Blueprint
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CONTENTS
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Important
information about this document
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4
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Reporting currency
and financial information
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4
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Caution about
forward-looking information
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4
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Examples of
forward-looking information in this AIF
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5
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Material
risks
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6
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Material
assumptions
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7
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National
Instrument 43-101 definitions
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8
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Glossary of
units
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9
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Glossary of
elements
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9
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Cautionary note to
US investors
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10
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About First
Mining
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11
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Vision
and strategy
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11
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General overview
of our business
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12
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Major
developments
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15
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Recent
developments
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19
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Significant
acquisitions
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20
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Corporate
organization
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20
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Our
projects
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21
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Material
Properties
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22
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Springpole
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22
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Technical
report
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22
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Project
description, location and access
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22
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History
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24
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Geological
setting, mineralization and deposit types
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25
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Exploration
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26
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Drilling
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26
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Sampling, analysis
and data verification
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27
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Mineral processing
and metallurgical testing
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30
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Mineral resource
estimates
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30
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Mining
Operations
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32
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Processing and
Recovery Operations
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34
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Infrastructure,
Permitting and Compliance Activities
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34
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Capital and
Operating Costs
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36
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Exploration,
Development and Production
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37
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Goldlund
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38
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Technical
report
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38
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Project
description, location and access
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38
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History
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39
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Geological
setting, mineralization and deposit types
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39
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Exploration
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41
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Drilling
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41
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Sampling, analysis
and data verification
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44
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Mineral processing
and metallurgical testing
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55
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Mineral resource
estimates
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55
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Cameron
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57
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Technical
report
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57
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Project
description, location and access
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57
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History
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58
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Geological
setting, mineralization and deposit type
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59
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Exploration
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59
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Drilling
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60
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Sampling, analysis
and data verification
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60
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Mineral processing
and metallurgical testing
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65
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Mineral resource
estimates
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66
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Pickle Crow
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68
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Technical
report
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68
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Project
description, location and access
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68
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History
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69
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Geological
setting, mineralization and deposit types
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70
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Exploration
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71
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Drilling
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72
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Sampling, analysis
and data verification
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73
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Mineral processing
and metallurgical testing
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75
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Mineral resource
estimates
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78
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Recent
activities
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81
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Hope Brook
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83
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Technical
report
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83
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Property
description, location and access
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83
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History
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84
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Geological
setting, mineralization and deposit types
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85
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Exploration
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86
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Drilling
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86
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Sampling, analyses
and data verification
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87
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Mineral processing
and metallurgical testing
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90
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Mineral resource
estimates
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90
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Non-material
properties
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91
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Risks that can
affect our business
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93
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Types
of risk
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93
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Exploration,
development, production and operational risks
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94
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Financial
risks
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98
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Political
risks
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101
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Regulatory
risks
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102
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Environmental
risks
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104
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Industry
risks
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105
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Other
risks
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106
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Investor
information
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111
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Share
capital
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111
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Common
shares
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111
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Preferred
shares
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112
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Security-based
compensation and convertible securities
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112
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Material
contracts
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113
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Market
for our securities
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113
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Trading
activity
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114
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Our
team
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115
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Audit
Committee information
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122
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Interests of
experts
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125
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Legal
counsel
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126
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Additional
information
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126
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Appendix A - Audit Committee
Charter
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127
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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.
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Throughout this
document, the terms we, us, our,
the Company and First
Mining mean First Mining Gold Corp. and its subsidiaries, in
the context.
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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.
All
financial information presented in this AIF has been prepared in
accordance with International Financial Reporting Standards as
issued by the International Accounting Standards
Board.
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 93, 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 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.
Examples of
forward-looking information in this AIF
●
statements
regarding future acquisitions of mineral properties
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our plan to retain
a residual interest in any of our projects in the form of
royalties, metal streams, minority interests or equity
positions
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statements relating
to our belief that the jurisdictions in eastern Canada in which the
Company holds mineral properties are mining friendly
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statements relating
to our vision and strategy
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our intention to
eventually pay a dividend to our shareholders
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our intention to
de-risk our material assets through exploration, drilling,
calculating resource estimates, conducting economic studies and
other activities;
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our intention to
utilize our management team’s expertise to successfully
permit and construct producing mines at our material
assets
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statements relating
to the criteria we will use when assessing potential
acquisitions
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our belief that we
will continue to be able to locate and retain professionals with
the necessary specialized skills and knowledge
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statements
regarding our intention and ability to select, acquire and bring to
production suitable properties or prospects for mineral exploration
and development
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our ability to
raise the capital necessary to fund our operations and the
potential development of our properties
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our ability to
obtain the resources to conduct exploration and development
activities on our properties
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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
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statements
regarding shifts in gold demand
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our ability to work
with the various Indigenous communities in relation to the
development of our projects
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our intention to
construct a low-profile, resource access road to connect the Hope
Brook Project to the Burgeo Highway or Highway 480
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our intention to
continue to make expenditures to ensure compliance with applicable
laws and regulations
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our intentions and
expectations regarding exploration at any of our mineral
properties
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statements
regarding potential increases in the ultimate recovery of gold and
silver from our properties, including the Springpole
Project
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forecasts relating
to mining, development and other activities at our
operations
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forecasts relating
to market developments and trends in global supply and demand for
gold
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future royalty and
tax payments and rates
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future work on our
non-material properties
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our mineral reserve
and mineral resource estimates
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exploration,
development and production risks
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global financial
conditions
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commodity price
fluctuations
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availability of
capital and financing on acceptable terms
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we have no history
of commercially producing metals from out mineral exploration
properties
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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 succeed
●
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
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we may be adversely
affected by currency fluctuations, volatility in securities markets
and volatility in mineral prices
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accidents or
equipment breakdowns may occur
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the cyclical nature
of the mining industry
●
there may be
changes to government regulations or policies, including tax and
trade laws and policies
●
we may be adversely
affected by changes in foreign currency exchange rates, interest
rates or tax rates
●
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
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uncertainties and
substantial expenditures related to determining whether mineral
resources or mineral reserves exist on a property
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future sales by
existing shareholders could reduce the market price of our
shares
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the assumptions
regarding market conditions upon which we have based our capital
expenditure expectations
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the availability of
additional capital and financing on acceptable terms, or at
all
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our mineral reserve
and resource estimates and the assumptions upon which they are
based are reliable
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the success of our
exploration plans
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our expectations
regarding spot prices and realized prices for gold and other
precious metals
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market developments
and trends in global supply and demand for gold meeting
expectations
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our expectations
regarding tax rates and payments, foreign currency exchange rates
and interest rates
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our reclamation
expenses
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the geological
conditions at our properties
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our ability to
satisfy payment and minimum expenditure obligations in respect of
certain of 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
●
our operations are
not significantly disrupted as a result of natural disasters,
governmental or political actions, litigation or arbitration
proceedings, the unavailability of reagents, equipment, operating
parts and supplies critical to our activities, equipment failure,
labour shortages, ground movements, transportation disruptions or
accidents or other exploration and development risks
●
our ability to
support stakeholders necessary to develop our mineral
projects
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the accuracy of
geological, mining and metallurgical estimates
●
maintaining good
relationships with the communities in which we operate
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
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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.
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Measured Mineral Resource
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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.
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Indicated Mineral Resource
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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.
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Inferred Mineral Resource
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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.
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Qualified Person
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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.
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Unit
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Abbreviation
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centimetre(s)
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cm
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cubic
metre(s)
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m3
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day
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d
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degree(s)
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°
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foot/feet (as
context requires)
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ft.
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gram(s)
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g
|
grams
per tonne
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g/t
|
hectare(s)
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ha
|
kilogram(s)
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kg
|
kilometre(s)
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km
|
metre(s)
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m
|
micrometre(s)
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µm
|
million
ounces
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Moz.
|
million
tonnes
|
Mt
|
ounce(s)
|
oz.
|
ounce(s) per
tonne
|
oz./t
|
parts
per million
|
ppm
|
square
kilometre(s)
|
km2
|
square
metre(s)
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m2
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tonne(s)
|
t
|
tonnes
per cubic metre
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t/m3
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Element
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Abbreviation
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copper
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Cu
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gold
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Au
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silver
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Ag
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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.
