First Mining Announces Positive Updated Preliminary Economic Assessment for the Springpole Gold Project Pre-Tax NPV5% of US$1.23 billion, Pre-Tax IRR of 26% and AISC of US$552/oz Average Annual Gold Production of 410,000 ounces in Years 2 through 9
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NEWS RELEASE
First Mining Announces Positive Updated Preliminary Economic
Assessment for the Springpole Gold Project
Pre-Tax NPV5% of US$1.23 billion, Pre-Tax IRR of 26% and AISC of US$552/oz
Average Annual Gold Production of 410,000 ounces in Years 2 through 9
This news release constitutes a “designated news release” for the purposes of First Mining Gold’s prospectus
supplement dated August 19, 2019 to its short form base shelf prospectus dated June 24, 2019.
October 16, 2019 – Vancouver, BC – First Mining Gold Corp. (“First Mining” or the “Company”) (TSX: FF)
(OTCQX: FFMGF) (FRANKFURT: FMG) is pleased to announce the positive results of an updated
independent Preliminary Economic Assessment (“PEA”) completed for its 100% -owned Springpole Gold
Project (the “Project”) located in northwestern Ontario, Canada. The PEA contemplates an open pit mine
and milling operation and reflects updated metallurgical testwork that has demonstrated the potential
for significantly improved recoveries. The PEA also reflects updated operating and capital cost estimates.
PEA Highlights
• $1.23 billion pre-tax net present value discounted at 5% (“NPV5%”) ($1.75 billion at $1,500/oz gold)
• $841 million after-tax NPV5% ($1.22 billion at $1,500/oz gold)
• 26% pre -tax internal rate of return (“IRR”) (33% at $1,500/oz gold), 22% after-tax IRR (28% at
$1,500/oz gold)
• Mine life of 12 years with a 2.5-year pre-production period
• Average annual gold produc tion in years 2 through 9 of 41 0,000 ounces gold and 2.4 million ounces
silver; 3.9 million ounces gold and 22 million ounces silver recovered over the Life of Mine (“LOM”)
• Low LOM strip ratio of 2.1 to 1 with a LOM mill grade of 1.0 g/t gold and 5.3 g/t silver
• LOM overall metal recoveries of 88% for gold and 93% for silver
• LOM direct operating cash costs (1) estimated at $575/oz of gold equivalent ($514/oz of gold on a by-
product basis)
• LOM all-in sustaining costs (AISC) (2) estimated at $611/oz of gold equivalent ($552/oz of gold on a by-
product basis)
• Initial capital costs estimated at $809 million, using an owner-operated mining scenario
• LOM sustaining capital costs estimated at $124 million, plus $26 million for closure costs
Note: Base case parameters assume a gold price of $1,300/oz and a silver price of $20/oz (the same prices used in the 2017 PEA),
and an exchange rate (C$ to US$) of 0.75. All currencies are reported in U.S. dollars unless otherwise specified. NPV calculated as
of the commencement of construction and excludes all pre-construction costs.
(1) Cash costs consist of mining costs, processing costs, mine-level G&A, treatment and refining charges and royalties.
(2) AISC consists of cash costs plus sustaining and closure costs.
“This updated PEA is an important step forward as we continue to advance and de-risk the Springpole
Gold Project,” stated Dan Wilton, CEO of First Mining. “ The updated PEA incorporates the potential for
improved gold and silver recoveries as a result of the updated metallurgical results that we announced in
February 2019. It reinforces the potential for the Springpole Gold Project to become one of Ca nada’s
largest gold mines when in production, with average annual gold production in excess of 400,000 ounces
between year 2 and year 9, with a very attractive operating cost profile. The results demonstrate a robust
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project, with further opportunity to improve on the economics through the optimization studies that will
be completed as we advance the Project through a Pre-Feasibility Study.”
This updated PEA for the Springpole Gold Project was prepared by SRK Consulting (Canada) Inc. (“SRK”)
of Vancouver, Canada, in accordance with National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”), and a technical report for the PEA will be filed by the Company on SEDAR within
45 days of this news release.
