo Highway or Highway 480
● statements regarding the completion of a Pre-Feasibility Study for the Springpole Project
● our intention to continue to make expenditures to ensure compliance with applicable laws and regulations
● statements regarding potential increases in the ultimate recovery of gold and silver from our properties, including the Springpole Project
● statements regarding regulatory approval and permitting, including but not limited to the Environmental Assessment process currently underway at the
Springpole Project
● statements regarding additional drilling planned for the Main Zone at the Goldlund Project
● our intentions and expectations regarding exploration at any of our mineral properties
● forecasts relating to mining, development and other activities at our operations
● forecasts relating to market developments and trends in global supply and demand for gold
Page5
● future royalty and tax payments and rates
● future work on our non-material properties
● our mineral reserve and mineral resource estimates
Material risks
● exploration, development and production risks
● operational hazards
● global financial conditions
● commodity price fluctuations
● we may be adversely affected by currency fluctuations, volatility in
securities markets and volatility in mineral prices
● accidents or equipment breakdowns may occur
● the cyclical nature of the mining industry
● availability of capital and financing on acceptable terms
● there may be changes to government regulations or policies,
including tax and trade laws and policies
● we have no history of commercially producing metals from our
mineral exploration properties
● we may be adversely affected by changes in foreign currency
exchange rates, interest rates or tax rates
● our mineral reserve and resource estimates may not be reliable, or
we may encounter unexpected or challenging geological,
hydrological or mining conditions
● our exploration plans may be delayed or may not be successful
● we may not be able to obtain or maintain necessary permits or
approvals from government authorities
● we may be affected by environmental, safety and regulatory risks,
including increased regulatory burdens or delays
● there may be defects in, or challenges to, title to our properties
● we may lose our interest in certain projects if we fail to make
certain required payments or minimum expenditures
● we may be unable to enforce our legal rights under our existing
agreements, permits or licences, or may be subject to litigation or
arbitration that has an adverse outcome
● our estimates of production, purchases, costs, decommissioning or
reclamation expenses, or our tax expense estimates, may prove to be
inaccurate
● we may be impacted by natural phenomena, including inclement
weather, fire, flood and earthquakes
● our operations may be disrupted due to problems with our own or
our customers’ facilities,
the unavailability of reagents or
equipment, equipment failure, lack of tailings capacity, labour
shortages, ground movements,
transportation disruptions or
accidents or other exploration and development risk
● uncertainties and substantial expenditures related to determining
whether mineral resources or mineral reserves exist on a property
● future sales by existing shareholders could reduce the market price
of our shares
● we may be impacted by public health crises, such as the COVID-19
novel coronavirus (“COVID-19”) outbreak
Page6
Material assumptions
● the assumptions regarding market conditions upon which we have
● our ability to satisfy payment and minimum expenditure obligations
based our capital expenditure expectations
in respect of certain of our properties
● the availability of additional capital and financing on acceptable
terms, or at all
● our mineral reserve and resource estimates and the assumptions
upon which they are based are reliable
● the success of our exploration plans
● our expectations regarding spot prices and realized prices for gold
and other precious metals
● market developments and trends in global supply and demand for
gold meeting expectations
● our expectations regarding tax rates and payments, foreign currency
exchange rates and interest rates
● our reclamation expenses
● the geological conditions at our properties
● our ability to comply with current and future environmental, safety
and other regulatory requirements, and to obtain and maintain
required regulatory approvals without undue delay
the COVID-19 outbreak,
● our operations are not significantly disrupted as a result of natural
disasters, governmental or political actions, public health crises,
such as
litigation or arbitration
proceedings, the unavailability of reagents, equipment, operating
parts and supplies critical to our activities, equipment failure, labour
transportation disruptions or
shortages, ground movements,
accidents or other exploration and development risks
● our ability to support stakeholders necessary to develop our mineral
projects
● the accuracy of geological, mining and metallurgical estimates
● maintaining good relationships with the communities in which we
operate
Page7
National Instrument 43-101 definitions
Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101 Standards of Disclosure for Mineral Projects
(“NI 43-101”). The definitions in NI 43-101 are adopted from those given by the Canadian Institute of Mining Metallurgy and Petroleum (“CIM”).
Mineral Resource
Measured Mineral Resource
Indicated Mineral Resource
The term “mineral resource” refers to a concentration or occurrence of diamonds, natural, solid, inorganic or
fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s
crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence and knowledge.
The term “measured mineral resource” refers to that part of a mineral resource for which quantity, grade or
quality, densities, shape and physical characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough to confirm
both geological and grade continuity.
The term “indicated mineral resource” refers to that part of a mineral resource for which quantity, grade or
quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to
allow the appropriate application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration
and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drillholes that are spaced closely enough for geological and grade continuity to be reasonably
assumed.
Page8
Inferred Mineral Resource
Qualified Person
The term “inferred mineral resource” refers to that part of a mineral resource for which quantity and grade or
quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on limited information and sampling
gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and
drillholes.
The term “qualified person” refers to an individual who is an engineer or geoscientist with at least five years of
experience in mineral exploration, mine development, production activities and project assessment, or any
combination thereof, including experience relevant to the subject matter of the project or report and is a
member in good standing of a self-regulating organization.
Page9
Glossary of units
Unit
centimetre(s)
cubic metre(s)
day
degree(s)
foot/feet (as context requires)
gram(s)
grams per tonne
hectare(s)
kilogram(s)
kilometre(s)
metre(s)
micrometre(s)
million ounces
million tonnes
ounce(s)
ounce(s) per tonne
parts per million
square kilometre(s)
square metre(s)
tonne(s)
tonnes per cubic metre
Glossary of elements
Element
copper
gold
silver
Abbreviation
cm
m3
d
°
ft.
g
g/t
ha
kg
km
m
µm
Moz.
Mt
oz.
oz./t
ppm
km2
m2
t
t/m3
Abbreviation
Cu
Au
Ag
Page10
Cautionary note to US investors
Technical disclosure contained or incorporated by reference in this AIF has not been prepared in accordance with the requirements of United States securities laws
and uses terms that comply with reporting standards in Canada with certain estimates prepared in accordance with NI 43-101.
NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and
technical information concerning mineral projects. Unless otherwise indicated, all mineral reserve and mineral resource estimates contained in this AIF have been
prepared in accordance with NI 43-101 and the CIM Classification System.
Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and
mineral reserve and resource information contained or incorporated by reference in this AIF may not be comparable to similar information disclosed by US
companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”.
Under US standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve determination is made and volumes that are not “reserves” should not be disclosed. Among other things, all
necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under SEC standards. Accordingly,
mineral reserve estimates included in this AIF may not qualify as “reserves” under SEC standards. The SEC’s disclosure standards normally do not permit the
inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the
amount of mineralization in mineral deposits that do not constitute “reserves” by US standards in documents filed with the SEC.
Our US investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under
Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned
not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is
permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by
SEC standards as in-place tonnage and grade without reference to unit measures. In addition, the definitions of “proven mineral reserves” and “probable mineral
reserves” under reporting standards in Canada differ in certain respects from the standards of the SEC. Accordingly, information concerning mineral deposits set
forth or incorporated by reference herein may not be comparable with information made public by companies that report in accordance with US standards.
Page11
About First Mining
First Mining Gold Corp. is a Canadian-focused gold exploration and development company that was created in 2015 by Mr. Keith Neumeyer, founding President
and CEO of First Majestic Silver Corp. and a co-founder of First Quantum Minerals Ltd. We are advancing a large resource base of 7.4 million ounces of gold in the
Measured and Indicated Mineral Resource categories and 3.8 million ounces of gold in the Inferred Mineral Resource category.
Our primary focus is the development and permitting of our Springpole Gold Project (the “Springpole Project”) and the advanced exploration of our Goldlund
Gold Project (the “Goldlund Project”), both located in northwestern Ontario. The Company’s eastern Canadian property portfolio also includes the Cameron,
Pickle Crow, Hope Brook, Duparquet, Duquesne, and Pitt gold projects.
Springpole is one of the largest undeveloped gold assets in Canada, with permitting and a Pre-Feasibility Study underway. The project hosts 4.67 million ounces
gold in the Indicated Mineral Resource category and 0.23 million ounces gold in the Inferred Mineral Resource category. We have begun consultation efforts with
local Indigenous communities within the area of the Springpole Project to support the federal and provincial Environmental Assessment (“EA”) processes that are
currently underway. These consultation efforts will be ongoing throughout the EA process.
Goldlund is an advanced exploration stage asset where drilling in 2020 is planned to define both the extension of the existing resource area and to better define the
regional scale potential of the project. The Goldlund Project hosts 0.81 million ounces gold in the Indicated Mineral Resource category and 0.88 million ounces gold
in the Inferred Mineral Resource category.
We are publicly listed on the Toronto Stock Exchange (“TSX”) under the
trading symbol “FF”, in the US on the OTC-QX under the trading symbol
“FFMGF”, and on the Frankfurt Stock Exchange under the symbol “FMG”.
Our management team has decades of experience in evaluating, exploring
and developing mineral assets.
First Mining Gold Corp.
(TSX: FF; OTC-QX: FFMG; Frankfurt: FMG)
Head Office:
First Mining Gold Corp.
Suite 2070,
1188 West Georgia Street
Vancouver, BC V6E 4A2
Canada
Telephone: 604.639.8848
Registered & Records Office
Bennett Jones LLP
Suite 2500, Park Place
666 Burrard Street
Vancouver, BC V6C 2X8
Canada
Vision and strategy
We hold a portfolio of 24 mineral assets in Canada, Mexico and the United States, with a focus on gold. Our vision is to advance our material assets toward a
construction decision and, ultimately, to production.
To achieve this goal, our strategy is to:
● de-risk our material assets through exploration, drilling, calculating resource estimates, conducting engineering, environmental and economic studies and
other activities;
● surface value for our portfolio of assets by finding partners to help advance them by committing financial and human capital to advance and de-risk them;
Page12
● utilize our management team’s expertise to successfully permit, finance and construct producing mines at our material assets, either on our own or with
financial or operating partners; and
● continue to grow our asset base by acquiring additional mineral assets.
We may acquire additional mineral assets in the future. We consider the following criteria when assessing potential acquisition targets:
● Quality of asset – we consider factors such as economics, grade, size and exploration potential, metallurgy and mineability (eg. strip ratio) when assessing
a new mineral property.
● Location – we are focused on assets located in politically stable and mining friendly jurisdictions.
● Compatibility with our existing asset base – we consider whether a project can improve the economic or strategic value of our existing projects.
● Availability of infrastructure – we consider whether the project has good access to power, water, highways, ports and a labour force.
● Holding costs – we take into account the holding costs (eg. assessment work requirements) and annual taxes payable on the mineral claims when deciding
whether to acquire a new mineral property.
● Valuation – we look for attractively valued resources to add to our portfolio.
General overview of our business
We are in the exploration and development stage, and we do not currently own any producing properties. Consequently, we have no current operating income or
cash flow from our properties, nor have we had any income from operations in the past three financial years. At this time, our operations are primarily funded by
equity subscriptions.
An investment in First Mining is speculative and involves a high degree of risk due to the nature of our business and the present stage of exploration of our mineral
properties. We encourage readers to carefully consider the risk factors that are set out in this AIF in the section “Risks that can affect our business” which starts on
page 107.
Principal products
We are currently in the exploration and development stage and do not produce or sell mineral products. Our principal focus is on gold.
Specialized skills and knowledge
Our business requires individuals with specialized skills and knowledge in the areas of geology, drilling, geophysics, geochemistry, metallurgy, engineering and
mineral processing, implementation of exploration programs, mining engineering, acquisitions, capital raising, mine finance, accounting, and environmental
compliance. In order to attract and retain personnel with such skills and knowledge, we maintain competitive remuneration and compensation packages. To date, we
have been able to locate and retain such professionals in Canada and in the US, and we believe we will be able to continue to do so.
Page13
Competitive conditions
The precious metal mineral exploration and mining industry is very competitive in all phases of exploration and development, and we compete with numerous other
companies and individuals in the search for, and the acquisition of, attractive precious metal mineral properties. Our ability to acquire mineral properties depends, to
a large part, on our success in exploring and developing our current properties and on our ability to select, acquire and bring to production suitable properties or
prospects for mineral exploration and development.
As a result of the competitors in our industry, many of whom have greater financial resources than us, the Company may be unable to acquire attractive mineral
properties in the future on terms it considers acceptable. We also compete with other companies when it comes to: (a) raising the capital necessary to fund our
operations and the potential development of our properties; and (b) obtaining the resources to conduct exploration and development activities on our properties.
As a result of this competition, we may at times compete with other companies that have greater financial resources and technical facilities, and we may compete
with other exploration and mining companies for the procurement of equipment and for the availability of skilled labour, which means that there may be times
where we are unable to attract or retain qualified personnel. As well, we cannot assure you that additional capital or other types of financing will be available if
needed or that, if available, the terms of such financing will be favourable to us.
Cycles
The mining business is subject to commodity price cycles. The gold market, late in 2010, made significant gains in terms of US dollars but remained volatile
throughout 2011 and suffered significant declines in 2013 and 2014. The financial markets for mining in general and mineral exploration and development in
particular, continued to be weak through to the end of 2019 and, as a result of the COVID-19 crisis and the response of governments and private actors to COVID-
19, markets are experiencing extreme volatility as of the date of this AIF. The long-term effects of this pandemic on financial markets and the economy in general is
at present unknown. If the global economy stalls and commodity prices decline as a consequence, a continuing period of lower prices could significantly affect the
economic potential of many of our current properties and may result in First Mining ceasing work on, or dropping its interest in, some or all of our properties. As we
do not carry on production activities, our ability to fund ongoing exploration is affected by the availability of financing (and particularly equity financing) which, in
turn, is affected by the strength of the economy and other general economic factors.
In addition, our mineral exploration activities may be subject to seasonality due to adverse weather conditions at our project sites. Drilling and other exploration
activities on our properties may be restricted during the winter season as a result of various weather-related factors including, without limitation, inclement weather,
snow covering the ground, frozen ground and restricted access due to snow, ice or other weather-related factors.
Economic dependence
Our business is dependent on the acquisition, exploration, development and operation of mineral properties. We are not dependent on any contract to sell our
products or services or to purchase the major part of our requirements for goods, services or raw materials, or on any franchise or licence or other agreement to use a
patent, formula, trade secret, process or trade name upon which our business depends.
Page14
Employees
As of the date of this AIF, we have 22 full-time employees, and we utilize consultants and contractors as needed to carry on many of our activities and, in particular,
to supervise and carry out the work programs at our mineral projects.
Environmental protection
We are subject to the laws and regulations relating to environmental matters in all jurisdictions in which we operate, including provisions relating to property
reclamation, discharge of hazardous materials and other matters.
We may also be held liable should environmental problems be discovered that were caused by former owners and operators of our projects. We conduct our mineral
exploration activities in compliance with applicable environmental protection legislation. A reclamation liability amount of $2.4 million was recorded in our audited
annual financial statements for the year ended December 31, 2019 with respect to our Pickle Crow gold project in Ontario. We are not aware of any existing
environmental issues relating to any of our properties that may result in material liability to First Mining.
New environmental laws and regulations, amendments to existing laws and regulations, or more stringent implementation of existing laws and regulations could
have a material adverse effect on us, both financially and operationally, by potentially increasing capital and/or operating costs and delaying or preventing the
development of our mineral properties.
We believe that the policies and procedures implemented by our executive management team provide a safe working environment for all our employees,
consultants, contractors and stakeholders. We recognize that safety and environmental due diligence are significant contributors to long-term sustainability of our
operations and support our objective of projects being completed in a cost effective and timely manner with excellent quality control.
Bankruptcy and similar procedures
There are no bankruptcies, receivership or similar proceedings against us, nor are we aware of any such pending or threatened proceedings. We have not
commenced any bankruptcy, receivership or similar proceedings during our history.
Foreign operations
We currently hold an interest in certain non-material exploration stage mineral resource properties located in Mexico and the United States. Such properties are
exposed to various degrees of political, economic and other risks and uncertainties. See “Risks that can affect our business” starting on page 107.
Page15
Major developments
2017
January
2017
May
● We announced the release of an initial mineral resource estimate for our
Goldlund Project.
● We announced the second and third sets of assay results from Phase 1 of
the 2017 Goldlund Drill Program.
● We announced the commencement of a 27,000 m drilling campaign at our
Goldlund Project, focused on in-fill and resource expansion of Zone
Seven (the “2017 Goldlund Drill Program”).
● We announced the completion of our Fall 2016 drilling program at our
Pickle Crow Gold Project (the “Pickle Crow Project”), which consisted
of nine holes comprising approximately 1,300 m of drilling, and the
completion of a metallurgical diamond drill program at our Springpole
Project.
June
● We announced the fourth set of assay results from Phase 1 of the 2017
Goldlund Drill Program.
● We announced that we had received approval from the TSX to graduate
from the TSX Venture Exchange to the TSX, and our common shares
commenced trading on the TSX.
March
July
● We announced the release of an updated mineral resource estimate for our
Cameron Gold Project.
April
● We announced the assay results from the first 12 holes of Phase 1 of the
2017 Goldlund Drill Program.
● We announced the fifth and sixth sets of assay results from Phase 1 of the
2017 Goldlund Drill Program.
● We announced the commencement of Phase 2 of the 2017 Goldlund
Drilling Program to identify new areas of gold mineralization and to
expand the overall resource base at the Goldlund Property, with data from
Phases 1 and 2 to be incorporated into a new mineral resource estimate for
the Goldlund Project.
2018
January
● We announced a new corporate strategy to focus on advancing our
existing properties to maximize shareholder value, and we changed our
name to “First Mining Gold Corp.” Or shares commenced trading on the
TSX under the new corporate name on January 11th, and our ticker
symbol remained as “FF”.
● In connection with our new corporate strategy, we announced the
appointment by our Board of Mr. Jeff Swinoga as the Company’s new
Chief Executive Officer (“CEO”). Mr. Swinoga succeeded Dr. Chris
Osterman as CEO, and Dr. Osterman assumed the role of Chief Operating
Officer of the Company to focus on the development of our projects. Mr.
Patrick Donnelly remained as President of the Company.
February
● We announced assay results from Phase 2 of the 2017 Goldlund Drill
Program.
● We announced that we had signed a negotiation protocol agreement (the
“Negotiation Protocol”) with the Lac Seul First Nation, the Slate Falls
2018
February (continued)
First Nation and the Cat Lake First Nation in Ontario (together, the
“Shared Territory Protocol Nations”). Under the Negotiation Protocol,
First Mining and the Shared Territory Protocol Nations have agreed to
work together in a responsible, cooperative and productive manner in
relation to the development of our Springpole Project ("Springpole").
March
● We announced that a Project Description for Springpole had been
submitted to, and subsequently accepted by, the Canadian Environmental
Assessment Agency (the “Agency”). The acceptance of the Project
Description by the Agency initiates the screening process to determine
whether a federal Environmental Assessment is required for Springpole.
● We announced the departure of Patrick Donnelly as First Mining’s
President, and the assumption of the role of President by Jeff Swinoga,
with Mr. Swinoga becoming the Company’s President and CEO. We also
announced the appointment of Mr. Swinoga to the Board.
Page16
Major developments (continued)
2018
April
● We announced further assay results from Phase 2 of the 2017 Goldlund
Drill Program.
● We announced the successful completion of a geotechnical drilling
program to investigate the lake bed sediments and bedrock along the
proposed alignment of the three coffer dams that will be required for the
Springpole Project, with preliminary findings that indicate that the
bedrock beneath the proposed coffer dams should provide a competent
foundation.
● We announced that we had entered into a voluntary agreement with the
Ministry of the Environment and Climate Change in Ontario to complete
certain requirements under the Ontario Environmental Assessment Act.
This marks the commencement of a Provincial Individual Environmental
Assessment for the Springpole Project.
May
● We announced the fourth and final set of assay results from Phase 2 of the
2017 Goldlund Drill Program.
June
● We announced the commencement of a metallurgical study on our
Springpole Project by M3 Engineering and Technology Corporation
(“M3”). The primary purpose of this metallurgical study is to determine
the optimal flow sheet for Springpole. A secondary focus of the study is
to attempt to improve the recovery of gold for the current Whole-Ore
Carbon-in-Pulp (“CIP”) flowsheet developed in the 2017 PEA as well as
optimize recovery for the flotation flowsheet being investigated.
● We commenced a regional exploration diamond drilling campaign at the
Goldlund Project (the “2018 Goldlund Regional Drilling Program”),
consisting of approximately 13 holes totaling 1,850 metres, designed to
test the extension of the known mineralized trend approximately 10
kilometres northeast of the mineralized material of the current resource
area.
● We announced that the final Environmental Impact Statement (“EIS”)
Guidelines for the Springpole Project had been issued by the Canadian
Environmental Assessment Agency. The final EIS Guidelines outline
federal information requirements for the preparation of the EIS and were
2018
June (continued)
prepared taking into consideration comments received from federal
departments, the Ontario provincial ministry, Indigenous groups and the
general public.
July
● We announced the commencement of permitting for the construction of a
low-profile, resource access road to connect our Hope Brook gold project
in southeast Newfoundland, Canada (the “Hope Brook Project”) to the
Burgeo Highway or Highway 480.
August
● We announced that we had entered into an option agreement with Gainey
Capital Corp. (“Gainey”) pursuant to which Gainey was granted a four-
year option to earn a 100% interest in our Las Margaritas gold property
located in Durango, Mexico (the “Margaritas Property”) in exchange
for certain annual share and/or cash payments to First Mining and annual
exploration expenditure requirements, and we retained a 2% NSR royalty
on the Margaritas Property. Gainey may buy back 1% of this NSR royalty
up until the first anniversary of commercial production at the property by
paying us US$1 million.
September
● We announced final fire assay results for all eight holes drilled at the
Miller prospect and partial metallic screen fire assay results for some of
these holes. In addition to drilling the Miller prospect, we completed
seven diamond drillholes at the Eaglelund prospect, and one diamond
drillhole at the Miles prospect for a total of 688 m drilled in the 2018
Goldlund Regional Drilling Program.
October
● We announced the departure of Jeff Swinoga as our President and CEO,
and the appointment of David Shaw, one of our directors, as interim CEO
until a permanent CEO for the Company had been identified by the
Board.
December
● We announced the appointment of Daniel Wilton as the Company’s new
Chief Executive Officer, effective as of January 7, 2019, to replace David
Shaw who had been acting as interim CEO. Dr. Shaw continued to
serve◦as◦a◦director◦of◦the◦Company.
Page17
Major developments (continued)
2019
February
● We announced positive interim metallurgical test results for our
Springpole Project that indicated the potential for significant increases in
the ultimate recovery of both gold and silver from the project. This
updated metallurgical work achieved total recoveries of 90.6% for gold
and 95.1% for silver through flotation followed by separate cyanide
leaching of both concentrate and flotation tails.
March
● We announced the results of an updated mineral resource estimate for our
Goldlund Project. Details of the updated resource estimate may be found
in the section of this AIF entitled “Material Properties – Goldlund”.
April
● We filed a technical report for the updated mineral resource estimate on
our Goldlund Project that was prepared by WSP Canada Inc. in
accordance with NI 43-101. The report, which is titled “Technical Report
and Resource Estimation Update, Goldlund Gold Project, Sioux Lookout,
ON” and is dated April 1, 2019, can be found under our SEDAR profile at
www.sedar.com, and on our website at www.firstminnggold.com. See the
section of this AIF entitled “Material Properties – Goldlund” for
comprehensive details of this updated resource estimate.
● We announced the appointment of Ken Engquist as our new Chief
Operating Officer, effective April 29, 2019.
May
● We announced the closing of a non-brokered private placement offering,
raising aggregate gross proceeds of approximately $7.4 million (the “May
2019 Offering”) pursuant to which we issued 20,412,995 units of the
Company (the “Units”) at a price of $0.27 per Unit for gross proceeds of
approximately $5.5 million, and 5,277,777 flow-through units of the
Company (the “FT Units”) at a price of $0.36 per FT Unit for gross
proceeds of approximately $1.9 million. Each Unit consists of one
common share of the Company (a “Unit Share”) and one-half of one
common share purchase warrant (each whole common share purchase
warrant, a “Warrant”). Each Warrant will entitle the holder to acquire
one common share of the Company at a price of $0.40 at any time prior to
May 16, 2022.
2019
May (continued)
The net proceeds from the sale of the Units issued under the May 2019
Offering will be used by First Mining for development and permitting
activities at our Canadian gold projects, as well as for general working
capital purposes. The gross proceeds raised from the sale of the FT Units
under the May 2019 Offering will be used by First Mining to fund
exploration programs that qualify as “Canadian Exploration Expenses”
(“CEE”) and “flow-through mining expenditures”, as those terms are
defined in the Income Tax Act (Canada), and as “eligible Ontario
exploration expenditures” for the purposes of the Taxation Act, 2007
(Ontario).
● We announced the filing of a preliminary short form base shelf prospectus
(the “Preliminary Shelf Prospectus”) with the securities commissions in
each of the provinces of Canada, and a corresponding registration
statement on Form F-10 (the “Registration Statement”) with the United
States Securities and Exchange Commission (the “SEC”) under the
U.S./Canada Multijurisdictional Disclosure System. The Preliminary
Shelf Prospectus and corresponding Registration Statement will allow us
to undertake offerings of common shares (including common shares
issued on a “flow-through” basis), preferred shares, warrants, subscription
receipts and units (collectively, the “Securities”), or any combination
thereof, up to an aggregate total of CAD$100 million from time to time
during the 25-month period that the final short form base shelf prospectus
remains effective.
June
● We announced the commencement of drilling at our Goldlund Project (the
“2019 Goldlund Drilling Program”), with an initial work program at the
Miller prospect on the property ("Miller") consisting of 14 drillholes
(including 3,000 m of step-out drilling) planned along strike, both to the
northeast and southwest of the area drilled at Miller in 2018.
August
● We announced the establishment of an at-the-market equity program (the
“ATM Program”) pursuant to which we may, at our discretion and from
time to time, issue up to $15 million of our common shares to the public
at the prevailing market price of the shares when issued through the TSX.
The volume and timing of distributions under the ATM Program, if any,
will be determined at our sole discretion, subject to
Page18
Major developments (continued)
2019
August (continued)
applicable regulatory limitations under Canadian securities laws. Sales of
common shares through the ATM Program will be made pursuant to the
terms of an equity distribution agreement dated August 19, 2019 (the
“Equity Distribution Agreement”) between First Mining and Cantor
Fitzgerald Canada Corporation. The ATM Program will be effective until
the earlier of July 26, 2021 or completion of the sale of the maximum
number of shares thereunder unless terminated prior to such date in
accordance with the Equity Distribution Agreement.
● We announced that we had entered into an option agreement with
Momentum Minerals Ltd. (“Momentum”), a private company, pursuant
to which Momentum was granted a four-year option to earn a 100%
interest in our Turquoise Canyon gold property located in Nevada, United
States (the “Turquoise Canyon Property”) in exchange for certain
annual share and/or cash payments to First Mining and annual exploration
expenditure requirements, and we retained a 2% NSR royalty on the
Turquoise Canyon Property. Momentum may buy back 1% of this NSR
royalty up until the first anniversary of commercial production at the
property by paying us US$1 million.
September
● We announced assay results from the first seven holes of the 2019
Goldlund Drilling Program at Miller, and that the 2019 Goldlund Drilling
Program had been increased to 25 drill holes, with drilling to date
totalling approximately 4,133 m in 22 holes, and visible gold noted in
many of these holes.
October
● We announced the positive results of an updated independent Preliminary
Economic Assessment (“PEA”) for our Springpole Project. The PEA for
Springpole contemplates an open pit mine and milling operation and
reflects updated metallurgical testwork that has demonstrated the potential
for significantly improved recoveries. It also reflects updated operating
and capital cost estimates. Details of this updated PEA may be found in
the section of this AIF entitled “Material Properties – Springpole”.
2019
November
● We filed a technical report for an updated PEA on our Springpole Project
that was prepared by SRK Consulting (Canada) Inc. in accordance with
NI 43-101. The report, which is titled “Preliminary Economic Assessment
Update for the Springpole Gold Project, Ontario, Canada” and is dated
November 5, 2019, can be found under our SEDAR profile at
www.sedar.com, and on our website at www.firstminnggold.com. See the
section of this AIF titled “Material Properties – Springpole” for
comprehensive details of the PEA.
● We announced that we had entered into an agreement with Ausenco
Engineering Canada Inc. (“Ausenco”) to complete a Pre-Feasibility Study
(“PFS”) for our Springpole Project.
● We announced the expansion of the 2019 Goldlund Drilling Program to
32 drillholes at the Miller prospect, totalling approximately 6,130 m, with
additional drilling planned for the Main Zone at the Goldlund Project in
2020, and we announced additional assay results on drilling completed to
date at Miller.
December
● We announced the closing of a non-brokered private placement offering,
raising aggregate gross proceeds of approximately $2.0 million (the
“December 2019 Offering”) pursuant to which we issued 7,405,000
common shares of the Company (the “Flow-Through Shares”) that
qualify as flow-through shares for purposes of the Income Tax Act
(Canada), at a price of $0.27 per Flow-Through Share. The gross proceeds
raised from the December 2019 Offering will be used by First Mining to
fund exploration programs that qualify as “CEE” and “flow-through
mining expenditures”, as those terms are defined in the Income Tax Act
(Canada). In connection with the December 2019 Offering, the Company
paid a 5% finder’s fee on the aggregate gross proceeds of the offering.
This fee was paid by First Mining in common shares of the Company at a
price of $0.27 per share, resulting in the issuance of an additional 370,250
common shares of the Company.
Page19
Recent developments
2020
January
● We announced the closing of a non-brokered private placement financing
with Ausenco, raising aggregate gross proceeds of approximately
$750,000 (the “January 2020 Offering”), pursuant to which we issued
2,777,777 common shares of the Company to Ausenco at a price of $0.27
per share. The net proceeds raised from the January 2020 Offering will be
used by First Mining to pay Ausenco for the first half of the costs of the
PFS that is being undertaken by Ausenco for the Springpole Project.
● We announced that we had entered into a binding term sheet with Auteco
Minerals Ltd. (“Auteco”) pursuant to which Auteco can earn up to an
80% interest in our Pickle Crow Project. For a summary of the key terms
of the earn-in agreement, see the section in this AIF entitled “Investor
information – Material contracts”
February
● We announced the remaining assay results from the 2019 Goldlund
Drilling Program at the Miller prospect, and we announced the resignation
of Dr. Christopher Osterman from our Board.
● We announced the closing of the first tranche of a non-brokered private
placement offering, raising aggregate gross proceeds of $2.5 million (the
“2020 Tranche 1 Offering”), pursuant to which we issued 10,000,000
flow-through units ("FT Units") at a price of $0.25 per FT Unit. Each FT
Unit consists of one Flow-Through Share and one-half of one Warrant.
Each whole Warrant entitles the holder to acquire one common share of
the Company at a price of $0.33 at any time prior to February 14, 2023.
The gross proceeds raised from the sale of the FT Units under the 2020
Tranche 1 Offering will be used by First Mining for expenditures that
qualify as “Canadian Development Expenses” as defined in the Income
Tax Act (Canada) on our Springpole Project, and that will be renounced to
subscribers effective no later than December 31, 2020.
We announced the closing of the second tranche of a non-brokered private
placement offering, raising aggregate gross proceeds of approximately
$5.1 million (the “2020 Tranche 2 Offering”), pursuant to which we
issued 23,328,818 Units at a price of $0.22 per Unit. Each Unit consists of
2020
February (continued)
one Unit Share and one-half of one Warrant. Each whole Warrant entitles
the holder to acquire one common share of the Company at a price of
$0.33 at any time prior to February 28, 2023. The net proceeds raised
from the sale of the Units under the 2020 Tranche 2 Offering will be used
by First Mining for development and permitting activities at our Canadian
gold projects, as well as for general working capital purposes.
March
● We announced the assay results of the first eleven drillholes from the
2020 drill program at the Goldlund Property, which is focused within and
around the defined resource area known as the Goldlund Main Zone.
● We announced the closing of the third and final tranche of a non-brokered
private placement offering, raising aggregate gross proceeds of
approximately $0.9 million (the “2020 Tranche 3 Offering”), pursuant to
which we issued 4,091,500 Units at a price of $0.22 per Unit. Each Unit
consists of one Unit Share and one-half of one Warrant. Each whole
Warrant entitles the holder to acquire one common share of the Company
at a price of $0.33 at any time prior to March 6, 2023. The net proceeds
raised from the sale of the Units under the 2020 Tranche 3 Offering will
be used by First Mining for development and permitting activities at our
Canadian gold projects, as well as for general working capital purposes.
In total, we raised gross proceeds of approximately $8.5 million across the
three
the February/March 2020 non-brokered private
tranches of
placement offering.
● We announced that, further to our news release dated January 27, 2020,
we had entered into a definitive earn-in agreement with Auteco pursuant
to which Auteco can earn up to an 80% interest in our wholly-owned
subsidiary PC Gold Inc. (“PC Gold”), which owns the Pickle Crow
Project. For a summary of the key terms of the earn-in agreement, see the
section in this AIF entitled “Investor information – Material contracts”.
Page20
Significant acquisitions
We have not completed any significant acquisitions during our most recently completed financial year.
Corporate organization
The following diagram shows our current corporate structure and material subsidiaries, including the properties held by the various subsidiaries:
Note:
Our other subsidiaries, which each have total assets and revenues less than 10%, and in the aggregate less than 20%, of our total consolidated assets or our total
consolidated revenue, are excluded from the above chart.
On March 30, 2015, First Mining was continued out of Alberta under the laws of the Province of British Columbia, Canada pursuant to the Business Corporations
Act (British Columbia) (the “BCBCA”), and as a result, First Mining is now governed by the laws of the Province of British Columbia. On January 8, 2018, we
changed our name to “First Mining Gold Corp.”.
We are a reporting issuer in the province of British Columbia (our principal reporting jurisdiction) and in each of the other provinces of Canada. We currently have
the following material wholly-owned subsidiaries:
● Gold Canyon Resources Inc., a company incorporated under the
BCBCA.
● Tamaka Gold Corporation, a company incorporated under the
Business Corporations Act (Ontario) (“OBCA”).
● PC Gold Inc., a company incorporated under the OBCA.
● Cameron Gold Operations Ltd., a company incorporated under the
OBCA.
● Coastal Gold Corp., a company incorporated under the OBCA.
For more information:
You can find more information about First Mining on SEDAR
(www.sedar.com), and on our website (www.firstmininggold.com).
See our most recent management proxy circular dated May 15, 2019
for additional information, including how our directors and officers are
compensated, principal holders of our securities, and securities
authorized for issuance under our equity compensation plans.
See our audited consolidated annual financial statements and
management’s discussion and analysis for the financial year ended
December 31, 2019 for additional financial information.
Page21
Our other subsidiaries, which each have total assets and revenues less than 10%, and in the aggregate less than 20%, of our total consolidated assets or our total
consolidated revenue, are excluded from the above list.
Our projects
We have interests in mineral properties located in Canada, Mexico and the United States. As at December 31, 2019, these properties were carried on our balance
sheet as assets with a total book value of approximately $252 million. The book value consists of acquisition costs plus cumulative expenditures on properties for
which the Company has future exploration plans. The current book value is not necessarily the same as the total cumulative expenditures on each property given the
acquisition costs were based on the consideration paid at the time of purchase. The book value is also not necessarily the fair market value of the properties.
Our material and non-material projects are set out below.
Material projects
● Springpole Project (Ontario)
● Goldlund Property (Ontario)
● Cameron Property (Ontario)
● Pickle Crow Property (Ontario)
● Hope Brook Property (Newfoundland & Labrador)
p. 23
p. 43
p. 67
p. 78
p. 95
Non-material projects
● Canada
● Mexico
● United States
p. 104
p. 105
p. 106
Page22
Springpole
Technical report
The description in this section of our Springpole Gold Project (the “Springpole Project”) is based on the project’s technical report: Preliminary Economic
Assessment Update for the Springpole Gold Project, Ontario, Canada (report date: November 5, 2019; effective date: September 1, 2019) (the “Springpole
Technical Report”). The report was prepared for us in accordance with NI 43-101 by SRK Consulting (Canada) Inc. (“SRK”) under the supervision of Dr. Gilles
Arseneau, Ph.D., P.Geo.; Grant Carlson, P.Eng.; Bruce Andrew Murphy, P.Eng.; Neil Winkelmann, FAusIMM; Mark Liskowich, P.Geo.; Michel Noël, P.Eng.;
Michael Royle, M.App.Sci., P.Geo.; Mauricio Herrera, Ph.D., P.Eng.; and Laurie Tahija, MMSA-QP; all qualified persons within the meaning of NI 43-101. The
following description has been prepared under the supervision of Hazel Mullin, P.Geo., who is a qualified person within the meaning of NI 43-101, but is not
independent of us. All currencies used in this summary of the Springpole Technical Report are in U.S. dollars unless otherwise noted.
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Springpole
Technical Report, except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the Springpole Technical Report
in its entirety to fully understand the project. You can download a copy from our SEDAR profile (www.sedar.com), or from our website
(www.firstmininggold.com).
Readers are cautioned that the PEA contained within the Springpole Technical Report 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.
Project description, location and access
The Springpole Project lies approximately 110 km northeast of the Municipality of Red Lake in northwest Ontario, Canada. The property is centered on a temporary
tent-based camp situated on a small land bridge between Springpole Lake and Birch Lake. The latitude and longitude coordinates for the project are:
Latitude
N51° 23ʹ 44.3ʺ
Longitude
W92° 17ʹ 37.4ʺ
The Universal Transverse Mercator map projection based on the World Geodetic System 1984 (WGS84) zone 15N is:
Easting
549,183
Northing
5,693,578
Average Elevation
395 m
Page23
During late spring, summer, and early fall, the Springpole Project is accessible by floatplane direct to Springpole Lake or Birch Lake. All fuel, food, and material
supplies are flown in from Red Lake or Pickle Lake, Ontario, or from Winnipeg, Manitoba, with flight distances of 110 km, 167 km, and 370 km, respectively. The
closest road access at present is the landing at the old South Bay Mine on Confederation Lake, approximately 50 km away by air. During winter, an ice road
approximately 85 km long is constructed from the South Bay landing point on Confederation Lake to a point about 1 km from Springpole Lake camp. During
breakup in spring and freeze-up in fall, access to the Springpole Project is by helicopter. Additional winter access may be available via temporary airstrips cleared
on nearby frozen lakes.
First Mining acquired 100% of the Springpole Project on November 13, 2015, when it completed the acquisition of Gold Canyon Resources Inc. All of the mining
claims, leases and patents are currently registered in the name of Gold Canyon Resources Inc., our wholly-owned subsidiary.
When the project was acquired from Gold Canyon, it consisted of 30 patented mining claims and 300 unpatented, contiguous mining claims and 6 leased unpatented
mining claims, totalling an area of approximately 32,448 Ha. Additional claims were subsequently acquired by First Mining in the Satterly Lake area, and the
original unpatented ‘legacy’ claims were converted into the new Ontario cell claim system in April 2018. The area covered by the Springpole property has increased
since 2015 to its current total of 41,943 hectares. Included in this total, an area covering 1,531 Ha was converted from mining claims to mining leases in July 2019.
Through Gold Canyon, we lease 10 patented claims, which are fee simple parcels with mining and surface rights attached to all 10 of these claims, and these
patented claims, together with the notices of lease, are registered with the Land Registry Office in Kenora, Ontario. The lease is for a term of 21 years less one day
and terminates on April 14, 2031. Under the lease, we are obligated to pay all applicable property taxes related to the 10 patented claims during the lease term
together with advance royalty payments on a sliding scale of $50,000 per year (2011-2016), $60,000 per year (2016-2021), and $80,000 per year (2021-2031).
These payments are to be credited to future NSR payables, if any. We have an option to acquire these 10 patented claims and would be required to do so upon the
commencement of commercial production on these or certain adjoining patented claims. This option term is renewable for a further period of five years by
providing notice and a $25,000 payment. The consideration payable is, at our option on exercise or at the option of the leaseholder upon commencement of
commercial production, either (a) $5 million with the leaseholder retaining a 1% NSR or (b) $4 million with the leaseholder retaining a 2% NSR. We have a right of
first refusal on any sale of the remaining royalty interest in the property on certain terms and conditions.
Through Gold Canyon, we also have an option and lease to a further 15 patented mining claims which are fee simple parcels with mining and surface rights attached
and registered, together with the notice of option and lease, with the Land Registry Office, Kenora, Ontario. The option can be exercised by us before expiry of the
earlier option period by confirmation of good standing of the agreement and payment of a $50,000 renewal fee. We are required to make option payments in the
aggregate amount of $35,000 per year and to expend an aggregate of CDN$300,000 on mining operations in each option term as a condition of any renewal and to
pay all property taxes related to these patented claims. We have an option to acquire the 15 claims and would be required to do so upon the commencement of
commercial production at any time during the option period by payment of an aggregate of $2 million. Upon exercise of the purchase option, we must also acquire
the cabin on the property for the lesser of fair market value or $20,000.
Page24
Underlying royalties which affect the Springpole Project are:
● 3% NSR on five patented claims payable to Jubilee Gold Exploration Ltd. (“Jubilee Gold”) upon commencement of commercial production with advance
royalty payments of $70,000 per year, adjusted using the yearly Consumer Price Index. We have an option to acquire 1% of the NSR for $1,000,000 at any
time, and a right of first refusal on any sale of the NSR. We can terminate the royalty obligations at any time by transferring the five patented claims back to
Jubilee Gold;
● 3% NSR on 10 leased patented claims payable to a leaseholder upon commencement of commercial production with advance royalty payments on a sliding
scale of US$50,000 per year (2011-2016), US$60,000 per year (2016-2021), and US$80,000 per year (2021-2031). We have a right to acquire up to 2% of the
NSR for US$1,000,000 per 1% at any time;
● 3% NSR on 15 patented claims (held by us pursuant to an option and lease) is payable to an optionor and leaseholder during the option term upon
commencement of commercial production or a 1% NSR if the purchase option is exercised prior to commercial production. We have a right to acquire the
remaining 1% NSR by a payment of US$500,000; and
● 3% NSR on six unpatented mining claims payable to an individual vendor upon commencement of commercial production with advance royalty payments of
US$50,000 per year. We have an option to acquire all or a portion of the NSR at a rate of US$500,000 per 1% of the NSR.
We are required to purchase a vacation home owned by a vendor that is located on the Springpole Project upon commencement of commercial production.
To keep a mining claim current, the mining claim holder must perform $400 per single cell mining claim unit worth of approved assessment work per year, or $200
per boundary cell mining claim unit, immediately following the initial registration date. The claim holder has two years to file one year’s worth of assessment work.
Surface rights are separate from mining rights. Should any method of mining be appropriate, other than those claims for which Crown leases were issued, the
surface rights would need to be secured.
History
Gold exploration on the property was carried out during two main periods, one during the 1920s to 1940s, and a second period from 1985 to the present.
Between 1933 and 1936, extensive trenching and prospecting was conducted on the Springpole Project, including 10 short holes totalling 458.5 m. Limited
trenching and prospecting was completed in 1945.
The area remained dormant until 1985, when an airborne geophysical survey was completed over the entire claim group, and on the 30 patented claims line cutting
was done at both 30.5 m centres and 61 m centres. Subsequently, geological mapping, humus geochemistry, and ground geophysics were conducted over the grids.
From 1986 through 1989, 118 diamond drillholes were completed in seven drill phases totalling 38,349 m. In addition, during 1986 and 1987, approximately
116,119 m2 of mechanical stripping was carried out and four petrographic reports were produced.
Page25
From 1989 through 1992, an induced polarization survey over the central portion of the Portage zone under Springpole Lake was conducted and the Springpole
Project was tested with eighteen core holes totalling 6,195 m. The majority of the drilling was conducted on the Portage zone. At the same time, a seven-core hole
drill program was completed around the east margins of Springpole Lake and lake-bottom sediment sampling of Springpole Lake east of Johnson Island was
completed.
During 1995, an exploration program consisting of remapping of the main area, of some of the existing drill core, and a reinterpretation of the geology was carried.
During the 1995 and 1996 programs, an additional 69 holes were drilled totalling 15,085 m on the Springpole Project proper and two drillholes on Johnson Island.
By late 1996, Gold Canyon acquired 100% of the Springpole Project. Gold Canyon continued exploration in 1997 and 1998 with another 51 core holes totalling
5,642 m.
In the summer of 1998 a lake bottom sediment sampling program was conducted in several areas of the Springpole Project, which identified several follow-up
targets that were tested in 1999 with 12 core holes totalling 2,779 m.
During 2004, 2005, and 2006, diamond drilling programs were conducted on the property by Gold Canyon, totalling 7,887 m in 65 drillholes.
In 2007, Gold Canyon conducted an 11 diamond drillhole program that totalled 2,122 m of drilling, and in the fall of 2007, they embarked on a limited exploration
program to further investigate the Fluorite zone that was previously identified during a trenching program in 1990.
In 2008, Gold Canyon drilled a further seven core holes totalling 2,452 m.
From early August through to the end of October 2009, Gold Canyon re-logged and re-sampled a portion of the historic drill core stored at the project site and
temporary tent camp. A total of 115 drillholes were re-logged which equates to approximately 31% of the available drillholes.
In the winter of 2010, a total of six diamond drill holes were drilled for a total of 1,774.5 m of HQ drilling. During the following spring and summer of 2010, a total
of 8,664.2 m of HQ core drilling was completed in 23 drillholes.
In 2011, Gold Canyon carried out a drill program which totaled 28,750 m in 80 diamond core holes.
A 2012 drill program began in-filling the Portage zone based upon results of the 2011 drill program. The 2012 drill program totaled 38,069 m in 87 diamond core
holes.
In 2013, a 7-hole oriented-core drill program totalling 2,450 m was implemented to collect rock geotechnical data within the immediate vicinity of the proposed
open pit.
In 2013, Gold Canyon commissioned SRK Consulting (Canada) Inc. (“SRK”) to complete a preliminary economic assessment on the Springpole Project.
On November 13, 2015, we acquired Gold Canyon, and as a result, the Springpole Project.
In October 2016 we commenced a drilling program at the Springpole Project to collect additional material for metallurgical testing. A total of four holes comprising
1,712 m were drilled, with hole locations specifically chosen to recover sample material that is representative of the Springpole deposit. In February 2017, we
announced the results of the drilling program.
In 2017, we commissioned SRK to complete an updated PEA on the Springpole Project.
In 2018, we carried out a limited geotechnical drill program to test the integrity of ground relevant to coffer dam construction. Eleven short holes were drilled
totalling 244 m.
Page26
Geological setting, mineralization and deposit types
The Springpole Project is located within the Archean-aged Birch-Uchi Greenstone Belt. Studies of the southern part of the Birch-Uchi greenstone belt have revealed
a long, multistage history of crustal development. Based on mapping, lithogeochemistry, and radiometric dating, the supracrustal rocks of the greenstone belt were
subdivided into three stratigraphic group-scale units (listed in decreasing age): the Balmer, Woman and Confederation assemblages. This three-part subdivision was
applied to most of the Uchi Subprovince. The Confederation assemblage is thought to be a continental margin (Andean-type) arc succession, versus the less certain
tectono-stratigraphic context of the other assemblages. Some relatively small conglomeratic units likely form a synorogenic, discontinuously distributed, post-
Confederation assemblage in the Birch-Uchi greenstone belt.
The northern margin of the Birch-Uchi greenstone belt forms a pattern of sub-regional scale cusps of supracrustal strata alternating with batholiths. Basaltic units
are prominent around the periphery of the greenstone belt and may be part of the Woman assemblage but the accuracy of this stratigraphic assignment is unknown.
It is suggested that Confederation assemblage age rocks make up the bulk of the greenstone belt.
The Springpole Project is underlain by a polyphase alkali, trachyte intrusive displaying autolithic breccia. The intrusive is comprised of a system of multiple phases
of trachyte that is believed to be part of the roof zone of a larger syenite intrusive; fragments displaying phaneritic textures were observed from deeper drill cores in
the southeast portion of the Portage zone. Early intrusive phases consist of megacrystic feldspar phenocrysts of albite and orthoclase feldspar in an aphanitic
groundmass. Successive phases show progressively finer grained porphyritic texture while the final intrusive phases are aphanitic. Within the country rocks to the
north and east are trachyte and lamprophyre dikes and sills that source from the trachyte- or syenite-porphyry intrusive system.
The main intrusive complex appears to contain many of the characteristics of alkaline, porphyry-style mineralization associated with diatreme breccias (e.g. Cripple
Creek, Colorado). Direct comparison with drill core from the two sites shows a number of consistent textures and styles of mineralization. A recent observation
made from drilling, combined with the airborne magnetic survey, shows that potentially economic gold mineralization is coincident with an unexplained
geophysical anomaly. This style of mineralization is characterized by the Portage zone and portions of the East Extension zone where mineralization is hosted by
diatreme breccia in aphanitic trachyte. It is suspected that ductile shearing and brittle faulting have played a significant role in redistributing structurally controlled
blocks of the mineralized rock. Yet to be confirmed is a form of porphyry-style alteration zoning consisting of an outer zone of phyllic (sericite) dominant alteration
with narrow zones of advanced argillic alteration characterized by illite and kaolinite, and a core zone of intense potassic alteration characterized by biotite and K-
feldspar.
Exploration
No ongoing exploration activity is currently underway at the Springpole Project.
Drilling
During the winters of 2007 and 2008 Gold Canyon conducted drill programs that completed 21 holes totalling 3,159 m, 11 holes totalling 2,122 m, and 7 holes
totalling 2,452 m of diamond core drilling, respectively.
Page27
During the winter of 2010, a total of six diamond drillholes were drilled for a total of 1,774.5 m of HQ drilling. Two drillholes were not completed and both holes
ended in altered and mineralized rock. The drill program revealed a more complex alteration with broader, intense zones of potassic alteration replacing the original
rock mass with biotite and pyrite. During the summer and fall of 2010, a total of 8,664.2 m of HQ core drilling was completed in 23 drillholes, averaging 44.23 m of
drilling per 24-hour shift, including time for moving the drill between drill sites.
The 2011 drill program totaled 28,750 m in 80 diamond core holes. Five of the diamond core holes were drilled for the purpose of metallurgical testing. All these
holes were twins of previously drilled holes.
The 2012 drill program began in-filling the Portage zone based upon results of the 2011 drill program. The goal was to in-fill areas where inferred mineral resource
had been defined in the February 2012 mineral resource update and to expand the mineral resource area to the southeast. The 2012 drill program totaled 38,069 m in
87 diamond core holes.
The 2013 oriented-core drill program was implemented to collect rock geotechnical data within the immediate vicinity of the proposed open pit. Approximately
2,450 m of drilling was completed on seven drillholes (SG13-200 to SG13-206).
The 2016 drill program was implemented to collect additional material from the Portage Zone so that additional metallurgical testing could be carried out. In total,
1,712 m were drilled in the four holes (PM-DH-01 to 04). Results of the metallurgical test results are discussed under the heading “Mineral processing and
metallurgical testing”.
Subsequent to the mineral resource estimate of 2017, we carried out a limited geotechnical drill program to test the integrity of ground relevant to coffer dam
construction. Eleven short holes were drilled, totalling 244 m. None of the holes intersected the mineralized domains and none have any impact on the mineral
resources presented in below under the heading “Mineral resource estimates”.
Sampling, analysis and data verification
Detailed descriptions of the drill core were carried out under the supervision of a senior geologist, a member in good standing of the Association of Professional
Geologists of Ontario and/or American Institute of Professional Geologists. The core logging was carried out on-site in a dedicated core logging facility. Drill log
data were recorded onto paper logs that were later scanned and digitized.
Core was laid out 30 to 40 boxes at a time. First, the core was photographed in 15 m batches prior to logging or sampling. This was followed by a geotechnical log
that recorded quantitative and qualitative engineering data including detailed recovery data and rock quality designation. Any discrepancies between marker blocks
and measured core length were addressed and resolved at this stage. The core was then marked up for sampling.
For the 2010 and 2011 drill programs, all the drill core intervals were sampled using sample intervals of 1 m. During the 2012 drilling program, Gold Canyon
changed its standard sample length from 1 to 2 m lengths. However, in zones of poor recovery, 1.5 m or 3 m samples were sometimes collected. Samples over the
standard sample length were typically half core samples and whole core was generally only taken in intervals of poor core recovery across the sampled interval.
Sampling marks were made on the core and sample tickets were stapled into the core boxes at the beginning of each sample interval. Quality control samples were
inserted into the sample stream.
Page28
Inserting quality control samples involved the addition of certified blanks, certified gold standards, and field and laboratory duplicates. Field duplicates were
collected by quartering the core in the sampling facility on-site. Laboratory duplicates were collected by splitting the first coarse reject and crushing and then
generating a second analytical pulp. Blanks, standards and duplicates made up 10% of the total sample stream. Sample tickets were marked blank, field or
laboratory duplicate, or standard, and a sample tag was stapled into the core box within the sample stream.
Geological descriptions were recorded for all core recovered. Separate columns in the log allow description of the lithology, alteration style, intensity of alteration,
relative degree of alteration, sulphide percentage, rock colour, vein type, and veining density. A separate column was reserved for written notes on lithology,
mineralization, structure, vein orientations/relations etc. The header page listed the hole number, collar coordinates, final depth, start/end dates, and the name of the
core logging geologist.
Following the logging and core marking procedures described above, the core was passed to the sampling facility. Core sampling was performed by experienced
sampling technicians from Ackewance Exploration & Services (“Ackewance”) of Red Lake, Ontario, and quality control was maintained through regular
verification by on-site geologists. Core was broken, as necessary, into manageable lengths. Pieces were removed from the box without disturbing the sample tags,
were cut in half lengthwise with a diamond saw, and then both halves were carefully repositioned in the box. When a complete hole was processed in this manner,
one half was collected for assay while the other half remained in the core box as a witness. The remaining core in the boxes was then photographed at 51 cm (20
inch) intervals. All logs and photographs were then submitted to the senior geologist/project manager for review and were archived. Data were backed up.
The sampling technician packed one half of the split core sample intervals into transparent vinyl sample bags that were sequentially numbered to match the sample
number sequences in the sample tag booklets used by the core-logging geologists. The numbered, blank portion of the triplicate sample tag was placed in the bag
with the sample; the portion that was marked with the sample interval remained stapled into the bottom of the core box at the point where the sample interval
begins. Sample bags were then sealed with plastic tags. Sealed sample bags were packed into rice sacks five samples at a time. All sacks were individually labeled
with the name of the company, number of samples contained therein, and the number sequence of the samples therein. Sacks were assigned sequential numbers on a
per shipment basis. A project geologist then checked the sample shipment and created a shipping manifest for the sample batch. A copy was given to the project
manager and a copy was sent along with the sample shipment. A copy of the sample shipment form was also sent via e-mail to the analytical laboratory.
The project geologist prepared the sample submission form for the assay laboratory. This form identifies the number of sample sacks as well as the sequence of
sample numbers to be submitted. Due to the remote location, the shipment was then loaded on to a plane or helicopter and flown direct to Red Lake where
representatives of the commercial analytical laboratory met the incoming flight and took the samples to the laboratory by pickup truck.
Once at the laboratory, a manager checked the rice sacks and sample numbers on the submission form. The laboratory then split the received sample manifest into
batches for analysis, assigned a work order to the batch, and sent a copy of the mineral analysis acknowledgement form to the project manager.
Page29
Aluminum tags embossed with the hole number, box number, and box interval (from/to) were prepared and stapled onto the ends of each core box. Core boxes were
cross-stacked on pallets and then moved to on-site storage.
Core samples collected at the drill site were held in closed core boxes sealed with fiber tape; at various times of day, camp staff collected the core boxes that were
then delivered to the core logging facility. All core logging, sampling and storage took place at the Springpole Project site. Following the logging and marking of
core, all core preparation and sampling was performed by technicians from Ackewance of Red Lake, Ontario, under the supervision of the project manager. All on-
site sampling activities were directly supervised by the project manager.
All primary assay work since the 2010 drill program has been performed by SGS Laboratories in Red Lake (gold), Ontario and Don Mills (silver and multi-element)
in Toronto, Ontario. The SGS Red Lake and Don Mills facilities are certified and conform to requirements CAN-P-1579 and CAN-P-4E (ISO/IEC 17025:2005).
Certification is accredited for precious metals including gold and silver and 52 element geochemical analyses.
We have attested that there is no commercial nor other type of relationship between us and SGS Laboratories that would adversely affect the independence of SGS
Laboratories.
All samples received by SGS Red Lake were processed through a sample tracking system that is an integral part of their laboratory information management
system. This system utilizes bar coding and scanning technology that provides complete chain of custody records for every stage in the sample preparation and
analytical process.
Samples were dried, and then crushed to 70% of the sample passing 2 mm (-70 mesh). A 250 g sample was split off the crushed material, and pulverized to 85%
passing 75 micron (-200 mesh). A 30 g split of the pulp was used for gold fire assay and a 2 g split was used for silver analysis. Crushing and pulverizing equipment
was cleaned with barren wash material between sample preparation batches and, where necessary, between highly mineralized samples. Sample preparation stations
were also equipped with dust extraction systems to reduce the risk of sample contamination. Once the gold assay was complete, a pulp was sent to the SGS Toronto
facility for silver and possibly for multi-element geochemical analysis.
As part of the standard internal quality control procedures used by the laboratory, each batch of 75 Springpole Project core samples included four blanks, four
internal standards, and eight duplicate samples. In the event that any reference material or duplicate result would fall outside the established control limits, the
sample batches would be re-assayed.
Prepared samples were analyzed for gold by fire assay with atomic absorption finish. Samples returning assays in excess of 10g/t gold were re-analyzed with a
gravimetric finish.
Prepared pulp samples shipped from SGS Red Lake to SGS Toronto were analyzed for silver by three-acid digestion with atomic absorption finish.
During the winter 2010 program, prepared samples were analyzed for 52 elements by acid digestion (3:1 HCl: HNO3).
Page30
Of the 18 drillholes completed in 2007 and 2008, comprising a total of 1,374 assay intervals analyzed for gold, SRK, who prepared the Springpole Technical
Report, checked a total of 137 samples representing 10% of the total against the original certificates. No errors were found.
A total of 3,135 assay values for gold and 3,161 assay values for silver in the database were compared against the original protected PDF assay certificates
submitted by SGS Red Lake. These totals represent 10.1% and 10.4% of the total number of assays for gold and silver, respectively.
Of the original assay values checked against certificates, the focus was on values material to any resource estimate, either higher-grade intervals or very low-grade
intervals in proximity to higher-grade intervals. The average grade of gold samples verified was 2.05 g/t Au. The average grade of silver samples checked was 8.27
g/t Ag.
Only two errors were found for gold:
●
●
The gold value of sample interval SP10-028 from 433 m to 436 m (sample number 8287) was found to have an entered value of 5.96 g/t gold against a value
on the assay certificate of 9.00 g/t gold.
The gold value of sample interval SP11-076 from 69 to 70 m (sample number 14583) having the value of 0.45 oz./t was incorrectly placed in the parts per
billion column.
No errors were found with respect to silver assays.
This represents an error rate of 0.064% in gold assays and an error rate of 0.0% in silver assays. This error rate is well within acceptable industry standards.
As part of the mineral resource estimation process, the authors of the Springpole Technical Report reviewed the QA/QC data collected by Gold Canyon, reviewed
the procedures in place to assure assay data quality, and verified the assay database against original assay certificates provided directly to the author by SGS Red
Lake, the assay laboratory. A total of 53,431 gold assays, 46% of the assay data, were checked against original assay certificates. No significant database errors were
identified. About 143 minor rounding errors were observed. None of the rounding errors are deemed material or of any significance to the mineral resource estimate
presented in the report.
Mineral processing and metallurgical testing
Over the period from 1989 to 2017, four testwork campaigns were completed on samples of mineralized material from the Springpole Project. Two samples from
the Portage Zone were tested in 1989, eight samples in 2011 from the Portage Zone and the Main and Oxide Zones, and five samples in 2012 from the Portage,
Oxide, East Pit Extension and Main zones. These samples were tested for mineralogy, hardness, gravity recovery and whole feed leaching. In addition, rougher
flotation of a pyrite concentrate was tested to reduce the grinding energy and tankage requirements for a smaller, concentrate leaching circuit.
First Mining completed a drilling program in late 2016 with four holes drilled primarily through the Portage zone, and in 2017 engaged Base Metallurgical
Laboratories Ltd. (“Base Met”) to evaluate gold and silver recoveries from these samples via whole ore leaching and flotation testing, as well as completing
comminution testwork, chemical and mineral determination.
Page31
Based on these test results, operating costs associated with grinding to a P80 of 40µm and a higher cyanide consumption were estimated. It was determined that the
process operating cost increase outweighed the value gained from higher metal recovery. For the 2017 PEA update the process plant design was based on the 2013
PEA conditions: grinding to a P80 of 70µm, 2 g/L cyanide concentration, and leaching for 24 hours (36-hour design).
In 2018, First Mining contracted M3 Engineering and Technology Corp. ("M3") to manage a metallurgical testwork program to further improve the gold and silver
recoveries and to define the process flowsheet in advance of a prefeasibility study for the Springpole Project. The metallurgical testwork program was to investigate
the potential performance of alternative process options compared to whole ore agitated leaching, and to select a single flowsheet with the best technical,
environmental, and financial results for additional testing in the next study phase.
A single phase of testing using a composite sample was completed and three independent labs were selected to perform the testwork. ALS Metallurgy in Kamloops,
Canada was selected for conventional flotation testing while Jacobs Engineering Group in Lakeland, Florida, USA and Eriez Flotation Division in Erie,
Pennsylvania, USA, were selected for mica removal (using two different concepts). ALS was selected to compile the composite for testing and split necessary
amounts for testing by Jacobs and Eriez.
All samples remaining from the 2017 Base Met test program were sent to ALS for use in the 2019 test program. The samples used for the Base Met test program
appear to be representative of the material to be processed through the plant. Samples were combined and blended to form a master composite sample of
approximately 300 kg.
Based on results of the 2018-2019 testwork program, the following was established with respect to the Springpole Project: (i) a primary grind size around 150µm is
suitable to give adequate sulphide flotation recovery; (ii) one stage of cleaning would reduce the mass to be reground and maintain the sulphide recovery in the
concentrate (approximately 86% of the 5% sulphide in the feed); (iii) reground cleaner concentrate of 17µm would result in higher leach extractions for both gold
and silver; and (iv) separate cyanide leaching of reground cleaner concentrate and flotation tails resulted in a combined extraction of gold and silver of 91% and
96%, respectively. When the proposed flowsheet is considered in aggregate, the estimates for recovery used in optimization and evaluations are 88% gold and 93%
silver, respectively.
It was therefore concluded by SRK that flotation followed by leaching of reground concentrate and combined (rougher plus cleaner) tails presents the more
beneficial processing route for the Springpole Project.
SRK, the author of the Springpole Technical Report, recommends that further testing be completed on a variability basis across the mineralized material deposit at
the Springpole Project to confirm the metallurgical response using the developed flotation plus leaching flowsheet including lock cycle tests. A larger sample of
flotation concentrate should be generated in order to obtain a more accurate assessment of regrinding energy requirements using larger dynamic protocol, such as
the IsaMill signature plot test. Additional testing should be conducted to confirm leach performance on flotation tailings obtained at coarser primary grind sizes and
on the flotation concentrate at the finer grind size.
