Close

Form 6-K First Mining Gold Corp. For: Aug 06

August 8, 2022 2:56 PM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2022

 

Commission File Number: 000-55607

 

First Mining Gold Corp.

(Translation of registrant's name into English)

 

Suite 2070, 1188 West Georgia Street, Vancouver, B.C., V6E 4A2

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐      Form 40-F ☒

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☒

 

 

 

 

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Exhibits 99.1 and 99.2 to this Report on Form 6-K are hereby incorporated by reference as Exhibits to the Registration Statement on Form F-10 of First Mining Gold Corp. (File No. 333-231801).

 

DOCUMENTS FILED AS PART OF THIS FORM 6-K 

 

Exhibits

 

Description

99.1

 

Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2022 and 2021

99.2

 

Management’s Discussion & Analysis for the three and six months ended June 30, 2022

99.3

 

CEO Certification of Interim Filings

99.4

 

CFO Certification of Interim Filings

 

 
2

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

    First Mining Gold Corp.    

 

 

(Registrant)

 

 

 

Date: August 8, 2022

 

    /s/ Samir Patel    

 

 

Samir Patel

 

 

General Counsel and Corporate Secretary

 

 
3

 

 

EXHIBIT INDEX

 

Exhibits

 

Description

99.1

 

Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2022 and 2021

99.2

 

Management’s Discussion & Analysis for the three and six months ended June 30, 2022

99.3

 

CEO Certification of Interim Filings

99.4

 

CFO Certification of Interim Filings

 

 
4

 


ff_ex991.htm

EXHIBIT 99.1

 

 

 

 

First Mining Gold Corp.

 

Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)

(Unaudited)

 

 

 

 

 

 
1

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT JUNE 30, 2022 AND DECEMBER 31, 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)

(Unaudited)

 

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current                                                           

 

 

 

 

 

 

Cash and cash equivalents

 

$ 15,641

 

 

$ 29,516

 

Investments (Note 3)

 

 

6,320

 

 

 

13,386

 

Prepaid expenses, accounts and other receivables

 

 

940

 

 

 

1,009

 

Total current assets                      

 

 

22,901

 

 

 

43,911

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Mineral properties (Note 4)

 

 

185,459

 

 

 

170,017

 

Investment in Treasury Metals Inc. (Note 5)

 

 

7,800

 

 

 

15,400

 

Investment in PC Gold Inc. (Note 6)

 

 

21,568

 

 

 

21,570

 

Investment in Big Ridge Gold Corp. (Note 7)

 

 

1,465

 

 

 

1,491

 

Investment in Beattie Gold Mines Ltd. (Note 8)

 

 

5,543

 

 

 

-

 

Mineral property investments (Note 9)

 

 

745

 

 

 

6,435

 

Property and equipment

 

 

1,434

 

 

 

1,086

 

Other assets

 

 

334

 

 

 

399

 

Total non-current assets

 

 

224,348

 

 

 

216,398

 

TOTAL ASSETS

 

$ 247,249

 

 

$ 260,309

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 3,122

 

 

$ 4,491

 

Current portion of lease liability

 

 

167

 

 

 

127

 

Provision for Pickle Crow reclamation funding (Note 4(c))

 

 

990

 

 

 

990

 

Option – PC Gold (Note 4(c))

 

 

4,347

 

 

 

4,347

 

Total current liabilities                

 

 

8,626

 

 

 

9,955

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Lease liability

 

 

213

 

 

 

315

 

Silver Stream derivative liability (Note 10)

 

 

18,706

 

 

 

26,114

 

Total non-current liabilities

 

 

18,919

 

 

 

26,429

 

TOTAL LIABILITIES

 

 

27,545

 

 

 

36,384

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Share capital (Note 11)

 

 

321,684

 

 

 

318,499

 

Warrant and share-based payment reserve (Note 11)

 

 

48,933

 

 

 

47,282

 

Accumulated other comprehensive gain (loss)

 

 

(3,167 )

 

 

410

 

Accumulated deficit

 

 

(147,746 )

 

 

(142,266 )

Total shareholders’ equity

 

 

219,704

 

 

 

223,925

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$ 247,249

 

 

$ 260,309

 

Subsequent Events (Note 16)

                 

The consolidated financial statements were approved by the Board of Directors:      

 

Signed: “Keith Neumeyer”, Director                                              Signed: “Raymond Polman”, Director

    

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 
2

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)                                                                                 

(Unaudited)

 

 

 

 

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2022

 

 

  2021

 

 

    2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

General and administration

 

$ 1,117

 

 

$ 1,271

 

 

$ 2,540

 

 

$ 2,625

 

Exploration and evaluation

 

 

203

 

 

 

209

 

 

 

380

 

 

 

448

 

Investor relations and marketing communications

 

 

463

 

 

 

959

 

 

 

755

 

 

 

1,432

 

Corporate development and due diligence

 

 

93

 

 

 

90

 

 

 

202

 

 

 

247

 

Impairment of non-current assets (Note 5)

 

 

7,424

 

 

 

-

 

 

 

7,424

 

 

 

23,555

 

Loss from operational activities

 

 

(9,300 )

 

 

(2,529 )

 

 

(11,301 )

 

 

(28,307 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ITEMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on deconsolidation of subsidiary

 

 

-

 

 

 

8,830

 

 

 

-

 

 

 

8,830

 

Fair value gain (loss) on Silver Stream liability (Note 10)

 

 

6,987

 

 

 

(2,400 )

 

 

7,408

 

 

 

(8,403 )

Investments fair value gain (loss) (Note 3)

 

 

(2,280 )

 

 

154

 

 

 

(1,479 )

 

 

(633 )

Foreign exchange gain (loss)

 

 

(143 )

 

 

(97 )

 

 

44

 

 

 

(165 )

Other expenses

 

 

(20 )

 

 

(13 )

 

 

(62 )

 

 

(54 )

Interest and other income

 

 

66

 

 

 

71

 

 

 

114

 

 

 

134

 

Gain (loss) before income taxes

 

$ (4,690 )

 

$ 4,016

 

 

$ (5,276 )

 

$ (28,598 )

Equity losses and dilution impacts of equity accounted investments (Note 5,6,7 & 8)

 

 

(17 )

 

 

(5,299 )

 

 

(204 )

 

 

(5,688 )

Net income (loss) for the period

 

$ (4,707 )

 

$ (1,283 )

 

$ (5,480 )

 

$ (34,286 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to net income or (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments fair value gain (loss) (Note 3)

 

 

(1,544 )

 

 

2,445

 

 

 

(40 )

 

 

2,794

 

Mineral property investments fair value gain (loss) (Note 9)

 

 

(3,995 )

 

 

257

 

 

 

(3,536 )

 

 

(443 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that are or may be reclassified to net income or (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustment of foreign subsidiaries

 

 

7

 

 

 

(6 )

 

 

(1 )

 

 

(11 )

Other comprehensive income (loss)

 

 

(5,532 )

 

 

2,696

 

 

 

(3,577 )

 

 

2,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) and comprehensive income (loss) for the period

 

$ (10,239 )

 

$ 1,413

 

 

$ (9,057 )

 

$ (31,946 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share (in dollars)

 

$ (0.01 )

 

$ (0.00 )

 

$ (0.01 )

 

$ (0.05 )

Weighted average number of shares outstanding–Basic and Diluted

 

 

711,749,169

 

 

 

697,682,299

 

 

 

709,220,346

 

 

 

697,493,176

 

 

 The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 
3

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)                                                                                 

(Unaudited) 

 

 

 

 

 

 

 

 

 

Three months ended

June 30,

 

 

   Six months ended

June 30,

 

 

 

2022

 

 

  2021

 

 

    2022

 

 

     2021  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

  Net loss for the period

 

$ (4,707 )

 

$ (1,283 )

 

$ (5,480 )

 

$ (34,286 )

  Adjustments for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Gain on deconsolidation of subsidiary

 

 

-

 

 

 

(8,830 )

 

 

-

 

 

 

(8,830 )

     Impairment of non-current assets (Note 5(b))

 

 

7,424

 

 

 

-

 

 

 

7,424

 

 

 

23,555

 

     Share-based payments (Note 11)

 

 

414

 

 

 

470

 

 

 

1,070

 

 

 

1,246

 

     Depreciation

 

 

103

 

 

 

82

 

 

 

202

 

 

 

158

 

     Fair value (gain) loss on Silver Stream derivative liability (Note 10)         

 

 

(6,987 )

 

 

2,400

 

 

 

(7,408 )

 

 

8,403

 

     Investments fair value (gain) loss (Note 3)

 

 

2,280

 

 

 

(154 )

 

 

1,479

 

 

 

633

 

     Other expenses

 

 

15

 

 

 

14

 

 

 

57

 

 

 

52

 

     Accrued interest receivable

 

 

7

 

 

 

(52 )

 

 

3

 

 

 

(89 )

     Unrealized foreign exchange (gain) loss

 

 

(67 )

 

 

84

 

 

 

(44 )

 

 

138

 

     Equity and dilution loss on equity accounted investments            

 

 

18

 

 

 

5,298

 

 

 

205

 

 

 

5,688

 

Operating cash flows before movements in working capital

 

 

(1,500 )

 

 

(1,971 )

 

 

(2,492 )

 

 

(3,332 )

Changes in non-cash working capital items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Increase (decrease) in prepaid expenditures, accounts and other receivables                  

 

 

(85 )

 

 

(8 )

 

 

17

 

 

 

131

 

    Increase (decrease) in accounts payables and Accrued liabilities                       

 

 

749

 

 

 

41

 

 

 

(794 )

 

 

(613 )

Total cash used in operating activities

 

$ (836 )

 

$ (1,938 )

 

$ (3,269 )

 

$ (3,814 )

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mineral property expenditures (Note 4)

 

 

(8,270 )

 

 

(4,413 )

 

 

(14,225 )

 

 

(7,511 )

    Proceeds from sale of investments (Note 3)

 

 

1,032

 

 

 

561

 

 

 

5,510

 

 

 

11,386

 

    Property and equipment purchases

 

 

(48 )

 

 

(173 )

 

