First Mining Gold Corp 6-K, filed May 13, 2020
First Mining Gold Corp. (FFMGF)
6-K
2020-05-13
For: 2020-03-31
View Original
Added on
April 07, 2026
About this 6-K
First Mining Gold Corp filed this 6-K on May 13, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN
PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May
2020
Commission File Number: 000-55607
First Mining Gold
Corp.
(Translation of registrant's name into English)
(Translation of registrant's name into English)
Suite
2070, 1188 West Georgia Street, Vancouver, B.C., V6E
4A2
(Address of principal executive office)
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form
40-F.
Form 20-F [ ]
Form 40-F [ X ]
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1): [ ]
DOCUMENTS INCORPORATED BY
REFERENCE
Exhibits 99.1 and
99.2 to this Report on Form 6-K are hereby incorporated by
reference as Exhibits to the Registration Statement on Form F-10 of
First Mining Gold Corp. (File No. 333-231801).
DOCUMENTS FILED AS PART OF THIS FORM
6-K
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Exhibits
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Description
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Condensed Interim Consolidated
Financial Statements for the period ended March 31,
2020
|
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Management’s Discussion &
Analysis for the period ended March 31, 2020
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CEO Certification of Interim
Filings
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CFO Certification of Interim
Filings
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
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|
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First Mining Gold
Corp.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
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|
Date: May 13, 2020
|
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/s/ Samir
Patel
|
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Samir Patel
|
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General Counsel and Corporate
Secretary
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EXHIBIT INDEX
|
Exhibits
|
Description
|
|
Condensed Interim Consolidated
Financial Statements for the period ended March 31,
2020
|
|
|
Management’s Discussion &
Analysis for the period ended March 31,
2020
|
|
|
99.3
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CEO Certification of Interim
Filings
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99.4
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CFO Certification of Interim
Filings
|
First Mining Gold Corp.
Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2020 and 2019
(Expressed in thousands of Canadian dollars unless otherwise
noted)
(Unaudited)
FIRST MINING GOLD CORP.
INTERIM
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT
MARCH 31, 2020 AND DECEMBER 31, 2019
(Expressed
in thousands of Canadian dollars unless otherwise
noted)
(Unaudited)
|
|
March
31,
2020
|
December
31,
2019
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
Cash and cash
equivalents
|
$10,497
|
$5,902
|
|
Accounts and other
receivables
|
370
|
303
|
|
Prepaid
expenditures (Note 9)
|
712
|
349
|
|
Marketable
securities (Note 3)
|
1,398
|
1,775
|
|
Total
current assets
|
12,977
|
8,329
|
|
|
|
|
|
Non-current
|
|
|
|
Mineral properties
(Note 4)
|
256,532
|
252,815
|
|
Mineral property
investments (Note 5)
|
5,733
|
5,398
|
|
Property and
equipment
|
695
|
608
|
|
Right-of-use asset
(Note 6)
|
626
|
648
|
|
Reclamation
deposit
|
120
|
119
|
|
Other
receivables
|
93
|
103
|
|
Total
non-current assets
|
263,799
|
259,691
|
|
TOTAL
ASSETS
|
$276,776
|
$268,020
|
|
|
|
|
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LIABILITIES
|
|
|
|
|
|
|
|
Current
|
|
|
|
Accounts payable
and accrued liabilities (Note 7)
|
$1,691
|
$1,398
|
|
Flow-through share
premium liability (Note 10)
|
424
|
341
|
|
Current portion of
lease liability (Note 6)
|
104
|
94
|
|
Current portion of
environmental reclamation provision (Note 8)
|
812
|
716
|
|
Total
current liabilities
|
3,031
|
2,549
|
|
|
|
|
|
Non-current
|
|
|
|
Lease liability
(Note 6)
|
527
|
554
|
|
Environmental
reclamation provision (Note 8)
|
1,550
|
1,639
|
|
Deferred tax
liabilities
|
1,229
|
946
|
|
Total
non-current liabilities
|
3,306
|
3,139
|
|
TOTAL
LIABILITIES
|
6,337
|
5,688
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY
|
|
|
|
Share capital (Note
9)
|
290,591
|
282,666
|
|
Warrant and
share-based payment reserve (Note 9)
|
34,952
|
33,330
|
|
Accumulated other
comprehensive loss
|
(3,627)
|
(3,649)
|
|
Accumulated
deficit
|
(51,477)
|
(50,015)
|
|
Total
shareholders’ equity
|
270,439
|
262,332
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$276,776
|
$268,020
|
|
|
|
|
|
Subsequent events
(Notes 4 and 15)
|
|
|
The consolidated
financial statements were approved by the Board of
Directors:
Signed: “Keith Neumeyer”,
Director
Signed: “Raymond
Polman”, Director
The accompanying
notes are an integral part of these condensed interim consolidated
financial statements.
FIRST MINING GOLD CORP.
INTERIM
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE
LOSS
FOR THE
THREE MONTHS ENDED MARCH 31, 2020 AND 2019
(Expressed
in thousands of Canadian dollars unless otherwise
noted)
(Unaudited)
|
|
Three months ended
March 31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
OPERATING EXPENSES (Note
11)
|
|
|
|
General and
administration
|
$757
|
$867
|
|
Exploration and
evaluation
|
203
|
199
|
|
Investor relations
and marketing communications
|
299
|
534
|
|
Corporate
development and due diligence
|
132
|
145
|
|
Loss from
operational activities
|
(1,391)
|
(1,745)
|
|
|
|
|
|
OTHER
ITEMS
|
|
|
|
Foreign exchange
loss
|
(22)
|
(2)
|
|
Other
expenses
|
(20)
|
(64)
|
|
Interest and other
income
|
38
|
84
|
|
Loss
before income taxes
|
$(1,395)
|
$(1,727)
|
|
|
|
|
|
Deferred income tax
expense
|
(67)
|
-
|
|
Net
loss for the period
|
$(1,462)
|
$(1,727)
|
|
OTHER
COMPREHENSIVE LOSS
|
|
|
|
Items that will not be reclassified to net (loss) or
income:
|
|
|
|
Marketable
securities fair value (loss) gain (Note 3)
|
(377)
|
12
|
|
Mineral property
investments fair value gain (Note 5)
|
335
|
-
|
|
Items that may be reclassified to net (loss) or
income:
|
|
|
|
Currency
translation adjustment
|
64
|
(24)
|
|
Other comprehensive
income (loss)
|
22
|
(12)
|
|
|
|
|
|
Total
comprehensive loss for the period
|
$(1,440)
|
$(1,739)
|
|
Basic and diluted
loss per share (in dollars)
|
$(0.00)
|
$(0.00)
|
|
Weighted
average number of shares outstanding – Basic and
Diluted
|
608,970,889
|
558,316,696
|
The
accompanying notes are an integral part of these condensed interim
consolidated financial statements.
FIRST
MINING GOLD CORP.
INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE
THREE MONTHS ENDED MARCH 31, 2020 AND 2019
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
|
|
Three months
ended March 31,
|
|
|
|
2020
|
2019
|
|
|
|
|
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Cash
flows from operating activities
|
|
|
|
Net loss for the
period
|
$(1,462)
|
$(1,727)
|
|
Adjustments
for:
|
|
|
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Depreciation
|
67
|
43
|
|
Unrealized
foreign exchange loss (gain)
|
6
|
(1)
|
|
Share-based
payments (Note 9(d))
|
405
|
574
|
|
Accrued
interest receivable and other income
|
-
|
(64)
|
|
Other
expenses
|
18
|
65
|
|
Deferred
income tax expense
|
67
|
-
|
|
Operating
cash flows before movements in working capital
|
(899)
|
(1,110)
|
|
Changes in non-cash
working capital items:
|
|
|
|
(Increase)
decrease in accounts and other receivables
|
(58)
|
4
|
|
Decrease
in prepaid expenditures
|
83
|
61
|
|
Decrease
in accounts payables and accrued liabilities
|
(439)
|
(28)
|
|
Total
cash used in operating activities
|
(1,313)
|
(1,073)
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Property and
equipment purchases
|
(131)
|
(37)
|
|
Mineral property
expenditures (Note 4)
|
(3,255)
|
(1,001)
|
|
Option payments and
expenditures recovered (Note 4)
|
100
|
55
|
|
Total
cash used in investing activities
|
(3,286)
|
(983)
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Proceeds from
private placements (Note 9(b))
|
9,282
|
-
|
|
Shares issuance
costs (Note 9(b))
|
(128)
|
-
|
|
Proceeds from
exercise of warrants and stock options
|
60
|
-
|
|
Repayment of lease
liability (Note 6)
|
(17)
|
-
|
|
Finance costs paid
(Note 6)
|
(10)
|
-
|
|
Total
cash provided by financing activities
|
9,187
|
-
|
|
|
|
|
|
Foreign exchange
effect on cash
|
7
|
-
|
|
|
|
|
|
Change
in cash and cash equivalents
|
4,595
|
(2,056)
|
|
Cash
and cash equivalents, beginning
|
5,902
|
5,115
|
|
Cash
and cash equivalents, ending
|
$10,497
|
$3,059
|
The
accompanying notes are an integral part of these condensed interim
consolidated financial statements.
FIRST MINING GOLD CORP.
INTERIM
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE
THREE MONTHS ENDED MARCH 31, 2020 AND 2019
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
|
|
Number
of common shares
|
Share
capital
|
Warrant
reserve
|
Share-based
payment reserve
|
Accumulated
other comprehensive income (loss)
|
Accumulated
deficit
|
Total
|
|
|
|
|
|
|
|
|
|
|
Balance
as at December 31, 2018
|
558,316,916
|
$275,068
|
$13,600
|
$16,630
|
$(5,292)
|
$(43,056)
|
$256,950
|
|
Share-based
payments
|
-
|
-
|
-
|
725
|
-
|
-
|
725
|
|
Loss for the
period
|
-
|
-
|
-
|
-
|
-
|
(1,727)
|
(1,727)
|
|
Other comprehensive
loss
|
-
|
-
|
-
|
-
|
(12)
|
-
|
(12)
|
|
Balance
as at March 31, 2019
|
558,316,916
|
$275,068
|
$13,600
|
$17,355
|
$(5,304)
|
$(44,783)
|
$255,936
|
|
Balance
as at December 31, 2019
|
591,997,138
|
$282,666
|
$14,532
|
$18,798
|
$(3,649)
|
$(50,015)
|
$262,332
|
|
Proceeds from private
placements (Note 9(b))
|
40,198,095
|
8,160
|
1,122
|
-
|
-
|
-
|
9,282
|
|
Flow-through share
premium liability (Note 9(b))
|
-
|
(300)
|
-
|
-
|
-
|
-
|
(300)
|
|
Shares issuance costs
(Note 9(b))
|
-
|
(110)
|
(18)
|
-
|
-
|
-
|
(128)
|
|
Exercise of options
(Note 9(c))
|
400,000
|
171
|
-
|
(111)
|
-
|
-
|
60
|
|
Shares issued for prior
mineral property acquisition
|
24,220
|
4
|
-
|
-
|
-
|
-
|
4
|
|
Share-based
payments
|
-
|
-
|
-
|
629
|
-
|
-
|
629
|
|
Loss for the
period
|
-
|
-
|
-
|
-
|
-
|
(1,462)
|
(1,462)
|
|
Other comprehensive
income
|
-
|
-
|
-
|
-
|
22
|
-
|
22
|
|
Balance
as at March 31, 2020
|
632,619,453
|
$290,591
|
$15,636
|
$19,316
|
$(3,627)
|
$(51,477)
|
$270,439
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed interim
consolidated financial statements.
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
1. NATURE OF OPERATIONS
First
Mining Gold Corp. (formerly First Mining Finance Corp.) (the
“Company” or “First Mining”) was
incorporated in Canada on April 4, 2005. The Company changed its
name to First Mining Gold Corp. in January 2018.
First
Mining is a Canadian-focused gold exploration and development
company. The Company’s primary focus is the development and
permitting of its Springpole Gold Project and the advanced
exploration of its Goldlund Gold Project, both located in
northwestern Ontario. These condensed interim consolidated
financial statements include the accounts of the Company and its
subsidiaries. The following table highlights the Company’s
material subsidiaries together with their projects:
|
Name of the
subsidiary
|
Ownership
Percentage
|
Project
|
Location
|
|
Gold
Canyon Resources Inc.
|
100%
|
Springpole
Gold Project (“Springpole”)
|
Northwestern
Ontario, Canada
|
|
Goldlund
Resources Inc.
|
100%
|
Goldlund
Gold Project (“Goldlund”)
|
Northwestern
Ontario, Canada
|
|
Coastal
Gold Corp.
|
100%
|
Hope
Brook Gold Project (“Hope Brook”)
|
Newfoundland,
Canada
|
|
Cameron
Gold Operations Ltd.
|
100%
|
Cameron
Gold Project (“Cameron”)
|
Northwestern
Ontario, Canada
|
|
PC Gold
Inc.
|
100%
|
Pickle
Crow Gold Project (“Pickle Crow”)(1)
|
Northwestern
Ontario, Canada
|
|
Clifton
Star Resources Inc.
|
100%
|
Duquesne
Gold Project (“Duquesne”)
10%
indirect interest in the Duparquet Gold Project
(“Duparquet”)
Pitt
Gold Project (“Pitt”)
|
Québec,
Canada
|
(1)
Pickle Crow Gold
Project is subject to an Earn-In Agreement pursuant to which Auteco
Minerals Ltd. Is the operator of the property and may acquire up to
an 80% interest in the property.
First
Mining is a public company which is listed on the Toronto Stock
Exchange (the “TSX”) under the symbol “FF”,
on the OTCQX under the symbol “FFMGF”, and on the
Frankfurt Stock Exchange under the symbol
“FMG”.
The
Company’s head office and principal address is Suite 2070
– 1188 West Georgia Street, Vancouver, British Columbia,
Canada, V6E 4A2.
2. BASIS OF PRESENTATION
These
condensed interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34,
Interim Financial Reporting
using policies consistent with International Financial Reporting
Standards (“IFRS”) as issued by the International
Accounting Standards Board. These condensed interim consolidated
financial statements should be read in conjunction with the
Company’s audited annual consolidated financial statements
for the year ended December 31, 2019, as some disclosures from the
annual consolidated financial statements have been condensed or
omitted. There are no IFRS or International Financial Reporting
Interpretations Committee interpretations that are not yet
effective that would be expected to have a material impact on the
Company’s consolidated financial statements.
These
condensed interim consolidated financial statements have been
prepared on a historical cost basis, except for financial
instruments classified as fair value through profit and loss or
fair value through other comprehensive income (loss), which are
stated at their fair value. The condensed interim consolidated
financial statements are presented in thousands of Canadian
dollars, unless otherwise noted. The functional currency of the
Company and its Canadian subsidiaries is the Canadian dollar while
the functional currency of the Company’s non-Canadian
subsidiaries is the US dollar.
2. BASIS OF PRESENTATION (Continued)
The use
of judgments, estimates and assumptions affects the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. In preparing these condensed interim consolidated
financial statements, the significant judgements made by management
in applying the Company’s accounting policies and the key
sources of estimation uncertainty were substantially the same as
those that applied to the audited annual consolidated financial
statements with the exception of considerations arising from
COVID-19.
In
March 2020, the World Health Organization declared a global
pandemic related to the virus known as COVID-19. To date, the
impacts on global commerce are far reaching. The mineral
exploration sector is expected to be impacted significantly as many
local and regional governments have issued public health orders in
response to COVID-19, including restricting the movement of people.
The Company has curtailed its on-site exploration activities in
response to the public health risks. As the Company does not have
production activities, the ability to fund ongoing exploration is
affected by the availability of financing. Due to market
uncertainty the Company may be restricted in its ability to raise
additional funding. The impact of these factors on the Company over
time is not determinable; however, they may have a material impact
on the Company’s financial position, results of operations
and cash flows in future periods. There may be heightened risk of
mineral property impairment and liquidity or going concern
uncertainty.
These
condensed interim consolidated financial statements were approved
by the Board of Directors on May 12, 2020.
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
3. MARKETABLE SECURITIES
The
movements in marketable securities during the three months ended
March 31, 2020, and year ended December 31, 2019 are summarized as
follows:
|
|
Silver One
Resources Inc.
|
Gainey
Capital
Corp.
|
Other Marketable
Securities
|
Total
|
|
Balance
as at December 31, 2019
|
$-
|
$74
|
$1,701
|
$1,775
|
|
Loss recorded in
other comprehensive loss
|
-
|
(37)
|
(340)
|
(377)
|
|
Balance
as at March 31, 2020
|
$-
|
$37
|
$1,361
|
$1,398
|
|
|
Silver One
Resources Inc.
|
Gainey
Capital
Corp.
|
Other Marketable
Securities
|
Total
|
|
Balance
as at December 31, 2018
|
$990
|
$-
|
$1,607
|
$2,597
|
|
Additions
|
60
|
171
|
-
|
231
|
|
Dispositions
|
(1,758)
|
-
|
-
|
(1,758)
|
|
Gain (loss)
recorded in other comprehensive loss
|
708
|
(97)
|
94
|
705
|
|
Balance
as at December 31, 2019
|
$-
|
$74
|
$1,701
|
$1,775
|
The
Company holds marketable securities of publicly traded companies as
strategic investments and has less than a 10% equity interest in
each of the investees. During the year ended December 31, 2019, the
Company sold 6,250,000 common shares of Silver One Resources Inc.
for net proceeds of $1,750 with original cost of $6,360, and
realized a cumulative loss on sale of $4,610 in other comprehensive
loss.
4.
MINERAL PROPERTIES
As at
March 31, 2020 and December 31, 2019, the Company has capitalized
the following acquisition, exploration and evaluation costs on its
mineral properties:
|
|
Balance
December 31, 2019
|
Concessions,
taxes, and royalties
|
Salaries
and share-based payments
|
Drilling,
exploration, and technical consulting
|
Assaying,
field supplies, and environmental
|
Travel
and other expenditures
|
Option
payments received and expenditures recovered
|
Currency
translation adjustments
|
Disposal
or write-down of mineral properties
|
Balance
March 31, 2020
|
|
Springpole
|
$76,775
|
$85
|
$296
|
$1,062
|
$624
|
$401
|
$-
|
$-
|
$-
|
$79,243
|
|
Goldlund
|
98,894
|
2
|
221
|
525
|
176
|
83
|
-
|
-
|
-
|
99,901
|
|
Hope
Brook
|
20,071
|
20
|
14
|
3
|
101
|
14
|
-
|
-
|
-
|
20,223
|
|
Cameron
|
27,374
|
7
|
21
|
14
|
4
|
9
|
-
|
-
|
-
|
27,429
|
|
Pickle
Crow
|
19,263
|
20
|
27
|
6
|
1
|
2
|
(100)
|
-
|
-
|
19,219
|
|
Duquesne
|
5,133
|
-
|
1
|
3
|
-
|
-
|
-
|
-
|
-
|
5,137
|
|
Pitt
|
2,084
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,084
|
|
Others(1)
|
2,615
|
1
|
2
|
5
|
4
|
1
|
-
|
-
|
-
|
2,628
|
|
Canada Total
|
$252,209
|
$135
|
$582
|
$1,618
|
$910
|
$510
|
$(100)
|
$-
|
$-
|
$255,864
|
|
Mexico Total(2)
|
154
|
5
|
-
|
-
|
-
|
-
|
-
|
15
|
-
|
174
|
|
USA
|
452
|
-
|
-
|
-
|
-
|
-
|
-
|
42
|
-
|
494
|
|
Total
|
$252,815
|
$140
|
$582
|
$1,618
|
$910
|
$510
|
$(100)
|
$57
|
$-
|
$256,532
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
|
|
Balance
December 31, 2018
|
Concessions,
taxes, and royalties
|
Salaries
and share-based payments
|
Drilling,
exploration, and technical consulting
|
Assaying,
field supplies, and environmental
|
Travel
and other expenditures
|
Option
payments received and expenditures recovered
|
Currency
translation adjustments
|
Disposal
or write-down of mineral properties
|
Balance
December 31, 2019
|
|
Springpole
|
$73,378
|
$347
|
$950
|
$1,058
|
$488
|
$554
|
$-
|
$-
|
$-
|
$76,775
|
|
Goldlund
|
96,604
|
3
|
726
|
1,085
|
240
|
236
|
-
|
-
|
-
|
98,894
|
|
Hope
Brook
|
19,581
|
20
|
213
|
105
|
41
|
111
|
-
|
-
|
-
|
20,071
|
|
Cameron
|
27,032
|
56
|
87
|
126
|
16
|
57
|
-
|
-
|
-
|
27,374
|
|
Pickle
Crow
|
16,754
|
31
|
88
|
46
|
2,376
|
18
|
(50)
|
-
|
-
|
19,263
|
|
Duquesne
|
5,091
|
2
|
3
|
35
|
1
|
1
|
-
|
-
|
-
|
5,133
|
|
Pitt
|
2,082
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
-
|
2,084
|
|
Others(1)
|
2,559
|
3
|
17
|
27
|
8
|
1
|
-
|
-
|
-
|
2,615
|
|
Canada Total
|
$243,081
|
$462
|
$2,084
|
$2,484
|
$3,170
|
$978
|
$(50)
|
$-
|
$-
|
$252,209
|
|
Mexico Total(2)
|
244
|
43
|
22
|
34
|
-
|
-
|
(179)
|
(10)
|
-
|
154
|
|
USA
|
804
|
46
|
-
|
-
|
-
|
-
|
(25)
|
(32)
|
(341)
|
452
|
|
Total
|
$244,129
|
$551
|
$2,106
|
$2,518
|
$3,170
|
$978
|
$(254)
|
$(42)
|
$(341)
|
$252,815
|
(1)
Other mineral
properties in Canada as at March 31, 2020 and December 31, 2019
include the mining claims and concessions located in the Township
of Duparquet, Quebéc, which are near the Company’s
Duquesne gold project and the Duparquet gold project (in which the
Company holds a 10% indirect interest).
