Resource World Magazine

58 www.resourceworld.com A U G U S T / S E P T E M B E R 2 0 1 8 The road to becoming a junior producer – Firesteel Resources by Yianni Sakarellos T ransitioning from an explorer to a junior producer for the majority of Venture-listed companies is a faint- hope proposition. However, that is not the case for Firesteel Resources Inc. [FTR-TSXV; FIEIF-OTC; 2FN-FSE] as the company is on the verge of pouring gold from a low-grade, past producing mine in Raahe, Finland. Firesteel Resources, which is changing its name to Nordic Gold Corp., is currently working to evolve from a junior explorer to a junior producer by bringing the Laiva gold mine in Northern Ostrobothnia, west- ern Finland, back into production since it ceased production in March 2014 after two years of mining by previous owner Nordic Mines. Historic expenditures on the prop- erty are estimated to be 220 million. Firesteel management is of the view that they are capable of exploiting to its fullest potential the 151,000 ounces of measured and indicated gold resources and the 445,000 ounces which have an average grade of 1.53 g/t gold. Total gold production of the mine while still in operation was 2,241 kilograms of gold from 2.8 million tonnes of ore, which equals an average head grade of 0.9 g/t gold with recoveries averaging 80%. According to Firesteel's management, the previous operator's mining practices led to the low head grades and insufficient recoveries. Nordic's decision to mine the resource using large-scale, open pit, bulk mining methods caused severe ore dilution, which further reduced overall mill capacity utilization and throughput. All the afore- mentioned factors resulted in an All-In Sustaining Cost averaging US $1,760/oz gold. In 2013, the price of the yellow metal averaged US $1,411 per ounce that resulted in production at the mine being far from economical, which led to the inevitable termination of operations. Despite the unsuccessful run of Nordic Mines, Firesteel's management still thinks that the mine can be considered a sig- nificantly de-risked project that can be operated profitably using selective min- ing and improved recovery and plant utilization, as well as overall better mining practices. Management believes all the factors required for the potential future success of the Laiva Project are in place for a fresh start with the first gold extraction estimated to take place in late October of this year. A recently released, economi- cally robust PEA shows an after tax IRR of 44.4% and a 1.7-year pay back. In addi- tion, Firesteel has been granted access for 10 years to $155,000 of tax losses incurred by the previous operators. The mine is fully financed and 100%- owned by Firesteel after the company acquired a 60% interest in the project through a $20 million investment. Capital was raised via a definitive prepaid for- ward gold purchase agreement, signed in November 2017 with New York-based Pandion Mine Finance for US $20.6 mil- lion. The remaining 40% was acquired in February 2018 for a payment of $5.65 million in shares (58.42 million shares at $0.0966 per share) to Nordic Mines. Laiva is also a fully permitted and fully built 1,694-hectare gold mine property with two open pits, allowing the company to restart the production with a significantly low pre-production capital cost of $7.1 million. Michael Hepworth, President and Chief Executive Officer of Firesteel, said that the main advantage of the company over its predecessors is the experienced manage- ment team – over 90 years of combined gold mining experience. Joe Ranford, General Manager and Chief Operating Officer, Vern Langdale, Mine Manager, along with Scott Salisbury, Process and Plant Manager, are the driving forces behind the evolution of the company and responsible for the robust PEA of the mine released in June 2018. Michael Hepworth commented, "The release of the details of this study is an important milestone. Although we had previously conducted an extensive internal study used for financing and had already made the decision to advance to production, for the benefit of the market, we needed confirmation from a more formal study." The key highlights of the study include 75,981 ounces of average annual gold pro- duction at a cash cost of $863/oz and All-In Sustaining Costs of $974/oz with a six-year expected mine life production. Firesteel and its Laiva gold project hope to defeat the odds in the junior mining sector when it comes to economic success. Having the mine located in the politically safe country of Finland – ranked fifth in terms of investment attractiveness accord- ing to the Fraser Institute and first as the best mining jurisdiction in Europe for 2016 – further de-risks the project and strengthens the company's credibility in the eyes of investors. n MINING The mill at the past-producing Laiva gold mine in Raahe, Finland. Photo courtesy Firesteel Resources Inc.

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