 

(484 )

 

 

(411 )

    Option payments and expenditures recovered

 

 

 

 

 

 

500

 

 

 

 

 

 

 

500

 

    Cash expended in acquisitions

 

 

-

 

 

 

-

 

 

 

(1,367 )

 

 

-

 

Total cash provided by (used in) investing activities

 

$ (7,286 )

 

$ (3,525 )

 

$ (10,566 )

 

$ 3,964

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Proceeds from Silver Stream (Note 10)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,757

 

    Proceeds from exercise of warrants and stock options            

 

 

-

 

 

 

190

 

 

 

-

 

 

 

199

 

    Repayment of lease liability

 

 

(32 )

 

 

(28 )

 

 

(62 )

 

 

(55 )

    Finance costs paid

 

 

(10 )

 

 

(13 )

 

 

(21 )

 

 

(26 )

Total cash used in financing activities

 

$ (42 )

 

$ 149

 

 

$ (83 )

 

$ 4,875

 

Foreign exchange effect on cash

 

 

81

 

 

 

(98 )

 

 

43

 

 

 

(164 )

Change in cash and cash equivalents

 

 

(8,083 )

 

 

(5,412 )

 

 

(13,875 )

 

 

4,861

 

Cash and cash equivalents, beginning

 

 

23,724

 

 

 

39,174

 

 

 

29,516

 

 

 

28,901

 

Cash and cash equivalents, ending

 

$ 15,641

 

 

$ 33,762

 

 

$ 15,641

 

 

$ 33,762

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 
4

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Expressed in thousands of Canadian dollars, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of common 

shares

 

 

Share capital

 

 

Warrant reserve

 

 

Share-based payment reserve

 

 

Accumulated other comprehensive income (loss)

 

 

Accumulated deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at December 31, 2020

 

 

697,216,453

 

 

$ 317,167

 

 

$ 25,056

 

 

$ 19,592

 

 

$ (1,392 )

 

$ (116,870 )

 

$ 243,553

 

Exercise of options (Note 11(d))

 

 

650,000

 

 

 

230

 

 

 

-

 

 

 

(67 )

 

 

-

 

 

 

-

 

 

 

163

 

Exercise of warrants (Note 11(c))

 

 

110,000

 

 

 

43

 

 

 

(7 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36

 

Shares issued in connection with mineral property tenure (Note 4)

 

 

565,705

 

 

 

208

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

208

 

Share-based payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,829

 

 

 

-

 

 

 

-

 

 

 

1,829

 

Obligation to distribute investments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,969

 

 

 

10,969

 

Loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(34,286 )

 

 

(34,286 )

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,340

 

 

 

-

 

 

 

2,340

 

Balance as at June 30, 2021

 

 

698,542,158

 

 

$ 317,648

 

 

$ 25,049

 

 

$ 21,354

 

 

$ 948

 

 

$ (140,187 ))

 

$ 224,812

 

Balance as at December 31, 2021

 

 

700,200,059

 

 

$ 318,499

 

 

$ 25,063

 

 

$ 22,219

 

 

$ 410

 

 

$ (142,266 )

 

$ 223,925

 

Settlement of RSUs (Note 11(e))

 

 

283,332

 

 

 

69

 

 

 

-

 

 

 

(69 )

 

 

-

 

 

 

-

 

 

 

-

 

Shares issued on acquisition of Beattie Gold Mines (Note 8)

 

 

7,636,944

 

 

 

2,024

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,024

 

Shares issued in connection with mineral property tenure (Note 4)

 

 

3,955,437

 

 

 

1,092

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,092

 

Share reduction due to expiry 

 

 

(118,029 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based payments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,720

 

 

 

-

 

 

 

-

 

 

 

1,720

 

Loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,480 )

 

 

(5,480 )

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,577 )

 

 

-

 

 

 

(3,577 )

Balance as at June 30, 2022

 

 

711,957,743

 

 

$ 321,684

 

 

$ 25,063

 

 

$ 23,870

 

 

$ (3,167 )

 

$ (147,746 )

 

$ 219,704

 

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

 
5

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

1.  NATURE OF OPERATIONS

 

First Mining Gold Corp. (the “Company” or “First Mining”) is a public company which is listed on the Toronto Stock Exchange (the “TSX”) under the symbol “FF”, on the OTCQX under the symbol “FFMGF”, and on the Frankfurt Stock Exchange under the symbol “FMG”. The Company’s head office and principal address is Suite 2070 – 1188 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4A2.

 

First Mining was incorporated on April 4, 2005. The Company changed its name to First Mining Gold Corp. in January 2018.

 

First Mining is advancing a portfolio of gold projects in Canada, with the most advanced project being the Springpole Gold Project in northwestern Ontario. The Company also holds a 15% equity position in Treasury Metals Inc. which is advancing the Goliath Gold Complex toward construction. First Mining’s portfolio of gold projects in eastern Canada also includes Hope Brook (being advanced in partnership with Big Ridge Gold Corp.), Cameron, Central Duparquet, Duquesne, and Pitt gold projects. In addition, the Company holds a 30% interest in the PC Gold Inc. legal entity which holds the Pickle Crow gold project (being advanced by Auteco Minerals Ltd).

 

In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. The Company continues to evaluate the potential impacts arising from COVID-19 on all aspects of its business. For the period ended June 30, 2022, there were no significant financial impacts on the Company.

 

2.  BASIS OF PRESENTATION

 

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting using policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2021, as some disclosures from the annual consolidated financial statements have been condensed or omitted.

 

These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit and loss or fair value through other comprehensive income (loss), which are stated at their fair value. The condensed interim consolidated financial statements are presented in thousands of Canadian dollars, unless otherwise noted, and tabular amounts are expressed in thousands of Canadian dollars.

 

These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries.

 

The functional currency of the Company and its Canadian subsidiaries is the Canadian dollar while the functional currency of the Company’s non-Canadian subsidiary is the US dollar.

 

These unaudited condensed interim consolidated financial statements were approved by the Board of Directors on August 8, 2022.

 

 
6

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

2.  BASIS OF PRESENTATION (continued)

 

In preparing the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2022, the Company used the same accounting policies, methods of computation and accounting policy judgments as in the annual consolidated financial statements for the year ended December 31, 2021. Additionally, the areas of estimation uncertainty remain unchanged from those disclosed in the annual consolidated financial statements. There are no IFRS or IFRS Interpretations Committee interpretations that are not yet effective that, if adopted, would be expected to have a material impact on the Company’s condensed interim consolidated financial statements.

 

3.  INVESTMENTS

 

The movements in investments during the six months ended June 30, 2022 and the year ended December 31, 2021 are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Marketable Securities (FVTPL)

 

 

Marketable Securities (FVTOCI)

 

 

Warrants

(FVTPL)

 

 

Total

Investments

 

Balance as at December 31, 2021

 

$ 8,400

 

 

$ 4,986

 

 

$ -

 

 

$ 13,386

 

Additions

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Disposals

 

 

(4,436 )

 

 

(1,111 )

 

 

-

 

 

 

(5,547 )

Loss recorded in other comprehensive loss

 

 

-

 

 

 

(40 )

 

 

-

 

 

 

(40 )

Loss recorded in net loss

 

 

(1,479 )

 

 

-

 

 

 

-

 

 

 

(1,479 )

Balance as at June 30, 2022

 

$ 2,485

 

 

$ 3,835

 

 

$ -

 

 

$ 6,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Marketable Securities (FVTPL)

 

 

Marketable Securities (FVTOCI)

 

 

 Warrants (FVTPL)

 

 

Total Investments

 

Balance as at December 31, 2020

 

$ 9,267

 

 

$ 3,386

 

 

$ 5,772

 

 

$ 18,425

 

Additions

 

 

13,691

 

 

 

216

 

 

 

-

 

 

 

13,907

 

Disposals

 

 

(13,971 )

 

 

(710 )

 

 

-

 

 

 

(14,681 )

Gain recorded in other comprehensive income

 

 

-

 

 

 

2,094

 

 

 

-

 

 

 

2,094

 

Loss recorded in net loss

 

 

(587 )

 

 

-

 

 

 

(3,698 )

 

 

(4,285 )

Distribution to shareholders

 

 

-

 

 

 

-

 

 

 

(2,074 )

 

 

(2,074 )

Balance as at December 31, 2021

 

$ 8,400

 

 

$ 4,986

 

 

$ -

 

 

$ 13,386

 

 

The Company holds securities of publicly traded companies as strategic interests. The investments where the Company does not have significant influence are classified as marketable securities. The Auteco and First Majestic common shares are classified as FVTPL. Other marketable securities are designated as FVTOCI.

 

During the six months ended June 30, 2022, the Company:

 

·

 

Sold a total of 60,000,000 common shares of Auteco for net proceeds of $4,406,000 which resulted in a $96,000 realized loss on sale based on the initial value at the time of initial recognition of the securities; and

·

 

Sold a total of 734,500 common shares of other marketable securities for net proceeds of $1,104,000 which resulted in a realized gain on sale of $744,000 based on the original cost at the time of initial recognition of the securities.