Readers are cautioned that the PEA is preliminary in nature and includes I nferred mineral resources that
are too speculative geologically to have economic considerations applied to them that would enable them
to be categorized as mineral reserves. There is no certainty tha t PEA results will be realized. Mineral
resources are not mineral reserves and do not have demonstrated economic viability.
PEA Overview
The Springpole Gold Project, located in northwestern Ontario, Canada, is one of the largest undeveloped
open pit gold projects in North America. The Project is located approximately 110 kilometres northeast of
the town of Red Lake.
The PEA update evaluates recovery of gold and silver from a 36,000 tonne -per-day (“tpd ”) open pit
operation, with a process plant that includes crushing, grinding, flotation, with fine grinding of the
flotation concentrate and agitated leaching of both the flotation concentrate and the flotation tails
followed by a carbon-in-pulp recovery process to produce doré bullion.
Important parameters of the updated PEA are presented in the following table.
Key Assumptions
Base Case Commodity Prices $1,300/oz Au, $20/oz Ag
Exchange Rate (C$ to US$) 0.75
Production Profile
Total Tonnes Processed (mt) 138.5
Total Tonnes Waste (mt) 319.0
Mill Grade - Gold, Silver 1.00 g/t Au, 5.28 g/t Ag
Mine Life 12 years
Throughput (tonnes per day) 36,000 tpd
Strip Ratio (waste:ore) 2.1 : 1
Overall Recovery - Gold, Silver 88% Au, 93% Ag
LOM Metal Recovered - Gold, Silver 3.9 mozs Au, 21.9 mozs Ag
Average Annual Production - Gold, Silver (Years 1 - 11) 356 kozs Au, 2.0 mozs Ag
Peak Production in Year 5 - Gold, Silver 529 kozs Au, 2.9 mozs Ag
Average Annual Production Years 2 to 9 - Gold, Silver 410 kozs Au, 2.4 mozs Ag
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Unit Operating Costs (1)
LOM Average Cash Cost (2) $575/oz gold eq., $514/oz gold (by-product)
LOM Cash Cost plus Sustaining Cost (AISC) (3) $611/oz gold eq., $552/oz gold (by-product)
Project Economics - $1,300/oz Gold Price
NPV5% - Pre-Tax, After-Tax $1.23 billion, $841 million
IRR - Pre-Tax, After-Tax 26%, 22%
Payback Period from Production Date 3.4 years
LOM Cash Flow - Pre-Tax, After-Tax $2.10 billion, $1.49 billion
Project Economics - $1,500/oz Gold Price
NPV5% - Pre-Tax, After-Tax $1.75 billion, $1.22 billion
IRR - Pre-Tax, After-Tax 33%, 28%
Payback Period from Production Date 2.9 years
LOM Cash Flow - Pre-Tax, After-Tax $2.88 billion, $2.05 billion
(1) All unit operating costs are shown on both equivalent as well as net of silver by-product credits
(2) Cash costs consist of mining costs, processing costs, mine-level G&A, treatment and refining charges and royalties
(3) AISC includes cash costs plus sustaining capital and closure costs
Economic Sensitivities
The Project economics and cash flows are highly sensitive to changes in the price of gold.
Springpole Economic Sensitivity to Gold Price
Gold Price (US$/oz) $1,200 $1,300 $1,400 $1,500
Pre-Tax NPV5% $972 million $1.23 billion $1.49 billion $1.75 billion
Pre-Tax IRR 23% 26% 30% 33%
After-Tax NPV5% $652 million $841 million $1.03 billion $1.22 billion
After-Tax IRR 19% 22% 25% 28%
Springpole Economic Sensitivity to Capital Costs
Initial Capital Costs +10% $809 million -10%
Pre-Tax NPV5% $1.15 billion $1.23 billion $1.32 billion
Pre-Tax IRR 24% 26% 29%
After-Tax NPV5% $773 million $841 million $909 million
After-Tax IRR 19% 22% 24%
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Springpole Economic Sensitivity to Operating Costs
Operating Costs +10% $2.36 billion -10%
Pre-Tax NPV5% $1.07 billion $1.23 billion $1.39 billion
Pre-Tax IRR 24% 26% 28%
After-Tax NPV5% $726 million $841 million $956 million
After-Tax IRR 20% 22% 24%
Mineral Processing and Metallurgical Testing
The updated PEA reflects higher recoveries for both gold and silver that were a result of the updated
metallurgical testwork completed in 201 8 and 201 9. First Mining contracted M3 Engineering and
Technology Corporation ( “M3”), with input from First Majestic Silver Corp.’s metallurgical team, to
manage a metallurgical testwork program to improve the gold an d silver recoveries and to define the
process flowsheet.