Page32
The author of the Springpole Technical Report also recommends additional comminution testing (crusher work index, abrasion index, SAG testing, rod and ball mill
work index) should be completed to confirm grinding power requirements. Additional testwork should be completed to confirm whether cyanide detoxification can
be completed successfully and within normal reagent cost levels. Thickening and filtering characteristics should be confirmed to increase confidence in the
estimation of dewatering costs.
Mineral resource estimates
There are 659 drillholes in the Springpole database. The mineral resource estimate for the Springpole Project utilizes results from 401 core boreholes drilled by
Gold Canyon and previous owners of the property during the period of 2003 to 2014 and four holes drilled by us in 2016.
The revised mineral resource estimate (September 1, 2019) is based on a gold price of $1,400/oz. and a silver price of $15/oz., both considered reasonable economic
assumptions by the author of the Springpole Technical Report. To establish a reasonable prospect of economic extraction in an open pit context, the resources were
defined within an optimized pit shell with pit walls set at 45°. Assumed recoveries of 80% for gold and 60% for silver were used (Note: A silver recovery
assumption of 85% was used for mine design and evaluation based on more recent data). Mining costs were estimated at $2/t of total material, processing costs
estimated at $12/t and general and administrative (“G&A”) costs estimated at $2/t. A cut-off grade (“COG”) of 0.4 g/t gold was calculated, and is considered to be
an economically reasonable value corresponding with breakeven mining costs. Approximately 90% of the revenue for the proposed project is derived from gold and
10% from silver.
Note: For the mine development (Whittle™ optimization) and economic analysis in the Springpole Technical Report, updated input parameters were used.
The updated resource estimate is summarized in the table below.
Category
Open Pit**
Indicated
Inferred
Quantity
(Mt)
139.1
11.4
Au
(g/t)
1.04
0.63
Grade
Metal
Ag
(g/t)
5.4
3.1
Au
(Moz.)
4.67
0.23
Ag
(Moz.)
24.19
1.12
Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resources would
be converted into mineral reserves. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical,
marketing, or other relevant issues. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been
insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource. SRK, the author of the Springpole Technical
Report, is of the opinion that further attempts to convert the remaining inferred material to indicated would be of questionable value. The current proportion of the
resource classified as inferred is 7.6% of total tonnes and 4.7% of contained gold.
Page33
Mining methods
A Lerch-Grossman pit optimization was carried out on the Springpole resource model in order to determine the ultimate pit limits for this PEA study. The pit
optimization was carried out in WhittleTM software. The tonnage of the incremental pit shells along with estimated discounted values are illustrated in the table
below.
For the Springpole deposit, shells beyond Pit Shell 28 add mineralized rock and waste tonnages to the overall pit, but have higher incremental strip ratios with
minimal positive impact on the Project’s Net Present Value (NPV). To better determine the optimum shell on which to base the phasing and scheduling and to gain a
better understanding of the deposit, the shells were analyzed in a preliminary schedule. The schedule assumed a maximum processing rate of 13 Mt/yr. Low grade
material was stockpiled with 95% reclaimed at the end of mine life, and no capital costs were added.
Based on the analysis of the shells and the preliminary schedule, Pit Shell 28 was chosen as the base case shell for further phasing and scheduling of the deposit.
This shell contains 151 Mt of mineralized material above cut-off with an average diluted gold grade of 0.95 g/t and 4,624 koz contained gold along with a silver
grade of 5.08 g/t and 24,736 koz of contained silver. The total waste tonnage in the shell is 319 Mt for a strip ratio of 2.1:1.
The resources within the ultimate pit shell were used as the basis of a production schedule and Life of Mine (LOM) plan. The table below summarizes the LOM
plan.
Page34
Description
Mine Production Life
Total Mineralized Material Mined
Stockpiled Material
Direct Process Feed
Stockpile Reclaim
Total Process Feed Material
Diluted Au Grade (mill head grade)
Contained Au
Diluted Ag Grade (mill head grade)
Contained Ag
Waste
Total Material
As-mined Strip Ratio
As-processed Strip Ratio
Unit
yr
Mt
Mt
Mt
Mt
Mt
g/t
koz
g/t
koz
Mt
Mt
t:t
t:t
Value
12
151
31
120
19
139
1.00
4,468
5.33
23,740
319
470
2.1
2.4
The tonnes of mineralized material and waste material are detailed by year in the figure below along with gold ounces produced.
Page35
The open pit mining activities for the Springpole pit were assumed to be primarily undertaken by an owner-operated fleet as the basis for the Springpole Technical
Report. The average unit mining costs used in the project economics was $1.74/t of material mined, for pit and dump operations, road maintenance, mine
supervision, and technical services. The cost estimate was built from first principles and based on experience of similar sized open pit operations and local
conditions. The open pit mining costs take into account variations in haulage profiles and equipment selection.
Non-contact surface water around the open pit and waste storage facilities will be diverted where possible and contact water will be collected in a series of ditches
and ponds for storage and treatment as required for discharge into the receiving environment. A schematic of the surface water management plan is illustrated in the
figure below.
Processing and recovery operations
The Springpole Technical Report is based on an assumed design criteria of 36,000 tpd (13,140,000 tpa) process plant processing moderate hardness (BWi of 12
kWh/t to 14 kWh/t) material averaging 1 g/t gold and 6 g/t silver.
Testwork determined that a coarse grind P80 size of 150µm could achieve up to 91% gold extraction using flotation followed by cyanide leaching of reground
concentrate and combined (rougher and cleaner) flotation tail. No new gravity recovery information was obtained for this update.
Page36
The updated design for the Springpole processing facilities is based on both previous and recent metallurgical testwork with several assumptions. The basis of the
design of the comminution circuit remains the same as the 2017 Preliminary Economic Assessment (the "2017 PEA") except for the primary grind size of P80
150µm, while the flotation circuit and cyanide leaching is based on recent testwork. The remaining unit operations selected: agitated leach, carbon handling, cyanide
detox, and tailing handling remain the same as the 2017 PEA with the exception of separate cyanide leaching circuits for flotation tails and concentrate.
The principal gold-silver ore mineral is the Ag-Au telluride mineral petzite that has approximately 5% sulphide. Flotation reagents are added to the sulphide
flotation circuits to promote the flotation of sulphides and associated precious metals. Sodium cyanide is added to the flotation tails and flotation concentrate to
leach gold and silver.
Infrastructure, permitting and compliance activities
There is no existing infrastructure within 20 km of the Springpole Project area. The primary access point for the Springpole Project will likely be a two-lane access
corridor road. SRK is of the view that, based on a cursory review of the alignment using low resolution topographical mapping, it is anticipated that only basic
cut/fill techniques will be required to construct the road. The unpaved road surface will require ongoing maintenance consisting of re-grading and topdressing the
running surface to reduce the wear on the haul truck and heavy equipment tires. Topdressing will be sourced from the local borrow sources used during
construction.
There are four 7 m wide single lane access roads located throughout the Springpole Project area. All single lane access roads will be constructed using conventional
cut and fill techniques prior to the placing of an approximately 0.5 m thick compacted sub-base layer sourced from locally developed and approved borrow sources.
Routine surface water management along all roads will be achieved by ensuring the roads are graded with a crown. Eleven locations along the access corridor road
will have corrugated steel culverts installed to allow surface water to pass while no culverts have been identified for the single lane access roads.
Two major stream crossings will be required along the access corridor road. An arched culvert will be constructed at the Deaddog Stream Crossing while a pre-
fabricated bridge will be constructed at the Birch River Crossing.
Surface infrastructure earthworks will also use conventional cut and fill techniques to provide suitably graded areas to place the buildings and allow for surface
drainage. The buildings will be of modular design or consist of fully contained pre-fabricated components. These structures will require minimal on-site
construction, plumbing, and electrical work.
Substantial storage of fuel will not be required on-site due to the easy access to the nearby highway. Some fuel storage will be required for the mine, haul, and light
vehicle fleets, as well as for the heavy equipment and production of ammonium nitrate/fuel oil, a bulk explosive. It has been assumed that a 5 ML fuel tank farm,
within a suitably-sized bund, is to be constructed at the mine site. The Fuel Tank Farm should be located on a blasted bedrock foundation. Compacted engineered
backfill will be used to bring the foundation up to the appropriate grades and provide suitable bedding material for the lined containment facility, as well as being
used for pedestal supports for the fuel tanks.
Page37
A 60 km long by 23 m wide right-of-way will be cleared, grubbed and prepared for the installation of a 115 kV wood pole transmission line using 636,000 mils
conductor. The right-of-way will start from Highway 105 near Ear Falls and travel a further 90 km alongside the existing Hydro One corridor overland where it will
connect to and follow the access corridor road to the project site.
The Wataynikaneyap Power project in northwestern Ontario plans to develop transmission lines north from Red Lake which may present an opportunity to reduce
the power line construction costs for the Project in future studies.
The potential impacts the project may have on Springpole Lake and/or Birch Lake are considered to be the more environmentally and socially sensitive components
of the Project. We are cognizant of these sensitivities and have taken steps to design the Project with these sensitivities in mind. To that end, the project has been
designed to avoid direct interaction with the Birch Lake watershed.
The Environmental Assessment (“EA”) process, currently underway, will address all regulatory requirements of the Canadian Environmental Assessment Act 2012
(“CEAA”) and the provincial EAA, including alternative assessments and potential cumulative environmental effects. Environmental baseline programs initiated
and/or completed to date have been designed in consultation with the Project’s indigenous communities and the regulatory requirements of both the federal and
provincial governments.
The management of the mine waste (tailings and waste rock) also represents a longer-term environmental concern. The tailings management facility and waste rock
repository will likely assimilate fish bearing ponds and doing so will likely involve additional fish habitat compensation. The next phase of engineering for the
Springpole Project will further evaluate alternative mine waste management areas to avoid impacting fish and fish habitat. The environmental risks associated with
tailings and waste rock management following operations will be addressed as part of the project’s detailed closure plan.
All potential environmental impacts associated with the Springpole Project can be mitigated through the implementation of accepted engineering practices currently
employed throughout Canada’s mining industry. A detailed monitoring plan will also be developed to ensure environmental compliance of all components of the
mine throughout its construction, operation, closure, and post-closure activities.
We comply with permit, notice and consultation requirements as they relate to the on-going exploration work on the Springpole Project. Legislation that requires
material permits and notices include the provincial Mining Act, Public Lands Act, Lakes and Rivers Improvement Act, Ontario Water Resources Act, as well as the
federal Fisheries Act.
To date, no formal memorandum of understanding agreements have been signed with local First Nations.
Capital and operating costs
Project costs in the Springpole Technical Report were estimated from a combination of sources including first principles, reference projects, vendor’s quotes, cost
service publications and SRK experience. Costs were considered from the commencement of production forward. Costs incurred prior to this date were considered
as “sunk” for the purposes of economic assessment.
Page38
Operating Costs
Operating costs estimated for the open pit mine and 36,000 tpd process plant are summarized in the tables below.
Mine Operating Costs
Open Pit Mine Operating Unit Cost
Drilling
Blasting
Loading
Hauling
Roads/Dumps/Support Equipment
General Mine/Mtce
Supervision & Technical
Total Open Pit Operating Cost
Process Plant Operating Costs
Processing Cost Expense Item
Labour
Power
Reagents
Liners
Grinding Media
Maintenance Part & Outside Repairs
Supplies & Services
Total
Capital Costs
Life of Mine
$M
49
99
195
243
96
33
49
763
$/t mill feed
0.35
0.71
1.40
1.76
0.69
0.24
0.35
5.50
Unit Cost
$/t material moved
0.11
0.23
0.45
0.55
0.22
0.07
0.11
1.74
$/tonne processed
0.72
2.29
5.84
0.16
0.16
0.47
0.07
9.71
Initial and sustaining capital costs for the Project are summarized in the table below.
Page39
Major Capital Cost Summary
Item
Open Pit Mining
Processing
Infrastructure
Water Management
Dike and Lake Dewatering
Tailings Management Facility Construction
Total Initial Capital
Sustaining Capital
Open Pit Mining
Processing
Infrastructure
Tailings Management Facility Lifts
Closure Costs
Total Sustaining Capital
Total Capital Costs
Economic Analysis
$M
149
519
38
4
25
74
809
52
6
0
67
26
150
959
The economic analysis that forms part of this summary of the Springpole Technical Report is intended to provide an initial review of the Springpole Project’s
potential and is preliminary in nature. The economic analysis includes consideration of 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 preliminary
economic assessment based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic
viability.
The primary economic evaluation measures used were total LOM cash flow, NPV of this cash flow at a 5% discount rate, the internal rate of return of the project
cash flows, and the payback period on a non-discounted basis. The table below summarizes the high-level economic outputs from the modelling. Note that payback
is quoted from the commencement of production.
Page40
Summary of Base Case Valuation
Parameter
Mill Feed
Payable Au Produced
Payable Ag Produced
Au Price
Ag Price
Gross Revenue
Treatment and Refining Costs
Royalty
Operating Costs
Operating Surplus
Initial Capital costs
Sustaining Capital Costs (incl. closure)
Life of Mine Capital Costs
Economic Results
Pre-tax NPV5%
Pre-tax IRR
After-tax NPV5%
After-tax IRR
Non-discounted Payback from Production Date
Units
kt
koz
koz
$/oz
$/oz
$M
$M
$M
$M
$M
$M
$M
$M
$M
%
$M
%
years
Value
138,528
3,914
21,426
1,300
20
5,516
4
76
2,360
3,076
809
150
959
1,232
26.2%
841
21.8%
3.4
The following production-related assumptions have been applied to the technical economic model:
● Production rate at maximum of 36,000 tonnes per day over 365 days per year.
● Pre-production period of three years from commencement of construction.
In addition, the following general assumptions have been applied for mine design and economic evaluation:
● A base case discount factor of 5% has been applied for NPV calculations. The author of the Springpole Technical Report considers this to be typical for
gold projects of this type and in this location.
● An average LOM sales price of $1,300/oz gold.
● An average LOM sales price of $20/oz silver.
● Estimates of royalties payable as described in elsewhere in the Springpole Technical Report.
● Working capital days have been assumed at 20 days for receivables and 30 days for payables.
Page41
Exploration, development and production
There is no on-going exploration taking place on the Springpole Project at this time.
Recent developments
In December 2019, we signed an MOU and a study agreement with Ausenco to complete a PFS for the Springpole Project. A field program in support of the
required pre-feasibility level studies was commenced in January 2020.
A detailed, two-phase, metallurgical program has been scoped and is underway. The “Phase 1” testwork program utilized material from the 2016 metallurgical drill
program, with testing underway at the SGS laboratory in Lakefield, Ontario. A second “Phase 2” test work program is being completed using additional core
material obtained from three new metallurgical holes (totalling 1,187 m) drilled in early 2020. The main objective of the program is to optimize flotation and
cyanide leaching conditions, and provide design criteria for the PFS.
In addition to the three metallurgical drill holes completed, additional holes have been strategically located to support both hydrogeology and geotechnical analysis.
This combined geotechnical-hydrogeological drill program consists of 10 holes in the proposed pit wall and coffer dam areas and drilling has been commenced. The
results of this drilling will help guide how the ground water communicates within the region and provide a better sense of the pit slope stability for the PFS, which
in turn may help improve strip ratio estimates. A further 14 geotechnical drill holes, as well as a number of test pits, are also planned as part of the PFS on-site work
to test the proposed plant site, tailings and waste storage areas.
Page42
Goldlund
Technical report
The description in this section of our Goldlund gold project (the “Goldlund Project”) is based on the project’s technical report: Technical Report and Resource
Estimation Update, Goldlund Gold Project, Sioux Lookout, ON (issue date April 1, 2019, effective date March 15, 2019) (the “Goldlund Technical Report”). The
report was prepared for us by WSP Canada, Inc. ("WSP") in accordance with NI 43-101 under the supervision of Todd McCracken, P.Geo., a qualified person
within the meaning of NI 43-101. The following description has been prepared under the supervision of Hazel Mullin, P.Geo., who is a qualified person within the
meaning of NI 43-101, but is not independent of us.
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Goldlund
Technical Report, except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the Goldlund Technical Report
in its entirety to fully understand the project. You can download a copy from our SEDAR profile (www.sedar.com), or from our website
(www.firstmininggold.com).
Project description, location and access
The Goldlund Project is situated within a land package of approximately 280 km2 referred to as the Goldlund Property (the “Goldlund Property”). The Goldlund
Property has a strike-length of over 50 km in the Wabigoon Subprovince. The Goldlund Project is an Archean lode-gold project located in northwestern Ontario,
approximately 60 km northeast from Dryden by road and stretches over several townships of the Patricia Mining and Kenora Mining Divisions of northwestern
Ontario. The Goldlund Property is centered at 49.900203 north latitude and 92.341103 west longitude (545800E, 5527400N NAD 83 Zone 15) NTS 52F/16.
Access to the Goldlund Property is by Ontario Provincial Highway 72, approximately 60 km by road from Dryden, or approximately 45 km southwest of Sioux
Lookout. A private all-weather gravel road leads from this point to the Goldlund Property. The road into the Goldlund Property would require upgrading to sustain
any form of mining operations, but is accessible by two-wheel drive vehicle for exploration. Regularly scheduled passenger air service and charter flights are
available to the towns of Dryden and Sioux Lookout.
The property consists of 1,348 mining claims totalling 28,015 ha, 27 patented claims (433 ha), one mining lease (48.56 ha), and one licence of occupation. We have
full surface rights on the 27 patents and 1 mining lease (the “Mining Lease”). The Ontario Mining Act (2010) grants surface access to a mineral claim without
owning the surface rights, with proper consultation with stakeholders in the area. All claims and patents are registered to Goldlund Resources Inc., a wholly-owned
subsidiary of Tamaka (which, itself, is a wholly-owned subsidiary of First Mining).
Underlying royalties which affect the Goldlund Property are:
● 1% NSR payable to an arm’s length vendor for 36 claims totalling 576 ha;
● 1% NSR payable to Goldlund Mines Limited on any ore mined above 50 m below the existing shaft collar for 6 patented claims and 3 patented claims
covered by the Mining Lease. We have a right of first refusal in the event the holder wishes to dispose of its interest in the NSR;
Page43
● 2.5% NSR payable to Rio Algom Limited for 21 patented claims. We have the right to purchase the NSR in its entirety for $2,500,000 and a right of first of
refusal in the event that Rio wishes to sell the NSR.
● 2% NSR payable to 1074127 Ontario Limited in accordance with industry practice on the sale of all minerals from the property for 13 mining claims. We
have right to purchase 100% of the NSR at any time for $1,500,000 and a right of first refusal in the event that the holder wishes to sell the NSR.
The Goldlund Project has two historic shafts that have been capped, an underground portal that has been blocked, a small open pit that is partially flooded, a waste
rock stockpile, a mineralized material stockpile, a building housing the original mill on the Goldlund Property, and a small tailing containment facility. All have
been overgrown with vegetation.
All permits and licenses to conduct exploration work at the Goldlund Project are in place.
History
Exploration of the Goldlund Property dates back to the 1940s. From the late 1940s up until 1988, intermittent exploration was carried out by various companies
mainly on five gold bearing zones. Past work included shaft sinking, driving a ramp, and underground development, including drifting and crosscuts on four levels.
There was a major period of exploration in the area from 1946 to 1952, in response to the discovery of gold mineralization in the southeastern part of Echo
Township. The historic Newlund and Windward gold deposits were discovered during this period.
The Newlund prospect saw extensive underground exploration (4,570 m of drifts and crosscuts, 6,220 m of diamond drilling) through five levels, via a 255 m deep
shaft. The first level (200 ft.) of the Newlund/Goldlund workings extends for over 3.2 km, connecting on the west with the 68 m shaft of the Windward prospect,
crossing the entire Windward claim block.
Virtually no work was carried out on the Echo Township gold prospects from 1952 to 1973.
In 1974, most of the surface facilities were rehabilitated and re-sampled portions of the first and second levels. In total, some 151,000 ft. (approximately 46,000 m)
of surface drilling has been completed in 506 holes, and more than 60,000 ft. (approximately 18,300 m) of underground drilling has been completed in 466 holes.
From mid-1982 to early 1985, an underground mine and an open pit mine was operated on the Goldlund Property and processed material through the mill at the site.
Production records have been compiled that show underground mine production of approximately 100,000 tons (approximately 90,700 t) at an estimated grade of
0.15 oz./ st (approximately 4.23 g/t) gold together with open pit production of approximately 43,000 st (approximately 39,000 t), at an estimated grade of 0.17 oz./
st (approximately 4.80 g/t) gold. Plant records show that some 132,000 st (approximately 119,750 t) were processed, with 18,000 oz. of recovered gold. The head-
grade was 0.15 oz./st gold and mill recovery was reported to be 86.6%. In total, some 1,050 ft. of shaft sinking, 1,385 ft. of driving a ramp and approximately
19,600 ft. of drifting and crosscuts were developed for the production.
Exploration work from the 1940s to present day has also been conducted by various companies on the remaining parts of the Property outside of the immediate
Goldlund Deposit area, which include the Quyta, Miles, Franciscan, Laval and Beartrack exploration blocks. Work has included ground and airborne geophysical
surveys, geological mapping, outcrop sampling, trenching, soil surveys and diamond drilling.
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Geological setting, mineralization and deposit types
Regional geology
The Goldlund Property is situated within a northeasterly-projecting arm of the Wabigoon Subprovince extending from Wabigoon Lake to Sioux Lookout. The area
is underlain by sedimentary and volcanic rocks, numerous intermediate to mafic sub-volcanic intrusive sheets, and intruded by several granitoid stocks. The
stratigraphic assemblage has been subdivided into five principal rock groups:
● Northern Volcanic Belt;
● Northern Sedimentary Group;
● Central Volcanic Belt;
● Southern Sedimentary Group; and
● Southern Volcanic Belt.
The area has been affected by multiple deformational events resulting in a predominately northeasterly structural fabric. Gold exploration dates back to at least the
1940s with the majority of occurrences located in the Central and Southern Volcanic Belts.
The area is comprised of meta-volcanic and meta-sedimentary rocks intruded by several granitoid stocks and many smaller porphyritic and non-porphyritic bodies.
The area has been subjected to at least four phases of deformation resulting in a predominantly northeasterly-striking structural grain. Regional and more important
local alteration occurred in two pulses; one preceding the earliest deformation and one coinciding with the late deformation. Quartz veining, gold mineralization,
and related alteration are related to the later alteration event.
Project geology
A 3 km wide belt of Precambrian basaltic volcanic rocks strikes northeast across the Goldlund Project. This basaltic formation is bound by Precambrian sediments
to the north and to the south, with a wedge of felsic volcanics that occurs between the basalt and sediments to the south of the basalt.
A suite of Leucotonolite to diorite sills (“granodiorite” in mine terminology) have intruded near the contact between the tuffs to the south and the spherulitic lavas to
the north. These strata-parallel sills dip from vertical to -80° southward and range from 14 m to 60 m in thickness. A subsidiary suite of sills intrudes narrow tuff
beds in spherulitic basalt lavas. These strata-parallel intrusions are known to extend northeastward well beyond the Goldlund Project and south-westward beyond
Crossecho Lake where they re-appear just south of Troutfly Lake. It has been postulated that this series of intrusions may occur intermittently over a strike-length of
15 km.
Mineralization
The gold mineralization occurs concentrated in quartz filled cross fractures that strike 010° to 015° and dip northwest at -40° to -75°. Historically it is reported that
these gold bearing fractures occur concentrated in zones that extend intermittently at intervals of 200 m to 300 m along the 1.6 km length of the underground
workings that has been explored to a vertical depth of 150 m to 200 m on the former Windfall and Goldlund Property.
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Gold mineralization occurs in essentially two types of deposits in the area of the Goldlund Project with the most important gold mineralization being associated with
quartz vein and stock-work structures.
Gold mineralization at the Goldlund Project is hosted by zones of northeast-trending and gently to moderately northwest-dipping quartz stockworks (comprised of
numerous quartz veinlets less than 1 cm to 20 cm thick). The stockwork zones form bands within the dykes that intrude the east-northeast-trending mafic volcanic
country rocks. The quartz veins and veinlets contain occasional fine-grained to coarse-grained pyrite. The intervening areas between the quartz veinlets exhibit
strong to moderate feldspathic alteration associated with common fine to medium-grained pyrite and magnetite.
The mineralized sills strike generally northeast (065°) and dip steeply to the southeast. The quartz stockwork veins generally strike 010° to 015° and dip northwest
at -40° to -75°. This results in a shallow rake within the various zones.
Deposit type
The identified mineralization fits an Archean shear zone-hosted quartz vein model (“Archean Lode gold”).
The dominant, and economically most significant type, of the shear zone hosted occurrences are transverse vein arrays within competent rocks and particularly the
intermediate to mafic sub-volcanic intrusive sheets. Vein systems occupy tensional fractures related to internal deformation of the competent units as folds tightened
during stage three deformation. Vein arrays could be expected to develop near fold hinges, within fold limbs, and along axial planar foliations. The orientations of
individual veins within the arrays are affected by their locations within folds.
Exploration
In 2018, First Mining completed a property-wide regional exploration program on the Goldlund Property, including mapping and sampling of previously-identified
targets and diamond drilling. A sixteen-hole, 1,944 m drill program was completed between June and September 2018 and tested the Miller, Miles and Eaglelund
occurrences.
This regional field exploration program included numerous bush traverses to follow up on historic gold occurrences reported over the Goldlund Property, and it
identified numerous targets for further field work at a later date. Between May and July, and September and October of 2018, traverses were made over the
Beartrack, Mistango, Quyta, Eaglelund, Miller, Miles, Jacobus Creek, Villbona, Lun-Echo, Goldlund-Eastern, and Camreco South showings. Geological mapping
was undertaken and geochemical grab or chip sampling was completed at suitable outcrop locations. The previous geological mapping commissioned in 2012 by
Tamaka was also ground-checked for accuracy of outcrop locations and descriptions.
Drilling
We completed our 2017 and 2018 drill programs at the Goldlund Project in two phases. Phase 1 was completed between January 2017 and July 2017 and targeted
Zone 7 of the Goldlund deposit, and Phase 2 was completed between June 2017 and March 2018 and primarily targeted Zone 1. Both programs together comprised
a total meterage of 40,198 m in 138 holes, and were designed to better understand and define the potential resource in both of these areas of the Goldlund deposit by
infill drilling.
Page46
The drilling was conducted by Rodren Drilling of Manitoba with HQ sized core. Casings were left in place and capped.
A total of 100 infill holes were drilled during the Phase 1 drill program, for a total meterage of 24,299 m. The target of this program was Zone 7.
The primary goal of this Phase 1 drilling campaign was to upgrade Inferred Resources at Zone 7 into a higher resource category and to better define the geology and
gold mineralization. The albitized tonalite (“granodiorite” in mine terminology) and immediate hanging wall and footwall were entirely sampled and assayed to
allow for a more accurate resource estimate with no data gaps.
Of the 100 holes, 86 holes intersected intervals of significant gold mineralization, and those holes with no significant gold mineralization encountered have helped
to define the extent and further the understanding of the shape and nature of the deposit.
We completed our Phase 2 drilling program on the Goldlund deposit between July 2017 and March 2018. A total of 38 infill holes were drilled over 14,961 m,
which were designed to provide greater confidence in the gold mineralization within Zone 1 of the Goldlund deposit. While 33 out of the 38 drillholes intersected
gold mineralization, this phase of drilling was limited in extent in order to avoid intersecting historic underground workings. Areas of Zone 1 have previously been
mined and therefore contain several levels of existing underground workings. Accordingly, new holes had to be positioned to avoid drilling through existing levels
or stopes, and as a result some of the holes may not have reached the key mineralized zones which occur closer to the footwall of the zone.
In addition to the 38 new Zone 1 holes, four Phase 1 holes drilled into Zone 7 (holes GL-17-010, GL-17-051, GL-17-106 and GL-17-108) were extended during the
Phase 2 program to test for deeper level mineralization. These were successful in encountering gold mineralization within the deeper portions of the holes, with hole
GL-17-010 intersecting 83 metres of 1.35 g/t Au at downhole depths of between 545 m and 628 m.
Two Zone 1 holes also tested for deeper mineralization: GL-17-115 (44 m of 0.78 g/t Au including 16 m at 1.07 g/t Au from 590 to 606 m) and GL-17-119 (2 m at
4.31 g/t Au from 446 to 448 m) which indicate that in Zone 1 as well as Zone 7, significant grades of gold exist below the levels of an open pit.
Also during 2018, First Mining completed a small, property-wide regional exploration and diamond drill program intended to test the regional potential of the
Goldlund Property to host significant gold mineralization similar to that demonstrated within the known resource area at the Goldlund Project. This exploratory drill
program consisted of 1,944 m of drilling in 16 holes. It was designed to test the Miller, Miles and Eaglelund occurrences and verify historical drillhole and surface
anomaly data, and was completed between June and September 2018. The drill program consisted of eight drillholes (MI-18-001 to MI-18-008) at the Miller
showing, seven drillholes (EL-18-001 thru EL-18-007) at the Eaglelund showing, and one hole (ML-18-001) designed to drill test under the exploratory pit found at
the Miles showing. Drilling totalled 1,256 m at Miller, 638 m at Eaglelund, and 50 m at the Miles target.
The Miller targeted area lies approximately 10 km northeast of the Goldlund resource area, along strike of the lithologic fabric of granodiorite sills/dykes intruded
into regional mafic meta-volcanic greenstone which extends over 30 km within the Goldlund Property boundary. This elongate pattern of brittle granodiorite in
ductile mafic meta-volcanic rocks is a key mechanism in focusing gold mineralization, as demonstrated in the area of the current Goldlund resource.
Page47
Granodiorite at Miller is coarse-grained with strong chlorite and silica alteration predominantly along the contacts with meta-basalt and gabbro in the hanging wall.
The contact with metabasalt and gabbro is sheared and strongly foliated.
Quartz-carbonate veining at Miller seems to have a slightly different orientation than that of the Goldlund deposit. Gold-bearing veins at Miller seem to be
dominated by steeply 80° - 85° dipping veins which are wider than the shallow 10° - 25° dipping narrow veins. Narrow veins returned higher gold grades from the
surface grab sampling. This observation is based only on a limited surface exposure and eight drillholes. Gold-bearing veins at the Goldlund deposit are dominated
by the conjugate 20 set and 70 set veins. The 20 set veins are most common but are typically narrow, being just a few cm in width, whereas the 70 set veins although
more erratic and discontinuous are typically wider.
Significant gold mineralization was encountered in the Miller drilling, and results have confirmed the same mineralogical associations of gold present in quartz-
carbonate-sulphide stockwork veining and adjacent alteration zone in granodiorite which is very similar to that observed at the Goldlund resource area.
The early results from the Miller prospect indicate that the entire width of the sill/dyke appears receptive to gold mineralization and this mineralization remains
open along strike in both directions and also at depth. The four drillholes which crosscut the granodiorite from hanging wall to footwall indicate that the entire width
of the dyke appears receptive to gold mineralization, while at the Goldlund resource area, gold mineralization tends to occupy only 25% to 40% of the total dyke
width.
In addition, while visible gold mineralization and gold tellurides were common in First Mining’s 2017-2018 infill drilling program at the Goldlund resource area,
the frequency of occurrence of visible gold at Miller was much greater, with visible gold observed in seven out of the total eight holes.
Due to the frequent occurrence of visible gold in the Miller drillholes, and the coarse, nuggety nature of the gold mineralization, we followed up our standard fire
assays on selected samples with a more definitive assay protocol of metallic screen fire assay, using a 1,000 g sample size to minimize the high nugget effect
characteristic of mineralization at the Goldlund Project. Metallic screen fire assay technique is commonly used to determine both the coarse and fine gold in
samples and utilizes a larger volume of the sample than regular fire assay. Samples were chosen for metallic screen analysis either where visible gold was observed
in the core, or adjacent to visible gold occurrences, or where the initial fire assay results did not appear to be representative of the level of gold mineralization
observed in the core.
Holes at Eaglelund and Miles were targeted close to the locations of historical drillholes that were drilled in the 1950s and 1980s, several of which reported gold
mineralization (although locations and assay results for these holes cannot be verified). Some narrow gold intersections were confirmed by the 2018 drill program,
notably in the south west region of the Eaglelund target, with hole EL-18-002 intersecting 1.0 m at 2.22 g/t Au, and hole EL-18-003 intersecting 2.0 m at 6.42 g/t
Au. No significant gold mineralization was encountered in the northeast area of drilling, however mapping and drill logging show that the granodiorite sill, the host
rock of gold mineralization, is faulted off and replaced by a sheared feldspar porphyry in this area. The faulted portion of the granodiorite sill was not located during
this drill campaign, hence additional drilling would be required to delineate this and to better understand the control and distribution of the mineralization at the
Eaglelund and Miles prospects.
Page48
Sampling, analysis and data verification
The following is a description of the sampling methodology for the Tamaka 2007 – 2008 drilling program:
● Drillers delivered the four-row NQ or NQ2 core boxes to the core logging facility.
● Core lids were removed and the boxes placed on the core logging table in order.
● A technician measured run lengths to confirm block markers.
● The technician recorded the rock quality designation (“RQD”) of the core on a computer form.
● Magnetic susceptibility was recorded over the entire hole length at 0.5 m intervals.
● Core was photographed (both wet and dry).
● Logging was completed by the geologist directly into a Microsoft Excel spreadsheet template form. Each drill log was a separate file:
o
o
logs recorded lithology, structures, alteration and sulphide content;
all geology related markings on the core used a yellow lumber crayon.
● Sample intervals were marked with a red lumber crayon on the core.
● Sample lengths were variable, 20 cm minimum sample length, 1.5 m maximum sample length.
● The samples did not cross lithological boundaries:
o
o
o
quartz veins were isolated if possible as well as zones in increased sulphides or alteration;
shoulder sample of 1 m was collected on both sides of the mineralized sections;
due to the nature of the mineralization, and from the onset of drilling, the decision was made by Tamaka staff to collect samples continuously
from collar to toe of hole.
● Three dedicated technicians were trained on sampling:
o
o
o
o
o
o
top-mounted core saw with a four-compartment settling tanks to recycle the water;
a sample interval sheet was generated by the geologist logging the core; the sheet contained the Borehole ID, From, To intervals, and sample
number;
the technician verified the sample number from the sample sheet with the sample number from pre-printed sample books provided by the
laboratory;
the technician cut the core and placed one half in a plastic sample bag and returned the other half to the core box;
one sample tag was placed in the sample bag, one sample tag was stapled into the core box at the beginning of the sample interval;
sample bags with sample and sample tag were sealed with fibre tape.
● Quality assurance and quality control ("QA/QC") samples were inserted into the sample stream. Standards, blanks, field, and crush duplicates were
inserted into the sample series using the same number sequence as the samples themselves. A QA/QC sample was inserted every 30 samples and were
alternated between crush duplicates, field duplicates, standards, and blanks. Pulp duplicates performed by Accurassay were also incorporated in the
program.
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● Samples were placed in rice bags and stored in the core logging facility until shipment.
● A Tamaka employee delivered the samples to Manitoulin Transport in Dryden for delivery to Accurassay Laboratories (“Accurassay”) in Thunder Bay.
Accurassay is an accredited facility, conforming to requirements of CAN P-4E ISO/IEC 17025, and CAN-P-1579.
● The laboratory returned all coarse rejects and pulps to Tamaka for storage at the Goldlund Project.
The following is a description of the sampling methodology for the Tamaka 2011 drilling program:
● Drill core was delivered by C3 Drilling to the Tamaka core logging facility located on site at the end of every shift.
● Core was put on the core logging tables for logging by the geologist or geological technician.
● A geologist technician checked the block measurements and measures recorded the RQD. Errors in block measurements were reported to the geologists.
● A technician recorded the magnetic susceptibility using a hand-held instrument for each 3 m length of core.
● Certain initial holes were logged into Microsoft Excel spreadsheets and the remainder were logged into a Gemcom© Gemslogger (“Gemslogger”)
Microsoft Access database.
● A geologist entered the header information from a planned drillhole spreadsheet.
● A geologist logged the core, recording lithology, alteration, structure, and mineralization in Gemslogger or the spreadsheet and marking the intervals with a
grease pen.
● A geologist inserted sample tags for intervals to be sampled, recording these intervals in Gemslogger or the spreadsheet.
● Sample lengths ranged between 0.2 and 2.6 m in length with an average sampling length of around 0.7 m.
● No samples crossed lithological boundaries.
● At least two shoulder samples were taken on either side of the mineralization.
● Sample tags marked with Standard Reference Material (“SRM”), blanks and duplicates were inserted at set intervals by the geologist.
● Core was photographed after logging and sampling was completed; both wet and dry photos were taken.
● Core was then relocated to the core splitting facility.
● A technician then double checked the intervals given in the sample booklet with printed logs from Gemslogger.
● Core was split using a top-mounted diamond saw blade.
● Half of the core was placed in a sample bag while the other half was replaced in the core box.
● Blanks and SRMs were inserted as specified in the sample booklet. Standards, blanks, field, and crush duplicates were inserted into the sample series using
the same number sequence as the samples themselves. A QA/QC sample was inserted every 30 samples and were alternated between crush duplicates, field
duplicates, standards, and blanks. Pulp duplicates performed by Accurassay were also incorporated in the program.
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● For field duplicates, the remaining half of the core was quarter split and placed in a sample bag.
● For coarse duplicates, a sample tag was placed in an empty sample bag.
● The sample tag was stapled to the inside of the sample bag and the sample bag is stapled closed.
● Sample tags were placed in rice bags and stored in crates awaiting shipment.
● Crates were shipped every week to Accurassay Laboratories in Thunder Bay by Manitoulin Transport.
● Downhole surveys were conducted using a Maxibor instrument while the drill rig was still setup on the drill pad.
● Once the drill rig was moved, collar locations were verified using a hand-held GPS.
● Once all the data was finalized in the field, the field databases/spreadsheets were transferred to the office in Thunder Bay where the master database is
stored.
The following is a description of the sampling methodology for the Tamaka 2013-2014 drilling program:
● Drillers delivered the four-row NQ or NQ2 core boxes to the core logging facility.
● Core lids were removed and the boxes placed on the core logging table in order.
● A technician measured run lengths to confirm block markers.
● The technician recorded the RQD of the core on a computer form.
● Magnetic susceptibility was recorded over the entire hole length at 0.5 m intervals.
● Core was photographed (both wet and dry).
● Logging was completed by the geologist directly into a Microsoft Excel spreadsheet template form.
● Each drill log was a separate file:
o
o
logs recorded lithology, structures, alteration and sulphide content;
all geology related markings on the core used a yellow lumber crayon.
● Sample intervals were marked with a red lumber crayon on the core.
● Sample lengths were variable; 20 cm minimum sample length, 1.5 m maximum sample length.
● The samples did not cross lithological boundaries:
o
o
o
quartz veins were isolated if possible as well as zones in increased sulphides or alteration;
shoulder sample of 1 m were collected on both sides of the mineralized sections;
due to the nature of the mineralization, and from the onset of drilling, the decision was made by Tamaka staff to collect samples continuously
from collar to toe of hole.
● Three dedicated technicians were trained on sampling:
o
top-mounted core saw with a four-compartment settling tanks to recycle the water;
Page51
o
o
o
o
o
o
a sample interval sheet was generated by the geologist logging the core; the sheet contained the Borehole ID, From, To intervals, and sample
number;
the technician verified the sample number from the sample sheet with the sample number from pre-printed sample books provided by the
laboratory;
the technician cut the core and placed one half in a plastic sample bag and returned the other half to the core box;
one sample tag was placed in the sample bag, one sample tag was stapled into the core box at the beginning of the sample interval;
sample bags with sample and sample tag were sealed with fibre tape;
quality assurance and quality control samples were inserted into the sample stream. Standards, blanks, field, and crush duplicates were inserted
into the sample series using the same number sequence as the samples themselves. A QA/QC sample was inserted every 30 samples and were
alternated between crush duplicates, field duplicates, standards, and blanks. Pulp duplicates performed by Accurassay were also incorporated in
the program. A second aliquot of pulp (from the pulps remaining after Accurassay analysis) from samples (predetermined by Fladgate) by
Accurassay to be shipped to a separate lab for analysis.
● Samples were placed in rice bags and stored in the core logging facility until shipment.
● A Tamaka employee delivered the samples to Manitoulin Transport in Dryden for delivery to Accurassay in Thunder Bay.
● The laboratory returned all coarse rejects and pulps to Tamaka for storage at the Goldlund Project.
All samples for each of the Tamaka drill programs were processed using both jaw crushers and ring mill pulverizers. Samples received by the lab were processed
using the following sample preparation packages:
● Dry, crush (less than 5 kg) 90% -8 mesh (2 mm);
● Split (1,000 g); and
● Pulverize to 90% -150 mesh (106µm).
The 2007 – 2008 samples were analyzed for gold and silver using a four-acid digestion followed by a 50 g fire assay (FA) with inductively coupled plasma (“ICP”)
finish.
Certain of the 2011 samples were analyzed using a conventional 30 g Fire Assay with an Atomic Absorption finish (“FA/AA”) for gold and a 0.25 aqua regia
digestion with an AA finish for silver. For the remaining 2011 samples, a 50 g conventional fire assay with an AA finish and a 0.25 aqua regia digestion with an
AA finish for silver was performed from the 500 g pulp. A second 500 g pulp was analyzed using a gravimetric finish for samples in excess of 10 ppm gold. In total,
during the 2011 drill program, 10,914 core samples were sent to the laboratory for analysis.
All 2012 and 2013-2014 samples were analyzed by a 50 g conventional fire assay with an AA finish and a 0.25 aqua regia digestion with an AA finish for silver
was performed from the 500 g pulp. A second 500 g pulp was analyzed using a gravimetric finish for samples in excess of 10 ppm gold.
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Tamaka’s QA/QC for each of its drilling programs was generally consistent. The QA/QC programs consisted of the insertion of blanks, Standard Reference Manual
(“SRM”) samples, field duplicates, and crush duplicates into the sample stream at set intervals. SRMs were inserted every 20th sample while blanks were inserted
every 27th to 30th sample. Field and crush duplicates were inserted into the sample stream only for the latter portion of the 2011 drilling campaign with a frequency
of one field duplicate every 30th sample and one crush duplicate every 32nd sample. In addition to the field-inserted QA/QC program, the laboratories operate their
own laboratory QA/QC system. The labs insert quality control materials, blanks and duplicates on each analytical run.
The Tamaka database has gone through several validations. The original data files received prior to the 2010 resource estimate were validated using 103 (10%) of
the 1,065 drillholes in the total database. The validation was completed by the author of the Goldlund Technical Report, while he was employed by Tetra Tech. Data
verification was completed on collar co-ordinates, end-of-hole depth, down-the-hole survey measurements, “From” and “To” intervals, measurements of assay
sampling intervals, and gold grades that were compiled from handwritten drill logs into Microsoft Excel spreadsheets. The error rate of the initial dataset exceeded
the acceptable limit of 1% of errors. Most errors were insignificant and related to mistakes in transcription. Tamaka retrieved the dataset from Tetra Tech and
corrected the entire dataset before returning the files to Tetra Tech. The second round of validation of the dataset returned no errors.
2011 and 2012 round of validation – All data is now recorded and received digitally, so it is possible to check 100% of the assay data for Tamaka surface holes
against the digital assay certificates. There is 100% agreement between the assay certificates and the assay data in the database. The same is true of collar
coordinates, survey data, and lithology intervals.
2013 and 2014 round of validation – All data is now recorded and received digitally, so it is possible to check 100% of the assay data for Tamaka surface holes
against the digital assay certificates. There is 100% agreement between the assay certificates and the assay data in the database. The same is true of collar
coordinates, survey data, and lithology intervals.
The drillhole data was imported into Surpac 6.6, which has a routine that checks for duplicate intervals, overlapping intervals, and intervals beyond the end of hole.
The errors identified in the routine were checked against the original logs and corrected.
The following is a description of the sampling methodology for the First Mining 2017 and 2018 Phase 1 and Phase 2 drilling programs:
● HQ diameter (63.5 mm) drill core was cleaned and the run blocks checked. After this, the runs were measured for recovery. The recovery percentage was
then used to mark off the adjusted metres within the run.
● The RQD was measured and recorded in an Excel sheet, for importing into Datamine DH Logger software.
● The core was logged for lithology, alteration, minerology, veining and structure, and entered into DH Logger, which synchronizes with First Mining’s
central Fusion SQL drilling database.
● 2 m sample intervals were marked off, except at lithological contacts, and in zones of poor recovery, where sample size was adjusted accordingly.
● Standards and blanks were inserted in the sample stream at the required intervals.
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● Duplicates were inserted between the blanks and standards, alternating between field and laboratory duplicates.
● Core pieces were selected and measured for SG.
● The core was photographed twice, both dry and wet.
● The core was sawn in half onsite, with one half bagged and labelled to be sent for assay. For field duplicates, the core was quartered, and one quarter was
sent for the regular assay and the other quarter was sent for the duplicate assay. For the laboratory duplicates, an empty sample bag with a sample ID was
sent to the laboratory where a split was taken from the pulverized sample to run a duplicate assay.
● The remaining half core was placed in core boxes which were stored in a secure on-site facility to serve as a permanent record.
● Sample bags were placed in zip-tied rice bags and shipped to SGS Laboratory facilities in Red Lake, Ontario and Burnaby, British Columbia for the fire
assay and Bulk Leach Extractable Gold (“BLEG”) assaying respectively.
● The laboratory returned all coarse rejects and pulps to First Mining for permanent storage on site at the Goldlund Project.
Samples from the mineralized granodiorite from the First Mining drill program were shipped to SGS Laboratories in Burnaby, BC for BLEG analysis. Samples
received by the lab were processed using the following sample preparation packages:
● Crush entire half core sample to 80% -10 mesh (1.68 mm)
● Pulverize 3,000 g in three separate batches of 1 kg each to 85% -200 mesh (0.074 mm)
● Recombine and blend all three batches for homogeneity
● Re-split into three separate 1 kg batches
● Send one of the 1 kg splits (“pulps”) for BLEG assay (the two remaining 1 kg splits are retained for duplicates)
Samples from the unmineralized volcanics from the First Mining drill program were shipped to SGS Laboratories in Red Lake, Ontario and prepared for fire assay
analysis. Samples received were processed as follows:
● Dry, crush (less than 3 kg) to 75% -8 mesh (2 mm);
● Split to 250 g; and
● Pulverize to 85% -150 mesh (106 µm).
At no time was an employee of First Mining involved in the preparation of the samples.
Page54
The following is a description of the sampling methodology for First Mining’s 2018 exploration drilling program at the Miller, Miles Lake and Eaglelund prospects
on the Goldlund Property:
● NQ diameter (47.6 mm) drill core was cleaned and the run blocks checked. After this, the runs were measured for recovery. The recovery percentage was
then used to mark off the adjusted meters within the run.
● The RQD was measured and recorded in an Excel sheet, for importing into Datamine DH Logger software.
● The core was logged for lithology, alteration, minerology, veining and structure directly into DH Logger, which synchronizes with First Mining’s central
Fusion SQL drilling database.
● 1 m sample intervals were marked off, except at lithological contacts, and in zones of poor recovery, where sample size could be adjusted accordingly.
● Standards and blanks were inserted in the sample stream at the required intervals.
● Duplicates were inserted between the blanks and standards, alternating between field and lab duplicates.
● Core pieces were selected and measured for SG.
● The core was photographed twice, both dry and wet.
● The core was sawn in half onsite, with one half bagged and labelled to be sent for assay. For field duplicates, the core was quartered and one quarter was
sent for the regular assay and the other quarter for the duplicate assay. For the lab duplicates, an empty sample bag with a sample ID was sent to the
laboratory where a split was taken from the coarse reject or the pulverized sample to run a duplicate assay.
● The remaining half core was placed in core boxes which are stored in a secure on-site facility to serve as a permanent record.
● Sample bags were placed in zip-tied rice bags and shipped to SGS Laboratory facilities in Red Lake, Ontario and Lakefield, Ontario for fire assay analysis.
Samples from the First Mining drill program 2018 drilling at Miller, Eaglelund, and Miles were shipped to SGS Laboratories in Red Lake, Ontario, or Lakefield,
Ontario and prepared for fire assay analysis. Samples received by the laboratory for fire assay were processed as follows:
● Dry, crush (less than 3 kg) 75% -8 mesh (2 mm);
● Split to 250 g; and
● Pulverize to 85% -150 mesh (106 µm).
At no time was an employee of First Mining involved in the preparation of the samples.
The following is a description of the analytical procedure followed for the assay results of First Mining’s 2017 and 2018 infill drilling program at the Goldlund
Project and the 2018 exploration drilling program at the Miller, Miles Lake and Eaglelund prospects on the Goldlund Property:
Page55
For the Phase 1 and Phase 2 infill drill program at the Goldlund Project, samples from the mineralized granodiorite were analyzed for gold using the BLEG
methodology, which incorporated a LeachWELLTM reagent. The LeachWELLTM CN test was selected to improve reproducibility of gold assays by using large
samples (1,000 g) which are better suited for a nuggety deposit such as Goldlund.
Samples were dried, pulverised and weighed into labeled bottles, and made into a solution by adding water (at a 1:1 solid-liquid ratio), cyanide (5%),
LeachWELLTM 60X (2%) and NaOH (0.7%) to the bottle. The sample were vigorously shaken on a bottle roll, for a leach time of two hours, to homogenize the
sample with flocculent. Once settled, and a layer of clear solution was available for sampling, a solution sample was taken and read by Atomic Absorption
Spectrometry (“AAS”). The grade of the original solid was calculated from the solid/solution ratio and the AAS reading.
The sample’s residue was filtered and washed 3 times to remove the LeachWELLTM solution; this residue was then dried, homogenized and a 200 g split retained
for each sample, 50 g of which was analyzed for gold by fire assay. Gold assays for the leach solution and residues are combined for each sample to report a final
‘head grade’ concentration.
A 50 g split from each sample sent to the Burnaby laboratory also underwent ICP multi-element analysis by two-acid aqua regia digestion with ICP-MS and AES
finish.
Samples of unmineralized volcanics from the Phase 1 and Phase 2 programs were sent to the SGS laboratory in Red Lake, Ontario for 30 g or 50 g fire assay.
Samples from the 2018 drilling at Miller, Eaglelund and Miles were sent to the SGS laboratories in Red Lake or Lakefield, Ontario for 50 g fire assay.
Due to the frequent occurrence of visible gold in the Miller drillholes, and the coarse, nuggety nature of the gold mineralization, First Mining followed up their
standard fire assays on selected Miller samples with a more definitive assay protocol of metallic screen fire assay using a 1,000-g sample size to minimize the high
nugget effect characteristic of mineralization at the Goldlund Project. Samples were chosen for metallic screen analysis either where visible gold was observed in
the core, or adjacent to visible gold occurrences, or where the initial fire assay results did not appear to be representative of the level of gold mineralization observed
in the core. A total of 52 samples from Miller were selected for a metallic screen fire assay run, and of these 52 samples, 12 were selected for a second metallic
screen fire assay run. Where two metallic screen fire assays were run on the same sample, an arithmetic average of the two assays was used in the final database.
Screened metallic assays for the Miller program were done by SGS at their Cochrane or Lakefield laboratories.
No metallic screen fire assays were done on the Eaglelund or Miles samples.
At no time was an employee of First Mining involved in the analytical process.
Page56
First Mining 2017-2018 QA/QC Program – Goldlund Infill Drilling
The QA/QC program for the 2017-2018 Phase 1 and Phase 2 infill drill programs on the Goldlund deposit consisted of the submission of duplicate samples and
check assays, and the insertion of certified reference materials (CRMs) at regular intervals. Blanks and standards were inserted at a rate of one standard for every 20
samples (5% of total) and one blank for every 30 samples (3% of total). Field duplicates from quartered core, as well as ‘pulp’ duplicates taken from 1 kg pulverized
splits, were also inserted at regular intervals with an insertion rate of 4% for field duplicates and 4% for pulp duplicates.
In addition to the QA/QC program implemented by First Mining, the laboratories each operate their own internal laboratory QA/QC system, inserting quality
control materials, blanks, lab replicates and lab duplicates on each analytical run.
First Mining's QA/QC for each of its drilling programs was generally consistent. The QA/QC programs consisted of the insertion of blanks, SRM samples, field
duplicates, coarse duplicates, pulp duplicates, screened metallics duplicates, check assay duplicates and BLEG residue duplicates into the sample stream at set
intervals.
Blanks
Blanks made of barren garden rock purchased from a local hardware store were used. A threshold of ten times the lower detection limit (LDL) was used as a guide
to determine potential contamination. Any assays above this threshold were reviewed on a case by case basis to determine if any corrective action was required at
that laboratory. As a general rule, for the mineralized rock being assayed at the SGS laboratory in Burnaby, BC, if a single blank or standard was deemed to have
failed, that QA/QC sample plus five samples either side in the same batch were sent for reanalysis. If a blank/standard plus one or more consecutive standards were
deemed to have failed, then the failed samples plus ten samples either side and all of the samples between, were sent for reanalysis.
For samples from unmineralized zones, which were sent for fire assay at the SGS Red Lake laboratory, if a single standard failed within a batch where the other
standards or blanks passed, the entire batch was deemed to have passed and no corrective action was taken.
A total of 611 blanks were submitted from the Phase 1 and Phase 2 programs. Three blanks from the SGS Burnaby laboratory and one from the SGS Red Lake
laboratory were above the 10 x LDL threshold and were part of batches that were rerun in accordance with the corrective action protocols detailed above. Overall
the laboratory performed well.
Standards
Twelve different standards were used in the Phase 1 and Phase 2 programs, spanning a range of gold grades from 0.05 g/t to 9 g/t, as summarized in Table 11.3 of
the Goldlund Technical Report. The majority of the standards were supplied by CDN Resource Laboratories Ltd. (CDN) of Vancouver, BC, with some low-grade
standards used for the BLEG residue duplicate program which were sourced from Analytical Solutions Ltd. (ASL) in Toronto. A standard was deemed suspect as a
failure if the result fell outside 3 standard deviations (± 3STDEV) from its expected value as defined by the standard’s certificate. Any assays outside of this
threshold were reviewed on a case by case basis to determine if any corrective action was required.
Page57
A total of 877 standards were submitted from the Phase 1 and Phase 2 programs. Instead of the sample weight of 1 kg (used for the drill core samples), a 200 g
sample weight was used for the standards, ensuring the ratio of the leach solution and sample weight is maintained.
The accepted results provided by the CRM labs are determined by fire assay whereas the Phase 1 and Phase 2 testing was done by CN leach combined with a fire
assay of the residue.
QA/QC Results
Overall laboratories performed well with a total of 877 samples submitted with 23 samples and five standards having failed as summarized below:
● One sample from CDN-GS-2R was deemed to have failed and was sent for re-analysis;
● 17 samples from CDN-GS-3P were deemed to have failed, 15 of which were sent for re-analysis;
● One sample from CDN-GS-5M was deemed to have failed and was sent for re-analysis;
● Two samples from CDN-GS-9B were deemed to have failed and were sent for re-analysis;
● One sample and five standards from CDN-GS-1U were deemed to have failed and three of the five failed standards were sent for re-analysis; and
● One sample from CDN-GS-2P was deemed to have failed and appears to have been a result of mislabelling.
Duplicates
After assay results were returned, additional duplicates were run on 1 kg pulverized splits, including BLEG duplicates and screened metallic duplicates. Selected
samples were also sent to an independent umpire laboratory (Activation Labs in Thunder Bay and Ancaster, Ontario) for check assay.
Duplicate data is not generally used to trigger quality control failures. Poor reproducibility can be a function of the extreme nugget effect of the Goldlund gold
mineralization, and/or the homogeneity of the samples, rather than a reflection of the laboratory’s analytical performance. For the BLEG assay program, efforts
were made to come as close as possible to a true ‘pulp’ duplicate by using the sample preparation techniques detailed in Section 11.1.5 of the Goldlund Technical
Report. All duplicates, whether they were BLEG duplicates, metallic screens or check duplicates for the umpire laboratory, utilized 1kg splits from the original 3 kg
pulverized batch. The only exception to this in the BLEG QA/QC program were the field duplicates which were done on separately-prepared, quarter-core samples.
As would be expected in a gold system of this type, there is a much higher variability between the field duplicate samples and their ‘parent’ assays, when compared
to the pulp duplicates.
Page58
First Mining 2018 QA/QC Program – Miller, Eaglelund and Miles Drilling
The QA/QC program for the Miller-Eaglelund-Miles drilling consisted of the submission of duplicate samples and the insertion of certified reference materials
(CRMs) at regular intervals. Blanks and standards were inserted at a rate of one standard for every 20 samples (5% of total) and one blank for every 30 samples (3%
of total). Field duplicates from quartered core, as well as alternating pulp and coarse duplicates (taken from coarse reject materials or pulverized splits) were also
inserted at regular intervals, with an insertion rate of 4% for field duplicates and 4% for pulp and coarse duplicates. Check assays were submitted to a second
independent laboratory.
In addition to the QA/QC program implemented by First Mining, the laboratories each operate their own internal laboratory QA/QC system, inserting quality
control materials, blanks, as well as laboratory replicates and duplicates on each analytical run.
First Mining's QA/QC for each of its drilling programs was generally consistent. The QA/QC programs consisted of the insertion of blanks, SRM samples, field
duplicates, coarse duplicates, pulp duplicates, and check assay duplicates into the sample stream at set intervals.
Blanks
Blanks made of barren garden rock purchased from a local hardware store were used. A threshold of ten times the lower detection limit (LDL) was used as a guide
to determine potential contamination.
Any assays above this threshold were reviewed on a case by case basis to determine if any corrective action was required at that laboratory. As a general rule, if a
single blank or standard was deemed to have failed, that QA/QC sample plus five samples either side in the same batch were sent for reanalysis. If a blank/standard
plus one or more consecutive standards were deemed to have failed, then the failed samples plus ten samples either side and all of the samples between were sent
for reanalysis.
A total of 49 blanks were submitted as part of the Miller-Eaglelund-Miles QA/QC program. Two samples were found to be above the 10 x LDL threshold, one of
which was part of a batch sent for reanalysis.
Standards
Six different standards were used. The standards were all supplied by CDN Resource Laboratories Ltd. of Vancouver. A standard was deemed suspect as a failure if
the result falls outside 3 standard deviations (± 3STDEV) from its expected value as defined by the standard’s certificate. Any assays outside of this threshold were
reviewed on a case by case basis to determine if any corrective action was required.
A total of 75 standards were submitted as part of the Miller-Eaglelund-Miles QA/QC program.
QA/QC Results
Overall laboratories performed well with a total of 75 samples submitted with 7 samples falling outside the ± 3STDEV tolerance and were part of batches sent for
reanalysis as described below:
● Two samples from CDN-GS-5M fell outside the tolerance range and were sent for re-analysis;
Page59
● Two samples from CDN-GS-2S fell outside the tolerance range and were sent for re-analysis;
● One sample from CDN-GS-P4E fell outside the tolerance range and was sent for re-analysis; and
● Two samples from CDN-GS-P4G fell outside the tolerance range and were sent for re-analysis.
Mineral processing and metallurgical testing
Tamaka received completed results of three metallurgical studies on the Goldlund Property: a gold deportment study, a scoping study including comminution
testing, and a review of the acid-base accounting completed as part of the scoping study.
Reported overall gold extraction for the high-grade samples by gravity separation, flotation of the gravity tailing, and cyanidation of the flotation concentrate ranged
from 55% to 74%. Reported overall gold extraction for bulk testing and composites by gravity separation and cyanidation of the entire gravity tailing ranged from
85% to 96%.
The majority of samples were determined to be not Potential Acid Generating (“PAG”), however two samples did have neutralization potential ratios of less than 1
and sulphide-sulphur greater than 12%, indicating that they are PAG. Due to the limited number of samples, these results should be considered preliminary, and
further sampling and testing is required to accurately determine whether the tailings would be PAG.
The recommended flowsheet for the Goldlund deposit includes crushing, grinding, gravity separation, and cyanidation (carbon-in-leach) of the gravity tailings.
Mineral resource estimates
We compiled all the data used in completing the mineral resource from original source drillhole documents and from plan and section originals and copies. The
Goldlund Project has been drilled by 2,195 drillholes. However, only drillholes within the areas of interest and with exploration potential were included in the
database. In addition to the drillhole database, a dataset containing underground wall sampling intervals was included. Wall sampling was conducted as continuous
samples on both walls and at times at chest and back heights. The wall sampling data was converted into drillhole format to supplement the dataset. All resource
estimations were conducted using SurpacTM version 6.8.
A pit shell analysis using a base case of US$1,350 gold price and a cut-off grade of 0.4 g/t Au, provided a pit constrained Indicated Resource estimate of 12.9 Mt
with an average grade of 1.96 g/t Au and an additional pit constrained Inferred Resource of 18.4 Mt with an average grade of 1.49 g/t Au. The following table
summarizes the Whittle pit constrained resource:
Page60
The Goldlund deposit remains open along strike and to depth.
Classification
Measured
Indicated
M&I
Inferred
Zone
1
2
3
4
5
7
8
Subtotal
1
2
3
4
5
7
8
Subtotal
Subtotal
1
2
3
4
5
7
8
Subtotal
Tonnage
-
-
-
-
-
-
-
-
4,882,400
1,642,900
–
1,664,600
–
4,161,600
508,600
12,860,000
12,860,000
11,288,000
1,028,000
1,385,000
734,000
1,284,000
1,928,000
715,000
18,362,000
Au g/t
-
-
-
-
-
-
-
-
2.16
1.76
–
2.73
–
1.58
2.00
1.96
1.96
1.54
1.22
1.61
2.40
1.19
1.29
0.90
1.49
Ounces
-
-
-
-
-
-
-
-
330,150
93,000
–
146,100
–
210,753
29,200
809,200
809,200
558,600
40,000
71,666
57,000
49,000
79,688
21,000
876,954
Notes:
1.
2.
3.
4.
5.
6.
The numbers in the above table are from the updated mineral resource estimate on Goldlund that has an effective date of March 15, 2019, and that was
prepared by WSP’s Todd McCracken, P.Geo., an independent “qualified person” within the meaning of NI 43-101.
The overall stripping ratio for the Whittle pit is 4.71:1.
A base case cut-off grade of 0.4 g/t Au was used for both the initial 2017 mineral resource estimate and the updated 2019 mineral resource estimate.
Resources are stated as contained within a potentially economic limiting pit shell using a metal price of US$1,350 per ounce of gold, mining costs of
US$2.00 per tonne, processing plus G&A costs of US$15.40 per tonne, 93% recoveries and an average pit slope of 48 degrees.
Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral
resources will be converted into mineral reserves.
Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
Page61
Recent developments
In 2019, we completed a 32-hole drill program at Miller, for a total of 6,130 m. Work consisted of in-fill drilling of the area tested in 2018, as well as step-out
drilling to the northeast and southwest along strike. The 2019 drilling tested a total strike length of up to 900 m, with drill spacing largely between 25 m and 50 m,
and followed on the strong results achieved in 2018, which included 108 m of 2.43 g/t Au, and frequent occurrences of visible gold within the drill core.