(2)
Mineral properties
in Mexico as at March 31, 2020 and December 31, 2019 include
Miranda, Socorro, San Ricardo, Las Margaritas, Puertecitos, Los
Tamales, Geranio, El Apache, El Roble, Batacosa and Lachatao. A
write-down of these properties to $nil except for Las Margaritas
was recorded during the year ended December 31, 2018.
The
Company has various underlying agreements and commitments with
respect to its Canadian mineral properties, which define annual or
future payments in connection with royalty buy-backs or maintenance
of property interests.
4. MINERAL PROPERTIES (Continued)
On
March 12, 2020, the Company and Auteco Minerals Ltd
(“Auteco”) executed a definitive Earn-In Agreement (the
“Earn-In Agreement”) whereby Auteco may earn an 80%
interest in the Pickle Crow project. Pursuant to the Earn-In
Agreement, Auteco can earn an 80% equity interest in PC Gold, a
wholly-owned subsidiary of First Mining which owns the Pickle Crow
Project, by (a) incurring a total of $10,000 in exploration
expenditures over five years, (b) making cash payments to First
Mining totaling $4,100 (of which the Company has received $100 to
date), and (c) issuing 125 million shares of Auteco to First
Mining. First Mining will also retain a 2% Net Smelter Returns
(“NSR”) Royalty, 1% of which can be purchased by Auteco
for USD $2,500,000. During the term of the Earn-In Agreement,
Auteco will be responsible for all program costs. During the three
months ended March 31, 2020, the Company received initial
consideration in cash of $100 under the terms of the Earn-in
Agreement. As at March 31, 2020, the carrying value of the Pickle
Crow Project is $19,219 (December 31, 2019 - $19,263). Subsequent
to March 31, 2020, the Company received the scheduled consideration
of 25 million shares of Auteco.
5. MINERAL PROPERTY INVESTMENTS
The
Company, through its subsidiary Clifton, has a 10% equity interest
in the shares of Beattie Gold Mines Ltd., 2699681 Canada Ltd., and
2588111 Manitoba Ltd which directly or indirectly own various
mining concessions and surface rights, collectively known as the
Duparquet gold project.
Mineral
property investments (which comprise equity interests in the shares
of three private companies) are designated as fair value through
other comprehensive income (loss) (“FVTOCI”), with
changes in fair value recorded in other comprehensive income
(loss).
As
there is no observable market data which can be used to determine
the fair value of the Company’s mineral property investments,
management uses property specific and market-based information to
determine whether a significant change in the fair value of these
investments has occurred. Factors that are considered
include:
●
Changes in the
economic and regulatory environment for the jurisdiction in which
the Duparquet Gold project is located;
●
Gold spot prices
over the period from the acquisition of the investment to March 31,
2020;
●
The company’s
market capitalization per in-situ ounce which are attributable to
the Duparquet Gold project; and
●
Recent transactions
involving mineral properties located in Quebec.
As at
March 31, 2020, management determined, as a function of the rising
gold price environment, that there was an increase in the fair
value of mineral property investments and a fair value gain of $335
was recorded (three months ended March 31, 2019 - $nil) (Note 14).
As at March 31, 2020, the fair value of the Company’s mineral
property investments is $5,733 (December 31, 2019 -
$5,398).
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
6. RIGHT-OF-USE ASSET AND LEASE LIABILITY
In
December 2019, the Company entered into a 5-year lease agreement to
use office space. The Company has recorded this lease as a
right-of-use asset and lease liability in the statement of
financial position as a December 31, 2019. At the commencement date
of the lease, the lease liability was measured at the present value
of the lease payments. The lease payments are discounted using an
interest rate of 10%, which is the Company’s incremental
borrowing rate.
a)
Right-of-Use
Asset
|
|
March 31,
2020
|
December 31,
2019
|
|
Balance,
beginning of period
|
$648
|
$-
|
|
Present value of
future lease payments
|
-
|
648
|
|
Depreciation
|
(22)
|
-
|
|
Balance,
end of period
|
$626
|
$648
|
b)
Lease
Liability
|
|
March 31,
2020
|
December 31,
2019
|
|
Balance,
beginning of period
|
$648
|
$-
|
|
Present value of
future lease payments
|
-
|
648
|
|
Finance
costs
|
10
|
-
|
|
Repayments of
principal
|
(17)
|
-
|
|
Payments of finance
costs
|
(10)
|
-
|
|
Balance,
end of period
|
$631
|
$648
|
|
Statements
of Financial Position Presentation
|
March 31,
2020
|
December 31,
2019
|
|
Current portion of
lease liability
|
$104
|
$94
|
|
Non-current lease
liability
|
527
|
554
|
|
Total
|
$631
|
$648
|
Maturity
analysis – contractual undiscounted cash flows:
|
As
at
|
March 31,
2020
|
December 31,
2019
|
|
Less than one
year
|
$163
|
$149
|
|
One to five
years
|
637
|
678
|
|
More than five
years
|
-
|
-
|
|
Total
undiscounted lease liability
|
$800
|
$827
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
Category
|
March 31,
2020
|
December 31,
2019
|
|
Accounts
payable
|
$980
|
$768
|
|
Other accrued
liabilities
|
711
|
630
|
|
Total
|
$1,691
|
$1,398
|
8. ENVIRONMENTAL RECLAMATION PROVISION
The
Company has an obligation to undertake decommissioning,
restoration, rehabilitation and environmental work when
environmental disturbance is caused by the exploration and
development of a mineral property. As at March 31, 2020, the
Company estimates that the environmental reclamation provision for
the Pickle Crow Gold Project is $2,362 (December 31, 2019 -
$2,355). The liability was estimated based on management’s
interpretation of current regulatory requirements and is recognized
at the present value of such costs. The recorded amount has been
measured using a risk-free discount rate of 1.67% based on a
Canadian government bond and an inflation rate of 2%. The cash
outflows in respect of the provision are expected to occur over the
next eight years.
|
|
March 31,
2020
|
December 31,
2019
|
|
Balance,
beginning of period
|
$2,355
|
$-
|
|
Present value of
environmental reclamation provision
|
-
|
2,355
|
|
Interest or
accretion expense
|
7
|
-
|
|
Balance,
end of period
|
$2,362
|
$2,355
|
|
Statements
of Financial Position Presentation
|
March 31,
2020
|
December 31,
2019
|
|
Current portion of
environmental reclamation provision
|
$812
|
$716
|
|
Non-current
environmental reclamation provision
|
1,550
|
1,639
|
|
Total
|
$2,362
|
$2,355
|
9. SHARE CAPITAL
c)
Authorized
Unlimited
number of common shares with no par value.
Unlimited
number of preferred shares with no par value.
b) Issued
and Fully Paid
Common
shares: 632,619,453 (December 31, 2019 –
591,997,138).
Preferred
shares: nil (December 31, 2019 – nil).
Private Placement Equity Financing with Ausenco
First
Mining has entered into an agreement with Ausenco Engineering
Canada Inc. (“Ausenco”) to complete a Pre-Feasibility
Study (“PFS”) for the Company’s Springpole Gold
Project. Ausenco or an
affiliate will be entitled to receive approximately $1,600 in fees
thereunder. Pursuant to the agreement with Ausenco, on January 15,
2020 the Company closed a private placement with Ausenco, for gross
cash proceeds of approximately $750 in respect of its subscription
for common shares (the “Ausenco Offering”). Pursuant to
the Ausenco Offering, First Mining issued 2,777,777 common shares
to Ausenco at a price of $0.27 per common share. First Mining then
prepaid $750 to Ausenco for the first tranche of work under the
PFS. The movements in the balance prepaid to Ausenco during the
three months ended March 31, 2020 and year ended December 31, 2019
are summarized as follows:
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
9. SHARE CAPITAL (Continued)
|
|
March 31,
2020
|
December 31,
2019
|
|
Balance,
beginning of period
|
$-
|
$-
|
|
Prepayment
|
750
|
-
|
|
PFS services
provided
|
(303)
|
-
|
|
Balance,
end of period
|
$447
|
$-
|
Non-Brokered Private Placement Financing
On
March 6, 2020, the Company completed a non-brokered private
placement raising aggregate gross proceeds of $8,532 (the
“2020 Offering”). Pursuant to the 2020 Offering, the
Company issued an aggregate of 27,420,318 units of the Company (the
“Units”) at a price of $0.22 per Unit for gross
proceeds of $6,032 and 10,000,000 flow-through units of the Company
(the “FT Units”) at a price of $0.25 per FT Unit for
gross proceeds of $2,500. In connection with the 2020 Offering, the
Company paid issuance costs of $128 in cash. Each Unit consisted of
one common share of the Company and one-half of one common share
purchase warrant (each whole common share purchase warrant, a
"Warrant"). Each Warrant entitles the holder to acquire one common
share of the Company for a period of 36 months from the date of
issuance at a price of $0.33. Each FT Unit consisted of one
flow-through common share of the Company that qualifies as a
"flow-through share" for the purposes of the Income Tax Act (Canada) (the
“ITA”) ITA and one-half of one Warrant on the same
terms as the Warrants forming part of the Units. An amount of
$7,300 ($7,410 net of allocated issuance costs of $110) was
recorded in share capital. The Warrants were valued at $1,104
($1,122 net of allocated issuance costs of $18) using the relative
fair value method, and the remaining $300, representing the implied
premium, was recorded as a flow-through share premium liability
(Note 10).
c) Warrants
The
movements in warrants during the three months ended March 31, 2020
and year ended December 31, 2019 are summarized as
follows:
|
|
Number
|
Weighted average
exercise price
|
|
Balance
as at December 31, 2018
|
20,116,855
|
$0.99
|
|
Warrants
issued
|
12,845,383
|
0.40
|
|
Warrants
exercised
|
(214,200)
|
0.20
|
|
Warrants
expired
|
(16,875,040)
|
1.10
|
|
Balance
as at December 31, 2019
|
15,872,998
|
$0.41
|
|
Warrants
issued
|
18,710,159
|
0.33
|
|
Balance
as at March 31, 2020
|
34,583,157
|
$0.37
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
9. SHARE CAPITAL (Continued)
The
following table summarizes information about warrants outstanding
as at March 31, 2020:
|
Exercise
price
|
Number of warrants
outstanding
|
Weighted average
exercise price ($ per share)
|
Weighted average
remaining life (years)
|
|
$0.33
|
18,710,159
|
$0.33
|
2.91
|
|
$0.40
|
12,845,383
|
$0.40
|
2.13
|
|
$0.44
|
3,027,615
|
$0.44
|
1.21
|
|
|
34,583,157
|
$0.37
|
2.47
|
The
Warrants issued during the three months ended March 31, 2020 and
year ended December 31, 2019 have been valued using the
Black-Scholes option pricing model with the following weighted
average assumptions:
|
|
Three months
ended
March 31,
2020
|
Year
ended
December 31,
2019
|
|
Risk-free interest
rate
|
1.75%
|
1.55%
|
|
Expected life
(years)
|
3.00 years
|
3.00 years
|
|
Expected
volatility(1)
|
65.78%
|
67.22%
|
|
Expected dividend
yield
|
Nil
|
Nil
|
d) Stock
Options
The
Company has adopted a stock option plan that allows for the
granting of stock options to Directors, Officers, employees and
certain consultants of the Company for up to 10% of the
Company’s issued and outstanding common shares. Stock options
granted under the plan may be subject to vesting provisions as
determined by the Board of Directors.
The
movements in stock options during the three months ended March 31,
2020 and year ended December 31, 2019 are summarized as
follows:
|
|
Number
|
Weighted average
exercise price
|
|
Balance
as at December 31, 2018
|
48,265,000
|
$0.61
|
|
Granted –
January 7, 2019
|
5,000,000
|
0.40
|
|
Granted –
April 1, 2019
|
750,000
|
0.40
|
|
Granted –
April 29, 2019
|
2,000,000
|
0.40
|
|
Options
expired
|
(7,700,000)
|
0.68
|
|
Options
forfeited
|
(1,387,500)
|
0.50
|
|
Balance
as at December 31, 2019
|
46,927,500
|
$0.57
|
|
Granted –
January 31, 2020
|
8,750,000
|
0.25
|
|
Options
exercised
|
(400,000)
|
0.15
|
|
Options
expired
|
(1,700,000)
|
0.40
|
|
Balance as at March 31,
2020
|
53,577,500
|
$ 0.54
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
9. SHARE CAPITAL (Continued)
The
weighted average closing share price at the date of exercise for
the three months ended March 31, 2020 was $0.23 (March 31, 2019
– $nil). 400,000 stock options were exercised during the
three months ended March 31, 2020 (March 31, 2019 –
Nil).
The
following table summarizes information about the stock options
outstanding as at March 31, 2020:
|
|
|
Options
Exercisable
|
||||
|
Exercise
price
|
Number of
options
|
Weighted average
exercise price
($ per
share)
|
Weighted average
remaining life (years)
|
Number of
options
|
Weighted average
exercise price
($ per
share)
|
Weighted average
remaining life (years)
|
|
$0.01 – 0.50
|
31,092,500
|
$0.39
|
3.82
|
17,964,375
|
$0.38
|
3.46
|
|
$0.51 – 1.00
|
22,485,000
|
0.75
|
1.89
|
22,485,000
|
0.75
|
1.89
|
|
|
53,577,500
|
$0.54
|
3.01
|
40,449,375
|
$0.58
|
2.59
|
During
the three months ended March 31, 2020, there were 8,750,000 (March
31, 2019 – 5,000,000) stock options granted with an aggregate
fair value of $1,080 (March 31, 2019 – $1,126), or a weighted
average fair value of $0.12 per option (March 31, 2019 –
$0.23). As at March 31, 2020, 13,128,125 (March 31, 2019 –
13,915,625) stock options remain unvested with an aggregate grant
date fair value of $842 (March 31, 2019 - $1,268).
Certain
stock options granted were directly attributable to exploration and
evaluation expenditures on mineral properties and were therefore
capitalized to mineral properties. In addition, certain stock
options were subject to vesting provisions. These two factors
result in differences between the aggregate fair value of stock
options granted and total share-based payments expensed during the
periods. Total share-based payments expense during the periods
ended March 31, 2020 and March 31, 2019 was classified within the
financial statements as follows:
|
|
For the three
months ended March 31,
|
|
|
Statements
of Net Loss:
|
2020
|
2019
|
|
General and
administration
|
$237
|
$330
|
|
Exploration and
evaluation
|
44
|
11
|
|
Investor relations
and marketing communications
|
63
|
120
|
|
Corporate
development and due diligence
|
61
|
113
|
|
Subtotal
|
$405
|
$574
|
|
|
For the three
months ended March 31,
|
|
|
Statements
of Financial Position:
|
2020
|
2019
|
|
Mineral
Properties
|
$224
|
$151
|
|
Total
|
$629
|
$725
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
9. SHARE CAPITAL (Continued)
The
grant date fair value of the stock options recognized in the period
has been estimated using the Black-Scholes option pricing model
with the following weighted average assumptions:
|
|
Three months
ended
March 31,
2020
|
Year
ended
December 31,
2019
|
|
Risk-free interest
rate
|
2.00%
|
2.20%
|
|
Share price at
grant date (in dollars)
|
$0.23
|
$0.36
|
|
Exercise price (in
dollars)
|
$0.25
|
$0.40
|
|
Expected life
(years)
|
5.00 years
|
5.00 years
|
|
Expected
volatility(1)
|
69.22%
|
71.86%
|
|
Forfeiture
rate
|
5.00%
|
5.00%
|
|
Expected dividend
yield
|
Nil
|
Nil
|
(1)
The computation of
expected volatility was based on the Company’s historical
price volatility, over a period which approximates the expected
life of the option.
10. FLOW-THROUGH SHARE PREMIUM LIABILITY
The
following is a continuity schedule of the liability portion of the
Company’s flow-through share issuances:
|
|
February 14,
2020
|
May 16,
2019
|
December 18,
2019
|
Total
|
|
Balance,
December 31, 2018
|
$-
|
$-
|
$-
|
$-
|
|
Liability incurred
for flow-through shares issued May 16, 2019
|
-
|
475
|
-
|
475
|
|
Settlement of
flow-through share premium liability upon incurring eligible
expenditures
|
|
(430)
|
-
|
(430)
|
|
Liability incurred
for flow-through shares issued December 18, 2019
|
-
|
-
|
296
|
296
|
|
Balance,
December 31, 2019
|
$-
|
$45
|
$296
|
$341
|
|
Liability incurred
for flow-through shares issued February 14, 2020
|
300
|
-
|
-
|
300
|
|
Settlement of
flow-through share premium liability upon incurring eligible
expenditures
|
(50)
|
(45)
|
(122)
|
(217)
|
|
Balance, March 31, 2020
|
$ 250
|
$ -
|
$174
|
$424
|
As at
March 31, 2020, the Company had $3,260 (December 31, 2019 - $2,178)
of unspent flow-through expenditure commitments.
