At Equity.Guru, the biggest successes we've tracked over the past few years weren't following the crowd, they were pushing against it, loading up properties while they're cheap in the expectation that the market would play catch up eventually.
Mining has had its doldrums period and the weak hands left long ago. The smart guys take advantage of that and find bargains.
Enter Falcon Gold (FG.V).
We chatted to Falcon CEO Stephen Wilkinson about what he's been finding behind the couch cushions and found that all that glitters is not only gold.
Q: We've stepped into an elevator and both hit the 30th floor button. “What do you do?” I ask. “I'm a CEO,” you say. “What does your company do?”, I ask. The doors close. Hook me.
A: We made an important decision not long ago to not fret over the challenging junior mining market and to take advantage of the protracted malaise. To that end we have sought out superior mineral assets for acquisition but at ridiculously low costs. So far, we have picked up three significant unique projects in friendly mining jurisdictions with resources indicated. We are researching several more assets and should be adding to the portfolio very soon. Falcon will be attracting lots of attention, differentiating itself when most of its peers are languishing.
Q: You have an MBA and a Masters in geology, what is it about your projects – and your company – that ticks all the boxes in both of those areas for you?
A: Plus applying my experience as a former small cap analyst and about 25 years at all levels of mining corporations, Falcon is being rebuilt to be an industry leader as the direct consequence of its business plan and objective. Its capitalization has been kept to as few shares out as possible. Management is not focused on funding lifestyle but on efficiencies and good governance. Acquisition decisions are made based upon the success of historical work and the likelihood of further success without undue expensive costs. Falcon’s assets are made up of mineral properties which the Company has expertise to explore and either to develop or to drop if warranted.
Q: Falcon is obviously predominantly a gold explorer, but your recent acquisition of cobalt properties adds a twist. How important is the cobalt to you as a hedge?
A: Falcon has for most of its history been recognized as a gold company when in fact it has held projects that encompass a variety of metals including copper, molybdenum and silver. Our recent acquisition near Atikokan in NW Ontario has been a long term objective of management. The geology of the claims is both unique and in keeping with modern concepts of metallogeny. The claims cover about 10 kilometers of the Quetico Fault Zone (“QFZ”) within which are a number of major occurrences of “banded iron formation”. These “BIF’s” are unusual due to contained zones/bands of sulphide mineralization – both massive and disseminated. The historic BIF-hosted Staines Cobalt Occurrence (0.64% Cu, 0.15% Co over 40m) is located within one of our claims. Plus regional airborne geophysical surveys indicate that about 4 kilometers of the QFZ has the likelihood of hosting similar Cobalt-mineralized BIF and affording us major drill targets.
Similar to the Destor Porcupine Fault Zone of the Timmins gold camp, splays off the QFZ are excellent locations to find gold deposits. Agnico Eagle’s 4.5 million ounce Hammond Reef gold deposit is a few kilometers to the north and Falcon’s past producing Central Canada gold mine are situated on QFZ splays. In fact, there are also several interesting gold occurrences within our Atikokan property.
Q: Your company, as it stands, has raised more money than the current market cap over the last few years, and has accrued interesting land packages along the way that cover several intriguing sectors, all without blowing out the share structure. It could be argued you guys are in an arbitrage situation. What do you think the junior mining investor crowd needs to see from you to start piling in?
A: Firstly, they need to understand the significance of our acquisition strategy related to historical mining and geological setting. Secondly – RESULTS! Falcon will need to deliver decisive results after this period of acquisitions. Each stage will be expected to have an accretive affect with respect to the value of the company. If not, the property will need to be dropped and efforts moved onto the next asset.
Q: If a potential investor was eyeing your stock but wanted to see you hitting milestones before they break in, what should they be looking for over the next month, six months, year...?
A: Through the remainder of the spring, we will be solidifying our project deals and making certain the market understands the “where what and why” that justifies the intent of the acquisition. Management will be focused on the distribution and presentation of the data and background for the projects while presenting the exploration plans to make or break the property.
The summer months (in Canada) will be occupied with the first stage exploration where our team will be on site, sampling surface showings and laying out the larger, later in the season programs. Drill targets will be defined by the surface sampling and new interpretations of the geology and the structures hosting the targets. We anticipate that management will visit each property to familiarize with the mineralization of each, to advise field personnel and to consult with first nations. We can expect a steady flow of news as a result of these early visits consisting reports of sampling and priority program plans.
By the end of summer, we can expect the start of the flow of data and drill results. It will be our objective to bring to the fore the discoveries of our field teams. Certainly, we have mitigated some of the exploration risk of all of our properties by selecting acquisition with proven targets but on zones that have had little if any news out and hence will come out as discoveries. We strongly believe that our Atikokan properties of the Central Canada Project is the model type of asset where very old exploration work has defined significant potential for commodities such as Cobalt and Gold.
Q: Trading volume in Falcon has ramped up over the last month – it looks like maybe some long holders cashed out to get in on financings and load up on warrants. What's your sense of the mood among folks who've been long Falcon for some time?
A: Much of the recent trading volume in Falcon shares has been due to management selling blocks to put the money back into the Company. We believe this shows our belief in the Company, its properties and, of course, ourselves. Our shareholder base which is largely composed of friends and family, are as frustrated with the general market malaise as anyone. However, for the most part, our stakeholders are supportive and looking for us to improve the market valuation and share price.
Q: We often tell people to look for smallcaps that have the 'wounded deer' look – that are low in market cap, low on shares out, and that have maybe had a period of restructuring while putting all the pieces together, that are moving slowly but may 'suddenly jump and take off.' This past month at Falcon, you have that look that the company is emerging from a long sleep and prepping for action. Would that be accurate?
A: Our stock has been in a holding pattern for sometime now. However, we have been very proactive – rather we have been sifting through proposals for agreements and looking for the 'right' opportunities. The Atikokan area has been of interest to management for nearly 40 years. The unique cobalt occurrences were notable, but the market conditions were not suitable. However, with demand and prices for cobalt rising and the countries that are the major supply sources politically uncertain, it seemed an excellent time to enter the cobalt sector. In addition, our cobalt deposits occur in a previously unrecognized deposit type in a potentially new cobalt mining camp. We believe there is likely a huge turnaround coming as the market wakens to discover Falcon’s new and improved asset base and potential for the substantial revaluation.
Q: What's the one thing about Falcon that you think the market really doesn't recognize that they should?
A: Markets seldom see beyond share price and charted trends. Professional traders, analysts and institutions are more likely to 'invest' in management. Falcon’s team is compact, but includes experts with domestic and international experience that spans the spectrum of fields necessary to build a successful mining junior. In combination, we have worked globally on mineral projects in jurisdictions from India to Polynesia, from the Canada’s Arctic to Argentina in projects that have been green fields to profitable mining operations. We have built companies that have seen radical price improvements in times of languishing metal prices and moved competitors to pay premiums in takeovers. And isn’t that what the junior market wants to see of its investments?
Falcon Gold trades under the ticker FG on the Venture Exchange.
-- Chris Parry
FULL DISCLOSURE: Falcon Gold is an Equity.Guru and Stockhouse marketing client.