Since drilling first commenced on the Miller prospect in 2018, a total of 40 holes (7,386 m) have been drilled, successfully outlining mineralization over a strike
length of approximately 450 m. Low grade gold mineralization encountered in gabbro in hole MI-19-037 (0.17 g/t Au over 15.0 m), which was drilled to test a
possible northeast extension of Miller, demonstrates that this northeast area may still be a viable target for follow-up soil and rock sampling.
The drilling at Miller revealed that mineralization in this area differs from that in the Goldlund Main Zone. At Miller, mineralization occurs in a highly silicified
granodiorite dyke of varying width, which has been intruded into a gabbro unit that is also highly silicified and sheared. Both the gabbro and granodiorite are hosts
to mineralization at Miller, in contrast to the Goldlund Main Zones 1 and 7, for example, where only the granodiorite is mineralized and the gabbro is
unmineralized. This recently identified characteristic represents the potential for significant regional exploration upside, since gabbro-hosted mineralization
provides a new exploration horizon and is abundant throughout the property. Future exploration will target these prospective areas. A further review of regional
targets over the broader property is ongoing, including identifying new geophysical targets for potential follow-up work, which may include geological mapping,
rock sampling, and/or drilling.
None of the drill results from Miller were included in the Goldlund Technical Report.
Drill highlights from the holes drilled at Miller in 2019 include:
Hole ID
From (m)
To (m)
Length (m)
Au g/t
MI-19-013
including
and including
MI-19-014
including
and including
and including
and including
MI-19-015
including
MI-19-017
including
and including
46.0
47.0
88.0
3.0
42.0
60.0
142.0
168.0
1.0
108.0
32.0
56.0
83.0
228.0
48.0
109.0
210.0
91.0
61.0
183.0
169.0
168.0
141.0
201.0
93.0
84.0
182.0
1.0
21.0
207.0
49.0
1.0
41.0
1.0
167.0
33.0
169.0
37.0
1.0
1.09
35.19
2.73
1.57
2.34
26.43
4.07
55.28
1.01
1.84
0.88
3.42
65.97
Target
Miller
Miller
Miller
Miller
Page62
Hole ID
MI-19-018
including
and including
and including
MI-19-020
including
MI-19-021
including
MI-19-022
including
MI-19-024
including
and including
MI-19-025
including
and
and
including
MI-19-027
including
MI-19-028
including
and including
MI-19-030
including
and
including
MI-19-032
including
and including
From (m)
18.0
100.0
113.0
129.0
133.0
134.0
111.0
112.0
115.0
121.0
133.0
133.0
139.0
53.0
63.0
84.0
101.0
104.0
100.0
106.0
59.0
69.0
70.0
36.0
38.0
48.0
61.0
39.0
79.0
126.0
To (m)
141.0
134.0
114.0
130.0
139.0
135.0
118.0
113.0
122.0
122.0
140.0
134.0
140.0
64.0
64.0
85.0
106.0
105.0
107.0
107.0
77.0
77.0
71.0
40.0
39.0
83.0
63.0
143.0
80.0
127.0
Length (m)
123.0
34.0
1.0
1.0
6.0
1.0
7.0
1.0
7.0
1.0
7.0
1.0
1.0
11.0
1.0
1.0
5.0
1.0
7.0
1.0
18.0
8.0
1.0
4.0
1.0
35.0
2.0
104.0
1.0
1.0
Au g/t
0.86
2.08
12.91
23.96
1.77
8.15
0.99
4.78
0.82
2.58
1.72
5.49
6.50
0.61
4.54
3.86
0.81
2.04
1.50
4.64
0.81
1.48
7.51
4.03
15.33
0.25
1.62
0.25
3.56
5.50
Target
Miller
Miller
Miller
Miller
Miller
Miller
Miller
Miller
Miller
Miller
Page63
Hole ID
MI-19-034
including
MI-19-040
including
and including
and including
Notes:
From (m)
129.0
133.0
60.0
60.0
80.88
86.88
To (m)
141.0
134.0
119.0
93.0
81.88
87.88
Length (m)
12.0
1.0
59.0
33.0
1.0
1.0
Au g/t
1.62
18.07
1.35
2.23
6.83
44.07
Target
Miller
Miller
● Assaying for the Miller drill program was completed by SGS Canada Inc. (“SGS”) at their laboratory in Lakefield, Ontario. Prepared 50 g samples were
analyzed for gold by lead fusion fire assay with an atomic absorption spectrometry finish. Multi-element analysis was also completed on selected holes by two-
acid aqua regia digestion with ICP-MS and AES finish.
● Reported widths are drilled core lengths; true widths are unknown at this time. Assay values are uncut.
● Intervals for holes MI-19-013, MI-19-014, MI-19-015, MI-19-017 through MI-19-022, MI-19-025, MI-19-032, MI-19-034 and MI-19-040 include results of
selected assay repeats. These repeats were done by screened metallic fire assay on 1 kg size samples at the SGS laboratory in Lakefield.
Drill Hole Locations of the Highlighted Holes
Hole ID
MI-19-013
MI-19-014
MI-19-015
MI-19-017
MI-19-018
MI-19-019
MI-19-020
MI-19-021
MI-19-022
MI-19-024
MI-19-025
MI-19-027
MI-19-028
MI-19-030
MI-19-032
MI-19-034
MI-19-040
Azimuth ⁰
140
140
140
140
120
320
290
320
320
320
140
140
140
140
0
0
287
Dip ⁰
-85
-85
-85
-85
-85
-55
-55
-60
-60
-60
-65
-60
-45
-45
-90
-90
-45
Final Depth (m)
251
245
224
242
212
176
215
173
167
146
176
128
125
113
212
179
212
UTM East
554585
554565
554547
554500
554471
554472
554440
554396
554356
554277
554220
554297
554297
554335
554367
554251
554616
UTM North
5533600
5533585
5533568
5533516
5533500
5533425
5533387
5533364
5533327
5533273
5533373
5533437
5533437
5533480
5533434
5533338
5533525
Page64
QA/QC Procedures
The QA/QC program for the 2019 drilling program at Miller consisted of the submission of duplicate samples and the insertion of Certified Reference Materials and
blanks at regular intervals. These were inserted at a rate of one standard for every 20 samples (5% of total) and one blank for every 30 samples (3% of total). The
standards used in the 2019 Miller drilling program range in grade from 0.5 g/t Au to 9.0 g/t Au, and were sourced from CDN Resource Laboratories in Langley, BC.
Blanks were sourced locally from barren granitic material. Field duplicates from quartered core, as well as “coarse” or “pulp” duplicates taken from coarse reject
material or pulverized splits, were also submitted at regular intervals with an insertion rate of 4% for field duplicates and 4% for coarse or pulp duplicates.
Additional selected duplicates were submitted to an umpire lab for check assaying. SGS also undertook its own internal coarse and pulp duplicate analysis to ensure
proper sample preparation and equipment calibration.
The 2019 drill program increased the strike length of mineralization at Miller to approximately 450 m. For further details regarding the assay results, see our news
releases dated September 25, 2019, November 19, 2019 and February 11, 2020, filed on SEDAR under our SEDAR profile at www.sedar.com.
Main Zone Drill Program
After the completion of the 2019 drilling at Miller, the exploration program moved to the Goldlund Main Zone area, and a new drill program is currently underway,
due for completion in 2020.
The initial phase of the 2020 drill program consisted of 23 holes (approximately 4,000 m), with the program’s overall focus being to define and extend
mineralization in the eastern and western portions of Zones 1, 2, 3 and 4. We are currently planning a second phase of this work program (the scale of the second
phase is yet to be determined, and will be based on pending results). Drilling at the Main Zone is focused on delineating mineralization between the currently-
defined zones of the Goldlund deposit.
Results from the first eleven holes of the Goldlund Main Zone drill program were reported in our news release dated March 2, 2020. These holes primarily targeted
the eastern parts of Zones 2 and 3 as well as the area between these two zones, following up on historical drill intercepts. Of the eleven drillholes reported, gold
mineralization has been encountered in nine holes. Hole GL-19-008 intersected 21 m of 5.36 g/t Au within highly mineralized granodiorite and porphyry units, as
well as within andesite, and was successful in confirming the high grades within Zone 2 that were encountered in historical drilling. Hole GL-19-010 was drilled to
intersect the area between the known mineralized areas at Zones 2 and 3, and encountered significant gold mineralization hosted within andesite (15.0 m at 1.68 g/t
Au), before intersecting the mineralized granodiorite and porphyries of Zone 2 towards the base of the hole. The remaining drill holes also show examples of gold
mineralization occurring throughout different lithological units, which include andesites, gabbros and felsic porphyries in addition to the granodiorite, which is the
principal host of the gold mineralization in Zones 1 and 7.
Page65
Highlights from the first eleven holes drilled at the Goldlund Main Zone include:
Hole ID
GL-19-008
including
GL-19-010
including
GL-19-013
including
Notes:
From (m)
83.00
96.00
69.00
69.00
63.00
75.00
To (m)
104.00
97.00
84.00
70.00
77.00
76.00
Length (m)
21.00
1.00
15.00
1.00
14.00
1.00
Au g/t
5.36
89.60
1.68
8.02
1.15
9.42
Target
Main Zone (Zone 2)
Main Zone (Zones 2 and 3)
Main Zone (Zone 2)
● Assaying for the Goldlund 2019-2020 drill program is being completed by SGS Canada Inc. (“SGS”) at their laboratories in Red Lake, Ontario and Vancouver,
BC. Prepared 50 g samples are analyzed for gold by lead fusion fire assay with an atomic absorption spectrometry finish. Multi-element analysis is also being
completed on selected holes by two-acid aqua regia digestion with ICP-MS and AES finish.
● Reported widths are drilled core lengths; true widths are unknown at this time. Assay values are uncut.
● Intervals for hole GL-19-008 include results of selected assay repeats. These repeats were done by screened metallic fire assay on 1 kg size samples at the SGS
laboratory in Vancouver, BC.
Drill Hole Locations of the Highlighted Holes
Hole ID
GL-19-008
GL-19-010
GL-19-013
QA/QC Procedures
Azimuth ⁰
335
335
335
Dip ⁰
-85
-77
-62
Final Depth (m)
125
176
101
UTM East
547722
547746
547774
UTM North
5528154
5528102
5528162
The QA/QC program for the 2019-2020 drilling program at Goldlund consists of the submission of duplicate samples and the insertion of Certified Reference
Materials and blanks at regular intervals. These are inserted at a rate of one standard for every 20 samples (5% of total) and one blank for every 30 samples (3% of
total). The standards used in the 2019-2020 Goldlund drilling program range in grade from 0.5 g/t Au to 9.0 g/t Au, and are sourced from CDN Resource
Laboratories in Langley, BC. Blanks have been sourced locally from barren granitic material. Field duplicates from quartered core, as well as “coarse” or “pulp”
duplicates taken from coarse reject material or pulverized splits, are also submitted at regular intervals with an insertion rate of 4% for field duplicates and 4% for
coarse or pulp duplicates. Additional selected duplicates are being submitted to an umpire lab for check assaying. SGS also undertakes its own internal coarse and
pulp duplicate analysis to ensure proper sample preparation and equipment calibration.
The main Goldlund deposit that hosts the current mineral resource estimate remains open along strike to the northeast, to the southwest, and at depth.
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Cameron
Technical report
The description in this section of our Cameron gold project (the “Cameron Project”) is based on the project’s technical report: Technical Report by Opitiro Pty Ltd.
on the Cameron Gold Deposit, Ontario, Canada (effective date January 17, 2017) (the “Cameron Gold Technical Report”). The report was prepared for us by
Optiro Pty Ltd. in accordance with NI 43-101 under the supervision of Mark Drabble, B. App. Sci. (Geology), MAIG, MAusIMM; and Kahan Cervoi, B. App. Sci
(Geology), MAIG, MAusIMM; each qualified persons within the meaning of NI 43-101. The following description has been prepared under the supervision of
Hazel Mullin, P.Geo., who is a qualified person within the meaning of NI 43-101, but is not independent of us.
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Cameron Gold
Technical Report, except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the Cameron Gold Technical
Report in its entirety to fully understand the project. You can download a copy from our SEDAR profile (www.sedar.com), or from our website
(www.firstmininggold.com).
Project description, location and access
The Cameron Gold Project is wholly-owned by us through our wholly-owned subsidiary, Cameron Gold. The Cameron Gold Project comprises 1,790 mining
claims, 24 patented claims, seven licences of occupation and four mining leases. All of the claims are located within unsurveyed crown lands, and are situated in the
Rowan Lake, Heronry Lake, Tadpole Lake, Brooks Lake, Lawrence Lake, Bluffpoint Lake, and Dogpaw Lake areas, and the Phillips and Godson townships.
The total area of the project is approximately 495.74 km2 (49,574 ha).
The Cameron Gold Project currently consists of two project areas; namely Cameron (which includes the Cameron deposit) (the “Cameron Deposit”) and West
Cedartree (which includes the Dubenski and Dogpaw deposits). The Cameron Gold Technical Report covers only the Cameron Deposit and Mineral Resource
Estimate within the broader Cameron Project. The Cameron Project area comprises 1,699 mining claims, four patented claims, six licences of occupation and three
mining leases. The West Cedartree property comprises 91 mining claims, 20 patented claims, one licence of occupation and two mining leases.
The Cameron Gold Project is located in the southern part of western Ontario, Canada approximately 80 km southeast of Kenora and 80 km northwest of Fort
Frances. The nearest towns are Sioux Narrows and Nestor Falls, 30 km and 25 km away respectively. The Cameron Gold Project is on unsurveyed crown lands
accessed by sealed and all-weather gravel roads. From Kenora via Highway 17, Hwy 71 and the Cameron Lake road the distance is around 123 km. From Fort
Frances via Hwy 11, Hwy 71 and the Cameron Lake road the distance is 168 km.
Underlying royalties which affect the Cameron Deposit are:
● 1.5% NSR payable to Rubicon Minerals Corp. for 47 unpatented claims. We have the option to repurchase 0.75% of the NSR for $750,000;
● 1% NSR payable to Orion Resource Partners for 20 unpatented claims, 4 patented claims, 6 MLOs and 2 mining leases;
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● 2% NSR payable to Mr. Sherridon Johnson and Mr. Edward Antony Barkauskas for one unpatented claim. We have the right to repurchase 1% of the NSR
for $500,000;
● $0.30 per ton on all ore mined payable to the estate of W. Moorhouse and D. Petrunka for one mining lease;
● 3% NSR payable to Lasir Gold Inc. We have the right to reduce the NSR to 1.5% by payment of $1,500,000; and
● 1% NSR payable to Chalice on 133 unpatented mining claims, all of which are not encumbered by pre-existing royalties. We have the right to repurchase
0.5% of the NSR for $1,000,000.
In order to maintain the title to a mining claim, the recorded holder of the claim is required to undertake approved work expenditure of $400 per single cell mining
claim or $200 per boundary cell mining claim within two years of the granting of the claim. Work programmes and expenditure commitments can be grouped across
a contiguous series of mining claims. The duration of a mining lease is 21 years from the date of grant. The mining leases within the Cameron Project were initially
granted in 1988 and were subsequently renewed for a further 21 years in July 2009, except one mining lease which was renewed in May 2006.
History
Exploration in the area commenced in the 1940s and numerous companies have carried out prospecting, line cutting, geological mapping, trenching, soil and
outcrop sampling and ground magnetic and electromagnetic geophysical surveys.
On the Cameron Gold Project there have been numerous exploration and drilling programmes. On the Cameron Deposit itself, the first drilling was undertaken in
July 1960. Prior to 2010, there were 836 holes comprising in excess of 90 km of diamond drill core drilled by six companies.
In 1987 at the Cameron Gold Deposit, underground development for an extensive sampling programme was undertaken. Some 65,000 m3 of material was excavated
with some bulk sampling, diamond drilling and rock chip sampling completed. The excavated material was placed on surface at site in three separate stockpiles: one
for unmineralized access development material, one for “low-grade” mineralized material; and one for “mineralized” material. The unmineralized stockpile has
been used from time to time for access road maintenance. The mineralized material stockpiles have been surveyed and sampled for the purpose of reconciliation
against depletion calculations but no estimate has been prepared that would permit inclusion of the material in a disclosure of resources.
Between 2010 and 2012, 242 surface diamond holes were drilled totalling 36,000 m, the majority on the Cameron Deposit.
Since 2010, the following exploration work has been carried out throughout the Cameron Gold Project consisting of:
● Airborne magnetic gradiometers survey of the project area in 2010.
● 250 km of line cutting over the property
● 142-line km of Pole-Dipole Induced Polarisation surveys (July 2010 to February 2011)
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● Orientation geochemical sampling programme of surface pits around the Cameron deposit in late 2011. A total of 19 samples of around 12 kg were
collected from the base of till over an area of about 900 m x 600 m.
● Excavation of 94 pits in 2013 on gold-in-till anomalies.
● Outcrop mapping and prospecting
● Heli-borne magnetics and Versatile Time-domain Electromagnetic (VTEM) over the western portion of the project in 2014. A total of 1457 line km of
VTEM was flown at 200 m spacings.
● Several historical mineral resource estimates have been done for the Cameron Deposit.
In May 2014, 15 holes for 2,599.5 m were diamond drilled at the Jupiter, Ajax, Juno and Hermione prospects that are proximal to the Cameron Deposit.
Geological setting, mineralization and deposit type
The mineralization at the Cameron Gold Project is mainly hosted in mafic volcanic rocks within a northwest trending shear zone (“Cameron Lake Shear Zone” or
“CLSZ”) which dips steeply to the northeast. In the south-eastern part of the deposit where the greatest amount of gold has been delineated, the shear zone forms
the contact between the mafic volcanic rocks and diabase/dolerite rocks of the footwall.
Gold mineralization occurs within quartz breccia veins, associated with intense silica‐sericite‐carbonate‐pyrite alteration in a series of zones that dip moderately to
steeply to the northeast within and adjacent to the shear zone. Gold is associated with disseminated pyrite with high sulphide concentration generally corresponding
with higher gold grade. Visible gold is rare. The mineralization is open at depth and along strike to the northwest with potential to expand the Mineral Resource in
these directions.
The Cameron Deposit is a greenstone‐hosted gold deposit. While the deposit can generally be considered to be part of the orogenic family of gold deposits, it bears
many characteristics atypical of the largest gold deposits of this style. These features include:
● mineralization dominated by disseminated sulphide replacement and quartz‐sulphide stockwork and quartz breccia veins;
● spatial and temporal association of mineralization with porphyry intrusive bodies that have similar alteration assemblages (taking into account primary
lithological variations);
● relatively minor amounts of auriferous quartz‐carbonate vein material comprising the mineralization, which is likely temporally‐late compared to the
disseminated sulphide replacement and quartz breccia veins;
● high‐grade mineralization is largely deformed and the disseminated sulphide replacement zones that constitute the bulk of the mineralization are
commonly foliated; and
● the alteration assemblage of the mineralization (sericite‐albite‐carbonate‐pyrite) is atypical.
Exploration
Exploration at the Cameron Gold Project commenced in 1960 and has been conducted intermittently until the present day.
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Drilling
A number of diamond drillhole programmes have been carried out across the Cameron Gold Project area by a number of explorers: Noranda Exploration Company
Limited (“Noranda”) from 1960 to 1961; Zahevy Mines Limited and Noranda from 1972 to 1974; Nuinsco in 1981; Nuinsco and Lockwood Petroleum Inc. from
1983 to 1984; Nuinsco and Echo Bay Mines Limited from 1985 to 1989; Nuinsco and Deak International Resources Holding Limited in 1989; Cambior Inc. in
1996; Nuinsco from 2003 to 2005; and Coventry Resources Inc. (“Coventry”) from 2010 to 2012. In addition, an RC drilling programme was completed by
Nuinsco from 1985 to 1986 to sample the overlying glacial till and the bottom of hole in bedrock to test for geochemical anomalism associated with gold
mineralisation.
From 1960 through to 2012, 981 diamond drillholes were drilled for a total of 120,813 m. An additional 83 RC holes were drilled during the mid-1980s for a total of
862 m.
Underground exploration of the Cameron Deposit commenced in October 1986 and was undertaken in two phases until July 1988 to verify the surface drilling
results. Overall, 457 underground diamond drillholes were completed for a total of more than 21,707 m. An additional 55 diamond drillholes were drilled from
underground for a total of 4,887 m between 1989 and 1990.
Sampling, analysis and data verification
Documentation regarding historic field procedures applied by previous explorers at the Cameron Gold Deposit, including details regarding sample collection,
preparation, transportation and security, and analytical techniques, is poor or non‐existent. Prior to 1988, core was manually split, with half‐core sent for analysis.
Post 1988, drill core was cut using a masonry saw. The inclusion of control samples is assumed and is sometimes referenced in documentation but details regarding
this are not documented.
For the 2010 to 2012 drill programmes, drill core was cut on site with wet masonry core saws by geotechnical personnel who are supervised by Coventry site‐based
geologists. The selection of intervals for cutting and the length of these intervals was based on lithological, alteration or mineralization boundaries as defined by the
supervising geologist with 1 m intervals used in zones of similar lithology. Within mineralization the sampling intervals vary from 0.06 m to 2 m.
Samples were received at the laboratory and checked against accompanying sample dispatch sheets to ensure all samples are delivered. Any discrepancies were
noted and Coventry notified that resolution was required before the samples advanced through the preparation process.
Sample preparation comprised standard laboratory techniques of (i) drying for a minimum of 8 hours, (ii) mill crushing to greater than 70% passing 2 mm, (iii) riffle
splitting (using a Jones Splitter) to approximately 250 gm and (iv) disk pulverising to 85% passing 75 microns. The sample was then split to 30 g for analysis with
the remainder retained as a pulp residue. The coarse remainder was put aside as a bulk residue (reject).
Overweight samples (>2.5 kg) were crushed and split into two samples, treating each as above and recombining after pulverising.
All samples were analysed for gold by accredited and independent Activation Laboratories Ltd. (“ActLabs”) at their Thunder Bay facility using method ‘1A3‐Tbay
Au – Fire Assay Gravimetric’. The 30 g assay sample was combined with fire assay fluxes (borax, soda ash, silica and a lead oxide litharge) and silver added as a
collector. The mixture was placed in a fire clay crucible, preheated at 850°C, intermediate at 950°C and finished at 1060°C over approximately 60 minutes. The
crucibles were then removed from the assay furnace and the molten slag (lighter material) is carefully poured from the crucible into a mould, leaving a lead button
at the base of the mould. The lead button is then placed in a preheated cupel which absorbs the lead when cupelled at 950°C to recover the silver and gold doré
bead.
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The gold was separated from the silver in the doré bead by parting with nitric acid. The resulting gold flake is annealed using a torch. The gold flake remaining is
weighed gravimetrically on a microbalance. The detection limits are 0.03 ppm Au (lower) and 10,000 ppm Au (upper).
All drillcore from the 2010 and 2011 drilling programs is stored in covered steel core racks at the Cameron Gold Project. Every core box is labelled with Dymo tags,
recording hole ID, box number and ‘from’ and ‘to’ depths.
All samples were individually bagged and labelled with unique sample numbers. Corresponding laboratory specific assay tags were included in each sample bag,
which were then sealed with plastic zip‐ties and batched in woven nylon bags. Samples were transported via commercial road transport on a weekly basis during
drilling programmes. The samples were taken to ActLabs in Thunder Bay or to the ActLabs sample preparation facility in Dryden before being transferred to
Thunder Bay for analysis.
Drill core was logged in the exploration camp at Cameron Lake. The core was logged for geology, alteration, mineralization, structure and other geological features
such as veining. The core was photographed in wet and dry condition and stored in racks prior to sampling by core cutting. The drill core was marked up with the
sample intervals and the core was cut using a diamond blade saw. Sample tickets were stapled into the wooden core trays and the other half put into the sample bag.
The sample number was also written on the outside of the calico sample bag for identification and sorting purposes. The core is stored in the exploration facility at
the Cameron Property. This has dedicated covered racks for storing drill core, wooden crates for sample residues, and sea containers for sample pulps.
All samples were individually bagged and labelled with unique sample numbers. Corresponding laboratory specific assay tags were included in each sample bag,
which were then sealed with plastic zip‐ties and batched in woven nylon bags. Samples were transported via Gardewine North commercial road transport of Kenora.
The samples were taken to ActLabs in Thunder Bay. Confirmation was sent to Chalice that the security tags were intact, and that the numbers match the sample
despatch request.
As part of its QA/QC review, Optiro Pty Ltd. (“Optiro”) was provided a Microsoft access database containing two QA/QC tables. One table comprised standards
and blanks and one table comprised duplicates assay results. Optiro exported these tables into CSV format and imported the QA/QC results into data analysis spread
sheets to review the Cameron QA/QC results.
The underground drilling data collected between 1987 and 1989 was considered critical to the quantity and quality of the 2014 Mineral Resource Estimate, and as
no QA/QC information was available, Coventry undertook a re‐sampling program in order to establish confidence in the assay results. The Coventry re‐sampling
programme targeted mineralization in and around the underground development. Remaining core was quartered either using a core saw or manually (depending on
core condition) over the same sample intervals as currently recorded in the database. The re‐samples were prepared and assayed in exactly the same manner that
samples from Coventry’s diamond drilling programme were processed with sample preparation and analysis carried out at ActLabs in Thunder Bay. This re‐sample
programme provided 816 directly comparable assay results, from a total of 1,904.6 m of drill core. The comparison is between half core (original sample) and
quarter core (resample).
Optiro only managed to identify 101 samples recorded in the QA/QC database to be duplicate samples and that were submitted by Coventry in 2010 and 2011.
Optiro’s analysis of the 101 identified quarter core duplicate samples indicates a poor repeatability of grades between paired samples with a correlation coefficient
of 0.24. The results suggest that the duplicate samples are under reporting compared to the original grades at gold grades of less than 1 g/t Au, and over reporting
compared to the original grades at gold grades of greater than 2 g/t Au.
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Results from the scatter plot, precision plot and relative difference plots highlight a moderate to poor precision and poor repeatability of duplicates from this
resample programme. In Optiro’s opinion the repeatability and precision of these duplicates does not demonstrate a high level of confidence. However, the small
number of samples does not in Optiro’s opinion provide definitive evidence of issues with the duplicate repeatability. Optiro notes that consideration for differing
sample volumes i.e. manually split half core (versus) sawn quarter core needs to be taken into account when reviewing duplicate analysis results. As such, whilst
Optiro recommends that First Mining needs to review the performance of the Coventry resample programme further, Optiro considers these results to be adequate
for resource estimation.
Optiro has identified 249 blanks submitted by Coventry as part of its resample programmes in 2010 and 2011. Of the 249 blanks submitted four returned grades
above 0.03 g /t Au. This represents a failure rate of less than 2%. Optiro considers these results to be adequate for resource estimation.
Optiro identified 236 standards submitted by Coventry as part of its resample programmes in 2010 and 2011. Of the 236 standards submitted, 10 different Certified
Reference Material (“CRM”) standards with gold grades ranging from 0.38 g/t to 7.97 g/t Au were used during the Coventry resample programme. A total of 55
gold standards fall outside three standard deviations which represents a failure rate of approximately 23%. When graphed, it is evident that a large number of the
standard failures are potential sample swaps (i.e. incorrect standard labelling or blanks labelled as a standard). However, due to the close gold grades of a number of
standards, it is not possible to determine with 100% accuracy what the actual standard ID might be.
Optiro does not know whether Coventry resubmitted all failed batches for re-analysis.
Optiro considers that the sample swaps should be rectified in the database so that the QA/QC performance is representative of the performance of the standards. In
taking these into account, Optiro considers that the CRM assay performance is adequate for estimation.
As part of their 2010 to 2012 drilling programmes, Coventry submitted standards, duplicates and blanks as part of their quality control program.
The blank material was obtained from a granite quarry and whilst not certified, was considered by Coventry to be sufficiently homogenous and unmineralized to act
as barren material. Of the 921 blanks submitted eight (8) returned grades above 0.03 g /t Au. This represents a failure rate of less than 2%. These failures were
reviewed at the time by Coventry and were considered to be potential laboratory contamination issues. Optiro considers these results adequate for resource
estimation.
Of the 921 standards submitted, six were recorded as have grades of -99. Optiro removed these standards from the database prior to any further analysis. A total of
12 different CRM standards with gold grades ranging from 0.69 g/t Au to 7.97 g/t Au were used during the Coventry drill programs.
The provided database contained 901 quarter core duplicate samples collected by Coventry during the 2010 to 2012 drilling programmes. The duplicates
demonstrate a moderate correlation coefficient (0.83) indicating moderate repeatability of grades between paired samples.
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The relative precision of a field duplicate dataset is determined by calculating the absolute difference between the two sample’s grades divided by the mean of the
sample pairs. Good or high precision suggests that the paired samples are consistent with each other, both samples have been well homogenised and that sample size
(weight) is adequate to be representative of the material collected from the drillhole. Poor or low precision suggests that the samples have been poorly prepared,
have a high inherent nugget, poor assaying, or are not large enough to be representative. Of the duplicates submitted to ActLabs, 74% of assays were within 5%
precision, 76% within 10% precision, and 78% within 15% precision.
Results from the scatter plot, precision plot, and relative difference plots highlight a moderate to poor precision and moderate to poor repeatability of duplicates
from these phases of drilling. Part of this could be due to the use of chisel vs. saw splitting, or the use of quarter vs. half core samples, which Optiro does not
consider to be a true representative duplicate sample when dealing with gold mineralisation. As previously stated, taking into account consideration for differing
sample volumes (i.e. half core versus quarter core), Optiro considers these results to be adequate for resource estimation.
In 2014, Chalice undertook a resampling program to provide additional confidence in the underlying drillhole sample assays results used for Mineral Resource
estimation. The samples selected were considered to be spatially representative of the majority of the Cameron Gold Deposit with an emphasis on near surface
locations. A total of 492 pulps and 325 coarse rejects were selected from the existing drillholes within the following series:
● Historical holes – resample of pulp samples only
● Coventry 2010 holes – pulps and rejects
● Coventry 2011 holes – pulps and rejects.
The following is an overview of the pulp sampling program taken from the Chalice 2014 Report.
● Selected pulp samples were sent to AGAT Laboratories of Mississauga, Ontario – the Umpire Laboratory
● The samples were not re‐numbered given the sample sequence had never been seen by this laboratory
● The laboratory was requested to place an “A” prefix to the start of the sample number to distinguish these results from the original results.
● Standards and Blanks were included with these samples positioned in the same location sequence as in the original submission; a new Standard was placed
in the position of the original Standard (the original Standard sample being exhausted by the analytical process) whilst the Blanks were retained from the
original submissions.
The selected samples were renumbered (for disguise) and re‐submitted to ActLabs to preparation and analysis by the method adopted by Coventry and described in
previous reports.
Standards and Blanks were included with these samples positioned in the same location sequence as in the original submission; a new Standard was placed in the
position of the original Standard (the original Standard sample being exhausted by the analytical process) whilst the Blanks were retained from the original
submissions.
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Results from the pulp duplicate analysis indicates a good repeatability of pulps, while results from the coarse reject analysis illustrates that the average grade of the
rejects is 4% lower than the original sample. Optiro was not provided with this data and as such has not been able to replicate these results.
Optiro considers the assay performance of the pulp and reject samples to provide good support for the representivity of the analytical results and for mineral
resource estimation.
In 2015, Chalice undertook two resampling programs of unsampled intervals within the Cameron Shear Zone. Optiro has based the following analysis of standards,
duplicates and blanks submitted as part of the 2015 resampling programs based on the coding in the provided database.
Of 1,608 blanks submitted during the 2015 resample program, 10 returned grades above 0.03 g/t Au. This represents a failure rate of less than 1%. Optiro considers
these results to be a good measure of the sample preparation process and acceptable for resource estimation.
Of 1,644 standards submitted, 10 were recorded as ‘sample consumed’. Optiro removed these standards from the database prior to any further analysis. A total of 9
different CRM standards with gold grades ranging from 0.34 g/t Au to 7.97 g/t Au were used during the Chalice resample programmes.
A total of 144 gold standards fell outside of three standard deviations, which represents a failure rate of approximately 9%. The majority (but not all) of the failures
appear to be sample swaps (i.e. incorrect standard labelling or blanks labelled as a standard). In this program, Chalice did not resubmit failed batches for re-analysis
but Optiro recommends implementation of this protocol for future programs. In addition, Optiro notes the presence of what appears to be cyclic trends in the
standard results. Further investigation into these trends is recommended.
Of 1,629 quarter core duplicates submitted, one was recorded as having a grade of -99. Optiro removed this sample from the database prior to any further analysis.
The duplicates demonstrate a moderate correlation coefficient (0.79) indicating a moderate repeatability of grades between paired samples. Optiro notes there are a
number of original samples (43) with barren grade (<0.03 g/t Au) where the duplicate has returned gold grades ranging from 0.1 g/t Au to 2.42 g/t Au. Furthermore,
there a number of duplicate samples (47) of barren grade with an original grade ranging from 0.1 g/t Au to 3.1 g/t Au, suggesting that there are potentially sample
swaps.
The relative precision of a field duplicate dataset is determined by calculating the absolute difference between the two sample’s grades divided by the mean of the
sample pairs. Good or high precision suggests that the paired samples are consistent with each other, both samples have been well homogenised and that sample size
(weight) is adequate to be representative of the material collected from the drillhole. Poor or low precision suggests that the samples have been poorly prepared,
have a high inherent nugget, poor assaying, or are not large enough to be representative. Of the duplicates submitted to ActLabs 86% of assays were within 5%
precision, 87% within 10% precision, and 88% within 15% precision.
Results from the scatter plot, precision plot, and relative difference plots highlight a moderate precision and a moderate repeatability of duplicates from these
resampling programs.
Based on the good correlation coefficient and moderate repeatability performance of the duplicate samples Optiro considers the results from the Chalice 2015
resampling program to be acceptable for use in a mineral resource estimate.
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Aside from the pulp resample programme undertaken by Chalice in 2014, Optiro is unaware of any additional umpire duplicate sampling that has taken place at
Cameron Gold Project.
Data verification has been carried out by the author to verify the following elements:
● Deposit location and geology confirmed by site visit to view outcrop exposures, drill core samples and photographs of drillcore
● Drill collar locations and grid co-ordinates verified by GPS check of randomly selected drillhole co-ordinates
● Downhole survey deviation compared on an random selection of drillholes
● Quantum of stated mineralisation supported by independent sampling of mineralization
● Assay integrity verified by sample QA/QC analysis, no significant bias identified
Primary source data (surveys, downhole survey information, assay certificates) checked against database for errors and no material issues identified.
The results of the data validation process have verified the accuracy and integrity of the information provided by Chalice. It is Optiro’s opinion that the Cameron
database is acceptable for the purpose of mineral resource estimation.
Mineral processing and metallurgical testing
A number of preliminary metallurgical studies have been carried out on samples from the Cameron Property from 1985 to the present. Multi-element geochemical
assays of the samples from the drillholes drilled between 2010 and 2012 have indicated that concentrations of deleterious elements (such as sulphur) are not
significant.
Metallurgical test work carried out on samples representative of the style of mineralization at the Cameron Gold deposit showed that recoveries of 92% to 93% were
returned from direct cyanidation of samples ground to 75 µm. The results also showed that the recoveries were grind sensitive with maximum recoveries at a P80
grind size in the range 53 to 75 µm. An alternative processing regime of sulphide flotation (mainly pyrite), regrind of flotation concentrate followed by intensive
cyanidation of flotation concentrate and flotation tailings provided gold recoveries marginally higher than direct cyanidation. At a grind size of 75 µm the optimum
leach time was approximately 24 hours.
Test work completed in 2013 by the Vancouver branch of SGS used a composite sample taken from 17 drillhole intersections from 14 separate drillholes at the
Cameron Project. Comminution tests indicated that:
● rod and ball mill bond work indices are low;
● moderate abrasion index within typical ranges for dolerite-basalt material; and
● JK breakage parameters indicating the material is highly competent.
Gravity recoverable gold is typically around 25% with no improvement in overall recovery after gravity recovery with cyanidation of the gravity tails. Test work
carried out in 2014 showed that cyanide in leach processing at a P80 of 75 µm would recover 92.5% of gold with a cyanide usage of 0.2 kg/t and lime usage of 1.2
kg/t. This result was an improvement on direct cyanidation in terms of reagent usage with a lower recovery (92.5% vs. <95% cyanidation). No processing issues or
deleterious elements have been identified that could have a significant effect on potential mineral extraction in metallurgical test work completed to date.
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Mineral resource estimates
The mineral resource estimates for the Cameron Deposit have been generated from drillhole sample assay results. The interpretations are based on an integrated 3D
geological model that defines the relationships of the geological elements at the Cameron Property. The interpreted mineralization wireframes (using a nominal
0.4 g/t Au, and 0.25 g/t Au cut-off grade for low grade domains) have been used to constrain gold grade estimates. There are eight mineralization domains that are
split into two global areas – ‘northern’ and ‘southern’, with the separation defined by a set of northwest (grid) striking quartz feldspar porphyry (“QFP”) dykes. The
southern domain is the most strongly mineralized. The stronger mineralization is attributed to being dominantly mafic hosted with an inflection point in the
Cameron Lake Shear Zone and resultant dilation zone defined by north-south striking hangingwall and footwall QFP dykes.
Block grade estimation parameters have been defined on the basis of geology, drillhole spacing and through geostatistical analysis of the data. Top-cut 1.0 metre
composite samples informed the block grade estimate by ordinary kriging (“OK”) into a panel size of 5 mE by 10 mN and 5 mRL, which is considered appropriate
for the distribution of sample data and the deposit type. Sub-celling of the parent cells to 0.625 mE by 2.5 mN and 1.25 mRL was enabled to ensure good volumetric
correlation with the mineralization wireframes.
The mineral resource estimates have been classified by the geological understanding, data spacing, block proximity to sample locations, underground development
and confidence in the block model grade estimate. The mineral resource estimate has been reported in accordance with the Standards on Mineral Resources and
Reserves of the Canadian Institute of Mining, Metallurgy and Petroleum 2014 Definition Standards.
The mineral resources have been reported using the constraints and cut-off grades specified in the tabulations below. The mineral resource is tabulated in Table A
for Measured and Indicated Mineral Resources and in Table B for Inferred Mineral Resources.
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Table A – Measured & Indicated Mineral Resource statement as at January 17, 2017
Mineral Resource Classification
Open-Pit Constraint
Measured Mineral Resource
Indicated Mineral Resource
Measured + Indicated
Within US$1,350 open-pit shell
Within US$1,350 open-pit shell
Mineral Resource Classification
Underground Constraint
Measured Mineral Resource
Indicated Mineral Resource
Measured + Indicated
TOTAL MEASURED + INDICATED
Below US$1,350 open-pit shell
Below US$1,350 open-pit shell
Table B – Inferred Mineral Resource statement as at January 17, 2017
Mineral Resource Classification
Open-Pit Constraint
Inferred Mineral Resource
Within US$1,350 open-pit shell
Mineral Resource Classification
Underground Constraint
Inferred Mineral Resource
TOTAL INFERRED
Below US$1,350 open-pit shell
Gold cut-off (Au
g/t)
0.55
0.55
Gold cut-off (Au
g/t)
2.00
2.00
Gold cut-off (Au
g/t)
0.55
Gold cut-off (Au
g/t)
2.00
Tonnes
2,670,000
820,000
3,490,000
Tonnes
690,000
1,350,000
2,040,000
5,530,000
Tonnes
35,000
Tonnes
6,500,000
6,535,000
Gold g/t
Gold (Ounces)
2.66
1.74
2.45
228,000
46,000
274,000
Gold g/t
Gold (Ounces)
3.09
2.80
2.90
2.61
69,000
121,000
190,000
464,000
Gold g/t
Gold (Ounces)
2.45
3,000
Gold g/t
Gold (Ounces)
2.54
2.54
530,000
533,000
The Measured and Indicated Mineral Resources are defined in the areas of the deposit that have the highest drilling density along with underground development
that has exposed and sampled the deposit on three levels of drift development.
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Pickle Crow
Technical report
The description in this section of our Pickle Crow gold project (the “Pickle Crow Project”) is based on the project’s technical report: An Updated Mineral
Resource Estimate for the Pickle Crow Property, Patricia Division, Northwestern Ontario, Canada (dated June 15, 2018) (the “Pickle Crow Technical Report”).
The report was prepared for us by Micon International Limited in accordance with NI 43-101 under the supervision of B. Terrence Hennessey, P.Geo., a qualified
person within the meaning of NI 43-101. The following description has been prepared under the supervision of Hazel Mullin, P.Geo., who is a qualified person
within the meaning of NI 43-101, but is not independent of us.
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Pickle Crow
Technical Report, except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the Pickle Crow Technical
Report in its entirety to fully understand the project. You can download a copy from our SEDAR profile (www.sedar.com), or from our website
(www.firstmininggold.com).
Project description, location and access
The Pickle Crow Property is located in northwestern Ontario about 400 km north of Thunder Bay and approximately 11 km east of the town of Pickle Lake. The
Pickle Crow Property is centred at approximately 51º 31’ North latitude and 90º West longitude in NTS map area 52O/11.
The Pickle Crow Property can be reached from the city of Thunder Bay by proceeding westerly on the paved TransCanada Highway (Highway 17) for
approximately 245 km to the town of Ignace and then northward on paved Provincial Highway 599 approximately 290 km to the town of Pickle Lake. From Pickle
Lake, access to the Pickle Crow Property is along a good gravel road that connects to Highway 599 near the village of Central Patricia. The western boundary of the
Pickle Crow Property is 6.5 km from the turn off at Highway 599. The total road distance to the Pickle Crow Property from Thunder Bay is approximately 545 km.
In 2011, the Pickle Crow Property consisted of 98 contiguous patented mining claims covering a surveyed area of 1,583 ha. On August 6, 2014, an additional 8
patented mining claims were acquired from Frontline Gold Corporation (“Frontline”) which increased the total property area to 1,712 ha. Additional property
acquisitions, including 28 claims from Metalcorp Limited (“Metalcorp”), increased the number of unpatented mining claims to 88, covering an area of
approximately 14,048 ha. The original unpatented ‘legacy’ claims were converted into the new Ontario cell claim system in April 2018 and the current property is
made up of 482 mining claims and 106 patented claims, and now covers an area of approximately 19,000 ha. The claims are located in Connell, McCullagh and
Ponsford Townships as well as the Atik Lake, Collinshaw Lake, Dona Lake, Firstloon Lake and Tarp Lake Areas, in the Patricia Mining Division, northwestern
Ontario.
Through our wholly-owned subsidiary, PC Gold Inc. (“PC Gold”), we are party to a 99 year mining lease (the “Mining Lease”) with Teck Resources Limited
(“Teck”). The Mining Lease encompasses the original 98 patented claims of the Pickle Crow property, and it expires on July 31, 2067. The Mining Lease requires
payment of $1.00 per year which has been prepaid in full in advance. Registered ownership of mineral rights and surface rights for the Pickle Crow patented claims
is held by Teck as ‘fee simple, absolute’, the highest level possible.
Our leasehold interest in the original 2008 Pickle Crow Property is additionally subject to two NSRs totalling 1.25% that are payable upon the commencement of
commercial production. We have the option of purchasing these royalties.
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The 8 patented claims and a further 5 unpatented claims acquired from Frontline are subject to a 2% NSR royalty in favor of Frontline, one half of which may be
purchased by the Company at any time for $1 million. This NSR is only payable upon the commencement of commercial production.
Certain of the claims acquired from Metalcorp are subject to a 2% NSR royalty in favour of Metalcorp one-half of which may be purchased by the Company at any
time for $2 million. The balance of the claims are subject to a 1% NSR royalty in favour of Metalcorp, one-half of which may be purchased by the Company at any
time for $1 million, and a 1% NSR royalty in favour of each of two individuals (for an aggregate 2% NSR), one-half of which may be purchased by the Company at
any time for $1 million. The consideration for the NSR royalties may be paid in cash or, at the option of the Company, in common shares of the Company, valued by
reference to the market price of the Company's common shares prevailing on the date on which the Company becomes obligated to pay such consideration.
Fourteen unpatented claims belonging to the property known as 'Pickle Lake #6' are subject to a 2% NSR royalty payable to Cadillac Ventures Inc. (“Cadillac”).
The Company has the option to acquire one-half of the 2% NSR royalty within 3 years of the commencement of commercial production on the Pickle Lake #6
claims by paying to Cadillac $1 million.
The mining claims in the Pickle Crow Property are subject to annual assessment work requirements to keep them in good standing.
All phases of our exploration activities on the Pickle Crow Property are subject to environmental regulation. These regulations mandate, among other things, the
maintenance of air and water quality standards and land reclamation and provide for restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with certain exploration and mining industry activities and operations. They also set forth limitations on the generation,
transportation, storage and disposal of hazardous waste. A breach of such regulations may result in the imposition of fines and penalties. In addition, certain types of
exploration and mining activities require the submission and approval of environmental impact assessments.
The Pickle Crow Property has, over the course of the past two decades, been subject to several environmental studies which examined, among other things, water
quality and its impact, if any, on the health of aquatic populations in the watershed encompassing it. These preliminary studies indicate that in spite of the history of
mining on the Pickle Crow Property, including a significant volume of historical tailings sitting in four tailings basins on surface and extensive areas of flooded
mine workings, water quality samples generally meet provincial water quality standards. This appears to be due in part to the generally low sulphide content and
natural buffering effect of the carbonate minerals found in the vein ore historically mined.
History
The Pickle Crow deposit was originally discovered in the early 1930s and commercial production at the mine began in 1935. The Pickle Crow mine operated until
1966 during which time it produced 1,446,214 troy ounces of gold and 168,757 troy ounces of silver from 3,070,475 tons of ore milled (at an average grade of 0.47
oz./t or 16.14 g/t). The Pickle Crow Property sat dormant from 1966 to the late 1970s.
In 1979, a VLF-EM (very low frequency-electromagnetic) geophysical survey of the Pickle Crow Property was performed and 47 surface diamond drillholes for
7,356 m were drilled. The only known soil geochemical survey done on the Pickle Crow Property was completed in 1983. The samples were collected along the
same cut grid lines as used for the VLF-EM survey. Soil values ranged from 10 to 12,000 ppb, with the high values attributed to the mine tailings and thought to be
cultural anomalies.
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Between 1985 and 1987, the most extensive exploration program on the Pickle Crow Property since its closure and up to that time was completed. The program
consisted of line-cutting, magnetometer and induced polarization geophysical surveying, geological mapping, surface trenching, diamond drilling and
environmental baseline studies. In total, 286 surface diamond drillholes drilled for 46,189 m and 79 underground diamond drillholes for 9,341 m which were
completed between 1985 and 1988. Following completion of the program, all shafts, ventilation raises and other surface openings were capped with concrete in
1989 after an estimated $9.2 million was spent on the Pickle Crow Property. Two historic (non-NI 43-101 compliant) resource estimates were commissioned, one in
April of 1988 and a second in December of 1988.
A total of four surface diamond drillholes for 2,287 m were drilled in the fall of 1998. An additional 18 surface diamond drillholes were completed in 1999 for
2,173.5 m.
Between 1999 and 2001, two bulk samples were taken from the No. 5 Vein and No. 1 Vein crown pillars respectively.
In 2002, the building of a 225 t/d extreme gravity mill was commenced on the site, a partially complete production closure plan was submitted to the then MNDM
and construction of a tailings management facility within the historic Pickle Crow tailings area began. Stockpiling of material mined from the historic No. 1 Vein
shaft and crown pillar area in the summer of 2002 also commenced.
On May 13, 2008, PC Gold acquired its interests in the Pickle Crow Property. It then launched an exploration program in conjunction with the staking of
surrounding unpatented claims which now define the boundaries of the current Pickle Crow Property.
Geological setting, mineralization and deposit types
The Pickle Crow Property lies within the Pickle Lake greenstone belt, part of the Uchi Subprovince, which is within the Superior Province of the Canadian Shield.
The Pickle Lake greenstone belt comprises an approximately 70 km long by 25 km wide area of supracrustal rocks and internal granitoid plutons surrounded by
large granitoid batholiths.
The supracrustal rocks have been deformed and metamorphosed to greenschist facies with amphibolite facies occurring in the thermal aureoles of younger plutonic
bodies. The Pickle Lake greenstone belt is subdivided into four tectono-stratigraphic assemblages including:
● The Pickle Crow assemblage.
● The Kaminiskag assemblage (not present on the Pickle Crow Property).
● Unnamed Temiskaming-like assemblage.
● The Confederation assemblage.
On the Pickle Crow Property, the Pickle Crow assemblage is dominated by tholeiitic basalts with intercalated sediments (primarily banded iron-formation,
sometimes referred to as BIF), and rare calc-alkaline volcanic and volcaniclastic units. The assemblage occupies the northwestern part of the greenstone belt and is
interpreted to be unconformably overlain by the Confederation assemblage.
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Gold mineralization on the Pickle Crow Property is orogenic in nature and occurs in complexly folded and sheared, mainly tholeiitic, volcanic rocks of the Pickle
Crow assemblage near its contact with calc-alkaline volcanic/volcaniclastic rocks of the Confederation assemblage. Host rocks for the mineralization include
tholeiitic lavas, banded iron formation, intermediate volcanic/volcaniclastic rocks and quartz feldspar porphyry. Gold occurrences on the Pickle Crow Property are
associated with four styles of mineralization:
● Narrow, high-grade gold-scheelite-bearing quartz veins, which were the main source of gold produced at the Pickle Crow mine from 1935 to 1966.
● Iron formation-hosted gold mineralization adjacent to vein structures. The iron formation contains stringers and discontinuous lenses of quartz and the
iron-bearing minerals have been replaced by sulphides. Both quartz and sulphides are gold- mineralized. Only a limited amount of this type of material was
processed at the Pickle Crow mine. However, iron formation-hosted gold was the main ore type at the adjacent Central Patricia mine to the southwest.
● Shear zone-hosted gold mineralization consisting of complex wide zones of intense shearing and alteration which are intimately associated with the
intrusion of the Albany porphyry and characterized by disseminated pyrite, discontinuous quartz veining and sulphidation of interflow iron formation.
● Arsenopyrite-associated gold mineralization which typically occurs as disseminated to semi-massive arsenopyrite and quartz-arsenopyrite stockworks
hosted by iron formation but can be also found, to a lesser extent, in shear zones and/or quartz veins in volcanic rocks. Similar arsenopyrite-rich iron
formation-hosted gold was the main ore type at the adjacent Central Patricia mine.
We consider the gold occurrences in the Pickle Lake mining camp to be classical examples of deposits grouped under the descriptive model of Archean low-
sulphide gold- quartz veins. This deposit type is also known as shear- zone-hosted gold, Archean quartz-carbonate vein gold deposits, Archean lode gold, Archean
mesothermal gold or orogenic gold.
Exploration
In 2007, sourcing and compilation of available historical data was started.
In October 2007, a total of nine samples were collected from the Pickle Crow Property. Two types of samples were obtained on a spontaneous and random basis:
eight field duplicate split core samples from a series of drillholes that are stored at two locations on the Pickle Crow Property and one composite chip channel
sample taken from the outcropping one vein in its bulk sample pit.
Starting in the spring of 2008 PC Gold commenced an extensive exploration program consisting of locating historical drill collars with a differential GPS; surveying
historical shafts; reconnaissance geological mapping and relocating historical trenches; limited channel sampling and mapping of historical trenches and diamond
drilling of 33 holes with up to 2 rigs totalling 8,638 m in the core mine trend to confirm historical holes. This program confirmed the results of historical drillholes
and provided confidence in the digital database.
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Field exploration was renewed in the spring of 2009 with a focus continuing on the core mine trend. This exploration program consisted of diamond drilling of 34
holes with up to 3 rigs totalling 14,308 m; shallow drilling targeting; U-Pb age dating of detrital zircons from two samples; line cutting (114.9 km) on the core mine
and Cohen-MacArthur trends; a Titan IP (71.45 line-km, 80.25 km with current extensions) and ground magnetometer survey (110 line-km); and prospecting with a
focus on the Cohen-MacArthur trend. The most significant results of the 2009 program were the discovery of Conduit Zone 1, the discovery of Pickle Crow type
high-grade veins hosted in intermediate volcanic rocks and gabbro of the Confederation assemblage (Confederation veins), possibly representing surface expression
of a vein, the identification of Temiskaming-like sediments in the core mine trend, and the identification of the Cohen-MacArthur trend by geophysics.
In 2010, exploration continued with the focus remaining on the core mine trend but expanding to include the Cohen-MacArthur trend. The exploration program
consisted of diamond drilling of 106 holes with up to 4 rigs totalling 35,545 m, including helicopter supported drilling; and trenching program consisting of 9
trenches totalling approximately 32,000 m2 including 1,707 channel samples. The most significant results of the 2010 program were the discovery of the no. 19
vein, the Kawinogans Zone and the Central Pat East Zone and the extension of the No. 1 Vein 700 m below the historical workings. The No. 20 and 21 Veins were
also discovered.
The exploration program continued in Q1 2011 with drill testing of the core mine but with a focus on regional targets along the Cohen-MacArthur trend. The
exploration program consisted of diamond drilling of 11 holes with up to 3 rigs, totalling 4,476 m; 881.4 line-km of 50-m spaced helicopter borne AeroTEM and
magnetometer surveys; and completion of baseline water sampling and sampling of stockpiled high and low grade ore for finalizing the closure plan. Significant
results of the 2011 exploration program include the expansion of the Central Pat East Zone as a possible near surface, bulk tonnage target and the continued
expansion of the No. 19 Vein.
On April 18, 2011, PC Gold announced a 1.26 million ounce NI 43-101-compliant inferred mineral resource, audited by Micon International Limited (“Micon”),
which triggered the preparation of the Pickle Crow Technical Report.
Drilling
Since acquiring the Pickle Crow Property in early May 2008, PC Gold has conducted an aggressive diamond drill program designed to confirm and expand the
historic resources and make new discoveries. The most prominent of these new discoveries was the No. 19 Vein with 15.95 g/t Au over 0.70 m. Follow-up
intercepts of the zone included 43.28 g/t Au over 13.13 m and are considered by PC Gold to represent the most significant discovery since the closure of the mine in
1966. Other discoveries include the Conduit Zones in the Albany Shaft area and the Central Pat East Zone along the Cohen-MacArthur trend.
A total of 184 holes totalling 62,968 m were drilled on the Pickle Crow Property between June 2008 and March 12, 2011. Drilling was completed in three phases as
described above.
All holes were drilled with NQ-sized core (47.6 mm) with the exception of 9 BQ Thin Wall holes (40.7 mm) drilled.
The bulk of the PC Gold holes were drilled in the core mine trend with the second largest concentration along the Cohen-MacArthur trend. Several new mineralized
zones were intersected. Other newly discovered zones include the No. 20 and 21 Veins, the Confederation Veins, and the Kawinogans Zone. Significant extensions
to known zones include extending the No. 1 Vein at Shaft 1 to 1,500 m depth and the intersection of abundant quartz veining beneath the workings of Shaft 3 which
is interpreted to be the extension of the No. 6 and 7 Veins.
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The drilling program has extended several known zones and outlined new discoveries. These include high grade, narrow vein targets and more disseminated bulk
tonnage targets which may be amenable to open pit or underground bulk mining.
Since 2011, 173 new holes have been drilled totalling 35,840.4 m. The 2011 to 2014 drilling concentrated mainly on the core mine trend and postulated eastward
extensions of the Central Patricia trend. The principal targets on the core mine trend were the No. 1 and No. 5 Veins and the BIF.
First Mining completed small diamond drill programs in 2016 and 2017 to meet the annual assessment work requirements for the Pickle Crow Property. The fall
2016 program was centred on selected targets in the core mine trend from the No.1 Shaft to the Crowshore shaft, and consisted of 9 holes totalling 1,318 m. The
winter 2017 drill program was designed to test the potential westward extension of the core mine trend and consisted of 6 holes, totalling 1,254 m.
Sampling, analysis and data verification
Two types of sample collected by PC Gold during exploration of the Pickle Crow Property were used in the preparation of the mineral resource estimate presented
in the Pickle Crow Technical Report, channel samples from trenches and diamond drill core. Sampling procedures remained the same after the previous 2011
mineral resource report.
Channel Samples – Collection of the trench channel samples was completed after the trenches were excavated, washed and mapped. Channel sampling was
performed utilizing a Stihl ‘quick-cut’ rock saw. Two continuous parallel cuts were sawn approximately 5 cm apart and approximately 5 cm deep, with the rock in
between then chipped out using a chisel. Sample lengths varied between 0.3 and 2.0 m averaging 0.90 m. Each sample was placed in a thick plastic bag with the
sample number clearly written on the outside of the bag with permanent marker and with one portion of a three-part sampling ticket placed inside. Each sample was
sealed with a cable strap. The location of the samples was noted in the sample book and on the trench map. Aluminum tags with etched sample numbers were
hammered into the cross cuts, using cement nails, at the beginning of each sample interval for a permanent record on the trench. Once collected, the samples were
bagged and shipped as per the sample shipment procedures described below, with the exception that all channel samples were shipped to AGAT Laboratories Ltd.
(“AGAT”) of Mississauga, Ontario.
Diamond Core Logging and Sampling – NQ diameter (47.6 mm) drill core was logged, then sawn in half using diamond bladed saws at the secure logging/core-
cutting buildings onsite, under the overall supervision of the logging geologists. The core was sawn in half following a sample cutting line determined by the
geologists during logging. After cutting, one half of the core was bagged, labelled and sealed with a zip tie or staples after one part of the three-part sample tag was
placed inside. The second part of the sample tag was stapled into the core box at the beginning of each sample. The third part of the tag was kept in the sample tag
book as a permanent record. The remaining half core was placed in core boxes to serve as a permanent record and stored in a secure onsite facility. All samples were
shipped from the site in a locked wooden crate with security tags. The samples were transported via Manitoulin Transport to laboratory preparation facilities in
Thunder Bay, Ontario for crushing, pulverization and pulp preparation. In 2008, samples were shipped to ALS Chemex’s (“ALS”) facility in Thunder Bay. In 2009
and 2010, samples were sent to Accurassay in Thunder Bay.
Once the core/channel samples were cut, bagged and sealed with zip ties or staples, ten samples were put into a larger rice bag, which was then sealed with a secure,
numbered security tag. The security tag numbers were recorded along with the corresponding samples within the bag, and then shipped in the locked wooden crates
to the laboratory. Once they arrived at the laboratory, the security tags and corresponding samples were recorded again by the laboratory and emailed back to the PC
Gold field site for confirmation. Prior to shipment the sample bags were stored in a locked building onsite. The site was always occupied during exploration. No
samples were left at the project site during field breaks.
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A total of 5,797 drill samples, which include QA/QC samples (i.e. duplicates, standards and blanks) were submitted to ALS in 2008 for analysis. A total of 42,392
drill samples, including QA/QC samples, were submitted to Accurassay in 2009 and 2010 for analysis. A total of 1,577 channel samples, including QA/QC samples,
were submitted to AGAT in 2010 for analysis.
For the analysis of Pickle Crow Property drill core samples, ALS was chosen as the primary laboratory in 2008. Accurassay was chosen as the primary laboratory
for drill core samples in 2009 and going forward.
In 2008, samples were crushed and prepared at ALS’ facilities in Thunder Bay, Ontario and sample pulps were shipped to its North Vancouver, British Columbia
laboratory for analysis. ALS’ facilities in Thunder Bay are certified to ISO 9001. The laboratory in North Vancouver is accredited to ISO 17025 for gold fire assay
by atomic absorption and gravimetric finish as well as four-acid multi-element analysis by ICP and MS. In 2009 and 2010, samples were crushed, prepared and
analyzed at the Accurassay facility in Thunder Bay, Ontario. Accurassay is accredited to ISO 17025 for gold by fire assay with atomic absorption finish. The trench
channel samples were assayed at AGAT in Mississauga, Ontario. AGAT is accredited to ISO 17025.
All samples sent to ALS for analysis were prepared using a jaw crusher, which was cleaned with compressed air between samples, resulting in 70% of the sample
passing through a 10 mesh screen. A 1,000 g split of the crushed sample was then pulverized to 85% passing a 200 mesh screen. All samples sent to Accurassay for
analyses were prepared using a jaw crusher, which was cleaned with a silica abrasive between samples, resulting in 90% of the sample passing through an 8 mesh
screen. A split of the crushed sample weighing 1,000 g was then pulverized to 90% passing a 150 mesh screen. AGAT’s sample preparation procedures include
crushing to 75% passing 2 mm and pulverizing to 85% passing 75 µm.
For all three laboratories, the prepared sample pulps were analyzed for gold by fire assay using 50-g sample charge with AAS finish. If the returned assay result was
equal to or greater than 5 g/t then the sample was reassayed by fire assay with gravimetric finish. All samples greater than 10 g/t, and any samples suspected of
nugget gold (quartz veins) were additionally sent for pulp metallics analysis using the remainder of the pulp (~950 g of sample).
PC Gold has completed bulk density measurements on 2,602 samples of mineralized and unmineralized diamond drill core, and select grab samples from “ore”
stockpiles onsite from the Pickle Crow mine. Of these, 1,918 measurements were used in the calculation of average specific gravity for the Pickle Crow Property.
During a review of the data, 684 measurements were discarded due to laboratory errors that produced unrealistic specific gravity values.
Diamond drillhole data and trench data were stored in Excel spreadsheets. These can easily be imported into Microsoft Access database software and used in many
resource estimation/mine planning software packages. We also use Gemcom software to evaluate drill results and has the finalized data stored in Microsoft Access.
Excel is used to manage the data and QA/QC program.
The Pickle Crow Project QA/QC program includes the use of crush duplicates, ¼-split drill core (field duplicates), the insertion of certified reference materials
including low, medium and high-grade standards and coarse blanks. This is accomplished by inserting the QA/QC samples sequentially in the drill core sample
numbering system. One set of the four QA/QC types were inserted every 30 samples, consisting of 1 crush duplicate, 1 quarter-split field duplicate, 1 standard
(alternating between a low, medium and high standard), and 1 blank. This resulted in approximately every seventh sample being a QA/QC sample.
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Sample assay results are evaluated through control charts, log sheets, sample logbook and signed assay certificates to determine the nature of any anomaly or
failure. Identified failures are re-assayed by the laboratory at which the failure occurred until a cause of the failure and correct analysis is obtained. Check assaying
is also conducted on approximately 1 in every 20 samples. The pulps are re-numbered with new, sequentially-inserted QA/QC samples and sent to a second ISO
certified laboratory (ActLabs of Ancaster, Ontario).
Approximately 1 out of every 20 samples for the Pickle Crow Project was submitted to a second laboratory, ActLabs, an ISO 17025 certified laboratory with a
sample preparation and analytical facility in Ancaster, Ontario. The assaying protocol used is similar to ALS and Accurassay’s using fire assaying with a 50-g
charge and AAS finish. Samples above 3 g/t Au are re-assayed using a gravimetric finish, and above 10 g/t by pulp metallic methods. A total of 2,117 check
samples were sent to Actlabs. Check assays generally matched the value obtained by the original laboratory and the overall variation between laboratories was well
within the natural variation of the sample material as indicated by the field and crush duplicates.
During the October 2011 site visit, Micon did not complete any check sampling. Micon did examine surface exposures and stockpiles of mineralization from the
No. 1 Vein and No. 5 Vein. Visible gold was noted in the samples on the No. 1 Vein stockpile.