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
11. OPERATING EXPENSES
Components
by nature of the Company’s functional operating expense
categories are as follows:
|
|
For the three
months ended March 31, 2020
|
||||
|
|
General and
administration
|
Exploration and
evaluation
|
Investor relations
and marketing communications
|
Corporate
development and due diligence
|
Total
|
|
Administrative and
office
|
$58
|
$50
|
$8
|
$1
|
$117
|
|
Consultants
|
21
|
11
|
10
|
-
|
42
|
|
Depreciation
|
26
|
41
|
-
|
-
|
67
|
|
Directors
fees
|
17
|
-
|
-
|
-
|
17
|
|
Exploration and
evaluation
|
-
|
8
|
-
|
-
|
8
|
|
Investor relations
and marketing communications
|
3
|
2
|
162
|
23
|
190
|
|
Professional
fees
|
142
|
9
|
-
|
-
|
151
|
|
Salaries
|
163
|
22
|
45
|
41
|
271
|
|
Share-based
payments (non-cash) (Note 9(d))
|
237
|
44
|
63
|
61
|
405
|
|
Transfer agent and
filing fees
|
77
|
-
|
-
|
-
|
77
|
|
Travel and
accommodation
|
13
|
16
|
11
|
6
|
46
|
|
Operating
expenses total
|
$757
|
$203
|
$299
|
$132
|
$1,391
|
|
|
For the three months ended March 31, 2019
|
||||
|
|
General and
administration
|
Exploration and
evaluation
|
Investor relations
and marketing communications
|
Corporate
development and due diligence
|
Total
|
|
Administrative and
office
|
$98
|
$42
|
$5
|
$-
|
$145
|
|
Consultants
|
26
|
12
|
23
|
-
|
61
|
|
Depreciation
|
3
|
40
|
-
|
-
|
43
|
|
Directors
fees
|
34
|
-
|
-
|
-
|
34
|
|
Exploration and
evaluation
|
-
|
10
|
-
|
-
|
10
|
|
Investor relations
and marketing communications
|
-
|
2
|
363
|
-
|
365
|
|
Professional
fees
|
86
|
-
|
-
|
-
|
86
|
|
Salaries
|
204
|
41
|
18
|
28
|
291
|
|
Share-based
payments (non-cash) (Note 9(d))
|
330
|
11
|
120
|
113
|
574
|
|
Transfer agent and
filing fees
|
74
|
-
|
-
|
-
|
74
|
|
Travel and
accommodation
|
12
|
41
|
5
|
4
|
62
|
|
Operating
expenses total
|
$867
|
$199
|
$534
|
$145
|
$1,745
|
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
12. SEGMENT INFORMATION
The
Company operates in a single reportable operating segment, being
the acquisition, exploration, and development of North American
mineral properties. Geographic information about the
Company’s non-current assets, excluding financial
instruments, as at March 31, 2020 and December 31, 2019 is as
follows:
|
Non-current
assets
|
March 31,
2020
|
December 31,
2019
|
|
Canada
|
$257,312
|
$253,587
|
|
Mexico
|
258
|
252
|
|
USA
|
496
|
454
|
|
Total
|
$258,066
|
$254,293
|
13. RELATED PARTY TRANSACTIONS
Key
management includes the Directors and Officers of the Company. The
compensation paid or payable to key management for services during
the three months ended March 31, 2020 and 2019 is as
follows:
|
Service
or Item
|
Three months
ended March 31,
|
|
|
|
2020
|
2019
|
|
Directors’
fees
|
$17
|
$34
|
|
Salaries and
consultants’ fees
|
268
|
274
|
|
Share-based
payments (non-cash)
|
395
|
568
|
|
Total
|
$680
|
$876
|
14. FAIR VALUE
Fair
values have been determined for measurement and/or disclosure
purposes based on the following methods.
The
Company characterizes fair value measurements using a hierarchy
that prioritizes inputs depending on the degree to which they are
observable. The three levels of the fair value hierarchy are as
follows:
●
Level 1: fair value
measurements are quoted prices (unadjusted) in active markets for
identical assets or liabilities;
●
Level 2: fair value
measurements are those derived from inputs other than quoted prices
included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
●
Level 3: fair value
measurements are those derived from valuation techniques that
include significant inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The
carrying values of cash and cash equivalents, current accounts and
other receivables, and accounts payable and accrued liabilities
approximated their fair values because of the short-term nature of
these financial instruments.
These
financial instruments are classified as financial assets and
liabilities at amortized cost.
The
carrying value of the non-current reclamation deposit approximated
its fair values as the amount is represented by a cash deposit.
This financial instrument is classified as financial asset at
amortized cost.
FIRST MINING GOLD CORP.
NOTES
TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in
thousands of Canadian dollars unless otherwise noted)
(Unaudited)
14. FAIR VALUE (Continued)
The
carrying value of marketable securities was based on the quoted
market prices of the shares as at March 31, 2020 and was therefore
considered to be Level 1. These financial instruments are
classified as financial assets at FVTOCI. During the three months
ended March 31, 2020, a fair value loss on marketable securities of
$377 (March 31, 2019 - gain of $12) was recorded (Note
3).
The
mineral property investments (First Mining’s 10% equity
interest in three privately held companies that own the Duparquet
Gold Project) are classified as financial assets at FVTOCI. The
carrying value of the mineral property investments was not based on
observable market data and was therefore considered to be Level 3.
The initial fair value of the mineral property investments was
determined based on attributable pro-rata gold ounces for the
Company’s 10% indirect interest in the Duparquet project,
which formed part of the identifiable assets from the acquisition
of Clifton. Subsequently, the fair value has been reassessed at
each period end. Scenarios which may result in a significant change
in fair value include, among others, a change in the performance of
the investee, a change in the performance of comparable entities, a
change in gold price, a change in the economic environment, or
evidence from external transactions in the investee’s equity.
During the three months ended March 31, 2020, management concluded
that there was an increase in the fair value of the mineral
property investments, and a fair value gain of $335 (March 31, 2019
- $nil) was recorded (Note 5).
The
following table presents the Company’s fair value hierarchy
for financial assets that are measured at fair value:
|
|
March 31,
2020
|
December 31,
2019
|
||||
|
|
|
Fair value
measurement
|
|
Fair value
measurement
|
||
|
|
Carrying
value
|
Level
1
|
Level
3
|
Carrying
value
|
Level
1
|
Level
3
|
|
Financial
assets:
|
|
|
|
|
|
|
|
Marketable
securities (Note 3)
|
$1,398
|
$1,398
|
$-
|
$1,775
|
$1,775
|
$-
|
|
Mineral property
investments (Note 5)
|
5,733
|
-
|
5,733
|
5,398
|
-
|
5,398
|
|
Total
|
$7,131
|
$1,398
|
$5,733
|
$7,173
|
$1,775
|
$5,398
|
None of
the Company’s financial liabilities are subsequently measured
at fair value after initial recognition.
During
the three months ended March 31, 2020 there have been no transfers
of amounts between Level 1, Level 2, and Level 3 of the fair value
hierarchy.
15. SUBSEQUENT EVENTS
Stock Options Grant
Subsequent
to March 31, 2020, the Company granted 900,000 incentive stock
options to Directors and Officers, and 200,000 incentive stock
options to consultants of the Company under the terms of its stock
option plan. The stock options have an exercise price of $0.25 per
share and are exercisable for a period of five and three years,
respectively, from the grant date.
Mexican Mineral Properties
On April 28, 2020, the Company entered into a share purchase
agreement with a third-party private company (the
“Purchaser”) pursuant to which the Purchaser acquired
all of the issued and outstanding shares of 0924682 B.C. Ltd. and
1089568 B.C. Ltd., two wholly-owned subsidiaries of the Company
that hold all of the shares of two Mexican companies which own all
of the Company’s Mexican mineral properties. As a result, the
Purchaser has acquired all eleven Mexican mineral properties that
were previously held by the Company, for nominal cash consideration
and granted the Company a 2% NSR on 10 of the 11 mineral
properties. As of the date of this transaction with the Purchaser,
First Mining no longer holds any mineral properties in
Mexico.
TSX:
FF | OTCQX: FFMGF | FRANKFURT: FMG
MANAGEMENT’S
DISCUSSION & ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2020
|
SUITE
2070 – 1188 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA
V6E 4A2
WWW.FIRSTMININGGOLD.COM | 1-844-306-8827
|
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
TABLE OF CONTENTS
|
COMPANY
OVERVIEW AND STRATEGY
|
3
|
|
2020
HIGHLIGHTS
|
3
|
|
CANADIAN
MINERAL PROPERTY PORTFOLIO LOCATIONS
|
5
|
|
MINERAL
PROPERTY PORTFOLIO GOLD RESOURCES
|
5
|
|
MINERAL
PROPERTY PORTFOLIO REVIEW
|
5
|
|
SELECTED
QUARTERLY FINANCIAL INFORMATION
|
10
|
|
MINERAL
PROPERTY BALANCES
|
11
|
|
RESULTS
OF CONTINUING OPERATIONS
|
12
|
|
FINANCIAL
CONDITION, LIQUIDITY AND CAPITAL RESOURCES
|
12
|
|
OUTLOOK
|
13
|
|
FINANCIAL
INSTRUMENTS
|
14
|
|
RELATED
PARTY TRANSACTIONS
|
14
|
|
OFF-BALANCE
SHEET ARRANGEMENTS
|
14
|
|
NON-IFRS
MEASURES
|
15
|
|
CHANGES
IN ACCOUNTING POLICIES
|
15
|
|
ACCOUNTING
STANDARDS ISSUED BUT NOT YET APPLIED
|
15
|
|
CRITICAL
ACCOUNTING JUDGMENTS AND ESTIMATES
|
15
|
|
RISKS
AND UNCERTAINTIES
|
16
|
|
QUALIFIED
PERSONS
|
17
|
|
SECURITIES
OUTSTANDING
|
17
|
|
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
17
|
|
FORWARD-LOOKING
INFORMATION
|
18
|
|
CAUTIONARY
NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND MINERAL
RESERVE ESTIMATES
|
18
|
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
GENERAL
This
Management’s Discussion and Analysis (“MD&A”) should be read in
conjunction with the unaudited condensed interim consolidated
financial statements of First Mining Gold Corp. (the
“Company” or
“First Mining”)
for the three months ended March 31, 2020, which are prepared in
accordance with International Financial Reporting Standards
(“IFRS”) as
applicable to the preparation of interim financial statements,
including International Accounting Standard IAS 34 Interim
Reporting. The unaudited condensed interim consolidation financial
statements should also be read in conjunction with the
Company’s audited consolidated financial statements for the
year ended December 31, 2019, which are prepared in accordance with
IFRS as issued by the International Accounting Standards Board
(“IASB”). These
documents along with additional information on the Company,
including the Company’s Annual Information Form for the year
ended December 31, 2019, are available under the Company’s
SEDAR profile at www.sedar.com,
on EDGAR at www.sec.gov.,
and on the Company’s website at www.firstmininggold.com.
In this
MD&A, unless the context otherwise requires, references to the
“Company”, “First Mining”,
“we”, “us”, and “our” refer to
First Mining Gold Corp. and its subsidiaries.
This
MD&A contains “forward-looking statements” and
“forward-looking information” within the meaning of
applicable Canadian securities laws. See the section on page 32 of
this MD&A titled “Forward-Looking Information” for
further details. In addition, this MD&A has been prepared
in accordance with the requirements of Canadian securities laws,
which differ in certain material respects from the disclosure
requirements of United States securities laws, particularly with
respect to the disclosure of mineral reserves and mineral
resources. See the section on page 34 of this MD&A titled
“Cautionary Note to U.S. Investors Regarding Mineral Resource
and Mineral Reserve Estimates” for further
details.
This
MD&A contains disclosure of certain non-IFRS financial
measures. Non-IFRS measures do not have any standardized meaning
prescribed under IFRS. See the section on page 26 of the MD&A
entitled "Non-IFRS Measures" for further details.
All
dollar amounts included in this MD&A are expressed in Canadian
dollars unless otherwise noted. This MD&A is dated as of May
12, 2020 and all information contained in this MD&A is current
as of May 12, 2020.
First
Mining was incorporated in Canada on April 4, 2005. The Company
changed its name to First Mining Gold Corp. in January 2018. First
Mining is a Canadian-focused gold exploration and development
company advancing a large resource base of 7.4 million ounces of
gold in the measured and indicated categories and 3.8 million
ounces of gold in the inferred category. First Mining’s
primary focus is the development and permitting of its Springpole
Gold Project and the advanced exploration of its Goldlund Gold
Project, both located in northwestern Ontario. Springpole Gold
Project is one of the largest undeveloped gold assets in Canada,
with permitting and a Pre-Feasibility Study underway. Goldlund
Gold
Project is an advanced exploration stage asset where
drilling is ongoing to define both the extension of the existing
resource area and to better define the regional scale potential.
First Mining’s eastern Canadian property portfolio also
includes Cameron Gold
Project, Pickle Crow Gold
Project, Hope Brook Gold
Project, Duparquet Gold
Project, Duquesne Gold
Project, and Pitt Gold
Project.
The
following table highlights the Company’s material
projects:
|
Project
|
Location
|
|
Springpole
Gold Project
|
Northwestern
Ontario, Canada
|
|
Goldlund
Gold Project
|
Northwestern
Ontario, Canada
|
|
Hope
Brook Gold Project
|
Newfoundland,
Canada
|
|
Cameron
Gold Project
|
Northwestern
Ontario, Canada
|
|
Pickle Crow Gold Project (1)
|
Northwestern
Ontario, Canada
|
(1)
Pickle Crow Gold
Project is subject to an Earn-In Agreement pursuant to which Auteco
Minerals Ltd. is the operator of the property and may acquire up to
an 80% interest in the property.
The
following highlights the Company’s developments during the
first three months of 2020 (including subsequent events up to May
12, 2020). For further information, please refer to the
“News” section on the Company’s website at
www.firstmininggold.com.
COVID-19 Response
On March 24, 2020, the Company announced that it had commenced the
demobilization of employees and contractors at the Springpole Gold
Project and the Goldlund Gold Project. To date, First Mining has
not had any cases of COVID-19 novel coronavirus
(“COVID-19”) at its camp operations or its head office
in Vancouver. The health and safety of First Mining’s
workforce, their families and the communities in which the Company
operates is First Mining’s number one concern. In the
interests of the health and well-being of our employees,
contractors, visitors to our office and operations, and the
families of all such persons, First Mining also implemented a work
from home policy for its employees until further notice. First
Mining is committed to fully supporting safety measures for our
workforce, families and communities.
At Springpole Gold
Project, the Company initially demobilized one of its two
drill crews. In order to ensure the health and safety of all its
employees the Company had intended to complete the current shift
rotation while limiting access to site for any new individuals.
Work at site was nearing completion ahead of a planned reduction in
on-site activities until after the spring ice break-up. However,
due to the current environment, First Mining decided to demobilize
the remaining contractors and staff and keep Springpole
Gold
Project on care and maintenance until it is able to restart
its work programs, currently planned for later in the spring and
summer of 2020.
At Goldlund Gold
Project, drill crews went on a scheduled break in mid-March
and were subsequently demobilized. Given the significant amount of
drilling that has taken place at Goldlund Gold Project
this year, this will allow First Mining’s geology team to
receive assays and interpret results before planning the remainder
of the 2020 drill program.
Management continues to monitor the COVID-19 situation very closely
and will adapt technical work programs as the situation
evolves.
Springpole Gold Project
Commencement of Pre-Feasibility Study
On
November 14, 2019, the Company announced that it had entered into
an agreement with Ausenco Engineering Canada Inc.
(“Ausenco”) to
complete a Pre-Feasibility Study (the “PFS”) for Springpole Gold
Project. The PFS will follow on from the work completed
during the Springpole Gold Project
PEA phase (described below), initially focusing on trade-off
studies and optimizations to define the ultimate project scope. The
final project scope will then be incorporated into the PFS. Ausenco
or an affiliate will be entitled to receive approximately
$1,600,000 in fees thereunder.
Pursuant
to the agreement referenced above, on January 15, 2020, the Company
closed a private placement with Ausenco, for gross cash proceeds of
approximately $750,000 in respect of its subscription for common
shares (the “Ausenco
Offering”). Pursuant to the Ausenco Offering, First
Mining issued 2,777,777 common shares to Ausenco at a price of
$0.27 per common share.
For the
balance of the PFS, the Company is required to issue common shares
to Ausenco in exchange for services provided. Once Ausenco has
completed an additional $375,000 in services in relation to the
PFS, First Mining will issue to Ausenco a further $375,000 of
common shares. Pricing will be based on the 30-day volume weighted
average price (“VWAP”) at the time less the
maximum discount allowed under Toronto Stock Exchange
(“TSX”) rules,
subject to the minimum pricing rules of the TSX.
Upon
completion of the PFS and the announcement by First Mining of the
PFS results, First Mining will satisfy the remaining amount owing
for completion of the PFS by issuing a final tranche of common
shares to Ausenco. This final tranche of common shares will be
issued to Ausenco at least five trading days after the date of the
Company’s news release announcing the results of the PFS have
passed, with pricing of the common shares based on the 30-day VWAP
as of the news release date, subject to the minimum pricing rules
of the TSX.
Ausenco
will issue separate monthly statements to the Company for total
labour and other direct costs to assist with tracking against the
initial budget proposal. Any additional costs represented by a
change order will either be paid in cash or through the issuance of
additional common shares to Ausenco in satisfaction of the costs in
the change order. If the Company chooses to pay the amounts in
common shares, these common shares will be issued once the PFS has
been delivered to First Mining. The shares issued for such purposes
will be based on the 30-day VWAP less the maximum discount allowed
under TSX rules (with the last day of the 30-day period being the
date on which the PFS is delivered to the Company).
3
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Goldlund Gold Project
“Main Zone” Drill Program
Following
completion of 2019 drilling at its Miller prospect on the Goldlund
Gold
Project (“Miller”), the exploration program
moved to the Goldlund Gold Project
Main Zone area in Q4 2019 and continued there in 2020 until the
scheduled break in mid-March.
The
initial phase of this Main Zone drill program was completed in
March 2020 (prior to the field program shutdown at Goldlund
Gold
Project due to COVID-19, which coincided with the scheduled
mid-March break), consisted of 39 holes (approximately 7,300 metres
(“m”)), with the
overall program’s focus being to define and extend
mineralization in the eastern and western portions of Zones 1, 2, 3
and 4. Fourteen of these holes (approximately 2,500 m) were drilled
in 2019, with a further 25 holes (approximately 4,800 m) drilled
during Q1 2020, and these holes primarily targeted the Zone 2 and 3
areas. The Company is currently planning an extension of this work
program (the scale of the second phase is yet to be determined, and
will be based on pending results). Drilling at the Main Zone is
focused on delineating mineralization between the currently-defined
zones of the Goldlund Gold Project
deposit. The main Goldlund Gold Project
deposit that hosts the current mineral resource estimate remains
open along strike to the northeast, to the southwest, and at
depth.
Results
from the first eleven holes of the Goldlund Gold Project
Main Zone drill program were reported in the news release dated
March 2, 2020. These holes primarily targeted the eastern parts of
Zones 2 and 3 as well as the area between these two zones,
following up on historical drill intercepts. Of the eleven holes
reported, gold mineralization has been encountered in nine. Hole
GL-19-008 intersected 21 m of 5.36 g/t gold within highly
mineralized granodiorite and porphyry units, as well as within
andesite, and was successful in confirming the high grades within
Zone 2 that were encountered in historical drilling. Hole GL-19-010
was drilled to intersect the area between the known mineralized
areas at Zones 2 and 3, and encountered significant gold
mineralization hosted within andesite (15.0 m at 1.68 g/t gold),
before intersecting the mineralized granodiorite and porphyries of
Zone 2 towards the base of the hole. The remaining drill holes also
show examples of gold mineralization occurring throughout different
lithological units, which include andesites, gabbros and felsic
porphyries in addition to the granodiorite, which is the principal
host of the gold mineralization in Zones 1 and 7.
Results
from the next set of nineteen holes of the Goldlund Gold Project
Main Zone drill program were reported in the news release dated May
6, 2020. The majority of these holes targeted the southwestern
extension of Zone 3 and the area between Zones 2 and 3. Hole
GL-20-004 intersected both Zones 2 and 3 in their southwest
extension. Hole GL-20-016 targeted the southwest extension of Zone
4. Most of the mineralization intercepted by these holes is
associated with altered porphyry units. Minor mineralization is
also associated with gabbro and basalt/andesite, and mainly occurs
in close proximity to the contacts with porphyry. The highest-grade
gold mineralization was intersected in holes GL-20-010 (44 m at
1.20 g/t Au) and GL-20-006 (13 m at 2.10 g/t Au) which were drilled
vertically through Zone 3.
Pickle Crow Gold Project
, Ontario
On January 27, 2020, the Company entered into a binding term sheet
(the “Term Sheet”) with Auteco Minerals Ltd
(“Auteco”) (ASX: AUT) whereby Auteco may earn up to
an 80% interest in the Pickle Crow Gold Project
(the “Earn-In”). On March 12, 2020, the Company and
Auteco executed a definitive Earn-In Agreement (the
“Earn-In
Agreement”), which
replaced the Term Sheet. Pursuant to the Earn-In Agreement, Auteco
can earn a full 80% equity interest in PC Gold Inc.
(“PC
Gold”), a wholly-owned
subsidiary of First Mining which owns the Pickle Crow Gold
Project, by (a) incurring a total of $10,000,000 in
exploration expenditures over five years, (b) making cash payments
to First Mining totaling $4,100,000 (of which the Company has
received $100,000 to date), and (c) issuing 125 million shares of
Auteco to First Mining. First Mining will also retain a 2% Net
Smelter Returns (“NSR”) Royalty, 1% of which can be purchased by
Auteco for USD $2,500,000. During the term of the Earn-In
Agreement, Auteco will be responsible for all program costs.