 

 
7

 

  

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

  

4.  MINERAL PROPERTIES

 

As at June 30, 2022 and December 31, 2021, the Company has capitalized the following acquisition, exploration, and evaluation costs on its mineral properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springpole

 

 

Birch-Uchi

(Note 4(a))

 

 

Cameron

 

 

Duquesne/

Pitt

 

 

Hope Brook

(Note 4(b))

 

 

Pickle Crow

(Note 4(c))

 

 

Others (1)

 

 

Total

 

Balance

December 31, 2021

 

$ 104,065

 

 

$ 1,320

 

 

$ 32,329

 

 

$ 7,244

 

 

$ 18,027

 

 

$ -

 

 

$ 7,032

 

 

$ 170,017

 

Acquisition

 

 

1,566

 

 

 

355

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36

 

 

 

1,957

 

Concessions, taxes and royalties

 

 

199

 

 

 

-

 

 

 

10

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

210

 

Salaries and share-based payments

 

 

1,928

 

 

 

237

 

 

 

41

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

88

 

 

 

2,296

 

Drilling, exploration, and technical consulting

 

 

4,879

 

 

 

44

 

 

 

49

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

91

 

 

 

5,063

 

Assaying, field supplies, and environmental

 

 

4,878

 

 

 

5

 

 

 

14

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6

 

 

 

4,903

 

Travel and other expenditures

 

 

993

 

 

 

11

 

 

 

4

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

1,009

 

Total Expenditures

 

$ 14,443

 

 

$ 652

 

 

$ 118

 

 

$ 2

 

 

$ -

 

 

$ -

 

 

$ 223

 

 

 

415,438

 

Disposal, impairment or reclassification

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

4

 

Balance

June 30, 2022

 

$ 118,508

 

 

$ 1,972

 

 

$ 32,447

 

 

$ 7,246

 

 

$ 18,027

 

 

$ -

 

 

$ 7,259

 

 

$ 185,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Springpole

 

 

Birch-Uchi

 

 

Cameron

 

 

Duquesne/

Pitt

 

 

Hope Brook

 

 

Pickle Crow

 

 

Others (1)

 

 

Total

 

Balance

December 31, 2020

 

$ 87,907

 

 

$ -

 

 

$ 31,875

 

 

$ 7,229

 

 

$ 20,612

 

 

$ 24,986

 

 

$ 6,820

 

 

$ 179,429

 

Acquisition

 

 

1,222

 

 

 

1,047

 

 

 

21

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,290

 

Concessions, taxes and royalties

 

 

684

 

 

 

-

 

 

 

32

 

 

 

3

 

 

 

20

 

 

 

-

 

 

 

-

 

 

 

739

 

Salaries and share-based payments

 

 

3,311

 

 

 

3

 

 

 

185

 

 

 

6

 

 

 

44

 

 

 

22

 

 

 

114

 

 

 

3,685

 

Drilling, exploration, and technical consulting

 

 

4,235

 

 

 

269

 

 

 

102

 

 

 

6

 

 

 

16

 

 

 

3,251

 

 

 

290

 

 

 

8,169

 

Assaying, field supplies, and environmental

 

 

5,194

 

 

 

1

 

 

 

80

 

 

 

-

 

 

 

3

 

 

 

-

 

 

 

18

 

 

 

5,296

 

Travel and other expenditures

 

 

1,512

 

 

 

-

 

 

 

34

 

 

 

-

 

 

 

17

 

 

 

-

 

 

 

6

 

 

 

1,569

 

Total Expenditures

 

$ 16,158

 

 

$ 1,320

 

 

$ 454

 

 

$ 15

 

 

$ 100

 

 

$ 3,273

 

 

$ 428

 

 

$ 21,748

 

Disposal, impairment or reclassification

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,685 )

 

 

(28,259 )

 

 

(216 )

 

 

(31,160 )

Balance

December 31, 2021

 

$ 104,065

 

 

$ 1,320

 

 

$ 32,329

 

 

$ 7,244

 

 

$ 18,027

 

 

$ -

 

 

$ 7,032

 

 

$ 170,017

 

 

(1)

Other mineral properties as at June 30, 2022 and December 31, 2021 include: the mining claims and concessions located in the Township of Duparquet, Québec, which are near the Company’s Duquesne gold project with a 1.5% NSR Royalty under the terms of the Treasury Share Purchase Agreement (defined in Note 5); and the Turquoise Canyon property in Nevada (under option with Momentum Minerals Ltd. which was subsequently acquired by IM Exploration Inc. on July 6, 2021 and IM Exploration Inc. was renamed to Westward Gold Inc. on October 7, 2021).

 

 
8

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

4.  MINERAL PROPERTIES (continued)

 

The Company has various underlying agreements and commitments with respect to its mineral properties, which define annual or future payments in connection with royalty buy-backs or maintenance of property interests, the most significant of which are discussed below. During the period ended June 30, 2022, the company issued 3,000,000 shares in relation to a Springpole property acquisition and issued 955,437 shares in accordance with certain Birch-Uchi option agreements.

 

a)   Birch-Uchi Properties

 

i)       Swain Post property option

 

On February 26, 2021, the Company entered into a three year earn-in agreement with Exiro Minerals Corp. (“Exiro”) pursuant to which First Mining may earn a 100% interest in Exiro’s Swain Post property (“Swain Post Property”) in northwestern Ontario by making total cash and share payments of $335,000 to Exiro during the term of the option, and by completing all assessment work requirements on the Swain Post Property during the three-year option term. During the period ended June 30, 2022, the company issued 388,267 shares and made payments of $50,000 in cash under the terms of the Earn-In agreement.

 

ii)      Swain Lake property option

 

On April 28, 2021, the Company entered into an earn-in agreement with Whitefish Exploration Inc. (“Whitefish”), which gives First Mining the option to earn up to a 100% interest in Whitefish’s Swain Lake project (“Swain Lake”) in northwestern Ontario in two stages over a period of five years.  First Mining may earn a 70% interest in Swain Lake by making cash payments totaling $200,000 and share payments totaling $425,000, and by incurring at least $500,000 worth of expenditures on the Swain Lake Property during the first three years of the earn-in term. Upon completing the first stage of the earn-in, First Mining will hold a 70% interest in the Swain Lake Property and will have an additional period of two years within which to acquire the remaining 30% of the project by paying $1,000,000 in cash and issuing $1,000,000 worth of First Mining shares to Whitefish. During the period ended June 30, 2022, the company issued 702,875 shares and made payments of $100,000 in cash under the terms of the Earn-In agreement.

 

iii)      Vixen properties option

 

On September 15, 2021, the Company entered into a three-year option agreement with ALX Resources Corp. (“ALX”) pursuant to which First Mining may earn up to a 100% interest in ALX’s Vixen North, Vixen South and Vixen West properties (the “Vixen Properties”) in northwestern Ontario in two stages over a period of five years. First Mining may earn a 70% interest in the Vixen Properties by making cash and share payments of approximately $950,000 to ALX during the term of the option, and by incurring at least $500,000 worth of expenditures on the property during the initial three-year option term.  Upon completing the first stage of the earn-in, First Mining will hold a 70% interest in the Vixen Properties and will have an additional period of two years to acquire the remaining 30% of the project by paying $500,000 in cash and issuing $500,000 worth of First Mining shares to ALX.

 

iv)       Birch Lake properties earn-in

 

On October 11, 2021, the Company entered into an earn-in agreement with Pelangio Exploration Inc. (“Pelangio”) pursuant to which First Mining may earn up to an 80% interest in Pelangio’s Birch Lake properties (the “Birch Lake Properties”) in two stages over a period of six years. First Mining may earn a 51% interest in the Birch Lake Properties by making cash payments totaling $350,000 and issuing in aggregate 1,300,000 First Mining shares and by incurring at least $1,750,000 worth of expenditures on the Birch Lake Properties during the first 4 years of the earn-in term.  Upon completing the first stage of the earn-in, First Mining will hold a 51% interest in the Birch Lake Properties and will have an additional period of 2 years to acquire a further 29% interest in the Birch Lake Properties by paying $400,000 to Pelangio in cash or issuing First Mining Shares, at First Mining’s sole discretion, and by incurring an additional $1,750,000 worth of expenditures on the Birch Lake Properties. 

 

 
9

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

4.  MINERAL PROPERTIES (continued)

 

v)      Stargazer properties earn-in

 

On October 29, 2021, the Company entered into a three year earn-in agreement with a private individual pursuant

to which First Mining may earn a 100% interest in the Stargazer and other properties (“Stargazer Properties”) in northwestern Ontario by making cash and share payments of $250,000 to the private individual during the term of the option, and by incurring at least $350,000 worth of expenditures on the Stargazer Properties during the three-year option term.

 

b)   Hope Brook Project

 

On June 8, 2021, the Company announced it had closed a definitive earn-in agreement with Big Ridge Gold Corp.  “Big Ridge” (the “Big Ridge transaction”) whereby Big Ridge may earn up to an 80% interest in First Mining’s Hope Brook Gold Project located in Newfoundland, Canada. Pursuant to the definitive earn-in agreement, Big Ridge can earn an 80% interest in the Hope Brook Project through a two-stage earn-in over five years by incurring a total of $20,000,000 in qualifying expenditures, issuing up to 36.5 million shares of Big Ridge to First Mining and making a future cash payment to First Mining. Upon completion of the earning in, First Mining will retain a 20% interest in the Hope Brook Project and a 1.5% net smelter returns royalty on the Hope Brook Project, of which 0.5% can be bought back by Big Ridge for $2,000,000. In accordance with the agreement, First Mining nominated one member to the Board of Directors of Big Ridge upon closing and received $500,000 and 11,500,000 shares of Big Ridge which have been credited against the Hope Brook project mineral property balance. At the end of the reporting period, the Company assessed the Hope Brooke Project for impairment indicators, no impairment indicators were identified. See Note 7 below for further details of the equity accounted investment in Big Ridge.

 

c)   Pickle Crow Project

 

On March 12, 2020, the Company and Auteco executed a definitive Earn-In Agreement (the “Auteco Earn-In Agreement”) whereby Auteco may earn up to an 80% interest in PC Gold, a then wholly-owned subsidiary of First Mining which owns the Pickle Crow Project. Pursuant to the Auteco Earn-In Agreement, the Earn-In is comprised of two stages and on June 9, 2021, the Company announced completion of the Stage 1 earn-in and accordingly Auteco obtained a 51% ownership of the PC Gold legal entity. First Mining received the scheduled 100,000,000 Auteco shares and executed the joint venture shareholders agreement.

 

Following the completion of the Stage 1 earn-in by Auteco, First Mining’s percentage ownership of its former subsidiary, PC Gold, was reduced from 100% to 49%, which led to a loss of control and the resulting deconsolidation of PC Gold Inc. from First Mining’s financial statements. Following completion of the Stage 2 earn-in in Q3 2021 the Company delivered the additional 19% interest in PC Gold to Auteco from the Option – PC Gold balance which represented the fair value loss on the reduced 30% PC Gold ownership. A corresponding reduction in the equity accounted investment in PC Gold was also recorded as a result of this dilution. The $4,347,000 balance as at June 30, 2022 represents the additional net dilution which would result from Auteco completing its additional 10% equity interest. Following receipt of $3,000,000 under this option First Mining’s ownership would reduce to 20%.