Based on the testwork carried out, a flowsheet that includes flotation followed by leaching of reground
concentrate and combined (rougher plus cleaner) tails presents as the more beneficial processing route
for the Project. This flowsheet is based on a primary grind of P 80 150 microns (“µm”) ahead of flotation,
with a cleaner flotation concentrate being re ground to ~17 µm ahead of agitated leaching. Under these
conditions, overall extractions achieved were 9 1% for gold and 9 6% for silver . When accounting for
carbon-in-pulp, carbon stripping and electrowinning circuit losses, the overall recoveries expected and
used for the economics presented in the PEA are 88% for gold and 93% for silver.
A proposed flowsheet for processing can be viewed at the following link:
https://www.firstmininggold.com/_resources/maps/2019-10-PEA-Process-Flow-Sheet.pdf
Capital Costs
The capital cost estimate for the proposed open pit operation is based on the scheduled plant throughput
rates, as well as a review of similar sized open pit gold operations.
Capital Cost Estimate Details
Initial Capital Cost Initial ($M) Sustaining ($M) LOM ($M)
Open Pit Mining $149 $52 $201
Processing $519 $6 $525
Infrastructure $38 - $38
Dike and Lake Dewatering (1) $29 - $29
Tailings Management Facility $74 $67 $141
Closure - $26 $26
Total $809 $150 $959
(1) Includes water management
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Mining Capital Costs
The open pit mining activities for the Project were assumed to be undertaken by an owner-operated fleet.
Mining capital costs were estimated based on a detailed equipment schedule matched to the mining
production schedule. Total initial mining equipment capital was estimated at $149 million for the life of
the project, inclusive of a 10% contingency and a 5% spares allowance.
Processing Capital Costs
Capital costs for the processing facility were estimated to be $519 million, inclusive of a $104 million
contingency. No major plant re-build or expansion was considered during the LOM, with sustaining capital
set to maintain the equipment in operating condition. No allowance for salvage value was made.
Site Infrastructure
An overall site plan for the Project can be viewed at the following link:
https://www.firstmininggold.com/_resources/maps/2019-10-PEA-Site-Layout.pdf
Springpole Lake Dewatering
The deposit sits underneath a small portion of the northern bay of Springpole Lake. Three dewatering
dikes (coffer dams), with a total length of approximately 510 metres, will need to be constructed to allow
this small portion of Springpole Lake to be dewatered. The coffer dams will have a height of 3 metres
above the waterline. The small area proposed to be dammed and dewatered totals 152 hectares and
represents approximately 6% of the entire surface area of the lake (and approximately 3% of the volume).
A map showing the portion of the lake proposed to be dammed and dewatered within the entire area of
Springpole Lake can be viewed at the following link:
https://www.firstmininggold.com/_resources/maps/2019-10-PEA-Springpole-Lake.pdf
Tailings Management Facility
The tailings management facility (“TMF”) has been relocated in the updated PEA to reduce the footprint
and haulage costs. It has also been designed to spread the required costs over the LOM . The TMF will be
located immediately west of the pit, and in the initial stages will occupy a smaller footprint to reduce the
construction period and to minimize the initial capital requirement. The TMF will be constructed with a
synthetic liner over the entire footprint to prevent exfiltration of contact water, and the dams will be
raised as needed as a measure to spread out the sustaining capital. The dams will be constructed using
waste rock that will be hauled directly from the pit.
Roads
The PEA contemplates a 12-metre-wide, two-lane unpaved, 39-kilometre access corridor road that would
extend from the Project to the existing Wenasaga Road , a Class 1 Forest Road that connects to the
provincial highway system near Ear Falls, Ontario. Alternative corridors for the access road will be further
assessed through trade-off studies as part of the Pre-Feasibility Study work for the Project.
