(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)
Foran Mining (FOM-V, $0.215)
~103.8 mm shares out F/D, ~$22 million market cap
~$4mm cash (estimated)
A slide from Foran Mining’s (FOM-V) corporate presentation that shows the current consensus view on zinc is included below. I’m not saying that it’s right, but it if the supply/demand projections are indeed accurate, then there may be some money to be made in zinc in the next year or two and there aren’t a lot of ways to play it.
A small, recycled, dinky exploration project will always be just that, but a few ears will likely perk up when you start talking about 25 million tonnes of VMS with good access to roads, power, and labour. Go a little further and put that asset in a good jurisdiction, with a good management team, and a vote of confidence from Pierre Lassonde (via a ~10-11% holding in the company), and some heads may start to turn. This seems to me like something that the market could latch onto… Foran’s McIlvenna Bay project is “camp scale” and is just 65 km from Flin Flon, a well-known and mature VMS camp. A recent PEA showed positive indicative economics (post-tax NPV7 of $262 million and a 18.9% IRR, on modest capex of $250mm) that could be characterized as a decent “smell test” to see if the project warrants further attention. Just to give a sense of comparative tonnage, the chart below puts Foran’s McIlvenna Bay project alongside a collection of other VMS deposits/camps.
For anyone interesting in reading a little more on the project, a good place to start may be the company’s corporate presentation (linked here). It covers the bases pretty well and forms a decent foundation for further discussion on the project. In the meantime, I’ll be watching to see if the market keeps warming up to zinc… if it does, FOM may heat up a little too. Time will tell.
For those looking for a second opinion, Stephan Ioannou at Haywood Securities covers the name and writes research on it from time to time. The stock is offered at $0.22 as a write this with BMO being the most active seller on the day.