The final database was sent to Micon in early March 2011 for validation. Micon performed a thorough validation of the database and specifically performed a cross-
check validation of the assay table against assay results received directly from the laboratories in electronic form. The cross-check validation of the assay table
described above was possible only for the newer PC Gold-generated data which contained laboratory sample identification numbers.
Several minor problems were found and corrected, most of them located outside of the modelled zones. The problems were related to the fact that the majority of
the database was collected from historical data digitized from old paper logs.
It is Micon’s opinion that the Company and PC Gold have run an industry standard QA/QC program for the drillhole database and insertion of control samples into
the stream of core and channel samples for the Pickle Crow Project exploration program.
While certain minor discrepancies in survey data of old workings have been noted it has been determined they will only affect the precise location in space of the
workings and are not likely to materially affect the estimate of remaining volumes of mineralization. As such they are suitable for use in an inferred resource
estimate. Determination of measured and indicated resources or reserves in the future will require resolution of these minor discrepancies, likely by dewatering and
re-accessing the workings.
The historic drill data have been shown to be acceptable for use in a mineral resource estimate with appropriate application of assay top cuts as discussed above.
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Mineral processing and metallurgical testing
The historic ore produced at the Pickle Crow mine presented no major milling problems.
Pickle Crow Mill, 1935-1966: The long since removed process plant for the Pickle Crow mine ran from 1935 to 1966. The 400 ton/day (360 t/d) mill recovered gold
by a combination of gravity/amalgamation and cyanidation. Overall gold recovery averaged slightly over 98%. When the mine closed in 1966 efficiency in the
gravity section had been improved to achieve as much as 60% of the total recovery.
1999-2002: In October 1999, prior to mining the first of two bulk samples, grab samples were collected from the surface exposures of the No. 5 Vein. These
samples were sent to ORTECH Inc. of Mississauga, Ontario for bottle roll leach tests. The bottle roll tests were conducted on minus 8 material assaying 53.2 g/t Au,
and minus 100 mesh material assaying 40.04 g/t Au. After 48 hours, 53.5% and 95.4% recoveries were achieved for the minus 8 and minus 100 mesh fractions
respectively.
No. 5 Vein Crown Pillar Bulk Sample: In December 1999, a bulk sample from the No. 5 Vein crown pillar was mined and sampled, estimated to contain 9,500 tons
(8,600 tonnes) averaging 0.38 oz./t Au (13.02 g/t Au) assuming a 3.0 ft. (0.91 metre) minimum mining width; cut to 1 oz./t and 25% diluted. The average grade of
the resource block was determined using a weighted average 9 drillhole and channel samples located inside the block. The bulk sample was carefully mined from a
small open pit, with vein material comprising an estimated 95% and wall rock dilution only 5% of the sample. The bulk sample was shipped to St. Andrews
Goldfields Ltd. 1,300 t/day CIP (carbon-in-pulp) gold process plant located at Stock Township near Timmins, Ontario for custom milling. The shipment was
processed on December 21, 1999. The commercial settlement was agreed upon at a recovered grade of 16.72 g/t Au (0.49 oz./t Au).
No. 1 Vein Crown Pillar Bulk Sample: A second phase of bulk sampling was initiated in 2000. 4,427 tonnes of material (over 90% from the No. 1 Vein) were
trucked to the Golden Giant mill near Hemlo, Ontario for custom milling. The custom milling flowsheet included secondary crushing, grinding, gravity
concentration, leaching, CIP, stripping, electrowinning and refining. The shipment was processed between December 4 and 10, 2000. The commercial settlement
was agreed upon at a recovered grade of 16.72 g/t Au (0.49 oz./t Au). Prior to accepting the Pickle Crow Property bulk sample, laboratory metallurgical tests were
completed to determine if the material could be treated at the mill and if the tailings produced would have a negative environmental impact on the tailings basin. No
environmental problems were noted. The test work indicated that about 40% of the gold was recoverable with a single pass gravity Knelson concentrator. The
remaining gold could be easily leached with cyanidation with an optimum grind of 75% passing 200 mesh. Test work indicated that higher grinds could result in
lower gold recoveries. Leach retention times of greater than 48 hours might be required. An overall recovery of 98.4% was achieved in the tests.
No. 1 Vein Crown Pillar Bench Scale GRG & Leaching Test work: A set of five approximately 20 kg samples from the No. 1 Vein Crown Pillar bulk sample were
submitted to the Knelson Research and Testing Centre (“KRTC”) in Langley, British Columbia for gravity-recoverable-gold (“GRG”) and leaching testwork.
These samples were sent from the Golden Giant mine. The samples were received at the KRTC facility on July 3, 2001. The samples were weighed and logged prior
to any processing. The primary objective of this test work was to quantify the gravity recoverable gold content of the ore using a standard test. The secondary
objectives were to determine the average head grade of the sample and to perform cyanide leach tests on sub-samples of the final tails. A KC-MD3 laboratory scale
Knelson Concentrator was utilized for the GRG test work.
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The procedure used for the KC-MD3 stage test was as follows:
● The samples were sorted by time and date into lots of approximately 20 kg.
● Each sample was screened at 10 mesh prior to the first pass through the KC-MD3 in order to prevent plugging. The oversize was saved and subsequently
added into the first grind.
● The ~20 kg test samples were processed through a 3” Laboratory Knelson Concentrator at a fluidization water flow rate of ~3.5 litres/min and at 60Gs.
● During the test, sub-samples of the tailings stream were collected for assays.
● At the end of the concentration stage, the concentrate was washed from the inner cone of the KC-MD3.
● The concentrate was panned to produce a pan concentrate and pan tailings (middlings) sample.
● The concentrate and tailings samples were labelled, dried, weighed and sent to an independent local lab for assaying.
● The tailings were re-ground two more times and steps 3 to 6 were repeated after each grind.
● During the final stage, an additional 2 kg sample of the tails was sub-sampled, dried and sent for cyanide leach test work.
● The remaining tails samples are being stored at the test facility.
This testing scheme is based on the philosophy that progressive size reduction allows the determination of gold liberated at finer grinds without over-grinding and
smearing coarse gold present in the initial sample.
Results indicate that the No. 1 Vein crown pillar samples have a very high gravity-recoverable gold content of 91.2% with a back-calculated head grade of 20.0 g/t
Au. The overall mass pull to the concentrate was 1.4%. The results indicate that the gold is fairly liberated in this particular material and is readily recoverable.
Visible gold was observed in all final concentrate samples.
Cyanide leaching was performed on sub-samples of the final GRG test tails.
The gold recoveries from leaching ranged from 93.5% to 95.4%. When the leach recoveries are combined with the gravity stage recoveries, the overall recoveries
exceed 99% for all samples. The final tailings assays were very low ranging from 0.09 to 0.11 g/t Au. Based on the encouraging bench scale GRG test results on the
No. 1 Vein crown pillar it was decided to commission the construction of a 225 tonne per day (~250 t/d) extreme gravity gold mill at Pickle Crow.
The concept of “extreme gravity” is a series of innovations that have resulted in a reintroduction of gravity recovery systems into the milling operations of most
gold mines. Traditionally, most gold milling circuits are designed around flotation and cyanidation requirements, with the gravity circuit being fit in where possible.
Extreme gravity takes the approach of optimizing the circuit in order to maximize recovery by gravity. In some cases gravity systems can achieve high enough
recoveries to eliminate the need for chemical systems such as cyanidation and flotation.
The benefits of extreme gravity include relatively low capital costs compared to conventional gold mills, reduced permitting, short project lead time, and much
reduced environmental issues with no use of cyanide or other chemicals. In addition, small plants can be modular and easily moved between locations.
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Pickle Crow Tailings Bench Scale GRG & Leaching Test work: In September 2001, a composite sample from Tailings Area 1 was submitted to Lakefield Research
of Lakefield, Ontario for cyanide leach test work. The sample, a blend of oxidized (10%) and unoxidized (90%) tailings, was leached for 48 hours. In May-June,
2002, a set of two approximately 8 kg composite samples from Tailings Area 3 were subjected to ‘gravity recoverable gold’ and cyanide leach test work. Composite
A was made up of auger drillhole sample material assaying >0.3 g/t Au and composite B material assaying <0.3 g/t Au. The GRG test work was performed by the
Knelson Research and Testing Centre in Langley, British Columbia and leach tests were conducted at Accurassay of Thunder Bay, Ontario.
Post 2011 Metallurgical Testing
After the completion of the previous 2011 mineral resource estimate, PC Gold completed some additional metallurgical testwork.
2012 Banded Iron Formation (BIF) Samples: Four samples ranging from approximately 40 to 100 kg were sent to SGS Lakefield in two batches in 2012. Samples
BIF-1 and BIF-2 were selected from Cantera’s low grade BIF stockpile, care was taken to select samples with minimal weathering. Samples BIF-3 and BIF-4 were
collected from PC Gold drill core from the No. 5 BIF zone. Sample BIF-3 represents the deepest intercept (approximately 1,100 m) to date on the No. 5 BIF zone.
Samples were ground in a rod mill and passed through a Knelson MD-3 concentrator, and the concentrate was then further treated by a Mozley table. Gravity tails
then underwent bottle roll test cyanidation.
Historically, the BIF-hosted mineralization was typically below the cut-off grade (8.57 g/t) of the historic Pickle Crow mine and thus was not mined in any
significant quantities. As such, is there is no documented metallurgical history. Anecdotal evidence from past workers at Pickle Crow suggest that their mill setup
did not result in great recoveries when processing BIF, however, what constitutes bad recovery in a mine where >98% recoveries were the norm is unclear.
Cantera performed one bench scale gravity test on the BIF which resulted in 87.6% recovery. PC Gold’s results do not support this; it could be that Cantera’s sample
had a high proportion of stringer high-grade vein material in it. PC Gold’s results (Table 13.9) indicate the BIF has poor gravity recoveries (average of 28.8% at 75
microns), however, it has acceptable gravity plus cyanide recoveries (average 89.9%).
2013 High-Grade Vein Samples: In January 2013, PC Gold submitted two samples, each comprising approximately100 kg from Cantera’s high-grade stockpile from
the crown pillar of the No. 1 Vein, to SGS Lakefield (SGS), in Lakefield, Ontario. These consisted of a high-grade sample (HG) with a moderate amount of visible
gold, and a low-grade sample (LG) with no visible gold, the samples were of vein material only and care was taken to select unweathered material.
The results of SGS indicated that the HG sample returned a head grade of 198 g/t and the LG sample 33.4 g/t. The test was carried out by milling the samples using
a rod mill to three different grind sizes, approximately160, 90, and 60 microns and then passing them through a Knelson concentrator with a Mozley table finish.
PC Gold’s test work is on the low end of Cantera’s Knelson test work, PC Gold’s % recoveries were achieved with a single grind and pass through the Knelson,
whereas Cantera’s involved 3 passes through the Knelson and 2 stages of grinding.
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Mineral resource estimates
The Pickle Crow Project resource estimate is divided into three distinct areas within the core mine trend: the Shaft 1 area, the Shaft 3 area and the Albany Shaft
area. These areas comprise three mineralization styles, high-grade narrow veins, iron formation-hosted and alteration-shear zone-hosted gold mineralization.
The mineral resources were estimated using kriging, where variograms could be modelled, and inverse distance cubed interpolation elsewhere. Based on the use of
historic drilling and the somewhat imprecise modelling of the underground workings, the resources have been classified as inferred under the CIM guidelines. The
resources were reported using a Whittle-optimized pit shell or at underground cut-off grades.
In 2016, Micon updated the mineral resource models for the No. 1 and No. 5 Veins and the BIF using new drilling completed since 2011. The No. 19 Vein block
model was adjusted so as to constrain interpretation to the Pickle Crow porphyry and then re-estimated. The No. 2 Vein block model had the crown pillar removed
when it was discovered to have been mined out. The newly discovered Vein 22/23 structure was modelled by Fladgate and that model was reviewed. Otherwise, the
remaining vein models are unchanged from 2011 but have been reported using different cut-off grades.
The resulting estimate of inferred mineral resources for the Pickle Crow Project is presented in Table A below.
Table A – Estimated Inferred Mineral Resources for the Pickle Crow Project
Area
Zone
Host
Shaft 1
BIF
BIF
No. 1 Vein
No. 5 Vein
No. 9 Vein
No. 11 Vein
No. 19 Vein
BIF & Vein
BIF
Vein
Vein
Vein
Vein
Vein
Shaft 1 Total
Mining
Method
Open Pit
Bulk Underground
Underground
Underground
Underground
Underground
Underground
Tonnes
1,887,000
5,297,000
594,000
362,000
148,000
21,000
186,000
8,495,000
Grade
(g/t Au)
Contained
Ounces
1.3
3.8
6.1
8.0
7.4
6.0
9.1
3.8
79,800
644,700
116,000
93,000
35,300
4,100
54,400
1,027,300
Cut-off
Grade
(g/t Au)
0.50
2.00
2.60
2.60
2.60
2.60
2.60
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Table A – Estimated Inferred Mineral Resources for the Pickle Crow Project (continued)
Area
Zone
Host
Shaft 3
Albany Shaft
No. 2 Vein
No. 6 Vein
No. 7 Vein
No. 8 Vein
No. 12 Vein
No. 13 Vein
No. 22 Vein
No. 23 Vein
CZ1
CZ3
No. 15 Vein
No. 16 Vein
Mining
Method
Underground
Underground
Underground
Underground
Underground
Underground
Underground
Underground
Vein
Vein
Vein
Vein
Vein
Vein
Vein
Vein
Shaft 3 Total
Conduit-Style
Conduit-Style
Vein
Vein
Albany Shaft Total
Bulk Underground
Bulk Underground
Underground
Underground
GRAND TOTAL
Tonnes
96,000
160,000
54,000
55,000
14,000
112,000
31,000
165,000
687,000
168,000
22,000
49,000
31,000
270,000
9,452,000
Grade
(g/t Au)
Contained
Ounces
8.9
7.9
5.5
8.0
11.7
6.2
5.4
7.0
7.3
4.9
2.7
4.5
6.0
4.8
4.1
27,200
40,900
9,600
14,200
5,300
22,300
5,300
37,000
161,800
26,600
1,900
7,000
5,900
41,400
1,230,500
Cut-off
Grade
(g/t Au)
2.60
2.60
2.60
2.60
2.60
2.60
2.60
2.60
2.00
2.00
2.60
2.60
2014 CIM Definition Standards were followed for mineral resources.
Notes:
1. The mineral resource estimate is entirely classified as inferred mineral resources.
2.
3. The mineral resource has been estimated using a gold price of US$1,300/oz.
4. High-grade assays have been capped. Each domain was capped with respect to their unique geology and statistics.
5. The mineral resource was estimated using a block model. Three dimensional wireframes were generated using geological information. A combination
of kriging and inverse distance estimation methods were used to interpolate grades into blocks of varying dimensions depending on geology and
spatial distribution of sampling.
6. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is currently insufficient exploration to define these
inferred resources as an indicated or measured resource.
7. Mineral resources have been adjusted for mined out areas. Small rib and sill pillars around old stopes have not been considered or reported.
8. Numbers may not add due to rounding.
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Considering that a combination of current drilling, historic drilling and underground chip samples were used in the resource estimation, no particular common
sample grid exists. There also exists a known minor error in terms of sample location and the accuracy of the digitized underground workings. However, even
though these known inaccuracies exist, the grade and tonnage discrepancy caused by this margin of error is within reasonable doubt for an inferred resource and the
estimate is reported as such.
Recent activities
In November 2016 we commenced a diamond drilling program at our Pickle Crow Project with a focus on identifying new high-grade vein gold mineralization. In
February 2017, we announced the results of this exploration drilling program. A total of nine holes comprising approximately 1,300 m were drilled.
The drill program targeted several shallow, high-grade vein and banded iron formation hosted targets in the core mine trend. The objective of the program was to
test extensions of known vein zones and discover new high-grade gold mineralization.
Highlights of Fall 2016 Drilling at Pickle Crow:
● Hole PC-16-306 intersected 1.28 g/t Au over 12.70 m including 15.14 g/t Au over 0.70 m in the middle vein zone of the No. 15 Vein.
● Visible gold was intersected in Hole PC-16-306 in the lower vein zone of the No. 15 Vein.
Gold mineralization was encountered in seven of the nine drillholes and visible gold was intercepted in the lower most vein zone of the No. 15 Vein structure. A
0.30 m section of drill core from the lower vein zone which included the visible gold was not assayed as it was retained for display purposes, hence the reported
intercept of 1.15 g/t gold over 8.19 m excludes this interval and the 0.30 m section was included at zero grade.
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Drill Hole Intercepts from Fall 2016 Drilling at Pickle Crow:
All assays were performed by Accurassay Laboratories of Thunder Bay, Ontario. Samples were analyzed by using 50 g fire assay with an atomic absorption finish.
Samples greater than 10 g/t or with visible gold were analyzed by 1,000 metallic analysis with a gravimetric finish. All assays reported are uncut. Reported widths
are drilled core lengths, and true widths are unknown at this time. Accurassay Laboratories is independent of First Mining and has no relationship with First
Mining.
QA/QC Procedures
NQ diameter (47.6 mm) drill core was logged then sawn in half on-site, with one half bagged and labelled and the other half placed in core boxes to serve as a
permanent record and stored in a secure on-site facility. All samples were shipped from site via Manitoulin Transport to the Accurassay Laboratories facility in
Thunder Bay, Ontario, for crushing, pulverization and pulp preparation. Accurassay Laboratories is independent of First Mining and has no relationship with First
Mining.
All samples sent for analyses were prepared using a jaw crusher, which is cleaned with compressed air between samples, resulting in 70% of the sample passing
through a 10 mesh screen. A 1,000 g split of the crushed sample was then pulverized with 85% passing through a 200 mesh screen. Fire assays were performed
using 50 g of sample with assays equal to or greater than 5 g/t calculated gravimetrically, and lower grade samples measured by atomic absorption (AA). All
samples greater than 10 g/t were additionally sent for screen metallics analysis using the remainder of the pulp (~950 grams of sample). Blanks, standards (one high-
grade, one mid-grade, and one low-grade), field duplicates (1/4 split cores), and crush duplicates were inserted into the drill core samples sequentially, at least every
8th sample, before shipment. Standards consisted of a high-grade (~13 g/t Au), a mid-grade (~5 g/t Au), and a low-grade (~1 g/t Au) gold standard from Geostats
Pty. Ltd. of Fremantle, Western Australia, as well as blanks from Nelson Granite of Kenora, Ontario.
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Recent developments
On March 12, 2020, the Company announced that it had entered into a definitive earn-in agreement (the “Earn-In Agreement”) with Auteco Minerals Ltd.
(“Auteco”) pursuant to which Auteco may earn up to an 80% interest PC Gold, which owns the Pickle Crow Project. During the term of the Earn-In Agreement,
Auteco will be the operator of the Pickle Crow Project and will be responsible for all expenditures.
As upfront consideration, we received $50,000 cash in January 2020 and received an additional $50,000 in March 2020 upon signing the Earn-In Agreement.
Auteco is also required to issue 25,000,000 ordinary shares of Auteco (the “Upfront Consideration Shares”) to First Mining within 45 days of execution of the
Earn-In Agreement.
The key terms of the Earn-In Agreement are as follows:
Stage 1 Earn-In (51% earn-in)
Three-year initial earn-in period for Auteco to acquire a 51% interest in PC Gold (and thereby a 51% interest in the Pickle Crow Property) by:
● spending $5 million on exploration of the Pickle Crow Property, of which $750,000 must be incurred within the first 12 months; and
● issuing 100,000,000 shares of Auteco to First Mining (the “Stage 1 Earn-In Shares”).
Stage 2 Earn-In (additional 19% to earn-in to 70%)
Upon completion of the Stage 1 Earn-In, Auteco will have a two-year follow-on period to acquire an additional 19% interest in PC Gold (and thereby an additional
19% interest in the Pickle Crow Property), by:
● spending a further $5 million on exploration of the Pickle Crow Project;
● making a $1 million cash payment to First Mining within 90 days of completing the additional exploration spend; and
● issuing First Mining a 2% net smelter returns royalty on the Pickle Crow Property (1% of which can be bought back for US$2.5 million).
Buy-In (additional 10% to earn-in to 80%)
Upon completion of the Stage 2 Earn-In, Auteco will have an option to acquire an additional 10% of PC Gold (and thereby an additional 10% interest in the Pickle
Crow Property), exercisable any time after completion of the Stage 2 Earn-In, by paying First Mining $3 million in cash.
Additional Terms
● Upon completion of the Stage 1 Earn-in, First Mining and Auteco (through a wholly-owned subsidiary) will form a joint venture.
● First Mining will be free carried, at a 20% interest until the earlier of termination of the earn-in agreement or a decision to mine.
Auteco has received shareholder approval to issue the Upfront Consideration Shares to First Mining, and Auteco will require shareholder approval to issue Stage 1
Earn-In Shares to First Mining. We may terminate the transaction if such shareholder approval is not obtained.
A copy of the Earn-In Agreement has been filed under our SEDAR profile at www.sedar.com.
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Hope Brook
Technical report
The description in this section of our Hope Brook gold project (the “Hope Brook Project”) is based on the project’s technical report: 2015 Mineral Resource
Estimate Technical Report for the Hope Brook Gold Project, Newfoundland and Labrador, Canada (effective date January 12, 2015, report date November 20, 2015)
(the “Hope Brook Technical Report”). The report was prepared for us by Mercator Geological Services in accordance with NI 43-101 under the supervision of
Michael P Cullen, P.Geo.; a qualified person within the meaning of NI 43-101. The following description has been prepared under the supervision of Hazel Mullin,
P.Geo., who is a qualified person within the meaning of NI 43-101, but is not independent of us.
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Hope Brook
Technical Report, except as such qualifications, assumptions and exclusions may be modified in this AIF. We recommend you read the Hope Brook Technical
Report in its entirety to fully understand the project. You can download a copy from our SEDAR profile (www.sedar.com), or from our website
(www.firstmininggold.com).
Property description, location and access
The Hope Brook Project is located on the southwest coast of the island of Newfoundland, in the province of Newfoundland and Labrador, Canada. It is comprised
of a core holding of 1,003 contiguous exploration claims originally acquired through map staking and issued in 2003 and 2008. This main property covers 25,075 ha
of surface area and measures approximately 32 km by 12 km in maximum east-west and north-south dimensions, respectively. Constituent claims are held under 5
separate mineral licenses and the property is approximately centered on the past-producing Hope Brook gold mine, located at Latitude 47.738° north and Longitude
58.095° west. An additional 63 claims (1,575 ha) are held by us in the Ironbound Hill (formerly “Peter Snout”) area, approximately 25 km northeast of the Hope
Brook deposit. These were staked in late 2013 to cover areas of exploration potential defined through review of government assessment reporting records.
The Hope Brook Project is located approximately 85 km by water east of the community of Port aux Basques and is not accessible by any form of highway
transportation at this time. Direct site access to the Hope Brook Project can be gained by chartered boat from either the Burgeo or Port aux Basques areas and could
also be gained through small boat charter from La Poile, after travel to that community on the coastal service vessel. The most efficient means of current access to
the property is by charter fixed wing aircraft or helicopter from commercial bases in the Deer Lake- Pasadena area, approximately 120 km to the north.
Coastal Gold earned a 100% interest in 993 claims of the original Hope Brook Project property by fulfilling requirements of an option to purchase agreement dated
January 25, 2010.
As of the date of the Hope Brook Technical Report, two exploration permits by the government of Newfoundland and Labrador were required for bedrock core
drilling and vibracore tailings drilling programs as well as geochemical and geophysical surveys, valid until April 15, 2015 and June 17, 2015, respectively. It is
anticipated that new permits will be required if we chose to initiate certain site-based aspects of the Phase I or Phase II work programs recommended in the Hope
Brook Technical Report. In addition, the License to Occupy for the Hope Brook exploration camp was being reviewed by government at the effective date of the
Hope Brook Technical Report, with timely issuance expected. No substantive difficulties have been encountered to date with respect to procurement of required
Exploration Permits and camp occupancy permissions.
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A 2% net smelter returns royalty payable applies under terms of a royalty pre-payment schedule of $20,000 per year. All royalty pre-payment funds provided under
the agreement are to be accounted for against future production. We retain a right during the term of the agreement to purchase one half of the 2% NSR royalty for
$1,000,000.
Annual work requirements for each claim are set out under the province’s Mineral Act and range from $200 per claim in year one to $1,200 per claim in years 16
through 20. In addition, a renewal fee of $25 – $100 is payable for each claim on a five-year basis.
As part of the 2011 work program a screening level assessment of baseline environmental conditions was carried out at the Hope Brook Property. Results of this
study showed that a number of chemical impacts that are residual to the former mining operation are present locally. These include elevated metal levels in soil,
sediment and water as well as elevated petroleum hydrocarbon levels in soil. The most significant liabilities were deemed to be associated with subsurface
conditions where impairment to both soil and groundwater had occurred around existing landfill sites, the heap leach pad, and within the underground mine
workings. All of these conditions pre-date Coastal Gold site activities and therefore we are excluded from associated liability. However, if a new mining venture is
established at this site it will be necessary to fully quantify the potential impacts of such conditions on site development, mining and site decommissioning and
reclamation plans for the new operation. All such issues would be dealt with under the mine permitting and associated environmental approval processes.
History
Documentation of Hope Brook Project area’s history of exploration and mining spans the period between 1923 and the present day, but modern programs directed
toward assessment of gold potential and related mining have only occurred since discovery of the Hope Brook gold deposit in 1983.
Programs of deposit definition drilling, resource estimation, metallurgical assessment and feasibility assessment were completed for the Hope Brook deposit
between 1984 and 1986 and a production decision was announced in 1986. The deposit was subsequently developed and mined during the period of 1987 through
1991. The production decision appears to have been supported by initial resources of 11.2 million tonnes grading 4.54 g/t Au above a 2.5 g/t Au cut-off (~1.6
million troy ounces) that were reported. Additionally, the same tonnage and gold grade was separately reported for the deposit but additionally specified a 0.3%
copper parameter.
Mining from both open pit and underground operations was ultimately carried out between 1987 and 1997. Provincial government records document production of
304,732 ounces of gold during the 1987-1991 period from all operations. Difficulties with elevated cyanide and copper levels were encountered in processing plant
effluent during the operating period and this may have contributed to cessation of mining and milling in early 1991.
During the 1987-1991 mining period, detailed exploration focus was largely restricted to the mine area and adjoining advanced argillic alteration zone (“AAZ”)
areas to the southwest, with particular attention paid to assessment of possible strike and dip extensions of the main deposit.
From 1991 to mid-1997, underground mining at the site was carried out. Operations ceased in mid-1997. Production of 447,431 ounces of gold was recorded during
the 1992-1997 period. Re-assessments of past exploration programs was carried out in both the mine area and surrounding district and follow-up exploration on
several promising areas not associated with the AAZ and the Hope Brook deposit trend was completed. No substantial new discoveries were made during this
period.
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During the period 2002 through 2007 the provincial government carried out environmental assessment and reclamation programs at the Hope Brook mine site. No
mining activities have been carried out subsequent to those of carried out from 1991 to 1997.
No drilling-based exploration programs were completed on the Hope Brook Project through the period 1997 through 2007. However, in 2003 mine area exploration
holdings were staked by related entities.
Beginning in 2008, an airborne magnetometer and electromagnetic survey of the entire property was carried out, past drilling results were compiled, prospecting
was carried out and an extensive bedrock sampling program was completed. Sampling was substantially focused in an area immediately northwest of the Hope
Brook open pit where alteration zone and silicified zone units occurring structurally below the mined Hope Brook deposit had been exposed during removal of acid
generating waste rock during the site reclamation program. No substantial new discoveries resulted from any of this work.
Since the start of exploration work in 2010, Coastal Gold carried out programs of drill core physical properties investigation, ground geophysics, environmental
screening, data compilation, data validation, core drilling, vibracore tailings drilling, bedrock and tailings mineral resource estimation, metallurgical assessment and
general property evaluation.
From April 2010 through December 2014, Coastal Gold completed systematic gold exploration programs, primarily focused in the area surrounding the past
producing Hope Brook mine.
Geological setting, mineralization and deposit types
The Hope Brook Property occurs within a tectonically complex zone that has been interpreted by some to occur within the Avalon Zone of the Appalachian Orogen
(or a related Avalon Composite Terrane), near its generally east-west trending tectonic contact with adjacent rocks of the Dunnage Zone. The Avalon Zone
represents a late Neo-Proterozoic assemblage of active plate margin sequences that accumulated prior to development and closure of the Lower Paleozoic Iapetan
Oceanic system. Sequences of Avalonian affinity occur throughout much of the Appalachian Orogen, and extend from the Avalon Peninsula and southwest coast
areas of Newfoundland, through Nova Scotia, New Brunswick and northern New England. From that point southward, more discontinuously distributed
outcropping segments occur as far as northern Georgia and subsurface extensions are interpreted to be present in Florida. Onshore exposures of confirmed Avalon
Zone affinity are limited in comparison with its interpreted width of at least 600 km in the eastern offshore area of Newfoundland and Labrador.
The geological aspects of the Avalon Zone, particularly in context of magmatic history represented in the Newfoundland, consist of four major tectono- stratigraphic
events. Most significant of these from the perspective of magmatic activity is the period when substantial volumes of volcanic and plutonic rocks evolved under
back-arc or continental arc settings, sometimes in broad association with terrestrial or marine siliciclastic sequences. These are related in time with development of
auriferous, high level hydrothermal alteration systems along the entire length of the Avalon Zone and the Hope Brook gold deposit may be an example of this
metallogenic association.
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The Hope Brook gold deposit and associated AAZ are of primary importance with respect to the Hope Brook Project. However, several other bedrock gold
occurrences are present within the Hope Brook Project that differ from Hope Brook. The most prominent examples of such are those in the Old Mans Pond, Phillips
Brook and Cross Gulch areas. Each of these areas has been investigated through historic exploration programs that typically included geological, geophysical and
geochemical surveys, surface trenching and limited amounts of core drilling. Drilling has locally confirmed subsurface gold-bearing intervals in each area but
mineralized zones of economically significant proportions have not been defined to date. The Hope Brook style of mineralization is considered to be most
important. The Hope Brook gold deposit is a large, disseminated gold-chalcopyrite-pyrite deposit hosted by highly altered sedimentary and volcano-sedimentary
rocks of the late Proterozoic Whittle Hill Sandstone and Third Pond Tuff successions, similarly altered felsic porphyry dikes and sills related to the Roti Intrusive
Suite and variably altered later mafic dikes and sills. Zones hosting gold mineralization of economic interest typically bear evidence of intense silicification and
occur within the AAZ, a broad envelope of advanced argillic alteration that can be traced for up to 8 km southwest of the deposit.
The Hope Brook gold deposit is currently one of the largest gold deposits in the Canadian Appalachians, based on historic resources and production. As noted
earlier, it occurs within a zone of extensive AAZ hosted by late Proterozoic sedimentary, volcanic and intrusive rocks. Recent work by Coastal Gold has added to
the technical documentation of alteration and mineralization that characterize the deposit. Intense hydrothermal alteration and spatially associated silicification have
been identified as key components of the mineralizing system that gave rise to the deposit. However, differences exist with respect to interpreted placement of the
Hope Brook mineralizing system in the time/space context of the orogen and some of these bear directly on deposit classification.
In addition to the Hope Brook deposit, several gold occurrences associated with Silurian or younger sericitic alteration, quartz veining and silicification have also
been documented within the Hope Brook Project area. None of these is substantial in size or gold grade as presently defined, but spatial association with the large
Bay d’Est Fault or its secondary splays, and possibly with Silurian magmatic activity, indicates that potential for more significant mineralization is present.
Exploration
No new exploration work has been undertaken to date by us on the core Hope Brook property. The Hope Brook Technical Report and associated mineral resource
estimate review reflect the first NI 43-101 technical reporting by us for the Hope Brook property.
Drilling
Between September 2010 and October 2013, Coastal Gold completed in five separate drilling programs 139 diamond drillholes and drillhole extensions on the Hope
Brook Property that total 39,320.4 m of drilling.
Coastal Gold completed 10 surface diamond holes totalling 3,421.9 m in length between September 2010 and January 2011 which successfully confirmed the
presence of disseminated gold-chalcopyrite-pyrite mineralization hosted by highly silicified sedimentary and volcano-sedimentary rocks both at depth, below the
4800 level of historic mining, and at surface to the southwest of the historic open-pit. An exploratory drillhole targeting mineralization along the northeast extension
of the mine at depth returned no significant results and an exploratory drillhole targeting the 240 Zone caved short of the target.
Another surface drilling campaign was completed between February 2011 and December 2011 that consisted of 67 holes totalling 21,350.5 m. The program was
successful in demonstrating continuity of disseminated gold-chalcopyrite-pyrite mineralization hosted by highly silicified volcano-sedimentary rocks in all three
targeted areas of drilling and provided the drillhole density required for resource estimation.
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Between February 2012 and May 2012 Coastal Gold completed a surface drill program that consisted of 15 holes, re-drills and hole extensions totalling 4,549 m in
length. This program focused on confirming the locations of workings and major pillars in the mine area, further testing of the Southwest Extension target area and
preliminary testing of the Northeast target area.
The fourth Hope Brook drilling program by Coastal Gold began on November 3, 2012 and was completed on December 21, 2012. A total of 5,923.9 m of drilling in
twenty-one drillholes were completed. Six separate targets areas, along a 3.4 km long mineralized trend, were drilled during the program including the Stope 4960-
150, the 240 Zone – Mine Zone Connector Target, the Chetwynd Prospect and the Chetwynd South Prospects, the Chetwynd to 240 Connector Target and the NW
Target Area. The drilling was completed in these areas in order to continue to expand on the area of known gold mineralization outside of the current Hope Brook
Deposit area.
The fifth drill program at the Hope Brook Property began on August 9, 2013 and was completed on October 10, 2013. A total of 4,075.2 m of drilling in twenty-six
drillholes were completed. The drill program was designed to test two major target areas; the Footwall Target and SW Pit Extension Target.
A systematic vibracore tailings drilling program on two tailing ponds at the Hope Brook site was carried out during the September through October period of 2013
and a total of 73 vibracore drillholes totalling 155 m were completed on an approximate 100 m square grid over the two tailings ponds. The purpose of the program
was to evaluate the thickness and gold grade of the tailings and to provide sufficient data to support a NI 43-101 compliant mineral resource estimate of the
contained gold and copper. Of the holes completed, 51 successfully sampled tailings, with thicknesses of the tailings sections ranging from 0.3 to 6.0 m. Average
thickness of cored tailings was 3.0 m.
Sampling, analyses and data verification
Coastal Gold staff members were responsible for arranging transport of core boxes from the drilling sites to the company’s secure core storage and logging facility
located at the Hope Brook camp. The core was initially examined by core technicians and all measurements are confirmed. Core was then aligned and repositioned
in the core box where possible and individual depth marks are recorded to facilitate logging. Core technicians photographed all core, measured core recovery
between core meterage blocks, carried out water immersion specific gravity measurements as required and recorded information on hard copy data record sheets
that were then entered into the project drilling database.
All paper copy and digital information for each hole, including quick logs, sample record sheets and assay certificates were maintained in a secure filing system at
the site to provide a complete archival record for each drillhole. Digital information was stored on a local server as well as on the company’s secure off-site server
that was accessible by satellite link from the camp facility. Subsequent to logging and processing, down hole lithocoded intervals, sample intervals and drillhole
collar and survey information that were entered into the digital database were checked for completeness before being uploaded to the project database upon which
drilling section generation and three-dimension deposit modeling were based.
The secured plastic sample bags were grouped in batches 40 to which QA/QC program samples were added prior to final packing for shipment to the ALS
preparation laboratory in Sudbury, ON. Samples were transported from the site by aircraft or chartered boat and then delivered to a commercial transport service for
final delivery to the laboratory. Sample shipment change of custody forms were used to list all samples in each shipment and laboratory personnel crosschecked
samples received against this list and reported any irregularities by fax or email to Coastal Gold.
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Primary project analytical work was completed by ALS with preparation taking place at ALS’ Sudbury, ON facility and subsequent analysis at the facility in
Vancouver, BC. ALS is an internationally accredited laboratory with National Association of Testing Authorities certification and also complies with standards of
ISO 9001:2000 and ISO 17025:1999. The laboratory utilizes industry standard analytical methodologies and rigorous internal Quality Assurance and Quality
Control (“QA/QC”) procedures for self-testing.
All Hope Brook Project core samples were weighed upon receipt at the ALS preparation laboratory and prepared using ALS preparation procedure PREP-31B that
consists of crushing the entire sample to >70% -2 mm, then splitting off 1 kg and pulverizing it to better than 85% passing 75 microns size. The coarse reject
materials from this processing were stored for future use.
Gold concentrations for submitted core and rock samples were determined by ALS using a 50 g sample split and fire assay pre-concentration methods followed by
atomic absorption spectroscopy finish (FA-AAS). This is reflected in ALS code Au-AA24. A 33-element analysis was also completed on selected samples by
method code ME-ICP61 which denotes four acid digestion followed by inductively coupled plasma – atomic emission spectroscopy (ICP-AES) analysis.
Drill core sampling carried out by Coastal Gold during the September 2010 through July 2012 period on the Hope Brook Property was subject to a QA/QC program
administered by Coastal Gold. This included submissions of blank samples, use of certified reference materials and analysis of pulp and coarse reject check sample
splits at a third party commercial laboratory.
The 2012 piston sampling program and 2013 vibracore drilling program of historic Hope Brook Property mine tailings deposits were also subject to a systematic
QA/QC program carried out by Coastal Gold.
All of the drill core programs for the period from October 2012 through to November 2013 were subject to essentially the same QA/QC protocols as had been
applied to the earlier core drilling campaigns referred to above. This included systematic submission of blank samples, use of certified reference materials and
analysis of pulp and, for core, coarse reject check sample splits at a third party commercial laboratory. Results of both the in-house and laboratory quality control
and assurance analyses were monitored by Coastal Gold on an on-going basis and were also made available for review by Mercator Geological Services Limited
(“Mercator”). A QA/QC protocol was also established for the vibracore drilling program and this included systematic analysis of certified reference materials,
duplicate sample splits, blank sample materials and analysis of third party pulp split check samples.
The drill core samples were packaged in batches of 40 samples, which included one blank sample (10th sample), one pulp duplicate (20th sample), one certified
reference material sample (30th sample) and one coarse reject duplicate sample (40th sample). ALS provided primary analytical services for the project while pulp
duplicate (20th sample) and coarse reject duplicate (40th sample) splits were analyzed at SGS to provide independent laboratory check sample data sets. SGS is a
commercial, ISO certified laboratory independent of Coastal Gold.
After standard crushing and pulverization of bedrock core samples, gold analysis was by atomic absorption methods after fire assay pre-concentration and multi-
element determinations were by inductively coupled plasma - optical emission spectroscopy methods after four acid total digestion. One certified reference material
sample and one blank sample were included in the core sample shipment. The tailings samples were separately processed from the core samples and were also
accompanied by one certified reference material sample and a blank sample. Results of the QA/QC program for these samples were acceptable.
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Core sample records, lithologic logs, laboratory reports and associated drillhole information for all drill programs completed were digitally compiled by Coastal
Gold staff and made available for previous resource estimation purposes. Information pertaining to the exploration history in the property area had already been
compiled by Mercator and was reviewed in conjunction with newly generated records to assess completeness, consistency and validity of compiled results. This
progressively compiled and validated information is acceptable for resource estimation purposes.
Database records for previously validated historic drillholes were modified by Coastal during 2013 through addition of copper analytical data recovered from
archival records. All such amendments were checked against source documents by Mercator and through spot checks by AGP prior to use in the current resource
estimation program and no errors were noted.
In addition to the above, records for 47 new diamond drillholes completed by Coastal Gold during 2012 and 2013 were reviewed and validated by Mercator for
addition to the project database and used in the previous and current resource estimation programs. Digital records were checked against original source documents
provided by Coastal Gold and both consistency and accuracy of such records were assessed. Parameters reviewed in detail include collar coordinates, down hole
survey values, hole depths, sample intervals, assay values and lithocodes. All 47 of the 2012 and 2013 holes completed by Coastal Gold were checked for
correlation of sample interval, assay value and lithocode information against source documents. This review showed consistently good agreement between original
records and digital database values for all data sets.
In 2013, Coastal added 152 historical short core holes (“OP” series holes) to the project database. These holes have not been validated by Mercator and were
excluded from use in the previous and current resource estimates. After completion of manual checking procedures, all drillhole database records were further
assessed through digital error identification methods available through the Gemcom-Surpac Version 6.2.1® software. This provided a check on items such as
sample record duplications, end of hole errors, survey and collar file inconsistencies and some potential lithocode file errors. The digital review and import of the
manually checked datasets provided a validated drillhole database to support the resource estimation program described in the Hope Brook Technical Report.
Coastal Gold completed several core drilling holes during the 2010-2011 drilling programs to serve as twins to historic holes. These were typically planned to
provide more complete lithological and assay information for associated historic holes and to provide a basis for comparison of the historic datasets with Coastal
Gold data. For the purposes of the Hope Brook Technical Report, 12 Coastal Gold holes that were completed in sufficiently close proximity to historic holes to
provide such assessment were selected for comparison with the Coastal Gold data.
For assessment purposes, Mercator reviewed drill log lithocodes and gold assay entries for hole pairs to determine the level of consistency between the two datasets.
Assessment of lithocodes focused primarily on identification of important silicified zone intervals associated with gold mineralization and secondarily on logged
intervals of mafic dike material. Comparison of the assay data on a sample by sample basis was not typically possible due to either spatial separation of hole traces,
differing sample lengths or presence of non-sampled intervals in some holes. Comparison of lithocoded intervals between hole pairs showed that good correlation
between data sets exists. However, greater detail in silicic lithocoding characterises the historic dataset prior to re-coding by Coastal Gold.
As noted above, comparison of assay values between hole pairs was affected in some instances by presence of un-sampled intervals within the historic holes that
contrast to continuously sampled Coastal Gold intervals, by differing mafic material percentages and by differing interpreted assay zone widths. Mercator focused
on gold assay data within the gold-bearing silicified zone lithologic units and created weighted average intervals to support comparison. Results of this program for
the 12 holes considered showed that spatial definition of the gold zones based on assay boundaries is typically consistent between hole pairs and this is reflected in
generally comparable intercept lengths selected.
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The weighted average Coastal Gold data set results are typically higher than equivalent intervals in historic holes but the reverse is also seen in some cases.
Mercator believes that several factors contribute to this result, including changes in mafic dike dilution between holes, higher overall core quality of the NQ and
BQTK size Coastal Gold core relative to the historic BQ core, and higher overall core recovery for Coastal Gold holes in fractured intervals of the mineralized zone.
Heterogeneity of primary gold distribution is also a potential contributor.
Based on results of the twin hole comparison originally carried out in support of earlier resource estimates, at the effective date of the Hope Brook Technical Report
Mercator remains of the opinion that acceptable consistency exists between these hole pairs with respect to gold assay value and lithocode data sets.
Mineral processing and metallurgical testing
Scoping level metallurgical test work on mineralized samples was first carried out for Coastal by G&T Metallurgical Services Ltd. (“G&T”) in Kamloops, BC in
2012. The objectives of that program were to evaluate potential processing routes for maximizing gold recovery and to identify operating parameters for the
preliminary circuit design. Flotation test work was successful at generating a concentrate grading 28% Cu from flotation of cyanidation residue in a process similar
to the historical flowsheet at Hope Brook. Gravity concentration tests indicated that between 16 and 41% of the contained gold was recoverable to concentrate by
this method. Combined gold recoveries of ~86% were achieved using a flowsheet consisting of gravity concentration followed by cyanidation of the gravity tailings.
Direct cyanidation of tailings resulted in up to 49% extraction of contained gold.
Additional metallurgical testing was carried out by G&T in the fall of 2013 to further advance the understanding of the metallurgy of the Hope Brook deposit. This
included batch flotation test work focused on the opportunity to recover a saleable grade copper concentrate after the grinding and gravity recovery step. Scoping
level test work was also carried out at Tomra Sorting Solutions in Surrey, BC to evaluate the potential of rejecting dilution material before the grinding area using
sensor-based sorting. Sorting program results indicated that the mafic dyke dilution was readily distinguished from the mineralized rock using four separate detector
systems, indicating that this material is highly amenable to rejection by sorting.
Mineral resource estimates
The mineral resource estimate for the Hope Brook Project is based on a three-dimensional block model developed using Geovia – Surpac Version 6.1.1® deposit
modeling software and a matrix size of 10 m (X) by 5 m (Z) by 3 m (Y). Grade interpolation utilized multiple pass ordinary kriging methodology with an inverse
distance squared check model used for validation. Classification of the resource followed the approach used in the 2014 NI 43-101 mineral resource estimate and
was based primarily on interpolation pass number, distance to the closest informing assay composite and kriged variance. The 3 g/t Au cut-off value used is
substantially higher than cut off values of Coastal Gold’s previous mineral resource estimates that were focused on optimization of open pit mining scenarios.
Current mineral resources are considered to have reasonable potential for economic viability based on application of underground mining methods, historic gold
recovery levels that range between 80% and 91% percent for past production (86% for Coastal Gold testing) and a long-term gold price of US$1,200 per ounce.
This estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, metal pricing, marketing, or other
relevant issues.
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Hope Brook Deposit Mineral Resource Estimate – Effective January 12, 2015
Gold Grade Cut-off (g/t)
3.00
Resource Category
Indicated
Inferred
Round Tonnes (Rounded)
5,500,000
836,000
Gold Grade (g/t)
4.77
4.11
Gold Ounces (Rounded)
844,000
110,000
Notes:
1.
2.
3.
4.
5.
6.
Includes only Mine Zone and 240 Zone areas.
The above mineral resource estimate is based on a partial percentage block model with dike material removed. Dike percent is estimated at 18% for
the Mine Zone and 0 % for the 240 Zone.
Gold grades reflect application of domain-specific raw assay capping factors that range between 55 g/t Au and 3 g/t Au.
Rounding of tonnes may result in apparent differences between tonnes, grade and contained ounces.
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, metal pricing, marketing, or other relevant issues.
The gold cut-off value of 3.00 g/t reflects a reasonable expectation of economic viability based on application of underground mining methods,
historic gold recovery levels that range between 80% and 91% percent for past production (86% for Coastal Gold testing) and a long-term gold price
of US$1,200 per oz.
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Non-material properties
We also hold a number of non-material mineral properties in our portfolio. Some of these properties are resource-stage assets which have NI 43-101 technical
reports that support resources of less than one million ounces of attributable gold. Others are grassroots exploration projects that host mineralization but have not
had sufficient drilling on them to classify resources under the CIM definition standards. A brief summary of some of these properties is set out in this section.
Canada
Duquesne Gold Project, Québec
We acquired a 100% interest in the Duquesne Gold project located in the Abitibi Region of Québec (the “Duquesne Project”) through our acquisition of Clifton
Star in April 2016. The Abitibi Region of Québec is one of the most prospective and productive mineral regions in Canada with more than 100 years of continuous
mining history and hosts a number of major Canadian mines.
The property, which comprises 85 contiguous mining claims and one mining concession, covers an area of 2,180 ha and is situated along the Destor-Porcupine
Break, which boasts historical production of 192 million oz. Au. It is approximately 30 km northwest of the city of Rouyn-Noranda, and approximately 16 km east
of the town of Duparquet, so it has excellent access to infrastructure and a skilled labour pool.
The Duquesne Project hosts, an NI 43-101 Indicated Resource of 1.9 Mt grading 3.33 g/t Au, containing 199,000 oz. Au, and an Inferred Resource of 1.6 Mt
grading 5.58 g/t Au, containing 281,000 oz. Au. The technical report in support of these resources, entitled “43-101 Technical Report Resource Estimate of the
Duquesne Gold Property”, was prepared by Genivar Limited Partnership in accordance with NI 43-101 and was dated July 26, 2011 and filed on SEDAR by Clifton
Star on October 28, 2011 under its SEDAR profile.
Pitt Gold Project, Québec
We purchased a 100% interest in the Pitt Gold project located in the Abitibi Region of Québec (the “Pitt Project”) from Brionor in April 2016. The property, which
comprises 14 contiguous mineral claims, covers an area of 492 ha.
The Pitt Project is close to our Duquesne Project, and to the Duparquet Gold Project located in the Abitibi Region of Québec (in which we hold an indirect 10%
interest). It is approximately 35 km north of the city of Rouyn-Noranda, and approximately 7 km east of the town of Duparquet, so it has excellent access to
infrastructure and a skilled labour pool.
The Pitt Project hosts an NI 43-101 Inferred Resource of 1,076,000 tonnes grading 7.42 g/t Au (at a cut-off grade of 3.0 g/t Au), containing 257,000 oz. Au. The
technical report in support of these resources, entitled “NI 43-101 Technical Report and Review of the Preliminary Mineral Resource Estimate for the Pitt Gold
Project Duparquet Township Abitibi Region, Quebec, Canada”, was prepared in accordance with NI 43-101 by Micon International Ltd., with an effective date of
December 6, 2016, and was filed by us on SEDAR on January 6, 2017 under our SEDAR profile at www.sedar.com.
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Duparquet Gold Project, Québec
We have a 10% indirect interest in the Duparquet Gold Project which has a large open-pittable resource, as well as underground and tailings resource. Our interest in
the Duparquet Gold Project was acquired through our acquisition of Clifton Star. The Duparquet Gold Project covers an area of 1,147 hectares and is located in the
Abitibi Region of Québec which is one of the world's most prolific gold producing regions.
The Duparquet Gold Project hosts measured mineral resources of 184,700 tonnes grading 1.52 g/t Au, containing 9,006 oz. Au, indicated mineral resources of 60.6
Mt grading 1.59 g/t Au, containing 3.1 million oz. Au and inferred mineral resources of 29.7 Mt grading 1.51 g/t Au, containing 1.4 million oz. Au. The technical
report entitled “Technical Report and Prefeasibility Study for the Duparquet Project” was completed by InnovExplo, with an effective date of March 26, 2014 and
was filed on SEDAR by Clifton Star on May 23, 2014.
As well as our 10% indirect interest in the Duparquet Gold Project, we also hold a 100% interest in the adjoining Central Duparquet Property, which was purchased
on January 20, 2017. This additional ground comprises 16 claims covering 339 ha. A technical report entitled “Technical Report and Mineral Resource Estimate
Update for the Duparquet Project” was completed by InnovExplo, with an effective date of June 26, 2013 and a signature date of August 2, 2013.
Infrastructure includes site roads, access to electrical power 15 km away, tailings storage facility and water management solutions and ancillary site buildings. The
Duparquet Gold Project is currently comprised of three mineral properties: Beattie, Donchester and Dumico. The 2014 prefeasibility study includes pre-production
capital costs of $394 million, a pay-back period of 4.3 years and pre-tax NPV (5%) of $222 million at US$1,300 per ounce of gold.
Mexico
Las Margaritas, Durango
The Margaritas Property covers an area of 500 ha consisting of two mining concessions approximately 150 km from Durango City. The property was acquired
through an Assignments of Rights Agreement signed July 6, 2011 and is subject to a 1% NSR royalty payable to the vendor which may be purchased at any time
before July 6, 2016 for US$500,000. The project is located in the Barrancas subprovince of the Sierra Madre Occidental. Some limited gold mining by artisanal
prospectors is known to have taken place on the project in the early 20th century and the project contains a known vein with quartz, argillic alteration striking for at
least 1.8 km.
The Company entered into an option agreement (the “Las Margaritas Option Agreement”) dated July 30, 2018 with Gainey Capital Corp. (“Gainey”) granting
Gainey the right to earn a 100% interest in the Margaritas Property. Pursuant to the Las Margaritas Option Agreement, upon obtaining TSX-V approval of the
agreement, Gainey will issue common shares with an aggregate value of $75,000 to the Company and make a cash payment of $12,000, representing the applicable
Mexican VAT. During the four-year term of the Las Margaritas Option Agreement, Gainey may elect to make either annual share payments with an aggregate value
of $875,000 (plus additional cash payments totaling $140,000 representing the applicable Mexican VAT) or aggregate cash payments of $899,000 (inclusive of the
applicable Mexican VAT).
In addition, Gainey has agreed to make annual cash payments to the Company of US$25,000 from September 2018 to September 2020, and US$250,000 in
September 2021 in connection with an existing agreement on the Margaritas Property, and will incur aggregate exploration expenditures of US$1 million over the
four-year term of the Las Margaritas Option Agreement. Upon satisfaction of these conditions and payment of the share or cash consideration, Gainey will obtain a
100% interest in the Margaritas Property and the Company will retain a 2% net smelter return royalty. Gainey will have the right to repurchase 1% of the royalty for
US$1 million until the first anniversary of the commencement of commercial production.
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United States
Turquoise Canyon, Nevada
The Turquoise Canyon property (formerly the Bald Mountain property) located in Nevada is wholly-owned by First Mining. The property covers an area of 1,562
hectares and is located along the Battle Mountain-Eureka Trend, 16 km south of Barrick Gold Corp.'s Cortez Mine Complex (23 Moz. Au), and 9 km west of its
newly discovered Gold Rush deposit (7 Moz. Au) and 1.5 km east of the Toiyabe Mine, a Carlin type gold deposit that produced 89,000 oz. of gold in the 1990s.
Results of an airborne ZTEM survey commissioned by the Company show an antiformal structure in the underlying Roberts Mountain Thrust which will be the
focus of future exploration. A gravity high and anomalous conductive/polarizable anomalies at the southwest corner of the property are high priority drill targets.
Six other potential drill targets were interpreted from two induced polarization/resistivity lines run over the property.
The Company entered into an option agreement (the “Turquoise Canyon Option Agreement”) dated August 20, 2019 with Momentum Minerals Ltd.
(“Momentum”) granting Momentum the right to earn a 100% interest in the Turquoise Canyon property. Pursuant to the Turquoise Canyon Option Agreement,
First Mining will receive up to $500,000 in aggregate proceeds from Momentum as follows:
● 10% of the current outstanding common shares of Momentum (value to be determined at the time of issuance);
● $25,000 cash within 30 days of signing the agreement;
● First anniversary: $50,000 in cash or Momentum common shares;
● Second anniversary: $150,000 in cash or Momentum common shares;
● Third anniversary: Half of the remaining amount owing in cash or Momentum common shares; and
● Fourth anniversary: Remaining amount owing in cash or Momentum common shares.
The annual consideration payments of cash or Momentum common shares will be at Momentum’s election. Beginning in 2020, Momentum will also be responsible
for paying all annual concession tax payments with respect to the Property to the Nevada State land management authorities.
In addition to the payment terms outlined above, Momentum will be required to incur exploration expenditures on the Turquoise Canyon property totaling $750,000
over the four-year option period, incurring at least $50,000 in year one and $100,000 in year two. Upon completion of all payment and expenditure obligations,
Momentum will obtain 100% ownership of Turquoise Canyon property and First Mining will retain a 2% net smelter returns (“NSR”) royalty. Momentum will have
the right to buy back 1% of the NSR royalty for $1,000,000 up until the first anniversary of the commencement of commercial production at the Turquoise Canyon
property.
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Risks that can affect our business
There are risks in every business.
The nature of our business means we face many kinds of risks and hazards – some that relate to the mineral exploration industry in general, and others that apply to
specific properties, operations or planned operations. These risks could have a significant impact on our business, earnings, cash flows, financial condition, results
of operations or prospects.
The following section describes the risks that are most material to our business. This is not, however, a complete list of the potential risks we face – there may be
others we are not aware of, or risks we believe are not material today that could become material in the future. We have in place systems and procedures appropriate
for a company at our stage of development to manage these risks, to the extent possible, but there is no assurance that we will be successful in preventing the harm
that any of these risks could cause.
Types of risk
● Exploration, development, production and operational
risks
● Financial risks
● Political risks
● Regulatory risks
● Environmental risks
● Industry risks
● Other risks
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p. 115
p. 117
p. 118
p. 119
p. 120
Exploration, development, production and operational risks
Exploration and development risks
The exploration for and development of minerals involves significant risks which even a combination of careful evaluation, experience and knowledge may not
eliminate. These risks include:
● few properties that are explored are ultimately developed into producing mines;
● there can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable;
● with all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of
extraction methods tested in pilot conditions; and
● mineral exploration is speculative in nature and there can be no assurance that any minerals discovered will result in an increase in our resource base.
Exploration and development of mineral properties is capital intensive and unsuccessful exploration or development programs could have a material adverse impact
on our operations and financial condition.
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Operational hazards and risks
Our operations will be subject to all of the hazards and risks normally encountered in the exploration and development of minerals. To the extent that we take a
property to production, we will be subject to all of the hazards and risks associated with the production of minerals. These risks include:
● unusual and unexpected geological formations;
● rock falls;
● seismic activity;
● flooding and other conditions involved in the extraction of material, any of which could result in damage to, or destruction of, mines and other producing
facilities, damage to life or property, environmental damage and possible legal liability;
● environmental pollution, and consequent liability that could have a material adverse impact on our business, operations and financial performance;
● mechanical equipment and facility performance problems; and
● periodic disruptions due to inclement or hazardous weather conditions.
Substantial expenditures
Substantial expenditures are required to establish resources and reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in
certain cases, to develop infrastructure at any site chosen for exploration. Although substantial benefits may be derived from the discovery of a major mineralized
deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development
can be obtained on a timely basis.
The economics of developing mineral properties is affected by many factors including:
● the cost of operations;
● variations in the grade of mineralized material mined;
● fluctuations in metal markets; and
● such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and
environmental protection.
The remoteness and restrictions on access of properties in which we have an interest will have an adverse effect on expenditures as a result of higher infrastructure
costs. There are also physical risks to the exploration personnel working in the terrain in which our properties are located, occasionally in poor climate conditions.
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No history of mineral production
First Mining has no history of commercially producing metals from its mineral exploration properties. There can be no assurance that we will successfully establish
mining operations or profitably produce gold or other precious metals on any of our properties. The development of mineral properties involves a high degree of
risk and few properties that are explored are ultimately developed into producing mines. The commercial viability of a mineral deposit is dependent upon a number
of factors which are beyond our control, including the attributes of the deposit, commodity prices, government policies and regulation and environmental protection.
Fluctuations in the market prices of minerals may render reserves and deposits containing relatively lower grades of mineralization uneconomic.
While our Springpole Project is currently in development, none of our other mineral properties are currently under development or production. The future
development of any properties found to be economically feasible will require applicable licenses and permits and will require the construction and operation of
mines, processing plants and related infrastructure. As a result, the development of any property will be subject to all of the risks associated with establishing new
mining operations and business enterprises, including, but not limited to:
● the timing and cost of the construction of mining and processing facilities;
● the availability and costs of skilled labour and mining equipment;
● the availability and cost of appropriate smelting and/or refining arrangements;
● the need to obtain necessary environmental and other governmental approvals and permits and the timing of those approvals and permits; and
● the availability of funds to finance construction and development activities.
It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in
the commencement of mineral production often occur. Accordingly, there are no assurances that our activities will result in profitable mining operations or that
mining operations will be established at any of our properties.
Title risks
Title to mineral properties, as well as the location of boundaries on the ground may be disputed. Moreover, additional amounts may be required to be paid to surface
right owners in connection with any mineral exploration or development activities. At all properties where we have current or planned exploration activities, we
believe that we have either contractual, statutory, or common law rights to make such use of the surface as is reasonably necessary in connection with those
activities.
We do not have title insurance for any of our mining claims and our ability to ensure that we have obtained secure claims to individual mineral properties or mining
concessions may be severely constrained. We have not conducted surveys of all our claims; therefore, the precise area and location of such claims may be in doubt.
In addition, many of our mineral properties have had previous owners, and third parties may have valid claims (known or unknown) underlying our interests therein.
Accordingly, our properties may be subject to prior unregistered liens, agreements, royalties, transfers or claims, including First Nations land claims, and title may
be affected by, among other things, undetected defects. In addition, we may be unable to explore our properties as permitted or to enforce our rights with respect to
our properties. An impairment to or defect in our title to our properties could have a material adverse effect on our business, financial condition or results of
operation.
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Mineral reserves/mineral resources
The properties in which we hold an interest are currently considered to be in the early exploration stage only and do not contain a known body of commercial
minerals beyond the PEA level. Mineral resources and mineral reserves are, in large part, estimates and no assurance can be given that the anticipated tonnages and
grades will be achieved or that the particular level of recovery will be realized.
Mineral resources on our properties have been determined based upon assumed cut-off grades, metal prices and operating costs at the time of calculation, as set out
in the applicable technical reports. Future production, if any, could differ dramatically from resource and reserve estimates because, among other reasons:
● mineralization or formations could be different from those predicted by drilling, sampling and similar examinations;
● calculation errors could be made in estimating mineral resources and mineral reserves;
● increases in operating mining costs and processing costs could adversely affect mineral resources and mineral reserves;
● the grade of the mineral resources and mineral reserves may vary significantly from time to time and there is no assurance that any particular level of
metals may be recovered from the ore; and
● declines in the market price of the metals may render the mining of some or all of the mineral reserves uneconomic.
Estimated mineral resources may require downward revisions based on changes in metal prices, further exploration or development activity, increased production
costs or actual production experience. This could materially and adversely affect estimates of the tonnage or grade of mineralization, estimated recovery rates or
other important factors that influence mineral resource and mineral reserve estimates.
Any reduction in estimated mineral resources as a result could require material write downs in investment in the affected mining property and increased
amortization, reclamation and closure charges, which could have a material and adverse effect on future cash flows for the property and on our earnings, results of
operations and financial condition.
Because we do not currently have any producing properties, mineralization estimates for our properties may require adjustments or downward revisions based upon
further exploration or development work or actual future production experience. In addition, the grade of mineralized material ultimately mined, if any, may differ
from that indicated by drilling results. There can be no assurance that minerals recovered in small-scale tests will be duplicated in large-scale tests under on- site
conditions or in production scale.
Extended declines in market prices for gold or other metals may render portions of our mineralization uneconomic and result in reduced reported mineralization.
Any material reductions in mineralization estimates, or of the ability to extract mineralized material from our properties, could (directly or indirectly) have a
material adverse effect on our results of operations or financial condition.
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Capital costs, operating costs, production and economic returns
Actual capital costs, operating costs, production and economic returns with respect to our properties may differ significantly from those we have anticipated and
there are no assurances that any future development activities will result in profitable mining operations. The capital costs required to develop or take our projects
into production may be significantly higher than anticipated. To the extent that such risks impact upon any such properties, there may be a material adverse effect on
results of operations on such properties which may in turn have a material adverse effect on our financial condition.
None of our mineral properties have sufficient operating history upon which we can base estimates of future operating costs. Decisions about the development of
these and other mineral properties will ultimately be based upon feasibility studies. Feasibility studies derive estimates of cash operating costs based upon, among
other things:
● anticipated tonnage, grades and metallurgical characteristics of the mineralized material to be mined and processed;
● anticipated recovery rates metals from the mineralized material;
● cash operating costs of comparable facilities and equipment; and
● anticipated climatic conditions.
Cash operating costs, production and economic returns, and other estimates contained in studies or estimates prepared by or for us, may differ significantly from
those anticipated by our current studies and estimates due to a variety of factors, including the impact of the COVID-19 crisis, and there can be no assurance that
our actual operating costs will not be higher than currently anticipated.
Property interests
The agreements pursuant to which we hold rights to certain of our properties provide that we must make a series of cash payments over certain time periods or make
minimum exploration expenditures. If we fail to make such payments or expenditures in a timely manner, we may lose some or all of our interest in those projects.
