THH – First Nordic Metals (FNM.V) Analyst Tour: The “Aida” Discovery Grows, 38+ Holes in the Lab, Agnico’s Plans and New Targets
This will be a summation of the recent First Nordic Analyst Tour. It was for sure the largest Analyst Tour I have ever been at and in this article I will run through my personal, subjective impressions backed up by some material prepared for the Analysts. Note that I am biased since it is my, and family members, largest gold junior position etc. Always do your own due diligence and never buy a stock if you don’t see a case yourself.
While finishing this article the company put out a news release (June 17): “First Nordic Launches Phase 1 Diamond Drill Program at High-Priority Nippas Target”
Main Take Aways
- Just finished drilling hole #38 with all holes yet to be reported
- The delay is due to slow assay lab turnaround
- Drilled more than first planned due to encouraging visuals in some holes
- Several New parallel shear zones with alteration very similar to the original Aida zone have been intersected both east and northwest of the original Aida discovery hole
- Visible Gold has been intersected around 1.5 km apart along the Main Aida Shear Zone
- The Aida targets have mineralization that closely resembles the mineralization at the past producing Svartliden gold mine
- A former Svartliden geologist works for First Nordic
- Agnico Eagle’s plan is to drill #7 different targets across the greater Barsele Project this year
- This is more (Free Carried) upside potential for First Nordic to att to the stack
- More information about the #5 most recent discovered multi km anomalies at “Storjuktan”
- Favorable looking outcrops were immediately discovered at the “Branå” and “Sellman” targets after a first pass boots on the ground effort
- “Branå” is basically a “walk up” drill ready target as outcropping mineralization has been traced for an impressive 200 m of strike and the till anomaly is very strong
- Some targets have seen historic drilling which ONLY tested the core for Tungsten (and not for gold)
- Tungsten shows correlation with gold in the Gold Line
- All #5 anomalies are still open and are only limited by sampling, so the current footprints are “worst case”, in terms of size
- Favorable looking outcrops were immediately discovered at the “Branå” and “Sellman” targets after a first pass boots on the ground effort
- Talked to some company geos who are very bullish on the Oijärvi deposit/project in Finland
- … Obviously one is not paying a cent for Oijärvi today
The site visit has cemented my belief that the company has one of the most exciting exploration portfolios, and ongoing exploration campaigns, in the gold junior space currently. The fact that the valuation is nowhere near pricing in the Base Value of the Young Davidson look alike Barsele gold deposit makes the Risk/Reward from the 100% owned exploration assets absurdly asymmetrical (aka Low Risk/High Reward). With the exceptional infrastructure (We literally took a bus to the Aida drill rig), proximity to the Svartliden plant and/or a future Barsele Hub, low power and operating costs, and a first world jurisdiction with the sector’s lowest effective tax rate on mining of any Western jurisdictions, the exploration potential has some of the lowest threshold for success together with some of the highest economic value on success. Lastly, the drill costs are only around US$200 per meter.