First
Mining is an emerging mineral development company with a
diversified portfolio of gold projects in North America that was
founded in 2015 by our Chairman, Mr. Keith Neumeyer.
Since
initially listing on the TSX Venture Exchange (“TSX-V”) in April 2015, First
Mining completed eight transactions, and as a result we have
assembled a large resource base of approximately 7.3 million ounces
of gold in the Measured and Indicated Mineral Resource categories
and approximately 3.6 million ounces of gold in the Inferred
Mineral Resource category in mining friendly jurisdictions in
eastern Canada.
We are publicly listed on the Toronto Stock Exchange
(“TSX”) under
the trading symbol “FF”, on the Frankfurt Stock
Exchange under the symbol “FMG”, and in the US on the
OTC-QX under the trading symbol “FFMGF”. Our management
team has decades of experience in evaluating, exploring and
developing mineral assets.
Vision and strategy
First
Mining Gold Corp.
(TSX: FF; OTC-QX:
FFMG; Frankfurt: FMG)
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Head Office:
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Registered & Records Office
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First Mining Gold
Corp.
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Bennett Jones
LLP
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Suite 1800,
Cathedral Place
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Suite 2600, Oceanic
Plaza
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925 West Georgia
Street
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1066 West Hastings
Street
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Vancouver, BC V6C
3L2
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Vancouver, BC V6E
3X1
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Canada
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Canada
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Telephone:
604.639.8848
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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;
●
utilize our
management team’s expertise to successfully permit and
construct producing mines at our material assets; and
●
to 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
– until recently, our focus has been on significantly
undervalued gold assets, most of which have had an enterprise value
of less than US$10 per ounce of gold.
General
overview of our business
We are
in the exploration and development stage of our corporate
development, 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 93.
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, 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 USA, and we believe we will be able to continue
to do so.
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 2019. 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.
Employees
As of
the date of this AIF, we have 18 full-time employees and 2
part-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. From a financial
reporting perspective, there were no reclamation liability amounts
recorded in our audited annual financial statements for the year
ended December 31, 2018, given that the nature of any reclamation
work in relation to our mineral properties is not material to First
Mining at this time. We are also not aware of any existing
environmental problems related 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 of 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 93.
Major
developments
January
●
We completed the
acquisition of Goldrush Resources Ltd. (“Goldrush”) pursuant to a
court-approved plan of arrangement.
April
●
We completed our
acquisition of Clifton Star Resources Inc. ("Clifton Star") pursuant to a court approved plan
of arrangement. Under the transaction, First Mining acquired all of
the shares of Clifton Star in exchange for 48,209,962 shares of
First Mining. Clifton Star owned a 100% interest in the Duquesne
gold project (the “Duquesne
Project”), a 100% interest in four early-stage
precious and base metals projects, and a 10% indirect interest in
the Duparquet gold project (the “Duparquet Project”). Following the
transaction, Michel Bouchard, Clifton Star’s former President
and CEO, joined our Board.
June
●
We completed our
acquisition of Cameron Gold Operations Ltd. ("Cameron Gold") from Chalice Gold Mines
Ltd. ("Chalice"). In
connection with the transaction, we issued 32,260,836 First Mining
shares to Chalice. In addition, we issued Chalice a 1% net smelter
returns (“NSR”)
royalty on certain claims within Cameron Gold's Cameron Project,
and we have a right to repurchase 0.5% of the NSR royalty for $1
million.
●
We completed the
acquisition of Tamaka Gold Corporation ("Tamaka") pursuant to an amalgamation,
which resulted in Tamaka becoming a wholly-owned subsidiary of
First Mining. Under the transaction, former Tamaka shareholders
received an aggregate of approximately 92.5 million First Mining
shares. Tamaka held a 100% interest in the Goldlund gold project in
Ontario. In addition, under the terms of the transaction, certain
Tamaka shareholders who held in the aggregate approximately 39.6%
of the outstanding Tamaka shares have deposited the First Mining
shares that they received under the transaction into escrow.
5,931,658 of these escrowed First Mining shares were be released
from escrow on June 17, 2017, and every six months thereafter a
further 5,931,658 First Mining shares will be released from escrow,
until the final escrow release on June 17, 2019.
June (continued)
●
Mr. Samir Patel was
appointed as our new Corporate Counsel and Corporate Secretary, and
Mr. Bill Tanaka joined the Company as Vice President, Technical
Services.
August
●
We closed a
non-brokered private placement (the “Private Placement”) of units (the
“Units”) under
which we raised gross proceeds of $27 million. We issued 33,750,000
Units with each Unit consisting of one First Mining share and
one-half of a common share purchase warrant to purchase a First
Mining share at $1.10 for a period of three years following the
closing of the Private Placement. Certain of our directors and
officers subscribed for an aggregate of 1,139,659 Units in the
Private Placement.
September
●
We sold all of the
outstanding shares of one of our Mexican subsidiaries, Minera Terra
Plata S.A. de C.V. (“Terra
Plata”), which owns the Peñasco Quemado, La
Frazada and Pluton properties (the “Mexican Silver Properties”)
located in Mexico to Silver One Resources Inc. (“Silver One”). As consideration, we
received six million common shares of Silver One, and we retained a
2.5% NSR royalty on the Mexican Silver Properties. Silver One may
buy back 1.5% of this NSR royalty by paying US$1 million to
us.
●
Mr. Andrew Marshall
was appointed as our new Chief Financial Officer.
October
●
We commenced a
metallurgical drill program at our Springpole Project, comprised of
up to four drillholes totaling approximately 1,500 m. The intent of
the program was to determine the optimal grind size and processing
flow sheet so as to maximize metallurgical recoveries. The results
from this metallurgical testing program were incorporated into a
new Preliminary Economic Assessment (“PEA”) for Springpole.
Major developments (continued)
January
●
We announced the
release of an initial mineral resource estimate for our Goldlund
Gold Project.
●
We announced the
commencement of a 27,000 m drilling campaign at our Goldlund Gold
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
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 Gold Project located in
northwestern Ontario.
●
We announced the
filing of a technical report outlining the initial resource
estimate for our Goldlund Gold Project entitled “Technical
Report and Resource Estimation Update on the Goldlund
Project”, with an effective date of September 20,
2016.
March
●
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.
May
●
We announced the
second and third sets of assay results from Phase 1 of the 2017
Goldlund Drill Program.
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-V to
the TSX, and our common shares commenced trading on the
TSX.
July
●
We announced the
fifth and sixth sets of assay results from Phase 1 of the 2017
Goldlund Drill Program.
September
●
We announced the
seventh and final set of assay results from Phase 1 of the 2017
Goldlund Drill Program. In total, Phase 1 of the 2017 Goldlund
Drilling Program comprised 100 holes (24,300 m), of which 87 holes
intersected intervals of significant gold
mineralization.
●
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.
October
●
We filed a technical report 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 October 16, 2017,
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 “Springpole” for comprehensive details of the
PEA.
Major developments (continued)
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 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.
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 EA 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.
April
●
We announced
further assay results from Phase 2 of the 2017 Goldlund Drill
Program.
April (continued)
●
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 (the “MOECC”) to complete certain
requirements under the Ontario Environmental Assessment Act (the
“EAA”). This
marks the commencement of a Provincial Individual Environmental
Assessment (“Provincial
EA”) 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”) designed to test the
extension of the known mineralized trend approximately 10
kilometres northeast of the mineralized material of the current
resource area. The drilling program will focus on showings at the
Miller and Eaglelund targets and will include approximately 13
holes totaling 1,850 metres. The primary objective of the program
is to verify historical sampling and drilling results, outline new
resources and demonstrate the potential of the northeastern section
of the Goldlund land package.
Major developments (continued)
June (continued)
●
We announced that
the final Environmental Impact Statement (“EIS”) Guidelines for the
Springpole Project had been issued by the Agency. The final EIS
Guidelines outline federal information requirements for the
preparation of the EIS and were 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
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.
August (continued)
●
We announced
initial fire assay results for the first 6 holes from the 2018
Goldlund Regional Drilling Program with respect to the Miller
prospect.