 

 
10

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

4.  MINERAL PROPERTIES (continued)

 

The Company’s agreement with Auteco requires First Mining to contribute its pro-rata share of environmental reclamation funding, which was 30% as at June 30, 2022 following completion of the stage 2 earn-in. Accordingly, the company has recorded a provision of $990,000 as at June 30, 2022 (December 31, 2021 - $990,000).

 

5.  INVESTMENT IN TREASURY METALS

 

a)   Treasury Share Purchase Agreement Overview

 

On August 7, 2020, First Mining completed a transaction with Treasury Metals under a share purchase agreement (the “Treasury Share Purchase Agreement”), pursuant to which Treasury Metals agreed to acquire all of the issued and outstanding shares of Tamaka Gold Corporation, a previously wholly-owned subsidiary of the Company, and 100% owner of the Goldlund Project. Under the terms of the Treasury Share Purchase Agreement, First Mining received total consideration of $91,521,000 which was comprised of (i) 43.33 million common shares (post-consolidation) of Treasury Metals (“Treasury Metals Shares”) with a fair value of $78,000,000; (ii) 11.67 million common share purchase warrants (post-consolidation) of Treasury Metals (“Treasury Metals Warrants”) with an exercise price of $1.50 for a three year term with a fair value of $9,812,000; (iii) a retained 1.5% Net Smelter Returns (“NSR”) royalty on Goldlund (0.5% of which can be bought back by Treasury Metals for $5 million in cash) with a fair value of $3,709,000; and (iv) the right to certain contingent milestone payments totaling $5 million, payable in cash on certain key advancements at Goldlund which have not been recorded as at June 30, 2022.

 

b)   Equity Accounting Method for Investment in Treasury Metals and Impairment

 

The Company has concluded it has significant influence over Treasury Metals. The Company is accounting for its investment using the equity method. As at June 30, 2022 the fair market value of the Company’s investment in common shares of Treasury Metals was $7,800,000, based on the Treasury Metals quoted market price. Due to the significant decline in fair value of the Treasury Metals Shares as at June 30, 2022, the Company recorded an impairment of the investment in Treasury Metals amounting to $7,424,000. This impairment was recorded within the impairment of non-current assets in the statement of net income (loss) and comprehensive income (loss). As at June 30, 2022, the Company owns approximately 20.0 million Treasury Metals Shares. 

 

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ 15,400

 

 

$ 63,812

 

Acquisition – Initial Recognition on August 7, 2020

 

 

-

 

 

 

-

 

Equity loss

 

 

(176 )

 

 

(167 )

Dilution event in Q2, 2021

 

 

-

 

 

 

(5,000 )

Impairment of Investment in Treasury Metals Inc.                                      

 

 

(7,424 )

 

 

(24,304 )

Distribution to shareholders

 

 

-

 

 

 

(18,941 )

Balance, end of period

 

$ 7,800

 

 

$ 15,400

 

 

The equity accounting for Treasury Metals is based on published results to December 31, 2021 and an estimate of results for the period of January 1, 2022 to June 30, 2022. The Company’s estimated equity share of Treasury’s net loss for the three-month period ending June 30, 2022 was $176,000.

 

 
11

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

6.  INVESTMENT IN PC GOLD INC.

 

Following the completion of the Stage 1 earn-in into PC Gold by Auteco, First Mining determined that its then 49% investment in the common shares of PC Gold gave it significant influence over PC Gold, requiring PC Gold to be recorded in First Mining’s financial statements using the equity method of accounting as an investment in associate.

 

The initial recognition of the investment in associate was accounted for based on an estimated fair value using a market approach to value Pickle Crow’s inferred resources on a per unit of metal basis derived from comparable gold project transactions. As at June 30, 2022, the Company owns a 30% interest in PC Gold Inc. 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ 21,570

 

 

$ -

 

Acquisition – Initial Recognition on June 9, 2021

 

 

-

 

 

 

36,000

 

Equity loss

 

 

(2 )

 

 

(3 )

Dilution of ownership - Stage 2 earn-in completion

 

 

-

 

 

 

(14,427 )

Balance, end of period

 

$ 21,568

 

 

$ 21,570

 

 

The subsequent equity accounting for PC Gold is based on audited results for the year-ended June 30,2021, and an estimate of results for the period of July 1, 2021 to June 30, 2022. The Company’s estimated equity share of PC Gold’s net loss for the interim period ending June 30, 2022 was $2,000.

 

7.  INVESTMENT IN BIG RIDGE GOLD CORP.

 

Following completion of the Big Ridge transaction on June 7, 2021, the Company’s common share ownership interest in Big Ridge was approximately 19.8% (Initial Recognition fair value - $2,185,000) and was 11% on June 30, 2022 following a dilution event whereby Big Ridge issued 23.4 million flow-through shares as part of a private placement. In addition to its share ownership interest, the Company considered various qualitative factors including representation rights on Big Ridge’s board of directors in arriving at the determination that significant influence exists, and therefore the Company applies the equity method of accounting.

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ 1,491

 

 

$ -

 

Acquisition – Initial Recognition on June 7, 2021

 

 

-

 

 

 

2,185

 

Equity loss

 

 

(26 )

 

 

(106 )

Dilution event in Q2 2021

 

 

-

 

 

 

(588 )

Balance, end of period

 

$ 1,465

 

 

$ 1,491

 

 

The subsequent equity accounting for Big Ridge is based on unaudited results for the year end June 30, 2021 and an estimate of results for the period of July 1, 2021 to June 30, 2022.The Company’s estimated equity share of Big Ridge’s net loss for the interim period ending June 30, 2022 was $26,000.

 

 
12

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

8.  INVESTMENT IN BEATTIE GOLD MINES LTD.

 

On February 7, 2022, the Company announced that it had acquired an aggregate of 286,904 common shares of Beattie Gold Mines Ltd. (“Beattie Gold”), a private company that owns the mineral rights to mining claims that make up the former Beattie mining concession that form a large part of the Duparquet Gold Project located on the Destor-Porcupine Fault in Québec. Together with the 187,839 common shares of Beattie already owned by Clifton Star Resources Inc. (“Clifton Star”), a wholly-owned subsidiary of First Mining, the Company now owns 474,743 common shares of Beattie, increasing its ownership in Beattie from 10% to 25.3% of the issued and outstanding common shares of Beattie.

 

Following completion of the Beattie transaction the Company determined that its 25.3% investment in the common shares of Beattie gave it significant influence, requiring the Company’s ownership interest in Beattie to be recorded in First Mining’s financial statements using the equity method of accounting as an investment in associate.

 

The initial recognition of the investment in associate was accounted for based on consideration payments under the purchase agreement for an additional 15.3% equity ($3,390,000) combined with a reclassification from Mineral Property Investments (Note 9) of the historically owned 10% equity of Beattie ($2,154,000).  

 

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ -

 

 

$ -

 

Acquisition – Initial Recognition on Feb 7, 2022

 

 

5,544

 

 

 

-

 

Equity loss (Feb 7, 2022 to June 30, 2022)

 

 

(1 )

 

 

-

 

Balance, end of period

 

$ 5,543

 

 

$ -

 

 

The Company’s estimated equity share of Beattie Gold’s net loss for the interim period ending June 30, 2022 was $1.

 

9.  MINERAL PROPERTY INVESTMENTS

 

The Company, through its wholly-owned subsidiary Clifton Star, has a 10% interest in the shares of 2699681 Canada Ltd. (“269 Canada”) and 2588111 Manitoba Ltd. (“258 Manitoba”) which directly or indirectly own various mining concessions and surface rights that comprise the remainder of the Duparquet Gold Project.

 

Mineral property investments (which comprise equity interests in the shares of two private companies, namely 269 Canada and 258 Manitoba) are designated as FVTOCI, with changes in fair value recorded in other comprehensive income (loss). During the period ended June 30, 2022, the Company’s 10% investment in Beattie was reclassified to Investment in associate (Note 8) following the purchase of an additional 15.3% equity ownership in Beattie. In addition, in light of the Company’s announcement on July 18, 2022, the Mineral Property Investments balance was reduced to reflect fair value associated with the offer made and subsequent acceptance to acquire the remaining 90% of 269 Canada and 258 Manitoba (see Note 16).  

 

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ 6,435

 

 

$ 6,726

 

Fair value loss - FVTOCI

 

 

(3,536 )

 

 

(291 )

Reclassified to Investment in Beattie Gold Mines

 

 

(2,154 )

 

 

-

 

Balance, end of period

 

$ 745

 

 

$ 6,435

 

 

 
13

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

10.  SILVER STREAM DERIVATIVE LIABILITY

 

a)   Silver Purchase Agreement Overview and Consideration Received

 

On June 10, 2020, the Company entered into a silver purchase agreement (the “Silver Purchase Agreement”) with First Majestic Silver Corp. (“First Majestic”), which closed on July 2, 2020. Under the terms of the Silver Purchase Agreement, First Majestic agreed to pay First Mining total consideration of US$22.5 million (approx. $30.6 million as

at the closing date), in three tranches, for the right to purchase 50% of the payable silver produced from the Springpole Gold Project over the life of the project (the “Silver Stream”) and also received 30 million common share purchase warrants of First Mining. Each share purchase warrant entitles First Majestic to purchase one common share of First Mining at an exercise price of $0.40 for a period of five years. The fair value of the warrants issued of $6,278,000 was recorded in Equity (Warrant reserve) on the Company’s consolidated statements of financial position.

 

First Mining has the right to repurchase 50% of the Silver Stream for US$22.5 million (approx. $28.1 million as at June 30, 2022) at any time prior to the commencement of production at Springpole (the “Buy-Back Right”).