Availability of supplies
As with other mineral exploration companies, certain raw materials, supplies and other critical resources used in connection with our operations are obtained from a
sole or limited group of suppliers. Due to an increase in activity in the global mining sector, there has been an increase in global demand for such resources. In
addition, the COVID-19 outbreak may cause disruptions in global supply chains which may reduce or eliminate the availability of certain supplies, particularly
those sourced from outside of Canada. Any decrease in the supplier’s inventory could cause unanticipated cost increases, an inability to obtain adequate supplies
and delays in delivery times, thereby impacting operating costs, and timing of exploration and development programs.
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Lack of infrastructure
The completion of the development of our development projects is subject to various requirements, including the availability and timing of acceptable arrangements
for electricity or other sources of power, water and transportation facilities. The lack of availability on acceptable terms or the delay in the availability of any one or
more of these items could prevent or delay the development of our exploration projects. If adequate infrastructure is not available in a timely manner, there can be
no assurance that: the development of our projects will be completed on a timely basis, if at all; any resulting operations will achieve the anticipated production
volume; or the ongoing operating costs associated with the development of our projects will not be higher than anticipated.
Personnel recruitment and retention
The success of our operations and development projects depend in part on our ability to attract and retain geologists, engineers, metallurgists and other personnel
with specialized skill and knowledge about the mining industry in the geographic areas in which we operate. The number of persons skilled in exploration and
development of mining properties is limited and competition for such persons is intense. As our business grows, we may require additional key financial,
administrative, and mining personnel as well as additional operations staff. There can be no assurance that we will be successful in attracting, training, and retaining
qualified personnel as competition for persons with these skill sets increases. Due to travel restrictions as a result of the COVID-19 crisis we may be unable to
source additional personnel from outside the local area, which may greatly reduce the number of potential qualified candidates for key positions. If we are unable to
attract and retain sufficiently trained, skilled or experienced personnel, our business may suffer and we may experience significantly higher staff or contractor costs,
which could have a material adverse effect on our operations and financial condition.
Financial risks
Substantial capital requirements
Our management team anticipates that we may make substantial capital expenditures for the exploration and development of our properties, in the future. As we are
in the exploration stage with no revenue being generated from the exploration activities on our mineral properties, we have limited ability to raise the capital
necessary to undertake or complete future exploration work, including drilling programs. As of the date of this AIF, financial markets have suffered significant
disruption due to the COVID-19 crisis. There can be no assurance that debt or equity financing will be available or sufficient to meet these requirements or for other
corporate purposes or, if debt or equity financing is available, that it will be on terms acceptable to us and any such financing may result in substantial dilution to
existing shareholders. Moreover, future activities may require us to alter our capitalization significantly. Our inability to access sufficient capital for our operations
could have a material adverse effect on our financial condition, results of operations or prospects. In particular, failure to obtain such financing on a timely basis
could cause us to forfeit our interest in certain properties, miss certain acquisition opportunities and reduce or terminate our operations.
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History of net losses
We have received no revenue to date from activities on our properties, and there is no assurance that any of our properties will generate earnings, operate profitably
or provide a return on investment in the future. We have not determined that production activity is warranted as of yet on any of our mineral properties. Even if we
(alone or in conjunction with a third party) undertake development and production activities on any of our mineral properties, there is no certainty that we will
produce revenue, operate profitably or provide a return on investment in the future.
We are subject to all of the risks associated with new mining operations and business enterprises including, but not limited to:
● the timing and cost, which can be considerable, for the further construction of mining and processing facilities;
● the availability and costs of skilled labour, consultants, mining equipment and supplies;
● the availability and cost of appropriate smelting and/or refining arrangements;
● the need to obtain necessary environmental and other governmental approvals, licenses and permits, and the timing of those approvals, licenses and
permits; and
● the availability of funds to finance construction and development activities.
It is common in new mining operations to experience unexpected problems and delays during construction, development, and mine start-up. In addition, delays in
mineral production often occur. Accordingly, there are no assurances that our activities will result in sustainable profitable mining operations or that we will
successfully establish mining operations or profitably produce metals at any of our other properties.
Potential volatility of share price
The securities markets in Canada have in the past experienced a high level of price and volume volatility, and the market price of securities of many junior
companies have experienced wide fluctuations in price. The market price of our shares may be volatile and could be subject to wide fluctuations due to a number of
factors, including but not limited to: actual or anticipated fluctuations in the results of our operations; changes in estimates of our future results of operations by
management or securities analysts; and general economic or industry changes. In addition, the financial markets are currently experiencing significant price and
value fluctuations as a result of the COVID-19 crisis that have particularly affected the market prices of equity securities of many venture issuers and that
sometimes have been unrelated to the operating performance of these companies. Broad market fluctuations, as well as economic conditions generally and in the
mining industry specifically, may adversely affect the market price of our shares.
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Non-Canadian investors
We are a public Canadian corporation, with our principal place of business in Canada. A majority of our directors and officers are residents of Canada and a
significant portion of our assets and the assets of a majority of our directors and officers are located outside the United States. Consequently, it may be difficult for
US or foreign investors to effect service of process within their local jurisdiction upon First Mining or its directors or officers or such experts who are residents of
Canada, or to realize in their local jurisdiction upon judgments of local courts (including, but not limited to, judgments predicated upon civil liabilities under the
United States Securities Act of 1933, as amended). Investors should not assume that Canadian courts: (i) would enforce judgments of foreign courts obtained in
actions against First Mining or such directors, officers or experts (including, but not limited to, judgments predicated upon the civil liability provisions of the US
federal securities laws or the securities or “blue sky” laws of any state within the United States); or (ii) would enforce, in original actions, liabilities against First
Mining or such directors, officers or experts predicated upon foreign securities laws (including, but not limited to, the US federal securities laws or any state
securities or “blue sky” laws). In addition, the protections afforded by Canadian securities laws may not be available to foreign investors.
Volatility of mineral prices
Metal prices are affected by numerous factors beyond our control, such as industrial demand, inflation and expectations with respect to the rate of inflation, the
strength of the US dollar and of other currencies, interest rates, forward sales by producers, production and cost levels, changes in investment trends, global and
regional levels of supply and demand, metal stock levels maintained by producers, inventory carrying costs, availability, demand and costs of metal substitutes,
international economic and political conditions, reduced demand resulting from obsolescence of technologies and processes utilizing metals and increased
production due to new mine developments and improved mining and production levels. Gold prices are sometimes subject to rapid short-term changes because of
speculative activities, and the market price of gold and other metals may not remain at current levels. If these prices were to decline significantly or for an extended
period of time, we might be unable to continue our operations, develop our properties or fulfill our obligations under agreements with our partners or under our
permits and licenses. As a result, we might lose our interest in, or be forced to sell, some of our properties. In the event of a sustained, significant drop in gold
prices, we may be required to re-evaluate our assets, resulting in reduced estimates of mineral resources and mineral reserves and in material write-downs of our
investment in mining properties. Furthermore, since gold prices are established in US dollars, a significant decrease in the value of the Canadian dollar relative to
the US dollar coupled with stable or declining gold prices could adversely affect our results with respect to development of and eventual sale of gold.
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Global financial conditions
Global financial conditions have, at various times in the past and may, in the future, experience extreme volatility. Many industries, including the mining industry,
are impacted by volatile market conditions. Global financial conditions may be subject to sudden and rapid destabilizations in response to economic shocks or other
events, such as the developing situation concerning the COVID-19 pandemic. A slowdown in the financial markets or other economic conditions, including but not
limited to consumer spending, employment rates, business conditions, inflation, fluctuations in fuel and energy costs, consumer debt levels, lack of available credit,
the state of the financial markets, interest rates and tax rates, may adversely affect our growth and financial condition. Future economic shocks may be precipitated
by a number of causes, including government debt levels, fluctuations in the price of oil and other commodities, the volatility of metal prices, geopolitical
instability, changes in laws or governments, war, terrorism, the volatility of currency exchanges, inflation or deflation, the devaluation and volatility of global stock
markets, pandemics and natural disasters. Any sudden or rapid destabilization of global economic conditions could impact our ability to obtain equity or debt
financing in the future on terms favourable to us or at all. In such an event, our operations and financial condition could be adversely impacted.
Public Health Crises
Our business, operations and financial condition could be materially adversely affected by the outbreak of epidemics, pandemics or other health crises, such as
COVID-19, and by reactions by government and private actors to such outbreaks. As at the date of this AIF, the global reactions to the spread of COVID-19 have
led to, among other things, significant restrictions on travel, quarantines, temporary business closures and a general reduction in consumer activity. While these
effects are expected to be temporary, the duration of the disruptions to business internationally and the related financial impact cannot be estimated with any degree
of certainty at this time. Such public health crises can result in disruptions and extreme volatility in financial markets and global supply chains as well as declining
trade and market sentiment and reduced mobility of people, all of which could impact commodity prices, interest rates, credit ratings, credit risk, availability of
financing and inflation. The risks to the Company of such public health crises also include risks to employee health and safety and may result in a slowdown or
temporary suspension of operations at some or all of our mineral properties as well as our head office. Although we are currently continuing certain head office and
administrative functions remotely, many other functions, including the conduct of exploration and development programs, cannot be conducted remotely and may
be impacted or delayed if we experience additional limitations on employee mobility. As of March 24, 2020, the province of Ontario has implemented an emergency
order mandating the closure of all non-essential workplaces in the province. This order has designated mineral exploration and development and mining supply and
services as essential workplaces and accordingly, our exploration properties in Ontario are at present not directly affected by the closure order. However, there can
be no guarantee that the closure order will not be extended to such workplaces in the future or that governments in other provinces in which we have mineral
properties will not pass similar orders reducing or preventing access to our properties. Any such orders may have a material adverse affect upon ongoing exploration
programs at our properties and, ultimately, on our business and financial condition. At this point, the extent to which COVID-19 may impact us remains uncertain;
however, it is possible that COVID-19 could have a material adverse effect on our business, results of operations and financial condition.
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Dividends
To date, we have not paid any dividends on our outstanding common shares and we have no plans to declare or pay dividends in the near future. Any decision to pay
dividends on our shares will be made by our Board on the basis of our earnings, financial requirements and other conditions.
Dilution
The number of common shares we are authorized to issue is unlimited. We may, in our sole discretion, issue additional common shares from time to time, and the
interests of the shareholders may be diluted thereby.
Political risks
Indigenous peoples
Various international and national laws, codes, court decisions, resolutions, conventions, guidelines, and other materials (collectively, the "Instruments") relate to
the rights of indigenous peoples, including the First Nations and Metis of Canada. We operate in some areas presently or previously inhabited or used by indigenous
peoples including areas in Canada over which Indigenous peoples have established or asserted Aboriginal treaty rights, Aboriginal title, or Aboriginal rights. Many
of these rights or titles impose obligations on governments and private parties as they relate to the rights of indigenous people concerning resource development.
Some mandate that government consult with, and if required, accommodate indigenous people for government actions which may affect indigenous people,
including actions to approve or grant mining rights or exploration, development or production permits. The obligations of government and private parties under the
various international and national Instruments pertaining to Indigenous people continue to evolve and be defined.
Government policy and its implementation regarding Indigenous consultation (including the requirements that are imposed on the mining industry) and
accommodation continue to change. In certain circumstances, Indigenous communities are entitled to be consulted prior to, and during, resource development. The
consultation and accommodation process and expectations of parties (government, Indigenous communities and industry proponents) involved can vary
considerably from project to project, within stages of the project life and among Indigenous communities. There can be overlapping or inconsistent Indigenous or
treaty claims respecting a project. These can contribute to process uncertainty, increased costs, delay in receiving required approvals, and potentially, an inability to
secure the required approvals for a project, each of which could have a material adverse effect on the Company’s business, operations, results of operations,
financial condition and future prospects. In addition, the federal government has committed to introducing legislation to implement the United Nations Declaration
on the Rights of Indigenous Peoples ("UNDRIP"). Some provinces and territories are also considering, or have introduced similar legislation. It is uncertain how the
federal and other governments intend to implement UNDRIP. Implementation may add additional uncertainty as to the nature and extent of Aboriginal rights or title
and may also include new processes and additional consultation requirements for project development and operations, which may increase costs, increase approval
timelines and impose development and operational additional obligations or restrictions.
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Our current operations and current and future exploration program may be subject to a risk that one or more groups of indigenous people may oppose the operations
on development of any of our properties or on properties in which we hold a direct or indirect interest, even where we have entered into agreements with applicable
indigenous and non-indigenous authorities. Such opposition may be directed through legal or administrative proceedings or expressed in manifestations such as
protests, roadblocks or other forms of public expression against our activities. Opposition by indigenous people to our operations may require modification of or
preclude development of our projects or may require us to enter into agreements with indigenous people with respect to projects on such properties. Such
agreements or restrictions on operations may have a material adverse effect on our business, financial condition and results of operations. Even where such
agreements have been entered into, there can be no certainty that there will not be disagreements between the Company and groups or sub-groups of Indigenous
persons which may result in project delays or have other material adverse effects on the Company.
Foreign operations
While our principal exploration properties are located in Canada, we continue to hold properties in Mexico and one property in the US. Our operations in Mexico or
in other countries we determine to operate in may be exposed to various levels of political, economic, and other risks and uncertainties depending on the country or
countries in which we operate. These risks and uncertainties include, but are not limited to, terrorism; hostage taking; military repression; fluctuations in currency
exchange rates; high rates of inflation or deflation; labour unrest; the risks of civil unrest; expropriation and nationalization; renegotiation or nullification of existing
concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; restrictions on foreign exchange and repatriation; and changing
governments, political conditions, currency controls, and governmental regulations that favour or require the awarding of contracts to local contractors, or require
foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Future political and economic conditions may result in a government adopting different policies with respect to foreign development and ownership of mineral
resources. Any changes in policy may result in changes in laws affecting ownership of assets, foreign investment, taxation, rates of exchange, resource sales,
environmental protection, labour relations, price controls, repatriation of income, and return of capital, which may affect both the ability to undertake exploration
and development activities in respect of future properties in the manner currently contemplated, as well as our ability to continue to explore, develop, and operate
those properties to which we have rights relating to exploration, development, and operations. In addition, as a result of the COVID-19 crisis international travel has
been greatly reduced and we may need to rely on local representatives with respect to foreign operations. Such representatives may not have the skill or knowledge
of our regular personnel.
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Regulatory risks
Government approvals
Our activities are subject to government approvals, various laws governing prospecting, development, land resumptions, production taxes, labour standards and
occupational health, mine safety, toxic substances and other matters, including issues affecting local First Nations populations. The costs associated with compliance
with these laws and regulations can be substantial. Although we believe our activities are carried out in accordance with all applicable rules and regulations, no
assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or
curtail production or development, or cause additional expense, capital expenditures, restrictions or delays in the development of our properties. Amendments to
current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof, could have a material adverse
impact on our business, operations and financial performance. Further, the mining licenses and permits issued in respect of our projects may be subject to conditions
which, if not satisfied, may lead to the revocation of such licenses. In the event of revocation, the value of our investments in such projects may decline.
Mineral claims, licenses and permitting
Our mineral claims, licenses and permits are subject to periodic renewal and may only be renewed a limited number of times for a limited period of time. While we
anticipate that renewals will be given as and when sought, there is no assurance that such renewals will be given as a matter of course and there is no assurance that
new conditions will not be imposed in connection therewith. Our business objectives may also be impeded by the costs of holding and/or renewing the mineral
claims, licenses and permits. In addition, the duration and success of efforts to obtain and renew mineral claims, licenses and permits are contingent upon many
variables not within our control.
Our current and anticipated future operations, including further exploration, development activities and commencement of production on our properties, require
licenses and permits from various governmental authorities. Our business requires many environmental, construction and mining permits, each of which can be
time-consuming and costly to obtain, maintain and renew. In connection with our current and future operations, we must obtain and maintain a number of permits
that impose strict conditions, requirements and obligations on the Company, including those relating to various environmental and health and safety matters. To
obtain, maintain and renew certain permits, we are required to conduct environmental assessments pertaining to the potential impact of our operations on the
environment and to take steps to avoid or mitigate those impacts. We cannot be certain that all licenses and permits that we may require for our operations will be
obtainable on reasonable terms or at all. Delays or a failure to obtain such licenses and permits, or a failure to comply with the terms of any such licenses and
permits that we have obtained, could have a material adverse impact on First Mining.
On August 28, 2019, the Impact Assessment Act came into force and replaced the Canadian Environmental Assessment Act, thereby establishing a new
environmental assessment process. It is uncertain how the new assessment process adopted by the federal government will result in a more efficient approval
process. The Impact Assessment Act broadens the assessment factors to include health, economy, social, gender, and sustainability considerations. The lack of
regulatory certainty is likely to have an influence on investment decisions for major projects. Even when projects are approved on a federal level, such projects often
face further delays due to interference by provincial and municipal governments, as well as court challenges related to issues such as indigenous rights, the
government's duty to consult and accommodate indigenous peoples and the sufficiency of the relevant environmental review processes. Such political and legal
opposition creates further uncertainty.
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Anti-bribery legislation
Our activities are subject to a number of laws that prohibit various forms of corruption, including domestic laws, that prohibit both commercial and official bribery
and anti-bribery laws that have a global reach such as the Corruption of Foreign Public Officials Act. The increasing number and severity of enforcement actions in
recent years present particular risks with respect to our business activities, to the degree that any employee or other person acting on our behalf might offer,
authorize, or make an improper payment to a government official, party official, candidate for political office, or political party, an employee of a state-owned or
state-controlled enterprise, or an employee of a public international organization.
Transparency in the extractive industry
The Canadian Extractive Sector Transparency Measures Act (“ESTMA”) came into force on June 1, 2015 and applies to fiscal periods which commenced after that
date. As a result, as a Canadian publicly listed corporation we must report annually on payments of $100,000 or more made to any level of government in Canada or
abroad related to a single project. The reporting applies to taxes, licences, fees, royalties, production entitlements, bonuses, dividends, fines and infrastructure
payments. Our reports under ESTMA are publicly available on the Department of Natural Resources website (www.nrcan.gc.ca).
Environmental risks
Environmental laws and regulations
All phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international
conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions, conditions and prohibitions on,
amongst other things, spills, releases or emissions of various substances produced in association with mining operations and development. The legislation also
requires that mines and exploration sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities and may require
the deposit of adequate reclamation and remediation security. Compliance with such legislation can require significant expenditures and a breach may result in the
imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and
enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. Environmental assessments of proposed projects carry a
heightened degree of responsibility for companies and directors, officers and employees. Companies engaged in exploration and development of mineral properties
may from time to time experience increased costs and delays in exploration and production as a result of the need to comply with applicable laws, regulations and
permits. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.
We believe we are in substantial compliance with all material laws and regulations which currently apply to our activities. We cannot give any assurance that,
notwithstanding our precautions and limited history of activities, breaches of environmental laws (whether inadvertent or not) or environmental pollution will not
result in additional costs or curtailment of planned activities and investments, which could have a material and adverse effect on our future cash flows, earnings,
results of operations and financial condition. Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring
capital expenditures, installation of additional equipment, or remedial actions. Companies engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations
and, in particular, environmental laws even where there has been no intentional wrong-doing.
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Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could
have a material adverse impact on us and cause increases in capital expenditures or any future production costs or require abandonment or delays in the
development of new mining properties.
Companies engaged in the exploration and development of mineral properties may from time to time experience increased costs and delays in exploration and
production as a result of the need to comply with applicable laws, regulations and permits.
Compliance with emerging climate change regulations
Climate change is an international concern and poses risks to issuers of both direct and indirect effects of physical climate changes and government policy including
climate change legislation and treaties. Both types of risks could result in increased costs, and therefore decreased profitability of our operations. Governments at all
levels may be moving towards enacting legislation to address climate change concerns, such as requirements to reduce emission levels and increase energy
efficiency, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place. Where
legislation has already been enacted, such regulations may become more stringent, which may result in increased costs of compliance. There is no assurance that
compliance with such regulations will not have an adverse effect on our results of operations and financial condition. Furthermore, given the evolving nature of the
debate related to climate change and resulting requirements, it is not possible to predict the impact on our results of operations and financial condition.
Climate change may result in a number of physical impacts on our business, including an increasing frequency of extreme weather events (such as increased periods
of snow and increased frequency and intensity of storms), water shortages and extreme temperatures, which have the potential to disrupt our exploration and
development plans and may have other impacts on our business, including transportation difficulties and supply disruptions. Our emergency plans for managing
extreme weather conditions may not be sufficient and extended disruptions could have adverse effects on our results of operations and financial condition.
Industry risks
Speculative nature of mineral development activities
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts
resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, may, for a variety of factors not be
economic to produce.
The marketability of minerals acquired or discovered by us may be affected by numerous factors which are beyond our control and which cannot be accurately
predicted, such as:
● market fluctuations;
● the proximity and capacity of milling facilities;
● mineral markets;
● processing equipment; and
● government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental
protection.
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Estimates of mineral resources, mineral reserves, mineral deposits and production costs can also be affected by such factors as:
● environmental permitting regulations and requirements;
● weather;
● environmental factors;
● unforeseen technical difficulties;
● unusual or unexpected geological formations; and
● work interruptions.
In addition, the grade of mineralized material ultimately mined may differ from that indicated by drilling results.
Short term factors relating to mineral properties, such as the need for orderly development of mineralized bodies or the processing of new or different grades, may
also have an adverse effect on mining operations and on the results of operations. Material changes in mineralized material reserves, grades, stripping ratios or
recovery rates may affect the economic viability of any project.
Our mineral properties are all in the exploration stage only and are without known bodies of commercial mineralized material. Few properties which are explored
are ultimately developed into producing mines. Major expenses may be required to establish mineral reserves, develop metallurgical processes and construct mining
and processing facilities at a particular site. There is no assurance that our mineral exploration activities will result in any discoveries of new commercial bodies of
mineralized material. There are no reassurances that commercial production activities will commence on any of our properties.
Competition
The mining industry is highly competitive. We compete with companies for the acquisition, exploration and development of gold and other precious and base
metals, and for capital to finance such activities, and such companies may have similar or greater financial, technical and personnel resources available to them.
Other risks
Reliance on key employees
We manage our business with a number of key personnel, including key contractors, the temporary or permanent loss or unavailability (including as a result of
exposure to or quarantine as a result of COVID-19) of a number of whom could have a material adverse effect on us. In addition, as our business develops and
expands, we believe that our future success will depend greatly on our continued ability to attract and retain highly-skilled and qualified personnel and contractors.
In assessing the risk of an investment in our shares, potential investors should realize that they are relying on the experience, judgment, discretion, integrity and
good faith of our management team and board of directors. We cannot be certain that key personnel will continue to be employed by us or that we will be able to
attract and retain qualified personnel and contractors in the future. Failure to retain or attract key personnel could have a material adverse effect on us. We do not
maintain “key person” insurance policies in respect of our key personnel.
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Conflicts of interest
Certain directors and officers will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies
(including mineral companies) and, as a result of these and other activities, such directors and officers may become subject to conflicts of interest. The BCBCA
provides that if a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director must disclose his interest in
such contract or agreement and must refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To
the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA and in accordance with our Code of
Business Conduct and Ethics. As a result of a conflict of interest, we may miss the opportunity to participate in certain transactions, which may have a material
adverse effect on our financial position.
Uninsured risks
Our business is subject to a number of risks and hazards, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected
geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena, such as inclement weather conditions,
floods and earthquakes. Such occurrences could result in damage to our properties, personal injury or death, delays in program development, monetary losses and
possible legal liability.
Despite efforts to attract and retain qualified personnel, as well as the retention of qualified consultants, to manage our interests, even when those efforts are
successful, people are fallible and human error and mistakes could result in significant uninsured losses to us. These could include, but are not limited to, loss or
forfeiture of mineral claims or other assets for non‐payment of fees or taxes, erroneous or incomplete filings or non‐fulfillment of other obligations, significant tax
liabilities in connection with any tax planning effort we might undertake or mistakes in interpretation and implementation of tax laws and practices, and legal claims
for errors or mistakes by our personnel.
Although we maintain insurance to protect against certain risks in amounts that we consider reasonable, our insurance will not cover all the potential risks
associated with our operations. We may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not
continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against certain risks, such as environmental pollution or other
hazards as a result of exploration and production, is not generally available to us or to other mineral exploration companies on acceptable terms. We may also
become subject to liability for pollution or other hazards which may not be insured against or which we may elect not to insure against because of premium costs or
other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial performance, results of
operations and business outlook.
Litigation and regulatory proceedings
We may be subject to civil claims (including class action claims) based on allegations of negligence, breach of statutory duty, public nuisance or private nuisance or
otherwise in connection with our operations, or investigations relating thereto. While we are presently unable to quantify any potential liability under any of the
above heads of damage, such liability may be material to us and may materially adversely affect our ability to continue operations. In addition, we may be subject to
actions or related investigations by governmental or regulatory authorities in connection with our business activities, including, but not limited to, current and
historic activities at our mineral properties. Such actions may include prosecution for breach of relevant legislation or failure to comply with the terms of our
licenses and permits and may result in liability for pollution, other fines or penalties, revocations of consents, permits, approvals or licenses or similar actions,
which could be material and may impact the results of our operations. Our current insurance coverage may not be adequate to cover any or all the potential losses,
liabilities and damages that could result from the civil and/or regulatory actions referred to above.
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Future Acquisitions and Dispositions
As part of our business strategy, we have sought and may continue to seek new mining and exploration opportunities in the mining industry. In pursuit of such
opportunities, we may fail to select appropriate acquisition targets or negotiate acceptable arrangements, including arrangements to finance acquisitions or integrate
the acquired businesses into us. Ultimately, any acquisitions would be accompanied by risks, which could include:
● a significant change in commodity prices after we have committed to complete the transaction and established the purchase price or exchange ratio;
● a material ore body could prove to be below expectations;
● difficulty in integrating and assimilating the operations and workforce of any acquired companies;
● realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise;
● the bankruptcy of parties with whom we have arrangements;
● maintaining uniform standards, policies and controls across the organization;
● disruption of our ongoing business and its relationships with employees, suppliers, contractors and other stakeholders as we integrate the acquired business
or assets;
● the acquired business or assets may have unknown liabilities which may be significant;
● delays as a result of regulatory approvals; and
● exposure to litigation (including actions commenced by shareholders) in connection with the transaction.
Any material issues that we encounter in connection with an acquisition could have a material adverse effect on our business, results of operations and financial
position.
Joint ventures
Our business plan anticipates that we may retain interest in properties which we have transferred in whole or in part to other parties who may choose to establish
mining operations, and that interest may be in the form of a joint venture or earn-in arrangement, such as the Earn-In Agreement entered into in relation to the
Pickle Crow Project. The existence or occurrence of one or more of the following circumstances and events could have a material adverse impact on our
profitability or the viability of our interests that may be held through joint venture arrangements, including the Pickle Crow Project, which could have a material
adverse impact on our future cash flows, earnings, results of operations and financial condition:
● disagreements with joint venture partners on how to develop and operate mines efficiently;
● inability to exert influence over certain strategic decisions made in respect of joint venture properties;
● inability of joint venture partners to meet their obligations to the joint venture or third parties; and
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● litigation between joint venture partners regarding joint venture matters.
We do not intend to be the operator of the Pickle Crow Project and therefore the success of any operations will be dependent on our joint venture partner (who will
act as operator). We are subject to the decisions made by the operator in the operation of the Pickle Crow Project and we will have to rely on the operator for
accurate information about the project. Failure by the operator to prudently manage the operations of the Pickle Crow Project could have a material adverse effect
on our business, results of operations and financial position.
Future Sales of Shares
Sales of a substantial number of our shares in the public market could occur at any time following, or in connection with, the completion of any offering. These
sales, or the market perception that the holders of a large number of our shareholders intend to sell our shares, could reduce the market price of our shares. A decline
in the market price of the shares could impair our ability to raise additional capital through the sale of securities should we desire to do so.
The issuance of shares to shareholders whose investment profile may not be consistent with our business may lead to significant sales of our shares or a perception
that such sales may occur, either of which could have a material adverse effect on the market for and market price of our shares. We are unable to predict the effect
that sales may have on the then prevailing market price of our shares.
Reputation Loss
Reputation loss may result in decreased investor confidence, increased challenges in developing and maintaining community relations and an impediment to our
overall ability to advance our projects, thereby having a material adverse impact on our financial performance, financial condition and growth prospects. Damage to
our reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity (for example, with respect to
our handling of environmental matters or our dealings with community groups), whether true or not. The increased usage of social media and other web-based tools
used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to
communicate and share opinions and views in regards to us and our activities, whether true or not. We do not ultimately have direct control over how we are
perceived by others and reputational loss could have a material adverse impact on our financial performance, financial condition and growth prospects.
Equity Price Risk
The Company is exposed to equity price risk as a result of holding equity investments, which comprise of marketable securities and mineral property investments, in
other mineral property exploration companies.
Foreign Currency Risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company operates in Canada, the United States, and Mexico,
and a portion of the Company’s expenses are incurred in Canadian dollars, US dollars, and Mexican Pesos. A significant change in the currency exchange rates
between the Canadian, US and Mexican currencies, could have an effect on the Company’s results of operations, financial position or cash flows.
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Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings that are
subject to fluctuations in market interest rates. Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with
chartered Canadian financial institutions. The Company considers this risk to be immaterial.
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial
instruments which are potentially subject to credit risk for the Company consist primarily of cash and cash equivalents, accounts and other receivables, and the
reclamation deposit. The Company considers credit risk with respect to its cash and cash equivalents to be immaterial as cash and cash equivalents are mainly held
through large Canadian financial institutions.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it will have
sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation. The Company manages its liquidity risk by preparing annual estimates of exploration and administrative expenditures and
monitoring actual expenditures compared to the estimates to ensure that there is sufficient capital on hand to meet ongoing obligations.
Capital Risk Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and
retention of its mineral properties. The Company has historically demonstrated the ability to raise new capital through equity issuances and/or through surplus cash
as part of its acquisitions. In the management of capital, the Company includes the components of shareholders’ equity as well as cash.
Financing Risks
The Company has finite financial resources, has no current source of operating cash flow and has no assurance that additional funding will be available to it for its
future activities, including exploration or development of mineral projects. Such further activities may be dependent upon the Company’s ability to obtain financing
through equity or debt financing or other means. As a result of the ongoing COVID-19 crisis, global financial markets, and the economy in general, are experiencing
extreme volatility which may impact our ability to obtain financing. Failure to obtain additional financing could result in delay or indefinite postponement of
exploration and development of the Company’s existing mineral projects and could result in the loss of one or more of its properties.
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Other risks
Our business and operations are subject to a number of risks and hazards including:
● environmental hazards;
● discharge of pollutants or hazardous chemicals;
● industrial accidents;
● failure of processing and mining equipment;
● labour disputes;
● supply problems and delays (including as a result of public health crises);
● changes in regulatory environment;
● encountering unusual or unexpected geologic formations or other geological or grade problems;
● encountering unanticipated ground or water conditions;
● cave-ins, pit-wall failures, flooding, rock bursts and fire;
● periodic interruptions due to inclement or hazardous weather conditions;
● uncertainties relating to the interpretation of drill results;
● inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
● results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration or development results will not be consistent
with our expectations;
● the potential for delays in exploration or the completion of feasibility studies; and
● other acts of God or unfavourable operating conditions.
Such risks could result in damage to, or destruction of, properties or equipment, personal injury or death, loss of key employees, environmental damage, delays in
development programs, monetary losses and possible legal liability. Satisfying such liabilities may be very costly and could have a material adverse effect on future
cash flow, results of operations and financial condition.
Legal proceedings
There are no material legal proceedings which we are or were a party to or to which our properties are or were subject, either during the financial year ended
December 31, 2019 or as of the date of this AIF, nor are we aware that any material proceedings are contemplated.
During the financial year ended December 31, 2019, and as of the date of this AIF, we have not had any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority, or by a court or regulatory body. We have also never been involved in a settlement agreement before a
court relating to securities legislation or with a securities regulatory authority.
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Investor information
Share capital
Our authorized share capital consists of:
● an unlimited number of common shares; and
● an unlimited number of preferred shares, issuable in series.
Common shares
We can issue an unlimited number of common shares with no nominal or par value. As of December 31, 2019 and as of the date of this AIF, we had 591,997,138
common shares and 632,619,453 common shares outstanding, respectively. All of our outstanding common shares are fully paid and non-assessable.
The following is a summary of the principal attributes of our common shares:
Voting rights
Holders of our common shares are entitled to vote on all matters that are to be voted on at any shareholder meeting, other than meetings that are only for holders of
another class or series of shares. Each common share you own represents one vote. There are no cumulative voting rights, and directors do not stand for re-election
at staggered intervals.
Dividends
Holders of our common shares are entitled to share pro rata in any profits of First Mining to the extent that such profits are distributed either through the declaration
of dividends by our Board or otherwise distributed to shareholders. There are no indentures or agreements limiting the payment of dividends. The Company has not
paid any dividends since incorporation and it has no plans to pay dividends for the foreseeable future.
Rights on dissolution
In the event of the liquidation, dissolution or winding up of First Mining, the holders of our common shares will be entitled to receive, on a pro rata basis, all of our
assets remaining after payment of all of our liabilities.
Pre-emptive, conversion and other rights
Holders of our common shares have no pre-emptive, redemption, purchase or conversion rights attaching to their shares, and our common shares, when fully paid,
will not be liable to further call or assessment. No other class of shares may be created without the approval of the holders of our common shares. There are no
provisions discriminating against any existing or prospective holder of our common shares as a result of such shareholder owning a substantial number of common
shares. In addition, non-residents of Canada who hold our common shares have the same rights as shareholders who are residents of Canada.
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Preferred shares
We can issue an unlimited number of preferred shares with no nominal or par value. As of the date of this AIF, we did not have any preferred shares outstanding.
The preferred shares are issuable in series. The preferred shares of each series rank in parity with the preferred shares of every other series with respect to dividends
and return of capital and are entitled to a preference over the common shares and any other shares ranking junior to the preferred shares with respect to priority in
the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of First Mining.
Our Board of Directors is empowered to fix the number of shares and the rights to be attached to the preferred shares of each series, including the amount of
dividends and any conversion, voting and redemption rights. Subject to our articles of incorporation and to applicable law, the preferred shares as a class are not
entitled to receive notice of or attend or vote at meetings of the Company’s shareholders.
Security-based compensation and convertible securities
Security-based compensation
Our shareholders most recently approved the Company’s existing share-based compensation plan (the “Share-Based Compensation Plan”) on June 25, 2019. The
maximum number of common shares issuable under the Share-Based Compensation Plan, together with the number of common shares issuable under any other
security-based compensation arrangement of the Company, shall not in the aggregate exceed 10% of our issued and outstanding common shares.
The Share-Based Compensation Plan allows for the issuance of up to 10% of our issued and outstanding common shares as incentive share options (“Options”),
bonus shares, restricted share units, performance share units and deferred share units to our directors, officers, employees and consultants.
For a full description of the Share-Based Compensation Plan, see the section entitled “Particulars of the Matters to be Acted Upon – Approval of share-based
compensation plan” in our most recent management information circular dated May 15, 2019.
As of December 31, 2019 and as of the date of this AIF, there were 46,927,500 Options and 55,277,500 Options, outstanding, respectively, with exercise prices
ranging from $0.25 to $0.95, and expiry dates ranging from March 30, 2020 to January 31, 2025. We have not made any awards other than Options since the
approval of the Share-Based Compensation Plan.
Warrants
In addition to the outstanding Options noted above, as of December 31, 2019 and as of the date of this AIF, there were 15,872,998 share purchase warrants and
34,583,157 share purchase warrants outstanding, respectively, to acquire common shares of First Mining at exercise prices ranging from $0.33 to $0.44, and with
expiry dates ranging from June 16, 2021 to March 6, 2023.
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Escrowed securities
No common shares of First Mining were held in escrow or subject to a contractual restriction on transfer as at December 31, 2019.
Material contracts
With the exception of contracts made in the ordinary course of business, as of the date of this AIF, we have no material contracts other than the Earn-In Agreement
with Auteco in relation to the Pickle Crow Project pursuant to which Auteco may earn up to an 80% interest PC Gold, which owns the Pickle Crow Project. For a
summary of the key terms of the Earn-In Agreement, see the section in this AIF entitled “Pickle Crow – Recent developments.”
Market for our securities
Our common shares are listed and traded on the TSX under the symbol “FF”, on the OTC-QX under the symbol “FFMGF”, and on the Frankfurt Stock Exchange
under the symbol “FMG”.
We have a registrar and transfer agent for our common shares:
Computershare Investor Services Inc.
510 Burrard Street, 2nd Floor, Vancouver, British Columbia V6C 3B9.
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Trading activity
The table below shows the high and low closing prices and trading volumes of our common shares on the TSX for each month of our most recently completed
financial year.
2019
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL
High ($)
0.395
0.390
0.410
0.340
0.320
0.270
0.325
0.310
0.285
0.250
0.240
0.265
Low ($)
0.310
0.325
0.330
0.265
0.255
0.205
0.225
0.255
0.245
0.220
0.205
0.215
Volume
19,972,000
5,622,000
9,068,200
5,908,800
8,671,100
63,705,900
22,412,300
15,827,800
10,339,600
8,791,800
7,306,800
15,763,000
193,389,300
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Our team
Directors
All our directors are elected for a one-year term, and hold office until our next annual shareholder meeting, unless he or she resigns before that time or steps down,
as required by corporate law. The directors of First Mining as of the date of this AIF are as follows:
Director
Board committees
Principal occupation or employment
for past five years
Chairman of the Board
Director and Chairman of First Mining since March 30, 2015
Audit Committee
Compensation Committee
Corporate Governance
Committee
November 2001 to present – Founder, President and Chief Executive
Officer, First Majestic Silver Corp. (mining company)
December 1998 to present – Director, First Majestic Silver Corp.
(mining company)
Keith Neumeyer
Zug, Switzerland
Director since
March 30, 2015
Ownership of Securities:
13,655,313 shares
750,000 warrants
7,190,000 options
Director
Board committees
Principal occupation or employment
for past five years
Audit Committee
Director of First Mining since April 8, 2016
Compensation
Committee
(chair)
September 2016 to present – Director, SIRIOS Resources Inc. (mining
company)
July 2016 to present – Chairman, Monarques Gold Corp. (mining
company)
May 2013 to present – Director, Cartier Resources Inc. (mining
company)
November 2011 to April 2016 – President, Chief Executive Officer and a
Director of Clifton Star Resources Inc. (mining company)
Michel Bouchard
Québec, Canada
Director since
April 8, 2016
Ownership of Securities:
1,028,000 shares
25,000 warrants
1,725,000 options
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Director
Board committees
Audit Committee
(chair)
Compensation
Committee
Corporate Governance
Committee
Principal occupation or employment
for past five years
Director of First Mining since March 30, 2015
February 2007 to present – Chief Financial Officer of First Majestic
Silver Corp. (mining company)
Raymond L. Polman, CPA, CA
British Columbia, Canada
Director since
March 30, 2015
Ownership of Securities:
408,333 shares
NIL warrants
2,375,000 options
Director
Board committees
Principal occupation or employment
for past five years
Compensation
Committee
Corporate Governance
Committee (chair)
December 2018 to present – Director of Cerro de Pasco Resources Inc.
(mining company)
June 2014 to present – Director of Medallion Resources Ltd. (mining
company)
December 2010 to present – Director of Great Quest Fertilizer Ltd.
(mining company)
June 2000 to present – President of Duckmanton Partners Ltd.
(consulting business)
January 2005 to December 2019 – Director, First Majestic Silver Corp.
(mining company)
April 2005 to March 2015 – President and Director of Albion Petroleum
Ltd. (capital pool company)
Dr. David Shaw, Ph.D.
British Columbia, Canada
Director since
March 30, 2015
(Director of the predecessor company,
Albion Petroleum Ltd., since April 5,
2005)
Ownership of Securities:
1,047,917 shares
56,333 warrants
2,775,000 options
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Director
Board committees
Principal occupation or employment
for past five years
None
Chief Executive Officer and a Director of First Mining since January 7,
2019
December 2018 to present – Director of South Star Mining Corp.
(mining company)
September 2010 to present – Director of Providence Health Care (non-
profit health care provider)
February 2013 to April 2018 – Partner of Pacific Road Capital
Management Pty Ltd. (global private equity investment firm)
Dan Wilton
British Columbia, Canada
Director since
January 7, 2019
Ownership of Securities:
4,490,000 shares
2,000,000 warrants
6,000,000 options
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Officers
The officers of our Company as of the date of this AIF are as follows:
Officer
Principal occupation or employment for past five years
Chief Executive Officer and a Director of First Mining since January 7, 2019
December 2018 to present – Director of South Star Mining Corp. (mining company)
September 2010 to present – Director of Providence Health Care (non-profit health care provider)
February 2013 to April 2018 – Partner of Pacific Road Capital Management Pty Ltd. (global private
equity investment firm)
Dan Wilton
Chief Executive Officer
British Columbia, Canada
Ownership of Securities:
4,490,000 shares
2,000,000 warrants
6,000,000 options
Officer
Principal occupation or employment for past five years
Chief Operating Officer of First Mining since April 2019
November 2018 to March 2019 – Managing Consultant, Project Development for Tinka Resources
Limited (mining company)
February 2018 to December 2018 – Managing Consultant, Project Development for Arizona Mining Inc.
(mining company)
January 2017 to January 2018 – Vice President, Project Development of Nevsun Resources Ltd. (mining
company)
January 2014 to July 2016 – Vice President, Project Development and Engineering for Pilot Gold Inc.
(mining company)
Ken Engquist
Chief Operating Officer
British Columbia, Canada
Ownership of Securities:
360,000 shares
137,500 warrants
2,800,000 options
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Officer
Principal occupation or employment for past five years
Chief Financial Officer of First Mining since September 2016
June 2015 to September 2016 – Controller of First Mining
June 2013 to June 2015 – Director of Finance, Great Panther Silver Ltd. (mining company)
October 2011 to June 2013 – Controller, Alexco Resource Corp. (mining company)
Andrew Marshall, CA, CFA
Chief Financial Officer
British Columbia, Canada
Ownership of Securities:
200,000 shares
29,600 warrants
3,100,000 options
Officer
Principal occupation or employment for past five years
General Counsel and Corporate Secretary of First Mining since January 2019
June 2016 to December 2018 – Corporate Counsel and Corporate Secretary of First Mining
November 2012 to May 2016 – Corporate Counsel and Corporate Secretary of Wellgreen Platinum Ltd.
(mining company)
November 2012 to February 2013 – Corporate Counsel and Corporate Secretary, Prophecy Coal Corp.
(mining company)
September 2009 to November 2012 – Associate, Securities & Capital Markets group, Borden Ladner
Gervais LLP (law firm)
Samir Patel, LL.B. (Hons)
General Counsel and
Corporate Secretary
British Columbia, Canada
Ownership of Securities:
200,000 shares
39,250 warrants
2,650,000 options
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Officer
Principal occupation or employment for past five years
Vice President, Corporate Development & Investor Relations of First Mining since April 2019
November 2016 to August 2018 – Investment Manager at Pacific Road Capital Management Pty Ltd.
(global private equity investment firm)
August 2015 to November 2016 – Business Development Director at Oxygen Capital Corp. (mining
house providing services to a portfolio of public companies, including at the time True Gold Mining Inc.,
Pure Gold Mining Inc. and Pilot Gold Inc.).
April 2014 to June 2015 – Senior Investment Research Analyst at Liberty Metals & Mining Holdings,
LLP (investment arm of Liberty Mutual Investments based in Boston)
Mal Karwowska
Vice President, Corporate Development &
Investor Relations
British Columbia, Canada
Ownership of Securities:
142,100 shares
45,000 warrants
1,450,000 options
To our knowledge, the total number of common shares that the directors and officers as a group either: (i) beneficially owned; or (ii) exercised direction or control
over, directly or indirectly, as at the date of this AIF was 21,531,663 common shares. This represents approximately 3.4% of our outstanding common shares as at
the date of this AIF (on an undiluted basis).
Interest of management and others in material transactions
To the best of our knowledge, none of the directors, executive officers or shareholders that either: (i) beneficially own; or (ii) control or direct, directly or indirectly,
over 10% of any class of our outstanding securities, nor their associates or affiliates, have or have had within the three most recently completed financial years, any
material interests, direct or indirect, in transactions which have materially affected, or are reasonably expected to materially affect, our Company.
Conflicts of interest
Certain directors and officers will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies
(including mineral companies) and, as a result of these and other activities, such directors and officers may become subject to conflicts of interest. The BCBCA
provides that if a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director must disclose his interest in
such contract or agreement and must refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To
the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA and in accordance with our Code of
Business Conduct and Ethics.
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Other information about our directors and officers
None of our directors or officers, or a shareholder holding a sufficient number of securities of First Mining to affect materially the control of our Company, is or was
a director or executive officer of another company (including our Company) in the past 10 years that:
● was subject to a cease trade or similar order, or an order denying that company any exemption under securities legislation that was in effect for more than
30 consecutive days, while the director or executive officer held that role with the company;
● was involved in an event while the director or executive officer was acting in that capacity that resulted in the company being subject to one of the above
orders after the director or executive officer no longer held that role with the company; or
● while acting in that capacity, or within a year of acting in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of that company.
None of them in the past 10 years:
● became bankrupt;
● made a proposal under any legislation relating to bankruptcy or insolvency;
● has been subject to or launched any proceedings, arrangement or compromise with any creditors; or
● had a receiver, receiver manager or trustee appointed to hold any of their assets.
None of them has ever been subject to:
● penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement
with a securities regulatory authority; or
● any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an
investment decision.
Audit Committee information
National Instrument 52-110 Audit Committees (“NI 52-110”) requires us to have an audit committee (the “Audit Committee”) comprised of not less than three
directors all of whom are “independent” and “financially literate” (as such terms are defined in NI 52-110). NI 52-110 also requires us to disclose in this AIF certain
information regarding the Audit Committee. That disclosure is set out below.
Overview
The Company’s Audit Committee is principally responsible for:
● recommending to our Board the external auditor to be nominated for election by the shareholders at each annual general meeting and negotiating the
compensation of such external auditor;
● overseeing the work of the external auditor;
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● reviewing our annual and interim financial statements, MD&A and press releases regarding earnings before they are reviewed and approved by our Board
and publicly disseminated; and
● reviewing our financial reporting procedures and internal controls to ensure adequate procedures are in place for our public disclosure of financial
information extracted or derived from our financial statements.
Committee charter
A copy of the Audit Committee’s charter is attached as Appendix “A” to this AIF.
Composition of the Audit Committee
Our current Audit Committee consists of Raymond Polman (current chairman of the Audit Committee), Keith Neumeyer and Michel Bouchard.
NI 52-110 provides that a member of an audit committee is “independent” if the member has no direct or indirect material relationship with the Company, which
could, in the view of our Board, reasonably interfere with the exercise of the member’s independent judgment. All of the members of our Audit Committee are
“independent” within the meaning of NI 52-110.
NI 52-110 provides that an individual is “financially literate” if he or she has the ability to read and understand a set of financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised
by the Company’s financial statements. All of the members of our Audit Committee are “financially literate” as that term is defined in NI 52-110.
Relevant education and experience
The following is a description of the skills and experience of each member of the Audit Committee that is relevant to the performance of their responsibilities as a
member of the Audit Committee:
Raymond Polman (Chairman of Audit Committee)
Mr. Polman has over 30 years of public accounting and corporate finance experience in the Canadian and US financial markets and has been Chief Financial Officer
of First Majestic Silver Corp. since February 2007. Prior to First Majestic, Mr. Polman had been a Chief Financial Officer for six years with a number of publicly
traded high technology companies, prior to which he served several years as the Director of Finance for Rescan Environmental, a large privately-owned company
serving the global mining community. Mr. Polman has a Bachelor of Science (Economics) Degree from the University of Victoria and he is a member of the
Institute of Chartered Accountants of British Columbia. Mr. Polman also brings eight years of prior public accounting experience with Deloitte LLP.
Keith Neumeyer
Mr. Neumeyer has worked in the investment community for over 30 years. He began his career at a number of Canadian national brokerage firms. Mr. Neumeyer
moved on to work with several publicly traded companies in the resource and high technology sectors. His roles have included senior management positions and
directorships responsible in areas of finance, business development, strategic planning and corporate restructuring. Mr. Neumeyer was the original and founding
President of First Quantum Minerals Ltd. He also founded and is currently the Chief Executive Officer of First Majestic Silver Corp. Mr. Neumeyer has also listed a
number of companies on the Toronto Stock Exchange and as such has extensive experience dealing with the financial, regulatory, legal and accounting issues that
are relevant in the investment community.
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Michel Bouchard
Mr. Bouchard has been involved in the exploration, development and production aspects of the mining sector for over 30 years. From November 2011 to April
2016, he was the President and CEO, and a director, of Clifton Star, and upon the acquisition of Clifton Star by First Mining, he was appointed to the Board of First
Mining. Mr. Bouchard has also been a director and senior officer of several public companies in the mining sector. He is credited with the co-discovery of the
Bouchard-Hebert Mine in north western Québec, and he has held senior executive positions at Aiguebelle Resources, Audrey Resources, Lyon Lake Mines,
SOQUEM, Cadiscor, McWatters Mines, North American Palladium Inc. and NAP Québec Inc. As such, Mr. Bouchard has extensive experience dealing with the
financial, regulatory, legal and accounting issues that are relevant in the mining industry. Mr. Bouchard has a Bachelor of Science (Geology) Degree and a Master of
Science (Geology) Degree from the University of Montreal, and an MBA from HEC Montréal.
Audit Committee oversight
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or
compensate an external auditor not adopted by the Board.
Reliance on certain exemptions
Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemptions in section 2.4 (De Minimis Non-
audit Services), section 3.2 (Initial Public Offerings), section 3.4 (Events Outside Control of Member) or section 3.5 (Death, Disability or Resignation of Audit
Committee Member) of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 (Exemptions).
Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemption in subsection 3.3(2) (Controlled
Companies), section 3.6 (Temporary Exemption for Limited and Exceptional Circumstances) or the exemption in section 3.8 (Acquisition of Financial Literacy) of
NI 52-110.
Pre-approval policies and procedures
The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services; however, the Audit Committee approves all non-
audit services in advance.
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External auditor service fees (by category)
PricewaterhouseCoopers LLP served as the Company’s external auditor for the years ended December 31, 2019 and December 31, 2018. The aggregate fees billed
by our external auditor during the years ended December 31, 2019 and December 31, 2018 are set out in the table below:
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total
Year Ended
December 31, 2019
$164,430
Nil
$29,715
Nil
$194,145
Year Ended
December 31, 2018
$121,931
Nil
$34,545
Nil
$156,476
(1) Represents the aggregate fees billed and expected to be billed by our external auditor for audit services. In addition to the amounts billed during the
calendar years 2019 and 2018, for the audit year ended December 31, 2019, an amount of $46,725 (2018 – $53,813) relating to audit fees expected to be
billed in calendar year 2020 has been included above. For the audit year ended December 31, 2018, an additional fee of $2,388 was billed that is included
in the audit fees of $121,931.
(2) Represents the aggregate fees billed for assurance and related services by our external auditor that are reasonably related to the performance of the audit or
review of our financial statements and are not included under “Audit Fees”.
(3) Represents the aggregate fees billed for professional services rendered by our external auditor for tax compliance, tax advice and tax planning. For the
audit year ended December 31, 2018, an additional fee of $32,865 was billed that is included in the tax fees of $34,545.
(4) Represents the aggregate fees billed for products and services provided by our external auditor other than those services reported under “Audit Fees”,
“Audit-Related Fees” and “Tax Fees”.
Interests of experts
Auditor
Our auditor is PricewaterhouseCoopers LLP, Chartered Professional Accountants, who have prepared an independent registered public accounting firm’s report
dated March 30, 2020 in respect of the Company’s consolidated financial statements as at December 31, 2019 and for the year then ended. PricewaterhouseCoopers
LLP has confirmed that they are independent with respect to the Company in compliance with PCAOB Rule 3520, and the Chartered Professional Accountants of
British Columbia Code of Professional Conduct. They are located at Suite 1400 – 250 Howe Street, Vancouver, British Columbia V6C 3S7.
Page139
Qualified persons
All technical and scientific information discussed in this AIF, including mineral resource estimates for our material properties, and all technical and scientific
information for our other non-material projects, has been reviewed and approved by our Director, Data Management and Technical Services, Hazel Mullin, P.Geo.,
who is a qualified person for the purposes of NI 43-101.
The following individuals prepared the Springpole Technical Report:
● Dr. Gilles Arseneau, Ph.D., P.Geo., Associate Consultant (Geology), of SRK Consulting (Canada) Inc.;
● Grant Carlson, P.Eng., Senior Consultant (Mining), of SRK Consulting (Canada) Inc.;
● Bruce Andrew Murphy, P.Eng., Practice Leader (Geotechnical), of SRK Consulting (Canada) Inc.;
● Neil Winkelmann, FAusIMM, Principal Consultant (Mining), of SRK Consulting (Canada) Inc.;
● Mark Liskowich, P.Geo., Principal Consultant (GeoEnvironmental), of SRK Consulting (Canada), Inc.;
● Michel Noël, P.Eng., Principal Consultant (GeoEnvironmental), of SRK Consulting (Canada) Inc.;
● Michael Royle, M.App.Sci., P.Geo., Principal Consultant (Hydrogeology), of SRK Consulting (Canada) Inc.;
● Mauricio Herrera, Ph.D., P.Eng., Principal Consultant (Surface Water Management), of SRK Consulting (Canada) Inc.; and
● Laurie Tahija, MMSA-QP, Principal Consultant (Processing), of M3 Engineering and Technology Corporation.
Todd McCracken, P.Geo., Manager – Mining of WSP Canada Inc., prepared the Goldlund Technical Report.
Mark Drabble, B.App.Sci (Geology), MAIG, MAusIMM, and Kahan Cervoj, B.App.Sci (Geology), MAIG, MAusIMM, Principal Consultants of Optiro Pty
Limited, prepared the Cameron Gold Technical Report.
B. Terrence Hennessey, P.Geo., of Micon International Limited, prepared the Pickle Crow Technical Report.
Michael P. Cullen, M.Sc., P.Geo., of Mercator Geological Services Limited, prepared the Hope Brook Technical Report.
Each of the abovementioned firms or persons named in this section, “Qualified persons”, hold, as either a registered or beneficial holder, less than one percent of the
outstanding securities of First Mining or of any associate or affiliate of First Mining. None of the aforementioned firms or persons received any direct or indirect
interest in any securities of First Mining or of any associate or affiliate of First Mining in connection with the preparation and review of any technical report or this
AIF. None of the aforementioned firms or persons, nor any directors, officers or employees of such firms or persons, are currently expected to be elected, appointed
or employed as a director, officer or employee of the Company or of any associate or affiliate of the Company.
Page140
Legal counsel
Our external legal counsel is Bennett Jones LLP, and they are located at Suite 2500, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2X8.
Additional information
You can find more information about First Mining under our SEDAR profile at www.sedar.com and on our website at www.firstmininggold.com.
Our most recent management information circular dated May 15, 2019 contains additional information on how our directors and officers are compensated, the
principal holders of our securities, and the securities that are authorized for issuance under our equity compensation plans, and is available under our SEDAR profile
at www.sedar.com.
For additional financial information about First Mining, see our audited consolidated annual financial statements and management’s discussion and analysis for the
financial year ended December 31, 2019, which are also available under our SEDAR profile at www.sedar.com and on our website at www.firstmininggold.com.
Copies of the above documents may be obtained from First Mining by contacting us at Suite 2070 – 1188 West Georgia Street, Vancouver, British Columbia V6E
4A2, telephone: 1.844.306.8827.
Page141
Appendix A
FIRST MINING GOLD CORP.
AUDIT COMMITTEE CHARTER
1.
(a)
(b)
2.
(a)
(b)
INTRODUCTION
The audit committee (the “Committee”) is appointed by the board of directors (the “Board”) of First Mining Gold Corp. (the “Company”) to be
responsible for the oversight of the accounting and financial reporting process and financial statement audits of the Company.
This charter is prepared to assist the Committee, the Board and management in clarifying responsibilities and ensuring effective communication between
the Committee, the Board and management.
COMPOSITION
The Committee will be composed of three directors from the Board, a majority of whom will be independent (as defined in National Instrument 58-101 –
Disclosure of Corporate Governance Practices).
All members of the Committee will be financially literate as defined by applicable legislation. If, upon appointment, a member of the Committee is not
financially literate as required, the person will be provided a three month period in which to achieve the required level of literacy.
3.
RESPONSIBILITIES
The Committee has the responsibility to:
(i)
review and report to the board of directors of the Company on the following before they are publicly disclosed:
(A)
the financial statements and MD&A (management discussion and analysis) (as defined in National Instrument 51-102 – Continuous
Disclosure Obligations) of the Company;
Page142
(ii)
(iii)
(B)
the auditor’s report, if any, prepared in relation to those financial statements,
review the Company’s annual and interim earnings press releases before the Company publicly discloses this information;
satisfy itself that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or
derived from the Company’s financial statements and periodically assess the adequacy of those procedures;
(iv)
recommend to the Board:
(A)
the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or
attest services for the Company; and
(B)
the compensation of the external auditor,
(v)
(vi)
oversee the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or
attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial
reporting;
monitor, evaluate and report to the board of directors on the integrity of the financial reporting process and the system of internal controls that
management and the board of directors have established;
(vii)
monitor the management of the principal risks that could impact the financial reporting of the Company;
(viii)
establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters;
(ix)
(x)
(xi)
pre-approve all non-audit services to be provided to the Company or its subsidiary entities by the Company’s external auditor;
review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former
external auditor of the Company;
with respect to ensuring the integrity of disclosure controls and internal controls over financial reporting, understand the process utilized by the
Chief Executive Officer and the Chief Financial Officer to comply with National Instrument 52-109 - Certification of Disclosure in Issuers’
Annual and Interim Filings; and
Page143
(xii)
review, and report to the Board on its concurrence with the disclosure required by Form 52-110F2 – Disclosure by Venture Issuers in any
management information circular prepared by the Company.
AUTHORITY
The Committee has the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties and the Committee will set
the compensation for such advisors.
The Committee has the authority to communicate directly with and to meet with the external auditor, without management involvement. This extends to
requiring the external auditor to report directly to the Committee.
REPORTING
The Committee will report to the Board on the proceedings of each Committee meeting and on the Committee’s recommendations at the next regularly
scheduled Board meeting.
EFFECTIVE DATE
This Charter was implemented by the Board on May 19, 2015.
4.
(a)
(b)
5.
(a)
6.
(a)
Page144
Exhibit 99.2
First Mining Gold Corp.
Consolidated Annual Financial Statements
For the years ended December 31, 2019 and 2018
(Expressed in thousands of Canadian dollars unless otherwise noted)
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of First Mining Gold Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of First Mining Gold Corp. and its subsidiaries (together, the Company) as of
December 31, 2019 and 2018, and the related consolidated statements of net loss and comprehensive loss, cash flows and changes in equity for the years then ended,
including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then
ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
March 30, 2020
We have served as the Company’s auditor since 2017.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
FIRST MINING GOLD CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2019 AND DECEMBER 31, 2018
(Expressed in thousands of Canadian dollars unless otherwise noted)
ASSETS
Current
Cash and cash equivalents
Accounts and other receivables (Note 4)
Prepaid expenditures
Marketable securities (Note 5)
Total current assets
Non-current
Mineral properties (Note 6)
Mineral property investments (Note 7)
Property and equipment
Right-of-use asset (Note 8)
Reclamation deposit
Other receivables (Note 4)
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current
Accounts payable and accrued liabilities (Note 9)
Flow-through share premium liability (Note 12)
Current portion of lease liability (Note 8)
Current portion of environmental reclamation provision (Note 10)
Total current liabilities
Non-current
Lease liability (Note 8)
Environmental reclamation provision (Note 10)
Deferred tax liabilities (Note 15)
Total non-current liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital (Note 11)
Warrant and share-based payment reserve (Note 11)
Accumulated other comprehensive loss
Accumulated deficit
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Subsequent events (Notes 6 and 20)
December 31,
2019
December 31,
2018
$
$
$
$
5,902
303
349
1,775
8,329
$
$
252,815
5,398
608
648
119
103
259,691
268,020
1,398
341
94
716
2,549
554
1,639
946
3,139
5,688
5,115
149
257
2,597
8,118
244,129
4,417
662
-
116
90
249,414
257,532
582
-
-
-
582
-
-
-
-
582
282,666
33,330
(3,649)
(50,015)
262,332
268,020
$
275,068
30,230
(5,292)
(43,056)
256,950
257,532
$
The consolidated financial statements were approved by the Board of Directors:
Signed: “Keith Neumeyer”, Director Signed: “Raymond Polman”, Director
The accompanying notes are an integral part of these consolidated annual financial statements.
1
FIRST MINING GOLD CORP.
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Expressed in thousands of Canadian dollars unless otherwise noted)
OPERATING EXPENSES (Note 13)
General and administration
Exploration and evaluation
Investor relations and marketing communications
Corporate development and due diligence
Write-down of mineral properties (Note 6)
Loss from operational activities
OTHER ITEMS
Foreign exchange loss
Other expenses
Interest and other income
Loss before income taxes
Deferred income tax expense (Notes 12, 15)
Net loss for the year
OTHER COMPREHENSIVE LOSS
Items that will not be reclassified to net (loss) or income:
Marketable securities fair value gain (loss) (Note 5)
Mineral property investments fair value gain (Note 7)
Items that may be reclassified to net (loss) or income:
Currency translation adjustment
Other comprehensive income (loss)
Total comprehensive loss for the year
Basic and diluted loss per share (in dollars)
Weighted average number of shares outstanding – Basic and Diluted
$
$
$
Year ended December 31,
2019
2018
$
3,414
1,124
1,177
517
341
(6,573)
(4)
(78)
212
(6,443) $
(516)
(6,959) $
705
981
(43)
1,643
4,692
764
1,634
505
4,181
(11,776)
(5)
(54)
190
(11,645)
-
(11,645)
(1,680)
-
431
(1,249)
$
$
(5,316) $
(0.01) $
574,872,959
(12,894)
(0.02)
557,470,696
The accompanying notes are an integral part of these consolidated annual financial statements.
2
FIRST MINING GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Expressed in thousands of Canadian dollars unless otherwise noted)
Cash flows from operating activities
Net loss for the year
Adjustments for:
Depreciation
Unrealized foreign exchange loss
Share-based payments (Note 11(d))
Accrued interest receivable and other income
Accrued other expenses
Write-down of mineral properties (Note 6)
Deferred income tax expense (Notes 12, 15)
Operating cash flows before movements in working capital
Changes in non-cash working capital items:
(Increase) decrease in accounts and other receivables
(Increase) decrease in prepaid expenditures
Increase in accounts payables and accrued liabilities
Total cash used in operating activities
Cash flows from investing activities
Property and equipment purchases
Mineral property expenditures (Note 6)
Option payments and expenditures recovered
Proceeds from sale of marketable securities (Note 5)
Total cash used in investing activities
Cash flows from financing activities
Proceeds from private placements (Note 11(b))
Shares issuance costs (Note 11(b))
Proceeds from exercise of warrants and stock options
Total cash provided by financing activities
Foreign exchange effect on cash
Change in cash and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Cash
Term deposits
Cash and cash equivalents, ending
Supplemental cash flow information (Note 17)
Year ended December 31,
2018
2019
$
(6,959) $
(11,645)
171
-
1,596
(59)
65
341
516
(4,329)
(242)
(87)
458
(4,200)
(123)
(6,031)
83
1,758
(4,313)
9,410
(152)
43
9,301
(1)
787
5,115
5,902
5,858
44
5,902
$
$
$
$
$
$
204
15
3,032
9
43
4,181
-
(4,161)
259
63
58
(3,781)
(93)
(7,402)
-
-
(7,495)
-
-
989
989
2
(10,285)
15,400
5,115
867
4,248
5,115
The accompanying notes are an integral part of these consolidated annual financial statements.