September
●
We announced final
fire assay results for all 8 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 Chief Executive
Officer, 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 will
continue to serve as
a director of the Company.
January
●
Daniel Wilton
joined First Mining as our new Chief Executive Officer, and was
appointed to the Board.
February
●
We announced
positive interim metallurgical test results for our Springpole
Project that indicate the potential for significant increases in
the ultimate recovery of both gold and silver from the project.
With oversight provided by M3 in Tucson, Arizona, flotation test
work completed by ALS Metallurgy in Kamloops, British Columbia
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. This represents a 13.2% increase
in gold recovery and an 11.9% increase in silver recovery over the
Whole-Ore CIP flowsheet presented in the 2017 PEA for
Springpole.
March
●
On March 27, 2019,
we announced the results of an updated mineral resource estimate
for Goldund, which has an effective date of March 15, 2019, and was
prepared in accordance with NI 43-101 by WSP Canada Inc.
(“WSP”) of
Sudbury, Ontario. A summary of the overall changes in the updated
resource estimate for Goldlund are as follows:
º
Indicated Resource
Au oz. increased by 248,700 oz. This increase in oz. corresponds to
an increase in tonnage of 3,595,900 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.
º
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 updated mineral resource estimate for Goldlund
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 3,595,900 tonnes at an
average grade of 1.96 g/t Au, it also resulted in the loss of a
large number of tonnes and ounces in the Inferred Resource. Our
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 both the south west
and north east, in addition to at depth.
We have
not completed any significant acquisitions during our most recently
completed financial year.
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 4, 2018 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, 2018 for additional financial
information.
|
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.
We have
interests in mineral properties located in Canada, Mexico and the
United States. As at December 31, 2018, these properties were
carried on our balance sheet as assets with a total book value of
approximately $244 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)
|
p. 22
|
●
|
Goldlund Property
(Ontario)
|
p. 38
|
●
|
Cameron Property
(Ontario)
|
p. 57
|
●
|
Pickle Crow
Property (Ontario)
|
p. 68
|
●
|
Hope Brook Property
(Newfoundland & Labrador)
|
p. 83
|
Non-material projects
●
|
Canada
|
p. 91
|
●
|
Mexico
|
p. 92
|
●
|
United
States
|
p. 93
|
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 (issue date October 16, 2017, effective date June 6,
2017) (the “Springpole
Technical Report”). The report was prepared for us in
accordance with NI 43-101, by or under the supervision of Dr.
Gilles Arseneau, Ph.D., P.Geo.; Dr. Adrian Dance, Ph.D., P.Eng.;
Victor Munoz, P.Eng. M.Eng; Grant Carlson, P.Eng; Neil Winkelmann,
FAusIMM; Bruce Andrew Murphy, P.Eng; Michael Royle, M.App.Sci.,
P.Geo.; Dr. Ewoud Maritz Rykaart, Ph.D., P.Eng.; and Mark
Liskowich, P.Geo.; all qualified persons within the meaning of NI
43-101. The following description has been prepared under the
supervision of Dr. Chris Osterman, Ph.D., 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 latitude
and longitude coordinates for the project are:
The
Universal Transverse Mercator map projection based on the World
Geodetic System 1984 (WGS84) zone 15N is:
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.
Gold
Canyon acquired ownership of five patented claims in 1993 and six
unpatented mining claims and related Crown leases for surface
rights in 2011. The five patented claims are fee simple parcels
with mining and surface rights attached to all five claims
registered with the Land Registry Office, Kenora, Ontario. A total
of 300 contiguous unpatented mining claims make up the greater area
of the Springpole Project and have been staked directly by Gold
Canyon.
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 (2016-2021),
and $80,000 (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 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.
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 $50,000 per year (2011-2016), $60,000 per year
(2016-2021), and $80,000 per year (2021-2031). We have a right to
acquire up to 2% of the NSR for $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 $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 $50,000 per year. We have an option to acquire all or a portion
of the NSR at a rate of $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
an unpatented mining claim current, the mining claim holder must
perform $400 per mining claim unit worth of approved assessment
work per year, immediately following the initial staking date. The
claim holder has two years to file one year 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.
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 competed in
1945.
The
area remained dormant until 1985. 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.
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.
During
2004, 2005, and 2006, diamond drilling programs were conducted on
the property by Gold Canyon.
In the
fall of 2007, Gold Canyon embarked on a limited exploration program
to further investigate the Fluorite zone that was previously
identified.
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 Gold Canyon’s project site and temporary tent
camp.
During
the spring and summer of 2010, a total of 8,664.2 m of HQ core
drilling was completed in 23 drillholes.
In the
winter of 2010, a total of six diamond drillholes were drilled for
a total of 1,774.5 m of HQ drilling.
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, 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.
In
February 2017, we announced the results of the drilling program. 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.
Geological setting,
mineralization and deposit types
The
Springpole Project is 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).
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 the ductile shearing and brittle faulting have played a
significant role in redistributing structurally controlled blocks
of the mineralized rock. Diamond drilling in the winter of 2010
revealed a more complex alteration with broader, intense zones of
potassic alteration replacing the original rock mass with biotite
and pyrite. In the core area of the deposit where fine grained
disseminated gold mineralization occurs with biotite, the primary
potassic alteration mineral, gold displays a good correlation with
potassium/rubidium.
No
on-going exploration activity is currently underway at the
Springpole Project, however, we did drill four representative holes
in 2016 to provide material for additional metallurgical testing,
the results of which are discussed under the heading “Mineral
processing and metallurgical testing”.
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.
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 7
drillholes (SG13-200 to SG13-206).
We
implemented the 2016 drill program 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”.
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 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.
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. Blank, 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.
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.
Pulps
and rejects of the samples were stored by SGS at its Red Lake
facility at the request of Gold Canyon.
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).
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 author 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 this report.
Mineral processing
and metallurgical testing
Over
the period from 1989 to 2013, three testwork campaigns were
completed on samples of Springpole mineralised material by SGS
Lakefield in Ontario and SGS Mineral Services in Vancouver, Canada.
Since 2013, one testwork program has been completed by Base
Metallurgical Laboratories Ltd. in 2017 to further investigate the
option of flotation followed by concentrate leaching. A Master
composite was prepared from the drillcore intervals and tested for
both rougher flotation as well as whole feed leaching at grind P80
sizes down to 20µm. Additional comminution tests were
conducted along with an estimate of the fine grind power
requirements based on a Levin test and Eliason test (small mass,
IsaMill signature plot). As a second phase, five samples were
prepared at a range of head grades from 1.0 g/t to 7.0 g/t to
investigate the effect of head grade on leach
extraction.
The
metallurgical testwork programs conducted to date suggest the
Portage zone to be quite consistent in its properties, with
fine-grained gold particles associated mainly with
petzite.
SRK,
the author of the Springpole Technical Report recommends that
additional testwork be undertaken to confirm whether cyanide
detoxification can be completed successfully and within normal
reagent cost levels and that thickening and filtering
characteristics should be confirmed to increase confidence in the
estimation of dewatering costs. SRK is of the opinion that further
variability testing is warranted to confirm the expected grinding
power requirements as well as cyanide consumption and that
opportunities exist to recover some of the cyanide in the leach
tailings rather than destroy it prior to being pumped to the
tailings management facility.
Mineral resource
estimates
The
mineral resource model for the Springpole Project considers 644
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 (March 17, 2017) was 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.
Mineral
resources were estimated by ordinary kriging using Gemcom block
modelling software in 10 m x 10 m x 6 m blocks. Grade estimates
were based on capped, 3 m composited assay data.
Capping
levels were set at 25 g/t for gold and 200 g/t for silver. Blocks
were classified as indicated mineral resources if at least two
drillholes and six composites were found within a 60 m x 60 m x 40
m search ellipse. All other interpolated blocks were classified as
inferred mineral resource. Mineral resources were then validated
using Gemcom GEMS (6.7) software.
This
resource model includes mineralized material in the Main, East
Extension and Portage zones spanning from geologic sections 0-1,
500 m in the northwest to 0-250 m in the southeast. Along the axis
of the Portage zone, resource modelling includes mineralized
material generally ranging from the surface to a depth of 340-440 m
below surface.