Subsequent to March 31, 2020, the Company received the scheduled
consideration of 25 million shares of Auteco.
Pursuant to the Definitive Agreement, the Earn-In is comprised of
two stages:
●
Stage 1 Earn-In
(51% earn-in) – Three-year initial earn-in period to acquire
a 51% equity interest in PC Gold by:
o
Spending $5,000,000
on exploration on the Pickle Crow Gold Project
(or cash payments in lieu), of which $750,000 must be incurred
within the first 12 months; and
o
Issuing 100 million
shares of Auteco to First Mining.
●
Stage 2 Earn-In
(additional 19% to earn-in to 70%) – Upon completion of the
Stage 1 Earn-In, Auteco will have a two-year follow-on period to
acquire an additional 19% equity interest in PC Gold
by:
o
Spending a further
$5,000,000 on exploration on the Pickle Crow Gold Project
(or cash payments in lieu);
o
Making a $1,000,000
cash payment to First Mining within 90 days of completing the
additional exploration spend; and
o
Issuing First
Mining a 2% NSR royalty on the Project (1% of which can be bought
back for USD$2,500,000) (issued upon completion of the Stage 2
Earn-In).
In addition, upon completion of the Stage 2 Earn-In, Auteco will
have an option to acquire an additional 10% equity interest in PC
Gold, exercisable any time following completion of the Stage 2
Earn-In, by paying First Mining $3,000,000 in cash. If Auteco
should fail to meet such requirements within the applicable time
periods, the Earn-In Agreement will terminate and Auteco will be
entitled to retain any interest which it has earned-in to prior to
the date of termination. Further details regarding the Earn-In are
set out in the Company’s March 12, 2020 news release. In May
2020, Auteco raised $5.1M Australian dollars in a strongly
supported placement from Australian and overseas
institutions.
Non-Brokered Private Placement Financings
On
March 6, 2020, the Company closed the third and final tranche of a
non-brokered private placement initially announced on February 6,
2020, pursuant to which it raised aggregate gross proceeds of
$8,532,000 (the “2020
Offering”). Pursuant to the 2020 Offering, the Company
issued an aggregate of 27,420,318 units of the Company (the
“Units”) at a
price of $0.22 per Unit for gross proceeds of $6,032,000 and
10,000,000 flow-through units of the Company (the
“FT Units”) at a
price of $0.25 per FT Unit for gross proceeds of $2,500,000. The
2020 Offering closed in three tranches, with 10,000,000 FT Units
issued on February 14, 2020, 23,328,818 Units issued on February
28, 2020 and 4,091,500 Units issued on March 6, 2020. In connection
with the 2020 Offering, the Company paid issuance costs of $128,000
in cash. Each Unit consisted of one common share of the Company and
one-half of one common share purchase warrant (each whole common
share purchase warrant, a "Warrant"). Each Warrant entitles the
holder to acquire one common share of the Company for a period of
36 months from the date of issuance at a price of $0.33. Each FT
Unit consisted of one flow-through common share of the Company that
qualifies as a "flow-through share" for the purposes of the
Income Tax Act (Canada)
(the "ITA") and one-half of
one Warrant on the same terms as the Warrants forming part of the
Units.
At-The-Market Financing
On
August 20, 2019, First Mining announced it had entered into an
at-the-market ("ATM") equity
distribution agreement with Cantor Fitzgerald Canada Corporation
(“Cantor”) as
agent pursuant to which First Mining may, at its discretion and
from time-to-time, sell up to $15.0 million of common shares of the
Company to the public at the prevailing market price of the
Company’s common shares on the TSX at the time of such sale.
The sale of these common shares will be made through
“at-the-market distributions” as defined in the
Canadian Securities Administrators’ National Instrument
44-102 Shelf Distributions,
including sales made directly on the TSX, or any other recognized
marketplace upon which the Company’s common shares are listed
or quoted or where the common shares are traded in Canada. During
the three months ended March 31, 2020, First Mining did not sell
any common shares of the Company under the ATM facility. As at the
date of this MD&A, First Mining has sold 532,000 common shares
of the Company under the ATM program at an average price of $0.24
per common share for gross proceeds of $129,000, or net proceeds of
$125,000 after deducting the commission of $4,000 paid to Cantor in
respect of these ATM sales.
SELECTED FINANCIAL INFORMATION
|
|
For the three months ended March
31,
|
||
|
Financial Results
(in $000s Except for per Share
Amounts):
|
2020
|
2019
|
2018
|
|
Mineral Property
Expenditures(1)
|
$3,255
|
$1,001
|
$3,044
|
|
Net
Loss
|
(1,462)
|
(1,727)
|
(3,752)
|
|
Net Loss Excluding
Certain Non-cash items(2)(3)
|
(990)
|
(1,153)
|
(1,224)
|
|
Basic and Diluted
Net Loss Per Share
(in
Dollars)(4)
|
$(0.00)
|
$(0.00)
|
$(0.01)
|
|
|
March
31,
|
December
31,
|
December
31,
|
|
Financial
Position (in $000s):
|
2020
|
2019
|
2018
|
|
Cash and Cash
Equivalents
|
$10,497
|
$5,902
|
$5,115
|
|
Working Capital(2)
|
9,946
|
5,780
|
7,536
|
|
Mineral
Properties
|
256,532
|
252,815
|
244,129
|
|
|
|
|
|
|
Total
Assets
|
276,776
|
268,020
|
257,532
|
|
Total Non-current
Liabilities
|
$3,306
|
$3,139
|
$-
|
(1)
This represents
mineral property expenditures per consolidated statements of cash
flows.
(2)
This is a non-IFRS
measurement with no standardized meaning under IFRS and may not be
comparable to similar financial measures presented by other
issuers. For further information and a detailed reconciliation,
please see the section in this MD&A titled “Non-IFRS
Measures”.
(3)
“The certain
non-cash items excluded” refers to the “Share-based
Payments”, “Write-down of Mineral Properties” and
“Deferred income tax expense (recovery)”.
(4)
The basic and
diluted loss per share calculations result in the same amount due
to the anti-dilutive effect of outstanding stock options and
warrants.
4
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
CANADIAN MINERAL PROPERTY PORTFOLIO LOCATIONS
The
Company classifies its mineral properties as Tier 1, Tier 2, and
Tier 3:
●
Tier 1 projects are core, material
assets which include the Company’s largest and most advanced
mineral resource-stage projects.
●
Tier 2 projects are resource-stage
assets which host mineral resources.
●
Tier 3 projects are grassroots
exploration projects that host mineralization but have not received
sufficient drilling to delineate mineral resources.
|
Project
|
Tonnes
|
Gold
Grade (g/t)
|
Silver
Grade (g/t)
|
Contained Gold Ounces (oz)
|
Contained Silver Ounces (oz)
|
|
Measured
Resources
|
|||||
|
Cameron Gold Project(2)
|
3,360,000
|
2.75
|
-
|
297,000
|
-
|
|
Duparquet Gold Project(3)
|
18,470
|
1.52
|
-
|
901
|
-
|
|
Indicated
Resources
|
|||||
|
Springpole Gold Project(4)
|
139,100,000
|
1.04
|
5.40
|
4,670,000
|
24,190,000
|
|
Goldlund Gold Project(8)
|
12,860,000
|
1.96
|
-
|
809,200
|
-
|
|
Hope Brook Gold
Project
|
5,500,000
|
4.77
|
-
|
844,000
|
-
|
|
Cameron Gold Project(5)
|
2,170,000
|
2.40
|
-
|
167,000
|
-
|
|
Duparquet Gold Project(3)
|
7,122,070
|
1.73
|
-
|
396,134
|
-
|
|
Duquesne Gold
Project
|
1,859,200
|
3.33
|
-
|
199,161
|
-
|
|
Inferred
Resources
|
|||||
|
Springpole Gold Project(4)
|
11,400,000
|
0.63
|
3.10
|
230,000
|
1,120,000
|
|
Goldlund Gold Project(8)
|
18,362,000
|
1.49
|
-
|
876,954
|
-
|
|
Hope Brook Gold
Project
|
836,000
|
4.11
|
-
|
110,000
|
-
|
|
Cameron Gold Project(6)
|
6,535,000
|
2.54
|
-
|
533,000
|
-
|
|
Pickle Crow Gold
Project(7)
|
9,452,000
|
4.10
|
-
|
1,230,500
|
-
|
|
Duparquet Gold Project(3)
|
4,066,284
|
1.85
|
-
|
242,312
|
-
|
|
Duquesne Gold
Project
|
1,563,100
|
5.58
|
-
|
280,643
|
-
|
|
Pitt Gold
Project
|
1,076,000
|
7.42
|
-
|
257,000
|
-
|
|
Total Measured
Resources
|
3,378,470
|
2.74
|
-
|
297,901
|
-
|
|
Total Indicated
Resources
|
168,611,270
|
1.30
|
5.40
|
7,085,495
|
24,190,000
|
|
Total Measured
and Indicated Resources
|
171,989,740
|
1.33
|
5.40
|
7,383,396
|
24,190,000
|
|
Total Inferred
Resources
|
53,290,384
|
2.21
|
3.10
|
3,760,409
|
1,120,000
|
(1)
The mineral
resources set out in this table are based on the technical report
for the applicable property, the title and date of which are set
out under the applicable property description within the section
“Mineral Property Portfolio Review” in this MD&A or
in the Company’s Annual Information Form for the year ended
December 31, 2019, which is available under the Company’s
SEDAR profile at www.sedar.com.
(2)
Comprised of
2,670,000 tonnes of pit-constrained (0.55 g/t Au cut-off) measured
resources at 2.66 g/t Au, and 690,000 tonnes of underground (2.00
g/t Au cut-off) measured resources at 3.09 g/t Au.
(3)
The Company owns
100% of the Central Duparquet Property, and a 10% indirect interest
in the Duparquet Gold Project. The measured, indicated and inferred
mineral resources for Duparquet shown in the above table reflect
both of these ownership interests.
(4)
Open pit mineral
resources are reported at a cut-off grade of 0.4 g/t Au. Cut-off
grades are based on a gold price of USD$1,400/oz and a gold
processing recovery of 80% and a silver price of USD$15/oz and a
silver processing recovery of 60%. The estimated LOM strip ratio
for the resource estimate is 2.1. Silver resource shown in separate
column with grade representing silver g/t, and contained ounces
representing silver Ag.
(5)
Comprised of
820,000 tonnes of pit-constrained (0.55 g/t Au cut-off) indicated
resources at 1.74 g/t Au, and 1,350,000 tonnes of underground (2.00
g/t Au cut-off) indicated resources at 2.08 g/t Au.
(6)
Comprised of 35,000
tonnes of pit-constrained (0.55 g/t Au cut-off) inferred resources
at 2.45 g/t Au, and 6,500,000 tonnes of underground (2.00 g/t Au
cut-off) inferred resources at 2.54 g/t Au.
(7)
Comprises 1,887,000
tonnes of pit-constrained (0.50 g/t Au cut-off) inferred resources
at 1.30 g/t Au, and 7,565,000 tonnes of underground inferred
resources that consist of: (i) a bulk tonnage, long-hole stoping
component (2.00 g/t Au cut-off); and (ii) a high-grade cut-and-fill
component (2.60 g/t Au cut-off) over a minimum width of 1
metre.
(8)
Resources are
stated as contained within a conceptual pit shell using a gold
price of USD$1,350/oz, mining costs of USD$2.00 per tonne,
processing plus G&A costs of USD$15.40 per tonne, 93%
recoveries and an average pit slope of 48 degrees.
First
Mining has properties located in Canada, Mexico, and the United
States. The following section discusses the Company’s
priority and other significant projects.
Readers are cautioned that, with respect to any Preliminary
Economic Assessment (“PEA”) referenced in the section
below or anywhere else in this MD&A, a PEA is preliminary in
nature, any inferred mineral resources included therein 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. Actual
results may vary, perhaps materially. The Company is not aware of
any environmental, permitting, legal, title, taxation,
socio-political, marketing or other issue which may materially
affect this estimate of mineral resources. The projections,
forecasts and estimates herein and in any technical reports
referred to herein constitute forward-looking statements and
readers are urged not to place undue reliance on such
forward-looking statements.
Tier 1 Projects
Springpole Gold
Project, Ontario
The
Springpole Gold Project
covers an area of 41,943 hectares in northwestern Ontario,
consisting of 30 patented mining claims, 435 contiguous mining
claims and thirteen mining leases. The project is located
approximately 110 kilometres (“km”) northeast of the Municipality
of Red Lake in northwestern Ontario and is situated within the
Birch-Uchi Greenstone Belt. The large, open pittable resource is
supported by significant infrastructure, including a 72-man onsite
camp, winter road access, a logging road and nearby power lines
within 40 km. Springpole Gold Project
is located within an area that is covered by Treaty Three and
Treaty Nine First Nations Agreements.
With
approximately 4.7 million ounces of gold and 24 million ounces of
silver in the indicated resource category, Springpole Gold Project
is one of the largest undeveloped gold projects in
Ontario1.
______________________________________
1
Source: S&P Market Intelligence database as of November 6,
2019. Ranking among undeveloped primary gold resources per
jurisdiction.
5
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Updated Preliminary Economic Assessment
On
October 16, 2019, the Company announced the results of an updated
independent Preliminary Economic Assessment study for Springpole
Gold
Project (the “2019
Springpole Gold Project
PEA”) that was prepared by SRK Consulting (Canada)
Inc. The 2019 Springpole Gold Project
PEA provides updates from the previous PEA for Springpole completed
in October 2017 (the “2017 Springpole Gold Project
PEA”).
The
2019 Springpole Gold Project
PEA evaluates recovery of gold and silver from a 36,000
tonne-per-day (“tpd”) open pit operation, with a
process plant that includes crushing, grinding and flotation, with
fine grinding of the flotation concentrate and agitated leaching of
both the flotation concentrate and the flotation tails followed by
a carbon-in-pulp recovery process to produce doré bullion.
Updated metallurgical testwork that has demonstrated the potential
for significantly improved gold and silver recoveries was included
along with updated operating and capital cost estimates. The
mineral resource calculations provided in the 2019 Springpole
Gold
Project PEA were not impacted and remain the same as were
stated in the 2017 Springpole Gold Project
PEA. A copy of the 2019
Springpole Gold Project
PEA technical report entitled “Preliminary Economic
Assessment Update for the Springpole Gold Project, Ontario,
Canada”, which has an effective date of September 1, 2019,
was filed by the Company on SEDAR on November 7, 2019. Under the
2019 Springpole Gold Project
PEA, capital costs for the processing facility were estimated to be
USD$519 million, inclusive of a USD$104 million contingency. No
major plant re-build or expansion was considered during the LOM,
with sustaining capital set to maintain the equipment in operating
condition. No allowance for salvage value was made.
Readers are cautioned that the 2019 Springpole Gold Project
PEA is preliminary in nature, and as such 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 2019 Springpole Gold Project
PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
Highlights of the 2019 Springpole Gold Project
PEA:
●
Base case USD$1.23
billion pre-tax net present value discounted at 5%
(“NPV5%”)
(USD$1.75 billion at USD$1,500/oz gold)
●
Base case USD$841
million after-tax NPV5% (USD$1.22
billion at USD$1,500/oz gold)
●
Base case 26%
pre-tax internal rate of return (“IRR”) (33% at USD$1,500/oz gold),
22% after-tax IRR (28% at USD$1,500/oz gold)
●
Mine life of 12
years with a 2.5-year pre-production period
●
Average annual gold
production in years 2 through 9 of 410,000 ounces gold and 2.4
million ounces silver; 3.9 million ounces gold and 22 million
ounces silver recovered over the Life of Mine (“LOM”)
●
Low LOM strip ratio
of 2.1 to 1 with a LOM mill grade of 1.0 grams per tonne
(“g/t”) gold and 5.3 g/t
silver
●
LOM overall metal
recoveries of 88% for gold and 93% for silver
●
LOM direct
operating cash costs estimated at USD$575/oz of gold equivalent
(USD$514/oz of gold on a by-product basis)
●
LOM all-in
sustaining costs (“AISC”) estimated at USD$611/oz of
gold equivalent (USD$552/oz of gold on a by-product
basis)
●
Initial capital
costs estimated at USD$809 million, using an owner-operated mining
scenario
●
LOM sustaining
capital costs estimated at USD$124 million, plus USD$26 million for
closure costs
Note: Base case parameters assume a gold price of USD$1,300/oz and
a silver price of USD$20/oz (the same prices used in the 2017
Springpole Gold Project
PEA), and an exchange rate (C$ to USD$) of 0.75. NPV is calculated
as of the commencement of construction and excludes all
pre-construction costs.
Highlights
of the 2019 Springpole Gold Project
PEA as compared to the 2017 Springpole Gold Project
PEA are as follows:
|
Parameters
|
2019 PEA
|
2017 PEA
|
|
Mine
life
|
12
years
|
12
years
|
|
Initial
capital cost
|
USD$809
million
|
USD$586
million
|
|
Base
case gold price
|
USD$1,300
per oz
|
USD$1,300
per oz
|
|
Base
case silver price
|
USD$20
per oz
|
USD$20
per oz
|
|
Exchange
rate (CAD/USD)
|
0.75
|
0.75
|
|
Gold
processing recovery
|
88%
|
80%
|
|
Silver
processing recovery
|
93%
|
85%
|
|
Average
annual payable production
|
353,900
oz Au and 1,937,000 oz Ag
|
296,500
oz Au and 1,632,000 oz Ag
|
|
Economic Results
|
2019 PEA
|
2017 PEA
|
|
Pre-tax
NPV at 5% discount rate
|
USD$1,233
million
|
USD$1,159
million
|
|
Pre-tax
Internal rate of return
|
25.5%
|
32.3%
|
|
Post-tax
NPV at 5% discount rate
|
USD$841
million
|
USD$792
million
|
|
Post-tax
Internal rate of return
|
21.8%
|
26.2%
|
|
Non-discounted
post-tax payback period
|
3.4
years
|
3.2
years
|
|
“All-in
Sustaining” cash costs
|
USD$611
per oz of Au equivalent
|
USD$655
per oz of Au equivalent
|
Environmental Assessment Process
The ongoing priority at Springpole Gold Project
is to continue to advance the project through the provincial and
federal environmental assessment (“EA”) processes, both of which are currently
underway. The goal is to prepare a synchronized Environmental
Impact Statement (“EIS”) that satisfies both the federal and
provincial requirements.
●
The federal EA process was initiated through the
submission of a Project Description (“PD”) to the Canadian Environmental Assessment
Agency (the “Agency”) in February 2018. The PD was used by the
Agency to determine whether an EA was required for the Springpole
Gold
Project and to prepare guidelines regarding the completion
of an EA. On April 20, 2018, the Agency determined that a federal
EA is required for the Springpole Gold Project, and EIS guidelines
for the federal EA were issued to First Mining on June 19,
2018. The EA process and eventual project approval is
expected to take approximately 24 months, after which permitting
for construction can commence.
●
For the provincial process, First Mining entered
into a Voluntary Agreement with the Ontario Ministry of
Environment, Conservation and Parks (“MECP”) (formerly MOECC) in April 2018 to conduct
an EA for the project. There are two main stages in the provincial
EA process, namely the development of Terms of Reference
(“ToR”) and the development of the EA Report. The
ToR is a work plan which will outline how the EA will be prepared.
The ToR will address the community consultation and engagement
plan, key components of the project, and the range of alternatives
that will be considered by First Mining.
●
First
Mining commenced community consultation and engagement with the
communities of interest in July 2018 and has held consultation
meetings with Indigenous communities and other stakeholders. The
Company is now in its second round of consultation in readiness for
the preparation of the ToR. First Mining continues with community
consultations and engagement and submitted the second draft of the
ToR to MECP on January 21, 2020. First Mining anticipates
completing another round of consultation and receiving final
approval of the ToR by Q2 2020.
●
While
the permitting process is ongoing, the Company has completed a
“data gap assessment” on the environmental baseline
work required at Springpole Gold Project
in order to identify any remaining work requirements. Data
collection programs to further advance the EA processes will
include terrestrial and aquatic environs, hydrology, surface water
quality monitoring, hydrogeology, geotechnical investigation, and
tailings and mine rock geochemical characterization.