Here is Taj and Adam summarizing the latest news and revelations from the ground:
“First Nordic Metals – Site Visit, Acquisition Of EMX’s Nordic Business Unit, And Exploration Update”
Take-Aways For me as an investor in short
- The Aida discovery looks to have some legs with the discovery of a) Multiple potential zones and b) Considerable confirmed strike length of the main zone with instances of Visible Gold almost 2 km apart
- I think there is good potential for some solid assay results out of the first serious drill campaign at this Aida target
- The #5 most recently discovered targets look much better than I previously thought
- Agnico Eagle will be drilling seven different targets which brings Free Carried upside risk
First Nordic is in my opinion one of the most one sided/asymmetrical Risk vs Reward stories in the gold space I have seen since I started 10 years ago. The value in Barsele alone at today’s gold price is easily in the billions and that is underpinning every single exploration target. With a fraction of the value of 45% of Barsele being priced in today I think the Blue Sky Investment Case is pretty obvious… First Nordic being priced like a run of the mill junior to, with the help of some explorations success, having an asset base that pushes i into Tier 1 aka “Must Own” territory for any gold miner. Given the amount of targets, and size of said targets, I for sure am not ruling out a 10+ Moz gold camp (Tier 1 asset) materializing in the Gold Line:
I have often talked about the fact that Mr Market has a hard time pricing in more than one thing, such as a company’s “flagship project”, at any point in time. I think First Nordic is no different and I basically believe that the ownership situation as well as the total ignorance of how good Sweden is as a mining jurisdiction are two factors that discounts the flagship pricing even more. So in other words it is my belief that First Nordic is _only_ priced based on a heavily (over) discounted Barsele Project. I don’t think anything at all is priced in from the exploration portfolio. Show me a gold Jr that is #38 holes into a drill campaign, with more coming, coupled with some fully carried exploration from Agnico Eagle, with 8 multi km targets in line to be tested as well, and the market would be think enough to price that at Zero… Such a world only potentially exists in a multi-asset Junior with a tunnel visioned Mr Market. My appetite for Exploration Risk is infinite if it comes for free. Thus, the amount of “free options” via exploration that comes with this case is silly:
(Ps. There is infrastructure near all these targets… It’s not like remote areas of Yukon or Alaska)
In light of this I think the company is starting to get so cheap that I maybe wouldn’t mind owning shares at this valuation if there even was no such deposit as Barsele within the company. All in all the share price has not kept up with either the price of gold, nor the de-risking of Aida, or new material targets such as Bråna (which will be discussed later). Thus, it is my opinion that First Nordic has probably never been cheaper than today.
The Barsele gold deposit is a better asset than what 99% of gold juniors have right now or will ever hope to find
The 100 km Gold Line belt has more exploration potential than 99% of gold juniors have
Barsele, Sweden is one of the best jurisdictions in the world for a gold explorer/developer/miner
… No gold junior that I am aware of have this combination of Margin of Safety + Exploration potential in a Tier 1, western jurisdiction.
Sweden as a Jurisdiction
It is beyond obvious that almost nobody has a clue of how good Sweden, and especially the Skellefte area of Sweden, is as a jurisdiction. I have _literally_ talked to people who did not even take a look at the story after hearing the flagship assets are in Sweden while in the next breath pitching me a story in Colombia. Sweden has seen mining for thousands of years and around 70% of all the world’s Underground Mining equipment is manufactured in Sweden. Sweden also has some of the most efficient large scale mines in the world (Aitik, Kiruna & Garpenberg etc). And if we’re talking actual shareholder value I am happy to say that Sweden has the lowest effective tax rate for gold mining companies out of any Western jurisdictions. In other words if one owned a gold mine and wanted to receive the maximum amount of actual value (Net profits) then one would want to have that gold mine in Sweden all else equal.
Furthermore Sweden has gone extremely pro mining in just the last couple of years and this is what an Australian born mining CEO who is active in Sweden today had to say about the current environment:
Peter George of Arctic Minerals (Ex Boliden, Western Mining etc):
“I’ve been coming backwards and forwards between Sweden and Australia over the last 30 years. And I have to say that I don’t think I have seen the Nordics and especially Sweden as bullish towards exploration and mining… I’ve never seen it as bullish as what it is today…”
Further proof of this very Pro Mining stance has been seen very recently with two new mines getting greenlit basically:
I would argue that Sweden is one of few Jurisdictions, especially in the Western World, that is actually going incredibly Pro Mining. Just to give an idea of how pro mining the current government is then look no further than the fact that this is the first time ever that the government has stepped in and over-ruled a municipality for the benefit of a mine (Vittangi).