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. There has been insufficient exploration to
define these inferred mineral resources as an indicated or measured
mineral resource but the author of the Springpole Technical Report
is of the opinion that with additional drilling, the majority of
the inferred mineral resources could be upgraded to indicated
mineral resources.
The
updated resource estimate is summarized in the table
below.
Category
|
Quantity
|
Grade
|
Metal
|
Au
|
Ag
|
Au
|
Ag
|
(Mt)
|
(g/t)
|
(g/t)
|
(Moz.)
|
(Moz.)
|
Open Pit**
|
Indicated
|
139.1
|
1.04
|
5.4
|
4.67
|
24.19
|
Inferred
|
11.4
|
0.63
|
3.1
|
0.23
|
1.12
|
Source: Springpole Project, Northwestern Ontario, SRK Consulting,
March 17, 2017.
*Mineral resources are reported in relation to a conceptual pit
shell. Mineral resources are not mineral reserves and do not have
demonstrated economic viability. All figures are rounded to reflect
the relative accuracy of the estimate. All composites have been
capped where appropriate.
**Open pit mineral resources are reported at a
cut-off grade of 0.4 g/t gold. Cut-off grades are based on a gold
price of $1,400/oz. and a gold processing recovery of 80% and a
silver price of $15/oz. and a silver processing recovery of
60%.
|
Mineral
resources that are not mineral reserves do not have demonstrated
economic viability. The estimate of mineral resources may be
materially affected by environmental, permitting, legal, title,
taxation, sociopolitical, marketing, or other relevant issues. 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, and it is uncertain if
further exploration will result in upgrading them to an indicated
or measured mineral resource category. 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.
The
mine development plan for the Springpole Project contemplates open
pit mining with a mine plan to mine a total of 151 Mt of
mineralised material (139 Mt of processing plant feed) and 319 Mt
of waste (2.1:1 overall strip ratio mined and 2.4:1 strip ratio for
material processed) over a twelve-year mine production life,
including stockpile reclamation. The current life of mine
(“LOM”) plan
focuses on achieving steady plant feed production rates, and mining
of higher grade material early in schedule, as well as balancing
grade and strip ratios. An elevated cut-off grade is applied
throughout the mine life. Low grade mineralised material is
stockpiled and processed at the end of mining.
The LOM
production schedule is shown in the table below. The open pit
mining operation is planned as an owner-operated
scenario.
Proposed LOM Production Schedule
Item
|
Units
|
Total
|
Years
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
12
|
Mineralised Material Mined
|
kt
|
151,408
|
7,796
|
16,593
|
16,705
|
16,721
|
16,388
|
16,416
|
18,703
|
16,543
|
14,984
|
9,583
|
976
|
0
|
Au
Mined Grade
|
g/t
|
1.10
|
1.20
|
1.06
|
1.22
|
1.22
|
1.42
|
1.22
|
0.82
|
0.95
|
0.98
|
0.91
|
0.94
|
0.00
|
Ag
Mined Grade
|
g/t
|
5.77
|
2.16
|
4.54
|
5.74
|
6.47
|
7.41
|
6.15
|
5.01
|
6.46
|
6.81
|
4.90
|
5.01
|
0.00
|
Contained Au
|
koz
|
5,355
|
301
|
566
|
655
|
658
|
750
|
643
|
495
|
504
|
473
|
280
|
29
|
0
|
Contained Ag
|
koz
|
28,066
|
540
|
2,422
|
3,081
|
3,477
|
3,904
|
3,247
|
3,012
|
3,436
|
3,280
|
1,508
|
157
|
0
|
Waste Mined
|
kt
|
319,002
|
57,204
|
48,407
|
48,295
|
48,279
|
43,612
|
43,584
|
20,758
|
6,414
|
2,090
|
324
|
36
|
0
|
Strip Ratio
|
w:o
|
2.1
|
7.3
|
2.9
|
2.9
|
2.9
|
2.7
|
2.7
|
1.1
|
0.4
|
0.1
|
0.0
|
0.0
|
0.0
|
Total Material Mined
|
kt
|
470,411
|
65,000
|
65,000
|
65,000
|
65,000
|
60,000
|
60,000
|
39,462
|
22,956
|
17,074
|
9,907
|
1,012
|
0
|
Stockpiled Mineralised Material
|
kt
|
31,435
|
1,797
|
3,458
|
3,566
|
3,591
|
3,250
|
4,069
|
5,563
|
3,403
|
1,844
|
825
|
68
|
0
|
Stockpile Reclaim
|
kt
|
18,555
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
4,382
|
12,232
|
1,940
|
Mill Feed
|
kt
|
138,528
|
5,999
|
13,135
|
13,139
|
13,130
|
13,138
|
12,347
|
13,140
|
13,140
|
13,140
|
13,140
|
13,140
|
1,940
|
Au
Grade
|
g/t
|
1.00
|
1.20
|
1.06
|
1.22
|
1.22
|
1.42
|
1.22
|
0.82
|
0.95
|
0.98
|
0.73
|
0.42
|
0.38
|
Ag
Grade
|
g/t
|
5.28
|
2.16
|
4.54
|
5.74
|
6.47
|
7.41
|
6.15
|
5.01
|
6.46
|
6.81
|
3.94
|
2.22
|
2.02
|
The
proposed overall site layout for the Springpole Project includes an
open pit, waste rock facilities, plant site and tailings management
facility locations. Much of the planned open pit lies beneath
northern embayment of Springpole Lake. The mine plan requires that
this embayment be dammed and dewatered, prior to mining
commencement. The proposed dammed portion of Springpole Lake is
proportiately small and totals 152 Ha representing 6.1% of the
total surface area of the lake.
The
mine design process for the deposit commenced with the development
of Whittle optimization input parameters. These parameters included
estimates of metal price, mining dilution, process recovery,
offsite costs, geotechnical constraints (slope angles) and
royalties.
Processing
and Recovery Operations
The
Springpole Technical Report envisages a 36,000 t/d process plant
treating 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
moderate grind P80 size of 70 µm should achieve 80% gold
extraction through whole-ore cyanide leaching for at least 24 hours
(design of 36 hours). Gravity recovery was considered optional
under the Springpole Technical Report, as only higher grade feed
would benefit from including this circuit.
Based
on the testwork results in 2012/2013 and in 2017, the Portage zone
material is very consistent in grade and leaching characteristics.
There does not appear to be much requirement for metallurgical
domaining or characterisation of different areas of the Portage
zone. The minor East Extension, Camp and Main zones are different
in their gold mineralogy and have been evaluated in the 2012/2013
metallurgical testwork programs.
Infrastructure, Permitting and Compliance
Activities
There
is no existing infrastructure within 50 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 corrugate 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 prefabricated 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 be used for pedestal
supports for the fuel tanks.
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
potential impacts the project may have on Springpole 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 is designed to
avoid direct interaction with the Birch Lake watershed, and all
baseline studies carried out to date are structured to identify
areas of risk so they can be protected to minimize impact during
the development and operation of the project or totally
avoided.
The
proposed project will need to be screened under the Canadian
Environmental Assessment Act 2012 (“CEAA”). The requirement of a
federal Environmental Assessment (“EA”) will become clearer once
consultations with CEAA administrators for the development of a
project description are completed; however, it is expected that a
federal assessment of the proposed project will be required given
the project’s potential impacts on fish, fish habitat, and
other aquatic species. At the provincial level, it is anticipated
the project will require multiple Class EAs or individual EAs to
develop the mining project.
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 water bodies. 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.
The
capital cost estimate for the project is shown in the table below
at a total of $723M. Contingency of 10% was included for mine
capital costs and 13.5% for process plant while a 40% contingency
of direct capital cost estimates was used for the tailings
management facility and other infrastructure. Engineering,
procurement, construction and management costs are contained within
the underlying estimates. Property acquisition costs are not
included in the capital estimate.
Capital
Cost Estimates
Item
|
$M
|
Preconstruction
Owners Costs
|
7
|
Initial
Capital
|
579
|
Sustaining
Capital
|
117
|
Mine
Closure
|
20
|
*Total Capital Costs
|
723
|
*Including 10% contingency on mine, 13.5% on process plant, and 40%
infrastructure capital including tailings facility.