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Power Infrastructure
It is anticipated that Springpole will be connected to the power grid via a 115 kV power line extending
along the planned road corridor. The electricity transmission infrastructure in the area is undergoing a
significant upgrade by Wataynikaneyap Power Inc. , who are in the process of building a new 230kV
transmission line to Pickle Lake. A direct connection to the new transmission line will be assessed through
trade-off studies as part of the Pre-Feasibility Study.
Operating Costs
Overall operating costs LOM, as well as on a unit cost, are summarized below.
Operating Costs LOM ($M) $/tonne milled $/oz AuEq.
Mining $763 $5.50 $180
Processing (1) $1,350 $9.75 $318
On-Site G&A $247 $1.78 $58
Total Operating Cost $2,360 $17.03 $556
Treatment & Refining Charges $4 n/a $1
Royalty $75 n/a $18
Cash Costs $2,439 n/a $575
Sustaining Capital (2) $150 n/a $35
All-in Sustaining Costs (AISC) $2,589 n/a $611
Note: $/oz AuEq. represent total revenue from payable metal divided by gold price
(1) Includes processing, TMF Opex and water management costs
(2) Includes closure capital
Operating Cost Estimate Details
Mining Costs
The PEA contemplates open pit mining undertaken by an owner -operated fleet. An average unit mining
cost of $1.74 per tonne of material mined was used in the economics. The cost estimate was built from
first principles and based on experience of similar sized open pit operations and local conditions. The open
pit mining costs consider variations in haulage profiles and equipment selection.
Processing Costs
An average cost of $9.71 per tonne of processed material was used in the PEA, based on the updated
process flowsheet. This i ncludes tailings handling, labour, consumables, maintenance and supplies. A
power cost of $0.08/kWh was assumed. An additional $0.04 per tonne of processed material was used in
the PEA for TMF Opex and water management costs.
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Mineral Resources
The mineral resources and resource methodology for the Project has not changed from the prior PEA. The
mineral resources stated in the PEA were prepared on March 15, 2017 and have been restated with this
updated PEA (with an effective date of September 1, 2019).
Category Tonnes
(Mt)
Grade
Au (g/t)
Grade
Ag (g/t)
Contained Metal
Au (mozs)
Contained Metal
Ag (mozs)
Indicated 139.1 1.04 5.4 4.67 24.19
Inferred 11.4 0.63 3.1 0.23 1.12
Source: Based on the technical report titled “Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada”, prepared
by SRK Consulting (Canada) Inc. and dated September 1, 2019
*Mineral resources are reported in relation to a conceptual pit shell. Mineral resources are not mineral reserves and do not have demonstrated
economic viability. All figures are rounded to reflect the relative accuracy of the estimate. All composites have been capped where appropriate.
**Open pit mineral resources are reported at a COG of 0.4 g/t gold. COGs are based on a gold price of $1,400/oz and a gold processing recovery
of 80% and a silver price of $15/oz and a silver processing recovery of 60%.
The current mineral resource model prepared by SRK used 401 core boreholes drilled by previous owners
of the property during the period of 2003 to 2013 . Drilling subsequent to 2016 was completed by First
Mining for metallurgical and geotechnical purposes and hence did not affect the mineral resource. The
Project currently consists of three separate mineralized zones: East Extension, Camp (also known as Main)
and Portage. The Portage zone is by far the largest of the three and represents more than 90% of the
stated mineral resource. There is potential for further explo ration upside along strike from the Portage
zone in the Springpole Lake area, as well as within the broader Springpole land package. Other targets on
the property include Satterly Lake and Horseshoe Island which have undergone drilling by previous
operators and may warrant further follow-up exploration in the future.
Over 95% of the contained gold in the resource is classified as Indicated. First Mining does not anticipate
requiring any further drilling to convert the remaining Inferred resources in prepara tion for a Pre -
Feasibility level assessment.
