First Equity Limited Morning Comment – First Class Metals FCM.L Sunbeam Acquisition

First Class Metals plc (FCM.L) this morning announced the acquisition of the Sunbeam project in Ontario, Canada which encompasses three past producing gold mines (1898 to 1905) within a total licence area of 48 sq. km (104 single cell claims).

Previous estimates suggest there could be 50,000 to 70,000 tonnes of ore at a grade of 13.0 g/t gold remaining in the old workings, with the structure hosting the Sunbeam Mine open in all directions, allowing for a concerted focus for future exploration. The property also appears to offer considerable gold exploration upside within the wider licence area, given the exploration results from Nuinsco, who reported astonishing grades of 93.3 g/t gold over 0.44 metres from drilling work near the permit area being acquired by FCM. Limited modern exploration has been conducted over the licences.

The project acquisition consideration is an initial C$700K, along with C$750K in exploration-related expenses over three years, certain milestone payments up to C$500K if a resource is defined and a net smelter royalty of 1%.

Sunbeam’s purchase is being financed through the raising of a 12-month – £1m convertible loan note (converting at 12p, 15p, 19p and 22p), with 1 for 1 warrants issued on each drawdown exercisable between 20p and 30p, and small equity placing at 12p to raise £80K, with attached warrants exercisable at 20p


This is a sizeable and important acquisition for First Class Metals to make, which adds a later-stage project to an existing portfolio of earlier-stage resource interests at the discovery and pre-discovery points.

The bonanza-style grade discovery of 93.3 g/t gold made by Nuinsco on a nearby claim area recently shows the project’s very high prospective potential. It also underlines the continuing execution and shrewd pursuit by the management of its ‘Close-ology’ exploration approach.

It is welcome, to see that the initial acquisition consideration and exploration costs in the next year or two are financed through the CLN issue, which has been structured in an intelligent way to minimise future dilution, given the upward conversion prices to 22p.

We continue to recommend the shares as a ‘Buy’ at 12.75p and suggest investors position themselves in the stock before any potential bonanza-style grades similar to Nuinsco’s find of 93.3 g/t gold are replicated on First Class Metals’ own permit area.

This is a non-independent marketing communication under the FCA Conduct of Business Rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of dissemination of the investment research. First Equity Limited (FEQ) has procedures in place to manage any conflicts which might arise in the production of investment research, including Chinese Wall procedures. The views expressed in this marketing communication are those of FEQ’s Analyst. They are based on information believed to be reliable but no warranty or representation, express or implied, is made about the accuracy or completeness of this information, which may be subject to change without notice. Any opinion given reflects the analyst’s judgement as at the date of this document’s publication. Any or all statements about the future may turn out to be incorrect. This marketing communication is designed for information purposes only and does not constitute a personal recommendation, offer or invitation to buy or sell any investment referred to within it. Investors should form their own conclusions and/or seek their own advice to determine whether any particular transaction is suitable for them in the light of their investment objectives, the benefits and risks associated with the transaction and all other relevant circumstances.

FEQ’s investment research products are paid by corporate clients as part of their broker retainer fee. Therefore, this document comes under the scope of Article 123(b) of the European Commission’s Delegated Directive of 7 April 2016 and thus qualifies as an ‘acceptable minor non-monetary benefit’ and does not qualify as ‘chargeable research’. FEQ can therefore send this document to investors without the requirement for any compensation to be paid to FEL from the recipients – it is hence available without charge.

First Equity Limited, its clients and staff members may be share and warrant holders in First Class Metals plc.

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned

Weekly Newsletter

Sign up to receive exclusive stock market content in your inbox, once a week.

We don’t spam! Read our privacy policy for more info.