A
summary of the operating cost estimate by SRK is shown in the table
below. The OP mining operating cost assumes owner-operated mining
including technical/supervisory support staff. Diesel fuel was
estimated to cost $0.78/L and power was estimated to cost
$0.08/kWh.
Operating
Cost Estimates
Activity
|
LOM ($M)
|
Per Tonne of Mill Feed ($)
|
Per Ounce of AuEq* ($)
|
|
Mining
including stockpile re-handle
|
733
|
5.29
|
190.00
|
Processing
|
1,038
|
7.49
|
268.87
|
Water
Management
|
2
|
0.01
|
0.44
|
Tailings
Handling
|
202
|
1.47
|
52.41
|
G&A
|
247
|
1.78
|
63.90
|
Total Operating Cost
|
2,221
|
16.04
|
575.62
|
Treatment
and Refining Charges
|
18
|
N/A
|
4.61
|
Royalty
Per Ounce @3%
|
150
|
N/A
|
38.86
|
Total Cash Costs including Royalty and TCRC
|
2,389
|
N/A
|
619.09
|
*Troy Ounce of AuEq = total revenue from precious metals divided by
gold price per ounce
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
base case economic analysis results indicate an after-tax net
present value of $792M at a 5% discount rate with an IRR of 26.2%.
Payback will be in early year four of production in a projected
twelve-year LOM. The economics are based on a base case of
$1,300/oz long-term gold price, $20/oz long-term silver price, and
production rate of 36,000 t/d over 365 d/yr. Direct operating costs
are estimated to be $619/oz of AuEq. Total capital costs are
estimated at $723M, consisting of initial capital costs of $586M,
ongoing sustaining capital of $117M and mine closure costs
estimated at $20M.
Exploration, Development and
Production
There
is no on-going exploration taking place on the Springpole Project
at this time.
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 in accordance
with NI 43-101, by or 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
Dr. Chris Osterman, Ph.D., 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 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.
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 claim
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;
●
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 small tailing containment facility. All have been
overgrown with vegetation.
All
permits and licenses to conduct exploration work in the Goldlund
Project are in place.
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.
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;
●
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
intrude 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.
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
dikes 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.
In 2018, First
Mining completed a property-wide regional exploration and diamond
drill program on the Goldlund Property. The 16-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 also 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.
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.
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) 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.
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.
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
logs recorded
lithology, structures, alteration and sulphide
content;
º
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
quartz veins were
isolated if possible as well as zones in increased sulphides or
alteration;
º
shoulder sample of
1 m was collected on both sides of the mineralized
sections;
º
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;
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;
º
the technician
verified the sample number from the sample sheet with the sample
number from pre-printed sample books provided by the
laboratory;
º
the technician cut
the core and placed one half in a plastic sample bag and returned
the other half to the core box;
º
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;
º
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.
●
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.
●
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
logs recorded
lithology, structures, alteration and sulphide
content;
º
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
quartz veins were
isolated if possible as well as zones in increased sulphides or
alteration;
º
shoulder sample of
1 m were collected on both sides of the mineralized
sections;
º
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;
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;
º
the technician
verified the sample number from the sample sheet with the sample
number from pre-printed sample books provided by the
laboratory;
º
the technician cut
the core and placed one half in a plastic sample bag and returned
the other half to the core box;
º
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;
º
sample bags with
sample and sample tag were sealed with fibre tape;
º
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);
●
Pulverize to 90%
-150 mesh (106 l).
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.
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 hand written
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.
●
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);
●
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 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.
●
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);
●
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:
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.
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.
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.
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;
●
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:
The
Goldlund deposit remains open along strike and to
depth.
Classification
|
Zone
|
Tonnage
|
Au
g/t
|
Ounces
|
Measured
|
1
|
-
|
-
|
-
|
2
|
-
|
-
|
-
|
3
|
-
|
-
|
-
|
4
|
-
|
-
|
-
|
5
|
-
|
-
|
-
|
7
|
-
|
-
|
-
|
8
|
-
|
-
|
-
|
Subtotal
|
-
|
-
|
-
|
Indicated
|
1
|
4,882,400
|
2.16
|
330,150
|
2
|
1,642,900
|
1.76
|
93,000
|
3
|
–
|
–
|
–
|
4
|
1,664,600
|
2.73
|
146,100
|
5
|
–
|
–
|
–
|
7
|
4,161,600
|
1.58
|
210,753
|
8
|
508,600
|
2.00
|
29,200
|
Subtotal
|
12,860,000
|
1.96
|
809,200
|
M&I
|
Subtotal
|
12,860,000
|
1.96
|
809,200
|
Inferred
|
1
|
11,288,000
|
1.54
|
558,600
|
2
|
1,028,000
|
1.22
|
40,000
|
3
|
1,385,000
|
1.61
|
71,666
|
4
|
734,000
|
2.40
|
57,000
|
5
|
1,284,000
|
1.19
|
49,000
|
7
|
1,928,000
|
1.29
|
79,688
|
8
|
715,000
|
0.90
|
21,000
|
Subtotal
|
18,362,000
|
1.49
|
876,954
|
Notes:
1.
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.
2.
The overall stripping ratio for the whittle pit is
4.71:1.
3.
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.
4.
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.
5.
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.
6.
Mineral resource tonnage and contained metal have been rounded to
reflect the accuracy of the estimate, and numbers may not add due
to rounding.
The
description in this section of our Cameron gold project (the
“Cameron
Project”) is based on the project’s technical
report: Technical Report on the
Cameron Gold Deposit, Ontario, Canada (effective date
January 17, 2017) (the “Cameron Gold Technical Report”).
The report was prepared for us in accordance with NI 43-101, by or
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 Dr. Chris Osterman, Ph.D., 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 226
unpatented claims, 24 patented claims (mineral rights only), seven
mining licences of occupation (“MLO”) and four mining leases. All
of the claims are located within unsurveyed crown lands, mainly
within the Rowan Lake area, though some claims are situated in the
Tadpole Lake, Brooks Lake and Lawrence Lake areas.
The
total area of the project is approximately 448.53 km2 (44,853.2
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 152 unpatented claims, four patented
claims, six mining licences of occupation and three mining leases.
The West Cedartree property comprises nine unpatented claims, 20
patented claims, one MLO 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;
●
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 an unpatented mining claim
indefinitely, the recorded holder of the claim is required to
undertake approved work expenditure in excess of $400 per claim
within two years of the granting of the claim. Work programmes and
expenditure commitments can be grouped across a contiguous series
of unpatented mining claims. To maintain the unpatented claims
comprising the Cameron Project in good standing, we are required to
incur an aggregate expenditure of $750,800 per year and to file
annual assessment reports of the work that has been
undertaken. 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.
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
unmineralised access development material, one for
“low-grade” mineralized material; and one for
“mineralized” material. The unmineralised 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)
●
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
mineralisation 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
mineralisation 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 mineralisation 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:
●
mineralisation
dominated by disseminated sulphide replacement and
quartz‐sulphide stockwork and quartz breccia
veins;
●
spatial and
temporal association of mineralisation 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 mineralisation, which is likely
temporally‐late compared to the disseminated sulphide
replacement and quartz breccia veins;
●
high‐grade
mineralisation is largely deformed and the disseminated sulphide
replacement zones that constitute the bulk of the mineralisation
are commonly foliated; and
●
the alteration
assemblage of the mineralisation
(sericite‐albite‐carbonate‐pyrite) is
atypical.
Exploration
at the Cameron Gold Project commenced in 1960 and has been
conducted intermittently until the present day.
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 mineralisation boundaries as defined by
the supervising geologist with 1 m intervals used in zones of
similar lithology. Within mineralisation 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.
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, mineralisation, 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 mineralisation 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.
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 unmineralised 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.
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.
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.
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
mineralisation
●
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 lm. The results also showed that the recoveries were
grind sensitive with maximum recoveries at a P80 grind size in the
range 53 to 75 lm. 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 lm 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 lm 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.
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 mineralisation 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 mineralisation 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 mineralised. The stronger mineralisation 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
mineralisation 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 updated constraints and
cut-off grades. The mineral resource is tabulated in the Table A
below for Measured and Indicated Mineral Resources and in Table B
for Inferred Mineral Resources.
