(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long FOM.V).
This Copper-Zinc Junior Flying Under the Radar is Getting Active Again
When I first mentioned Foran Mining (FOM on the TSX Venture) in December of 2015, I highlighted Foran as a company with a large established copper-zinc resource within a camp-scale project (link to my initial note here). At the time, the stock could be had for about 20 cents. A little over a year later, the stock is now trading at 40 cents and recent news from the company shows that Foran is about to get active on the drilling front again. Exploration drilling on “Target A” adjacent to the company’s ~25 million tonne McIlvenna Bay VMS deposit is planned for early March, followed by resource definition drilling at the company’s nearby Bigstone Deposit. Given the lack of quality copper-zinc development projects in the market right now at a time when both copper and zinc are surging, I’m starting to feel optimistic about Foran again. My optimism was helped along when I saw Pierre Lassonde and other company insiders recently put $470,000 into the company via an early warrant exercise.
With only about $1.6 million in the bank, Foran will clearly need more cash to continue to move the project forward. Having said that, the current McIlvenna Bay payable metal production estimate includes a very interesting precious metals component that I think could be attractive to a royalty company. Over the life of mine plan, Foran estimates payable metal production of 218,000 ounces of gold (16,000 ounces/year) and 5.4 million ounces of silver (398,000 ounces/year). That might not seem like a lot at first, but then I got to looking at a deal that metal-streamer Sandstorm Resources cut with Metanor Resources back in January 2011. That deal, which on paper was for 12,000 ounces of gold per year, landed Metanor a staged US$20 million investment from Sandstorm. At the time, Metanor was planning to be in production about 18 months later and wouldn’t be in full production until late 2012. So maybe, just maybe, Foran might have a very nice chip to play in its quest towards financing the path ahead… and that’s not even considering options on the base metals streaming side. Maybe the company takes advantage of its relative share price strength and issues equity here… maybe not… all I’m saying is that I think Foran has options and that this unknown company with a big asset might have some creative financing potential. Have a look at some of the McIlvenna Bay details taken from the company’s corporate presentation… this deposit has good scale.
Time will tell.