6
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
The
final EIS guidelines outline federal information requirements for
the preparation of an EIS and were prepared after taking into
consideration comments received from federal departments, the
Ontario provincial ministry, Indigenous groups and the general
public. To meet the requirements of the EIS, the Company has
already undertaken a broad range of environmental baseline studies
at Springpole Gold Project
to collect biophysical data, which includes fish community and
habitat surveys, species at risk surveys, atmospheric environment
surveys as well as surface, groundwater and hydrology surveys.
Currently, the Company is collecting environmental baseline data
and other information to prepare an EIS for Springpole Gold
Project. The Company chose to continue to stay in the
Canadian Environmental
Assessment Act, 2012
permitting process and not move to the newly enacted Impact Assessment Act
process.
In
parallel with the federal EA process, on April 23, 2018, the
Company announced that it had entered into a Voluntary Agreement
with the MECP to complete certain requirements under the
Ontario Environmental
Assessment Act. This marked the commencement of a provincial
Individual EA for Springpole Gold
Project, and the Company is in the process of preparing the
ToR, which will describe the scope of the EA and how the Company
intends to undertake all aspects of the provincial EA, including
consultation efforts with Indigenous communities and other
stakeholders. The Company submitted a draft ToR in Q1 2020 to MECP,
Indigenous communities, Provincial and Federal government agencies,
and various Municipal Governments. The Company is also working on
various biophysical work plans for the Provincial EA.
The
Company is focused on advancing the permitting and development of
Springpole Gold
Project, and its activities in this regard can be summarized
as follows:
Indigenous Communities Consultation Process
On
February 13, 2018, the Company announced that it had signed a
Negotiation Protocol Agreement with the Lac Seul First Nation, the
Slate Falls First Nation and the Cat Lake First Nation in Ontario.
There has been continued community engagement on the Springpole
Gold
Project ToR and the second round of engagement with the
local communities for the federal EA process commenced in 2019.
This consultation includes the Company’s plans to study and
mitigate any potential impacts from the development of Springpole
Gold
Project. The Company continues to undertake community
consultation and engagement with the Indigenous communities,
government and public for the federal and provincial EA
processes.
Project Enhancement Opportunities
The
2019 Springpole Gold Project
PEA identified several opportunities to enhance the project
economics which the Company plans to investigate as it continues to
advance the Springpole Gold
Project. These opportunities include:
●
Mine Plan
Optimization. Refined pit optimization
parameters could result in better optimized open pit limits which
could reduce the overall strip ratio which is currently
2.1:1.
●
Further Metallurgical
Testing. Continued efforts to investigate opportunities to
improve the gold and silver recoveries through further
metallurgical testing and refining milling processes.
●
Geotechnical Studies. A
better hydrogeological and geotechnical understanding may increase
pit slope angles, potentially reducing costs associated with mining
waste material.
●
Resource Expansion.
There are other geophysical targets around the current resource
area where additional drilling has the potential to add resources,
which has the potential to extend the life of the project beyond 12
years of production (which is the current LOM scoped in the 2019
Springpole Gold Project
PEA).
Activities
involved in advancing the project to pre-feasibility include
additional metallurgical testwork, advanced hydrogeological and
geotechnical characterization, permitting and continued baseline
environmental studies. A number of these studies are ongoing as
part of the data collection in support of the completion of an EIS
for the project.
Goldlund Gold
Project, Ontario
The
Goldlund Gold Project
in northwestern Ontario consists of 1,349 mining claims (totaling
27,255 hectares), 27 patented claims (totaling 433 hectares), 1
mining lease (48.56 hectares), and 1 License of Occupation (74.84
hectares). Rocks at the property consist of a volcanic sequence
about 1.5 km wide. This north-easterly striking volcanic sequence
is intruded by several granodiorite sills. These sills are the
primary host rock of the gold mineralization in the current
resource area. These strata-parallel intrusions are known to extend
for over 50 km along the strike of the property. A number of
historic gold occurrences are present on the property. The majority
of identified mineralization is hosted within the Central and
Southern Volcanic Belts and historic production demonstrates the
presence of small zones of higher-grade mineralization. A technical
report titled “Technical Report and Resource Estimation
Update, Goldlund Gold Project, Sioux Lookout, Ontario”, which
has an effective date of March 15, 2019, was prepared by WSP and
was filed by the Company on SEDAR on April 1, 2019, and is
available under the Company’s SEDAR profile at www.sedar.com
and on the Company’s website at www.firstmininggold.com.
Mining
at Goldlund Gold Project
in the 1980s produced approximately 90,700 tonnes of ore
grading 4.23 g/t Au from underground and 39,000 tonnes of ore
grading 4.80 g/t from a small open pit. The project has year-round
road access from Ontario Highway 72, which is 2 km to the south,
and regional power lines are located 15 km to the
north.
Updated Mineral Resource Estimate
On
March 27, 2019, the Company announced the results of an updated
mineral resource estimate for Goldlund Gold
Project, which has an effective date of March 15, 2019 and
was prepared by WSP Canada Inc. (“WSP”) of Sudbury, Ontario (the
“2019 Goldlund Gold Project
Resource Estimate”). A summary of the overall changes
detailed in the 2019 Goldlund Gold Project
Resource Estimate is as follows:
●
In total, indicated
resource Au ounces (“oz”) increased by 248,700 oz. This
increase in oz corresponds to an increase in tonnage of 3,535,900
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.
●
In total, 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 2019 Goldlund Gold Project
Resource Estimate 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 3,535,900 tonnes at an average grade of 1.96 g/t
Au, it also resulted in a
large reduction in the number of tonnes and ounces in the inferred
resource category. First Mining’s 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 Gold
Project, which remains open along strike to the northeast,
to the southwest, and at depth. Further details can be found in the
technical report for the 2019 Goldlund Gold Project
Resource Estimate entitled “Technical Report and Resource
Estimation Update, Goldlund Gold Project, Sioux Lookout,
Ontario”, which was prepared by WSP and filed by the Company
on SEDAR on April 1, 2019.
“Main Zone” 2019/2020 Drill Program
After
the completion of the 2019 drilling at Miller, the exploration
program moved to the Goldlund Gold Project
Main Zone area, and a new drill program is currently underway, due
for completion in 2020.
The
initial phase of this drill program, completed in 2019 and Q1 2020
(prior to the field program shutdown at Goldlund due to COVID-19,
which coincided with the scheduled mid-March break), consisted of
39 holes (approximately 7,300 m), with the overall program’s
focus being to define and extend mineralization in the eastern and
western portions of Zones 1, 2, 3 and 4. Fourteen of these holes
(approximately 2,500 m) were drilled in 2019, with a further 25
holes (approximately 4,800 m) drilled in Q1 2020, and these holes
primarily targeted the Zone 2 and 3 areas. The Company is currently
planning an extension of this work program (the scale of the second
phase is yet to be determined, and will be based on pending
results). Drilling at the Main Zone is focused on delineating
mineralization between the currently-defined zones of the Goldlund
Gold
Project deposit.
Highlights
from the first 39 holes drilled at the Main Zone
include:
|
Hole
|
From (m)
|
To (m)
|
Length (m)
|
Au g/t
|
|
Hole
|
From (m)
|
To (m)
|
Length (m)
|
Au g/t
|
|||
|
Hole GL-19-008
|
83.0
|
104.0
|
21.0
|
5.36
|
|
Hole
GL-20-006
|
153.0
|
211.0
|
58.0
|
0.83
|
|||
|
Including
|
96.0
|
97.0
|
1.0
|
89.60
|
|
including
|
153.0
|
166.0
|
13.0
|
2.10
|
|||
|
Hole GL-19-010
|
69.0
|
84.0
|
15.0
|
1.68
|
|
and
including
|
161.0
|
162.0
|
1.0
|
12.07
|
|||
|
Including
|
69.0
|
70.0
|
1.0
|
8.02
|
|
and
including
|
165.0
|
166.0
|
1.0
|
5.10
|
|||
|
Hole GL-19-013
|
63.0
|
77.0
|
14.0
|
1.15
|
|
and
including
|
202.0
|
211.0
|
9.0
|
1.67
|
|||
|
Including
|
75.0
|
76.0
|
1.0
|
9.42
|
|
and
including
|
208.0
|
209.0
|
1.0
|
9.00
|
|||
|
Hole GL-19-021
|
139.0
|
140.0
|
1.0
|
9.19
|
|
Hole
GL-20-010
|
119.0
|
122.0
|
3.0
|
3.06
|
|||
|
and
|
188.0
|
191.0
|
3.0
|
3.20
|
|
including
|
120.0
|
121.0
|
1.0
|
7.86
|
|||
|
including
|
188.0
|
189.0
|
1.0
|
6.54
|
|
and
|
148.0
|
192.0
|
44.0
|
1.20
|
|||
|
and
|
286.0
|
288.6
|
2.6
|
1.97
|
|
including
|
152.0
|
153.0
|
1.0
|
6.70
|
|||
|
including
|
286.0
|
286.7
|
0.7
|
6.64
|
|
and
including
|
166.0
|
183.0
|
17.0
|
1.94
|
|||
|
Hole GL-19-034
|
25.9
|
27.2
|
1.2
|
8.63
|
|
and
including
|
182.0
|
183.0
|
1.0
|
15.90
|
|||
|
and
|
30.7
|
31.2
|
0.4
|
1.81
|
|
and
|
199.0
|
210.0
|
11.0
|
0.26
|
|||
|
and
|
53.0
|
55.0
|
2.0
|
1.46
|
|
|
|
|
|
|
|
||
|
and
|
60.0
|
62.0
|
2.0
|
3.40
|
|
|
|
|
|
|
|
||
7
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Results
from the next set of nineteen holes of the Goldlund Main Zone drill
program were reported in the news release dated May 6, 2020
(following on from the Company’s March 2, 2020 news release
which announced the results of the first eleven holes). The first
eleven holes primarily targeted the eastern parts of Zones 2 and 3
as well as the area between these two zones, following up on
historical drill intercepts. The majority of the remaining holes
reported in the May 6, 2020 news release targeted the southwestern
extension of Zone 3 and the area between Zones 2 and 3. Hole
GL-19-008 intersected 21 m of 5.36 g/t gold within highly
mineralized granodiorite and porphyry units, as well as within
andesite, and was successful in confirming the high grades within
Zone 2 that were encountered in historical drilling. Hole GL-19-010
was drilled to intersect the area between the known mineralized
areas at Zones 2 and 3, and encountered significant gold
mineralization hosted within andesite (15.0 m at 1.68 g/t gold),
before intersecting the mineralized granodiorite and porphyries of
Zone 2 towards the base of the hole. The highest-grade gold
mineralization was intersected in holes GL-20-010 (44 m at 1.20 g/t
Au) and GL-20-006 (13 m at 2.10 g/t Au) which were drilled
vertically through Zone 3. Hole GL-20-004 intersected both Zones 2
and 3 in their southwest extension. Hole GL-20-016 targeted the
southwest extension of Zone 4. Most of the mineralization
intercepted by these holes is associated with altered porphyry
units. Minor mineralization is also associated with gabbro and
basalt/andesite, and mainly occurs in close proximity to the
contacts with porphyry. The remaining drill holes also show
examples of gold mineralization occurring throughout different
lithological units, which include andesites, gabbros and felsic
porphyries in addition to the granodiorite, which is the principal
host of the gold mineralization in Zones 1 and 7.
Drill
hole locations of the highlighted holes at the Main Zone
are:
|
Hole ID
|
Azimuth ⁰
|
Dip ⁰
|
Final Depth (m)
|
UTM East
|
UTM North
|
|
GL-19-008
|
335
|
-85
|
125
|
547722
|
5528154
|
|
GL-19-010
|
335
|
-77
|
176
|
547746
|
5528102
|
|
GL-19-013
|
335
|
-62
|
101
|
547774
|
5528162
|
|
GL-19-021
|
0
|
-90
|
386
|
546100
|
5527506
|
|
GL-19-034
|
335
|
-45
|
74
|
547774
|
5528162
|
|
GL-20-006
|
0
|
-90
|
221
|
546200
|
5527525
|
|
GL-20-010
|
0
|
-90
|
218
|
546295
|
5527527
|
Notes:
●
Assaying for the Goldlund Gold Project
2019-2020 drill program is being completed by SGS Canada Inc.
(“SGS”) at their laboratories in Red Lake, Ontario and
Vancouver, BC. Prepared 50 g samples are analyzed for gold by lead
fusion fire assay with an atomic absorption spectrometry finish.
Multi-element analysis is also being completed on selected holes by
two-acid aqua regia digestion with ICP-MS and AES
finish.
●
Reported widths are drilled core lengths; true widths are unknown
at this time. Assay values are uncut.
●
Intervals for holes GL-19-008, GL-20-006 and GL-20-010 include results of
selected assay repeats. These repeats were done by screened
metallic fire assay on 1 kg size samples at the SGS laboratory in
Vancouver, BC.
The
main Goldlund Gold Project
deposit that hosts the current mineral resource estimate remains
open along strike to the northeast, to the southwest, and at
depth.
2019 Regional drill program
In
2019, the Company completed a 32-hole drill program at its Miller
prospect on the Goldlund Gold
Project, for a total of 6,130 m. Miller is located approximately 10
km northeast and along strike of the current resource area at
Goldlund Gold
Project. Work consisted of infill drilling of the area
tested in 2018, as well as step-out drilling to the northeast and
southwest along strike. The 2019 drilling tested a total strike
length of up to 900 m, with drill spacing largely between 25 m and
50 m, and followed on the strong results achieved in 2018, which
included 108 m of 2.43 g/t Au, and frequent occurrences of visible
gold within the drill core.
Since
drilling first commenced on the Miller prospect in 2018, a total of
40 holes (7,386 m) have been drilled, successfully outlining
mineralization over a strike length of approximately 450 m. Low
grade gold mineralization encountered in gabbro in hole MI-19-037
(0.17 g/t Au over 15.0 m), which was drilled to test a possible
northeast extension of Miller, demonstrates that this northeast
area may still be a viable target for follow-up soil and rock
sampling.
The
drilling at Miller revealed that mineralization in this area
differs from that in the Goldlund Gold Project
Main Zone. At Miller, mineralization occurs in a highly silicified
granodiorite dyke of varying width, which has been intruded into a
gabbro unit that is also highly silicified and sheared. Both the
gabbro and granodiorite are hosts to mineralization at Miller, in
contrast to the Goldlund Gold Project
Main Zones 1 and 7, for example, where only the granodiorite is
mineralized and the gabbro is unmineralized. This recently
identified characteristic represents the potential for significant
regional exploration upside, since gabbro-hosted mineralization
provides a new exploration horizon and is abundant throughout the
property. Future exploration will target these prospective areas. A
further review of regional targets over the broader property is
ongoing, including identifying new geophysical targets for
potential follow-up work, which may include geological mapping,
rock sampling, and/or drilling.
Drill
highlights from the holes drilled at Miller in 2019
include:
|
Hole
|
From (m)
|
To (m)
|
Length (m)
|
Au g/t
|
|
Hole
|
From (m)
|
To (m)
|
Length (m)
|
Au g/t
|
|
Hole MI-19-013
|
46.0
|
228.0
|
182.0
|
1.09
|
|
Hole MI-19-025
|
53.0
|
64.0
|
11.0
|
0.61
|
|
Including
|
47.0
|
48.0
|
1.0
|
35.19
|
|
Including
|
63.0
|
64.0
|
1.0
|
4.54
|
|
And Including
|
88.0
|
109.0
|
21.0
|
2.73
|
|
and
|
84.0
|
85.0
|
1.0
|
3.86
|
|
Hole MI-19-014
|
3.0
|
210.0
|
207.0
|
1.57
|
|
and
|
101.0
|
106.0
|
5.0
|
0.81
|
|
Including
|
42.0
|
91.0
|
49.0
|
2.34
|
|
Including
|
104.0
|
105.0
|
1.0
|
2.04
|
|
And Including
|
60.0
|
61.0
|
1.0
|
26.43
|
|
Hole MI-19-027
|
100.0
|
107.0
|
7.0
|
1.50
|
|
And Including
|
142.0
|
183.0
|
41.0
|
4.07
|
|
Including
|
106.0
|
107.0
|
1.0
|
4.64
|
|
And Including
|
168.0
|
169.0
|
1.0
|
55.28
|
|
Hole MI-19-028
|
59.0
|
77.0
|
18.0
|
0.81
|
|
Hole MI-19-015
|
1.0
|
168.0
|
167.0
|
1.01
|
|
Including
|
69.0
|
77.0
|
8.0
|
1.48
|
|
Including
|
108.0
|
141.0
|
33.0
|
1.84
|
|
And Including
|
70.0
|
71.0
|
1.0
|
7.51
|
|
Hole MI-19-017
|
32.0
|
201.0
|
169.0
|
0.88
|
|
Hole MI-19-030
|
36.0
|
40.0
|
4.0
|
4.03
|
|
Including
|
56.0
|
93.0
|
37.0
|
3.42
|
|
Including
|
38.0
|
39.0
|
1.0
|
15.33
|
|
And Including
|
83.0
|
84.0
|
1.0
|
65.97
|
|
and
|
48.0
|
83.0
|
35.0
|
0.25
|
|
Hole MI-19-018
|
18.0
|
141.0
|
123.0
|
0.86
|
|
Including
|
61.0
|
63.0
|
2.0
|
1.62
|
|
Including
|
100.0
|
134.0
|
34.0
|
2.08
|
|
Hole MI-19-032
|
39.0
|
143.0
|
104.0
|
0.25
|
|
And Including
|
113.0
|
114.0
|
1.0
|
12.91
|
|
Including
|
79.0
|
80.0
|
1.0
|
3.56
|
|
And Including
|
129.0
|
130.0
|
1.0
|
23.96
|
|
And Including
|
126.0
|
127.0
|
1.0
|
5.50
|
|
Hole MI-19-019
|
65.0
|
101.0
|
36.0
|
0.41
|
|
Hole MI-19-034
|
129.0
|
141.0
|
12.0
|
1.62
|
|
Hole MI-19-020
|
133.0
|
139.0
|
6.0
|
1.77
|
|
Including
|
133.0
|
134.0
|
1.0
|
18.07
|
|
Including
|
134.0
|
135.0
|
1.0
|
8.15
|
|
Hole MI-19-040
|
60.0
|
119.0
|
59.0
|
1.35
|
|
Hole MI-19-021
|
111.0
|
118.0
|
7.0
|
0.99
|
|
Including
|
60.0
|
93.0
|
33.0
|
2.23
|
|
Including
|
112.0
|
113.0
|
1.0
|
4.78
|
|
And Including
|
80.88
|
81.88
|
1.0
|
6.83
|
|
Hole MI-19-022
|
115.0
|
122.0
|
7.0
|
0.82
|
|
And Including
|
86.88
|
87.88
|
1.0
|
44.07
|
|
Including
|
121.0
|
122.0
|
1.0
|
2.58
|
|
|
|
|
|
|
|
Hole MI-19-024
|
133.0
|
140.0
|
7.0
|
1.72
|
|
|
|
|
|
|
|
Including
|
133.0
|
134.0
|
1.0
|
5.49
|
|
|
|
|
|
|
|
And Including
|
139.0
|
140.0
|
1.0
|
6.50
|
|
|
|
|
|
|
None of
the drill results from Miller were included in the 2019 updated
mineral resource estimate for Goldlund Gold
Project.
On
February 11, 2020, the Company announced final assay results from
the drilling completed to date at the Miller prospect. The 2019
drill program increased the strike length of mineralization at
Miller by approximately 450 m. For further details regarding the
assay results, see the Company’s new releases dated September
25, 2019, November 19, 2019 and February 11, 2020, filed on SEDAR
under the Company's SEDAR profile at www.sedar.com.