Table A – Measured & Indicated Mineral Resource statement
as at January 17, 2017
Mineral Resource Classification
|
Open-Pit Constraint
|
Gold cut-off (Au g/t)
|
Tonnes
|
Gold g/t
|
Gold (Ounces)
|
Measured
Mineral Resource
|
Within
US$1,350 open-pit shell
|
0.55
|
2,670,000
|
2.66
|
228,000
|
Indicated
Mineral Resource
|
Within
US$1,350 open-pit shell
|
0.55
|
820,000
|
1.74
|
46,000
|
Measured
+ Indicated
|
|
|
3,490,000
|
2.45
|
274,000
|
Mineral Resource Classification
|
Underground Constraint
|
Gold cut-off (Au g/t)
|
Tonnes
|
Gold g/t
|
Gold (Ounces)
|
Measured
Mineral Resource
|
Below
US$1,350 open-pit shell
|
2.00
|
690,000
|
3.09
|
69,000
|
Indicated
Mineral Resource
|
Below
US$1,350 open-pit shell
|
2.00
|
1,350,000
|
2.80
|
121,000
|
Measured
+ Indicated
|
|
|
2,040,000
|
2.90
|
190,000
|
TOTAL MEASURED + INDICATED
|
|
|
5,530,000
|
2.61
|
464,000
|
Table B – Inferred Mineral Resource statement as at January
17, 2017
Mineral Resource Classification
|
Open-Pit Constraint
|
Gold cut-off (Au g/t)
|
Tonnes
|
Gold g/t
|
Gold (Ounces)
|
Inferred
Mineral Resource
|
Within
US$1,350 open-pit shell
|
0.55
|
35,000
|
2.45
|
3,000
|
Mineral Resource Classification
|
Underground Constraint
|
Gold cut-off (Au g/t)
|
Tonnes
|
Gold g/t
|
Gold (Ounces)
|
Inferred
Mineral Resource
|
Below
US$1,350 open-pit shell
|
2.00
|
6,500,000
|
2.54
|
530,000
|
TOTAL INFERRED
|
|
|
6,535,000
|
2.54
|
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.
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 in accordance
with NI 43-101, by or 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 Dr. Chris Osterman, Ph.D., 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”), have increased the
number of unpatented mining claims to 88, comprised of 878 units
covering an area of approximately 14,048 ha.
Through
our wholly-owned subsidiary, PC Gold, we are party to a 99 year
mining lease (the “Mining
Lease”) with Teck Resources Limited
(“Teck”) which
expires 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.
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
unpatented portion of the Pickle Crow Property is subject to
assessment work requirements.
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.
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.
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 the current 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.
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.
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.
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.
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.
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.
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.
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.
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.
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 the 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.
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.
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.
Mineral resource
estimates
The
Pickle Crow project resource estimate is divided into three
distinct areas within the core mine trend comprising 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
|
Mining
Method
|
Tonnes
|
Grade
(g/t Au)
|
Contained Ounces
|
Cut-off Grade
(g/t Au)
|
Shaft
1
|
BIF
|
BIF
& Vein
|
Open
Pit
|
1,887,000
|
1.3
|
79,800
|
0.50
|
|
BIF
|
BIF
|
Bulk
Underground
|
5,297,000
|
3.8
|
644,700
|
2.00
|
|
No. 1
Vein
|
Vein
|
Underground
|
594,000
|
6.1
|
116,000
|
2.60
|
|
No. 5
Vein
|
Vein
|
Underground
|
362,000
|
8.0
|
93,000
|
2.60
|
|
No. 9
Vein
|
Vein
|
Underground
|
148,000
|
7.4
|
35,300
|
2.60
|
|
No. 11
Vein
|
Vein
|
Underground
|
21,000
|
6.0
|
4,100
|
2.60
|
|
No. 19
Vein
|
Vein
|
Underground
|
186,000
|
9.1
|
54,400
|
2.60
|
|
|
Shaft 1 Total
|
8,495,000
|
3.8
|
1,027,300
|
|
Table A – Estimated Inferred Mineral Resources for the Pickle
Crow Project (continued)
Area
|
Zone
|
Host
|
Mining
Method
|
Tonnes
|
Grade
(g/t Au)
|
Contained Ounces
|
Cut-off Grade
(g/t Au)
|
Shaft
3
|
No. 2
Vein
|
Vein
|
Underground
|
96,000
|
8.9
|
27,200
|
2.60
|
|
No. 6
Vein
|
Vein
|
Underground
|
160,000
|
7.9
|
40,900
|
2.60
|
|
No. 7
Vein
|
Vein
|
Underground
|
54,000
|
5.5
|
9,600
|
2.60
|
|
No. 8
Vein
|
Vein
|
Underground
|
55,000
|
8.0
|
14,200
|
2.60
|
|
No. 12
Vein
|
Vein
|
Underground
|
14,000
|
11.7
|
5,300
|
2.60
|
|
No. 13
Vein
|
Vein
|
Underground
|
112,000
|
6.2
|
22,300
|
2.60
|
|
No. 22
Vein
|
Vein
|
Underground
|
31,000
|
5.4
|
5,300
|
2.60
|
|
No. 23
Vein
|
Vein
|
Underground
|
165,000
|
7.0
|
37,000
|
2.60
|
|
|
Shaft 3 Total
|
687,000
|
7.3
|
161,800
|
|
|
|
|
|
|
|
|
|
Albany
Shaft
|
CZ1
|
Conduit-Style
|
Bulk
Underground
|
168,000
|
4.9
|
26,600
|
2.00
|
|
CZ3
|
Conduit-Style
|
Bulk
Underground
|
22,000
|
2.7
|
1,900
|
2.00
|
|
No. 15
Vein
|
Vein
|
Underground
|
49,000
|
4.5
|
7,000
|
2.60
|
|
No. 16
Vein
|
Vein
|
Underground
|
31,000
|
6.0
|
5,900
|
2.60
|
|
|
Albany Shaft Total
|
270,000
|
4.8
|
41,400
|
|
|
|
GRAND TOTAL
|
9,452,000
|
4.1
|
1,230,500
|
|
Notes:
1.
The mineral
resource estimate is entirely classified as inferred mineral
resources.
2.
2014 CIM Definition
Standards were followed for mineral resources.
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.
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.
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.
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.
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 in accordance with NI 43-101, by or
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 Dr. Chris Osterman,
Ph.D., 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 993 contiguous
exploration claims acquired through map staking and issued in 2003
and 2008. This main property covers 24,825 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 7 separate 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 Peter Snout
area, approximately 25 km northeast of the Hope Brook deposit and
10 claims (250 ha) in the Cross Gulch area, approximately 6 km
north of the deposit. These were staked in late 2013 and early
2015, respectively, 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.
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.
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.
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.
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.
No new
exploration work has been undertaken to date by us on the 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.
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.
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.
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 couple 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.
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.
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.
Hope Brook Deposit Mineral Resource Estimate – Effective
January 12, 2015
Gold Grade Cut-off (g/t)
|
Resource Category
|
Round Tonnes (Rounded)
|
Gold Grade (g/t)
|
Gold Ounces (Rounded)
|
3.00
|
Indicated
|
5,500,000
|
4.77
|
844,000
|
Inferred
|
836,000
|
4.11
|
110,000
|
Notes:
1.
Includes only Mine
Zone and 240 Zone areas.
2.
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.
3.
Gold grades reflect
application of domain-specific raw assay capping factors that range
between 55 g/t Au and 3 g/t Au.
4.
Rounding of tonnes
as may result in apparent differences between tonnes, grade and
contained ounces.
5.
Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. The estimate of mineral resources may be materially
affected by environmental permitting, legal, title, taxation,
sociopolitical, metal pricing, marketing, or other relevant
issues.
6.
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.
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 55 contiguous mining claims and one
mining concession, covers an area of 936 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 in
accordance with NI 43-101 and was 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 24 contiguous mineral
claims, covers an area of 384 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 Audit 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 and was filed by us on SEDAR
on January 6, 2017 under our SEDAR profile at www.sedar.com.