3
FIRST MINING GOLD CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(Expressed in thousands of Canadian dollars unless otherwise noted)
Number of
common
shares
Share capital
Warrant
reserve
Share-based
payment
reserve
Accumulated
other
comprehensive
income (loss)
Accumulated
deficit
Total
Balance as at December 31, 2017
Exercise of options (Note 11(d))
Exercise of warrants (Note 11(c))
Options forfeited (Note 11(d))
Share-based payments
Loss for the year
Other comprehensive loss
Balance as at December 31, 2018
Balance as at December 31, 2018
Proceeds from private placements (Note 11(b))
Flow-through share premium liability (Note 11(b))
Shares issuance costs (Note 11(b))
Exercise of warrants (Note 11(c))
Share-based payments
Loss for the year
Other comprehensive income
Balance as at December 31, 2019
552,547,616
638,000
5,131,300
-
-
-
-
558,316,916
558,316,916
33,095,772
-
370,250
214,200
-
-
-
591,997,138
$
$
$
$
$
$
$
272,501
276
2,291
-
-
-
-
275,068
275,068
8,392
(771)
(131)
108
-
-
-
282,666
15,007
-
$
(1,407)
$
$
-
-
-
-
13,600
13,600
1,018
-
(21)
(65)
-
-
-
14,532
12,600
$
(171)
-
(39)
4,240
-
-
16,630
16,630
-
-
-
-
2,168
-
-
18,798
$
$
$
(4,043) $
-
-
-
-
-
(1,249)
(5,292) $
(5,292) $
-
-
-
-
-
-
1,643
(3,649) $
(31,411) $
-
-
-
-
(11,645)
-
(43,056) $
(43,056) $
-
-
-
-
-
(6,959)
-
(50,015) $
264,654
105
884
(39)
4,240
(11,645)
(1,249)
256,950
256,950
9,410
(771)
(152)
43
2,168
(6,959)
1,643
262,332
$
$
The accompanying notes are an integral part of these consolidated annual financial statements.
4
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
1. NATURE OF OPERATIONS
First Mining Gold Corp. (formerly First Mining Finance Corp.) (the “Company” or “First Mining”) was incorporated in Canada on April 4, 2005. The Company
changed its name to First Mining Gold Corp. in January 2018.
First Mining is a Canadian-focused gold exploration and development company. The Company’s primary focus is the development and permitting of its Springpole
Gold Project and the advanced exploration of its Goldlund Gold Project, both located in northwestern Ontario.
First Mining is a public company which is listed on the Toronto Stock Exchange (the “TSX”) under the symbol “FF”, on the OTCQX under the symbol “FFMGF”,
and on the Frankfurt Stock Exchange under the symbol “FMG”.
The Company’s head office and principal address is Suite 2070 – 1188 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4A2.
2. BASIS OF PRESENTATION
These consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board, effective for the Company’s reporting for the year ended December 31, 2019.
These consolidated annual financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit
and loss or fair value through other comprehensive income (loss), which are stated at their fair value. The consolidated annual financial statements are presented in
thousands of Canadian dollars, unless otherwise noted. The functional currency of the Company and its Canadian subsidiaries is the Canadian dollar while the
functional currency of the Company’s non-Canadian subsidiaries is the US dollar.
The accounts of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Inter-company transactions,
balances and unrealized gains or losses on transactions are eliminated. The Company’s material subsidiaries are as follows:
Name
First Mining Gold Corp.
Gold Canyon Resources Inc. (“Gold Canyon”)
Goldlund Resources Inc. (“Goldlund”)
Coastal Gold Corp. (“Coastal Gold”)
Cameron Gold Operations Ltd. (“Cameron Gold”)
PC Gold Inc. (“PC Gold”)
Clifton Star Resources Inc. (“Clifton”)
Place of Incorporation
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Ownership Percentage
Parent
100%
100%
100%
100%
100%
100%
These consolidated annual financial statements were approved by the Board of Directors on March 30, 2020.
5
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES
These consolidated annual financial statements have been prepared using the following accounting policies:
a)
New accounting policy – IFRS 16
The Company has adopted IFRS 16 Leases (“IFRS 16”) which is effective for annual periods beginning on or after January 1, 2019. IFRS 16 specifies how to
recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize a right-of-use asset and a
lease liability for all leases unless the lease term is 12 months or less or the underlying asset has a low value.
For new leases, the right-of-use asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall
measure the right-of-use asset at cost less accumulated depreciation and accumulated impairment. A lessee shall either apply IFRS 16 with full retrospective
effect or alternatively not restate comparative information but recognise the cumulative effect of initially applying IFRS 16, if any, as an adjustment to opening
equity at the date of initial application. The adoption of IFRS 16 did not have an impact on the Company’s consolidated annual financial statements as at the date
of adoption. Subsequent to January 1, 2019, the Company entered into a lease agreement which was in scope of IFRS 16 (Note 8).
b)
New accounting policy – Flow-through units and shares
The Company may, from time to time, issue flow-through common shares or units to finance a portion of its Canadian exploration programs. Pursuant to the
terms of the flow-through share agreements and the Income Tax Act (Canada) (the “ITA”), these equity instruments transfer the tax deductibility of qualifying
resource expenditures to investors.
Upon the issuance of a flow-through share, the Company bifurcates the flow-through share into i) fair value of capital stock issued, based on market price at time
of issuance, and ii) the residual as a flow-through share premium, which is recognized as a liability. Upon the issuance of a flow-through unit, the Company
bifurcates the flow-through unit into i) relative fair value of capital stock issued, ii) relative fair value of a warrant, and iii) the residual as a flow-through share
premium, which is recognized as a liability.
Upon incurring qualifying expenses the Company derecognizes the flow-through share premium liability and recognizes a credit to deferred tax expense
(recovery). Proceeds received from the issuance of flow-through shares are to be used for Canadian resource property exploration expenditures within a certain
time period as prescribed by the Government of Canada’s flow-through regulations, as contained in the ITA. The portion of the proceeds received but not yet
expended at the end of the Company’s relevant reporting period is disclosed separately in the notes to the financial statements as flow-through expenditure
commitments (Note 12). The Company is also subject to Part XII.6 of the ITA, which imposes a tax on flow-through proceeds renounced under the “Look-back
Rule”, in accordance with the Government of Canada’s flow-through regulations. When applicable, this tax is accrued until paid.
6
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
c)
Financial Instruments
(i)
Classification
The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other
comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The
classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics.
Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, at the time of acquisition the Company can make an
irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are
required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL.
Upon the adoption of IFRS 9, the Company made an irrevocable election to classify marketable securities and mineral property investments (First Mining’s 10%
equity interest in a group of privately held companies that own the Duparquet Gold Project) as FVTOCI given they are not held for trading and are instead held as
strategic investments that align with the Company’s corporate objectives.
(ii) Measurement
Financial assets at FVTOCI
Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value,
with gains and losses recognized in other comprehensive income (loss).
Financial assets and liabilities at amortized cost
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at
amortized cost less any impairment.
Financial assets and liabilities at FVTPL
Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statements of net (loss)
income. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the
consolidated statements of net (loss) income in the period in which they arise. Where management elected to recognize a financial liability at FVTPL, any
changes associated with the Company’s own credit risk will be recognized in other comprehensive income (loss).
(iii)
Impairment of financial assets at amortized cost
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.
At each reporting date, the Company measures the loss allowance for a financial asset at an amount equal to the lifetime expected credit losses if the credit risk on
the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial
recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company
recognizes in the consolidated statements of net (loss) income, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recognized.
7
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
(iv) Derecognition
Financial assets
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets
and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the
consolidated statements of net (loss) income. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated
other comprehensive income (loss).
Financial liabilities
The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. Generally, the
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred
or liabilities assumed, is recognized in the consolidated statements of net (loss) income.
d)
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value. The carrying amounts approximate fair value due to the short-term maturities of these instruments.
e)
Mineral Properties
Once the legal right to explore a property has been acquired, costs directly related to exploration and evaluation expenditures are recognized and capitalized, in
addition to the acquisition costs. These direct expenditures include such costs as mineral concession taxes, option payments, wages and salaries, surveying,
geological consulting and laboratory costs, field supplies, travel and administration. Costs not directly attributable to exploration and evaluation activities, including
general administrative overhead costs, are expensed in the period in which they are incurred.
The Company may occasionally enter into option or royalty arrangements, whereby the Company will transfer part of its mineral properties, as consideration, for an
agreement by the transferee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken by the Company. Any cash
consideration received from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with any excess cash
accounted for as a gain on disposal.
The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its
recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.
Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under
development and is classified as ‘mines under construction’. Exploration and evaluation assets are also tested for impairment before the assets are transferred to
development properties.
8
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
f)
Impairment of Non-Financial Assets
Mineral properties are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down
accordingly. An impairment loss is charged to profit or loss.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows (cash-generating units). As a
result, some assets may be tested individually for impairment and some are tested at a cash-generating unit level.
Impairment reviews for the Company’s exploration and evaluation stage mineral properties are carried out on a property by property basis, with each property
representing a single cash generating unit. An impairment review for an exploration and evaluation asset is undertaken when indicators of impairment arise, but
typically when one of the following circumstances apply:
● The right to explore the area has expired or will expire in the near future with no expectation of renewal;
● Substantive expenditure on further exploration for and evaluation of mineral resources in the area is neither planned nor budgeted;
● No commercially viable deposits have been discovered, and the decision had been made to discontinue exploration in the area; and
● Sufficient work has been performed to indicate that the carrying amount of the expenditure carried as an asset will not be fully recovered.
g)
Property and equipment
Property and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase
price or construction cost, any costs directly attributable to bringing the asset into operation and, where applicable, the initial estimation of any asset retirement
obligation.
The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
Depreciation is recognized in profit or loss on a straight-line basis over the following estimated useful lives:
Buildings
Machinery and equipment
Furniture and fixtures
Vehicles
Computer equipment
Computer software
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
9
10 years
5 years
5 years
5 years
3 years
1 year
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
h)
Environmental Reclamation Provision
The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The
present value of the estimated costs of legal and constructive obligations required to restore the exploration sites is recognized in the year in which the obligation is
incurred. The nature of the reclamation activities includes restoration and revegetation of the affected exploration sites.
When a liability is recognized, the present value of the estimated costs (discounted using a risk-free rate) is capitalized by increasing the carrying amount of the
related exploration property. Over time, the discounted liability is increased for the changes in present value based on current market discount rates and liability
specific risks.
Additional environment disturbances or changes in reclamation costs will be recognized as additions to the corresponding assets and reclamation provision in the
year in which they occur.
i)
Income Taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent that it relates to a business
combination or items recognized directly in equity or in other comprehensive loss.
Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to
income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted
by the year-end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences
arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a
business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that
future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized
deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
j)
Share Capital
Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity
only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares are classified as equity instruments.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
10
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
Consideration received from a private placement financing involving units consisting of common shares and warrants is allocated to the share capital and the
warrant reserve accounts using the relative fair value method. As prescribed by this method, the consideration is allocated to the value of share capital and warrant
reserve on a pro rata basis. The share capital is valued at the closing share price of the Company on the completion date of the private placement and the warrant
reserve is valued using the Black-Scholes option pricing model.
k)
Loss per Share
Basic loss per share is calculated by dividing the net loss for the year by the weighted average number of shares outstanding during the year. Diluted loss per share
is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of shares outstanding used in the calculation of diluted
income or loss per share assumes that the deemed proceeds received from the exercise of stock options, share purchase warrants and their equivalents would be used
to repurchase common shares of the Company at the average market price during the year, if they are determined to have a dilutive effect. In periods when the
Company has generated a net loss, stock options and share purchase warrants are not included in the computation of diluted loss per share as they are anti-dilutive.
l)
Share-based Payments
Where equity-settled share options are granted to employees, the fair value of the options at the date of grant, measured using the Black-Scholes option pricing
model, is charged to the statement of comprehensive loss or capitalized to mineral properties over the vesting period using the graded vesting method. Performance
vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative
amount recognized over the vesting period is based on the number of options that eventually vest. Charges for options that are forfeited before vesting are reversed
from share-based payment reserve.
Where equity-settled share options are granted to non-employees, they are measured at the fair value of the goods or services received. However, if the value of
goods or services received in exchange for the options cannot be reliably estimated, the options are measured using the Black-Scholes option pricing model.
All equity-settled share-based payments are reflected in share-based payment reserve, until exercised. Upon exercise, shares are issued from treasury and the
amount reflected in share-based payment reserve is credited to share capital, together with any consideration received.
m)
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-
maker is responsible for allocating resources and assessing performance of the operating segment.
11
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
n)
Accounting Policy Judgments and Estimation Uncertainty
The preparation of financial statements requires the use of accounting estimates. It also requires management to exercise judgment in the process of applying its
accounting policies. Estimates and judgments are regularly evaluated and are based on management’s experience and other factors, including expectations about
future events that are believed to be reasonable under the circumstances. The use of judgments, estimates and assumptions affects the application of accounting
policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The following discusses accounting
policy judgments and the sources of estimation uncertainty that may result in material changes in the carrying amount of assets or liabilities within the next year:
(i)
Accounting policy judgements
Impairment of Mineral Properties
In accordance with the Company’s accounting policy for its mineral properties, exploration and evaluation expenditures on mineral properties are capitalized.
There is no certainty that the expenditures made by the Company in the exploration of its property interests will result in discoveries of commercial quantities of
minerals. The Company applies judgment to determine whether indicators of impairment exist for these capitalized costs.
Management uses several criteria in making this assessment, including the period for which the Company has the right to explore, expected renewals of
exploration rights, whether substantive expenditures on further exploration and evaluation of mineral properties are budgeted, and evaluation of the results of
exploration and evaluation activities up to the reporting date.
(ii)
Estimation Uncertainty
Determining Amount and Timing of Reclamation Provisions
A reclamation provision represents the present value of estimated future costs for the reclamation of the Company’s mineral properties. These estimates include
assumptions as to the future activities, cost of services, timing of the reclamation work to be performed, inflation rates and interest rates. The actual cost to
reclaim a mine or exploration property may vary from the estimated amounts because there are uncertainties with respect to the extent of required future
remediation activities, as studies are currently ongoing, and uncertainties in factors used to estimate the cost and potential changes in regulations or laws
governing the reclamation of a mineral property. Management periodically reviews the reclamation requirements and adjusts the liability as new information
becomes available and will assess the impact of new regulations and laws as they are enacted.
12
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
3. ACCOUNTING POLICIES (Continued)
Valuation of Mineral Property Investments
The Company makes estimates and assumptions that affect the carrying value of its mineral property investments, which are comprised of equity interests in the
shares of private companies. These financial assets are designated as fair value through other comprehensive income (loss), and management needs to determine
the fair value as at each period end. As there is no observable market data which can be used to determine this fair value, management uses property specific and
market based information to determine whether a significant change in the fair value of these investments has occurred. Changes to the property specific and
market based variables could result in the fair value being less than or greater than the amount recorded.
o)
Accounting Standards Issued but Not Yet Applied
There are no IFRS or International Financial Reporting Interpretations Committee interpretations that are not yet effective that would be expected to have a
material impact on the Company’s consolidated financial statements.
4. ACCOUNTS AND OTHER RECEIVABLES
Category
Current
GST and HST receivables
Quebec mining tax receivables
Other receivables
Total current accounts and other receivables
Non-current
Mexican VAT receivable
Total accounts and other receivables
13
December 31,
2019
December 31,
2018
$
$
231
-
72
303
$
$
103
$
406
$
71
61
17
149
90
239
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
5. MARKETABLE SECURITIES
The movements in marketable securities during the years ended December 31, 2019 and 2018 are summarized as follows:
Balance as at December 31, 2018
Additions
Dispositions
Gain (loss) recorded in other comprehensive loss
Balance as at December 31, 2019
5. MARKETABLE SECURITIES (Continued)
$
$
Silver One Resources
Inc.
990
60
(1,758)
708
-
Gainey Capital Corp.
-
$
171
-
(97)
74
$
$
$
Balance as at December 31, 2017
Loss recorded in other comprehensive loss
Balance as at December 31, 2018
$
$
Silver One Resources
Inc.
2,280
(1,290)
990
Gainey Capital Corp.
-
$
-
-
$
$
$
1,997
(390)
1,607
$
$
The Company holds marketable securities of publicly traded companies as strategic investments and has less than a 10% equity interest in each of the investees.
During the year ended December 31, 2019, the Company sold 6,250,000 common shares of Silver One Resources Inc. for net proceeds of $1,750 with original cost
of $6,360, and realized a cumulative loss on sale of $4,610 in other comprehensive loss.
14
Other Marketable
Securities
Total
1,607
-
-
94
1,701
$
$
Other Marketable
Securities
Total
2,597
231
(1,758)
705
1,775
4,277
(1,680)
2,597
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
6. MINERAL PROPERTIES
As at December 31, 2019 and December 31, 2018, the Company has capitalized the following acquisition, exploration and evaluation costs on its mineral properties:
Balance
December 31,
2018
Concessions,
taxes, and
royalties
Salaries and
share-based
payments
Drilling,
exploration,
and technical
consulting
Assaying, field
supplies, and
environmental
Travel and other
expenditures
Option
payments
received
and
expenditures
recovered
Currency
translation
adjustments
Disposal or
write-down of
mineral
properties
Balance
December 31,
2019
Springpole
Goldlund
Hope Brook
Cameron
Pickle Crow
Duquesne
Pitt
Others(1)
Canada Total
Miranda
Socorro
San Ricardo
Las Margaritas
Others(2)
Mexico Total
USA
Total
Springpole
Goldlund
Hope Brook
Cameron
Pickle Crow
Duquesne
Pitt
Others(1)
Canada Total
Miranda
Socorro
San Ricardo
Las Margaritas
Others(2)
Mexico Total
USA
Total
$
$
$
$
$
$
$
$
73,378
96,604
19,581
27,032
16,754
5,091
2,082
2,559
243,081
-
-
-
244
-
244
804
244,129
$
$
$
$
347
3
20
56
31
2
-
3
462
-
-
-
43
-
43
46
551
Balance
December 31,
2017
Concessions,
taxes, and
royalties
70,398
93,807
18,665
26,676
16,496
5,053
2,080
2,515
235,690
810
782
969
183
739
3,483
698
239,871
$
$
$
$
237
2
123
39
50
6
-
2
459
48
107
140
41
195
531
43
1,033
$
$
$
$
$
$
$
$
950
726
213
87
88
3
-
17
2,084
-
-
-
22
-
22
-
2,106
Salaries and
share-based
payments
1,048
928
459
193
92
4
-
10
2,734
18
3
1
4
7
33
-
2,767
$
$
$
$
$
$
$
$
1,058
1,085
105
126
46
35
2
27
2,484
-
-
-
34
-
34
-
2,518
Drilling,
exploration,
and technical
consulting
657
1,045
136
57
58
27
1
21
2,002
9
4
6
25
7
51
-
2,053
$
$
$
$
$
$
$
$
488
240
41
16
2,376
1
-
8
3,170
-
-
-
-
-
-
-
3,170
$
$
$
$
554
236
111
57
18
1
-
1
978
-
-
-
-
-
-
-
978
Assaying, field
supplies, and
environmental
Travel and other
expenditures
479
596
116
39
36
-
-
9
1,275
1
-
-
4
-
5
-
1,280
$
$
$
$
559
226
82
28
22
1
1
2
921
-
-
4
1
1
6
-
927
$
$
$
$
$
$
$
$
$
-
-
-
-
(50)
-
-
-
(50) $
-
-
-
(179)
-
(179) $
(25)
(254) $
$
$
-
-
-
-
-
-
-
-
-
-
-
-
(10)
-
(10) $
(32)
(42) $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(341)
(341)
Option
payments
received
and
expenditures
recovered
Currency
translation
adjustments
Disposal or
write-down of
mineral
properties
$
$
-
-
-
-
-
-
-
-
-
-
-
-
(33)
-
(33) $
-
(33) $
-
-
-
-
-
-
-
-
-
76
77
96
19
81
349
63
412
$
$
$
$
-
-
-
-
-
-
-
-
-
(962)
(973)
(1,216)
-
(1,030)
(4,181)
-
(4,181)
$
$
$
$
$
$
$
$
76,775
98,894
20,071
27,374
19,263
5,133
2,084
2,615
252,209
-
-
-
154
-
154
452
252,815
Balance
December 31,
2018
73,378
96,604
19,581
27,032
16,754
5,091
2,082
2,559
243,081
-
-
-
244
-
244
804
244,129
(1) Other mineral properties in Canada as at December 31, 2019 and December 31, 2018 include the mining claims and concessions located in the Township of
Duparquet, Quebéc, which are near the Company’s Duquesne gold project and the Duparquet gold project (in which the Company holds a 10% indirect
interest).
(2) Other mineral properties in Mexico as at December 31, 2019 and December 31, 2018 include Puertecitos, Los Tamales, Geranio, El Apache, El Roble,
Batacosa and Lachatao. A write-down of these properties to $nil was recorded during the year ended December 31, 2018.
The Company has various underlying agreements and commitments with respect to its Canadian mineral properties, which define annual or future payments in
connection with royalty buy-backs or maintenance of property interests.
15
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
6. MINERAL PROPERTIES (Continued)
Subsequent to the end of the year, on January 27, 2020, the Company entered into a binding term sheet (the “Term Sheet”) with Auteco Minerals Ltd (“Auteco”)
whereby Auteco may earn up to an 80% interest in the Pickle Crow project (the “Earn-In”). On March 12, 2020, the Company and Auteco executed a definitive
Earn-In Agreement (the “Earn-In Agreement”), which replaced the Term Sheet. Pursuant to the Earn-In Agreement, Auteco can earn a full 80% equity interest in PC
Gold, the entity which owns the Pickle Crow Project, by (a) incurring a total of $10,000 in exploration expenditures over five years, (b) making cash payments to
First Mining totaling $4,100 (of which the Company has received $100 to date), and (c) issuing 125 million shares of Auteco to First Mining. First Mining will also
retain a 2% Net Smelter Returns (“NSR”) Royalty, 1% of which can be bought back for USD $2,500,000. During the term of the Earn-In Agreement, Auteco will be
responsible for all program costs.
On August 21, 2019, the Company entered into an option agreement (the “Momentum Option Agreement”) with Momentum Minerals Ltd. (“Momentum”), a
private company, granting Momentum the right to earn a 100% interest in First Mining’s Turquoise Canyon property (“Turquoise Canyon”) located in Nevada, U.S.
Under the terms of the Momentum Option Agreement, Momentum can elect to make either annual share or cash payments to the Company for aggregate
consideration of $500 over the four year option period. In addition, as per the terms of the Momentum Option Agreement, beginning in 2020, Momentum will also
be responsible for paying all annual concession tax payments with respect to Turquoise Canyon to the Nevada State land management authorities. In addition to the
payment terms outlined above, Momentum will be required to incur exploration expenditures on Turquoise Canyon totaling $750 over the four-year option period,
incurring at least $50 in year one and $100 in year two. Upon completion of all payment and expenditure obligations, Momentum will obtain 100% ownership of
Turquoise Canyon and First Mining will retain a 2% NSR royalty. Momentum will have the right to buy back 1% of the NSR royalty for $1,000 up until the first
anniversary of the commencement of commercial production at Turquoise Canyon. During the year December 31, 2019, the Company received initial consideration
in cash of $25 under the terms of the Momentum Option Agreement and recorded a write-down of Turquoise Canyon amounting to $341 (2018 - $nil), based on the
recoverable amount indicated by the Momentum Option Agreement. As at December 31, 2019, the carrying value of the Turquoise Canyon property is $452
(December 31, 2018 - $804).
On July 30, 2018, the Company entered into an option agreement (the “Gainey Option Agreement”) with Gainey Capital Corp. (“Gainey”), granting Gainey the
right to earn a 100% interest in First Mining’s Las Margaritas gold project (“Las Margaritas”) located in the State of Durango in Mexico. Under the terms of the
Gainey Option Agreement, Gainey can elect to make either annual share or cash payments to the Company for aggregate consideration of between $900 and $1,015
over the four year option period. In addition, as per the terms of the Gainey Option Agreement, Gainey will make annual payments of USD$25,000 in September
2018 (paid), September 2019 (remains unpaid), September 2020 and USD$250,000 in September 2021 in connection with an existing agreement on Las Margaritas,
and exploration expenditures totaling USD$1,000,000 over the four year option period on Las Margaritas. Upon completion of the four year option period, Gainey
obtains a 100% ownership interest in Las Margaritas, except that First Mining will retain a 2% NSR royalty interest, with Gainey having the right to buy back 1% of
the NSR royalty interest for USD$1,000,000 up until the first anniversary of the commencement of commercial production at Las Margaritas. During the year ended
December 31, 2019, the Company received initial consideration in the form of Gainey shares with a fair value of $171 on the date of receipt and cash of $12 relating
to value-added tax in Mexico under the terms of the Gainey Option Agreement. As at December 31, 2019, the carrying value of the Las Margaritas property is $154
(December 31, 2018 - $244).
7. MINERAL PROPERTY INVESTMENTS
Mineral property investments (which comprise equity interests in the shares of three private companies) are designated as fair value through other comprehensive
income (loss) (“FVTOCI”), with changes in fair value recorded in other comprehensive income (loss).
16
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
7. MINERAL PROPERTY INVESTMENTS (Continued)
As there is no observable market data which can be used to determine this fair value, management uses property specific and market based information to determine
whether a significant change in the fair value of these investments has occurred. Factors that are considered include:
● Changes in the economic and regulatory environment for the jurisdiction in which the Duparquet Gold project is located;
● Gold spot prices over the period from the acquisition of the investment to December 31, 2019;
● The company’s market capitalization per in-situ ounce which are attributable to the Duparquet Gold project; and
● Recent transactions involving mineral properties located in Quebec.
The Company, through its subsidiary Clifton, has a 10% equity interest in the shares of Beattie Gold Mines Ltd., 2699681 Canada Ltd., and 2588111 Manitoba Ltd
which directly or indirectly own various mining concessions and surface rights, collectively known as the Duparquet gold project. As at December 31, 2019,
management determined, as a function of the rising gold price environment, that there was an increase in the fair value of mineral property investments and a fair
value gain of $981 was recorded (December 31, 2018 - $nil) (Note 18). As at December 31, 2019, the fair value of the Company’s mineral property investments is
$5,398 (December 31, 2018 - $4,417).
8. RIGHT-OF-USE ASSET AND LEASE LIABILITY
In December 2019, the Company entered into a 5-year lease agreement to use office space. The Company has recorded this lease as a right-of-use asset and lease
liability in the statement of financial position as a December 31, 2019. At the commencement date of the lease, the lease liability was measured at the present value
of the lease payments. The lease payments are discounted using an interest rate of 10%, which is the Company’s incremental borrowing rate.
Balance as at December 31, 2018
Present value of future lease payments
Balance as at December 31, 2019
Maturity analysis – contractual undiscounted cash flows:
As at
Less than one year
One to five years
More than five years
Total undiscounted lease liability
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Category
Accounts payable
Other accrued liabilities
Total
17
Right-of-Use Asset
Lease Liability
Current portion
-
$
94
94
$
-
648
648
$
Non-current
portion
-
554
554
$
$
December 31,
2019
December 31,
2018
149
678
-
827
$
$
-
-
-
-
December 31,
2019
December 31,
2018
768
630
1,398
$
$
341
241
582
$
$
$
$
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
10. ENVIRONMENTAL RECLAMATION PROVISION
The Company has an obligation to undertake decommissioning, restoration, rehabilitation and environmental work when environmental disturbance is caused by the
exploration and development of a mineral property. As at December 31, 2019, the Company estimates that the fair value of the environmental reclamation provision
for the Pickle Crow Gold Project is $2,355 (December 31, 2018 - $nil). The fair value of the liability was estimated based on management’s interpretation of current
regulatory requirements and is recognized at the present value of such costs. The amount was recorded in the “Assaying, field supplies, and environmental”
category in Mineral Properties per Note 6. The undiscounted balance of the estimated cash flows is $2,334 in 2019 dollars. The recorded amount has been measured
using a risk free discount rate of 1.67% based on a Canadian government bond and an inflation rate of 2%. The cash outflows in respect of the provision are
expected to occur over the next nine years.
Current portion
-
$
716
716
$
$
$
Non-current
portion
-
1,639
1,639
$
$
Total
-
2,355
2,355
Balance as at December 31, 2018
Present value of environmental reclamation provision
Balance as at December 31, 2019
11. SHARE CAPITAL
a)
Authorized
Unlimited number of common shares with no par value.
Unlimited number of preferred shares with no par value.
b)
Issued and Fully Paid
Common shares: 591,997,138 (December 31, 2018 – 558,316,916).
Preferred shares: nil (December 31, 2018 – nil).
On December 18, 2019, the Company completed a non-brokered private placement raising aggregate gross proceeds of $1,999 (the “December Offering”). Pursuant
to the December Offering, the Company issued 7,405,000 common shares of the Company (the “Flow-Through Shares”) that qualify as flow-through shares for
purposes of the ITA, at a price of $0.27 per Flow-Through Share. In connection with the December Offering, the Company paid a 5% finder’s fee on the aggregate
gross proceeds in common shares, resulting in the issuance of an additional 370,250 common shares of the Company with fair value of $85, and shares issuance
costs of $11 in cash. An amount of $1,692 was recorded in share capital, and the remaining $296, representing the implied premium, was recorded as a flow-through
share premium liability (Note 12).
On May 16, 2019, the Company completed a non-brokered private placement raising aggregate gross proceeds of $7,411 (the “May Offering”). Pursuant to the May
Offering, the Company issued 20,412,995 units of the Company (the "Units") at a price of $0.27 per Unit for gross proceeds of $5,511 and 5,277,777 flow-through
units of the Company (the "FT Units") at a price of $0.36 per FT Unit for gross proceeds of $1,900. In connection with the May Offering, the Company paid units
issuance costs of $141 in cash. Net proceeds after issuance costs was $7,270. Each Unit consisted of one common share of the Company and one-half of one
common share purchase warrant (each whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder to acquire one common share of the
Company until May 16, 2022 at a price of $0.40. Each FT Unit consists of one flow-through common share of the Company that qualifies as a "flow-through share"
for the purposes of the ITA and one-half of one Warrant on the same terms as the Warrants forming part of the Units.
18
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
11. SHARE CAPITAL (Continued)
An amount of $5,798 was recorded in share capital. The Warrants were valued at $997 using the relative fair value method, and the remaining $475, representing
the implied premium, was recorded as a flow-through share premium liability (Note 12).
c)
Warrants
The movements in warrants during the years ended December 31, 2019 and 2018 are summarized as follows:
Balance as at December 31, 2017
Warrants exercised
Warrants expired
Balance as at December 31, 2018
Warrants issued
Warrants exercised
Warrants expired
Balance as at December 31, 2019
Number
49,693,409
(5,131,300)
(24,445,254)
20,116,855
12,845,383
$
$
(214,200)
(16,875,040)
15,872,998
$
Weighted average
exercise price
0.81
0.17
0.80
0.99
0.40
0.20
1.10
0.41
The following table summarizes information about warrants outstanding as at December 31, 2019:
Exercise price
$
$
0.40
0.44
Number of warrants outstanding
12,845,383
3,027,615
15,872,998
$
$
$
Weighted average exercise price ($
per share)
Weighted average remaining life
(years)
0.40
0.44
0.41
2.38
1.46
2.20
The Warrants issued in 2019 have been valued at $997 ($1,018 net of allocated issuance costs of $21) using the Black-Scholes option pricing model with the
following assumptions:
Risk-free interest rate
Expected life (years)
Expected volatility(1)
Expected dividend yield
d) Stock Options
1.55%
3.00 years
67.22%
Nil
The Company has adopted a stock option plan that allows for the granting of stock options to Directors, Officers, employees and certain consultants of the Company
for up to 10% of the Company’s issued and outstanding common shares. Stock options granted under the plan may be subject to vesting provisions as determined by
the Board of Directors.
19
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
11. SHARE CAPITAL (Continued)
The movements in stock options during the years ended December 31, 2019 and 2018 are summarized as follows:
Balance as at December 31, 2017
Granted – January 15, 2018
Granted – April 16, 2018
Granted – July 20, 2018
Granted – October 16, 2018
Granted – December 10, 2018
Options exercised
Options expired
Options forfeited
Balance as at December 31, 2018
Granted – January 7, 2019
Granted – April 1, 2019
Granted – April 29, 2019
Options expired
Options forfeited
Balance as at December 31, 2019
Weighted average
exercise price
$
Number
30,608,000
9,575,000
120,000
50,000
1,400,000
12,075,000
(638,000)
(1,950,000)
(2,975,000)
48,265,000
5,000,000
750,000
2,000,000
(7,700,000)
(1,387,500)
46,927,500
$
$
0.74
0.60
0.50
0.43
0.40
0.40
0.17
1.27
0.68
0.61
0.40
0.40
0.40
0.68
0.50
0.57
The weighted average closing share price at the date of exercise for the year ended December 31, 2019 was $nil (December 31, 2018 – $0.38). No stock options
were exercised during the year ended December 31, 2019 (December 31, 2018 – 638,000).
The following table summarizes information about the stock options outstanding as at December 31, 2019:
Exercise price
$
$
0.01 – 0.50
0.51 – 1.00
Number of options
24,442,500
22,485,000
46,927,500
Options Outstanding
Weighted average
exercise price ($ per
share)
$
$
0.40
0.75
0.57
Weighted average
remaining life (years)
3.39
2.14
2.79
Number of options
17,876,875
22,485,000
40,361,875
Options Exercisable
Weighted average
exercise price ($ per
share)
$
$
0.39
0.75
0.59
Weighted average
remaining life (years)
3.15
2.14
2.59
During the year ended December 31, 2019, there were 7,750,000 (December 31, 2018 – 23,220,000) stock options granted with an aggregate fair value of $1,550
(December 31, 2018 – $5,116), or a weighted average fair value of $0.20 per option (December 31, 2018 – $0.22). As at December 31, 2019, 6,565,625 (December
31, 2018 – 9,056,250) stock options remain unvested with an aggregate grant date fair value of $392 (December 31, 2018 - $876).
20
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
11. SHARE CAPITAL (Continued)
Certain stock options granted were directly attributable to exploration and evaluation expenditures on mineral properties and were therefore capitalized to mineral
properties. In addition, certain stock options were subject to vesting provisions. These two factors result in differences between the aggregate fair value of stock
options granted and total share-based payments expensed during the periods. Total share-based payments expense during the years ended December 31, 2019 and
2018 was classified within the financial statements as follows:
Statements of Net Loss:
General and administration
Exploration and evaluation
Investor relations and marketing communications
Corporate development and due diligence
Subtotal
Statements of Financial Position:
Mineral Properties
Total
For the year ended December 31,
2019
2018
824
143
325
304
1,596
$
$
2,254
106
437
235
3,032
For the year ended December 31,
2019
2018
572
2,168
$
$
1,169
4,201
$
$
$
$
The grant date fair value of the stock options recognized in the period has been estimated using the Black-Scholes option pricing model with the following weighted
average assumptions:
Risk-free interest rate
Share price at grant date (in dollars)
Exercise price (in dollars)
Expected life (years)
Expected volatility(1)
Forfeiture rate
Expected dividend yield
$
$
Year ended
December 31,
2019
Year ended
December 31,
2018
2.20%
0.36
0.40
5.00 years
$
$
71.86%
5.00%
Nil
1.91%
0.41
0.48
5.00 years
70.87%
2.64%
Nil
(1) The computation of expected volatility prior to the December 10, 2018 option grant was based on the historical volatility of comparable companies from a
representative peer group of publicly traded mineral exploration companies. Commencing December 10, 2018, the computation of expected volatility was
based on the Company’s historical price volatility, over a period which approximates the expected life of the option.
21
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
12. FLOW-THROUGH SHARE PREMIUM LIABILITY
The following is a continuity schedule of the liability portion of the Company’s flow-through share issuances:
May 16, 2019
Balance, December 31, 2018
Liability incurred on flow-through shares issued May 16, 2019
Settlement of flow-through share premium liability upon incurring eligible expenditures
Liability incurred on flow-through shares issued December 18, 2019
Balance, December 31, 2019
$
$
-
475
(430)
-
45
$
$
December 18, 2019
-
-
-
296
296
$
$
Total
-
475
(430)
296
341
As at December 31, 2019, the Company had $2,178 (December 31, 2018 - $nil) of flow-through expenditure commitments to fulfill the flow-through requirements.
The Company reversed the associated flow-through share premium liability and recognized a deferred income tax recovery of $430 in the Company’s consolidated
financial statements for the year ended December 31, 2019.
13. OPERATING EXPENSES
Components by nature of the Company’s functional operating expense categories are as follows:
Administrative and office
Consultants
Depreciation
Directors fees
Exploration and evaluation
Investor relations and marketing communications
Professional fees
Salaries
Share-based payments (non-cash) (Note 11(d))
Transfer agent and filing fees
Travel and accommodation
Operating expenses total
Write-down of mineral properties (non-cash) (Note 6)
Loss from operational activities
General and
administration
424
108
14
277
-
1
614
899
824
193
60
3,414
$
$
22
$
$
Exploration and
evaluation
Corporate
development and
due diligence
$
$
For the year ended December 31, 2019
Investor relations
and marketing
communications
21
29
-
-
-
592
-
175
325
1
34
1,177
136
211
157
-
40
8
5
329
143
-
95
1,124
$
$
2
-
-
-
-
-
-
179
304
-
32
517
Total
$
$
$
583
348
171
277
40
601
619
1,582
1,596
194
221
6,232
341
6,573
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
13. OPERATING EXPENSES (Continued)
Administrative and office
Consultants
Depreciation
Directors fees
Exploration and evaluation
Investor relations and marketing communications
Professional fees
Salaries
Share-based payments (non-cash) (Note 11(d))
Transfer agent and filing fees
Travel and accommodation
Operating expenses total
Write-down of mineral properties (non-cash) (Note 6)
Loss from operational activities
14. SEGMENT INFORMATION
General and
administration
501
62
11
143
-
7
342
1,110
2,254
162
100
4,692
$
$
$
$
Exploration and
evaluation
Corporate
development and
due diligence
$
$
For the year ended December 31, 2018
Investor relations
and marketing
communications
33
17
-
-
-
803
-
228
437
8
108
1,634
139
72
193
-
1
7
-
145
106
-
101
764
$
$
5
-
-
-
-
2
-
238
235
-
25
505
$
$
$
Total
678
151
204
143
1
819
342
1,721
3,032
170
334
7,595
4,181
11,776
The Company operates in a single reportable operating segment, being the acquisition, exploration, and development of North American mineral properties.
Geographic information about the Company’s non-current assets, excluding financial instruments, as at December 31, 2019 and December 31, 2018 is as follows:
Non-current assets
Canada
Mexico
USA
Total
15. INCOME TAXES
December 31,
2019
December 31,
2018
$
$
253,587
252
454
254,293
$
$
243,854
334
809
244,997
Taxation in the Company and its subsidiaries’ operational jurisdictions is calculated at the rate prevailing in the respective jurisdictions. The reconciliation of
income taxes calculated at the applicable Canadian federal and provincial statutory rates to the actual income tax expense (recovery) is as follows:
23
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
15. INCOME TAXES (Continued)
Net loss before income tax
Combined Canadian statutory income tax rate
Income tax recovery computed at statutory income tax rate
Tax effect of:
Permanent differences
Difference in tax rates in foreign jurisdictions
Changes in estimate and others
Flow-through share premium liability
Changes in unrecognized deferred tax assets
Income tax expense
Year ended
December 31,
2019
Year ended
December 31,
2018
$
$
6,443
27.00%
1,740
(678)
(17)
124
430
(2,115)
$
(516) $
11,645
27.00%
3,144
(599)
128
(539)
-
(2,134)
-
Deferred tax assets and liabilities are offset if they relate to the same taxable entity and same taxation authority. No deferred tax asset has been recognized in respect
to the losses and temporary differences below, as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered.
Recognized deferred income tax assets (liabilities) are comprised of:
Non-capital loss carryforwards
Property and equipment
Mineral properties
Mineral property investments
Total
Deferred tax assets have not been recognized in respect of the following items:
Non-capital loss carryforwards
Net capital loss carryforwards
Investment tax credits
Undeducted financing costs
Marketable securities
Property and equipment
Environmental reclamation provision
Mineral properties
Total
24
December 31,
2019
December 31,
2018
$
1,162
-
(1,978)
(130)
(946) $
64
4
(68)
-
-
December 31,
2019
December 31,
2018
26,403
763
3,857
41
83
304
624
2,242
34,317
$
$
24,172
1,580
3,857
77
830
261
-
1,417
32,194
$
$
$
$
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
15. INCOME TAXES (Continued)
As at December 31, 2019, the Company and its subsidiaries had unrecognized Canadian non-capital loss carryforwards of approximately $99,214 (2018 - $87,300)
which expire between the years 2026 and 2039, unrecognized Canadian net capital loss carryforwards of approximately $2,827 (2018 - $5,900) which can be carried
forward indefinitely, unrecognized Canadian investment tax credits of approximately $5,282 (2018 - $5,282) which expire between the years 2024 and 2033, and
unrecognized Mexican non-capital loss carryforwards of approximately $1,900 (2018 - $1,603) which expire between the years 2019 and 2029.
16. RELATED PARTY TRANSACTIONS
Key management includes the Directors and Officers of the Company. The compensation paid or payable to key management for services during the years ended
December 31, 2019 and 2018 is as follows:
Service or Item
Directors’ fees
Salaries and consultants’ fees
Severance payments
Share-based payments (non-cash)
Total
Year ended December 31,
2018
2019
$
$
277
1,188
-
1,601
3,066
$
$
143
1,208
410
2,991
4,752
17. SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended December 31, 2019, the significant non-cash investing and financing transactions were as follows:
●
●
370,250 shares issued as finder’s fee in connection with December 18, 2019 private placement (Note 11); and
Received Gainey shares with a fair value of $171 under the terms of the Gainey Option Agreement (Note 6).
During the year ended December 31, 2018, significant non-cash investing and financing transactions were as follows:
●
Paid or accrued $nil for income taxes.
18. FAIR VALUE
Fair values have been determined for measurement and/or disclosure purposes based on the following methods.
The Company characterizes fair value measurements using a hierarchy that prioritizes inputs depending on the degree to which they are observable. The three levels
of the fair value hierarchy are as follows:
●
●
●
Level 1: fair value measurements are quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: fair value measurements are those derived from valuation techniques that include significant inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The carrying values of cash and cash equivalents, current accounts and other receivables, and accounts payable and accrued liabilities approximated their fair values
because of the short-term nature of these financial instruments.
25
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
18. FAIR VALUE (Continued)
These financial instruments are classified as financial assets and liabilities at amortized cost.
The carrying value of the non-current reclamation deposit approximated its fair values as the amount is represented by cash deposit. This financial instrument is
classified as financial asset at amortized cost.
The carrying value of marketable securities was based on the quoted market prices of the shares as at December 31, 2019 and was therefore considered to be Level
1. These financial instruments are classified as financial assets at FVTOCI.
The mineral property investments (First Mining’s 10% equity interest in three privately held companies that own the Duparquet Gold Project) are classified as
financial assets at FVTOCI. The carrying value of the mineral property investments was not based on observable market data and was therefore considered to be
Level 3. The initial fair value of the mineral property investments was determined based on attributable pro-rata gold ounces for the Company’s 10% indirect
interest in the Duparquet project, which formed part of the identifiable assets from the acquisition of Clifton. Subsequently, the fair value has been reassessed at
each period end. Scenarios which may result in a significant change in fair value include, among others, a change in the performance of the investee, a change in the
performance of comparable entities, a change in gold price, a change in the economic environment, or evidence from external transactions in the investee’s equity.
During the year ended December 31, 2019, management concluded that there was an increase in the fair value of the mineral property investments, and a fair value
gain of $981 (December 31, 2018 - $nil) was recorded (Note 7).
The following table presents the Company’s fair value hierarchy for financial assets that are measured at fair value:
Financial assets:
Marketable securities (Note 5)
Mineral property investments (Note 7)
Total
December 31, 2019
Fair value measurement
Carrying value
Level 1
Level 3
December 31, 2018
Fair value measurement
Carrying
value
Level 1
Level 3
$
$
1,775 $
5,398
7,173 $
1,775 $
-
1,775 $
- $
5,398
5,398 $
2,597 $
4,417
7,014 $
2,597 $
-
2,597 $
-
4,417
4,417
None of the Company’s financial liabilities are subsequently measured at fair value after initial recognition.
During the year ended December 31, 2019 there have been no transfers of amounts between Level 1, Level 2, and Level 3 of the fair value hierarchy.
26
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
18. FAIR VALUE (Continued)
The classification of the financial instruments as well as their carrying values as at December 31, 2019 and 2018 is shown in the table below:
At December 31, 2019
Financial assets:
Cash and cash equivalents
Current accounts and other receivables
Marketable securities
Mineral property investments
Reclamation deposit
Total financial assets
Financial liabilities:
Accounts payable and accrued liabilities
At December 31, 2018
Financial assets:
Cash and cash equivalents
Current accounts and other receivables
Marketable securities
Mineral property investments
Reclamation deposit
Total financial assets
Amortized Cost
(Financial assets)
FVTOCI(1)
Amortized Cost
(Financial liabilities)
Total
5,902
97
-
-
119
6,118
$
$
-
-
1,775
5,398
-
7,173
$
$
-
-
-
-
-
-
$
$
5,902
97
1,775
5,398
119
13,291
-
$
-
$
1,398
$
1,398
Amortized Cost
(Financial assets)
FVTOCI(1)
Amortized Cost
(Financial liabilities)
Total
5,115
17
-
-
116
5,248
$
$
-
-
2,597
4,417
-
7,014
$
$
-
-
-
-
-
-
$
$
5,115
17
2,597
4,417
116
12,262
$
$
$
$
$
Financial liabilities:
Accounts payable and accrued liabilities
(1) The Company made an irrevocable election to reclassify marketable securities and mineral property investments fair value remeasurements from FVTPL to
582
582
$
$
$
$
-
-
FVTOCI.
19. FINANCIAL AND CAPITAL RISK MANAGEMENT
The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These
risks include market risk, price risk, foreign currency risk, interest rate risk, credit risk, liquidity risk, and capital risk. Where material, these risks are reviewed and
monitored by the Board of Directors.
27
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
19. FINANCIAL AND CAPITAL RISK MANAGEMENT (Continued)
The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies. The overall objective of the
Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility.
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk includes equity
price risk, foreign currency risk and interest rate risk.
Equity Price Risk
The Company is exposed to equity price risk as a result of holding investments in equity securities, which are comprised of marketable securities and mineral
property investments, in other mineral property exploration companies.
If the fair value of our investments in equity instruments had been 10% higher or lower as at December 31, 2019, other comprehensive loss for the year ended
December 31, 2019 would have decreased or increased, respectively, by approximately $717 (2018 – $701), as a result of changes in the fair value of equity
investments.
Foreign Currency Risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company operates in Canada, the United States, and Mexico
and a portion of the Company’s expenses are incurred in Canadian dollars (“CAD”), US dollars (“USD”), and Mexican Pesos (“MXN”). A significant change in the
currency exchange rates between the Canadian, US and Mexican currencies, could have an effect on the Company’s results of operations, financial position or cash
flows. The Company has not hedged its exposure to currency fluctuations.
As at December 31, 2019, the Company is exposed to currency risk on certain financial instruments denominated in USD and MXN. The Company does not have
significant transactions or hold significant cash or other financial instruments denominated in USD and MXN currencies. Therefore, the Company considers this
risk to be immaterial.
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings that are
subject to fluctuations in market interest rate. Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with
chartered Canadian financial institutions. The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining
the necessary liquidity to conduct its day-to-day operations. The Company considers this risk to be immaterial.
b) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial
instruments which are potentially subject to credit risk for the Company consist primarily of cash and cash equivalents, accounts and other receivables, and the
reclamation deposit. The Company considers credit risk with respect to its cash and cash equivalents to be immaterial as cash and cash equivalents are mainly held
through high credit quality major Canadian financial institutions as determined by ratings agencies. As a result, the Company does not expect any credit losses.
28
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
19. FINANCIAL AND CAPITAL RISK MANAGEMENT (Continued)
c) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.
The Company’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages its liquidity risk by preparing annual
estimates of exploration and administrative expenditures and monitoring actual expenditures compared to the estimates to ensure that there is sufficient capital on
hand to meet ongoing obligations.
The following table summarizes the maturities of the Company’s financial liabilities as at December 31, 2019 based on the undiscounted contractual cash flows:
Accounts payable and accrued liabilities
Lease liability
$
1,398 $
648
1,398 $
827
1,398 $
149
- $
496
After 5 years
-
-
- $
182
Carrying
Amount
Contractual
Cash Flows
Less than 1
year
1 – 3 years
4 – 5 years
As at December 31, 2019, the Company held cash and cash equivalents of $5,902 (December 31, 2018 - $5,115). The Company believes it has sufficient cash on
hand to meet operating requirements as they arise for at least the next 12 months.
d) Capital Risk Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and
retention of its mineral properties. The Company has historically demonstrated the ability to raise new capital through equity issuances and/or through surplus cash
as part of its acquisitions. In the management of capital, the Company includes the components of shareholders’ equity as well as cash. The Company prepares
annual estimates of exploration and administrative expenditures and monitors actual expenditures compared to the estimates to ensure that there is sufficient capital
on hand to meet ongoing obligations.
20. SUBSEQUENT EVENTS
Private Placement Equity Financing with Ausenco
First Mining has entered into an agreement with Ausenco Engineering Canada Inc. (“Ausenco”) to complete a Pre-Feasibility Study (“PFS”) for the Company’s
Springpole Gold Project. Ausenco or an affiliate will be entitled to receive approximately $1,600 as fees thereunder. Pursuant to the agreement with Ausenco, on
January 15, 2020 the Company closed a private placement with Ausenco, for gross cash proceeds of approximately $750 from Ausenco in respect of its subscription
for common shares (the “Ausenco Offering”). Pursuant to the Ausenco Offering, First Mining issued 2,777,777 common shares to Ausenco at a price of $0.27 per
common share. First Mining then paid $750 to Ausenco as a prepayment for the costs of the PFS.
Non-Brokered Private Placement Financing
On March 6, 2020, the Company closed the third and final tranche of a non-brokered private placement initially announced on February 6, 2020, pursuant to which
it raised aggregate gross proceeds of $8,500 (the “2020 Offering”). Pursuant to the 2020 Offering, the Company issued an aggregate of 27,420,318 units of the
Company (the “Units”) at a price of $0.22 per Unit for gross proceeds of $6,000 and 10,000,000 flow-through units of the Company (the “FT Units”) at a price of
$0.25 per FT Unit for gross proceeds of $2,500. The 2020 Offering closed in three tranches, with 10,000,000 FT Units issued on February 14, 2020, 23,328,818
Units issued on February 28, 2020 and 4,091,500 Units issued on March 6, 2020. In connection with the 2020 Offering, the Company paid issuance costs of $91 in
cash. Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant,
a "Warrant"). Each Warrant will entitle the holder to acquire one common share of the Company for a period of 36 months from the date of issuance at a price of
$0.33. Each FT Unit consisted of one flow-through common share of the Company that qualifies as a "flow-through share" for the purposes of the ITA and one-half
of one Warrant on the same terms as the Warrants forming part of the Units.
29
FIRST MINING GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of Canadian dollars unless otherwise noted)
20. SUBSEQUENT EVENTS (Continued)
Stock Options Grant
Subsequent to December 31, 2019, the Company granted 8,750,000 incentive stock options to Directors, Officers, employees and consultants of the Company under
the terms of its stock option plan. The stock options have an exercise price of $0.25 per share and are exercisable for a period of five years from the grant date.
Exercise of Stock Options
Subsequent to December 31, 2019 and as at the date of filing these consolidated annual financial statements, a total of 400,000 stock options were exercised for
gross proceeds of $60.
Stock Options Expired
Subsequent to December 31, 2019 and as at the date of filing these consolidated annual financial statements, 1,700,000 stock options expired unexercised.
Impacts of COVID-19 Pandemic
In March 2020, the World Health Organization declared a global pandemic related to the virus known as COVID-19. The expected impacts on global commerce are
anticipated to be far reaching. To date there have been significant stock market declines, and the movement of people and goods has become restricted. The mineral
exploration sector is expected to be impacted significantly as many local and regional governments have issued public health orders in response to COVID-19,
including restricting the movement of people, which could impact the Company's ability to access its properties and complete its exploration programs in the
coming year. A continuing period of lower prices could significantly affect the economic potential of many of the Company’s current properties and may result in
the Company ceasing work on, or dropping its interest in, some or all of them.
As the Company does not have production activities, the ability to fund ongoing exploration is affected by the availability of financing. Due to market uncertainty
the Company may be restricted in its ability to raise additional funding.
The impact of these factors on the Company is not yet determinable; however they may have a material impact on the Company’s financial position, results of
operations and cash flows in future periods. In particular, there may be heightened risk of mineral property impairment and liquidity or going concern uncertainty.
As a result, impairment indicators for our mineral properties and/or a decline in the fair value of our mineral property investment could arise in 2020 if current
conditions persist. We continue to work on revisions to our company's forecasts and exploration plans in light of the current conditions and will use these updated
assumptions / forecasts in measurement of our assets going forward.
As required by IFRS, we have not reflected these subsequent conditions in the measurement of our mineral properties or our mineral property investment as at
December 31, 2019.
30
Exhibit 99.3
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
TABLE OF CONTENTS
COMPANY OVERVIEW AND STRATEGY
2019 HIGHLIGHTS
SELECTED FINANCIAL INFORMATION
SELECTED QUARTERLY FINANCIAL INFORMATION
CANADIAN MINERAL PROPERTY PORTFOLIO LOCATIONS
MINERAL PROPERTY PORTFOLIO GOLD RESOURCES
MINERAL PROPERTY PORTFOLIO REVIEW
MINERAL PROPERTY BALANCES
RESULTS OF CONTINUING OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
OUTLOOK
FINANCIAL INSTRUMENTS
RELATED PARTY TRANSACTIONS
OFF-BALANCE SHEET ARRANGEMENTS
NON-IFRS MEASURES
CHANGES IN ACCOUNTING POLICIES
ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED
CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES
RISKS AND UNCERTAINTIES
QUALIFIED PERSONS
SECURITIES OUTSTANDING
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
FORWARD-LOOKING INFORMATION
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
3
4
8
10
11
12
13
24
26
29
30
31
32
32
32
34
34
35
36
46
46
47
48
49
Page 2
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
GENERAL
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial statements of First Mining Gold
Corp. (the “Company” or “First Mining”) for the years ended December 31, 2019 and 2018, which are prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These documents along with additional information on the
Company, including the Company’s Annual Information Form for the year ended December 31, 2019, are available under the Company’s SEDAR profile at
www.sedar.com, on EDGAR at www.sec.gov., and on the Company’s website at www.firstmininggold.com.
In this MD&A, unless the context otherwise requires, references to the “Company”, “First Mining”, “we”, “us”, and “our” refer to First Mining Gold Corp. and its
subsidiaries.
This MD&A contains “forward-looking statements” and “forward-looking information” within the meaning of applicable Canadian securities laws. See the section
on page 44 of this MD&A titled “Forward-Looking Information” for further details. In addition, this MD&A has been prepared in accordance with the
requirements of Canadian securities laws, which differ in certain material respects from the disclosure requirements of United States securities laws, particularly
with respect to the disclosure of mineral reserves and mineral resources. See the section on page 45 of this MD&A titled “Cautionary Note to U.S. Investors
Regarding Mineral Resource and Mineral Reserve Estimates” for further details.
This MD&A contains disclosure of certain non-IFRS financial measures. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. See
the section on page 30 of the MD&A entitled "Non-IFRS Measures" for further details.
All dollar amounts included in this MD&A are expressed in thousands of Canadian dollars unless otherwise noted. This MD&A is dated as of March 30, 2020 and
all information contained in this MD&A is current as of March 27, 2020.
COMPANY OVERVIEW AND STRATEGY
First Mining was incorporated in Canada on April 4, 2005. The Company changed its name to First Mining Gold Corp. in January 2018. First Mining is a Canadian-
focused gold exploration and development company advancing a large resource base of 7.4 million ounces of gold in the measured and indicated categories and 3.8
million ounces of gold in the inferred category. First Mining’s primary focus is the development and permitting of its Springpole Gold Project and the advanced
exploration of its Goldlund Gold Project, both located in northwestern Ontario. Springpole is one of the largest undeveloped gold assets in Canada, with permitting
and a Pre-Feasibility Study underway. Goldlund is an advanced exploration stage asset where drilling is ongoing to define both the extension of the existing
resource area and to better define the regional scale potential. First Mining’s eastern Canadian property portfolio also includes Cameron, Pickle Crow, Hope Brook,
Duparquet, Duquesne, and Pitt.
The following table highlights the Company’s material projects:
Project
Springpole Gold Project (“Springpole”)
Goldlund Gold Project “(Goldlund”)
Hope Brook Gold Project (“Hope Brook”)
Cameron Gold Project (“Cameron”)
Pickle Crow Gold Project (“Pickle Crow”)
Location
Northwestern Ontario, Canada
Northwestern Ontario, Canada
Newfoundland, Canada
Northwestern Ontario, Canada
Northwestern Ontario, Canada
Page 3
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
2019 HIGHLIGHTS
The following highlights the Company’s developments during fiscal 2019 (including subsequent events up to March 27, 2020). For further information, please refer
to the “News” section on the Company’s website at www.firstmininggold.com.
Springpole Gold Project
Commencement of Pre-Feasibility Study
On November 14, 2019, the Company announced that it had entered into an agreement with Ausenco Engineering Canada Inc. (“Ausenco”) to complete a Pre-
Feasibility Study (the “PFS”) for Springpole. The PFS will follow on from the work completed during the Springpole PEA phase (described below), initially
focusing on trade-off studies and optimizations to define the ultimate project scope. The final project scope will then be incorporated into the PFS. Ausenco or an
affiliate will be entitled to receive approximately $1,600 as fees thereunder.
Pursuant to the agreement referenced above, on January 15, 2020, the Company closed a private placement with Ausenco, for gross cash proceeds of approximately
$750 from Ausenco in respect of its subscription for common shares (the “Ausenco Offering”). Pursuant to the Ausenco Offering, First Mining issued 2,777,777
common shares to Ausenco at a price of $0.27 per common share. First Mining then paid $750 to Ausenco as a prepayment for the costs of the PFS.
For the balance of the PFS, the Company is required to issue common shares to Ausenco in exchange for services provided. Once Ausenco has completed an
additional $375 in services in relation to the PFS, First Mining will issue to Ausenco a further $375 of common shares. Pricing will be based on the 30-day volume
weighted average price (“VWAP”) at the time less the maximum discount allowed under Toronto Stock Exchange (“TSX”) rules, subject to the minimum pricing
rules of the TSX.
Upon completion of the PFS and the announcement by First Mining of the PFS results, First Mining will satisfy the remaining amount owing for completion of the
PFS by issuing a final tranche of common shares to Ausenco. This final tranche of common shares will be issued to Ausenco at least five trading days after the date
of the Company’s news release announcing the results of the PFS have passed, with pricing of the common shares based on the 30-day VWAP as of the news
release date, subject to the minimum pricing rules of the TSX.
In addition, Ausenco will issue separate monthly statements to the Company for total labour and other direct costs to assist with tracking against the initial budget
proposal. Any additional costs represented by a change order will either be paid in cash or through the issuance of additional common shares to Ausenco in
satisfaction of the costs in the change order. If the Company chooses to pay the amounts in common shares, these common shares will be issued once the PFS has
been delivered to First Mining. The shares issued for such purposes will be based on the 30-day VWAP less the maximum discount allowed under TSX rules (with
the last day of the 30-day period being the date on which the PFS is delivered to the Company).
Updated Preliminary Economic Assessment
On October 16, 2019, the Company announced the results of an updated independent Preliminary Economic Assessment study for Springpole (the “2019
Springpole PEA”) that was prepared by SRK Consulting (Canada) Inc. The 2019 Springpole PEA provides updates from the previous PEA for Springpole
completed in October 2017 (the “2017 Springpole PEA”).
The 2019 Springpole PEA evaluates recovery of gold and silver from a 36,000 tonne-per-day (“tpd”) open pit operation, with a process plant that includes crushing,
grinding and 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. Updated metallurgical testwork that has demonstrated the potential for significantly improved gold and
silver recoveries was included along with updated operating and capital cost estimates. The mineral resource calculations provided in the 2019 Springpole PEA
were not impacted and remain the same as were stated in the 2017 Springpole PEA. A copy of the 2019 Springpole PEA technical report entitled “Preliminary
Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, which has an effective date of September 1, 2019, was filed by the Company on
SEDAR on November 7, 2019.
Page 4
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Readers are cautioned that the 2019 Springpole PEA is preliminary in nature, and as such 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 2019 Springpole PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Highlights of the 2019 Springpole PEA:
● Base case USD$1.23 billion pre-tax net present value discounted at 5% (“NPV5%”) (USD$1.75 billion at USD$1,500/oz gold)
● Base case USD$841 million after-tax NPV5% (USD$1.22 billion at USD$1,500/oz gold)
● Base case 26% pre-tax internal rate of return (“IRR”) (33% at USD$1,500/oz gold), 22% after-tax IRR (28% at USD$1,500/oz gold)
● 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 grams per tonne (“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 estimated at USD$575/oz of gold equivalent (USD$514/oz of gold on a by-product basis)
● LOM all-in sustaining costs (“AISC”) estimated at USD$611/oz of gold equivalent (USD$552/oz of gold on a by-product basis)
● Initial capital costs estimated at USD$809 million, using an owner-operated mining scenario
● LOM sustaining capital costs estimated at USD$124 million, plus USD$26 million for closure costs
Note: Base case parameters assume a gold price of USD$1,300/oz and a silver price of USD$20/oz (the same prices used in the 2017 Springpole PEA), and an
exchange rate (C$ to USD$) of 0.75. NPV is calculated as of the commencement of construction and excludes all pre-construction costs.
Metallurgical Study
On February 19, 2019, the Company announced interim metallurgical test results which indicated the potential for significant increases in the ultimate recovery of
both gold and silver from Springpole. Further details of the testing procedures used are set out in the February 19th news release. The next stage of metallurgical
testing will involve further investigation into flotation, fine and ultra-fine grinding alternatives and will eventually lead to locked cycle metallurgical testing to
confirm the final processing flowsheet. The final flowsheet will be selected after completing trade-off studies on capital and operating costs as part of the PFS for
Springpole.