8
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Drill
hole locations of the highlighted holes drilled at Miller
are:
|
Hole ID
|
Azimuth ⁰
|
Dip ⁰
|
Final Depth (m)
|
UTM East
|
UTM North
|
|
MI-19-013
|
140
|
-85
|
251
|
554585
|
5533600
|
|
MI-19-014
|
140
|
-85
|
245
|
554565
|
5533585
|
|
MI-19-015
|
140
|
-85
|
224
|
554547
|
5533568
|
|
MI-19-017
|
140
|
-85
|
242
|
554500
|
5533516
|
|
MI-19-018
|
120
|
-85
|
212
|
554471
|
5533500
|
|
MI-19-019
|
320
|
-55
|
176
|
554472
|
5533425
|
|
MI-19-020
|
290
|
-55
|
215
|
554440
|
5533387
|
|
MI-19-021
|
320
|
-60
|
173
|
554396
|
5533364
|
|
MI-19-022
|
320
|
-60
|
167
|
554356
|
5533327
|
|
MI-19-024
|
320
|
-60
|
146
|
554277
|
5533273
|
|
MI-19-025
|
140
|
-65
|
176
|
554220
|
5533373
|
|
MI-19-027
|
140
|
-60
|
128
|
554297
|
5533437
|
|
MI-19-028
|
140
|
-45
|
125
|
554297
|
5533437
|
|
MI-19-030
|
140
|
-45
|
113
|
554335
|
5533480
|
|
MI-19-032
|
0
|
-90
|
212
|
554367
|
5533434
|
|
MI-19-034
|
0
|
-90
|
179
|
554251
|
5533338
|
|
MI-19-040
|
287
|
-45
|
212
|
554616
|
5533525
|
Notes:
●
Assaying for the Miller drill program was completed by SGS Canada
Inc. (“SGS”) at their laboratory in Lakefield, Ontario.
Prepared 50 g samples were analyzed for gold by lead fusion fire
assay with an atomic absorption spectrometry finish. Multi-element
analysis was also completed on selected holes by two-acid aqua
regia digestion with ICP-MS and AES finish.
●
Reported widths are drilled core lengths; true widths are unknown
at this time. Assay values are uncut.
●
Intervals for holes MI-19-013, MI-19-014, MI-19-015, MI-19-017
through MI-19-022, MI-19-025, MI-19-032, MI-19-034 and MI-19-040
include results of selected assay repeats. These repeats were done
by screened metallic fire assay on 1 kg size samples at the SGS
laboratory in Lakefield.
Hope Brook Gold
Project, Newfoundland
The
Hope Brook Gold Project
covers an area of 26,650 hectares in Newfoundland, including six
mineral licenses, with a deposit hosted by pyritic silicified zones
occurring within a deformed, strike-extensive advanced argillic
alteration zone. A technical report titled “2015 Mineral
Resource Estimate Technical Report for the Hope Brook Gold Project,
Newfoundland and Labrador, Canada”, prepared by Mercator
Geological Services Limited, was filed by the Company on SEDAR on
November 27, 2015, and is available under the Company’s SEDAR
profile at www.sedar.com
and on the Company’s website at www.firstmininggold.com.
The
resource covers 1.5 km of an 8 km mineralized structure.
Substantial infrastructure at the property includes a ramp to 350 m
below surface with vent raise, line-power to site, commercial barge
and landing craft ramp, air strip, and a strong local labour force.
Hope Brook Gold Project
was a former operating gold mine that produced 752,163 oz Au from
1987 to 1997.
The Company continues to collect environmental baseline data for
permitting and the understanding of site environmental
conditions.
In Q3
2019, the Company commenced a waste rock characterization and
economic study of marketable aggregates at the Hope Brook
Gold
Project site. In addition, low cost geological mapping and
soil sampling is planned in 2020. Surface and groundwater quality
programs will continue for environmental data collection
purposes.
Cameron Gold
Project, Ontario
The
Cameron Gold Project
covers an area of 49,574 hectares in northern Ontario and comprises
24 patented claims, 1,790 mining claims, 4 mining leases, and 7
Licenses of Occupation. The Cameron Gold Project
deposit is a greenstone‐hosted gold deposit and the
mineralization is mainly hosted in mafic volcanic rocks within a
northwest trending shear zone (Cameron Lake Shear Zone) which dips
steeply to the northeast. A technical report titled
“Technical Report on the Cameron Gold Deposit, Ontario,
Canada”, prepared by Optiro Pty Limited, was filed by the
Company on SEDAR on March 22, 2017, and is available under the
Company’s SEDAR profile at www.sedar.com
and on the Company’s website at www.firstmininggold.com.
There is year-round road access to the property from the nearby
highway and power lines within 20 km.
During
2019, the Company conducted minimal environmental studies,
including surface and groundwater quality monitoring programs to
support a potential environmental assessment or permitting
application in the future. In addition, the Company undertook an
ore sorting test program on selected core samples (results of which
are expected in Q2 2020), along with low cost maintenance of site
infrastructure.
Pickle Crow Gold
Project, Ontario
The
Pickle Crow Gold Project
covers an area of 19,033 hectares and comprises 104 patented claims
and 932 mining claims. The area is located in northwestern Ontario
and is covered by the Treaty Nine First Nations Agreement. A
technical report titled “An Updated Mineral Resource Estimate
for the Pickle Crow Property, Patricia Mining Division,
Northwestern Ontario, Canada”, prepared by Micon
International and dated June 15, 2018, was filed by the Company on
SEDAR on August 23, 2018, and is available under the
Company’s SEDAR profile at www.sedar.com
and on the Company’s website at www.firstmininggold.com.
Extensive infrastructure in place or proximal to the Pickle Crow
Gold
Project includes a 200 tonne per day gravity mill on site,
generators and fuel storage and gravel road access to the property,
and the property is within 10 km of a regional airport at Pickle
Lake. Pickle Crow Gold Project was a former high-grade operating
mine until the late 1960s. The Pickle Crow Gold Project
is owned by PC Gold Inc. ("PC
Gold"), a wholly-owned subsidiary of the
Company.
On January 27, 2020, the Company entered into a binding term sheet
(the “Term Sheet”) with Auteco Minerals Ltd
(“Auteco”) (ASX: AUT) whereby Auteco may earn up to
an 80% interest in the Pickle Crow Gold Project
(the “Earn-In”). On March 12, 2020, the Company and
Auteco executed a definitive Earn-In Agreement (the
“Earn-In
Agreement”), which
replaced the Term Sheet. Pursuant to the Earn-In Agreement, Auteco
can earn a full 80% equity interest in PC Gold by (a) incurring a
total of $10,000,000 in exploration expenditures over five years,
(b) making cash payments to First Mining totaling $4,100,000 (of
which the Company has received $100,000 to date), and (c) issuing
125 million shares of Auteco to First Mining. First Mining will
also retain a 2% Net Smelter Returns (“NSR”) Royalty, 1% of which can be purchased by
Auteco for USD $2,500,000. During the term of the Earn-In
Agreement, Auteco will be responsible for all program costs.
Subsequent to March 31, 2020, the Company received the scheduled
consideration of 25 million shares of Auteco.
On February 28, 2019, the Company received a letter from the Acting
Director, Mine Rehabilitation, at the Ontario Ministry of Energy,
Northern Development and Mines (“MENDM”), which required the Company to submit a
schedule for the development of a closure plan amendment for the
Pickle Crow Gold
Project. The Company complied with the requirement and
submitted the schedule for the development of a closure plan
amendment on March 29, 2019. The submission of a closure plan
amendment complete with cost estimates was initially due on
November 1, 2019. The Company has been granted an extension and is
required to submit the closure plan amendment and cost estimates to
the MENDM by August 31, 2020; the Company has engaged consultants
to assist with developing this plan. Pursuant to the Earn-In
Agreement, Auteco is required to reimburse the Company for a pro
rata amount of its expenses with respect to any related bond
requirements for the mine closure plan once it has completed the
first stage of the Earn-In.
9
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Tier 2 and 3 Projects
The
following table sets out the Company’s Tier 2 and 3 projects
by region. These projects are 100%-owned by the Company with the
exception of Duparquet Gold
Project. The Company has a 10% indirect ownership interest
in the Duparquet Gold Project and a 100% interest in the Central
Duparquet Property.
|
Canada
|
USA
|
|
Duquesne,
Québec
|
Turquoise
Canyon, Nevada(1)
|
|
Pitt,
Québec
|
|
|
Duparquet,
Québec
|
|
|
Joutel,
Québec
|
|
|
Morris,
Québec
|
|
|
Horseshoe
Island, Ontario
|
|
|
Lac
Virot, Newfoundland
|
|
(1)
Property under option to a third party. Please see further
discussion below.
For further information on the Company’s Tier 2 and 3
projects, see the Company’s Annual Information Form for the
year ended December 31, 2019 which is available under the
Company’s SEDAR profile at www.sedar.com,
as an exhibit to the Company’s Form 40-F on EDGAR at
www.sec.gov,
and on the Company’s website at www.firstmininggold.com.
NSR on the Duquesne Gold Project, Québec
In
connection with an agreement entered into by Clifton Star Resources
Inc. ("Clifton Star") on
July 31, 2012, prior to its acquisition by First Mining, Clifton
Star purchased 0.5% of a 3% NSR royalty on the Duquesne
Gold
Project for $1,000,000 in cash. Per the terms of this
agreement, beginning June 2019, the remaining 2.5% NSR must be
purchased over the ensuing five years in tranches of 0.5% for
$1,000,000 for each tranche. Management is currently in discussions
with the royalty owners regarding potential amendments to the
timing and amount of any future payments related to this royalty
repurchase.
Recent Developments
On April 28, 2020, the Company entered into a share purchase
agreement with a third-party private company (the
“Purchaser”) pursuant to which the Purchaser acquired
all of the issued and outstanding shares of 0924682 B.C. Ltd. and
1089568 B.C. Ltd., two wholly-owned subsidiaries of the Company
that hold all of the shares of two Mexican companies that own all
of the Company’s Mexican mineral properties.
As a result, the Purchaser has
acquired all 11 Mexican mineral properties that were previously
held by the Company, for nominal cash consideration, and granted
the Company a 2% NSR on 10 of the 11 mineral
properties. The Purchaser has
the right to buy-back 1% of each of these 10 NSRs by paying US$1
million to the Company for each NSR in respect of which the
buy-back right is exercised. As of the date of this transaction
with the Purchaser, First Mining no longer holds any mineral
properties in Mexico, and this will allow the Company to focus its
capital and resources on its Canadian mineral
properties.
|
Financial
Results (in $000s Except for per Share
Amounts):
|
|
|
|
|||||
|
2020-Q1
|
2019-Q4
|
2019-Q3
|
2019-Q2
|
2019-Q1
|
2018-Q4
|
2018-Q3
|
2018-Q2
|
|
|
Net
Loss
|
$(1,462)
|
$(2,274)
|
$(1,643)
|
$(1,315)
|
$(1,727)
|
$(5,658)
|
$(937)
|
$(1,298)
|
|
Write-down of
Mineral Properties
|
-
|
-
|
341
|
-
|
-
|
4,181
|
-
|
-
|
|
Net Loss Excluding
Certain Non-cash Items(1)(2)
|
(990)
|
(1,402)
|
(970)
|
(840)
|
(1,153)
|
(1,085)
|
(910)
|
(1,213)
|
|
Basic and Diluted
Net Loss Per Share (in dollars)(3)
|
(0.00)
|
(0.00)
|
(0.01)
|
(0.00)
|
(0.00)
|
(0.01)
|
(0.00)
|
(0.00)
|
|
Financial Position (in
$000s):
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
10,497
|
5,902
|
5,687
|
8,396
|
3,059
|
5,115
|
6,950
|
9,585
|
|
Working
Capital(1)
|
9,946
|
5,780
|
8,360
|
10,627
|
5,491
|
7,536
|
9,688
|
12,463
|
|
Mineral
Properties
|
256,532
|
252,815
|
248,509
|
246,411
|
245,169
|
244,129
|
246,652
|
245,199
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
276,776
|
268,020
|
263,470
|
263,381
|
256,463
|
257,532
|
262,146
|
263,586
|
|
Total Non-Current
Liabilities
|
$3,306
|
$3,139
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
(1)
These are
non-IFRS measures with no standardized meaning under IFRS. For
further information and a detailed reconciliation, please refer to
the section in this MD&A titled “Non-IFRS
Measures”.
(2)
“The
certain non-cash items excluded” refers to the
“Share-based Payments”, “Write-down of Mineral
Properties”, and “Deferred income tax expense
(recovery)”.
(3)
The basic and
diluted loss per share calculations result in the same amount due
to the anti-dilutive effect of outstanding stock options and
warrants in all periods.
Quarterly results are discussed relative to the preceding
quarter’s results in the following paragraphs
The
most significant variance in net loss quarter to quarter is due to
non-cash share-based payments expense, which comprises the timing
of stock option grants and associated vesting, the number of
underlying options granted and the associated fair value dollar
amount calculated at the time of the grant, and to a lesser extent
any impairment and deferred income tax expenses. Similarly,
non-cash share-based payments and impairment expenses explain the
largest fluctuation in net loss excluding certain non-cash items.
In 2020-Q1 there was a decrease in marketing expenses compared to
2019-Q4 due to a reduction in marketing campaigns. In 2019-Q4 a
bonus accrual was recorded as at December 31, 2019, resulting in an
increase in salaries when compared to the 2019-Q3 and 2020-Q1. In
2019-Q3 there was an increase in professional fees in connection
with the base shelf prospectus and arrangement of an ATM facility,
and an increase in directors’ fees. In 2019-Q2 there was a
decrease in marketing expenses compared to 2019-Q1 due to fewer
conferences attended and fewer marketing campaigns. In 2019-Q1
there was an increase in marketing expenses compared to 2018-Q4 due
to an increase in conference attendance and marketing campaigns,
which resulted in a higher net loss in 2019-Q1. Furthermore, in
2018-Q4 there was a $4,181,000 non-cash write-down of the
Company’s Mexican mineral properties and a non-recurring
severance payment of $300,000. In 2018-Q3 there was a decrease in
marketing expenses as compared to 2018-Q2, due to a reduction in
marketing activities by the Company.
In
terms of cash and cash equivalents, variances between quarters
depend on the amount, type and timing of work being performed on
the Company’s mineral property portfolio, classified under
investing activities in the statements of cash flows. In 2020-Q1,
the Company completed a non-brokered private placement financing
including the issuance of flow-through common shares, which
provided net cash inflows of $9,154,000, classified under financing
activities in the statements of cash flows. In 2019-Q4, the Company
completed a non-brokered private placement financing consisting of
flow-through common shares, which provided net cash inflows of
$1,988,000, classified under financing activities in the statements
of cash flows. In 2019-Q4 and 2019-Q3, the Company sold some of its
marketable securities, which provided cash inflows of $1,758,000,
classified under investing activities in the statements of cash
flows. In 2019-Q2, the Company completed a non-brokered private
placement financing including the issuance of flow-through common
shares, which provided net cash inflows of $7,270,000, classified
under financing activities in the statements of cash
flows.
The
fluctuation in total assets from one quarter to the next is
primarily a function of decreases in cash used to fund operating
activities, increases in cash from private placements, changes in
the fair value of marketable securities and mineral property
investments, and additions to or write-down of mineral property
balances. It is worth noting that cash used in investing activities
for the purposes of exploration and development work being
performed on the Company’s mineral properties remains within
total assets, given that these amounts are capitalized in
connection with the Company’s accounting
policies.
10
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
MINERAL PROPERTY BALANCES
As at
March 31, 2020 and December 31, 2019, the Company had capitalized
the following acquisition, exploration and evaluation costs to its
mineral properties:
|
(in $000s)
|
||||||
|
|
Balance
December 31, 2019
|
2020 expenditures
|
Option payments received and expenditures recovered
|
Currency translation adjustments
|
Disposal or write-down of mineral properties
|
Balance
March 31, 2020
|
|
Springpole
Gold
Project
|
$76,775
|
$2,468
|
$-
|
$-
|
$-
|
$79,243
|
|
Goldlund
Gold
Project
|
98,894
|
1,007
|
-
|
-
|
-
|
99,901
|
|
Hope
Brook Gold
Project
|
20,071
|
152
|
-
|
-
|
-
|
20,223
|
|
Cameron
Gold
Project
|
27,374
|
55
|
-
|
-
|
-
|
27,429
|
|
Pickle
Crow Gold
Project
|
19,263
|
56
|
(100)
|
-
|
-
|
19,219
|
|
Duquesne
Gold
Project
|
5,133
|
4
|
-
|
-
|
-
|
5,137
|
|
Pitt
Gold
Project
|
2,084
|
-
|
-
|
-
|
-
|
2,084
|
|
Others
|
2,615
|
13
|
-
|
-
|
-
|
2,628
|
|
Canada Total
|
$252,209
|
$3,755
|
$(100)
|
$-
|
$-
|
$255,864
|
|
Mexico
|
154
|
5
|
-
|
15
|
-
|
174
|
|
USA
|
452
|
-
|
-
|
42
|
-
|
494
|
|
Total
|
$252,815
|
$3,760
|
$(100)
|
$57
|
$-
|
$256,532
|
|
(in $000s)
|
||||||
|
|
Balance
December
31, 2018
|
2019
expenditures
|
Option
payments received and expenditures recovered
|
Currency
translation adjustments
|
Disposal
or write-down of mineral properties
|
Balance
December
31, 2019
|
|
Springpole
Gold
Project
|
$73,378
|
$3,397
|
$-
|
$-
|
$-
|
$76,775
|
|
Goldlund
Gold
Project
|
96,604
|
2,290
|
|
-
|
-
|
98,894
|
|
Hope
Brook Gold
Project
|
19,581
|
490
|
|
-
|
-
|
20,071
|
|
Cameron
Gold
Project
|
27,032
|
342
|
|
-
|
-
|
27,374
|
|
Pickle
Crow Gold
Project
|
16,754
|
2,559
|
(50)
|
-
|
-
|
19,263
|
|
Duquesne
Gold
Project
|
5,091
|
42
|
|
-
|
-
|
5,133
|
|
Pitt
Gold
Project
|
2,082
|
2
|
|
-
|
-
|
2,084
|
|
Others
|
2,559
|
56
|
|
-
|
-
|
2,615
|
|
Canada Total
|
$243,081
|
$9,178
|
$(50)
|
$-
|
$-
|
$252,209
|
|
Mexico
|
244
|
99
|
(179)
|
(10)
|
-
|
154
|
|
USA
|
804
|
46
|
(25)
|
(32)
|
(341)
|
452
|
|
Total
|
$244,129
|
$9,323
|
$(254)
|
$(42)
|
$(341)
|
$252,815
|
The
Company continues with its environmental data collection,
permitting and Indigenous consultation processes at its Tier 1
Canadian mineral properties, focusing primarily on Springpole
Gold
Project and Goldlund Gold
Project. At Springpole Gold
Project, the goal in 2020 is to continue to advance
permitting and to substantially complete the PFS. At Goldlund
Gold
Project, the focus in 2020 is to follow up on the successful
2019 drill program by continuing to define the broader regional
potential of the project and upgrade inferred mineral resources to
indicated mineral resources within the current resource area.
Regarding First Mining’s broader gold asset portfolio,
including the Hope Brook Gold Project
and Cameron Gold
Project, the priority is to complete low-spend, incremental
work, including baseline environmental studies, internal scoping
studies and potential reconnaissance mapping and exploration
work.
In
addition to the above mineral property balances, $5,733,000
(December 31, 2019 - $5,398,000) is recorded as mineral property
investments on the statements of financial position, which
represents the Company’s 10% indirect interest in the
Duparquet Gold Project in Québec, Canada. During the three
months ended March 31, 2020, Management determined that there was
an increase in the fair value of mineral property investments and a
fair value gain of $335,000 (three months ended March 31, 2019 -
$nil) was recorded.
The
Company’s $3,760,000 expenditures on mineral properties
during the three months ended March 31, 2020 (three months ended
March 31, 2019 - $1,117,000) are primarily related to the
following:
Springpole Gold
Project
During
the three months ended March 31, 2020, the Company incurred
expenditures of $418,000 in connection with metallurgical and
geotechnical drilling, $351,000 in connection with pre-feasibility
work, and $326,000 in connection with the continuation of
environmental fieldwork. In the prior year period, the Company
incurred expenditures of $124 in connection with the completion of
metallurgical testwork and $30,000 in connection with the
continuation of environmental fieldwork.
Goldlund Gold
Project
During
the three months ended March 31, 2020, the Company incurred
$1,005,000 in connection with the 2020 drill campaign of
approximately 4,800 m. In contrast, in the prior year period the
Company incurred $49,000 in connection with the reporting of an
updated mineral resource estimate for Goldlund Gold
Project, which incorporated management salary
allocations.