Duparquet Gold Project, Québec
We have
a 10% indirect interest in the Duparquet Gold Project which has a
large open-pittable 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 165,000 tonnes grading
1.45 g/t Au, containing 7,700 oz. Au, indicated mineral resources
of 59.5 Mt grading 1.57 g/t Au, containing 3.0 million oz. Au and
inferred mineral resources of 28.5 Mt grading 1.46 g/t Au,
containing 1.3 million oz. Au. The technical report entitled
“Technical Report and Prefeasibility Study for the Duparquet
Project” was filed on SEDAR by Clifton Star on May 23, 2014.
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 Las
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 Las 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 Las 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 Las 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.
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.
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.
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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.
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;
●
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.
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 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.
None of
our 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
grounds 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.
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 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.
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, 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. A
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.
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. 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.
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. 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.
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 industry changes. In addition, the financial
markets have in the recent past experienced significant price and
value fluctuations 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.
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.
Currency fluctuations
We
maintain our accounts in Canadian dollars. Our operations in Mexico
and the United States make us subject to foreign currency
fluctuations and such fluctuations may affect our financial
position and results. We do not plan to engage in currency hedging
activities.
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.
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. 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 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.
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.
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 of
Canada. We operate in some areas presently or previously inhabited
or used by indigenous peoples including areas covered by treaties
among the First Nations, the federal and applicable provincial
governments. Many of these materials impose obligations on
government to respect the rights of indigenous people. Some mandate
that government consult with indigenous people regarding 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 materials
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) continue to change. In certain circumstances,
Indigenous communities are entitled to be consulted prior to, and
during, resource development. The consultation 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.
Our
current and future exploration program may be subject to a risk
that one or more groups of indigenous people may oppose development
on 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 may have a
material adverse effect on our business, financial condition and
results of operations.
Foreign operations
While
our principal exploration properties are located in Canada, we
continue to hold properties in Mexico. 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.
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.
In
February 2018, the Government of Canada released Bill C-69 to amend
the current federal approval processes. It is uncertain when the
new legislation will be brought into force and what types of
projects may be affected by the proposed legislation. It is also
uncertain whether any new approval process adopted by the federal
government will result in a more efficient approval process. 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
title, 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.
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 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 and prohibitions on spills, releases or
emissions of various substances produced in association with mining
operations. The legislation also requires that mines and
exploration sites be operated, maintained, abandoned and reclaimed
to the satisfaction of applicable regulatory authorities.
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.
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.
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.
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:
●
the proximity and
capacity of milling facilities;
●
processing
equipment; and
●
government
regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals and environmental
protection.
Estimates
of mineral resources, mineral reserves, mineral deposits and
production costs can also be affected by such factors
as:
●
environmental
permitting regulations and requirements;
●
unforeseen
technical difficulties;
●
unusual or
unexpected geological formations; and
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.
Reliance on key employees
We
manage our business with a number of key personnel, including key
contractors, the loss 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.
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.
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.
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
If we
dispose of any of our mineral properties, we may consider retaining
interest in such properties and that interest may be in the form of
a joint venture. 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 ventures, 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
●
litigation between
joint venture partners regarding joint venture
matters.
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.
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.
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.
Other risks
Our
business and operations are subject to a number of risks and
hazards including:
●
discharge of
pollutants or hazardous chemicals;
●
failure of
processing and mining equipment;
●
supply problems and
delays;
●
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, 2018 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, 2018, 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.
Our
authorized share capital consists of:
●
an unlimited number
of common shares; and
●
an unlimited number
of preferred shares, issuable in series.
We can
issue an unlimited number of common shares with no nominal or par
value. As of December 31, 2018 and as of the date of this AIF, we
had 558,316,916 common shares outstanding. 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.
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.
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
Stock options
Our
shareholders most recently approved the Company’s existing
amended and restated stock option plan (the “Option Plan”) on June 12, 2018.
The Option Plan allows for the issuance of up to 10% of our issued
and outstanding shares as incentive share options
(“Options”) to
our directors, officers, employees and consultants of the
Company.
Options
granted under the Option Plan may be subject to vesting provisions
as determined by our Board of Directors. All outstanding Options
granted prior to December 1, 2018 are fully vested and exercisable,
with the exception of Options granted to employees who carry out
investor relations functions, as such Options are subject to
certain vesting periods required under the rules and policies of
the TSX. Subject to the additional vesting restrictions on Options
granted to employees who carry out investor relations functions,
all outstanding Options granted after December 1, 2018 are subject
to a vesting schedule pursuant to which 25% of the Options vest
immediately on the date of grant, with 25% vesting every six months
thereafter.
As of
December 31, 2018 and as of the date of this AIF, there were
48,265,000 Options and 45,715,000 Options, respectively,
outstanding with exercise prices ranging from $0.15 to $0.95, and
expiry dates ranging from March 30, 2020 to January 7,
2024.
Warrants
In
addition to the outstanding Options noted above, as of December 31,
2018 and as of the date of this AIF, there were 20,116,855 share
purchase warrants outstanding to acquire common shares of First
Mining at exercise prices ranging from $0.20 to $1.10, and with
expiry dates ranging from April 2, 2019 to June 16,
2021.
Escrowed securities
The
following table shows the number and percentage of common shares
held, to First Mining’s knowledge, in escrow or subject to a
contractual restriction on transfer as at December 31,
2018:
Designation of class
|
|
|
Number of securities held in escrow or subject to a contractual
restriction on transfer
|
|
Percentage of class
|
Common
Shares
|
|
|
5,931,658
(1)
|
|
1.1%
|
Notes:
1.
These 5,931,658
common shares of First Mining are being held in escrow by
Computershare Trust Company of Canada pursuant to an escrow
agreement dated June 16, 2016 that was entered into in connection
with our acquisition of Tamaka. These escrowed shares will be
released from escrow on June 17, 2019.
Other
than contracts made in the ordinary course of business, as of the
date of this AIF, we have no material contracts.
Market for
our securities
Our
common shares are listed and traded on the TSX under the symbol
“FF”, on the OTC-QX under the symbol
“FFMGF”, and on the Frankfurt Stock Exchange under the
symbol “FMG”.
We have
a registrar and transfer agent for our common shares:
Computershare
Investor Services Inc.
510
Burrard Street, 2nd Floor, Vancouver,
British Columbia V6C 3B9.
The
table below shows the high and low closing prices and trading
volumes of our common shares on the TSX for each month of our most
recently completed financial year.
2018
|
High ($)
|
Low ($)
|
Volume
|
January
|
0.620
|
0.500
|
11,670,400
|
|
February
|
0.550
|
0.460
|
10,862,200
|
|
March
|
0.475
|
0.410
|
13,761,900
|
|
April
|
0.540
|
0.430
|
13,034,600
|
|
May
|
0.550
|
0.500
|
7,179,400
|
|
June
|
0.495
|
0.435
|
13,693,300
|
|
July
|
0.450
|
0.410
|
11,417,100
|
|
August
|
0.435
|
0.345
|
11,097,300
|
|
September
|
0.370
|
0.330
|
12,576,200
|
|
October
|
0.385
|
0.285
|
10,143,800
|
|
November
|
0.300
|
0.255
|
8,843,500
|
|
December
|
0.265
|
0.210
|
16,631,200
|
|
TOTAL
|
140,910,900
|
|
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
|
Keith
Neumeyer
Zug,
Switzerland
Director
since
March
30, 2015
|
Chairman of the
Board
Audit
Committee
Compensation
Committee
Corporate
Governance
Committee
|
Director and
Chairman of First Mining since March 30, 2015
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)
|
Ownership
of Securities:
|
10,955,313
shares
|
356,129
warrants
|
6,890,000
options
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
Michel
Bouchard
Québec,
Canada
Director
since
April
8, 2016
|
Audit
Committee
Compensation
Committee
(chair)
|
Director of First
Mining since April 8, 2016
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)
|
Ownership
of Securities:
|
578,000
shares
|
15,000
warrants
|
1,925,000
options
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
Chris
Osterman, Ph.D.
Tucson,
Arizona
USA
Director
since
March
30, 2015
|
None
|
Director of First
Mining since March 30, 2015
Chief
Operating Officer of First Mining since January 2018
March
2015 to January 2018 – Chief Executive Officer of First
Mining
September 2011 to
March 2015 – Chief Executive Officer, Sundance Minerals Ltd.
