What Other People’s Money Can Buy You in a Bear Market– Firesteel Resources Inc

Palisade Research June 12, 2018
Category: Research

If you haven’t, read our last update about Firesteel Resources here...

Share Price: C$0.135

Shares Outstanding: 146.0M

Market Capitalization: C$19.1M

Cash: C$17.1M

Total Liabilities: C$33.7M

 

Firesteel Resources just released results showing a very positive preliminary economic assessment (PEA) on their 100%-owned Laiva Gold project in Finland. . .

A quick recap – the Laiva Gold Mine is a past producing mine that failed due to a perfect storm of poor mining practices and dismal market conditions.

The mill is only two years old – it’s high quality and has a liquidation value of C$100 million – that’s four times more than the company’s entire market cap at the time of writing this. . .

Through the advice of their mining and geological consultants – and a strengthening gold market – Laiva is poised to be a very profitable gold mine, and one with substantial exploration upside.

Pre-production CapEx is pegged at C$7.1 million, which is already covered with a US$20.6 million loan with Pandion Mine Finance LP, secured via prepaid forward gold purchase agreement.

Firesteel currently has 600,000 ounces gold resources to draw upon, and according to our analysis, has an intrinsic value of C$56 million – or a share price of C$0.34.

Today’s PEA results are highlighted by an after-tax NPV of C$69.0 million – and an after-tax IRR of 36.5%.

While the report has not been filed, average annual gold production is slated at 75,981 ounces per year with an all-in-sustaining-cash-cost (AISC) of $974 per ounce. This will cement Firesteel as one of the premier mid-tier producers on the Venture Exchange.

We will like to see the actual breakdown of numbers, however, the stated NPV gives a reassuring cushion to what we currently peg Firesteel’s value at. Not too mention the mill’s liquidation value being worth four times more than the company’s current market cap.

Michael Hepworth has done an incredible job on an aggressive time schedule. The company has significant catalysts on the horizon, including. . .

First-production at the end of 2018

The expansion of their current resources

And the exploration of their satellite properties.

The company will be initiating an major drill program in early 2019 with the purpose of discovering additional pits close to the mill and expanding the current resource.

 

Palisade Global Investments Limited holds shares of Firesteel Resources Inc. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report’s from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.

Did You Like What You Read? Get Our Free Exclusive Content
Enter your email below and you'll receive our 'Weekly Palisade Newsletter' covering Contrarian Ideas and Macro-Situations that the mainstream financial media ignores. You'll also get our Top Investment Ideas and Asymmetric Trading Opportunities right when we find them...
Don't worry - we respect your privacy

Get our Research for FREE