 

Per the Silver Purchase Agreement, First Majestic paid US$10 million ($13.7 million) to First Mining on the July 2, 2020 closing date, with US$2.5 million ($3.3 million) paid in cash and the remaining US$7.5 million ($10.4 million) paid in 805,698 common shares of First Majestic (“Tranche 1”). Upon announcement of the Pre-Feasibility Study (“PFS”) on March 4, 2021, First Mining received US$7.5 million ($9.8 million) from First Majestic, with US$3.75 million

($4.8 million) paid in cash and the remaining US$3.75 million ($5.0 million) paid in 287,300 common shares of First Majestic (“Tranche 2”). The final trance (“Tranche 3”) of US$5.0 million ($6.5 million) is payable by First Majestic upon First Mining receiving approval of a federal or provincial EA for the Springpole Gold Project, which is to be paid half in cash and half in shares of First Majestic.

 

b)   Silver Stream Derivative Liability Fair Value

 

The Company has concluded that the Silver Stream is a standalone derivative measured at FVTPL.

 

The estimated fair value of the Silver Stream derivative liability is determined using a discounted cash flow model which incorporates a Monte Carlo simulation. The fair value of the Silver Stream derivative liability is a Level 3 measurement.

 

The fair value of the Silver Stream derivative liability is calculated at each reporting date as the net of the future Advance Payment tranches receivable (an asset for the Company) and the Silver Stream obligation (a liability to the Company), with gains or losses recorded in the statement of net loss and comprehensive loss. The fair value of the Silver Stream derivative liability as at June 30, 2022 is US$14,517,000 ($18,706,000), which is comprised of the Silver Stream obligation fair value of US$17,784,000 ($22,916,000) less the Advance Payment receivable fair value of US$3,267,000 ($4,210,000). The fair value of the Silver Stream derivative liability as at December 31, 2021 was US$20,664,000 ($26,114,000), which is comprised of the Silver Stream obligation fair value of US$23,818,000 ($30,098,000) less the Advance Payment receivable fair value of US$3,154,000 ($3,984,000).

 

 
14

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

10.  SILVER STREAM DERIVATIVE LIABILITY (continued)

 

 

 

 

 

 

 

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

$ (26,114 )

 

$ (13,260 )

Advance payment received (Tranche 2) (US$7.5 million) mmillion)

 

 

-

 

 

 

(9,808 )

Change in fair value during the period

 

 

7,408

 

 

 

(3,046 )

Balance, end of period

 

$ (18,706 )

 

$ (26,114 )

 

11.  SHARE CAPITAL

 

a)   Authorized

 

Unlimited number of common shares with no par value.

Unlimited number of preferred shares with no par value.

 

b)   Issued and Fully Paid

 

Common shares: 711,957,743 (December 31, 2021 – 700,200,059).

Preferred shares: nil (December 31, 2020 – nil).

 

c)  Warrants

 

The movements in warrants during the six months ended June 30, 2022 and year ended December 31, 2021 are summarized as follows:

 

 

 

 

 

 

 

 

 

 

Number

 

 

Weighted average exercise price

 

Balance as at December 31, 2020

 

 

93,085,657

 

 

$ 0.48

 

Warrants issued

 

 

2,100,228

 

 

 

0.38

 

Warrants exercised

 

 

(265,650 )

 

 

0.33

 

Warrants expired

 

 

(3,027,615 )

 

 

0.44

 

Balance as at December 31, 2021

 

 

91,892,620

 

 

$ 0.45

 

Warrants issued

 

 

-

 

 

 

-

 

Warrants exercised

 

 

-

 

 

 

-

 

Warrants expired

 

 

(12,795,383 )

 

 

0.37

 

Balance as at June 30, 2022

 

 

79,097,237

 

 

$ 0.46

 

 

 
15

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

  

11.  SHARE CAPITAL (continued)

 

The following table summarizes information about warrants outstanding as at June 30, 2022:

 

 

 

 

 

 

 

 

 

 

 

Exercise price

 

 

Number of warrants outstanding

 

 

Weighted average exercise price

($ per share)

 

 

Weighted average remaining life (years)

 

$ 0.31

 

 

 

18,247,009

 

 

$ 0.31

 

 

 

0.66

 

$ 0.37

 

 

 

32,050,228

 

 

 

0.37

 

 

 

3.01

 

$ 0.42

 

 

 

50,000

 

 

 

0.42

 

 

 

1.08

 

$ 0.65

 

 

 

28,750,000

 

 

 

0.65

 

 

 

0.16

 

 

 

 

 

79,097,237

 

 

$ 0.46

 

 

 

1.43

 

 

There were no warrants issued during the six months ended June 30, 2022.

 

d)   Stock Options

 

The Company has adopted a stock option plan that allows for the granting of stock options to Directors, Officers, employees and certain consultants of the Company for up to 10% of the Company’s issued and outstanding common shares. Stock options granted under the plan may be subject to vesting provisions as determined by the Board of Directors.

 

The movements in stock options during the six months ended June 30, 2022 and year ended December 31, 2021 are summarized as follows: 

 

 

 

 

 

 

 

 

 

Number

 

 

Weighted average exercise price

 

Balance as at December 31, 2020

 

 

45,820,000

 

 

$ 0.53

 

Options granted

 

 

12,190,000

 

 

 

0.23

 

Options exercised

 

 

(2,287,500 )

 

 

0.25

 

Options expired

 

 

(7,820,000 )

 

 

0.75

 

Options forfeited

 

 

(2,762,500 )

 

 

0.39

 

Balance as at December 31, 2021

 

 

45,140,000

 

 

$ 0.44

 

Options granted

 

 

14,835,000

 

 

 

0.27

 

Options exercised

 

 

-

 

 

 

-

 

Options expired

 

 

(10,208,750 )

 

 

0.70

 

Options forfeited

 

 

(756,250 )

 

 

0.32

 

Balance as at June 30, 2022

 

 

49,010,000

 

 

$ 0.33

 

 

The weighted average closing share price at the date of exercise for the six months ended June 30, 2022 was nil (June 30, 2021 – $0.41). There were no stock options exercised during the six months ended June 30, 2022 (June 30, 2021 – 650,000).

 

 
16

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

11.  SHARE CAPITAL (continued)

 

The following table summarizes information about the stock options outstanding as at June 30, 2022: 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Exercise

price

 

Number of options

 

 

Weighted average exercise price

($ per share)

 

 

Weighted average remaining life (years)

 

 

Number of options

 

 

Weighted average exercise price

($ per share)

 

 

Weighted average remaining life (years)

 

$ 0.25 – 0.50

 

 

43,960,000

 

 

$ 0.34

 

 

 

3.19

 

 

 

30,348,750

 

 

$ 0.37

 

 

 

2.62

 

$ 0.51 – 1.00

 

 

5,050,000

 

 

 

0.60

 

 

 

0.55

 

 

 

5,050,000

 

 

 

0.60

 

 

 

0.55

 

 

 

 

49,010,000

 

 

$ 0.37

 

 

 

2.92

 

 

 

35,398,750

 

 

$ 0.40

 

 

 

2.33

 

 

During the six months ended June 30, 2022, there were 14,835,000 (June 30, 2021 – 9,815,000) stock options granted with an aggregate fair value at the date of grant of $3,975,750 (June 30, 2021 - $445,000), or a weighted average fair value of $0.14 per option (June 30, 2021 – $0.37). As at June 30, 2022, 13,611,250 (June 30, 2021 – 9,524,000) stock options remain unvested with an aggregate grant date fair value of $2,119,599 (June 30, 2021 - $1,933,000).

 

Certain stock options granted were directly attributable to exploration and evaluation expenditures on mineral properties and were therefore capitalized to mineral properties. In addition, certain stock options were subject to vesting provisions. These two factors result in differences between the aggregate fair value of stock options granted and total share-based payments expensed during the periods. Total share-based payments expense during the periods ended June 30, 2022 and June 30, 2021 was classified within the financial statements as follows:

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

June 30,

 

 

For the six months ended

June 30,

 

Statements of Net Loss:

 

2022

 

 

2021

 

 

2022

 

 

2021

 

General and administration

 

$ 331

 

 

$ 270

 

 

$ 840

 

 

$ 768

 

Exploration and evaluation

 

 

12

 

 

 

75

 

 

 

32

 

 

 

190

 

Investor relations and marketing communications

 

 

36

 

 

 

72

 

 

 

102

 

 

 

162

 

Corporate development and due diligence

 

 

37

 

 

 

24

 

 

 

98

 

 

 

98

 

Subtotal

 

$ 416

 

 

$ 441

 

 

$ 1,072

 

 

$ 1,218

 

Statements of Financial Position:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Properties

 

 

251

 

 

 

204

 

 

 

648

 

 

 

612

 

Total

 

$ 667

 

 

$ 645

 

 

$ 1,720

 

 

$ 1,830

 

 

 
17

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

11.  SHARE CAPITAL (continued)

 

The grant date fair value of the stock options recognized in the period has been estimated using the Black-Scholes option pricing model with the following weighted average assumptions: 

 

 

 

 

 

 

 

 

 

Six months ended

June 30, 2022

 

 

Year ended

December 31, 2021

 

Risk-free interest rate

 

 

1.75 %

 

 

0.86 %

Share price at grant date (in dollars)

 

$ 0.27

 

 

$ 0.44

 

Exercise price (in dollars)

 

$ 0.27

 

 

$ 0.41

 

Expected life (years)

 

5.00 years

 

 

5.00 years

 

Expected volatility (1)

 

 

64.14 %

 

 

67.89 %

Forfeiture rate

 

 

7.50 %

 

 

7.50 %

Expected dividend yield

 

Nil

 

 

Nil

 

(1)     The computation of expected volatility was based on the Company’s historical price volatility, over a period which approximates the expected life of the option.

 

e)   Restricted Share Units

 

During the six months ended June 30, 2022, the company granted 1,090,000 Restricted Share Units ("RSUs") under its share-based compensation plan to the Company’s executive officers as part of the Company’s long-term incentive plan (“LTIP”). Unless otherwise stated, the awards typically have a graded vesting schedule over a three-year period and will be settled in equity upon vesting. The company intents to settle all RSU’s in equity.

 

The associated compensation cost, which is based on the underlying share price on the date of grant, is recorded as share-based payments expense against share-based payment reserve.