If I were to list some of the best parts of Sweden, and the Barsele area speficially, from a jurisdictional stand point;
- One of The Lowest Effective Tax Rates on a Mining Company in The Western World
- Lowest (Green) Power Costs in All of Europe
- Excellent Infrastructure (Roads, rails & Powerlines)
- Exceptionally Low Monetization Threshold
- Gold deposits as small as 377 Koz (Svartliden) and 30 Koz (Botnia) deposits have been put into production here
- Excellent CAPEX & OPEX (Some of the most efficient mines in the world)
- The Most Pro Mining Government That Anyone Can Remember
- Pro Mining Municipalities around Barsele (Storuman etc)
- Cheap Drilling Costs (~$200/m)
- Nevada is around $500-$600/m and remote Canada can be up to $1,000/m
- Swedish companies have 70% of the world market for Underground Mining equipment
Compare the Barsele area of Sweden to some remote Canadian jurisdiction where the threshold for success might be 3 Moz, drilling is expensive, OPEX/CAPEX is high, the time to production might be 10-15 years, and you pay more taxes on any profits. It is like night and day in terms of ROI which is not reflected at all in the market. This makes every single known deposit, discovery and target worth more thanks to quality of the jurisdiction and there are many as we know.
In order to outperform the market one has to appreciate what the market is missing or getting wrong. That list for First Nordic might be the longest one I have ever seen in a junior mining resource company with total cluelessness about Sweden being a top Tier jurisdiction as one of the more obvious ones.
In Summary
If I were to come up with an, in my opinion, base case for what the company is at least worth it would be something like this:
I do not know exactly what First Nordic Metals is WORTH but I know it is impossible for it to be the current Market Cap. I love cases where the Price vs Value gap is so large that I don’t need precision… When it is so obvious that I can’t even come up with a reality where I am overpaying. And that does not happen as often as I would like so when I see such a case I tend to go big. Also note that these “Parts” of First Nordic are not peripheral assets which have potential monetization as some pipe dream. Barsele can be unlocked via a deal, Oijärvi could be spun out and drilled, and all of the listed targets will likely get drilled sooner or later so the threat of discovery at any is a real risk to the upside. And the “biggest bang” would be for this land package to host a heavily discounted Tier 2 gold assets and transform to an obvious Tier 1 project via additional discoveries.
I think Phil Ker of Ventum Capital Markets visualized this notion perfectly in this next slide which shows his most pessimistic estimation of First Nordic’s value (NAV) to still be over 100% higher than the current Market Cap:
… You won’t find so extremely asymmetrical bets like this in the markets very often. It’s not like you are going to find Apple to be in a situation where it is so undervalued that if their sales drop by 50% is is still “easy double” for example.
The “Aida” Discovery Impresses
Lets dig into the most recent revelations from the first serious drill campaign following the Aida discovery in 2021. As a refresher this was the original discovery hole at Aida:
… As one can see there was one material zone of alteration and mineralization in that hole and the numbers were impressive. In this first, real follow-up drill campaign some of the holes in this area have been able to hit multiple (shear) zones of interest:
… This is of course very exciting because of the potential to increase potential tonnage per vertical meter and strike etc. It also goes to show how much there is left to learn about the Aida target for starters. The original discovery hole was impressive in its own right but as we can see there might be much more to this target than “just” one mineralized shear zone. Of course one also hopes that one ore more of these zones are a) Significantly mineralized and b) are continuous over some distances. If that turns to be true then Aida could really be a home run…. But this is to be decided. Until then I think one can at least say that the potential size of the price has become even better already.