Hope Brook Gold
Project
During
the three months ended March 31, 2020, the Company incurred
expenditures of $96,000 for an aggregate study and made its annual
advanced royalty payment of $20,000 on the Hope Brook Gold
Project. In the prior year period, the Company made its
annual advanced royalty payment on the Hope Brook Gold Project
and conducted aquatic environmental baseline studies.
Pickle Crow Gold
Project
During
the three months ended March 31, 2020, the Company incurred $19,000
in mineral land taxes, and received consideration of $100,000 from
Auteco per terms of the Earn-In Agreement.
Other Mineral Properties
Net
expenditures on the Company's other mineral properties were $77,000
in the first quarter 2020, compared with net expenditures of
$86,000 in 2019.
Share-based Payments (non-cash)
During
the three months ended March 31, 2020, the Company capitalized
$224,000 in share-based payments compared to $151,000 in 2019,
which is predominantly a function of the higher number of options
granted.
11
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
For the three months ended March 31, 2020 and 2019
Unless
otherwise stated, the following financial data was prepared on a
basis consistent with IFRS and extracted from the Condensed Interim
Consolidated Financial Statements:
|
(in
$000s)
|
Three months ended
March 31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
General and
administration
|
$520
|
$537
|
|
Exploration and
evaluation
|
159
|
188
|
|
Investor relations
and marketing communications
|
236
|
414
|
|
Corporate
development and due diligence
|
71
|
32
|
|
Share-based
payments (non-cash)
|
405
|
574
|
|
Loss from
operational activities
|
(1,391)
|
(1,745)
|
|
|
|
|
|
OTHER
ITEMS
|
|
|
|
Foreign exchange
loss
|
(22)
|
(2)
|
|
Other
expenses
|
(20)
|
(64)
|
|
Interest and other
income
|
38
|
84
|
|
Loss
before income taxes
|
$(1,395)
|
$(1,727)
|
|
Deferred income tax
expense (non-cash)
|
(67)
|
-
|
|
Net
loss
|
$(1,462)
|
$(1,727)
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
Items that will not be reclassified to net loss:
|
|
|
|
Marketable
securities fair value (loss) gain
|
(377)
|
12
|
|
Mineral property
investments fair value gain
|
335
|
-
|
|
Items that may be reclassified to net loss:
|
|
|
|
Currency
translation adjustment
|
64
|
(24)
|
|
Other comprehensive
income (loss)
|
22
|
(12)
|
|
|
|
|
|
Total
comprehensive loss
|
$(1,440)
|
$(1,739)
|
First Quarter 2020 Compared to First Quarter 2019
For the
three months ended March 31, 2020, loss from operational activities
(excluding write-down of mineral properties) has decreased by
$354,000 compared to the three months ended March 31, 2019. This
change was explained by the following:
Investor Relations and Marketing Communications
Investor
relations and marketing communications decreased by $178,000 during
the three months ended March 31, 2020 compared to the same period
in 2019. This decrease is predominantly due to the Company
conducting fewer marketing activities during the first quarter
2020.
Other Functional Expenses
The
amounts in general and administration; exploration and evaluation;
and corporate development and due diligence were comparable between
periods.
Share-based Payments (non-cash)
Share-based
payments decreased by $169,000 during the three months ended March
31, 2020 compared to the same period in 2019, primarily due to a
lower fair value per option in 2019 ($0.12 per option in 2020
compared to $0.23 per option in 2019).
|
(in
$000s)
|
Three months ended
March 31,
|
|
|
|
2020
|
2019
|
|
CASH PROVIDED BY (USED IN)
|
|
|
|
Operating
activities
|
$(1,313)
|
$(1,073)
|
|
Investing
activities
|
(3,286)
|
(983)
|
|
Financing
activities
|
9,187
|
-
|
|
Foreign exchange
effect on cash
|
7
|
-
|
|
CHANGE IN CASH AND CASH
EQUIVALENTS
|
4,595
|
(2,056)
|
|
Working
capital(1)
|
9,946
|
5,491
|
|
Cash and cash
equivalents, beginning
|
5,902
|
5,115
|
|
Cash and cash
equivalents, ending
|
$10,497
|
$3,059
|
(1)
Working capital is
a non-IFRS measurement with no standardized meaning under IFRS and
may not be comparable to similar financial measures presented by
other issuers. For further information and a detailed
reconciliation, please see the section “Non-IFRS Measures – Working
Capital”.
Cash and Cash Equivalents
The
increase of $4,595,000 in cash and cash equivalents from $5,902,000
at December 31, 2019 to $10,497,000 at March 31, 2020 was primarily
due to cash raised from the 2020 Offering and Ausenco Offering,
offset by cash used in operating activities and investing
activities which comprised technical analysis, drilling,
environmental and permitting activities at Springpole Gold Project
and Goldlund Gold
Project.
Operating Activities
Cash
used in operating activities increased by $240,000 during the three
months ended March 31, 2020 compared to the same period in 2019.
This increase was driven by changes in working capital and in
particular timing of accounts payable payments during the three
months ended March 31, 2020.
12
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Investing Activities
For the
period ended March 31, 2020, the cash used in investing activities
of $3,286,000 was primarily a result of Canadian mineral property
expenditures including the completion of metallurgical and
geotechnical drilling and further hydrogeological studies for
Springpole Gold
Project, completion of the 2019 drill program and initial
phase of the drill Program at the Main Zone at Goldlund
Gold
Project. In the prior year period, the cash used in
investing activities of $983,000 was primarily a result of Canadian
mineral property expenditures including the updated mineral
resource estimate for Goldlund Gold Project
and completion of metallurgical tests for Springpole Gold
Project. For the year 2019, the Company spent approximately
$2,080,000 for exploration expenditures on the Goldlund Gold
Project, including 6,130 m of drilling consisting of 32 holes. For
the three months ended March 31, 2020, the Company spent
approximately $910,000 for exploration expenditures on the Goldlund
Gold
Project, including 4,800 m of drilling consisting of 25
holes.
Financing Activities
Cash
raised from financing activities during the three months ended
March 31, 2020 was $9,187,000, of which $8,404,000 (three months
ended March 31, 2019 - $nil) related to the funds raised from the
2020 Offering, $750,000 (three months ended March 31, 2019 - $nil)
related to the funds raised from the Ausenco Offering, and $60,000
(three months ended March 31, 2019 - $nil) related to the exercise
of stock options. In addition, $27,000 (three months ended March
31, 2019 - $nil) was incurred for settlement of the lease liability
and associated finance costs.
Trends in Liquidity, Working Capital, and Capital
Resources
As at
March 31, 2020, the Company has working capital of $9,946,000. The
Company has no history of revenues from its operating activities.
The Company is not in commercial production on any of its mineral
properties and accordingly does not generate cash from operations.
During the three months ended March 31, 2020, the Company had
negative cash flow from operating activities. The Company
anticipates it will have negative cash flow from operating
activities in future periods.
The
Company has, in the past and during the three months ended March
31, 2020, financed its activities by raising capital through
issuances of new shares. In addition to adjusting spending,
disposing of assets and seeking other non-equity sources of
financing, the Company will remain reliant on equity markets for
raising capital until it can generate positive cash flow from
operations to finance its exploration and development
programs.
The
Company believes it has sufficient cash resources to maintain its
mineral properties in good standing for the next twelve
months.
FINANCIAL LIABILITIES AND COMMITMENTS
The
Company’s financial liabilities as at March 31, 2020 are
summarized as follows:
|
(in
$000s)
|
Contractual Cash Flows
|
Less than 1 year
|
1 – 3 years
|
4 – 5 years
|
After 5 years
|
|
Accounts payable
and accrued liabilities
|
$1,691
|
$1,691
|
$-
|
$-
|
$-
|
|
Lease
liability
|
800
|
163
|
497
|
140
|
-
|
|
Total
|
$2,491
|
$1,854
|
$497
|
$140
|
$-
|
Other
material financial commitments as at March 31, 2020 consist of
flow-through expenditure commitments of $1,174,000 (2019 - $nil) to
be incurred prior to December 31, 2020 to fulfill flow-through
requirements from the Company’s December 18, 2019 private
placement, and $2,086,000 (2019 - $nil) to be incurred prior to
December 31, 2021 fulfill flow-through requirements from the
Company’s February 14, 2020 private placement. Management is
of the view that the above financial liabilities and commitments
will be sufficiently funded by current working
capital.
First
Mining is a Canadian-focused gold exploration and development
company advancing a large resource base of 7.4 million ounces of
gold in the measured and indicated categories and 3.8 million
ounces of gold in the inferred category. First Mining’s
primary focus is the development and permitting of its Springpole
Gold Project and the advanced exploration of its Goldlund Gold
Project, both located in northwestern Ontario. Springpole
Gold
Project is one of the largest undeveloped gold assets in
Canada, with permitting and a Pre-Feasibility Study underway.
Goldlund Gold Project
is an advanced exploration stage asset where drilling is ongoing to
define both the extension of the existing resource area and to
better define the regional scale potential. First Mining’s
eastern Canadian property portfolio also includes Cameron
Gold
Project, Hope Brook Gold
Project, Duparquet Gold
Project, Duquesne Gold Project
and Pitt Gold
Project, and Pickle Crow Gold Project
under the recently announced earn-in agreement with Auteco Minerals
Ltd.
The
Company continues its Indigenous community consultations related to
its core Canadian mineral properties, and has been engaged in
significant consultation efforts with local Indigenous communities
in the Springpole Gold Project
area since 2018 to support the ongoing federal and provincial EA
processes, and in preparation for the Springpole Gold Project
EIS.
The
following is a summary of ongoing activities planned for
2020:
●
The Company is
planning to submit a final ToR to MECP for Springpole Gold
Project. The ToR will provide a framework for the
preparation of a provincial EA, and it will set out the
Company’s work plan for addressing the legislated
requirements of the Ontario Environmental Assessment Act when
preparing the provincial EA. The Company is also working on the
Federal EA under the Canadian
Environmental Assessment Act.
●
The Company is
continuing to advance the Springpole Gold Project
PFS, which is targeted for completion in Q1 2021, and data
collection and compilation of the EIS, which is targeted for
submission in 2021 as well.
●
The Company plans
to complete additional resource definition and regional exploration
drilling at Goldlund Gold
Project.
●
Ongoing technical
and economic evaluations are underway at Hope Brook Gold
Project, Cameron Gold Project
and at the Québec projects to gain a better understanding of
the potential of these projects.
●
Auteco is expected
to produce an updated resource estimate and commence drilling at
Pickle Crow Gold
Project, and are required to spend $750,000 on exploration
within the first 12 months of the Earn-In Agreement, by Q1
2021.
13
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
FINANCIAL INSTRUMENTS
Cash and Cash Equivalents
Cash
and cash equivalents include cash and short-term deposits that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value. The carrying amounts
approximate fair value due to the short-term maturities of these
instruments.
Cash
and cash equivalents are mainly held in interest bearing accounts
at large Canadian financial institutions.
Marketable Securities
During
the three months ended March 31, 2020, the Company held shares in
Gainey Capital Corp. (“Gainey”), which the Company
received pursuant to the Option Agreement with Gainey on the Las
Margaritas gold project, and other investments in publicly traded
companies within the mining industry for strategic
purposes.
|
(in
$000s)
|
Silver One Resources Inc.
|
Gainey Capital Corp.
|
Other Marketable Securities
|
Total
|
|
Balance
as at December 31, 2019
|
$-
|
$74
|
$1,701
|
$1,775
|
|
Loss recorded in
other comprehensive loss
|
-
|
(37)
|
(340)
|
(377)
|
|
Balance
as at March 31, 2020
|
$-
|
$37
|
$1,361
|
$1,398
|
|
(in
$000s)
|
Silver One Resources Inc.
|
Gainey Capital Corp.
|
Other Marketable Securities
|
Total
|
|
Balance
as at December 31, 2018
|
$990
|
$-
|
$1,607
|
$2,597
|
|
Additions
|
60
|
171
|
-
|
231
|
|
Dispositions
|
(1,758)
|
-
|
-
|
(1,758)
|
|
Gain (loss)
recorded in other comprehensive loss
|
708
|
(97)
|
94
|
705
|
|
Balance
as at December 31, 2019
|
$-
|
$74
|
$1,701
|
$1,775
|
The
Company holds marketable securities of publicly traded companies as
strategic investments and has less than a 10% equity interest in
each of the investees. During the year ended December 31, 2019, the
Company sold 6,250,000 common shares of Silver One for net proceeds
of $1,750,000 with original cost of $6,360,000, and realized a
cumulative loss on sale of $4,610,000 in other comprehensive
loss.
Mineral Property Investments
The
Company, through its subsidiary Clifton Star, has a 10% equity
interest in the shares of Beattie Gold Mines Ltd., 2699681 Canada
Ltd., and 2588111 Manitoba Ltd., which are private companies which
directly or indirectly own various mining concessions and surface
rights, collectively known as the Duparquet Gold
Project.
As
there is no observable market data which can be used to determine
the fair value of the Company’s mineral property investments,
management uses property specific and market-based information to
determine whether a significant change in the fair value of these
investments has occurred. Factors that are considered
include:
●
Changes in the
economic and regulatory environment for the jurisdiction in which
the Duparquet Gold project is located;
●
Gold spot prices
over the period from the acquisition of the investment to March 31,
2020;
●
The company’s
market capitalization per in-situ ounce which are attributable to
the Duparquet Gold project; and
●
Recent transactions
involving mineral properties located in Quebec.
As at
March 31, 2020, Management determined, as a function of the rising
gold price environment, that there was an increase in the fair
value of mineral property investments and a fair value gain of
$335,000 was recorded (three months ended March 31, 2019 - $nil).
As at March 31, 2020, the fair value of the Company’s mineral
property investments was $5,733,000 (December 31, 2019 –
$5,398,000).
Amounts
paid to related parties were incurred in the normal course of
business and measured at the exchange amount, which is the amount
agreed upon by the transacting parties and on terms and conditions
similar to non-related parties. There were no significant
transactions with related parties outside of the ordinary course of
business during the period ended March 31, 2020.
The
Company has no off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future effect on the
results of operations or financial condition of the Company
including, without limitation, such considerations as liquidity and
capital resources.
14
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
The
Company has included a non-IFRS measure for “net loss
excluding write-down of mineral properties (non-cash)”,
“net loss excluding share-based payments, write-down of
mineral properties (non-cash) and deferred income tax expense
(recovery) (non-cash)” and “working capital” in
this MD&A which should be read in conjunction with its
financial statements which are presented in accordance with IFRS.
The Company believes that these measures provide investors with an
improved ability to evaluate the performance of the Company.
Non-IFRS measures do not have any standardized meaning prescribed
under IFRS. Therefore, such measures may not be comparable to
similar measures employed by other companies. The data is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
The
Company determines working capital and net loss excluding
share-based payments (non-cash), write-down of mineral properties
(non-cash) and deferred income tax expense (recovery) (non-cash) as
follows:
Quarterly Reconciliations:
|
Reconciliation
as of the end of the period (in $000s)
|
2020-Q1
|
2019-Q4
|
2019-Q3
|
2019-Q2
|
|
Current
assets
|
$12,977
|
$8,329
|
$9,713
|
$11,747
|
|
Less current
liabilities
|
(3,031)
|
(2,549)
|
(1,353)
|
(1,120)
|
|
Working
capital
|
$9,946
|
$5,780
|
$8,360
|
$10,627
|
|
Reconciliation
as of the end of the period (in $000s)
|
2019-Q1
|
2018-Q4
|
2018-Q3
|
2018-Q2
|
|
Current
assets
|
$6,018
|
$8,118
|
$10,166
|
$13,036
|
|
Less current
liabilities
|
(527)
|
(582)
|
(478)
|
(573)
|
|
Working
capital
|
$5,491
|
$7,536
|
$9,688
|
$12,463
|
|
Reconciliation
for the three months ended (in $000s)
|
2020-Q1
|
2019-Q4
|
2019-Q3
|
2019-Q2
|
|
Net
loss
|
$(1,462)
|
$(2,274)
|
$(1,643)
|
$(1,315)
|
|
Excluding
share-based payments (non-cash)
|
405
|
215
|
332
|
475
|
|
Excluding
write-down of mineral properties (non-cash)
|
-
|
-
|
341
|
-
|
|
Excluding deferred
income tax expense (recovery) (non-cash)
|
67
|
657
|
(141)
|
-
|
|
Net loss excluding
certain non-cash items(1)
|
$(990)
|
$(1,402)
|
$(1,111)
|
$(840)
|
|
Reconciliation for
the three months ended (in $000s)
|
2019-Q1
|
2018-Q4
|
2018-Q3
|
2018-Q2
|
|
Net
loss
|
$(1,727)
|
$(5,658)
|
$(937)
|
$(1,298)
|
|
Excluding
share-based payments (non-cash)
|
574
|
392
|
27
|
85
|
|
Excluding
write-down of mineral properties (non-cash)
|
-
|
4,181
|
-
|
-
|
|
Excluding deferred
income tax expense (recovery) (non-cash)
|
-
|
-
|
-
|
-
|
|
Net loss excluding
certain non-cash items(1)
|
$(1,153)
|
$(1,085)
|
$(910)
|
$(1,213)
|
Annual Reconciliations:
|
Reconciliation
as of the end of the period (in $000s)
|
March
31,
2020
|
December
31,
2019
|
December
31,
2018
|
|
Current
assets
|
$12,977
|
$8,329
|
$8,118
|
|
Less current
liabilities
|
(3,031)
|
(2,549)
|
(582)
|
|
Working
capital
|
$9,946
|
$5,780
|
$7,536
|
|
Reconciliation
for the three months ended March 31 (in
$000s),
|
2020
|
2019
|
2018
|
|
Net
loss
|
$(1,462)
|
$(1,727)
|
$(3,752)
|
|
Excluding
share-based payments (non-cash)
|
405
|
574
|
2,528
|
|
Excluding
write-down of mineral properties (non-cash)
|
-
|
-
|
-
|
|
Excluding deferred
income tax expense (recovery) (non-cash)
|
67
|
-
|
-
|
|
Net loss excluding
certain non-cash items(1)
|
$(990)
|
$(1,153)
|
$(1,224)
|
(1)
“The certain
non-cash items excluded” refers to the “Share-based
Payments”, “Write-down of Mineral Properties” and
Deferred income tax expense (recovery)”.
The
unaudited condensed interim consolidated financial statements for
the three months ended March 31, 2020 were prepared using
accounting policies consistent with those used in the audited
annual consolidated financial statements for the year ended
December 31, 2019.
There
are no IFRS or International Financial Reporting Interpretations
Committee interpretations that are not yet effective that would be
expected to have a material impact on the Company’s
consolidated financial statements.
The
preparation of financial statements requires the use of accounting
estimates. It also requires management to exercise judgment in the
process of applying its accounting policies. Estimates and
judgments are regularly evaluated and are based on
Management’s experience and other factors, including
expectations about future events that are believed to be reasonable
under the circumstances. The use of judgments, estimates and
assumptions affects the application of accounting policies and the
reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. The following discusses
accounting policy judgments and the sources of estimation
uncertainty that may result in material changes in the carrying
amount of assets or liabilities within the next year:
Impairment of mineral properties:
In
accordance with the Company’s accounting policy for its
mineral properties, exploration and evaluation expenditures on
mineral properties are capitalized. There is no certainty that the
expenditures made by the Company in the exploration of its property
interests will result in discoveries of commercial quantities of
minerals. The Company applies judgment to determine whether
indicators of impairment exist for these capitalized
costs.
Management
uses several criteria in making this assessment, including the
period for which the Company has the right to explore, expected
renewals of exploration rights, whether substantive expenditures on
further exploration and evaluation of mineral properties are
budgeted, and evaluation of the results of exploration and
evaluation activities up to the reporting date.
Determining amount and timing of reclamation
provisions:
A
reclamation provision represents the present value of estimated
future costs for the reclamation of the Company’s mineral
properties. These estimates include assumptions as to the future
activities, cost of services, timing of the reclamation work to be
performed, inflation rates, exchange rates and interest rates. The
actual cost to reclaim a mine may vary from the estimated amounts
because there are uncertainties with respect to the extent of
required future remediation activities, as studies are currently
ongoing, and uncertainties in factors used to estimate the cost and
potential changes in regulations or laws governing the reclamation
of a mineral property. Management periodically reviews the
reclamation requirements and adjusts the liability, if any, as new
information becomes available and will assess the impact of new
regulations and laws as they are enacted.