 

The following table summarizes the changes in RSU's for the six months ended June 30, 2022: 

 

 

 

 

 

 

 

 

 

Number

 

 

Weighted average fair value

 

Balance as at December 31, 2021

 

 

1,550,000

 

 

$ 0.40

 

Granted – February 3, 2022

 

 

1,090,000

 

 

 

0.25

 

RSUs settled

 

 

(283,332 )

 

 

0.40

 

RSUs forfeited

 

 

(233,333 )

 

 

0.40

 

Balance as at June 30, 2022

 

 

2,123,335

 

 

$ 0.32

 

 

During the six months ended June 30, 2022, total share-based payments expense related to RSU’s was $103,000    (December 31,2021- 347,000)

 

f)   Deferred Share Units

 

During the six months ended June 30, 2022, the company granted 356,000 Deferred Share Units ("DSUs") under its share-based compensation plan to a director as part of the Company’s LTIP. DSUs have a graded vesting schedule over an 18-month period and will be settled in equity upon vesting.

 

The associated compensation cost, which is based on the underlying share price on the date of grant, is recorded as share-based payments expense against share-based payment reserve.

 

 
18

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

11.  SHARE CAPITAL (continued)

 

 

 

 

 

 

 

 

 

 

Number

 

 

Weighted average fair value

 

Balance as at December 31, 2021

 

 

303,000

 

 

$ 0.36

 

Granted – February 11, 2022

 

 

356,000

 

 

 

0.26

 

Balance as at June 30, 2022

 

 

659,000

 

 

$ 0.30

 

 

12.  OPERATING EXPENSES

 

Operating expenses by nature, which map to the Company’s functional operating expense categories presented in the consolidated statements of net loss and comprehensive loss, are as follows:

 

 

 

 

 

 

 

For the three months ended June 30, 2022

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

$ 94

 

 

$ 19

 

 

$ 9

 

 

$ -

 

 

$ 122

 

Consultants

 

 

155

 

 

 

4

 

 

 

4

 

 

 

-

 

 

 

163

 

Depreciation (non-cash)

 

 

45

 

 

 

58

 

 

 

-

 

 

 

-

 

 

 

103

 

Directors fees

 

 

72

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

72

 

Investor relations and marketing communications

 

 

-

 

 

 

2

 

 

 

239

 

 

 

4

 

 

 

245

 

Professional fees

 

 

163

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

163

 

Salaries

 

 

299

 

 

 

104

 

 

 

88

 

 

 

48

 

 

 

537

 

Share-based payments

(non-cash) (Note 11(d))

 

 

331

 

 

 

11

 

 

 

36

 

 

 

36

 

 

 

414

 

Transfer agent and filing fees

 

 

(50 )

 

 

-

 

 

 

14

 

 

 

-

 

 

 

(38 )

Travel and accommodation

 

 

8

 

 

 

5

 

 

 

73

 

 

 

4

 

 

 

90

 

Operating expenses total

 

$ 1,115

 

 

 

203

 

 

$ 463

 

 

$ 92

 

 

$ 1,873

 

Impairment of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,424

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 9,300

 

 

 
19

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

12.  OPERATING EXPENSES (continued)

 

 

 

 

 

 

For the three months ended June 30, 2021

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

$ 121

 

 

$ 18

 

 

$ 54

 

 

$ 1

 

 

$ 194

 

Consultants

 

 

27

 

 

 

10

 

 

 

30

 

 

 

-

 

 

 

67

 

Depreciation (non-cash)

 

 

42

 

 

 

39

 

 

 

-

 

 

 

-

 

 

 

81

 

Directors fees

 

 

12

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12

 

Investor relations and marketing communications

 

 

-

 

 

 

-

 

 

 

699

 

 

 

-

 

 

 

699

 

Professional fees

 

 

486

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

486

 

Salaries

 

 

251

 

 

 

66

 

 

 

70

 

 

 

65

 

 

 

452

 

Share-based payments (non-cash) (Note 11(d))

 

 

299

 

 

 

76

 

 

 

72

 

 

 

24

 

 

 

471

 

Transfer agent and filing fees

 

 

32

 

 

 

-

 

 

 

34

 

 

 

-

 

 

 

66

 

Travel and accommodation

 

 

1

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Operating expenses total

 

$ 1,271

 

 

 

209

 

 

$ 959

 

 

$ 90

 

 

$ 2,529

 

 

 

 

 

 

 

 

For the six months ended June 30, 2022

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

$ 170

 

 

$ 65

 

 

$ 11

 

 

$ -

 

 

$ 246

 

Consultants

 

 

249

 

 

 

9

 

 

 

4

 

 

 

-

 

 

 

261

 

Depreciation (non-cash)

 

 

89

 

 

 

113

 

 

 

-

 

 

 

-

 

 

 

202

 

Directors fees

 

 

155

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

155

 

Investor relations and marketing communications

 

 

-

 

 

 

2

 

 

 

377

 

 

 

4

 

 

 

383

 

Professional fees

 

 

347

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

347

 

Salaries

 

 

614

 

 

 

126

 

 

 

171

 

 

 

95

 

 

 

1,005

 

Share-based payments (non-cash) (Note 11(d))

 

 

840

 

 

 

32

 

 

 

102

 

 

 

97

 

 

 

1,071

 

Transfer agent and filing fees

 

 

65

 

 

 

-

 

 

 

14

 

 

 

-

 

 

 

79

 

Travel and accommodation

 

 

10

 

 

 

33

 

 

 

75

 

 

 

5

 

 

 

123

 

Operating expenses total

 

$ 2,540

 

 

 

380

 

 

$ 755

 

 

$ 202

 

 

$ 3,877

 

Impairment of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,424

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 11,301

 

 

 
20

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

12.  OPERATING EXPENSES (continued)

 

 

 

 

 

 

For the six months ended June 30, 2021

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

$ 184

 

 

$ 55

 

 

$ 60

 

 

$ 1

 

 

$ 300

 

Consultants

 

 

89

 

 

 

14

 

 

 

45

 

 

 

-

 

 

 

148

 

Depreciation (non-cash)

 

 

85

 

 

 

72

 

 

 

-

 

 

 

-

 

 

 

157

 

Directors fees

 

 

80

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

80

 

Investor relations and marketing communications

 

 

-

 

 

 

-

 

 

 

917

 

 

 

-

 

 

 

917

 

Professional fees

 

 

783

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

783

 

Salaries

 

 

469

 

 

 

114

 

 

 

215

 

 

 

148

 

 

 

946

 

Share-based payments (non-cash) (Note 11(d))

 

 

797

 

 

 

191

 

 

 

161

 

 

 

98

 

 

 

1,247

 

Transfer agent and filing fees

 

 

136

 

 

 

-

 

 

 

34

 

 

 

-

 

 

 

170

 

Travel and accommodation

 

 

2

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

4

 

Operating expenses total

 

$ 2,625

 

 

 

448

 

 

$ 1,432

 

 

$ 247

 

 

$ 4,752

 

Impairment of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,555

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 28,307

 

 

13.  SEGMENT INFORMATION

 

The Company operates in a single reportable operating segment, being the acquisition, exploration, development and strategic disposition of its North American mineral properties. Geographic information about the Company’s non-current assets, excluding financial instruments, as at June 30, 2022 and December 31, 2021 is as follows: Canada - $223,374,000 (December 31, 2021 - $209,739,000) and USA - $229,000 (December 31, 2021 - $226,000).

 

14.  RELATED PARTY TRANSACTIONS

 

The Company’s related parties consist of the Company’s Directors and Officers, and any companies associated with them.

 

Key management includes the Directors, Officers and Vice Presidents of the Company. The compensation paid or payable to key management for services during the three months ended June 30, 2022 and 2021 is as follows:

 

 

 

 

 

 

 

 

Service or Item

 

Three months ended June 30,

 

 

Six months ended June 30, 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021 

 

Directors’ fees

 

$ 72

 

 

$ 80

 

 

$ 155

 

 

$ 160

 

Salaries and consultants’ fees

 

 

902

 

 

 

396

 

 

 

1,416

 

 

 

931

 

Share-based payments (non-cash)

 

 

513

 

 

 

320

 

 

 

1,118

 

 

 

803

 

Total

 

$ 1,487

 

 

$ 796

 

 

$ 2,689

 

 

$ 1,894

 

 

 
21

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

15.  FAIR VALUE

 

Fair values have been determined for measurement and/or disclosure requirements based on the methods below.

 

The Company characterizes fair value measurements using a hierarchy that prioritizes inputs depending on the degree to which they are observable. The three levels of the fair value hierarchy are as follows:

 

 

·

Level 1 fair value measurements are quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

·

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

 

·

Level 3 fair value measurements are those derived from valuation techniques that include significant inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

The carrying values of cash and cash equivalents, current accounts receivables, and accounts payable and accrued liabilities approximated their fair values because of the short-term nature of these financial instruments. These financial instruments are financial assets and liabilities at amortized cost.

 

The carrying value of investments was based on the quoted market prices of the shares as at June 30, 2022 and was therefore considered to be Level 1.

 

The mineral property investments (First Mining’s 10% equity interest in 269 Canada and 258 Manitoba, two privately held companies that directly or indirectly own various mining concessions and surface rights that comprise a part of the Duparquet Gold Project) are classified as financial assets at FVTOCI. The fair value of the mineral property investments was not based on observable market data and was therefore considered to be Level 3. The initial fair value of the mineral property investments was determined based on attributable pro-rata gold ounces for the Company’s 10% indirect interest in the Duparquet Gold Project, which formed part of the identifiable assets from the acquisition of Clifton. Subsequently, the fair value has been reassessed at each period end. Scenarios which may result in a significant change in fair value include, among others, a change in the performance of the investee, a change in the performance of comparable entities, a change in gold price, a change in the economic environment, or evidence from external transactions in the investee’s equity. During the six months ended June 30, 2022, management concluded that there was a decrease in the fair value of the mineral property investments, and a fair value loss of $3,536,000 (June 30, 2021 – fair value loss of $443,000) was recorded (Note 9).