The discovery of multiple zones kind of reminds me of some cross section at Barsele:
But again the actual mineralization style looks more like Svartliden, according to the First Nordic geos, and the Svartliden deposit had parallel zones as well:
Furthermore the sheer distance that the company has been able to intercept the main shear/mineralized zone is already very impressive. To make things even more interesting there have been several instances of Visible Gold in the drill core which at least confirms that at least those places are indeed gold bearing. Thus Aida might be a Svartliden type gold system but potentially much larger:
(Stars mark instances of Visible Gold that has been encountered so far)
Just to get a sense of how quickly significant value could be added from this picture ponder this…
While the main Aida corridor is still open to both the south and the north, with confirmed mineralization across a stretch of say at least 1.6 km, lets look at a “Base Case” scenario. Picture 1,000 m of total strike (say across 3 shear zones), only to a depth of 200m, and 20m wide (to conservatively line up with original Aida width). This gives us around 11M and at an average grade of 2.5 g/t that translates to over 1 Moz. 1 Moz would already be more than 2X the size of the Svartliden gold mine and one can imagine a 10 year mine life of 100,000 ounces per year of production either via the Svartliden plant or a Hub & Spoke scenario where one would have a central mill at the Barsele deposit. Combined with mining at Barsele one could theoretically have a 300,000 oz/year operation for 10 years just based on that. With that said there is no guarantee that 1 Moz will be outlined at Aida but on the other side of the coin the Aida target alone also has potential to be a lot bigger than this as well. Most importantly none of it is priced in, in my opinion, since ownership of all of First Nordic’s assets is currently traded in the market for a mere C$110 M…
And currently Aida is treated as a targe with 4+ km strike potential so the Blue Sky potential is very large.
An example of Visible Gold in one of the Aida drill holes:
… Again visible gold does not guarantee high grades but at least it is the most definite proof that there were indeed gold bearing fluids moving through the rock where it is encountered. The more common signs for gold mineralization at Aida is core which looks like this:
(The shiny stuff is probably pyrrhotite and arsenopyrite)
… Core that looks like this has been encountered in quite a few holes which is a promising sign! Not only do the Aida geology closely resemble the Svartliden gold deposit geology, but these targets are also just a few kilometers from the fully functioning (and today operating) Svartliden gold plant, which was built for the Svartliden gold deposit:
… With the Svartliden open pit deposit having been mined out the plant is currently used for treating ore from Botnia Exploration’s gold mine (Toll milling)… So you basically have a mill without its own feed and ore is being trucked from a gold mine which is much farther away from the mill than the nearby Aida target (Which also looks to have similar mineralization to what the mill originally was built to treat).
Other Targets
The advanced Phase 1 drill campaign at Aida seems to be going very well and I believe the odds are good that a significant deposit will be outlined there sooner or later. With that said I do not think Aida will be the only discovery on First Nordic’s enormous land package. We already know that “Nippas” and the “Harpsund” corridor of targets are next in line to be drilled and geochemistry, geophysics and structural geology are pointing towards large scale potential at both:
The “Nippas” corridor:
The “Harpsund” corridor:
… Nippas will be the next target to be drilled and will allow Aida assays to catch up before drilling continues there.
On that note a news release signaling the start of drilling at Nippas just hit the news wires:
“Phase 1 will consist of up to 26 diamond drill holes to test two of three identified structural corridors at Nippas. Drilling is being carried out by Finland-based Comadev Oy and is designed to build on promising results from recent base-of-till / top-of-bedrock (“BoT/ToB”) drilling. The third corridor identified to date is in an area dominated by bogs and will be tested in the winter after freeze-up. Based on the success of this program, FNM plans to complete up to an additional 5,000 m of drilling at Nippas through 2025.”
… Fingers crossed for a significant discovery not only at Aida but at the Nippas targets as well.
I will not go through all other targets but one I really wanted to highlight is the new “Bråna” target which was discovered during the latest till sampling campaign at Storjuktan. This target already has a strong geochemical Gold-in-Till anomaly that measures 2 x 1 km and is only limited by the amount of sampling(!):
… Not only is this a very large and strong gold anomaly but remarkably the First Nordic geos were able to quickly identify favorable outcrops. Together with the till anomaly might make this one of the most de-risked targets that could pretty much be drilled without much further work:
… To me it looks like there is quite bit of veining in these outcrops I am happy to say. And again, given the strong gold anomaly I think there is a good chance that they might have found an outcropping gold system at Bråna already.
Agnico’s 2025 Drilling Plans For The Greater Barsele Project
I was a bit surprised to learn that Agnico is planning to drill seven different targets this year including drilling the Barsele deposit at depth. I am not sure what the total meterage might be but it is obviously exciting to be Free Carred in a project where Agnico Eagle will be testing several targets since it is literally risk free upside potential from a very competent team:
Now I do not know if Agnico will even publish the results, even if favorable, but that does not change the fact that this campaign bring even more discovery potential in 2025 in addition to First Nordic’s own exploration.