Permitting
The ongoing priority at Springpole is to continue to advance the project through the provincial and federal environmental assessment (“EA”) processes, both of
which are currently underway. The goal is to prepare a synchronized Environmental Impact Statement (“EIS”) that satisfies both the federal and provincial
requirements.
● The federal EA process was initiated through the submission of a Project Description (“PD”) to the Canadian Environmental Assessment Agency (the
“Agency”) in February 2018. The PD was used by the Agency to determine whether an EA was required for the Springpole project and to prepare
guidelines regarding the completion of an EA. On April 20, 2018, the Agency determined that a federal EA is required for the Springpole Gold Project,
and EIS guidelines for the federal EA were issued to First Mining on June 19, 2018.
● For the provincial process, First Mining entered into a Voluntary Agreement with the Ontario Ministry of Environment, Conservation and Parks
(“MECP”) (formerly MOECC) in April 2018 to conduct an EA for the project. There are two main stages in the provincial EA process, namely the
development of Terms of Reference (“ToR”) and the development of the EA Report. The ToR is a work plan which will outline how the EA will be
prepared. The ToR will address the community consultation and engagement plan, key components of the project, and the range of alternatives that will be
considered by First Mining.
Page 5
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
● First Mining commenced community consultation and engagement with the communities of interest in July 2018 and has held consultation meetings with
Indigenous communities and other stakeholders. The Company is now in its second round of consultation in readiness for the preparation of the ToR. First
Mining continues with community consultations and engagement and submitted the second draft of the ToR to MECP on January 21, 2020. First Mining
anticipates completing another round of consultation and receiving final approval of the ToR by Q2 2020.
● While the permitting process is ongoing, the Company has completed a “data gap assessment” on the environmental baseline work required at Springpole
in order to identify any remaining work requirements. Data collection programs to further advance the EA processes will include terrestrial and aquatic
environs, hydrology, surface water quality monitoring, hydrogeology, geotechnical investigation, and tailings and mine rock geochemical characterization.
Goldlund Gold Project
Regional Drill Program
In 2019, the Company completed a 32-hole drill program at its Miller prospect on the Goldlund property (“Miller”), for a total of 6,130 metres (“m”). Miller is
located approximately 10 kilometres (“km”) northeast and along strike of the current resource area at Goldlund. Work consisted of infill drilling of the area initially
tested in 2018, as well as step-out drilling to the northeast and southwest along strike. The 2019 drilling tested a total strike length of up to 900 m, with drill spacing
largely between 25 m and 50 m, and followed on the strong results achieved in 2018, which included 108 m of 2.43 g/t gold (“Au”), and frequent occurrences of
visible gold within the drill core.
Since drilling first commenced on the Miller prospect in 2018, a total of 40 holes (7,386 m) have been drilled, successfully outlining mineralization over a strike
length of approximately 450 m. Low grade gold mineralization encountered in gabbro in hole MI-19-037 (0.17 g/t Au over 15.0 m), which was drilled to test a
possible northeast extension of Miller, demonstrates that this northeast area may still be a viable target for follow-up soil and rock sampling.
The drilling at Miller has revealed that mineralization in this area differs from that in the Goldlund Main Zone. At Miller, mineralization occurs in a highly silicified
granodiorite dyke of varying width, which has been intruded into a gabbro unit that is also highly silicified and sheared. Both the gabbro and granodiorite are hosts
to mineralization at Miller, in contrast to Goldlund Zones 1 and 7, for example, where only the granodiorite is mineralized and the gabbro is unmineralized. This
recently identified characteristic represents the potential for significant regional exploration upside, since gabbro-hosted mineralization provides a new exploration
horizon and is abundant throughout the property. Future exploration will target these prospective areas. A further review of regional targets over the broader
Goldlund property is ongoing, including identifying new geophysical targets for potential follow-up work, which may include geological mapping, rock sampling,
and/or drilling.
None of the drill results from Miller were included in the 2019 updated mineral resource estimate for Goldlund.
“Main Zone” Drill Program
After the completion of the 2019 drilling at Miller, the exploration program moved to the Goldlund Main Zone area, and a new drill program is currently underway,
due for completion in 2020.
The initial phase of this drill program consisted of 23 holes (approximately 4,000 m), with the overall program’s focus being to define and extend mineralization in
the eastern and western portions of Zones 1, 2, 3 and 4. The Company is currently planning a second phase of this work program (the scale of the second phase is
yet to be determined, and will be based on pending results). Drilling at the Main Zone is focused on delineating mineralization between the currently-defined zones
of the Goldlund deposit.
Results from the first eleven holes of the Goldlund Main Zone drill program were reported in the news release dated March 2nd, 2020. These holes primarily
targeted the eastern parts of Zones 2 and 3 as well as the area between these two zones, following up on historical drill intercepts. Of the eleven holes reported, gold
mineralization has been encountered in nine. Hole GL-19-008 intersected 21 m of 5.36 g/t gold within highly mineralized granodiorite and porphyry units, as well
as within andesite, and was successful in confirming the high grades within Zone 2 that were encountered in historical drilling. Hole GL-19-010 was drilled to
intersect the area between the known mineralized areas at Zones 2 and 3, and encountered significant gold mineralization hosted within andesite (15.0 m at 1.68 g/t
gold), before intersecting the mineralized granodiorite and porphyries of Zone 2 towards the base of the hole. The remaining drill holes also show examples of gold
mineralization occurring throughout different lithological units, which include andesites, gabbros and felsic porphyries in addition to the granodiorite, which is the
principal host of the gold mineralization in Zones 1 and 7.
Page 6
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Highlights from the first eleven holes drilled at the Main Zone include:
Hole
From (m)
To (m)
Length (m)
Au g/t
Hole GL-19-008
Including
Hole GL-19-010
Including
Hole GL-19-013
Including
83.0
96.0
69.0
69.0
63.0
75.0
104.0
97.0
84.0
70.0
77.0
76.0
21.0
1.0
15.0
1.0
14.0
1.0
5.36
89.60
1.68
8.02
1.15
9.42
The main Goldlund deposit that hosts the current mineral resource estimate remains open along strike to the northeast, to the southwest, and at depth.
Updated Mineral Resource Estimate
On March 27, 2019, the Company announced the results of an updated mineral resource estimate for Goldlund, which has an effective date of March 15, 2019 and
was prepared by WSP Canada Inc. (“WSP”) of Sudbury, Ontario (the “2019 Goldlund Resource Estimate”). A summary of the overall changes detailed in the
2019 Goldlund Resource Estimate is as follows:
● In total, indicated resource Au ounces (“oz”) increased by 248,700 oz. This increase in oz corresponds to an increase in tonnage of 3,535,900 tonnes from
9,324,100 tonnes at an average grade of 1.87 g/t Au to 12,860,000 tonnes at an average grade of 1.96 g/t Au.
● In total, inferred resource Au oz decreased by 628,400 oz, after adjusting for the proportion of Inferred resource tonnes removed due to the upgrade of
certain tonnes to the indicated resource category. This represents an overall reduction in tonnage of 22,533,000 tonnes from 40,895,000 tonnes at an
average grade of 1.33 g/t Au to 18,362,000 tonnes at an average grade of 1.49 g/t Au.
In summary, the 2019 Goldlund Resource Estimate incorporated approximately 40,000 m of incremental drilling, the bulk of which was focused on Zone 7. While
the increased data density and geological understanding of the deposits resulted in increased confidence of the resource, adding 3,535,900 tonnes at an average
grade of 1.96 g/t Au, it also resulted in a large reduction in the number of tonnes and ounces in the inferred resource category. First Mining’s technical team believes
that the increased understanding of the deposit will assist the Company in better targeting subsequent drill programs aimed at growing the current resource body at
Goldlund, which remains open along strike to the northeast, to the southwest, and at depth. Further details can be found in the technical report for the 2019
Goldlund Resource Estimate entitled “Technical Report and Resource Estimation Update, Goldlund Gold Project, Sioux Lookout, Ontario”, which was prepared by
WSP and filed by the Company on SEDAR on April 1, 2019.
Non-Brokered Private Placement Financings
On March 6, 2020, the Company closed the third and final tranche of a non-brokered private placement initially announced on February 6, 2020, pursuant to which
it raised aggregate gross proceeds of $8,500 (the “2020 Offering”). Pursuant to the 2020 Offering, the Company issued an aggregate of 27,420,318 units of the
Company (the “Units”) at a price of $0.22 per Unit for gross proceeds of $6,000 and 10,000,000 flow-through units of the Company (the “FT Units”) at a price of
$0.25 per FT Unit for gross proceeds of $2,500. The 2020 Offering closed in three tranches, with 10,000,000 FT Units issued on February 14, 2020, 23,328,818
Units issued on February 28, 2020 and 4,091,500 Units issued on March 6, 2020. In connection with the 2020 Offering, the Company paid issuance costs of $91 in
cash. Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant,
a "Warrant"). Each Warrant will entitle the holder to acquire one common share of the Company for a period of 36 months from the date of issuance at a price of
$0.33. Each FT Unit consisted of one flow-through common share of the Company that qualifies as a "flow-through share" for the purposes of the Income Tax Act
(Canada) (the "ITA") and one-half of one Warrant on the same terms as the Warrants forming part of the Units.
On December 18, 2019, the Company completed a non-brokered private placement raising aggregate gross proceeds of $1,999 (the “December 2019 Offering”).
Pursuant to the December 2019 Offering, the Company issued 7,405,000 common shares of the Company (the “Flow-Through Shares”) that qualify as “flow-
through shares” for purposes of the ITA, at a price of $0.27 per Flow-Through Share. In connection with the December 2019 Offering, the Company paid a 5%
finder’s fee on the aggregate gross proceeds in common shares, resulting in the issuance of an additional 370,250 common shares of the Company, and issuance
costs of $11 in cash.
On May 16, 2019, the Company completed a non-brokered private placement raising aggregate gross proceeds of $7,411 (the “May 2019 Offering”). Pursuant to
the May 2019 Offering, the Company issued 20,412,995 units of the Company (the "Units") at a price of $0.27 per Unit for gross proceeds of $5,511, and 5,277,777
flow-through units of the Company (the "FT Units") at a price of $0.36 per FT Unit for gross proceeds of $1,900. In connection with the May 2019 Offering, the
Company paid issuance costs of $141 in cash. Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant (each
whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder to acquire one common share of the Company until May 16, 2022 at a price
of $0.40. Each FT Unit consisted of one flow-through common share of the Company that qualifies as a "flow-through share" for the purposes of the ITA and one-
half of one Warrant on the same terms as the Warrants forming part of the Units.
Page 7
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
At-The-Market Financing
On August 20, 2019, First Mining announced it had entered into an at-the-market ("ATM") equity distribution agreement with Cantor Fitzgerald Canada
Corporation as agent pursuant to which First Mining may, at its discretion and from time-to-time, sell up to $15.0 million of common shares of the Company to the
public at the prevailing market price of the Company’s common shares on the TSX at the time of such sale. The sale of these common shares will be made through
“at-the-market distributions” as defined in the Canadian Securities Administrators’ National Instrument 44-102 Shelf Distributions, including sales made directly on
the TSX, or any other recognized marketplace upon which the Company’s common shares are listed or quoted or where the common shares are traded in Canada. To
date, First Mining has not sold any common shares of the Company under the ATM facility.
SELECTED FINANCIAL INFORMATION
Financial Results:
Mineral Property Expenditures(1)
Net Loss
Write-down of Mineral Properties
Loss from Operational Activities Excluding Certain Non-cash items(2)(3)
Basic and Diluted Net Loss Per Share (in Dollars)(4)
Financial Position:
Cash and Cash Equivalents
Working Capital(2)
Mineral Properties
Total Assets
Total Non-current Liabilities
For the twelve months ended December 31,
2019
2018
2017
$
6,031
(6,959)
341
(4,636)
(0.01) $
$
7,402
(11,645)
4,181
(4,563)
(0.02) $
11,996
(11,184)
-
(5,795)
(0.02)
December 31,
December 31,
December 31,
2019
2018
2017
$
5,902
5,780
252,815
$
5,115
7,536
244,129
268,020
3,139
$
257,532
-
$
15,400
19,401
239,871
265,737
-
$
$
$
$
(1) This represents the costs directly related to exploration and evaluation expenditures that have been capitalized into mineral properties, excluding share-
based payments.
(2) This is a non-IFRS measurement with no standardized meaning under IFRS and may not be comparable to similar financial measures presented by other
issuers. For further information and a detailed reconciliation, please see the section in this MD&A titled “Non-IFRS Measures”.
(3) “The certain non-cash items excluded” refers to the “Share-based Payments” and “Write-down of Mineral Properties”
(4) The basic and diluted loss per share calculations result in the same amount due to the anti-dilutive effect of outstanding stock options and warrants.
Page 8
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Net Loss
Fluctuations in the net loss between 2019 and 2018 were caused by changes in non-cash items such as write-down of mineral properties, share-based payments and
deferred income taxes. During the year ended December 31, 2019, net loss included a $341 write-down of the Turquoise Canyon mineral property, $1,596 in share-
based payment expenses and $516 in deferred income tax expense. The 2019 loss from operational activities excluding certain non-cash items increased by $73
when compared to the 2018 year, primarily due to bonus accruals recorded in Q4 2019. During the year ended December 31, 2018, net loss included a $4,181 write-
down of the Company’s Mexican mineral properties, and $3,032 in share-based payment expenses, which was significantly lower than the $5,497 share‐based
payment expense recorded in 2017 owing to a lower fair value per stock option granted. Loss from operational activities excluding certain non-cash items in 2018
fell by $1,232 when compared to the fiscal year ended December 31, 2017 primarily due to lower investor relations and marketing communications activities.
Cash and Cash Equivalents
Cash and cash equivalents decreased by $10,285 from December 31, 2017 to December 31, 2018, and increased by $787 from December 31, 2018 to December 31,
2019. During 2019 the increase in cash and cash equivalents was primarily attributable to cash raised from financing activities and the sale of marketable securities,
offset by cash used in mineral property exploration and development activities and cash used in operating activities including movements in working capital. In
2018, the Company drilled approximately 7,000 m at Goldlund compared with approximately 6,100 m in 2019, and due to movements in unpaid mineral properties
invoices had lower cash used in mineral property exploration and development activities in 2019 when comparing mineral property expenditures to 2018. It is worth
noting that cash used in investing activities for the purposes of exploration and development work being performed on the Company’s mineral properties remains
within total assets, given that these amounts are capitalized in connection with the Company’s accounting policies.
Total Assets
Total assets decreased by $8,205 from December 31, 2017 to December 31, 2018 mainly due to the cash used in operating activities, the decrease in the fair value of
the Company’s marketable securities, and the write-down of Mexican mineral properties. Total assets increased by $10,488 from December 31, 2018 to December
31, 2019 mainly due to cash raised from financing activities, additions to the mineral properties during the year, an increase in the fair value of mineral property
investments of $981 and commencement of an office space lease resulting in a right-of-use asset of $648.
Page 9
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
SELECTED QUARTERLY FINANCIAL INFORMATION
Financial Results
Net Loss
Write-down of Mineral Properties
Loss from Operational Activities
Excluding Certain Non-cash Items(1)(2)
Basic and Diluted Net Loss Per Share
(in dollars)(3)
Financial Position:
Cash and Cash Equivalents
Working Capital(1)
Mineral Properties
2019-Q4
2019-Q3
2019-Q2
2019-Q1
2018-Q4
2018-Q3
2018-Q2
$
(2,274) $
-
(1,643) $
341
(1,315) $
-
(1,727) $
-
(5,658) $
4,181
(937) $
-
(1,298) $
-
(1,441)
(1,143)
(0.00)
(0.01)
5,902
5,780
252,815
5,687
8,360
248,509
(881)
(0.00)
8,396
10,627
246,411
(1,171)
(1,099)
(0.00)
(0.01)
3,059
5,491
245,169
5,115
7,536
244,129
(971)
(0.00)
6,950
9,688
246,652
(1,254)
(0.00)
9,585
12,463
245,199
Total Assets
Total Non-Current Liabilities
$
268,020
3,139
$
263,470
-
$
263,381
-
$
256,463
-
$
257,532
-
$
262,146
-
$
263,586
-
$
2018-Q1
(3,752)
-
(1,239)
(0.01)
12,289
16,016
243,895
266,704
-
(1) These are non-IFRS measures with no standardized meaning under IFRS. For further information and a detailed reconciliation, please refer to the section
in this MD&A titled “Non-IFRS Measures”.
(2) “The certain non-cash items excluded” refers to the “Share-based Payments” and “Write-down of Mineral Properties”.
(3) The basic and diluted loss per share calculations result in the same amount due to the anti-dilutive effect of outstanding stock options and warrants in all
periods.
Quarterly results are discussed relative to the preceding quarter’s results in the following paragraphs
The most significant variance in net loss quarter to quarter is due to non-cash share-based payments expense, which comprises the timing of stock option grants and
associated vesting, the number of underlying options granted and the associated fair value dollar amount calculated at the time of the grant, and to a lesser extent
any impairment and deferred income tax expenses. Similarly, non-cash share based payments and impairment expenses explain the largest fluctuation in loss from
operational activities excluding certain non-cash items. In 2019-Q4 a bonus accrual was recorded as at December 31, 2019, resulting in an increase in salaries when
compared to the prior quarter. In 2019-Q3 there was an increase in professional fees in connection with the base shelf prospectus and arrangement of an ATM
facility, and an increase in directors’ fees. In 2019-Q2 there was a decrease in marketing expenses compared to 2019-Q1 due to fewer conferences attended and
fewer marketing campaigns. In 2019-Q1 there was an increase in marketing expenses compared to 2018-Q4 due to an increase in conference attendance and
marketing campaigns, which resulted in a higher net loss in 2019-Q1. Furthermore, in 2018-Q4 there was a $4,181 non-cash write-down of the Company’s Mexican
mineral properties and a non-recurring severance payment of $300. In 2018-Q3 there was a decrease in marketing expenses as compared to 2018-Q2, due to a
reduction in marketing activities by the Company.
In terms of cash and cash equivalents, variances between quarters depend on the amount, type and timing of work being performed on the Company’s mineral
property portfolio, classified under investing activities in the statements of cash flows. In 2019-Q4, the Company completed a non-brokered private placement
financing consisting of flow-through common shares, which provided net cash inflows of $1,988, classified under financing activities in the statements of cash
flows. In 2019-Q4 and 2019-Q3, the Company sold some of its marketable securities, which provided cash inflows of $1,758, classified under investing activities in
the statements of cash flows. In 2019-Q2, the Company completed a non-brokered private placement financing including the issuance of flow-through common
shares, which provided net cash inflows of $7,270, classified under financing activities in the statements of cash flows.
The fluctuation in total assets from one quarter to the next is primarily a function of decreases in cash used to fund operating activities, increases in cash from
private placements, changes in the fair value of marketable securities and mineral property investments, and additions to or write-down of mineral property
balances. It is worth noting that cash used in investing activities for the purposes of exploration and development work being performed on the Company’s mineral
properties remains within total assets, given that these amounts are capitalized in connection with the Company’s accounting policies.
Total non-current liabilities in 2019-Q4 consist of a long-term portion of a lease liability and environmental reclamation provision for the Pickle Crow Gold Project.
In December 2019, the Company entered into a 5-year lease agreement to use office space, and at the commencement date of the lease, the lease liability was
measured at the present value of the lease payments. As at December 31, 2019, the Company estimates that the fair value of the environmental reclamation
provision for environmental rehabilitation is $2,355.
Page 10
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
CANADIAN MINERAL PROPERTY PORTFOLIO LOCATIONS
The Company classifies its mineral properties as Tier 1, Tier 2, and Tier 3:
● Tier 1 projects are core, material assets which include the Company’s largest and most advanced mineral resource-stage projects.
● Tier 2 projects are resource-stage assets which host mineral resources.
● Tier 3 projects are grassroots exploration projects that host mineralization but have not received sufficient drilling to delineate mineral resources.
Page 11
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
MINERAL PROPERTY PORTFOLIO GOLD RESOURCES (1)
Project
Tonnes
Gold
Grade (g/t)
Silver
Grade (g/t)
Contained Gold Ounces
(oz)
Contained Silver
Ounces (oz)
Measured Resources
Cameron Gold Project(2)
Duparquet Gold Project(3)
Indicated Resources
Springpole Gold Project(4)
Goldlund Gold Project(8)
Hope Brook Gold Project
Cameron Gold Project(5)
Duparquet Gold Project(3)
Duquesne Gold Project
Inferred Resources
Springpole Gold Project(4)
Goldlund Gold Project(8)
Hope Brook Gold Project
Cameron Gold Project(6)
Pickle Crow Gold Project(7)
Duparquet Gold Project(3)
Duquesne Gold Project
Pitt Gold Project
Total Measured Resources
Total Indicated Resources
Total Measured and Indicated
Resources
Total Inferred Resources
3,360,000
18,470
139,100,000
12,860,000
5,500,000
2,170,000
7,122,070
1,859,200
11,400,000
18,362,000
836,000
6,535,000
9,452,000
4,066,284
1,563,100
1,076,000
3,378,470
168,611,270
171,989,740
53,290,384
2.75
1.52
1.04
1.96
4.77
2.40
1.73
3.33
0.63
1.49
4.11
2.54
4.10
1.85
5.58
7.42
2.74
1.30
1.33
2.21
-
-
5.40
-
-
-
-
-
3.10
-
-
-
-
-
-
-
-
5.40
5.40
3.10
297,000
901
4,670,000
809,200
844,000
167,000
396,134
199,161
230,000
876,954
110,000
533,000
1,230,500
242,312
280,643
257,000
297,901
7,085,495
7,383,396
3,760,409
-
-
24,190,000
-
-
-
-
-
1,120,000
-
-
-
-
-
-
-
-
24,190,000
24,190,000
1,120,000
(1) The mineral resources set out in this table are based on the technical report for the applicable property, the title and date of which are set out under the
applicable property description within the section “Mineral Property Portfolio Review” in this MD&A or in the Company’s Annual Information Form for
the year ended December 31, 2019, which is available under the Company’s SEDAR profile at www.sedar.com.
(2) Comprised of 2,670,000 tonnes of pit-constrained (0.55 g/t Au cut-off) measured resources at 2.66 g/t Au, and 690,000 tonnes of underground (2.00 g/t Au
cut-off) measured resources at 3.09 g/t Au.
(3) The Company owns 100% of the Central Duparquet Property, and a 10% indirect interest in the Duparquet Gold Project. The measured, indicated and
inferred mineral resources for Duparquet shown in the above table reflect both of these ownership interests.
(4) Open pit mineral resources are reported at a cut-off grade of 0.4 g/t Au. Cut-off grades are based on a gold price of USD$1,400/oz and a gold processing
recovery of 80% and a silver price of USD$15/oz and a silver processing recovery of 60%. The estimated LOM strip ratio for the resource estimate is 2.1.
Silver resource shown in separate column with grade representing silver g/t, and contained ounces representing silver Ag.
(5) Comprised of 820,000 tonnes of pit-constrained (0.55 g/t Au cut-off) indicated resources at 1.74 g/t Au, and 1,350,000 tonnes of underground (2.00 g/t Au
cut-off) indicated resources at 2.08 g/t Au.
(6) Comprised of 35,000 tonnes of pit-constrained (0.55 g/t Au cut-off) inferred resources at 2.45 g/t Au, and 6,500,000 tonnes of underground (2.00 g/t Au
cut-off) inferred resources at 2.54 g/t Au.
(7) Comprises 1,887,000 tonnes of pit-constrained (0.50 g/t Au cut-off) inferred resources at 1.30 g/t Au, and 7,565,000 tonnes of underground inferred
resources that consist of: (i) a bulk tonnage, long-hole stoping component (2.00 g/t Au cut-off); and (ii) a high-grade cut-and-fill component (2.60 g/t Au
cut-off) over a minimum width of 1 metre.
(8) Resources are stated as contained within a conceptual pit shell using a gold price of USD$1,350/oz, mining costs of USD$2.00 per tonne, processing plus
G&A costs of USD$15.40 per tonne, 93% recoveries and an average pit slope of 48 degrees.
Page 12
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
MINERAL PROPERTY PORTFOLIO REVIEW
First Mining has properties located in Canada, Mexico, and the United States. The following section discusses the Company’s priority and other significant projects.
Readers are cautioned that, with respect to any Preliminary Economic Assessment (“PEA”) referenced in the section below or anywhere else in this MD&A, a
PEA is preliminary in nature, any inferred mineral resources included therein 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. Actual results may vary, perhaps materially. The Company is not aware of any
environmental, permitting, legal, title, taxation, socio-political, marketing or other issue which may materially affect this estimate of mineral resources. The
projections, forecasts and estimates herein and in any technical reports referred to herein constitute forward-looking statements and readers are urged not to
place undue reliance on such forward-looking statements.
Tier 1 Projects
Springpole, Ontario
The Springpole property covers an area of 41,943 hectares in northwestern Ontario, consisting of 30 patented mining claims, 435 contiguous mining claims and
thirteen mining leases. The project is located approximately 110 km northeast of the Municipality of Red Lake in northwestern Ontario and is situated within the
Birch-Uchi Greenstone Belt. The large, open pittable resource is supported by significant infrastructure, including a 72-man onsite camp, winter road access, a
logging road and nearby power lines within 40 km. Springpole is located within an area that is covered by Treaty Three and Treaty Nine First Nations Agreements.
With approximately 4.7 million ounces of gold and 24 million ounces of silver in the indicated resource category, Springpole is one of the largest undeveloped gold
projects in Ontario1.
Updated Preliminary Economic Assessment
On October 16, 2019, the Company announced the results of the 2019 Springpole PEA, which was prepared by SRK Consulting (Canada) Inc. The 2019 Springpole
PEA evaluates the recovery of gold and silver from a 36,000 tpd open pit operation at an average head grade of 1.00 g/t Au and 5.28 g/t Ag. The mineral resource
estimate used for the 2019 Springpole PEA was the same as was used in the 2017 Springpole PEA and remains current. A copy of the 2019 Springpole PEA
technical report entitled “Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, which has an effective date of September 1,
2019, was filed by the Company on SEDAR on November 7, 2019. Under the 2019 Springpole PEA, capital costs for the processing facility were estimated to be
USD$519 million, inclusive of a USD$104 million contingency. No major plant re-build or expansion was considered during the LOM, with sustaining capital set to
maintain the equipment in operating condition. No allowance for salvage value was made.
1 Source: S&P Market Intelligence database as of November 6, 2019. Ranking among undeveloped primary gold resources per jurisdiction.
Page 13
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Highlights of the 2019 Springpole PEA as compared to the 2017 Springpole PEA are as follows:
Parameters
Mine life
Initial capital cost
Base case gold price
Base case silver price
Exchange rate (CAD/USD)
Gold processing recovery
Silver processing recovery
Average annual payable production
Economic Results
Pre-tax NPV at 5% discount rate
Pre-tax Internal rate of return
Post-tax NPV at 5% discount rate
Post-tax Internal rate of return
Non-discounted post-tax payback period
“All-in Sustaining” cash costs
Project Enhancement Opportunities
2019 PEA
12 years
USD$809 million
USD$1,300 per oz
USD$20 per oz
0.75
88%
93%
353,900 oz Au and 1,937,000 oz Ag
2019 PEA
USD$1,233 million
25.5%
USD$841 million
21.8%
3.4 years
USD$611 per oz of Au equivalent
2017 PEA
12 years
USD$586 million
USD$1,300 per oz
USD$20 per oz
0.75
80%
85%
296,500 oz Au and 1,632,000 oz Ag
2017 PEA
USD$1,159 million
32.3%
USD$792 million
26.2%
3.2 years
USD$655 per oz of Au equivalent
The 2019 Springpole PEA identified several opportunities to enhance the project economics which the Company plans to investigate as it continues to advance the
Springpole project. These opportunities include:
● Mine Plan Optimization. Refined pit optimization parameters could result in better optimized open pit limits which could reduce the overall strip ratio which
is currently 2.1:1.
● Further Metallurgical Testing. Continued efforts to investigate opportunities to improve the gold and silver recoveries through further metallurgical testing
and refining milling processes.
● Geotechnical Studies. A better hydrogeological and geotechnical understanding may increase pit slope angles, potentially reducing costs associated with
mining waste material.
● Resource Expansion. There are other geophysical targets around the current resource area where additional drilling has the potential to add resources, which
has the potential to extend the life of the project beyond 12 years of production (which is the current LOM scoped in the 2019 Springpole PEA).
Page 14
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Activities involved in advancing the project to pre-feasibility include additional metallurgical testwork, advanced hydrogeological and geotechnical
characterization, permitting and continued baseline environmental studies. A number of these studies are ongoing as part of the data collection in support of the
completion of an EIS for the project.
The Company is focused on advancing the permitting and development of Springpole, and its activities in this regard can be summarized as follows:
Commencement of Pre-Feasibility Study
On November 14, 2019, the Company announced that it had entered into an agreement with Ausenco to complete a PFS for Springpole. The PFS will follow on
from the work completed during the Springpole PEA phase (described below), initially focusing on trade-off studies and optimizations to define the ultimate project
scope. The final project scope will then be incorporated into the PFS. Ausenco or an affiliate will be entitled to receive approximately $1,600 as fees thereunder
Pursuant to the agreement above, on January 15, 2020, the Company closed a private placement with Ausenco for gross cash proceeds of $750 from Ausenco in
respect of its subscription for common shares. Pursuant to the Ausenco Offering, First Mining issued 2,777,777 common shares to Ausenco at a price of $0.27 per
common share. First Mining then paid $750 to Ausenco as a prepayment for the costs of the PFS.
For the balance of the PFS, the Company is required to issue common shares to Ausenco in exchange for services provided. Once Ausenco has completed an
additional $375 in services in relation to the PFS, First Mining will issue to Ausenco a further $375 of common shares. Pricing will be based on the 30-day VWAP
at the time less the maximum discount allowed under TSX rules, subject to the minimum pricing rules of the TSX.
Upon completion of the PFS and the announcement by First Mining of the PFS results, First Mining will satisfy the remaining amount owing for completion of the
PFS by issuing a final tranche of common shares to Ausenco. This final tranche of common shares will be issued to Ausenco at least five trading days after the date
of the Company’s news release announcing the results of the PFS have passed, with pricing of the common shares based on the 30-day VWAP as of the news
release date, subject to the minimum pricing rules of the TSX. In addition, Ausenco will issue separate monthly statements to the Company for total labour and
other direct costs to assist with tracking against the initial budget proposal. Any additional costs represented by a change order will either be paid in cash or through
the issuance of additional common shares to Ausenco in satisfaction of the costs in the change order. If the Company chooses to pay the amounts in common shares,
these common shares will be issued once the PFS has been delivered to First Mining. The shares issued for such purposes will be based on the 30-day VWAP less
the maximum discount allowed under TSX rules (with the last day of the 30-day period being the date on which the PFS is delivered to the Company).
Environmental Assessment Process
On March 7, 2018, the Company announced that the PD had been submitted to, and subsequently accepted by, the Agency. The PD is a required government filing
that initiated the federal EA process for Springpole. On April 20, 2018, the Agency determined that a federal EA is required for the Springpole Gold Project. The
EA process and eventual project approval is expected to take approximately 24 months, after which permitting for construction can commence.
On June 26, 2018, the Company announced that the final EIS guidelines for a federal EA for Springpole had been issued by the Agency. The final EIS guidelines
were issued following the expiry of a public comment period on the draft EIS guidelines which had been made available to the public since April 27, 2018. The
final EIS guidelines outline federal information requirements for the preparation of an EIS and were prepared after taking into consideration comments received
from federal departments, the Ontario provincial ministry, Indigenous groups and the general public. To meet the requirements of the EIS, the Company has already
undertaken a broad range of environmental baseline studies at Springpole to collect biophysical data, which includes fish community and habitat surveys, species at
risk surveys, atmospheric environment surveys as well as surface, ground water and hydrology surveys. Currently, the Company is collecting environmental
baseline data and other information to prepare an EIS for Springpole. The Company chose to continue to stay in the Canadian Environmental Assessment Act, 2012
permitting process and not the newly enacted Impact Assessment Act process.
In parallel with the federal EA process, on April 23, 2018, the Company announced that it had entered into a Voluntary Agreement with the MECP to complete
certain requirements under the Ontario Environmental Assessment Act. This marked the commencement of a provincial Individual EA for Springpole, and the
Company is in the process of preparing the ToR, which will describe the scope of the EA and how the Company intends to undertake all aspects of the provincial
EA, including consultation efforts with Indigenous communities and other stakeholders. The Company submitted a draft ToR in Q1 2020 to MECP, Indigenous
communities, Provincial and Federal government agencies, and various Municipal Governments. The Company is also working on various biophysical work plans
for the Provincial EA.
Page 15
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Indigenous Communities Consultation Process
On February 13, 2018, the Company announced that it had signed a Negotiation Protocol Agreement with the Lac Seul First Nation, the Slate Falls First Nation and
the Cat Lake First Nation in Ontario. There has been continued community engagement on the Springpole ToR and the second round of engagement with the local
communities for the federal EA process commenced in 2019. This consultation includes the Company’s plans to study and mitigate any potential impacts from the
development of Springpole. The Company continues to undertake community consultation and engagement with the Indigenous communities, government and
public for the federal and provincial EA processes.
Metallurgical Study
On June 11, 2018, the Company contracted M3 Engineering and Technology Corporation to manage a metallurgical testwork program to improve the forecasted
gold and silver recoveries for the Springpole property and to define the process flowsheet. On February 19, 2019, the Company announced the interim metallurgical
test results from the program, which indicated the potential for significant increases in the ultimate recovery of both gold and silver from the project. The results
from this metallurgical testwork program were incorporated into the 2019 Springpole PEA, and thereafter are planned to be used in the preparation of the PFS for
Springpole.
Based on the testwork carried out, a flowsheet that includes flotation followed by leaching of reground concentrate and combined (rougher plus cleaner) tails
presents as the more beneficial processing route for the Springpole project. This flowsheet is based on a primary grind of P80 150 microns (“µm”) ahead of flotation,
with a cleaner flotation concentrate being reground to ~17 µm ahead of agitated leaching. Under these conditions, overall extractions achieved were 91% for gold
and 96% for silver. When accounting for carbon-in-pulp, carbon stripping and electrowinning circuit losses, the overall recoveries expected and used for the
economics presented in the 2019 Springpole PEA are 88% for gold and 93% for silver.
The next stage of metallurgical testing will involve further investigation into flotation as well as fine and ultrafine grinding alternatives, and will eventually lead to
locked cycle metallurgical testing to confirm the final processing flowsheet. This final flowsheet will be selected after completing trade-off studies on capital and
operating costs as part of the PFS for Springpole.
Geotechnical Coffer Dam Drilling
On April 19, 2018, the Company announced the completion of a geotechnical drilling program to investigate the lake bed sediments and bedrock along the proposed
alignment of the coffer dams at Springpole. The pre-feasibility level geotechnical drilling program has been completed over the approximately 800 m long footprint
of the three coffer dams which are required to dewater the north bay of Springpole Lake.
Goldlund, Ontario
The Goldlund property in northwestern Ontario consists of 1,349 mining claims (totaling 27,255 hectares), 27 patented claims (totaling 433 hectares), 1 mining
lease (48.56 hectares), and 1 License of Occupation (74.84 hectares). Rocks at the property consist of a volcanic sequence about 1.5 km wide. This north-easterly
striking volcanic sequence is intruded by several granodiorite sills. These sills are the host rock of the gold mineralization. These strata-parallel intrusions are
known to extend for over 50 km along the strike of the property. A number of historic gold occurrences are present on the property. The majority of identified
mineralization is hosted within the Central and Southern Volcanic Belts and historic production demonstrates the presence of small zones of higher-grade
mineralization. A technical report titled “Technical Report and Resource Estimation Update, Goldlund Gold Project, Sioux Lookout, Ontario”, which has an
effective date of March 15, 2019, was prepared by WSP and was filed by the Company on SEDAR on April 1, 2019, and is available under the Company’s SEDAR
profile at www.sedar.com and on the Company’s website at www.firstmininggold.com.
Mining at Goldlund in the 1980s produced approximately 90,700 tonnes of ore grading 4.23 g/t Au from underground and 39,000 tonnes of ore grading 4.80 g/t
from a small open pit. The project has year-round road access from Ontario Highway 72, which is 2 km to the south, and regional power lines are located 15 km to
the north.
2019 Regional drill program
In 2019, the Company completed a 32-hole drill program at its Miller prospect on the Goldlund property, for a total of 6,130 m. Miller is located approximately 10
km northeast and along strike of the current resource area at Goldlund. Work consisted of infill drilling of the area tested in 2018, as well as step-out drilling to the
northeast and southwest along strike. The 2019 drilling tested a total strike length of up to 900 m, with drill spacing largely between 25 m and 50 m, and followed
on the strong results achieved in 2018, which included 108 m of 2.43 g/t Au, and frequent occurrences of visible gold within the drill core.
Since drilling first commenced on the Miller prospect in 2018, a total of 40 holes (7,386 m) have been drilled, successfully outlining mineralization over a strike
length of approximately 450 m. Low grade gold mineralization encountered in gabbro in hole MI-19-037 (0.17 g/t Au over 15.0 m), which was drilled to test a
possible northeast extension of Miller, demonstrates that this northeast area may still be a viable target for follow-up soil and rock sampling.
Page 16
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
The drilling at Miller revealed that mineralization in this area differs from that in the Goldlund Main Zone. At Miller, mineralization occurs in a highly silicified
granodiorite dyke of varying width, which has been intruded into a gabbro unit that is also highly silicified and sheared. Both the gabbro and granodiorite are hosts
to mineralization at Miller, in contrast to the Goldlund Main Zones 1 and 7, for example, where only the granodiorite is mineralized and the gabbro is
unmineralized. This recently identified characteristic represents the potential for significant regional exploration upside, since gabbro-hosted mineralization
provides a new exploration horizon and is abundant throughout the property. Future exploration will target these prospective areas. A further review of regional
targets over the broader property is ongoing, including identifying new geophysical targets for potential follow-up work, which may include geological mapping,
rock sampling, and/or drilling.
None of the drill results from Miller were included in the 2019 updated mineral resource estimate for Goldlund.
Drill highlights from the holes drilled at Miller in 2019 include:
Hole
From (m)
To (m)
Length (m)
Au g/t
Hole
From (m)
To (m)
Length (m)
Au g/t
Hole MI-19-013
Including
And Including
Hole MI-19-014
Including
And Including
And Including
And Including
Hole MI-19-015
Including
Hole MI-19-017
Including
And Including
Hole MI-19-018
Including
And Including
And Including
Hole MI-19-019
Hole MI-19-020
Including
Hole MI-19-021
Including
Hole MI-19-022
Including
Hole MI-19-024
Including
And Including
46.0
47.0
88.0
3.0
42.0
60.0
142.0
168.0
1.0
108.0
32.0
56.0
83.0
18.0
100.0
113.0
129.0
65.0
133.0
134.0
111.0
112.0
115.0
121.0
133.0
133.0
139.0
228.0
48.0
109.0
210.0
91.0
61.0
183.0
169.0
168.0
141.0
201.0
93.0
84.0
141.0
134.0
114.0
130.0
101.0
139.0
135.0
118.0
113.0
122.0
122.0
140.0
134.0
140.0
182.0
1.0
21.0
207.0
49.0
1.0
41.0
1.0
167.0
33.0
169.0
37.0
1.0
123.0
34.0
1.0
1.0
36.0
6.0
1.0
7.0
1.0
7.0
1.0
7.0
1.0
1.0
1.09
35.19
2.73
1.57
2.34
26.43
4.07
55.28
1.01
1.84
0.88
3.42
65.97
0.86
2.08
12.91
23.96
0.41
1.77
8.15
0.99
4.78
0.82
2.58
1.72
5.49
6.5
Hole MI-19-025
Including
and
and
Including
Hole MI-19-027
Including
Hole MI-19-028
Including
And Including
Hole MI-19-030
Including
and
Including
Hole MI-19-032
Including
And Including
Hole MI-19-034
Including
Hole MI-19-040
Including
And Including
And Including
53.0
63.0
84.0
101.0
104.0
100.0
106.0
59.0
69.0
70.0
36.0
38.0
48.0
61.0
39.0
79.0
126.0
129.0
133.0
60.0
60.0
80.88
86.88
64.0
64.0
85.0
106.0
105.0
107.0
107.0
77.0
77.0
71.0
40.0
39.0
83.0
63.0
143.0
80.0
127.0
141.0
134.0
119.0
93.0
81.88
87.88
11.0
1.0
1.0
5.0
1.0
7.0
1.0
18.0
8.0
1.0
4.0
1.0
35.0
2.0
104.0
1.0
1.0
12.0
1.0
59.0
33.0
1.0
1.0
0.61
4.54
3.86
0.81
2.04
1.50
4.64
0.81
1.48
7.51
4.03
15.33
0.25
1.62
0.25
3.56
5.50
1.62
18.07
1.35
2.23
6.83
44.07
Page 17
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
For the year 2018, the Company spent approximately $2,411 for exploration expenditures on the Goldlund property, including approximately 5,000 m of infill
drilling and 1,944 m of regional exploration drilling along the property’s 50 km strike length. For the year 2019, the Company spent approximately $2,080 for
exploration expenditures on the Goldlund property, including approximately 6,100 m of regional exploration drilling. On February 11, 2020, the Company
announced final assay results from the drilling completed to date at the Miller prospect.
The 2019 drill program increased the strike length of mineralization at Miller by approximately 450 m. For further details regarding the assay results, see the
Company’s new releases dated September 25, 2019, November 19, 2019 and February 11, 2020, filed on SEDAR under the Company's SEDAR profile at
www.sedar.com.
“Main Zone” Drill Program
After the completion of the 2019 drilling at Miller, the exploration program moved to the Goldlund Main Zone area, and a new drill program is currently underway,
due for completion in 2020.
The initial phase of the 2020 drill program consisted of 23 holes (approximately 4,000 m), with the overall program’s focus being to define and extend
mineralization in the eastern and western portions of Zones 1, 2, 3 and 4. The Company is currently planning a second phase of this work program (the scale of the
second phase is yet to be determined, and will be based on pending results). Drilling at the Main Zone is focused on delineating mineralization between the
currently-defined zones of the Goldlund deposit.
Results from the first eleven holes of the Goldlund Main Zone drill program were reported in the Company’s news release dated March 2, 2020. These holes
primarily targeted the eastern parts of Zones 2 and 3 as well as the area between these two zones, following up on historical drill intercepts. Of the eleven holes
reported, gold mineralization has been encountered in nine. Hole GL-19-008 intersected 21 m of 5.36 g/t gold within highly mineralized granodiorite and porphyry
units, as well as within andesite, and was successful in confirming the high grades within Zone 2 that were encountered in historical drilling. Hole GL-19-010 was
drilled to intersect the area between the known mineralized areas at Zones 2 and 3, and encountered significant gold mineralization hosted within andesite (15.0 m
at 1.68 g/t gold), before intersecting the mineralized granodiorite and porphyries of Zone 2 towards the base of the hole. The remaining drill holes also show
examples of gold mineralization occurring throughout different lithological units, which include andesites, gabbros and felsic porphyries in addition to the
granodiorite, which is the principal host of the gold mineralization in Zones 1 and 7.
Highlights from the first eleven holes drilled at the Main Zone include:
Hole
From (m)
To (m)
Length (m)
Au g/t
Hole GL-19-008
Including
Hole GL-19-010
Including
Hole GL-19-013
Including
83.0
96.0
69.0
69.0
63.0
75.0
104.0
97.0
84.0
70.0
77.0
76.0
21.0
1.0
15.0
1.0
14.0
1.0
5.36
89.60
1.68
8.02
1.15
9.42
Page 18
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
The main Goldlund deposit that hosts the current mineral resource estimate remains open along strike to the northeast, to the southwest, and at depth.
2018 Regional drilling
Following the Phase 1 and 2 drilling campaigns, the Company commenced a regional exploration drilling campaign at Goldlund in June 2018. The 2018 exploration
drilling campaign focused on showings at the Miller, Eaglelund and Miles targets, which are approximately 10 km northeast of the current resource area, and
included 16 holes totaling 1,944 m.
The Company announced final fire assay results and metallic screen fire assay results for the Miller prospect on August 20, 2018, September 20, 2018 and March
27, 2019, respectively. The early results from the Miller prospect indicated that the entire width of the sill/dyke appears receptive to gold mineralization and this
mineralization remains open along strike in both directions and also at depth.
In addition to the highlights of the 2018 Miller prospect drilling results noted below, please see the Company’s news releases dated August 20, 2018, September 20,
2018 and March 27, 2019 for further details regarding the assay results, which include seven diamond drill holes at the Eaglelund prospect, and one diamond drill
hole at the Miles prospect. This completed the Company's 2018 regional drill program at Goldlund.
Highlights of the released Miller prospect drilling results from 2018 are as follows:
Hole
Hole MI-18-001
including
Hole MI-18-002
including
Hole MI-18-003
including
Hole MI-18-004
including
From (m)
To (m)
Length (m)
7.0
15.0
0.4
1.5
90.0
115.0
34.0
52.0
114.6
88.6
142.5
109.5
138.0
130.0
57.8
57.8
107.6
73.6
142.1
108.0
48.0
15.0
23.8
5.8
Au g/t
0.42
0.55
1.90
2.43
1.17
1.70
0.54
1.40
Hole
Hole MI-18-005
and
Hole MI-18-006
including
Hole MI-18-007
including
Hole MI-18-008
including
From (m)
To (m)
Length (m)
Au g/t
68.0
46.0
102.0
103.62
89.0
94.5
135.0
135.5
78.0
47.0
124.0
104.0
138.0
116.0
149.0
138.0
10.0
1.0
22.0
0.38
49.0
21.5
14.0
2.5
0.45
4.10
0.70
20.80
2.58
5.54
0.63
1.85
Page 19
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Hope Brook, Newfoundland
The Hope Brook property covers an area of 26,650 hectares in Newfoundland, including six mineral licenses, with a deposit hosted by pyritic silicified zones
occurring within a deformed, strike-extensive advanced argillic alteration zone. A technical report titled “2015 Mineral Resource Estimate Technical Report for the
Hope Brook Gold Project, Newfoundland and Labrador, Canada”, prepared by Mercator Geological Services Limited, was filed by the Company on SEDAR on
November 27, 2015, and is available under the Company’s SEDAR profile at www.sedar.com and on the Company’s website at www.firstmininggold.com.
The resource covers 1.5 km of an 8 km mineralized structure. Substantial infrastructure at the property includes a ramp to 350 m below surface with vent raise, line-
power to site, commercial barge and landing craft ramp, air strip, and a strong local labour force. Hope Brook was a former operating gold mine that produced
752,163 oz Au from 1987 to 1997.
The Company continues to collect environmental baseline data for permitting and the understanding of site environmental conditions.
In Q3 2019, the Company commenced a waste rock characterization and economic study of marketable aggregates at the Hope Brook site. In addition, low cost
geological mapping and soil sampling is planned in 2020. Surface and groundwater programs will continue for environmental data collection purposes.
Cameron, Ontario
The Cameron property covers an area of 49,574 hectares in northern Ontario and comprises 24 patented claims, 1,790 mining claims, 4 mining leases, and 7
Licenses of Occupation. The Cameron deposit is a greenstone‐hosted gold deposit and the mineralization is mainly hosted in mafic volcanic rocks within a
northwest trending shear zone (Cameron Lake Shear Zone) which dips steeply to the northeast. A technical report titled “Technical Report on the Cameron Gold
Deposit, Ontario, Canada”, prepared by Optiro Pty Limited, was filed by the Company on SEDAR on March 22, 2017, and is available under the Company’s
SEDAR profile at www.sedar.com and on the Company’s website at www.firstmininggold.com. There is year-round road access to the property from the nearby
highway and power lines within 20 km.
During 2018, the Company conducted minimal environmental studies, including fish community and habitat surveys as well as hydrology surveys, to support a
potential environmental assessment or permitting application in the future. During 2019, the Company undertook an ore sorting test program on selected core
samples (results of which are still pending), along with low cost maintenance of site infrastructure.
Pickle Crow, Ontario
The Pickle Crow project covers an area of 19,033 hectares and comprises 104 patented claims and 932 mining claims. The area is located in northwestern Ontario
and is covered by the Treaty Nine First Nations Agreement. A technical report titled “An Updated Mineral Resource Estimate for the Pickle Crow Property, Patricia
Mining Division, Northwestern Ontario, Canada”, prepared by Micon International and dated June 15, 2018, was filed by the Company on SEDAR on August 23,
2018, and is available under the Company’s SEDAR profile at www.sedar.com and on the Company’s website at www.firstmininggold.com. Extensive infrastructure
in place or proximal to the Pickle Crow project includes a 200 tonne per day gravity mill on site, generators and fuel storage and gravel road access to the property,
and the property is within 10 km of a regional airport at Pickle Lake. Pickle Crow was a former high-grade operating mine until the late 1960s. The Pickle Crow
project is owned by PC Gold Inc. ("PC Gold"), a wholly-owned subsidiary of the Company.
Subsequent to the end of the year, on January 27, 2020, the Company entered into a binding term sheet (the “Term Sheet”) with Auteco Minerals Ltd (“Auteco”)
(ASX: AUT) whereby Auteco may earn up to an 80% interest in the Pickle Crow project (the “Earn-In”). On March 12, 2020, the Company and Auteco executed a
definitive Earn-In Agreement (the “Earn-In Agreement”), which replaced the Term Sheet. Pursuant to the Earn-In Agreement, Auteco can earn a full 80% equity
interest in the PC Gold by (a) incurring a total of $10,000 in exploration expenditures over five years, (b) making cash payments to First Mining totaling $4,100 (of
which the Company has received $100 to date), and (c) issuing 125 million shares of Auteco to First Mining. First Mining will also retain a 2% Net Smelter Returns
(“NSR”) Royalty, 1% of which can be bought back for USD $2,500,000. During the term of the Earn-In Agreement, Auteco will be responsible for all program
costs.
Page 20
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Pursuant to the Term Sheet, the Earn-In is comprised of two stages:
● Stage 1 Earn-In (51% earn-in) – Three-year initial earn-in period to acquire a 51% equity interest in PC Gold by:
o Spending $5,000 on exploration on the Pickle Crow project (or cash payments in lieu), of which $750 must be incurred within the first 12 months; and
o Issuing 100,000,000 shares of Auteco to First Mining.
● Stage 2 Earn-In (additional 19% to earn-in to 70%) – Upon completion of the Stage 1 Earn-In, Auteco will have a two-year follow-on period to acquire an
additional 19% equity interest in PC Gold by:
o Spending a further $5,000 on exploration on the Pickle Crow project (or cash payments in lieu);
o Making a $1,000 cash payment to First Mining within 90 days of completing the additional exploration spend; and
o Issuing First Mining a 2% NSR royalty on the Project (1% of which can be bought back for USD$2,500,000) (issued upon completion of the Stage 2 Earn-
In).
In addition, upon completion of the Stage 2 Earn-In, Auteco will have an option to acquire an additional 10% equity interest in PC Gold, exercisable any time
following completion of the Stage 2 Earn-In, by paying First Mining $3,000 in cash.
If Auteco should fail to meet such requirements within the applicable time periods, the Earn-In Agreement will terminate and Auteco will be entitled to retain any
interest which it has earned-in to prior to the date of termination.
Further details regarding the Earn-In are set out in the Company’s March 12, 2020 news release.
On February 28, 2019, the Company received a letter from the Acting Director, Mine Rehabilitation, at the Ontario Ministry of Energy, Northern Development and
Mines (“MENDM”), which required the Company to submit a schedule for the development of a closure plan amendment for the Pickle Crow project. The
Company complied with the requirement and submitted the schedule for the development of a closure plan amendment on March 29, 2019. The submission of a
closure plan amendment complete with cost estimates was initially due on November 1, 2019. The Company has been granted an extension and is required to
submit the close plan amendment and cost estimates to the MENDM by August 31, 2020; the Company has engaged consultants to assist with developing this plan.
Pursuant to the Earn-In Agreement, Auteco is required to reimburse the Company for a pro rata amount of its expenses with respect to any related bond
requirements for the mine closure plan as it completes its earn-in requirements.
In August 2018, an 85-hole drilling program was conducted on the historic Pickle Crow tailings, which was split into 4 distinct geographic zones. Of the total 302 m
program, 225 m were sampled, and primarily taken on 1 m intervals with intervals as short as 0.3 m where the base of the tails were encountered.
In 2016, the Company completed a 9-hole drilling program comprising approximately 1,300 m. The objectives of this drilling program were to fulfill assessment
work requirements and test extensions of known vein zones and discover new high-grade gold mineralization. Gold mineralization was encountered in seven of the
nine drill holes and visible gold was intercepted in the lowermost vein zone of the No. 15 Vein structure. In 2017, the Company completed a further six holes,
comprising approximately 1,250 m.
Page 21
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Tier 2 and 3 Projects
The following table sets out the Company’s Tier 2 and 3 projects by region. These projects are 100%-owned by the Company with the exception of Duparquet, in
which the Company has a 10% indirect ownership interest in the Duparquet Gold Project and a 100% interest in the Central Duparquet Property.
Canada
Mexico
Duquesne, Québec
Pitt, Québec
Duparquet, Québec
Joutel, Québec
Morris, Québec
Horseshoe Island, Ontario
Lac Virot, Newfoundland
Miranda, Sonora
Apache, Sonora
Socorro, Sonora
San Ricardo, Sonora
Los Tamales, Sonora
Puertecitos, Sonora
Batacosa, Sonora
Las Margaritas, Durango(1)
Geranio, Oaxaca
Lachatao, Oaxaca
El Roble, Oaxaca
USA
Turquoise Canyon, Nevada(1)
(1) Property under option to a third party. Please see further discussion below.
For further information on the Company’s Tier 2 and 3 projects, see the Company’s Annual Information Form for the year ended December 31, 2019 which are both
available under the Company’s SEDAR profile at www.sedar.com, as an exhibit to the Company’s Form 40-F on EDGAR at www.sec.gov, and on the Company’s
website at www.firstmininggold.com.
Option Agreement on the Turquoise Canyon Property, Nevada
On August 21, 2019, the Company entered into an option agreement (the “Momentum Option Agreement”) with Momentum Minerals Ltd. (“Momentum”), a
private company, granting Momentum the right to earn a 100% interest in First Mining’s Turquoise Canyon property (“Turquoise Canyon”) located in Nevada,
U.S. Under the terms of the Momentum Option Agreement, Momentum can elect to make either annual share or cash payments to the Company for aggregate
consideration of $500 over the four-year option period. In addition, as per the terms of the Momentum Option Agreement, beginning in 2020, Momentum will also
be responsible for paying all annual concession tax payments with respect to the property to the Nevada State land management authorities. In addition to the
payment terms outlined above, Momentum will be required to incur exploration expenditures on the property totaling $750 over the four-year option period,
incurring at least $50 in year one and $100 in year two. Upon completion of all payment and expenditure obligations, Momentum will obtain 100% ownership of
Turquoise Canyon and First Mining will retain a 2% NSR royalty interest. Momentum will have the right to buy back 1% of the NSR royalty for $1,000 up until the
first anniversary of the commencement of commercial production at Turquoise Canyon.
During the year ended December 31, 2019, the Company received initial consideration in cash of $25 under the terms of the Momentum Option Agreement. During
the year ended December 31, 2019, the Company recorded a write-down of Turquoise Canyon amounting to $341 (2018 - $nil), based on the recoverable amount
indicated by the Momentum Option Agreement. As at December 31, 2019, the carrying value of the Turquoise Canyon property is $452 (December 31, 2018 -
$804).
Page 22
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Option Agreement on the Las Margaritas Gold Project, Mexico
On July 30, 2018, the Company entered into an option agreement (the “Gainey Option Agreement”) with Gainey Capital Corp. (TSX-V: GNC) (“Gainey”),
granting Gainey the right to earn a 100% interest in First Mining’s Las Margaritas gold project (“Las Margaritas”) located in the State of Durango, Mexico.
Under the terms of the Gainey Option Agreement, Gainey can elect to make share or cash payments to the Company for aggregate consideration of between $900
and $1,015 over the four-year option period. In addition, as per the terms of the Gainey Option Agreement, Gainey will undertake the following:
● Annual payments to the Company of USD$25,000 in each of September 2018 (paid), September 2019 (remains unpaid) and September 2020, and
USD$250,000 in September 2021 in connection with an existing agreement on the property; and
● Exploration expenditures totaling USD$1,000,000 over the four-year option period on Las Margaritas.
Upon completion of the four-year option period and satisfaction of the above payment and exploration expenditure requirements, Gainey will obtain a 100%
ownership interest in Las Margaritas, and First Mining will retain a 2% NSR royalty interest, with Gainey having the right to buy back 1% of the NSR royalty for
USD$1,000,000 up until the first anniversary of the commencement of commercial production at Las Margaritas. The transaction and the issuance of Gainey’s
common shares pursuant to the Gainey Option Agreement were approved by the TSX-V on March 27, 2019. During the year ended December 31, 2019, the
Company received initial consideration in the form of Gainey shares with a fair value of $171 on the date of receipt and cash of $12 relating to value-added tax in
Mexico under the terms of the Gainey Option Agreement. As at December 31, 2019, the carrying value of Las Margaritas property is $154 (December 31, 2018 –
$244).
NSR on the Duquesne Gold Project, Québec
In connection with an agreement entered into by Clifton Star Resources Inc. ("Clifton Star") on July 31, 2012, prior to its acquisition by First Mining, Clifton Star
purchased 0.5% of a 3% NSR royalty on the Duquesne project for $1,000 in cash. Per the terms of this agreement, beginning June 2019, the remaining 2.5% NSR
must be purchased over the ensuing five years in tranches of 0.5% for $1,000 for each tranche. Management is currently in discussions with the royalty owners
regarding potential amendments to the timing and amount of any future payments related to this royalty repurchase.
Page 23
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
MINERAL PROPERTY BALANCES
As at December 31, 2019 and December 31, 2018, the Company had capitalized the following acquisition, exploration and evaluation costs to its mineral
properties:
Springpole
Goldlund
Hope Brook
Cameron
Pickle Crow
Duquesne
Pitt
Others
Canada Total
Mexico
USA
Total
Springpole
Goldlund
Hope Brook
Cameron
Pickle Crow
Duquesne
Pitt
Others
Canada Total
Mexico
USA
Total
Balance
December 31,
2018
2019
expenditures
Currency
translation
adjustments
Disposal or write-
down of mineral
properties
Balance
December 31,
2019
$
$
$
$
$
$
73,378
96,604
19,581
27,032
16,754
5,091
2,082
2,559
243,081
244
804
244,129
Balance
December 31,
2017
70,398
93,807
18,665
26,676
16,496
5,053
2,080
2,515
235,690
3,483
698
239,871
$
$
$
$
$
$
3,397
2,290
490
342
2,509
42
2
56
9,128
(80)
21
9,069
2018
expenditures
2,980
2,797
916
356
258
38
2
44
7,391
593
43
8,027
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
(10)
(32)
(42)
$
$
$
-
-
-
-
-
-
-
-
-
-
(341)
(341)
Currency
translation
adjustments
Disposal or write-
down of mineral
properties
-
-
-
-
-
-
-
-
-
349
63
412
$
$
$
-
-
-
-
-
-
-
-
-
(4,181)
-
(4,181)
$
$
$
$
$
$
76,775
98,894
20,071
27,374
19,263
5,133
2,084
2,615
252,209
154
452
252,815
Balance
December 31,
2018
73,378
96,604
19,581
27,032
16,754
5,091
2,082
2,559
243,081
244
804
244,129
Page 24
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
The Company continues with its environmental data collection, permitting and Indigenous consultation processes at its Tier 1 Canadian mineral properties, focusing
primarily on Springpole and Goldlund. At Springpole, the goal in 2020 is to continue to advance permitting and to substantially complete the PFS. At Goldlund, the
focus in 2020 is to follow up on the successful 2019 drill program by continuing to define the broader regional potential of the project and upgrade inferred mineral
resources to indicated mineral resources within the current resource area. Regarding First Mining’s broader gold asset portfolio, including the Hope Brook and
Cameron projects, the priority is to complete low-spend, incremental work, including baseline environmental studies, internal scoping studies and potential
reconnaissance mapping and exploration work.
In addition to the above mineral property balances, $5,398 (December 31, 2018 - $4,417) is recorded as mineral property investments on the statements of financial
position, which represents the Company’s 10% indirect interest in the Duparquet Gold Project in Québec, Canada. During the year ended December 31, 2019,
Management determined that there was an increase in the fair value of mineral property investments and a fair value gain of $981 (December 31, 2018 - $nil) was
recorded.
The Company’s $9,000 expenditures on mineral properties during the year ended December 31, 2019 (2018 – $8,000) are primarily related to the following:
Springpole
During the year ended December 31, 2019, the Company incurred expenditures of $718 for its site employees’ salaries and management salary allocations, $286 in
connection with the completion of metallurgical testwork, and $378 in connection with the continuation of environmental fieldwork. In addition, $340 of
expenditures for certain annual advanced royalty payments and $262 in fuel charges were made during the year ended December 31, 2019, at Springpole. In the
prior year, the Company incurred costs of $503 related to submitting its PD to the Agency, completion of its fish habitat report on Springpole Lake and ongoing
environmental assessment work. In addition, $214 of expenditures were incurred for the 2018 geotechnical drilling to test the footing locations of the proposed
Springpole Lake coffer dams.
Goldlund
During the year ended December 31, 2019, the Company incurred $45 in connection with the reporting of an updated mineral resource estimate for Goldlund. In
addition, $1,721 was incurred in connection with the 2019 drill campaign of approximately 6,100 m. In contrast, the prior year period included $1,853 of
expenditures in relation to the completion of the Goldlund Phase 2 drilling campaign of approximately 7,000 m.
Hope Brook
During the year ended December 31, 2019, the Company incurred expenditures of $245 for its site employees’ salaries and management salary allocations, made its
annual advanced royalty payment of $20 on the Hope Brook project and conducted aquatic environmental baseline studies. In the prior year, $100 was incurred on
renewing certain property licenses, which is required every 5 years, and $314 was incurred for site employees’ salaries and management salary allocations.
Pickle Crow
During the year ended December 31, 2019, the Company recorded environmental reclamation provision for the Pickle Crow Gold Project of $2,355 (December 31,
2018 - $nil).
Other Mineral Properties
Excluding the above mineral properties, net expenditures on the Company's remaining mineral properties were $383 during the year ended December 31, 2019,
compared with net expenditures of $1,076 in 2018. The main decrease was due to lower expenditures in Mexico, as a result of reductions in concession tax
payments on the properties. In addition, all Mexican properties (except Las Margaritas) were impaired during the year ended December 31, 2018, and expenditures
incurred on these properties continue to be expensed. The Company also received initial consideration from Gainey, pursuant to the Gainey Option Agreement, and
from Momentum pursuant to the Momentum Option Agreement, which were both recorded as recoveries. During the year ended December 31, 2019, Mexican
recoveries amounted to $80 (expenditures of $99 and recoveries of $179) compared to expenditures of $593 (expenditures of $626 and recoveries of $33) during the
prior year period, which included certain concession tax payments.
Share-based Payments (non-cash)
During the year ended December 31, 2019, the Company capitalized $572 in share-based payments compared to $1,169 in 2018, which is predominantly a function
of the lower number of options granted (7,750,000 stock options granted in fiscal 2019 compared to 23,220,000 granted in fiscal 2018) and the lower average fair
value per option ($0.20 during fiscal 2019 compared to $0.22 during fiscal 2018).
