There is little doubt but as we have headed into the autumn there has been a change in small cap company investors attitude to risk. This is meant that many so-called flagship project mining companies have seen their share prices hit as the market tries to factor in timelines and funding issues within a higher interest rate environment. As often happens on the stock market very often the babies are thrown out with the bath water, with a broad brush attitude towards both valuation and sentiment.
Therefore, for companies themselves at the moment the challenge is to highlight the USPs, and emphasise how they are different from the crowd. In the case of First Class Metals (FCM), we see a company with a best in class portfolio of assets, in the Tier 1 jurisdiction of Canada, and where the timeline to being drill ready is far more accelerated than most. At the same time given that it is in Ontario, one of the hottest mining regions in the world, the company has the optionality of continuing with the advanced exploration of projects or merely, selling them on.
This means that unlike many of its peers, to tag it with the current negative views pervading in the junior exploration market, is to miss a trick as far as both its valuation, and how good a place the company could be as soon as this time next year.
The Big Four: Zigzag
Followers of First Class Metals will already be aware of the company highlighting its Big Four projects: North Hemlo, Esa, Sunbeam, and Zigzag. However, private investors being private investors, it can be the case that they really prefer to look at just one driver/ leading hook per company, and in this case it may be that if you are thinking First Class Metals, you should be thinking its Zigzag lithium project.
Lithium and the EV revolution
Part of the reason is that as we head into the EV revolution, lithium is the metal that is exciting investors most. At Zigzag it is lithium and tantalum that are primarily in focus, the latter very much on the zeitgeist as far as the use of capacitors is concerned. First Class already has its exploration permits in place at Zigzag, and has promised over coming months to prove up the potential of this project through the aforementioned advanced exploration. As we already know drilling is the catalyst for valuation uplift in junior minors, and led by the decades of experience of CEO Marc Sale, we can expect strong and persistent news flow regarding how Zigzag is being proven up going into 2024 and beyond.
The GT1 factor
However, as the market is notoriously not forward looking, wanting things to happen yesterday, it may be wise to look at what has already been achieved at Zigzag. For instance, there have already been highly encouraging results. Larger aggressive players in the area such as Green Technology Metals (GT1) have just bought a Landore (LND) early-stage lithium asset.
There is already great infrastructure at Zigzag (a major cost saving) to create an economic mid-high grade hard rock lithium project. The project location is key, a point underlined by the way the larger players are land grabbing what they can and there is a real “gold rush” to secure the best stakes.
GT1 are building a benefacting plant at Seymour which will ship refined ore to a Lithium processing plant in Thunder Bay. The rail network is 20km or so south of Zigzag, and Thunder Bay with a deep port is two hours away. Within 36 hours of Thunder Bay you have the majority of North America to access. There is also a hydro project being built in the area giving cheap power at Jackfish River.
With a plethora of projects to choose from, all of which would be considered a ‘flagship’ asset for another junior explorer FCM are in a truly enviable position. One could take the view that while it may be that choosing which of its Big 4 to advance fully itself is like trying to choose a favourite child, Zigzag looks to be right in the frame.