EX-99.1 2 firstmining_ex991.htm FINANCIAL STATEMENTS firstmining_ex991.htm

EXHIBIT 99.1 

 

First Mining Gold Corp.

 

Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)

(Unaudited)

 

 

 

 

FIRST MINING GOLD CORP.                     

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)

(Unaudited)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current                                                    

 

 

 

 

 

 

Cash and cash equivalents

 

 $ 6,587

 

 

 $ 29,516

 

Investments (Note 4)

 

 

 4,715

 

 

 

 13,386

 

Prepaid expenses, accounts and other receivables

 

 

 1,891

 

 

 

 1,009

 

Total current assets                   

 

 

 13,193

 

 

 

 43,911

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Mineral properties (Note 5)

 

 

 219,196

 

 

 

 170,017

 

Investment in Treasury Metals Inc. (Note 6)

 

 

 6,000

 

 

 

 15,400

 

Investment in PC Gold Inc. (Note 7)

 

 

 21,535

 

 

 

 21,570

 

Investment in Big Ridge Gold Corp. (Note 8)

 

 

 2,915

 

 

 

 1,491

 

Mineral property investments

 

 

 -

 

 

 

 6,435

 

Property and equipment

 

 

 1,391

 

 

 

 1,086

 

Other assets

 

 

 303

 

 

 

 399

 

Total non-current assets

 

 

251,340

 

 

 

 216,398

 

TOTAL ASSETS

 

 $ 264,533

 

 

 $ 260,309

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 $ 4,429

 

 

 $ 4,491

 

Current portion of lease liability

 

 

 167

 

 

 

 127

 

Flow-through share premium liability (Note 11)

 

 

 1,256

 

 

 

-

 

Provision for Pickle Crow reclamation funding (Note 5(d))

 

 

 990

 

 

 

 990

 

Option – PC Gold (Note 5(d))

 

 

 4,347

 

 

 

 4,347

 

Total current liabilities              

 

 

 11,189

 

 

 

 9,955

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Lease liability

 

 

 181

 

 

 

 315

 

Silver Stream derivative liability (Note 9)

 

 

 17,407

 

 

 

 26,114

 

Total non-current liabilities

 

 

17,588

 

 

 

 26,429

 

TOTAL LIABILITIES 

 

 

 28,777

 

 

 

 36,384

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Share capital (Note 10)

 

 

340,942

 

 

 

 318,499

 

Warrant and share-based payment reserve (Note 10)

 

 

 49,277

 

 

 

 47,282

 

Accumulated other comprehensive  (loss) gain

 

 

(4,049)

 

 

 410

 

Accumulated deficit

 

 

(150,414)

 

 

 (142,266 )

Total shareholders’ equity

 

 

 235,756

 

 

 

 223,925

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 $ 264,533

 

 

 $ 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.

 

 
1

 

 

FIRST MINING GOLD CORP.

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Expressed in thousands of Canadian dollars unless otherwise noted)

(Unaudited)

 

 

 

Three months ended

September 30,

   Nine months ended

September 30,

 

 

 

2022

 

 

  2021

 

 

    2022

 

 

     2021  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

General and administration

 

 $ 1,081

 

 

 $ 1,195

 

 

 $ 3,620

 

 

 $ 3,820

 

Exploration and evaluation

 

 

 111

 

 

 

 174

 

 

 

 491

 

 

 

 621

 

Investor relations and marketing communications

 

 

 313

 

 

 

 399

 

 

 

 1,068

 

 

 

 1,830

 

Corporate development and due diligence

 

 

 99

 

 

 

 100

 

 

 

 300

 

 

 

 347

 

Fair value adjustment of non-current assets (Note 6, 8)

 

 

 2,180

 

 

 

 -

 

 

 

 9,604

 

 

 

 23,555

 

Loss from operational activities

 

 

 (3,784 )

 

 

 (1,868 )

 

 

 (15,083 )

 

 

 (30,173 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ITEMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on deconsolidation of subsidiary

 

 

 -

 

 

 

 449

 

 

 

 -

 

 

 

 9,280

 

Fair value gain (loss) on Silver Stream liability (Note 9)

 

 

 1,299

 

 

 

 7,704

 

 

