Putting our incubator model into action...
First Class Metals announced a very significant milestone this morning.
You can read the full details here. But the headline is, we’ve initiated the process of selling multiple assets to Seventy Ninth Resources – an asset management company planning to list on the Toronto Stock Exchange.
As you can imagine, we’re excited. Discussions remain in process, and we’re looking forward to releasing more details when we can.
For now, I feel today’s development not only demonstrates the value of what we’ve already achieved….
But it also shows our dedication to doing what we’ve always said we’d do – incubate and add value to early-stage exploration projects in Ontario.
Recognising value
As Marc points out in our release, the discussions with Seventy Ninth Resources underline our belief that First Class Metals is currently undervalued. Let’s recap quickly.
First, our exploration properties are prospective for minerals with a strong price outlook.
Be it critical metals underpinning the Green Revolution or precious metals enjoying record buying amid prevailing macro uncertainty – supply/demand economics are in our favour.
Second, our properties are based in Ontario, Canada.
It’s one of the most supportive and well-established jurisdictions in the world. This stands to add a (potentially significant) premium to the value of any discovery.
Third, we’ve added significant value to our properties through our work on the ground since listing.
Take our four core projects, for example. We’ve developed their upside through exploration, secured all the necessary permits and first nations agreements for drilling, and either begun drilling or achieved drill ready status.
All this may not currently be reflected by our current market cap. But it has led to our engagement with Seventy Ninth Resources, and this speaks measures.
Seventy Ninth is a high calibre company specifically looking to build out a pipeline of quality, data-verified exploration projects to underpin its planned IPO in Canada. It wouldn’t be in discussions with us if it didn’t see the same upside we do.
Incubation in action
Today’s announcement also shows our incubator model in action.
To reiterate, our goal is not to hold exploration projects all the way from maiden surveying to metal production. It is instead to add value at projects by establishing the scale of their upside through exploration and drilling – upside that can subsequently be developed by a third party. Where we monetise is at the point a deal is made with a third party on a project.
Now, while we have not yet reached any such deal, the discussions with Seventy Ninth are an active step towards this stated goal of value creation. And what’s more, we have already begun to secure a wave of new projects where we start can start the process of establishing upside and adding value anew.
In the last few weeks, we’ve added the following Ontario-based assets on attractive terms:
Quinlan, which adds further lithium optionality to our portfolio, with lake sediment values of up to 966.3 parts per million li;
McInnes Lake, which adds the rare combination of gold and lithium prospectivity within one property along with a large area for exploration; and
Kerrs, which – along with upside potential – already has a resource estimate of 386,467 ounces of gold
In summary, then, I think we currently find ourselves in a very strong position.
By following our incubator model to a tee, we not only find ourselves with the prospect of monetising some of our exploration projects, but we also have a selection of new exciting exploration projects for future work.
One thing’s for sure, the next few weeks stand to be significant. We look forward to sharing more details as and when we are able to.