Page 25
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
RESULTS OF CONTINUING OPERATIONS
For the three months and years ended December 31, 2019 and 2018
Unless otherwise stated, the following financial data was prepared on a basis consistent with IFRS and extracted from the Audited Consolidated Financial
Statements:
OPERATING EXPENSES
General and administration
Exploration and evaluation
Investor relations and marketing communications
Corporate development and due diligence
Share-based payments (non-cash)
Write-down of mineral properties (non-cash)
Loss from operational activities
OTHER ITEMS
Foreign exchange loss
Other expenses
Interest and other income
Loss before income taxes
Deferred income tax expense (non-cash)
Net loss
Other comprehensive income (loss)
Items that will not be reclassified to net loss:
Marketable securities fair value (loss) gain
Mineral property investments fair value gain
Items that may be reclassified to net loss:
Currency translation adjustment
Other comprehensive income (loss)
Three months ended
December 31,
Year ended
December 31,
2019
2018
2019
2018
$
$
$
$
755
436
172
78
215
-
(1,656)
(13)
(9)
61
(1,617) $
(657)
(2,274) $
(475)
981
(13)
493
$
761
150
95
93
392
4,181
(5,672)
(17)
(4)
35
(5,658) $
-
(5,658) $
(54)
-
265
211
$
2,590
981
852
213
1,596
341
(6,573)
(4)
(78)
212
(6,443) $
(516)
(6,959) $
705
981
(43)
1,643
2,438
658
1,197
270
3,032
4,181
(11,776)
(5)
(54)
190
(11,645)
-
(11,645)
(1,680)
-
431
(1,249)
Total comprehensive loss
$
(1,781) $
(5,447) $
(5,316) $
(12,894)
Page 26
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Fourth Quarter 2019 Compared to Fourth Quarter 2018
For the three months ended December 31, 2019, loss from operational activities (excluding write-down of mineral properties) has increased by $165 compared to
the three months ended December 31, 2018. This change was explained by the following:
Exploration and Evaluation
Exploration and evaluation increased by $286 during the three months ended December 31, 2019 compared to the same period in 2018, predominantly due to salary
allocations and retaining consultants for the Company’s Technical Advisory Committee. Exploration and evaluation expenses consisted of unallocated expenses not
directly attributable to specific mineral properties.
Investor Relations and Marketing Communications
Investor relations and marketing communications increased by $77 during the three months ended December 31, 2019 compared to the same period in 2018,
predominantly due to additional conferences attended in the fourth quarter of 2019 as well as additional headcount.
Other Functional Expenses
The amounts in general and administration; and corporate development and due diligence were comparable between periods.
Share-based Payments (non-cash)
Share-based payments decreased by $177 during the three months ended December 31, 2019 compared to the same period in 2018, primarily due to a lower number
of incentive stock options granted in 2019 (nil options granted during the three months ended December 31, 2019 as compared to 13,475,000 granted during the
three months ended December 31, 2018).
Fiscal Year 2019 Compared to Fiscal Year 2018
For the year ended December 31, 2019, total loss from operational activities (excluding write-down of mineral properties) has decreased by $1,363 compared to the
prior year. This change was explained by the following:
Investor Relations and Marketing Communications
Investor relations and marketing communications decreased by $345 during the year ended December 31, 2019, compared to the prior year. This decrease is mainly
due to fewer marketing activities during the year ended December 31, 2019.
Page 27
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Exploration and Evaluation
Exploration and evaluation increased by $323 during the year ended December 31, 2019, compared to the prior year. This increase is predominantly due to
additional consulting fees and salaries in connection with higher headcount and retaining consultants for the Technical Advisory Committee.
General and Administration
General and administration increased by $152 during the year ended December 31, 2019, compared to the prior year. This increase is predominantly due to
additional professional fees in connection with the base shelf prospectus and arrangement of an ATM facility. In addition, Directors fees increased when compared
to the prior year.
Other Functional Expenses
The amounts in corporate development and due diligence were comparable between periods.
Share-based Payments (non-cash)
Share-based payments decreased by $1,436 during the year ended December 31, 2019 compared to the prior year, primarily due to a lower number of incentive
stock options granted in 2019 (7,750,000 options granted during the year ended December 31, 2019 as compared to 23,220,000 granted during the year ended
December 31, 2018), and due to lower fair value per option in 2019 ($0.20 per option in 2019 compared to $0.22 per option in 2018).
Page 28
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
CASH PROVIDED BY (USED IN)
Operating activities
Investing activities
Financing activities
Foreign exchange effect on cash
CHANGE IN CASH AND CASH EQUIVALENTS
Working capital(1)
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Year ended December 31,
2018
2019
$
$
(4,200) $
(4,313)
9,301
(1)
787
5,780
5,115
5,902
$
(3,781)
(7,495)
989
2
(10,285)
7,536
15,400
5,115
(1) Working capital is a non-IFRS measurement with no standardized meaning under IFRS and may not be comparable to similar financial measures presented
by other issuers. For further information and a detailed reconciliation, please see the section “Non-IFRS Measures – Working Capital”.
Cash and Cash Equivalents
The increase of $787 in cash and cash equivalents from $5,115 at December 31, 2018 to $5,902 at December 31, 2019 was primarily due to cash raised from the
May 2019 Offering and the December 2019 Offering, offset by cash used in operating activities and investing activities which comprised technical analysis, drilling,
environmental and permitting activities at Springpole and Goldlund.
Operating Activities
Cash used in operating activities increased by $419 during the year ended December 31, 2019 compared to the prior year. This increase was driven by higher loss
from operational activities excluding certain non-cash items, and changes in working capital during the year ended December 31, 2019, such as timing of GST and
other receivables receipts, and prepaid marketing expenses.
Investing Activities
For the year ended December 31, 2019, the cash used in investing activities of $4,313 was primarily a result of Canadian mineral property expenditures including
the updated mineral resource estimate for Goldlund, the start of the 2019 drill program at Goldlund and completion of metallurgical testing for Springpole. In the
prior year period, the cash used in investing activities of $7,495 was primarily a result of Canadian mineral property expenditures including the Phase 2 drilling
campaign at Goldlund and environmental and permitting development activities at Springpole. For the year 2018, the Company spent approximately $2,400 for
exploration expenditures on the Goldlund property, including approximately 5,000 m of in‐fill drilling and 1,850 m for regional exploration. For the year 2019, the
Company spent approximately $2,080 for exploration expenditures on the Goldlund property, including 6,130 m of drilling consisting of 32 holes.
Cash used for mineral property expenditures is offset by proceeds received on sale of marketable securities of $1,758 (year ended December 31, 2018 - $nil).
Financing Activities
Cash raised from financing activities during the year ended December 31, 2019 was $9,301, of which $7,270 related to the funds raised from the May 2019
Offering, $1,858 related to the funds raised from the December 2019 Offering (year ended December 31, 2018 - $nil), and $43 (year ended December 31, 2018 -
$989) related to the exercise of warrants and stock options.
Page 29
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Trends in Liquidity, Working Capital, and Capital Resources
As at December 31, 2019, the Company has working capital of $5,780. The Company has no history of revenues from its operating activities. The Company is not
in commercial production on any of its mineral properties and accordingly does not generate cash from operations. During the year ended December 31, 2019, the
Company had negative cash flow from operating activities. The Company anticipates it will have negative cash flow from operating activities in future periods.
The Company has, in the past and during the year ended December 31, 2019, financed its activities by raising capital through issuances of new shares. In addition to
adjusting spending, disposing of assets and seeking other non-equity sources of financing, the Company will remain reliant on equity markets for raising capital
until it can generate positive cash flow from operations to finance its exploration and development programs.
The Company believes it has sufficient cash resources to maintain its mineral properties in good standing for the next twelve months. However, there is no
assurance that the Company will be able to maintain sufficient working capital in the future due to market, economic and commodity price fluctuations.
FINANCIAL LIABILITIES AND COMMITMENTS
The Company’s financial liabilities as at December 31, 2019 are summarized as follows:
Accounts payable and accrued liabilities
Lease liability
Total
$
1,398 $
827
2,225
1,398 $
149
1,547
- $
496
496
After 5 years
-
-
-
- $
182
182
Contractual
Cash Flows
Less than 1
year
1 – 3 years
4 – 5 years
Other material financial commitments as at December 31, 2019 consist of flow-through expenditure commitments of $2,178 (2018 - $nil) to be incurred prior to
December 31, 2020 to fulfill flow-through requirements from the Company’s December 18, 2019 and May 16, 2019 private placements. Management is of the view
that the above financial liabilities and commitments will be sufficiently funded by current working capital.
OUTLOOK
First Mining is a Canadian-focused gold exploration and development company advancing a large resource base of 7.4 million ounces of gold in the measured and
indicated categories and 3.8 million ounces of gold in the inferred category. First Mining’s primary focus is the development and permitting of its Springpole Gold
Project and the advanced exploration of its Goldlund Gold Project, both located in northwestern Ontario. Springpole is one of the largest undeveloped gold assets in
Canada, with permitting and a Pre-Feasibility Study underway. Goldlund is an advanced exploration stage asset where drilling is ongoing to define both the
extension of the existing resource area and to better define the regional scale potential. First Mining’s eastern Canadian property portfolio also includes Cameron,
Pickle Crow, Hope Brook, Duparquet, Duquesne, and Pitt.
As at December 31, 2019, the Company held a portfolio of 24 mineral properties located in Canada, Mexico and the United States, including two under option
agreement to other parties. Following year-end, the Company entered into the Earn-In Agreement with respect to its Pickle Crow project.
The Company is actively conducting environmental studies at its core Tier 1 Canadian mineral properties, and is continuing Indigenous community consultations
related to these properties. In particular, the Company is actively collecting environmental baseline data in relation to fish habitat and has begun consultation efforts
with local Indigenous communities within the Springpole area to support the ongoing federal and provincial EA processes and prepare an EIS for the project.
Page 30
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
The following is a summary of ongoing activities planned for 2020:
● The Company is planning to submit a final ToR to MECP for Springpole. The ToR will provide a framework for the preparation of a provincial EA, and it
will set out the Company’s work plan for addressing the legislated requirements of the Ontario Environmental Assessment Act when preparing the
provincial EA. The Company is also working on the Federal EA under the Canadian Environmental Assessment Act.
● Springpole PFS is targeted for completion in Q4 2020.
● The Company plans to complete additional resource and regional exploration drilling at Goldlund.
● Low-cost technical investigations are underway at Hope Brook, Cameron and at the Québec projects to gain a better understanding of the economic and
technical potential of these projects.
● Auteco is required to spend $750 on exploration of Pickle Crow within the first 12 months of the Earn-In Agreement.
FINANCIAL INSTRUMENTS
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and short-term deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value. The carrying amounts approximate fair value due to the short-term maturities of these instruments.
Cash and cash equivalents are mainly held in interest bearing accounts at large Canadian financial institutions.
MARKETABLE SECURITIES
During the year ended December 31, 2019, the Company held shares in Gainey, which the Company received pursuant to the Gainey Option Agreement on the Las
Margaritas gold project, and in Silver One Resources Inc. (“Silver One”), which the Company received as a result of the Company’s sale of certain Mexican silver
assets to Silver One. The Company also holds other investments in publicly traded companies within the mining industry for strategic purposes.
Balance as at December 31, 2018
Additions
Dispositions
Gain (loss) recorded in other comprehensive loss
Balance as at December 31, 2019
$
$
Silver One Resources
Inc.
990
60
(1,758)
708
-
Gainey Capital Corp.
-
$
171
-
(97)
74
$
$
$
Balance as at December 31, 2017
Loss recorded in other comprehensive loss
Balance as at December 31, 2018
$
$
Silver One Resources
Inc.
2,280
(1,290)
990
Gainey Capital Corp.
-
$
-
-
$
$
$
1,997
(390)
1,607
$
$
The Company holds marketable securities of publicly traded companies as strategic investments and has less than a 10% equity interest in each of the investees.
During the year ended December 31, 2019, the Company sold 6,250,000 common shares of Silver One for net proceeds of $1,750 with original cost of $6,360, and
realized a cumulative loss on sale of $4,610 in other comprehensive loss.
Page 31
Other Marketable
Securities
Total
1,607
-
-
94
1,701
$
$
Other Marketable
Securities
Total
2,597
231
(1,758)
705
1,775
4,277
(1,680)
2,597
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
MINERAL PROPERTY INVESTMENTS
As there is no observable market data which can be used to determine this fair value, management uses property specific and market based information to determine
whether a significant change in the fair value of these investments has occurred. Factors that are considered include:
● Changes in the economic and regulatory environment for the jurisdiction in which the Duparquet Gold project is located;
● Gold spot prices over the period from the acquisition of the investment to December 31, 2019;
● The company’s market capitalization per in-situ ounce which are attributable to the Duparquet Gold project; and
● Recent transactions involving mineral properties located in Quebec.
The Company, through its subsidiary Clifton Star, has a 10% equity interest in the shares of Beattie Gold Mines Ltd., 2699681 Canada Ltd., and 2588111 Manitoba
Ltd., which are private companies which directly or indirectly own various mining concessions and surface rights, collectively known as the Duparquet Gold
Project. As at December 31, 2019, Management determined, as a function of the rising gold price environment, that there was an increase in the fair value of
mineral property investments and a fair value gain of $981 was recorded (December 31, 2018 - $nil). As at December 31, 2019, the fair value of the Company’s
mineral property investments was $5,398 (December 31, 2018 – $4,417).
RELATED PARTY TRANSACTIONS
Amounts paid to related parties were incurred in the normal course of business and measured at the exchange amount, which is the amount agreed upon by the
transacting parties and on terms and conditions similar to non-related parties. There were no significant transactions with related parties outside of the ordinary
course of business during the year ended December 31, 2019.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial
condition of the Company including, without limitation, such considerations as liquidity and capital resources.
NON-IFRS MEASURES
The Company has included a non-IFRS measure for “loss from operational activities excluding write-down of mineral properties (non-cash)”, “loss from
operational activities excluding share-based payments and write-down of mineral properties (non-cash)” and “working capital” in this MD&A which should be read
in conjunction with its financial statements which are presented in accordance with IFRS. The Company believes that these measures provide investors with an
improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore, such
measures may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The Company determines working capital and loss from operational activities excluding share-based payments (non-cash) and write-down of mineral properties
(non-cash) as follows:
Quarterly Reconciliations:
Reconciliation as of the end of the period
Current assets
Less current liabilities
Working capital
$
$
2019-Q4
2019-Q3
2019-Q2
2019-Q1
8,329
(2,549)
5,780
$
$
9,713
(1,353)
8,360
$
$
11,747
(1,120)
10,627
$
$
6,018
(527)
5,491
Page 32
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Reconciliation as of the end of the period
Current assets
Less current liabilities
Working capital
Reconciliation for the three months ended
Loss from operational activities
Excluding share-based payments (non-cash)
Excluding write-down of mineral properties (non-cash)
Loss from operational activities excluding certain non-cash items(1)
Reconciliation for the three months ended
Loss from operational activities
Excluding share-based payments (non-cash)
Excluding write-down of mineral properties (non-cash)
Loss from operational activities excluding certain non-cash items(1)
$
$
$
$
$
$
Annual Reconciliations:
Reconciliation as of the end of the period
Current assets
Less current liabilities
Working capital
Reconciliation for the years ended
Loss from operational activities
Excluding share-based payments (non-cash)
Excluding write-down of mineral properties (non-cash)
Loss from operational activities excluding certain non-cash items(1)
2018-Q4
2018-Q3
2018-Q2
2018-Q1
8,118
(582)
7,536
$
$
10,166
$
(478)
9,688
$
13,036
$
(573)
12,463
$
17,437
(1,421)
16,016
2019-Q4
2019-Q3
2019-Q2
2019-Q1
(1,656) $
215
-
(1,441) $
(1,816) $
332
341
(1,143) $
(1,356) $
475
-
(881) $
(1,745)
574
-
(1,171)
2018-Q4
2018-Q3
2018-Q2
2018-Q1
(5,672) $
392
4,181
(1,099) $
(998) $
27
-
(971) $
(1,339) $
85
-
(1,254) $
(3,767)
2,528
-
(1,239)
December 31,
2019
December 31,
2018
December 31,
2017
$
$
$
$
8,329
(2,549)
5,780
$
$
8,118
(582)
7,536
$
$
20,484
(1,083)
19,401
2019
2018
2017
(6,573) $
1,596
341
(4,636) $
(11,776) $
3,032
4,181
(4,563) $
(11,292)
5,497
-
(5,795)
(1) “The certain non-cash items excluded” refers to the “Share-based Payments” and “Write-down of Mineral Properties”.
Page 33
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
CHANGES IN ACCOUNTING POLICIES
The Company’s significant accounting policies and accounting estimates are contained in the audited consolidated financial statements for the year ended December
31, 2019. During the year ended December 31, 2019, the Company has adopted the following new accounting policies:
IFRS 16 Leases
During the year ended December 31, 2019, the Company adopted the following new accounting standard effective January 1, 2019:
IFRS 16 replaced IAS 17 “Leases”. IFRS 16 specifies how to recognize, measure, present and disclose leases. The IFRS 16 standard provides a single lessee
accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.
As at January 1, 2019, adoption of IFRS 16 had no impact on the financial statements since there were no operating leases that required the Company to recognize
assets and liabilities.
Flow-through units and shares
The Company may, from time to time, issue flow-through common shares or units to finance a portion of its Canadian exploration programs. Pursuant to the terms
of the flow-through share agreements and the ITA, these equity instruments transfer the tax deductibility of qualifying resource expenditures to investors.
Upon the issuance of a flow-through share, the Company bifurcates the flow-through share into i) fair value of capital stock issued, based on market price at time of
issuance, and ii) the residual as a flow-through share premium, which is recognized as a liability. Upon the issuance of a flow-through unit, the Company bifurcates
the flow-through unit into i) relative fair value of capital stock issued, ii) relative fair value of a warrant, and iii) the residual as a flow-through share premium,
which is recognized as a liability.
Upon incurring qualifying expenses, the Company derecognizes the flow-through share premium liability and recognizes a credit to deferred tax expense (recovery).
Proceeds received from the issuance of flow-through shares are to be used for Canadian resource property exploration expenditures within a certain time period as
prescribed by the Government of Canada’s flow-through regulations, as contained in the ITA. The portion of the proceeds received but not yet expended at the end
of the Company’s relevant reporting period is disclosed separately as flow-through expenditure commitments. The Company is also subject to Part XII.6 of the ITA,
which imposes a tax on flow-through proceeds renounced under the "Look-back Rule", in accordance with the Government of Canada’s flow-through regulations.
When applicable, this tax is accrued until paid.
ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED
There are no IFRS or International Financial Reporting Interpretations Committee interpretations that are not yet effective that would be expected to have a material
impact on the Company’s consolidated financial statements.
Page 34
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of financial statements requires the use of accounting estimates. It also requires management to exercise judgment in the process of applying its
accounting policies. Estimates and judgments are regularly evaluated and are based on Management’s experience and other factors, including expectations about
future events that are believed to be reasonable under the circumstances. The use of judgments, estimates and assumptions affects the application of accounting
policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The following discusses accounting
policy judgments and the sources of estimation uncertainty that may result in material changes in the carrying amount of assets or liabilities within the next year:
Impairment of mineral properties:
In accordance with the Company’s accounting policy for its mineral properties, exploration and evaluation expenditures on mineral properties are capitalized. There
is no certainty that the expenditures made by the Company in the exploration of its property interests will result in discoveries of commercial quantities of minerals.
The Company applies judgment to determine whether indicators of impairment exist for these capitalized costs.
Management uses several criteria in making this assessment, including the period for which the Company has the right to explore, expected renewals of exploration
rights, whether substantive expenditures on further exploration and evaluation of mineral properties are budgeted, and evaluation of the results of exploration and
evaluation activities up to the reporting date.
Determining amount and timing of reclamation provisions:
A reclamation provision represents the present value of estimated future costs for the reclamation of the Company’s mineral properties. These estimates include
assumptions as to the future activities, cost of services, timing of the reclamation work to be performed, inflation rates, exchange rates and interest rates. The actual
cost to reclaim a mine may vary from the estimated amounts because there are uncertainties with respect to the extent of required future remediation activities, as
studies are currently ongoing, and uncertainties in factors used to estimate the cost and potential changes in regulations or laws governing the reclamation of a
mineral property. Management periodically reviews the reclamation requirements and adjusts the liability, if any, as new information becomes available and will
assess the impact of new regulations and laws as they are enacted.
Valuation of Mineral Property Investments:
The Company makes estimates and assumptions that affect the carrying value of its mineral property investments, which are comprised of equity interests in the
shares of private companies. These financial assets are designated as fair value through other comprehensive income (loss), and Management needs to determine the
fair value as at each period end. As there is no observable market data which can be used to determine this fair value, management uses property specific and market
based information to determine whether a significant change in the fair value of these investments has occurred. Changes to the property specific and market based
variables could result in the fair value being less than or greater than the amount recorded.
Page 35
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
RISKS AND UNCERTAINTIES
The Company is subject to a number of risks and uncertainties, each of which could have an adverse effect on its business operations or financial results. Some of
these risks and uncertainties are detailed below. For a comprehensive list of the Company’s risks and uncertainties, see the Company’s Annual Information Form for
the year ended December 31, 2019 under the heading “Risks that can affect our business”, which is available under our SEDAR profile at www.sedar.com, and on
EDGAR as an exhibit to Form 40-F.
Risks related to Financial Instruments
The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These
risks include market risk, equity price risk, foreign currency risk, interest rate risk, credit risk, liquidity risk, and capital risk. Where material, these risks are
reviewed and monitored by the Company’s Board of Directors (the “Board”).
The Board has overall responsibility for the determination of the Company’s risk management objectives and policies. The overall objective of the Board is to set
policies that seek to reduce risk as much as possible without unduly affecting the Company’s competitiveness and flexibility.
a) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk includes equity
price risk, foreign currency risk and interest rate risk.
Equity Price Risk
The Company is exposed to equity price risk as a result of holding investments in equity securities, which are comprised of marketable securities and mineral
property investments, in other mineral property exploration companies.
If the fair value of our investments in equity instruments had been 10% higher or lower as at December 31, 2019, other comprehensive loss for the year ended
December 31, 2019 would have decreased or increased, respectively, by approximately $717 (2018 - $701), as a result of changes in the fair value of equity
investments.
Foreign Currency Risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company operates in Canada, the United States, and Mexico,
and a portion of the Company’s expenses are incurred in Canadian dollars (“CAD”), US dollars (“USD”), and Mexican Pesos (“MXN”). A significant change in the
currency exchange rates between the Canadian, US and Mexican currencies, could have an effect on the Company’s results of operations, financial position or cash
flows. The Company has not hedged its exposure to currency fluctuations.
As at December 31, 2019, the Company is exposed to currency risk on certain financial instruments denominated in USD and MXN. The Company does not have
significant transactions or hold significant cash or other financial instruments denominated in USD and MXN currencies. Therefore, the Company considers this
risk to be immaterial.
Page 36
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings that are
subject to fluctuations in market interest rates. Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with
chartered Canadian financial institutions. The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining
the necessary liquidity to conduct its day-to-day operations. The Company considers this risk to be immaterial.
b) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial
instruments which are potentially subject to credit risk for the Company consist primarily of cash and cash equivalents, accounts and other receivables, and the
reclamation deposit. The Company considers credit risk with respect to its cash and cash equivalents to be immaterial as cash and cash equivalents are mainly held
through high credit quality major Canadian financial institutions as determined by ratings agencies. As a result, the Company does not expect any credit losses.
c) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it will have
sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation. The Company manages its liquidity risk by preparing annual estimates of exploration and administrative expenditures and
monitoring actual expenditures compared to the estimates to ensure that there is sufficient capital on hand to meet ongoing obligations.
The following table summarizes the maturities of the Company’s financial liabilities as at December 31, 2019 based on the undiscounted contractual cash flows:
Accounts payable and accrued liabilities
Lease liability
$
1,398 $
648
1,398 $
827
1,398 $
149
- $
496
As at December 31, 2019, the Company had cash and cash equivalents of $5,902 (December 31, 2018 – $5,115).
d) Capital Risk Management
Carrying
Amount
Contractual
Cash Flows
Less than 1
year
1 – 3 years
4 – 5 years
After 5 years
-
-
- $
182
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and
retention of its mineral properties. The Company has historically demonstrated the ability to raise new capital through equity issuances and/or through surplus cash
as part of its acquisitions. In the management of capital, the Company includes the components of shareholders’ equity as well as cash. The Company prepares
annual estimates of exploration and administrative expenditures and monitors actual expenditures compared to the estimates to ensure that there is sufficient capital
on hand to meet ongoing obligations.
Page 37
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Other Risk Factors
Financing Risks
The Company has finite financial resources, has no current source of operating cash flow and has no assurance that additional funding will be available to it for its
future activities, including exploration or development of mineral projects. Such further activities may be dependent upon the Company’s ability to obtain financing
through equity or debt financing or other means. Failure to obtain additional financing could result in delay or indefinite postponement of exploration and
development of the Company’s existing mineral projects and could result in the loss of one or more of its properties.
Exploration and Development Risks
The exploration for and development of minerals involves significant risks, which even a combination of careful evaluation, experience and knowledge may not
eliminate. These risks include:
● few properties that are explored are ultimately developed into producing mines;
● there can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable;
● with all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of
extraction methods tested in pilot conditions; and
● mineral exploration is speculative in nature and there can be no assurance that any minerals discovered will result in an increase in our resource base.
Exploration and development of mineral properties is capital intensive and unsuccessful exploration or development programs could have a material adverse impact
on the Company’s operations and financial condition.
Operational hazards and risks
The Company's operations will be subject to all of the hazards and risks normally encountered in the exploration and development of minerals. To the extent that the
Company takes a property to production, the Company will be subject to all of the hazards and risks associated with the production of minerals. These risks include:
● unusual and unexpected geological formations;
● rock falls;
● seismic activity;
● flooding and other conditions involved in the extraction of material, any of which could result in damage to, or destruction of, mines and other producing
facilities, damage to life or property, environmental damage and possible legal liability;
● environmental pollution, and consequent liability that could have a material adverse impact on the Company's business, operations and financial
performance;
● mechanical equipment and facility performance problems; and
● periodic disruptions due to inclement or hazardous weather conditions.
Page 38
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Substantial expenditures
Substantial expenditures are required to establish resources and reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in
certain cases, to develop infrastructure at any site chosen for exploration. Although substantial benefits may be derived from the discovery of a major mineralized
deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development
can be obtained on a timely basis.
The economics of developing mineral properties is affected by many factors including:
● the cost of operations;
● variations in the grade of mineralized material mined;
● fluctuations in metal markets; and
● such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and
environmental protection.
The remoteness and restrictions on access of properties in which we have an interest will have an adverse effect on expenditures as a result of higher infrastructure
costs. There are also physical risks to the exploration personnel working in the terrain in which the Company's properties are located, occasionally in poor climate
conditions.
No History of Mineral Production
The Company has no history of commercially producing metals from its mineral exploration properties. There can be no assurance that the Company or any other
party will successfully establish mining operations or profitably produce gold or other precious metals on any of the Company’s properties. The development of
mineral properties involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The commercial viability of a
mineral deposit is dependent upon a number of factors which are beyond the Company’s control, including the attributes of the deposit, commodity prices,
government policies and regulation and environmental protection. Fluctuations in the market prices of minerals may render reserves and deposits containing
relatively lower grades of mineralization uneconomic.
None of the Company’s properties are currently under development or production. The future development of any properties found to be economically feasible will
require applicable licenses and permits and will require the construction and operation of mines, processing plants and related infrastructure. As a result, the
development of any property will be subject to all of the risks associated with establishing new mining operations and business enterprises, including, but not
limited to:
● the timing and cost of the construction of mining and processing facilities;
● the availability and costs of skilled labour and mining equipment;
● the availability and cost of appropriate smelting and/or refining arrangements;
● the need to obtain necessary environmental and other governmental approvals and permits and the timing of those approvals and permits; and
● the availability of funds to finance construction and development activities.
It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in
the commencement of mineral production often occur. Accordingly, there are no assurances that the Company’s activities will result in profitable mining operations
or that mining operations will be established at any of the Company’s properties.
Page 39
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Acquisition of Business Arrangements
As part of the Company’s business strategy, First Mining has sought and may continue to seek to acquire new mining and exploration projects. In pursuit of such
opportunities, the Company may fail to select appropriate acquisition targets or negotiate acceptable arrangements, including arrangements to finance acquisitions or
integrate the acquired businesses into the Company. Ultimately, any acquisitions would be accompanied by risks, which could include:
● a significant change in commodity prices after the Company has committed to complete the transaction and established the purchase price or exchange
ratio;
● a material ore body could prove to be below expectations;
● difficulty in integrating and assimilating the operations and workforce of any acquired companies;
● realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise;
● the bankruptcy of parties with whom the Company has arrangements;
● maintaining uniform standards, policies and controls across the organization;
● disruption of our ongoing business and relationships with employees, suppliers, contractors and other stakeholders as the Company integrates the acquired
business or assets;
● the acquired business or assets may have unknown liabilities which may be significant;
● delays as a result of regulatory approvals; and
● exposure to litigation (including actions commenced by shareholders) in connection with the transaction.
Any material issues that the Company encounters in connection with an acquisition could have a material adverse effect on its business, results of operations and
financial position.
Page 40
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Mineral Reserves/Mineral Resources
The properties in which the Company holds an interest are currently considered to be in the early exploration stage only and do not contain a known body of
commercial minerals beyond the PEA level. Mineral resources and mineral reserves are, in large part, estimates and no assurance can be given that any anticipated
tonnages and grades will be achieved or that the particular level of recovery will be realized.
Mineral resources on the Company’s properties have been determined based upon assumed cut-off grades, metal prices and operating costs at the time of
calculation, as set out in the applicable technical reports. Future production could differ dramatically from resource and reserve estimates because, among other
reasons:
● mineralization or formations could be different from those predicted by drilling, sampling and similar examinations;
● calculation errors could be made in estimating mineral resources and mineral reserves;
● increases in operating mining costs and processing costs could adversely affect mineral resources and mineral reserves;
● the grade of the mineral resources and mineral reserves may vary significantly from time to time and there is no assurance that any particular level of
metals may be recovered from the ore; and
● declines in the market price of the metals may render the mining of some or all of the mineral reserves uneconomic.
Estimated mineral resources may require downward revisions based on changes in metal prices, further exploration or development activity, increased production
costs or actual production experience. This could materially and adversely affect estimates of the tonnage or grade of mineralization, estimated recovery rates or
other important factors that influence mineral resource and mineral reserve estimates.
Any reduction in estimated mineral resources as a result could require material write downs in investment in the affected mining property and increased
amortization, reclamation and closure charges, which could have a material and adverse effect on future cash flows for the property and on the Company’s earnings,
results of operations and financial condition.
Because the Company does not currently have any producing properties, mineralization estimates for its properties may require adjustments or downward revisions
based upon further exploration or development work or actual future production experience. In addition, the grade of mineralized material ultimately mined, if any,
may differ from that indicated by drilling results. There can be no assurance that minerals recovered in small-scale tests will be duplicated in large-scale tests under
on- site conditions or in production scale.
The mineral resource estimates contained in this MD&A have been determined and valued based on assumed future prices, cut-off grades and operating costs that
may prove to be inaccurate. Extended declines in market prices for gold or other metals may render portions of our mineralization uneconomic and result in reduced
reported mineralization. Any material reductions in mineralization estimates, or of the ability to extract mineralized material from our properties, could (directly or
indirectly) have a material adverse effect on the Company’s results of operations or financial condition.
Capital Costs, Operating Costs, Production and Economic Returns
Actual capital costs, operating costs, production and economic returns with respect to our properties may differ significantly from those we have anticipated and
there are no assurances that any future development activities will result in profitable mining operations. The capital costs required to develop or take our projects
into production may be significantly higher than anticipated. To the extent that such risks impact upon any such properties, there may be a material adverse effect on
results of operations on such properties which may in turn have a material adverse effect on our financial condition.
Page 41
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Substantial Capital Requirements
The Company’s Management team anticipates that it may make substantial capital expenditures for the exploration and development of properties in the future. As
the Company is in the exploration stage with no revenue being generated from the exploration activities on its mineral properties, the Company has limited ability to
raise the capital necessary to undertake or complete future exploration work, including drilling programs. There can be no assurance that debt or equity financing
will be available or sufficient to meet these requirements or for other corporate purposes or, if debt or equity financing is available, that it will be on terms
acceptable to the Company and any such financing may result in substantial dilution to existing shareholders. Moreover, future activities may require the Company
to alter its capitalization significantly. The Company’s inability to access sufficient capital for its operations could have a material adverse effect on the Company’s
financial condition, results of operations or prospects. In particular, failure to obtain such financing on a timely basis could cause the Company to forfeit its interest
in certain properties, miss certain acquisition opportunities and reduce or terminate its operations.
History of Net Losses
The Company hasn’t received any revenue to date from activities on its properties, and there is no assurance that any of its properties will generate earnings, operate
profitably or provide a return on investment in the future. The Company has not determined that production activity is warranted as of yet on any of its mineral
properties. Even if the Company (alone or in conjunction with a third party) undertakes development and production activities on any of its mineral properties, there
is no certainty that the Company will produce revenue, operate profitably or provide a return on investment in the future. The Company is subject to all of the risks
associated with new mining operations and business enterprises including, but not limited to:
● the timing and cost, which can be considerable, for the future construction of mining and processing facilities;
● the availability and costs of skilled labour, consultants, mining equipment and supplies;
● the availability and cost of appropriate smelting and/or refining arrangements;
● the need to first obtain necessary environmental and other governmental approvals, licenses and permits, and the timing of those approvals, licenses and
permits; and
● the availability of funds to finance construction and development activities.
It is common in new mining operations to experience unexpected problems and delays during construction, development, and mine start-up. In addition, delays in
mineral production often occur. Accordingly, there are no assurances that the Company’s activities will result in sustainable profitable mining operations or that the
Company will successfully establish mining operations or profitably produce metals at any of its properties.
Global Financial Conditions
Global financial conditions have, at various times in the past and may, in the future, experience extreme volatility. Many industries, including the mining industry,
are impacted by volatile market conditions. Global financial conditions may be subject to sudden and rapid destabilizations in response to economic shocks or other
events, such as developments concerning the COVID-19 novel coronavirus (“COVID-19”). A slowdown in the financial markets or other economic conditions,
including but not limited to consumer spending, employment rates, business conditions, inflation, fluctuations in fuel and energy costs, consumer debt levels, lack of
available credit, the state of the financial markets, interest rates and tax rates, may adversely affect the Company’s growth and financial condition. Future economic
shocks may be precipitated by a number of causes, including government debt levels, fluctuations in the price of oil and other commodities, volatility of metal
prices, geopolitical instability, changes in laws or governments, war, terrorism, the volatility of currency exchanges inflation or deflation, the devaluation and
volatility of global stock markets, pandemics and natural disasters. Any sudden or rapid destabilization of global economic conditions could impact the Company’s
ability to obtain equity or debt financing in the future on terms favourable to the Company or at all. In such an event, the Company’s operations and financial
condition could be adversely impacted.
Page 42
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Public Health Crises
The Company's business, operations and financial condition could be materially adversely affected by the outbreak of epidemics, pandemics or other health crises,
such as COVID-19, and by reactions by government and private actors to such outbreaks. As at the date of this MD&A, the global reactions to the spread of
COVID-19 have led to, among other things, significant restrictions on travel, quarantines, temporary business closures and a general reduction in consumer activity.
While these effects are expected to be temporary, the duration of the disruptions to business internationally and the related financial impact cannot be estimated with
any degree of certainty at this time. Such public health crises can result in disruptions and extreme volatility in financial markets and global supply chains as well as
declining trade and market sentiment and reduced mobility of people, all of which could impact commodity prices, interest rates, credit ratings, credit risk,
availability of financing and inflation. The risks to the Company of such public health crises also include risks to employee health and safety and may result in a
slowdown or temporary suspension of operations at some or all of the Company's mineral properties as well as its head office. Although the Company has the
capacity to continue certain administrative functions remotely, many other functions, including the conduct of exploration and development programs, cannot be
conducted remotely and may be impacted or delayed if the Company experiences limitations on employee mobility. As of March 24, 2020, the province of Ontario
has implemented an emergency order mandating the closure of all non-essential workplaces in the province. This order has designated mineral exploration and
development and mining supply and services as essential workplaces and accordingly, our exploration properties in Ontario are at present not directly affected by
the closure order. However, there can be no guarantee that the closure order will not be extended to such workplaces in the future or that governments in other
provinces in which we have mineral properties will not pass similar orders reducing or preventing access to our properties. Any such orders may have a material
adverse effect upon ongoing exploration programs at our properties and, ultimately, on our business and financial condition. At this point, the extent to which
COVID-19 may impact the Company remains uncertain; however, it is possible that COVID-19 could have a material adverse effect on the Company's business,
results of operations and financial condition.
Indigenous Peoples
Various international and national laws, codes, court decisions, resolutions, conventions, guidelines, and other materials relate to the rights of Indigenous peoples,
including the First Nations and Metis of Canada. The Company operates in some areas presently or previously inhabited or used by Indigenous peoples, including
areas in Canada over which Indigenous peoples have established or asserted Aboriginal treaty rights, Aboriginal title, or Aboriginal rights. Many of these rights or
titles impose obligations on governments and private parties as they relate to the rights of Indigenous people concerning resource development. Some mandate that
government consult with, and if required, accommodate, Indigenous people for government actions which may affect Indigenous people, including actions to
approve or grant mining rights or exploration, development or production permits. The obligations of government and private parties under the various international
and national Instruments pertaining to Indigenous people continue to evolve and to be defined.
Government policy and its implementation regarding Indigenous consultation (including the requirements that are imposed on the mining industry) and
accommodation continue to change. In certain circumstances, Indigenous communities are entitled to be consulted prior to, and during, resource development. The
consultation and accommodation process and expectations of parties (government, Indigenous communities and industry proponents) involved can vary
considerably from project to project, within stages of the project life and among Indigenous communities. There can be overlapping or inconsistent Indigenous or
treaty claims respecting a project. These can contribute to process uncertainty, increased costs, delay in receiving required approvals, and potentially, an inability to
secure the required approvals for a project, each of which could have a material adverse effect on the Company’s business, operations, results of operations,
financial condition and future prospects. In addition, the federal government has committed to introducing legislation to implement the United Nations Declaration
on the Rights of Indigenous Peoples ("UNDRIP"). Some provinces and territories are also considering, or have introduced similar legislation. It is uncertain how
the federal and other governments intend to implement UNDRIP. Implementation may add additional uncertainty as to the nature and extent of Aboriginal rights or
title and may also include new processes and additional consultation requirements for project development and operations, which may increase costs, increase
approval timelines and impose development and operational additional obligations or restrictions.
The Company’s current operations, and current and future exploration program may be subject to a risk that one or more groups of Indigenous people may oppose
the operations on or development of any of its properties or on properties in which it holds a direct or indirect interest, even where the Company has entered into
agreements with applicable Indigenous and non-Indigenous authorities. Such opposition may be directed through legal or administrative proceedings or expressed in
manifestations such as protests, roadblocks or other forms of public expression against the Company’s activities. Opposition by Indigenous people to the Company’s
operations may require modification of or preclude development of its projects or may require the Company to enter into agreements with Indigenous people with
respect to projects on such properties. Such agreements or restrictions on operations or development may have a material adverse effect on the Company’s business,
financial condition and results of operations. Even where such agreements have been entered into, there can be no certainty that there will not be disagreements
between the Company and groups or sub-groups of Indigenous persons which may result in project delays or have other material adverse effects on the Company.
Page 43
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Environmental Laws and Regulations
All phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international
conventions and federal, provincial and local laws and regulations. Environmental legislation provides for, among other things, restrictions, conditions and
prohibitions on amongst other things, spills, releases or emissions of various substances produced in association with mining operations and development. The
legislation also requires that mines and exploration sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities
and may require the deposit of adequate reclamation and remediation security. Compliance with such legislation can require significant expenditures and a breach
may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter
standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. Environmental assessments of proposed
projects carry a heightened degree of responsibility for companies and Directors, Officers and employees. The cost of compliance with changes in governmental
regulations has a potential to reduce the profitability of operations.
The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities. The Company cannot give any
assurance that, notwithstanding its precautions and limited history of activities, breaches of environmental laws (whether inadvertent or not) or environmental
pollution will not result in additional costs or curtailment of planned activities and investments, which could have a material adverse effect on the Company’s future
cash flows, earnings, results of operations and financial condition. Failure to comply with applicable laws, regulations, and permitting requirements may result in
enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective
measures requiring capital expenditures, installation of additional equipment, or remedial actions. Companies engaged in mining operations may be required to
compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations and, in particular, environmental laws.
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could
have a material adverse impact on the Company and cause increases in capital expenditures or any future production costs or require abandonment or delays in the
development of new mining properties.
Companies engaged in the exploration and development of mineral properties may from time to time experience increased costs and delays in exploration and
production as a result of the need to comply with applicable laws, regulations and permits.
Title Risks
Title to mineral properties, as well as the location of boundaries on the ground may be disputed. Moreover, additional amounts may be required to be paid to surface
right owners in connection with any mineral exploration or development activities. At all properties where the Company has current or planned exploration
activities, it believes that it has either contractual, statutory, or common law rights to make such use of the surface as is reasonably necessary in connection with
those activities.
The Company does not have title insurance with respect to any of its mining claims and the Company’s ability to ensure that it has obtained secure claims to
individual mineral properties or mining concessions may be severely constrained. The Company has not conducted surveys of all of its claims; therefore, the precise
area and location of such claims may be in doubt. In addition, all of the Company’s mineral properties have had previous owners, and third parties may have valid
claims (known or unknown) underlying our interests therein. Accordingly, the Company’s properties may be subject to prior unregistered liens, agreements,
royalties, transfers or claims, including First Nations land claims, and title may be affected by, among other things, undetected defects. In addition, the Company
may be unable to explore its properties as permitted or to enforce its rights with respect to its properties. An impairment to or defect in the Company’s title to its
properties could have a material adverse effect on its business, financial condition or results of operation.
Page 44
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Compliance with Laws
The Company’s activities are subject to government approvals, various laws governing prospecting, development, land resumptions, production taxes, labour
standards and occupational health, mine safety, toxic substances and other matters, including issues affecting local First Nations populations. The costs associated
with compliance with these laws and regulations can be substantial. Although the Company believes its activities are carried out in accordance with all applicable
rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a
manner which could limit or curtail production or development, or cause additional expense, capital expenditures, restrictions or delays in the development of its
properties. Amendments to current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof,
could have a material adverse impact on our business, operations and financial performance. Further, the mining licenses and permits issued in respect of our
projects may be subject to conditions which, if not satisfied, may lead to the revocation of such licenses. In the event of revocation, the value of the Company’s
investments in such projects may decline.
The Company’s mineral claims, licenses and permits are subject to periodic renewal and may only be renewed a limited number of times for a limited period of
time. While the Company anticipates that renewals will be given as and when sought, there is no assurance that such renewals will be given as a matter of course
and there is no assurance that new conditions will not be imposed in connection therewith. The Company’s business objectives may also be impeded by the costs of
holding and/or renewing the mineral claims, licenses and permits. In addition, the duration and success of efforts to obtain and renew mineral claims, licenses and
permits are contingent upon many variables not within the Company’s control.
Permitting
The Company’s current and anticipated future operations, including further exploration, development activities and commencement of production on its properties,
require licenses and permits from various governmental authorities. Our business requires many environmental, construction and mining permits, each of which can
be time-consuming and costly to obtain, maintain and renew. In connection with our current and future operations, we must obtain and maintain a number of permits
that impose strict conditions, requirements and obligations on the Company, including those relating to various environmental and health and safety matters. To
obtain, maintain and renew certain permits, we are required to conduct environmental assessments pertaining to the potential impact of our operations on the
environment and to take steps to avoid or mitigate those impacts. The Company cannot be certain that all licenses and permits that it may require for its operations
will be obtainable on reasonable terms or at all. Delays or a failure to obtain such licenses and permits, or a failure to comply with the terms of any such licenses
and permits that we have obtained, could have a material adverse impact on First Mining.
On August 28, 2019, the Impact Assessment Act came into force and replaced the Canadian Environmental Assessment Act, thereby establishing a new
environmental assessment process. It is uncertain how the new assessment process adopted by the federal government will result in a more efficient approval
process. The Impact Assessment Act broadens the assessment factors to include health, economy, social, gender, and sustainability considerations. The lack of
regulatory certainty is likely to have an influence on investment decisions for major projects. Even when projects are approved on a federal level, such projects often
face further delays due to interference by provincial and municipal governments, as well as court challenges related to issues such as indigenous rights, the
government's duty to consult and accommodate indigenous peoples and the sufficiency of the relevant environmental review processes. Such political and legal
opposition creates further uncertainty.
Climate Change
Climate change is an international concern and poses risks to issuers of both direct and indirect effects of physical climate changes and government policy including
climate change legislation and treaties. Both types of risks could result in increased costs, and therefore decreased profitability of our operations. Governments at all
levels may be moving towards enacting legislation to address climate change concerns, such as requirements to reduce emission levels and increase energy
efficiency, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place. Where
legislation has already been enacted, such regulations may become more stringent, which may result in increased costs of compliance. There is no assurance that
compliance with such regulations will not have an adverse effect on the Company’s results of operations and financial condition. Furthermore, given the evolving
nature of the debate related to climate change and resulting requirements, it is not possible to predict the impact on the Company’s results of operations and
financial condition.
Climate change may result in a number of physical impacts on our business, including an increasing frequency of extreme weather events (such as increased periods
of snow and increased frequency and intensity of storms), water shortages and extreme temperatures, which have the potential to disrupt our exploration and
development plans and may have other indirect impacts on our business, including transportation difficulties and supply disruptions. The Company’s emergency
plans for managing such extreme weather conditions may not be sufficient and extended disruptions could have adverse effects on our results of operations and
financial condition.
Page 45
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
Key Persons
The Company manages its business with a number of key personnel, including key contractors, the temporary or permanent loss or unavailability (including as a
result of exposure to or quarantine as a result of COVID-19) of a number of whom could have a material adverse effect on the Company. In addition, as its business
develops and expands, the Company believes that its future success will depend greatly on our continued ability to attract and retain highly-skilled and qualified
personnel and contractors. In assessing the risk of an investment in the Company’s shares, potential investors should realize that they are relying on the experience,
judgment, discretion, integrity and good faith of our management team and Board of Directors. The Company cannot be certain that key personnel will continue to
be employed by it or that it will be able to attract and retain qualified personnel and contractors in the future. Failure to retain or attract key personnel could have a
material adverse effect on the Company. The Company does not maintain “key person” insurance policies in respect of its key personnel.
QUALIFIED PERSONS
Hazel Mullin, P.Geo, Director of Data Management and Technical Services at First Mining, is a Qualified Person as defined by National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”), and is responsible for the review and verification of the scientific and technical information in this
MD&A.
SECURITIES OUTSTANDING
Authorized share capital: The Company can issue an unlimited number of common shares with no par value and an unlimited number of preferred shares with no
par value. No preferred shares have been issued as at March 27, 2020.
The following table sets out all outstanding securities of the Company as of March 27, 2020.
Common shares – issued
Stock options(1)
Warrants(2)
Common shares - fully diluted
Number
632,619,453
55,277,500
34,583,157
722,480,110
$
$
(1) Each stock option is exercisable for one common share of the Company.
(2) Each warrant is exercisable for one common share of the Company.
Weighted
Average Exercise
Price
Expiry Date
0.52
0.37
March 30, 2020 – January 31, 2025
June 16, 2021 – May 16, 2022
Page 46
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
During the amalgamation of Tamaka on June 16, 2016, certain vendors deposited an aggregate of 29,658,290 First Mining shares received into escrow. 20% of such
escrowed shares were released from escrow on June 17, 2017, and an additional 20% will be released every six months thereafter, and the final tranche was released
on June 17, 2019. As at December 31, 2019, there were nil common shares of the Company held in escrow as a result of the Tamaka transaction (December 31,
2018 – 5,931,658).
DISCLOSURE CONTROLS AND PROCEDURES
The Company’s Management, with the participation of its Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), have evaluated the
effectiveness of the Company’s disclosure controls and procedures. Based upon the results of that evaluation, the Company’s CEO and CFO have concluded that, as
of December 31, 2019, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be
disclosed by the Company in reports it files is recorded, processed, summarized and reported, within the appropriate time periods and is accumulated and
communicated to Management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s Management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial
reporting as such term is defined in the SEC’s rules and the rules of the Canadian Securities Administrators. The Company’s internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with IFRS as issued by the IASB. The Company’s internal control over financial reporting includes policies and procedures that:
● address maintaining records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;
● provide reasonable assurance that transactions are recorded as necessary for preparation of financial statements in accordance with IFRS;
● provide reasonable assurance that the Company’s receipts and expenditures are made only in accordance with authorizations of Management and the
Company’s Directors; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could
have a material effect on the Company’s consolidated financial statements.
The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any
evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the
degree of compliance with the Company’s policies and procedures.
There has been no change in the Company's internal control over financial reporting during the year ended December 31, 2019 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over financial reporting.
LIMITATIONS OF CONTROLS AND PROCEDURES
The Company’s Management, including the CEO and CFO, believes that any disclosure controls and procedures or internal control over financial reporting, no
matter how well conceived and operated, may not prevent or detect all misstatements because of inherent limitations. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and may not be detected.
Page 47
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
FORWARD-LOOKING INFORMATION
This MD&A is based on a review of the Company’s operations, financial position and plans for the future based on facts and circumstances as of December 31,
2019. This MD&A contains “forward-looking statements” within the meaning of applicable Canadian securities regulations (collectively, “forward-looking
statements”). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or
future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”,
“project”, “predict”, “forecast”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions) are not statements of historical
fact and may be “forward-looking statements”. These statements relate to future events or the Company’s future performance, business prospects or opportunities.
Forward-looking statements include, but are not limited to: statements regarding the advancement of the Company’s mineral assets towards production; statements
regarding the potential for the Company to acquire additional mineral assets in the future; statements regarding the next stages and anticipated timing of the
metallurgical study or the environmental, permitting and Indigenous and community consultation process at Springpole; statements regarding opportunities to
enhance project economics identified under the 2019 Springpole PEA; statements regarding the targeted completion date of the Springpole PFS; statements
regarding the potential increase in gold and silver recoveries at Springpole; statements regarding the Company’s intentions and expectations regarding exploration,
infrastructure and production potential of any of its mineral properties; statements relating to the Company's working capital, capital expenditures and ability and
intentions to raise capital; statements regarding the potential effects of financing on the Company's capitalization, financial condition and operations; statements
regarding future share issuances under the ATM facility; forecasts relating to mining, development and other activities at the Company’s operations; forecasts
relating to market developments and trends in global supply and demand for gold; statements relating to future global financial conditions and the potential effects
on the Company; statements relating to future work on the Company’s non-material properties; statements relating to the Company’s mineral reserve and mineral
resource estimates; statements regarding the Company's belief that the increased understanding of the Goldlund deposit will assist the Company in better targeting
subsequent drill programs to potentially grow the current resource body at Goldlund; statements regarding regulatory approval and permitting including, but not
limited to, EA approval for the Springpole project and the expected timing of such EA approval; statements regarding the Company’s anticipated timing to receive
final approval from the MECP of the ToR for Springpole, and consultations in respect thereof; statements regarding the Company's compliance with laws and
regulations including, but not limited to environmental laws and regulations; statements regarding the Pickle Crow Earn-In Agreement and payouts, share issuances
and exploration expenditure commitments thereunder; statements regarding Gainey's anticipated adherence to required payment and expenditure obligations
pursuant to the Gainey Option Agreement; statements regarding Momentum's anticipated adherence to required payment and expenditure obligations pursuant to the
Momentum Option Agreement; statements regarding the Company’s plans to complete additional resource and regional drilling at Goldlund; statements regarding
anticipated completion of the “Main Zone” drill program and any subsequent phase of the work program; statements regarding the Company’s intention and
proposed timing to conduct a waste rock characterization and economic study of marketable aggregates at Hope Brook, as well as geological mapping and soil
sampling; statements regarding improved efficiency as a result of building new access roads to mineral properties; statements regarding the Company’s plans to
complete low-spend, incremental work on its broader gold asset portfolio; statements regarding the Company’s engagement with local stakeholders; statements
regarding the Company's ability to enter into agreements with local stakeholders including, but not limited to, local Indigenous groups; statements regarding the
potential impact of the COVID-19 pandemic; statements regarding key personnel; statements regarding non-IFRS measures and changes in accounting standards;
statements relating to the limitation of the Company's internal controls over financial reporting; and statements regarding the preparation or conduct of studies and
reports and the expected timing of the commencement and completion of such studies and reports.
There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such
statements. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed under the heading “Risks that can
affect our business” in the Company’s Annual Information Form for the year ended December 31, 2019 and other continuous disclosure documents filed from time
to time via SEDAR with the applicable Canadian securities regulators. Forward-looking statements are based on the estimates and opinions of Management on the
date the statements are made, and the Company does not undertake any obligation to update forward-looking statements should conditions or our estimates or
opinions change, except as required by applicable laws. Actual results may differ materially from those expressed or implied by such forward-looking statements.
These statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward-looking
statements.
The Company believes that the expectations reflected in any such forward-looking statements are reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements included herein this MD&A should not be unduly relied upon.
Page 48
FIRST MINING GOLD CORP.
(Expressed in thousands of Canadian dollars, unless otherwise indicated)
Management’s Discussion & Analysis
For the three months and year ended December 31, 2019
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
This MD&A has been prepared in accordance with the requirements of Canadian securities laws, which differ in certain material respects from the disclosure
requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as
defined in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) 2014 Definition Standards on Mineral Resources
and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the
United States Securities and Exchange Commission (the “SEC”) and contained in SEC Industry Guide 7 (“Industry Guide 7”). Under Industry Guide 7 standards,
a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow
analysis to designate mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined under the
2014 CIM definition standards, and are required to be disclosed by NI 43-101. However, these terms are not defined under Industry Guide 7 and are not permitted to
be used in reports and registration statements of United States companies filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and
great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors
are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a
mineral resource is permitted disclosure under Canadian regulations. In contrast, the SEC only permits U.S. companies to report mineralization that does not
constitute “mineral reserves” by SEC standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this MD&A may not be comparable to similar information made public by U.S. companies subject to the reporting and
disclosure requirements under the United States federal securities laws and the rules and regulations of the SEC thereunder.
Page 48
Exhibit 99.4
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Daniel W. Wilton, certify that:
1. I have reviewed this annual report on Form 40-F of First Mining Gold Corp.;
2.
3.
4.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and
have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s
auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over
financial reporting.
Date: March 30, 2020
/s/ Daniel W. Wilton
Daniel W. Wilton
Chief Executive Officer
(Principal Executive Officer)
Exhibit 99.5
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Andrew Marshall, certify that:
1. I have reviewed this annual report on Form 40-F of First Mining Gold Corp.;
2.
3.
4.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and
have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual
report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s
auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over
financial reporting.
Date: March 30, 2020
/s/ Andrew Marshall
Andrew Marshall
Chief Financial Officer
(Principal Financial Officer and) Principal Accounting Officer
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.6
The undersigned, Daniel W. Wilton, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(a)
(b)
the annual report on Form 40-F of First Mining Gold Corp. for the year ended December 31, 2019 fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Form 40-F fairly presents, in all material respects, the financial condition and results of operations of First Mining Gold
Corp.
Date: March 30, 2020
/s/ Daniel W. Wilton
Daniel W. Wilton
Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.7
The undersigned, Andrew Marshall, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(a)
(b)
the annual report on Form 40-F of First Mining Gold Corp. for the year ended December 31, 2019 fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Form 40-F fairly presents, in all material respects, the financial condition and results of operations of First Mining Gold
Corp.
Date: March 30, 2020
/s/ Andrew Marshall
Andrew Marshall
Chief Financial Officer
(Principal Financial Officer and) Principal Accounting Officer
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.8
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Dr. Gilles Arseneau, Ph.D., P.Geo., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration
Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation
of the following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Dr. Gilles Arseneau, Ph.D., P.Geo.
Dr. Gilles Arseneau, Ph.D., P.Geo.
Associate Consultant (Geology)
SRK Consulting (Canada) Inc.
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.9
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Grant Carlson, P.Eng., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement on Form
F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the following
technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Grant Carlson, P.Eng.
Grant Carlson, P.Eng.
Senior Consultant (Mining)
SRK Consulting (Canada) Inc.
Exhibit 99.10
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Bruce Andrew Murphy, P.Eng., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement
on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the
following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Bruce Andrew Murphy, P.Eng.
Bruce Andrew Murphy, P.Eng.
Practice Leader (Geotechnical)
SRK Consulting (Canada) Inc.
Exhibit 99.11
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Neil Winkelmann, FAusIMM, of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement on
Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the
following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Neil Winkelmann, FAusIMM
Neil Winkelmann, FAusIMM
Principal Consultant (Mining)
SRK Consulting (Canada) Inc.
Exhibit 99.12
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Mark Liskowich, P.Geo., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement on
Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the
following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Mark Liskowich, P.Geo.
Mark Liskowich, P.Geo.
Principal Consultant (GeoEnvironmental)
SRK Consulting (Canada) Inc.
Exhibit 99.13
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Michel Noël, P.Eng., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement on Form F-
10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the following
technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Michel Noël, P.Eng.
Michel Noël, P.Eng.
Principal Consultant (GeoEnvironmental)
SRK Consulting (Canada) Inc.
Exhibit 99.14
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Michael Royle, M.App.Sci., P.Geo., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration
Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation
of the following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Michael Royle, M.App.Sci., P.Geo.
Michael Royle, M.App.Sci., P.Geo.
Principal Consultant (Hydrogeology)
SRK Consulting (Canada) Inc.
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.15
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Dr. Mauricio Herrera, Ph.D., P.Eng., of SRK Consulting (Canada) Inc., hereby consent to the use of my name in the Annual Report and in the Registration
Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation
of the following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Dr. Mauricio Herrera, Ph.D., P.Eng.
Dr. Mauricio Herrera, Ph.D., P.Eng.
Principal Consultant (Surface Water Management)
SRK Consulting (Canada) Inc.
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.16
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Laurie Tahija, MMSA-QP, of M3 Engineering and Technology Corporation, hereby consent to the use of my name in the Annual Report and in the Registration
Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation
of the following technical report:
“Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, dated November 5, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Laurie Tahija, MMSA-QP
Laurie Tahija, MMSA-QP
Principal Consultant (Processing)
M3 Engineering and Technology Corporation
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.17
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Todd McCracken, P.Geo., of WSP Canada Inc., hereby consent to the use of my name in the Annual Report and in the Registration Statement on Form F-10 (File
No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the following technical
report:
“Technical Report and Resource Estimation Update, Goldlund Gold Project, Sioux Lookout, ON”, dated April 1, 2019 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Todd McCracken, P.Geo.
Todd McCracken, P.Geo.
Manager – Mining
WSP Canada Inc.
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.18
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Mark Drabble, B.App.Sci (Geology), MAIG, MAusIMM, of Optiro Pty Limited, hereby consent to the use of my name in the Annual Report and in the
Registration Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in
the preparation of the following technical report:
“Technical Report on the Cameron Gold Deposit, Ontario, Canada”, dated January 17, 2017 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Mark Drabble, B.App.Sci (Geology), MAIG, MAusIMM
Mark Drabble, B.App.Sci (Geology), MAIG, MAusIMM
Principal Consultant
Optiro Pty Limited
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.19
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Kahan Cervoj, B.App.Sci (Geology), MAIG, MAusIMM, of Optiro Pty Limited, hereby consent to the use of my name in the Annual Report and in the
Registration Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in
the preparation of the following technical report:
“Technical Report on the Cameron Gold Deposit, Ontario, Canada”, dated January 17, 2017 (the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Kahan Cervoj, B.App.Sci (Geology), MAIG, MAusIMM
Kahan Cervoj, B.App.Sci (Geology), MAIG, MAusIMM
Principal Consultant
Optiro Pty Limited
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.20
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, B. Terrence Hennessey, P.Geo., of Micon International Limited, hereby consent to the use of my name in the Annual Report and in the Registration Statement on
Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation of the
following technical report:
“An Updated Mineral Resource Estimate for The Pickle Crow Property, Patricia Mining Division, Northwestern Ontario, Canada”, dated June 15, 2018
(the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ B. Terrence Hennessey, P.Geo.
B. Terrence Hennessey, P.Geo.
Micon International Limited
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Annual Report on Form 40-F
Consent of Expert
Exhibit 99.21
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the Annual Information Form of
the Company for the year ended December 31, 2019.
I, Michael P. Cullen, M.Sc., P.Geo., of Mercator Geological Services Limited, hereby consent to the use of my name in the Annual Report and in the Registration
Statement on Form F-10 (File No. 333-231801) of the Company (the “Registration Statement”), in connection with reference to my involvement in the preparation
of the following technical report:
“2015 Mineral Resource Estimate Technical Report for the Hope Brook Gold Project, Newfoundland and Labrador, Canada”, dated November 20, 2015
(the “Technical Report”).
and to references to the Technical Report, or portions thereof, in the Annual Report and Registration Statement, and to the inclusion and incorporation by reference
of the information derived from the Technical Report in the Annual Report and Registration Statement.
Yours truly,
/s/ Michael P. Cullen, M.Sc., P.Geo.
Michael P. Cullen, M.Sc., P.Geo.
Mercator Geological Services Limited
March 30, 2020
VIA EDGAR
United States Securities and Exchange Commission
Re:
First Mining Gold Corp. (the “Company”)
Technical Information in Annual Report on Form 40-F and Annual Information Form
Exhibit 99.22
This letter is provided in connection with the Company’s Form 40-F annual report for the year ended December 31, 2019 (the “Annual Report”) to be filed by the
Company with the United States Securities and Exchange Commission (the “SEC”). The Annual Report incorporates by reference the annual information form of
the Company for the year ended December 31, 2019.
I, Hazel Mullin, P.Geo., Director, Data Management and Technical Services of the Company, hereby consent to being named as a qualified person in the Annual
Report and authorize the use of the information included or incorporated by reference into the Annual Report and represented therein as having been prepared by me
or under my supervision.
I also consent being named as a qualified person in the Registration Statement on Form F-10 (File No. 333-231801) of the Company and authorize the use of the
information included or incorporated by reference into such Registration Statement and represented therein as having been prepared by me or under my supervision.
Yours truly,
/s/ Hazel Mullin, P.Geo.
Hazel Mullin, P.Geo.
Director, Data Management and Technical Services
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in this Annual Report on Form 40-F for the year ended December 31, 2019 of First Mining Gold Corp. of our
report dated March 30, 2020, relating to the consolidated financial statements which appear in Exhibit 99.2 incorporated by reference in this Annual Report.
We also consent to the incorporation by reference in the Registration Statement on Form F-10 (No. 333-231801) of First Mining Gold Corp. of our report dated
March 30, 2020 referred to above.
We also consent to reference to us under the heading “Interests of Experts,” which appears in the Annual Information Form included in Exhibit 99.1 incorporated by
reference in this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statement.
Exhibit 99.23
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
Canada
March 30, 2020