 

As the Earn‐In Agreement provides Auteco the right to earn an interest in PC Gold, rather than a direct interest in the Pickle Crow project, Auteco’s option to acquire PC Gold shares is a financial liability of First Mining. As a derivative, the Pickle Crow project option liability is classified as financial liability at FVTPL. The carrying value of the Option - Pickle Crow Gold Project is not based on observable market data and therefore is considered to be Level 3. The fair value of the Option – Pickle Crow Gold Project as at June 30, 2022 was determined by reference to the portion of the estimated fair value of PC Gold to be given up by the Company with the option for Auteco to earn an additional 10%, net of $3,000,000 proceeds to be received on exercise.

 

The Silver Stream was determined to be a derivative liability, which is classified as a financial liability at FVTPL. The carrying value of the derivative liability was not based on observable market data and involved complex valuation methods and was therefore considered to be Level 3.

 

 
22

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

15.  FAIR VALUE (continued)

 

The following table presents the Company’s fair value hierarchy for financial assets and liabilities that are measured at fair value:

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

 

 

 

Fair value measurement

 

 

 

 

 

Fair value measurement

 

 

 

Carrying value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Carrying value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments (Notes 3, 5)

 

$ 6,320

 

 

$ 6,320

 

 

$ -

 

 

$ -

 

 

$ 13,386

 

 

$ 13,386

 

 

$ -

 

 

$ -

 

Mineral property investments (Note 9)

 

 

745

 

 

 

-

 

 

 

-

 

 

 

745

 

 

 

6,435

 

 

 

-

 

 

 

-

 

 

 

6,435

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Silver Stream derivative liability (Note 10)

 

 

18,706

 

 

 

-

 

 

 

-

 

 

 

18,706

 

 

 

26,114

 

 

 

-

 

 

 

-

 

 

 

26,114

 

Option – PC Gold (Note 4(b))

 

$ 4,347

 

 

$ -

 

 

$ -

 

 

$ 4,347

 

 

$ 4,347

 

 

$ -

 

 

$ -

 

 

$ 4,347

 

 

During the six months ended June 30, 2022 there has been a transfer out of level 3 in the fair value hierarchy related to the Company’s 15.3% equity ownership increase in Beattie Gold that required a reclassification from Mineral Property Investments of the historically owned 10% equity ownership of Beattie Gold ($2,154,000).

 

16. Subsequent Events

 

On July 18, 2022, the Company announced that it has made an offer to acquire all of the issued and outstanding common shares of Beattie Gold, a private company that owns the mineral rights to mining claims that make up the former Beattie mining concession which forms a large part of the Duparquet Gold Project located in Quebec, Canada (the “Beattie Offer”), that are not already owned by the Company or Clifton Star.  The total consideration of the Beattie Offer is $4.43641 cash per Beattie Gold common share and 35 common shares of First Mining (“First Mining Shares”) per Beattie Gold common share for total cash consideration of $6,227,176 and total share consideration of 49,127,820 First Mining Shares.  As of August 8, 2022, First Mining has received signed, irrevocable lock-up agreements from shareholders holding, in aggregate, 1,358,652 Beattie Gold shares, representing 72.3% of the issued and outstanding common shares of Beattie Gold.  Upon acquiring the Beattie Gold common shares committed under the lock-up agreements, First Mining will own 97.6% of the issued and outstanding common shares of Beattie Gold (inclusive of the 474,743 common shares of Beattie Gold that First Mining owned, directly and through Clifton Star, prior to making the Beattie Offer).

 

Concurrent with making the Beattie Offer, First Mining has entered into definitive share purchase agreements to acquire the remaining 90% of the issued and outstanding common shares of both 258 Manitoba and 269 Canada (together the “Concurrent Transactions”) that are not already owned by the Company (through Clifton Star).  The Concurrent Transactions are conditional on the Beattie Offer and will close on the same day as the Beattie Offer, which is expected to be in mid-September 2022. The total consideration f the Concurrent Transactions is $2,500,000 in cash and the issuance of 20,000,000 First Mining Shares. 

 

 
23

 

 

FIRST MINING GOLD CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian dollars unless otherwise noted, tabular amounts are expressed in thousands of Canadian dollars)

(Unaudited)

 

16. Subsequent Events (continued)

 

As at June 30, 2022, the carrying value of the Company’s 10% ownership interest in 258 Manitoba and 269 Canada, two private companies that make up the Mineral Property Investments balance, was reduced to the associated fair value of $745,000 in connection with the consideration being offered by the Company under the Concurrent Transactions, which resulted in a $3.7 million fair value loss recognized in Other Comprehensive Income (See Note 9). There was no resultant impact of the Beattie Offer to the Company’s equity accounted Investment in Beattie Gold as at June 30, 2022.

 

 
24

 


ff_ex992.htm

EXHIBIT 99.2

 

 

 

TSX: FF | OTCQX: FFMGF | FRANKFURT: FMG

 

 

 

 

 

 

MANAGEMENT’S

DISCUSSION & ANALYSIS

 

FOR THE SIX MONTHS ENDED JUNE 30, 2022

 

 

 

 

 

Suite 2070 – 1188 West Georgia Street, Vancouver, British Columbia V6E 4A2

www.firstmininggold.com | 1-844-306-8827

  

 

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

TABLE OF CONTENTS

 

COMPANY OVERVIEW AND STRATEGY

 

2

 

 

 

 

 

2022 HIGHLIGHTS

 

2

 

 

 

 

 

SELECT FINANCIAL INFORMATION

 

4

 

 

 

 

 

ONTARIO MINERAL PROPERTY PORTFOLIO LOCATIONS (1)

 

5

 

 

 

 

 

MINERAL PROPERTY PORTFOLIO GOLD RESERVES (1)

 

6

 

 

 

 

 

MINERAL PROPERTY PORTFOLIO GOLD RESOURCES (1)

 

7

 

 

 

 

 

MINERAL PROPERTY PORTFOLIO REVIEW

 

8

 

 

 

 

 

SELECT QUARTERLY FINANCIAL INFORMATION

 

20

 

 

 

 

 

RESULTS OF CONTINUING OPERATIONS

 

22

 

 

 

 

 

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

 

24

 

 

 

 

 

FINANCIAL INSTRUMENTS

 

25

 

 

 

 

 

RELATED PARTY TRANSACTIONS

 

25

 

 

 

 

 

OFF-BALANCE SHEET ARRANGEMENTS

 

25

 

 

 

 

 

NON-IFRS MEASURES

 

26

 

 

 

 

 

ACCOUNTING POLICIES

 

26

 

 

 

 

 

CRITICAL ACCOUNTING ESTIMATES

 

26

 

 

 

 

 

CRITICAL ACCOUNTING JUDGMENTS

 

26

 

 

 

 

 

ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED

 

27

 

 

 

 

 

RISKS AND UNCERTAINTIES

 

27

 

 

 

 

 

QUALIFIED PERSONS

 

30

 

 

 

 

 

SECURITIES OUTSTANDING

 

30

 

 

 

 

 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

31

 

 

 

 

 

FORWARD-LOOKING INFORMATION

 

32

 

 

 

 

 

CAUTIONARY NOTE TO U.S. INVESTORS

 

32

 

 

 
Page 1

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

GENERAL

 

This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the unaudited condensed interim consolidated financial statements of First Mining Gold Corp. (the “Company” or “First Mining”) for the three and six months ended June 30, 2022, which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as applicable to the preparation of interim financial statements, including International Accounting Standard IAS 34 Interim Reporting. The unaudited condensed interim consolidated financial statements should also be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, which are prepared in accordance with IFRS as issued by the International Accounting Standards Board.  These documents, along with additional information on the Company including the Company’s Annual Information Form (“AIF”) for the year ended December 31, 2021, are available under the Company’s SEDAR profile at www.sedar.com, on EDGAR at www.sec.gov.

 

In this MD&A, unless the context otherwise requires, references to the “Company”, “First Mining”, “we”, “us”, and “our” refer to First Mining Gold Corp. and its subsidiaries.

 

This MD&A contains “forward-looking statements” and “forward-looking information” within the meaning of applicable Canadian securities laws. See the section in this MD&A titled “Forward-Looking Information” for further details.  In addition, this MD&A has been prepared in accordance with the requirements of Canadian securities laws, which differ in certain material respects from the disclosure requirements of United States securities laws, particularly with respect to the disclosure of Mineral Reserves and Mineral Resources. See the section in this MD&A titled “Cautionary Note to U.S.” for further details.

 

This MD&A contains disclosure of certain non-IFRS financial measures. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. See the section in this MD&A titled "Non-IFRS Measures" for further details.

 

All dollar amounts included in this MD&A are expressed in Canadian dollars unless otherwise noted. This MD&A is dated as of August 8, 2022, and all information contained in this MD&A is current as of August 8, 2022.

 

COMPANY OVERVIEW AND STRATEGY

 

First Mining is advancing a portfolio of gold projects in Canada, with the most advanced project being the Springpole Gold Project (the “Springpole Project” or “Springpole”) in northwestern Ontario, which is one of the largest undeveloped gold projects in Canada. The Company has commenced a Feasibility Study and permitting activities are on-going, with a draft Environmental Impact Statement/Environmental Assessment (the “Draft EA”) for the Springpole Project submitted in June 2022. First Mining also owns advanced-stage gold projects in Ontario (Cameron gold project) and in Québec (Central Duparquet, Duquesne and Pitt gold projects). The portfolio of gold project interests also includes the Pickle Crow Gold Project (being advanced by Auteco Minerals Ltd.), the Hope Brook Gold Project (being advanced in partnership with Big Ridge Gold Corp.), an equity interest in Treasury Metals Inc. (“Treasury Metals”) which owns the Goldlund Gold Project, and a portfolio of 21 gold royalties.

 

2022 HIGHLIGHTS

 

The following highlights the Company’s most recent developments (including subsequent events up to August 8, 2022).

 

Project Highlights

 

Springpole

 

·

In the six months ended June 30, 2022, 21,626 metres of technical drilling and 1,545 metres of exploration drilling was completed at the Springpole Gold Project, for a total of 23,171 metres in the period.