Production Schedule and Mine Plan
Mining would occur as a series of open pits with a maximum depth of approximately 400 metres. The
deposit is planned to produce a total of 139 Mt of plant process feed and 319 Mt of waste (2.1:1 overall
strip ratio) over a twelve-year mine operating life. The current LOM plan focuses on achieving consistent
processing feed production rates, mining of higher -grade material early in the schedule and balancing
grade and strip ratios.
A summary of the production schedule can be viewed at the following link:
https://www.firstmininggold.com/_resources/maps/2019-10-PEA-Production-Schedule.pdf
Project Enhancement Opportunities
The PEA identified a number of opportunities to enhance the project economics which will be investigated
as First Mining continues to advance the Springpole Gold Project. These parameters include:
• Mine Plan Optimization. Refined pit optimization parameters could result in better optimi zed open
pit limits which could reduce the overall strip rate.
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• Further Metallurgical Testing. Continued efforts to investigate opportunities to improve the
recoveries through further metallurgical testing and refining milling processes.
• Geotechnical Studie s. A better hydrogeological and geotechnical understanding may increase pit
slope angles, potentially reducing costs associated with mining waste material.
• Resource Expansion. There are other geophysical targets around the current resource where
additional drilling has the potential to add resources, which has the potential to extend the LOM.
Recommended Work
The PEA recommends that First Mining advance the Springpole Gold Project to a Pre -Feasibility Study.
Activities involved in advancing the project include additional metallurgical testwork, advanced
hydrogeological and geotechnical characteri zation, permitting and continued baseline environmental
studies. A number of these studies are ongoing right now as part of the data collection in suppor t of the
completion of an Environmental Impact Statement (“EIS”) for the Project.
Permitting and Environmental Baseline Data
First Mining has been actively collecting environmental baseline data necessary to support an
Environmental Assessment (“EA”) for the Springpole Gold Project since 2010. The studies, both completed
and ongoing, are focused on characterizing all relevant biological and physical components of the aquatic
and terrestrial environments that may be impacted by and may interact with the Project. The designs of
most of these programs were also vetted by representatives of the I ndigenous groups expressing an
interest in the project in order to ensure their valued components are consistent with those targeted in
the baseline studies. The databases compiled to date within these programs exceeds the level of
environmental baseline data one would typically have in support of a Preliminary Economic Assessment.
First Mining continues to advance the Project through the provincial and federal permitting process. The
Springpole Gold Project is subject to both provincial and federal EA processes. The goal is to prepare a
synchronized EIS that meets the f ederal and provincial requirements. Community consultation and
engagement with various stakeholders is ongoing with a number of consultation meetings taking place
with Indigenous communities and other stakeholders. The Company is now in its second round of
consultations in readiness for the preparation of the Terms of Reference and EIS preparation.
Qualified Persons and NI 43-101 Technical Report
The updated PEA for the Springpole Gold Project summarized in this news release was completed by SRK
and will be incorporated in a NI 43 -101 technical report which will be available under the Company’s
SEDAR profile at www.sedar.com, and on the Company’s website, within 45 days of this news release. The
compilation of the technical report was completed by Dr. Gilles Arseneau (SRK), Ph.D., P.Geo. - Qualified
Person for M ineral Resource Evaluation; Mr. Neil Winkelmann (SRK), FAusIMM - Qualified Person for
Economic Analysis; Mr. Grant Carlson (SRK), P.Eng. - Qualified Person for Open Pit Mine Engineering; Bruce
Andrew Murphy (SRK), P.Eng. - Qualified Person for Open Pit Geotechnical Aspects; Mark Liskowich (SRK),
P.Geo. - Qualified Person for Environmental and Social Aspects; Mauricio Herrera (SRK), Ph.D., P.Eng. -
Qualified Person for Hydrology; Michael Royle (SRK), M.App.Sci., P.Geo - Qualified Person for
Hydrogeology; Michel Noël (SRK), P.Eng. - Qualified Person for Tailings and Coffer Dams; Ms. Laurie Tahija
(M3), MMSA -OP - Qualified Person for Mineral Processing and Recovery Methods . By virtue of their
education, membership to a recognized professional association and relevant work experience, Dr.