(private mining company)
April
2007 to March 2015 – President, Sundance Minerals Ltd.
(private mining company)
|
Ownership
of Securities:
|
1,760,084
shares
|
8,500
warrants
|
7,265,000
options
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
Raymond
L. Polman, CPA, CA
Vancouver,
British
Columbia,
Canada
Director
since
March
30, 2015
|
Audit
Committee
(chair)
Compensation
Committee
Corporate
Governance
Committee
|
Director of First
Mining since March 30, 2015
February 2007 to
present – Chief Financial Officer of First Majestic Silver
Corp. (mining company)
|
Ownership
of Securities:
|
358,333
shares
|
NIL
warrants
|
2,175,000
options
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
David
Shaw, Ph.D.
Vancouver,
British
Columbia,
Canada
Director
since
March
30, 2015
(Director of the
predecessor company,
Albion
Petroleum Ltd.,
since
April 5, 2005)
|
Compensation
Committee
Corporate
Governance
Committee
(chair)
|
Director of First
Mining since March 30, 2015
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)
January
2005 to present – Director, First Majestic Silver Corp.
(mining company)
June
2000 to present – President of Duckmanton Partners Ltd.
(consulting business)
November 2013 to
July 2014 – Director of Global Strategic Metals NL (capital
pool company)
April
2005 to March 2015 – President and Director of Albion
Petroleum Ltd. (capital pool company)
|
Ownership
of Securities:
|
935,250
shares
|
50,000
warrants
|
2,575,000
options
|
Director
|
Board
committees
|
Principal
occupation or employment
for
past five years
|
Dan
Wilton
Vancouver, British
Columbia
Canada
Director
since
January
7, 2019
|
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)
December 2018 to
present – Director of Magna 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)
|
Ownership
of Securities:
|
240,000
shares
|
NIL
warrants
|
5,000,000
options
|
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
|
Dan
Wilton
Chief Executive Officer
Vancouver, British
Columbia
Canada
|
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)
December 2018 to
present – Director of Magna 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)
|
Ownership
of Securities:
|
240,000
shares
|
NIL
warrants
|
5,000,000
options
|
Officer
|
Principal
occupation or employment for past five years
|
Chris
Osterman, Ph.D.
Chief Operating Officer
Tucson,
Arizona
USA
|
Chief
Operating Officer of First Mining since January 2018
Director of First
Mining since March 2015
March
2015 to January 2018 – Chief Executive Officer of First
Mining
September 2011 to
March 2015 – Chief Executive Officer, Sundance Minerals Ltd.
(private mining company)
April
2007 to March 2015 – President, Sundance Minerals Ltd.
(private mining company)
|
Ownership
of Securities:
|
1,760,084
shares
|
8,500
warrants
|
7,265,000
options
|
Officer
|
Principal
occupation or employment for past five years
|
Andrew
Marshall
Chief Financial Officer
Vancouver, British
Columbia
Canada
|
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)
|
Ownership
of Securities:
|
140,800
shares
|
18,750
warrants
|
2,350,000
options
|
Officer
|
Principal
occupation or employment for past five years
|
|
Samir
Patel, LL.B. (Hons)
General Counsel and
Corporate Secretary
Vancouver, British
Columbia,
Canada
|
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)
|
|
Ownership
of Securities:
|
108,000
shares
|
37,700
warrants
|
1,950,000
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 15,075,780 common shares. This represents
approximately 2.7% 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.
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:
●
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;
●
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 publically 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.
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 Masters 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.
External auditor service fees (by category)
PricewaterhouseCoopers
LLP served as the Company’s external auditor for the years
ended December 31, 2018 and December 31, 2017. The aggregate fees
billed by our external auditor during the years ended December 31,
2018 and December 31, 2017 are set out in the table
below.
|
Year Ended
December 31, 2018
|
Year Ended
December
31, 2017
|
Audit
fees (1)
|
$119,543
|
$88,924
|
Audit-related fees
(2)
|
Nil
|
Nil
|
Tax
fees (3)
|
$1,680
|
$8,936
|
All
other fees (4)
|
Nil
|
Nil
|
Total
|
$121,223
|
$97,860
|
(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 2018 and 2017, for the audit year ended
December 31, 2018, an amount of $53,813 (2017 – $47,250)
relating to audit fees expected to be billed in calendar year 2019
has been included above. For the audit
year ended December 31, 2017, an additional fee of $2,824 was
billed that is included in the audit fees of
$88,924.
(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.
(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”.
Auditor
Our
auditor is PricewaterhouseCoopers LLP, Chartered Professional
Accountants, who have prepared an independent auditor’s
report dated March 28, 2019 in respect of the Company’s
consolidated financial statements as at December 31, 2018 and for
the year then ended. PricewaterhouseCoopers LLP has advised that
they are independent within the
meaning of PCAOB Rule 3526, 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.
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 Chief
Operating Officer and Director, Dr. Chris Osterman, Ph.D., P.Geo.,
who is a qualified person for the purposes of NI
43-101.
The
following individuals prepared the Springpole Technical Report with
reference to the requirements of NI 43-101:
●
Dr. Gilles
Arseneau, Ph.D., P.Geo., Associate Consultant (Geology), of SRK
Consulting (Canada) Inc.;
●
Dr. Adrian Dance,
Ph.D., P.Eng., Principal Consultant (Metallurgy), of SRK Consulting
(Canada) Inc.;
●
Victor Munoz,
P.Eng., M.Eng., Senior Consultant (Water Resources Engineering), of
SRK Consulting (Canada) Inc.;
●
Grant Carlson,
P.Eng, Senior Consultant (Mining), of SRK Consulting (Canada)
Inc.;
●
Neil Winkelmann,
FAusIMM, Principal Consultant (Mining), of SRK Consulting (Canada)
Inc.;
●
Bruce Andrew
Murphy, P.Eng, Principal Consultant (Geotechnical), of SRK
Consulting (Canada) Inc.;
●
Michael Royle,
M.App.Sci., P.Geo., Principal Consultant (Hydrogeology), of SRK
Consulting (Canada) Inc.;
●
Dr. Ewoud Maritz
Rykaart, Ph.D., P.Eng., Principal Consultant (Geotechnical
Engineering), of SRK Consulting (Canada) Inc.; and
●
Mark Liskowich,
P.Geo., Principal Consultant (Environmental), of SRK Consulting
(Canada), Inc.
Todd
McCracken, P.Geo., Manager – Mining of WSP Canada Inc.,
prepared the Goldlund Technical Report with reference to the
requirements of NI 43-101.
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 with
reference to the requirements of NI 43-101.
B.
Terrence Hennessey, P.Geo., of Micon International Limited,
prepared the Pickle Crow Technical Report with reference to the
requirements of NI 43-101.
Michael
P. Cullen, M.Sc., P.Geo., of Mercator Geological Services Limited,
prepared the Hope Brook Technical Report with reference to the
requirements of NI 43-101.
Each of
the abovementioned firms or 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, other than Dr. Chris Osterman, our Chief Operating
Officer and a Director of First Mining.
Our
external legal counsel is Bennett Jones LLP, and they are located
at Suite 2600, Oceanic Plaza, 1066 West Hastings Street, Vancouver,
British Columbia V6E 3X1.
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 4, 2018
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, 2018, 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 1800 – 925 West Georgia Street,
Vancouver, British Columbia V6C 3L2, telephone:
1.844.306.8827.
Appendix A
FIRST MINING GOLD CORP.
AUDIT COMMITTEE CHARTER
(a)
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.
(b)
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.
(a)
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).
(b)
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.
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;
(B)
the auditor’s
report, if any, prepared in relation to those financial
statements,
(ii)
review the
Company’s annual and interim earnings press releases before
the Company publicly discloses this information;
(iii)
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)
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;
(vi)
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)
pre-approve all
non-audit services to be provided to the Company or its subsidiary
entities by the Company’s external auditor;
(x)
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;
(xi)
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
(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.
(a)
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.
(b)
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.
(a)
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.
(a)
This Charter was
implemented by the Board on May 19, 2015.