The Risberget Target/Deposit
“Risberget” which in Swedish translates to “The rice mountain” is a gold discovery located to the south-east of the main Barsele deposit. Agnico has not published a resource for Risberget but from what I have heard it is expected that a resource would show at least a few hundred thousand of ounces that starts at surface:
… Note that First Nordic currently owns 45% of this as well since it is within the greater Barsele project but as with pretty much every single target/project I do not believe this is reflected at all in the valuation. This might not be that surprising given that this target is seldom talked about but Agnico Eagle will be drilling in that area this year as well. To get this kind of obvious satellite deposit potential like for “free” is just one more reason why I think First Nordic is extremely undervalued.
The Svartliden Gold Mine
Some information on the past producing Svartliden gold mine south-west of Aida…
Production
Mining at Svartliden commenced as an open pit operation in 2004, with underground operations starting in 2011. Open-pit and underground mining were carried out in tandem until the completion of open-pit mining in April 2013. Underground mining was completed by the end of 2013.
A total of 3.18 Mt of ore grading 4.1 g/t gold was mined from the Svartliden Gold Mine during its operation, comprising 2.73 Mt grading 4.2 g/t gold from the open cut operation and 0.45 Mt grading 2.9 g/t gold from the underground operation.
… Again the hope is that Aida, for starters, would be a Svartliden type gold mine but bigger.
Closing Thoughts
I simply see First Nordic as an extremely asymmetrical bet where the known success; Barsele, Risberget & Oijärvi etc re together worth multiples of the current Market Cap which by extension means that all additional exploration potential becomes risk free upside potential at face value. The gold line has the potential to become a brand new gold camp and I am not paying for that potential. There are cheap developers out there with Margin of Safety. There are cheap High Risk/High Reward drill plays out there. I own many such stories but the positions are much smaller than when I find these Margin of Safety plays that also have incredible exploration potential because I get Margin of Safety, plus exposure to the High Reward side of the exploration equation, but without the High Risk.
“We live in a world where optionality is not priced. It is not valued. And yet there is enormous value in optionality.” – Pierre Lassonde
The current drilling cannot un-drill the “Barsele”, “Risberget” and “Oijärvi” deposits but it has the potential to show that there are more “Barseles” in one of the best jurisdictions in the world right now.
The biggest risk is if an Agnico drilled/worked 2.4 Moz gold resource, done to be economic at $1,300 gold, would become worthless. With gold at $3,400 it looks like a long shot to say the least. And then they need to miss on all targets and have Risberget and Oijärvi be worthless as well… If all that happens then I overpaid for my shares today.
Some pictures from the Analyst Tour:
Note: Consider me biased as I own shares of the company. This is not financial advice. Juniors are risky so never invest money you cannot afford to lose. I share neither your profits or losses. Assume I could buy or sell shares at any time. Do your own due diligence and make up your own mind. Never buy a stock just because someone else owns a stock. I cannot guarantee the accuracy of the information in this article.
Hi Erik!
Thanks for the update! Very exiting times ahead!
I was wondering if you think that Agnico is drilling 7 holes at Barsele this season to get value up (or get the larger share of Barsele project…) to get higher price from FNM when they want to get control of Barsele? Could this make things more difficult?
Once again thanks for a good update!
// Mikael
Hi and very welcome Mikael!
Well I do not think they are drilling 7 holes but 7 targets. First of all they have some mandatory spending to keep the claims in good standing so drilling seems like a worthwhile use of the money. I think they are still looking for discoveries in case they “missed an elephant” but the deep drilling at Barsele is what intrigues me the most… I do not know if that signals they are warming up to potentially developing Barsele themselves or simply to get a better picture of what they have at Barsele for negotiations etc… Basically my guess is as good as yours :).
Again, very welcome!
All the best,
Erik