This is going to be a long post. I’ve seen some posts lately about Dan’s performance and the share price. Here are some of my thoughts for what it’s worth. Full disclosure, I have been in this stock since 2016, I have multi seven figure share count and my average price per share is a little over .39 cents USD. I say this to show that I’m down a tremendous amount and I’m not happy about it. I also participated in the latest offering round where I picked up shares at .091 as well as the options.
I certainly recognize that at the end of the day, it is the CEO’s primary job to increase the share price for the shareholders. In that respect, current management has failed. With that said, we are in uncharted waters when it comes to the mining industry as it relates to valuations compared to the gold price. I just read an article a couple of weeks ago discussing how Barrick has never been at a lower valuation compared to their NPV (net present value) then now. In its entire history. The point being that this is not an issue affecting just us. It’s the entire mining industry. The valuations of mining companies follow 10-15 year cycles and we are at the low currently. I believe that we’ve bottomed and will begin a sustained move up. Historically, developers are valued at about .5 to NPV. At $1600 gold, our NPV is around 1.6 billion which means our current valuation is around .05 to NPV. This is undeniably the worst bear market the mining industry has ever seen. I’m not sure what Dan or for that matter Keith could do differently to make a difference the last couple of years. Based on conversations that I’ve had with them, it appears the plan has been to just keep working on Springpole and Duparque to advance them so that when the industry comes back into favor, everything lines up for our share price.
Speaking about Springpole, we’re very close to submitting our final environmental approval application. It’s slated for June or July of this year. It’s important to note that there are two ways to conduct this process. One way is to do your work, submit the application and then spend a couple of years going back and forth with the regulators answering thousands and thousands of questions, concerns and clarifications. The other way to do it is to go back and forth with the regulators ahead of time, work through all the issues prior to submitting the final draft. We opted for the second approach. If I recall, early last year we submitted a draft and after a few months, the regulators sent back 1200 questions. We responded to all of those and then a few months later, we received somewhere around 500 follow up questions to which we responded to all of those. This option takes more time to the point of final submission but much less time to get final approval after submission. By doing it this way, once you submit the final submission, you’re all but guaranteed to receive approval because you’ve already addressed all the issues prior to submission. Full approval takes about 12 months from final submission but it’s really just crossing T’s and dotting I’s. I asked management if there was ever an example of a company going this route and not receiving approval. The response was yes but only because a few companies ran into financial difficulties and shut down their operations not because the regulators denied them the environmental approvals. So essentially, once we submit the final draft, (June or July of this year) we’re on the clock for final approval. This is important because the smart money knows this as well. Institutional investors, big mining specific funds and most importantly, senior producers.
All of this is to say that I believe the bottom is in. Not just for us but the entire mining sector. That’s not to say that if the stock market were to crash that we wouldn’t experience a sharp drop as well but it would be brief and would set up an epic bull run for PM’s and miners. Looking at FF specifically, it appears to me that everything is lining up perfectly for a huge run in our stock price over the next few years. It appears the gold price has begun a sustained move up, we by all accounts are at the absolute bottom of the 10-15 year miner valuation cycle, we’re months away from final submission on one of the largest projects in North America that fits exactly into what the senior producers are looking for and desperately need and we seem to be moving forward on a small scale mining operation on Duparque (by limiting to sub 2000 tons per day, we can get approved without having to go through the tedious process of environmental approvals).
So what does all this mean to our share price? My guess is that we’ve seen the low (baring a near term stock market crash) and we will soon see our share price break above .10 and continue to appreciate as we head into the summer. I would bet that we put a deal together on Springpole with a major prior to receiving full approval which would be Q2-Q3 of 2025. If the gold price continues to go up (2400-2600), the sector comes back into favor in terms of valuations and we put a blockbuster deal together with one of the largest mining companies on the planet, I believe our share price will be magnitudes higher then it is now. Run the math yourself on what our share price would be if we just mean revert to historical norms of .5 to NPV with the gold price at $2600. I have and it’s a really big number. In short, I believe the stars are aligning for us over the next 12-18 months. We’ve weathered the storm that lasted many years longer than I ever thought possible.
And to Ron and Marv up in BC, since I know you’ll be reading this, hang tight, we’re very close to a breakout in the stock price.