 

 8,707

 

 

 

 (700 )

Investments fair value (loss) (Note 4)

 

 

 (151 )

 

 

 (4,039 )

 

 

 (1,630 )

 

 

 (4,672 )

Foreign exchange gain (loss)

 

 

 196

 

 

 

 112

 

 

 

 239

 

 

 

 (54 )

Other expenses

 

 

 (18 )

 

 

 (15 )

 

 

 (80 )

 

 

 (68 )

Interest and other income

 

 

 73

 

 

 

 61

 

 

 

 187

 

 

 

 195

 

Gain (loss) before income taxes

 

 $ (2,385 )

 

 $ 2,404

 

 

 $ (7,660 )

 

 $ (26,192 )

Deferred income tax recovery

 

 

 95

 

 

 

 -

 

 

 

 95

 

 

 

 -

 

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

 

 

 (379 )

 

 

 15

 

 

 

 (583 )

 

 

 (5,675 )

Net (loss) income for the period

 

 $ (2,669 )

 

 $ 2,419

 

 

 $ (8,148 )

 

 $ (31,867 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments fair value (loss) gain (Note 4)

 

 

 (896 )

 

 

 (1,263 )

 

 

 (936 )

 

 

 1,533

 

Mineral property investments fair value gain (loss)

 

 

 -

 

 

 

 (73 )

 

 

 (3,537 )

 

 

 (516 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustment of foreign subsidiaries

 

 

 15

 

 

 

 10

 

 

 

 14

 

 

 

 (1 )

Other comprehensive income (loss)

 

 

 (881 )

 

 

 (1,326 )

 

 

 (4,459 )

 

 

 1,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) and comprehensive income (loss)

for the period

 

 $ (3,550 )

 

 $ 1,093

 

 

 $ (12,607 )

 

 $ (30,851 )

Income (loss) per share (in dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ (0.00 )

 

 $ (0.00 )

 

 $ (0.01 )

 

 $ (0.05 )

Diluted

 

 $ (0.00 )

 

 $ (0.00 )

 

 $ (0.01 )

 

 $ (0.05 )

Weighted average number of shares outstanding Basic

 

 

 731,230,138

 

 

 

 699,523,115

 

 

 

 716,637,566

 

 

 

 698,177,258

 

Diluted

 

 

 731,231,172

 

 

 

 705,398,997

 

 

 

 716,637,566

 

 

 

 698,177,258

 

 

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

 

 
2

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Expressed in thousands of Canadian dollars unless otherwise noted) 

(Unaudited)

 

 

 

Three months ended

September 30,

 

 

   Nine months ended

September 30,

 

 

 

2022

 

 

  2021

 

 

    2022

 

 

     2021  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

  Net (loss) gain for the period

 

 $ (2,669 )

 

 $ 2,419

 

 

 $ (8,148 )

 

 $ (31,867 )

  Adjustments for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Gain on deconsolidation of subsidiary

 

 

 -

 

 

 

 (449 )

 

 

 -

 

 

 

 (9,280 )

     Fair value adjustment of non-current assets (Note 6(b))

 

 

 2,180

 

 

 

 -

 

 

 

 9,604

 

 

 

 23,555

 

     Share-based payments (Note 10)

 

 

 284

 

 

 

 339

 

 

 

 1,354

 

 

 

 1,585

 

     Depreciation

 

 

 229

 

 

 

 80

 

 

 

 407

 

 

 

 238

 

     Fair value (gain) loss on Silver Stream derivative               

     liability (Note 9)         

 

 

 (1,299 )

 

 

 (7,704 )

 

 

 (8,707 )

 

 

 700

 

     Investments fair value (gain) loss (Note 4)

 

 

 151

 

 

 

 4,039

 

 

 

 1,630

 

 

 

 4,672

 

     Other expenses

 

 

 15

 

 

 

 28

 

 

 

 73

 

 

 

 80

 

     Accrued interest receivable

 

 

 21

 

 

 

 5

 

 

 

 24

 

 

 

 (84 )

     Unrealized foreign exchange loss (gain)

 

 

 41

 

 

 

 (98 )

 

 

 (3 )

 

 

 40

 

     Deferred income tax (recovery) expense

 