15
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
Valuation of mineral property investments:
The
Company makes estimates and assumptions that affect the carrying
value of its mineral property investments, which are comprised of
equity interests in the shares of private companies. These
financial assets are designated as fair value through other
comprehensive income (loss), and Management needs to determine the
fair value as at each period end. As there is no observable market
data which can be used to determine this fair value, management
uses property specific and market-based information to determine
whether a significant change in the fair value of these investments
has occurred. Changes to the property specific and market-based
variables could result in the fair value being less than or greater
than the amount recorded.
The
Company is subject to a number of risks and uncertainties, each of
which could have an adverse effect on its business operations or
financial results. Some of these risks and uncertainties are
detailed below. For a comprehensive list of the Company’s
risks and uncertainties, see the Company’s Annual Information
Form for the year ended December 31, 2019 under the heading
“Risks that can affect our business”, which is
available under our SEDAR profile at www.sedar.com,
and on EDGAR as an exhibit to Form 40-F.
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 or other
events, such as developments concerning COVID-19. 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 the Company’s 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, 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, pandemics and
natural disasters. Any sudden or rapid destabilization of global
economic conditions could impact the Company’s ability to
obtain equity or debt financing in the future on terms favourable
to the Company or at all. In such an event, the Company’s
operations and financial condition could be adversely
impacted.
Public Health Crises
The
Company's business, operations and financial condition could be
materially adversely affected by the outbreak of epidemics,
pandemics or other health crises, such as COVID-19, and by
reactions by government and private actors to such outbreaks. As at
the date of this MD&A, the global reactions to the spread of
COVID-19 have led to, among other things, significant restrictions
on travel, quarantines, temporary business closures and a general
reduction in consumer activity. While these effects are expected to
be temporary, the duration of the disruptions to business
internationally and the related financial impact cannot be
estimated with any degree of certainty at this time. Such public
health crises can result in disruptions and extreme volatility in
financial markets and global supply chains as well as declining
trade and market sentiment and reduced mobility of people, all of
which could impact commodity prices, interest rates, credit
ratings, credit risk, availability of financing and inflation. The
risks to the Company of such public health crises also include
risks to employee health and safety and may result in a slowdown or
temporary suspension of operations at some or all of the Company's
mineral properties as well as its head office. Although the Company
has the capacity to continue certain administrative functions
remotely, many other functions, including the conduct of
exploration and development programs, cannot be conducted remotely
and may be impacted or delayed if the Company experiences
limitations on employee mobility.
On
March 24, 2020, the province of Ontario implemented an emergency
order (the “Emergency
Order”) mandating the closure of all non-essential
workplaces in the province, and the Emergency Order has since been
extended to May 19, 2020. This order has designated mineral
exploration and development and mining supply and services as
essential workplaces and accordingly, our exploration properties in
Ontario are at present not directly affected by the Emergency
Order. However, there can be no guarantee that the Emergency Order
will not be extended to such workplaces in the future or that
governments in other provinces in which we have mineral properties
will not pass similar orders reducing or preventing access to our
properties. Any such orders may have a material adverse effect upon
ongoing exploration programs at our properties and, ultimately, on
our business and financial condition. At this point, the extent to
which COVID-19 may impact the Company remains uncertain; however,
it is possible that COVID-19 could have a material adverse effect
on the Company's business, results of operations and financial
condition.
As discussed above under “2020 Highlights”,
notwithstanding that the Company has been exempted from the
Emergency Order in Ontario as an essential workplace, due to the
current environment the Company has demobilized the contractors and
staff at its Springpole Gold Project
and Goldlund Gold Project
properties and is keeping Springpole Gold Project
and Goldlund Gold Project
on care and maintenance until it is able to restart its work
programs, which are currently planned for later in the spring and
summer of 2020. There can be no assurance that such demobilization
will not last for longer than expected. Any increase in the length
of demobilization may have an adverse impact on the Company’s
ability to conduct exploration and further advance its work
programs on the affected properties.
Risks related to Financial Instruments
The
Company thoroughly examines the various financial instruments and
risks to which it is exposed and assesses the impact and likelihood
of those risks. These risks include market risk, equity price risk,
foreign currency risk, interest rate risk, credit risk, liquidity
risk, and capital risk. Where material, these risks are reviewed
and monitored by the Company’s Board of Directors (the
“Board”).
The
Board has overall responsibility for the determination of the
Company’s risk management objectives and policies. The
overall objective of the Board is to set policies that seek to
reduce risk as much as possible without unduly affecting the
Company’s competitiveness and flexibility.
a)
Market
Risk
Market
risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate due to changes in market
prices. Market risk includes equity price risk, foreign currency
risk and interest rate risk.
Equity Price Risk
The
Company is exposed to equity price risk as a result of holding
investments in equity securities, which are comprised of marketable
securities and mineral property investments, in other mineral
property exploration companies.
If the
fair value of our investments in equity instruments had been 10%
higher or lower as at March 31, 2020, other comprehensive loss for
the three months ended March 31, 2020 would have decreased or
increased, respectively, by approximately $713,000 (2019 -
$708,000), as a result of changes in the fair value of equity
investments.
Foreign Currency Risk
The
Company is exposed to the financial risk related to the fluctuation
of foreign exchange rates. During the first quarter of 2020, the
Company operated in Canada, the United States, and Mexico, and a
portion of the Company’s expenses were incurred in
Canadian dollars (“CAD”), US dollars
(“USD”), and
Mexican Pesos (“MXN”). 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. The Company has not
hedged its exposure to currency fluctuations.
As at
March 31, 2020, the Company was exposed to currency risk on certain
financial instruments denominated in USD and MXN. The Company does
not have significant transactions or hold significant cash or other
financial instruments denominated in USD and MXN currencies.
Therefore, the Company considers this risk to be
immaterial.
16
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
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
manages its interest rate risk by maximizing the interest income
earned on excess funds while maintaining the necessary liquidity to
conduct its day-to-day operations. The Company considers this
risk to be immaterial.
b)
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
high credit quality major Canadian financial institutions as
determined by ratings agencies. As a result, the Company does not
expect any credit losses.
c)
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.
The
following table summarizes the maturities of the Company’s
financial liabilities as at March 31, 2020 based on the
undiscounted contractual cash flows:
|
(in
$000s)
|
Carrying Amount
|
Contractual Cash Flows
|
Less than 1 year
|
1 – 3 years
|
4 – 5 years
|
After 5 years
|
|
Accounts payable
and accrued liabilities
|
$1,691
|
$1,691
|
$1,691
|
$-
|
$-
|
$-
|
|
Lease
liability
|
631
|
800
|
163
|
497
|
140
|
-
|
As at
March 31, 2020, the Company had cash and cash equivalents of
$10,497,000 (December 31, 2019 – $5,902,000).
d)
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. The Company prepares annual estimates of exploration and
administrative expenditures and monitors actual expenditures
compared to the estimates to ensure that there is sufficient
capital on hand to meet ongoing obligations.
Hazel
Mullin, P.Geo, Director of Data Management and Technical Services
at First Mining, is a Qualified Person as defined by National
Instrument 43-101 Standards of
Disclosure for Mineral Projects (“NI 43-101”), and is responsible
for the review and verification of the scientific and technical
information in this MD&A.
Authorized
share capital: The Company can issue an unlimited number of common
shares with no par value and an unlimited number of preferred
shares with no par value. No preferred shares have been issued as
at May 12, 2020.
The
following table sets out all outstanding securities of the Company
as of May 12, 2020.
|
|
Number
|
Weighted Average Exercise Price
|
Expiry Date
|
|
|
|||
|
Common
shares – issued
|
633,151,453
|
|
|
|
Stock
options(1)
|
54,677,500
|
$0.52
|
July
27, 2020 – April 1, 2025
|
|
Warrants(2)
|
34,583,157
|
$0.37
|
June
16, 2021 – March 6, 2023
|
|
Common
shares - fully diluted
|
722,412,110
|
|
|
(1)
Each stock option
is exercisable for one common share of the Company.
(2)
Each warrant is
exercisable for one common share of the Company.
DISCLOSURE CONTROLS AND PROCEDURES
The
Company’s Management, with the participation of its Chief
Executive Officer (“CEO”) and its Chief Financial
Officer (“CFO”),
have evaluated the effectiveness of the Company’s disclosure
controls and procedures. Based upon the results of that evaluation,
the Company’s CEO and CFO have concluded that, as of March
31, 2020, the Company’s disclosure controls and procedures
were effective to provide reasonable assurance that the information
required to be disclosed by the Company in reports it files is
recorded, processed, summarized and reported, within the
appropriate time periods and is accumulated and communicated to
Management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure.
The
Company’s Management, with the participation of its CEO and
CFO, is responsible for establishing and maintaining adequate
internal control over financial reporting as such term is defined
in the SEC’s rules and the rules of the Canadian Securities
Administrators. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with IFRS as issued by the IASB. The Company’s
internal control over financial reporting includes policies and
procedures that:
●
address maintaining
records that accurately and fairly reflect, in reasonable detail,
the transactions and dispositions of assets of the
Company;
●
provide reasonable
assurance that transactions are recorded as necessary for
preparation of financial statements in accordance with
IFRS;
●
provide reasonable
assurance that the Company’s receipts and expenditures are
made only in accordance with authorizations of Management and the
Company’s Directors; and
●
provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that
could have a material effect on the Company’s consolidated
financial statements.
The
Company’s internal control over financial reporting may not
prevent or detect all misstatements because of inherent
limitations. Additionally, projections of any evaluation of
effectiveness for future periods are subject to the risk that
controls may become inadequate because of changes in conditions or
deterioration in the degree of compliance with the Company’s
policies and procedures.
There
has been no change in the Company's internal control over financial
reporting during the three months ended March 31, 2020 that has
materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial
reporting.
17
|
FIRST MINING GOLD CORP.
|
Management’s
Discussion & Analysis
|
|
(Expressed in Canadian dollars, unless otherwise
indicated)
|
For
the three months ended March 31, 2020
|
LIMITATIONS OF CONTROLS AND PROCEDURES
The
Company’s Management, including the CEO and CFO, believes
that any disclosure controls and procedures or internal control
over financial reporting, no matter how well conceived and
operated, may not prevent or detect all misstatements because of
inherent limitations. Further, the design of a control system must
reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, they
cannot provide absolute assurance that all control issues and
instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can
occur because of a simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by unauthorized override of the
control. The design of any control system is also based in part
upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.
Accordingly, because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud
may occur and may not be detected.
This
MD&A is based on a review of the Company’s operations,
financial position and plans for the future based on facts and
circumstances as of March 31, 2020. This MD&A contains
“forward-looking statements” within the meaning of
applicable Canadian securities regulations (collectively,
“forward-looking
statements”). Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
“seek”, “anticipate”, “plan”,
“continue”, “estimate”,
“expect”, “may”, “will”,
“project”, “predict”,
“forecast”, “potential”,
“targeting”, “intend”, “could”,
“might”, “should”, “believe”
and similar expressions) are not statements of historical fact and
may be “forward-looking statements”. These statements
relate to future events or the Company’s future performance,
business prospects or opportunities. Forward-looking statements
include, but are not limited to: statements regarding the
advancement of the Company’s mineral assets towards
production; statements regarding the potential for the Company to
acquire additional mineral assets in the future; statements
regarding the next stages and anticipated timing of the
metallurgical study or the environmental, permitting and Indigenous
and community consultation process at Springpole Gold
Project; statements regarding opportunities to enhance
project economics identified under the 2019 Springpole Gold Project
PEA; statements regarding the targeted completion date of the
Springpole Gold Project
PFS; statements regarding the potential increase in gold and silver
recoveries at Springpole Gold
Project; statements regarding the Company’s intentions
and expectations regarding exploration, infrastructure and
production potential of any of its mineral properties; statements
relating to the Company's working capital, capital expenditures and
ability and intentions to raise capital; statements regarding the
potential effects of financing on the Company's capitalization,
financial condition and operations; statements regarding future
share issuances under the ATM facility; forecasts relating to
mining, development and other activities at the Company’s
operations; forecasts relating to market developments and trends in
global supply and demand for gold; statements relating to future
global financial conditions and the potential effects on the
Company; statements relating to future work on the Company’s
non-material properties; statements relating to the Company’s
mineral reserve and mineral resource estimates; statements
regarding the Company's belief that the increased understanding of
the Goldlund Gold Project
deposit will assist the Company in better targeting subsequent
drill programs to potentially grow the current resource body at
Goldlund Gold
Project; statements regarding regulatory approval and
permitting including, but not limited to, EA approval for the
Springpole Gold Project
and the expected timing of such EA approval; statements regarding
the Company’s anticipated timing to receive final approval
from the MECP of the ToR for Springpole Gold
Project, and consultations in respect thereof; statements
regarding the Company's compliance with laws and regulations
including, but not limited to environmental laws and regulations;
statements regarding the Pickle Crow Gold Project
Earn-In Agreement and payouts, share issuances and exploration
expenditure commitments thereunder; statements regarding Gainey's
anticipated adherence to required payment and expenditure
obligations pursuant to the Gainey Option Agreement; statements
regarding Momentum's anticipated adherence to required payment and
expenditure obligations pursuant to the Momentum Option Agreement;
statements regarding the Company’s plans to complete
additional resource and regional drilling at Goldlund Gold
Project; statements regarding anticipated completion of the
“Main Zone” drill program and any subsequent phase of
the work program; statements regarding the Company’s
intention and proposed timing to conduct a waste rock
characterization and economic study of marketable aggregates at
Hope Brook Gold
Project, as well as geological mapping and soil sampling;
statements regarding improved efficiency as a result of building
new access roads to mineral properties; statements regarding the
Company’s plans to complete low-spend, incremental work on
its broader gold asset portfolio; statements regarding the
Company’s engagement with local stakeholders; statements
regarding the Company's ability to enter into agreements with local
stakeholders including, but not limited to, local Indigenous
groups; statements regarding the potential impact of the COVID-19
pandemic; statements regarding key personnel; statements regarding
non-IFRS measures and changes in accounting standards; statements
relating to the limitation of the Company's internal controls over
financial reporting; and statements regarding the preparation or
conduct of studies and reports and the expected timing of the
commencement and completion of such studies and
reports.
There
can be no assurance that such statements will prove to be accurate,
and future events and actual results could differ materially from
those anticipated in such statements. Important factors that could
cause actual results to differ materially from the Company’s
expectations are disclosed under the heading “Risks that can
affect our business” in the Company’s Annual
Information Form for the year ended December 31, 2019 and other
continuous disclosure documents filed from time to time via SEDAR
with the applicable Canadian securities regulators. Forward-looking
statements are based on the estimates and opinions of Management on
the date the statements are made, and the Company does not
undertake any obligation to update forward-looking statements
should conditions or our estimates or opinions change, except as
required by applicable laws. Actual results may differ materially
from those expressed or implied by such forward-looking statements.
These statements involve known and unknown risks, uncertainties,
and other factors that may cause the Company’s actual
results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity,
performance or achievement expressed or implied by these
forward-looking statements.
The
Company believes that the expectations reflected in any such
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included herein this MD&A should not
be unduly relied upon.
This
MD&A has been prepared in accordance with the requirements of
Canadian securities laws, which differ in certain material respects
from the disclosure requirements of United States securities laws.
The terms “mineral reserve”, “proven mineral
reserve” and “probable mineral reserve” are
Canadian mining terms as defined in accordance with NI 43-101 and
the Canadian Institute of Mining, Metallurgy and Petroleum
(“CIM”) 2014
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended. These definitions differ
from the definitions in the disclosure requirements promulgated by
the United States Securities and Exchange Commission (the
“SEC”) and
contained in SEC Industry Guide 7 (“Industry Guide 7”). Under Industry
Guide 7 standards, a “final” or “bankable”
feasibility study is required to report mineral reserves, the
three-year historical average price is used in any mineral reserve
or cash flow analysis to designate mineral reserves and the primary
environmental analysis or report must be filed with the appropriate
governmental authority.
In
addition, the terms “mineral
resource”, “measured mineral resource”,
“indicated mineral
resource” and “inferred mineral resource” are
defined under the 2014 CIM definition standards, and are required
to be disclosed by NI 43-101. However, these terms are not defined
under Industry Guide 7 and are not permitted to be used in reports
and registration statements of United States companies filed with
the SEC. Investors are cautioned not to assume that any part or all
of the mineral deposits in these categories will ever be converted
into mineral reserves. “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,
estimates of 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 mineral
resource is permitted disclosure under Canadian regulations. In
contrast, the SEC only permits U.S. companies to report
mineralization that does not constitute “mineral
reserves” by SEC standards as in place tonnage and grade
without reference to unit measures.
Accordingly,
information contained in this MD&A may not be comparable to
similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States
federal securities laws and the rules and regulations of the SEC
thereunder.
18
FORM
52-109F2
CERTIFICATION
OF INTERIM FILINGS
FULL
CERTIFICATE
I,
Daniel W. Wilton, Chief Executive Officer of First Mining Gold
Corp., certify the following:
1.
Review: I have
reviewed the interim financial report and interim MD&A
(together, the “interim
filings”) of First Mining Gold Corp. (the
“issuer”) for
the interim period ended March 31, 2020.
2.
No
misrepresentations: Based on my knowledge, having exercised
reasonable diligence, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made,
for the period covered by the interim filings.
3.
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the
interim financial report together with the other financial
information included in the interim filings fairly present in all
material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility: The
issuer’s other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer’s other certifying officer(s) and I have, as at the
end of the period covered by the interim filings:
(a)
designed DC&P,
or caused it to be designed under our supervision, to provide
reasonable assurance that
(i)
material
information relating to the issuer is made known to us by others,
particularly during the period in which the interim filings are
being prepared; and
(ii)
information
required to be disclosed by the issuer in its annual filings,
interim filings or other reports filed or submitted by it under
securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities
legislation; and
(b)
designed ICFR, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1
Control framework:
The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is the 2013
Internal Control –
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
5.2
N/A.
5.3
N/A.
6.
Reporting changes in
ICFR: The issuer has disclosed in its interim MD&A any
change in the issuer’s ICFR that occurred during the period
beginning on January 1, 2020 and ended on March 31, 2020 that has
materially affected, or is reasonably likely to materially affect,
the issuer’s ICFR.
Date:
May 13, 2020.
/s/ Daniel W.
Wilton
Daniel
W. Wilton
Chief
Executive Officer
FORM
52-109F2
CERTIFICATION
OF INTERIM FILINGS
FULL
CERTIFICATE
I,
Andrew Marshall, the Chief Financial Officer of First Mining Gold
Corp., certify the following:
1.
Review: I have
reviewed the interim financial report and interim MD&A
(together, the “interim
filings”) of First Mining Gold Corp. (the
“issuer”) for
the interim period ended March 31, 2020.
2.
No
misrepresentations: Based on my knowledge, having exercised
reasonable diligence, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made,
for the period covered by the interim filings.
3.
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the
interim financial report together with the other financial
information included in the interim filings fairly present in all
material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility: The
issuer’s other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer’s other certifying officer(s) and I have, as at the
end of the period covered by the interim filings:
(a)
designed DC&P,
or caused it to be designed under our supervision, to provide
reasonable assurance that
(i)
material
information relating to the issuer is made known to us by others,
particularly during the period in which the interim filings are
being prepared; and
(ii)
information
required to be disclosed by the issuer in its annual filings,
interim filings or other reports filed or submitted by it under
securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities
legislation; and
(b)
designed ICFR, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with the issuer’s GAAP.
5.1
Control framework:
The control framework the issuer’s other certifying
officer(s) and I used to design the issuer’s ICFR is the 2013
Internal Control –
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
5.2
N/A.
5.3
N/A.
6.
Reporting changes in
ICFR: The issuer has disclosed in its interim MD&A any
change in the issuer’s ICFR that occurred during the period
beginning on January 1, 2020 and ended on March 31, 2020 that has
materially affected, or is reasonably likely to materially affect,
the issuer’s ICFR.
Date:
May 13, 2020.
/s/ Andrew
Marshall
Andrew
Marshall
Chief
Financial Officer