 

 

 

 

·

Continued engagement with local Indigenous rights holders and stakeholders of the Springpole Gold Project.

 

 

 

 

·

Progressed environmental fieldwork into 2022, with the completion of the terrestrial studies in February 2022, and completed technical modelling & studies for incorporation into the draft EIS which was issued for consultation in June 2022.

 

Birch-Uchi

 

·

In 2021, the Company announced the Birch-Uchi greenstone belt consolidation through multiple transactions, increasing the Company’s land package in the Springpole region by 36,000 hectares (“Ha”) to a total of 74,000 Ha of this prospective region which hosts several past-producing mines, including the Sol d’Or mine where there has been demonstrated historical, high-grade exploration potential. First Mining intends to undertake a comprehensive regional exploration program on this new land package in 2022.

 

 
Page 2

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

Québec

 

·

In February 2022, the Company announced that it had acquired an aggregate of 286,904 common shares of Beattie Gold Mines Ltd. (“Beattie”), a private company that owns the mineral rights to mining claims that make up the former Beattie mining concession that form a large part of the Duparquet Gold Project located on the Destor-Porcupine Fault in Québec. Together with the 187,839 common shares of Beattie already owned by the Company’s wholly-owned subsidiary, Clifton Star Resources Inc. (“Clifton Star”), the Company now owns 474,743 shares of Beattie, increasing its ownership in Beattie from 10% to 25.3% of the issued and outstanding common shares of Beattie (the “Beattie Gold Shares”)..

 

 

 

 

·

On July 18, 2022, the Company announced that it has made an offer to acquire all of the issued and outstanding shares of Beattie Gold that are not already owned by the Company or Clifton (the “Beattie Offer”). The total consideration of the Beattie Offer is $4.43641 cash per Beattie Gold Share and 35 common shares of First Mining (“First Mining Shares”) per Beattie Gold Share for total cash consideration of $6,227,176 and total share consideration of 49,127,820 First Mining Shares. As of August 8, 2022, First Mining has received signed, irrevocable lock-up agreements from shareholders holding, in aggregate, 1,358,652 Beattie Gold Shares, representing 72.3% of the issued and outstanding Beattie Gold Shares. Upon acquiring the Beattie Gold Shares committed under the lock-up agreements, First Mining will own 97.6% of the issued and outstanding Beattie Gold Shares (inclusive of the 474,743 Beattie Gold Shares that First Mining owned, directly and through Clifton Star, prior to making the Beattie Offer).

 

 

 

 

·

Concurrent with making the Beattie Offer, First Mining has entered into share purchase agreements to acquire the remaining 90% of the issued and outstanding shares of two other private companies, 2588111 Manitoba Ltd. (“258 Manitoba”) and 2699681 Canada Ltd. (“269 Canada”) (together, the “Concurrent Transactions”), that are not already owned by the Company (through Clifton Star). The Concurrent Transactions are conditional on the Beattie Offer and will close on the same day as the Beattie Offer, which is expected to be in mid-September 2022. The total consideration of the Concurrent Transactions is $2,500,000 in cash and the issuance of 20,000,000 First Mining Shares. The Duparquet Gold Project consists of several properties held in different entities which, in addition to the Beattie property, include the Donchester, Dumico and Central Duparquet properties. 258 owns the mineral rights to mining claims that make up the former Donchester mining concession and Dumico property, and 269 owns, in whole or in part, the surface rights to the Beattie, Donchester and Dumico properties. First Mining already owns 100% of the Central Duparquet property, so after completing the Beattie Offer and the Concurrent Transactions, First Mining will own all of the mineral tenure that comprises the Duparquet Gold Project.

 

Corporate Highlights

 

 

·

On March 29, 2022, the Company announced the appointment of Jeff Reinson as Chief Operating Officer, who will lead the Company’s project development and water and tailings management for the feasibility stage for the Springpole Project.

 

 

 

 

·

On June 23, 2022, the Company released its inaugural ESG report which established and initiated an environmental, social and governance (“ESG”) reporting framework as a foundation for future years. A copy of the ESG report can be found on the Company’s website at the following link: https://firstmininggold.com/esg/esg-report/The June 30, 2022 cash balance was $15.6 million, the investments position was $6.3 million and the equity interests in Treasury Metals, PC Gold, Big Ridge and Beattie had a combined carrying value of $36.4 million.

 

In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. The Company continues to evaluate the potential impacts arising from COVID-19 on all aspects of its business. For the period ended June 30, 2022, there were no material operational or financial impacts on the Company.

 

 
Page 3

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

SELECT FINANCIAL INFORMATION

 

Financial Results (in $000s Except for per Share Amounts):

 

For the six months ended June 30,

 

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Mineral Property Cash Expenditures(1)

 

$ 14,225

 

 

$ 7,511

 

 

$ 6,194

 

Net Loss

 

 

(5,480 )

 

 

(34,286 )

 

 

(20,993 )

Total Cash Used in Operating Activities(3)

 

 

(3,293 )

 

 

(3,814 )

 

 

(2,441 )

Basic and Diluted Net Loss Per Share (in Dollars)(4)

 

$ (0.01 )

 

$ (0.05 )

 

$ (0.03 )

 

Financial Position (in $000s):

 

June 30,

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Cash and Cash Equivalents

 

$ 15,641

 

 

$ 29,516

 

 

$ 28,901

 

Working Capital(2)

 

 

14,275

 

 

 

33,956

 

 

 

9,201

 

Investments

 

 

6,320

 

 

 

13,386

 

 

 

18,425

 

Mineral Properties

 

 

185,459

 

 

 

170,017

 

 

 

179,429

 

Investment in Treasury Metals Inc.

 

 

7,800

 

 

 

15,400

 

 

 

63,812

 

Investment in PC Gold Inc.

 

 

21,568

 

 

 

21,570

 

 

 

-

 

Investment in Big Ridge Gold Corp.

 

 

1,465

 

 

 

1,491

 

 

 

-

 

Investment in Beattie Gold Mines Ltd.

 

 

5,543

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

247,249

 

 

 

260,309

 

 

 

301,213

 

Total Non-current Liabilities

 

$ 18,919

 

 

$ 26,429

 

 

$ 16,835

 

 

 

(1)

This represents mineral property expenditures per consolidated statements of cash flows.

 

(2)

This is a non-IFRS measurement with no standardized meaning under IFRS and may not be comparable to similar financial measures presented by other issuers. For further information please see the section in this MD&A titled “Non-IFRS Measures”.

 

(3)

Per the consolidated statement of cash flows in each corresponding period.

 

(4)

The basic and diluted loss per share calculations result in the same amount due to the anti-dilutive effect of outstanding stock options and warrants.

 

Net Loss – Fluctuations in net loss are typically caused by non-cash items. Removing the impact of these non-cash items shows that the income statement loss from operational activities is more consistent over the periods presented at an average of approximately $3.3 million. However, there was a non-recurring $1.1 million payment in Q1 2022 in relation to reimbursement of legal fees and expert costs associated with a settlement agreement where Clifton Star was a named defendant.

 

Cash and Cash Equivalents - the decrease in 2022 was primarily due to cash used in operational activities and investing activities at the Company’s mineral projects, particularly Springpole and was partly offset by cash received through sales of investments in Auteco. See the section in this MD&A titled “Financial Condition, Liquidity and Capital Resources”.

 

Total Assets – decreased relative to December 2021 primarily due to cash spent on operating expenses in the income statement together with a reduction in Investments fair value in current assets and the $7.4 million impairment charge recorded against the investment in Treasury Metals Inc.

 

 
Page 4

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

ONTARIO MINERAL PROPERTY PORTFOLIO LOCATIONS (1)

(1)   Pickle Crow is subject to the Auteco Earn-In Agreement pursuant to which Auteco is the operator of the project and owns 70% of PC Gold, the joint venture company that owns the project (PC Gold was formerly a wholly-owned subsidiary of First Mining until Auteco completed stage 1 of its earn-in to PC Gold in June 2021).

 

 
Page 5

 

 

FIRST MINING GOLD CORP.

Management’s Discussion & Analysis

(Expressed in Canadian dollars, unless otherwise indicated)

For the six months ended June 30, 2022

 

MINERAL PROPERTY PORTFOLIO GOLD RESERVES (1)

 

The Springpole Gold Project is the only project owned by First Mining that has Mineral Reserves attributed to it. The Mineral Reserves for Springpole are based on the conversion of Indicated Mineral Resources within the current pit design. The Mineral Reserves for the Springpole Gold Project are shown below (for further details, see the technical report entitled “NI 43-101 Technical Report and Pre-Feasibility Study on the Springpole Gold Project, Ontario Canada” dated February 26, 2021, which was prepared by AGP Mining Consultants Inc. (“AGP”) in accordance with NI 43-101 and is available under First Mining’s SEDAR profile at www.sedar.com):

 

Springpole Proven and Probable Reserves

 

Category

Tonnes (Mt)

Grade

Au (g/t)

Grade

Ag (g/t)

Contained Metal

Au (Moz)

Contained Metal

Ag (Moz)

Proven

0.0

0.0

0.0

0.0

0.0

Probable

121.6

0.97

5.23

3.8

20.5

Total

121.6

0.97

5.23

3.8

20.5

 

 

Notes:

 

 

 

 

(1)

The Mineral Reserve estimate has an effective date of December 30, 2020 and is based on the Mineral Resource estimate that has an effective date of July 30, 2020.

 

(2)

The Mineral Reserve estimate was completed under the supervision of Gordon Zurowski, P.Eng., of AGP, a Qualified Person as defined under NI 43-101.

 

(3)

Mineral Reserves are stated within the final design pit based on a US$878/oz Au pit shell with a US$1,350/oz Au price for revenue.

 

(4)

The equivalent cut-off grade was 0.34 g/t gold (“Au”) for all pit phases.

 

(5)

The mining cost averaged $2.75/t mined, processing cost averaged $14.50/t milled, and the G&A cost averaged $1.06/t milled. The process recovery for gold averaged 88% and the silver recovery was 93%.

 

(6)

The exchange rate assumption applied was $1.30 equal to US$1.00.

 

 
Page 6