 

 (95 )

 

 

 -

 

 

 

 (95 )

 

 

 -

 

     Equity and dilution loss (gain) on equity accounted                   

     investments            

 

 

 379

 

 

 

 (13 )

 

 

 583

 

 

 

 5,675

 

Operating cash flows before movements in working capital

 

 

 (763 )

 

 

 (1,354 )

 

 

 (3,278 )

 

 

 (4,686 )

Changes in non-cash working capital items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Increase in prepaid expenditures,                                                        

    accounts and other receivables                  

 

 

 (570 )

 

 

 (197 )

 

 

 (553 )

 

 

 (66 )

    Increase (decrease) in accounts payables and                               

    Accrued liabilities                       

 

 

 1,305

 

 

 

 (138 )

 

 

 511

 

 

 

 (751 )

Total cash used in operating activities

 

 $ (28 )

 

 $ (1,689 )

 

 $ (3,320 )

 

 $ (5,503 )

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Mineral property expenditures (Note 5)

 

 

 (5,847 )

 

 

 (3,730 )

 

 

 (20,072 )

 

 

 (11,241 )

    Proceeds from sale of investments (Note 4)

 

 

 661

 

 

 

 -

 

 

 

 6,171

 

 

 

 11,386

 

    Property and equipment purchases

 

 

 (156 )

 

 

 (14 )

 

 

 (616 )

 

 

 (425 )

    Option payments and expenditures recovered

 

 

 -

 

 

 

 1,468

 

 

 

 -

 

 

 

 1,968

 

    Cash expended in acquisitions

 

 

 (8,727 )

 

 

 -

 

 

 

 (10,094 )

 

 

 -

 

Total cash provided by (used in) investing activities

 

 $ (14,069 )

 

 $ (2,276 )

 

 $ (24,611 )

 

 $ 1,688

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Proceeds from private placements

 

 

 5,325

 

 

 

 -

 

 

 

 5,325

 

 

 

 -

 

    Share issuance costs

 

 

 (231 )

 

 

 -

 

 

 

 (231 )

 

 

 -

 

    Proceeds from Silver Stream (Note 9)

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 4,757

 

    Proceeds from exercise of warrants and stock            

    options            

 

 

 -

 

 

 

 469

 

 

 

 -

 

 

 

 668

 

    Repayment of lease liability

 

 

 (32 )

 

 

 (28 )

 

 

 (94 )

 

 

 (83 )

    Finance costs paid

 

 

 (9 )

 

 

 (11 )

 

 

 (30 )

 

 

 (37 )

Total cash provided by (used in) financing activities

 

 $ 5,053

 

 

 $ 430

 

 

 $ 4,970

 

 

 $ 5,305

 

Foreign exchange effect on cash

 

 

 (11 )

 

 

 121

 

 

 

 32

 

 

 

 (43 )

Change in cash and cash equivalents

 

 

 (9,054 )

 

 

 (3,414 )

 

 

 (22,929 )

 

 

 1,447

 

Cash and cash equivalents, beginning

 

 

 15,641

 

 

 

 23,724

 

 

 

 29,516

 

 

 

 28,901

 

Cash and cash equivalents, ending

 

 $ 6,587

 

 

 $ 20,310

 

 

 $ 6,587

 

 

 $ 30,348

 

 

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

 

 
3

 

 

FIRST MINING GOLD CORP.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 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 10(d))

 

 

 2,287,500

 

 

 

 841

 

 

 

 -

 

 

 

 (265 )

 

 

 -

 

 

 

 -

 

 

 

 576

 

Exercise of warrants (Note 10(c))

 

 

 265,650

 

 

 

 104

 

 

 

 (12 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 92

 

Shares issued in connection with mineral property tenure (Note 5)

 

 

 857,035

 

 

 

 310

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 310

 

Cameron Gold exploration agreement

 

 

 25,000

 

 

 

 12

 

 

 

 9

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 21

 

Share reduction due to expiry

 

 

 (701,579 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Share-based payments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 2,301

 

 

 

 -

 

 

 

 -

 

 

 

 2,301

 

Obligation to distribute investments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 12,954

 

 

 

 12,954

 

Loss for the period

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (31,867 )

 

 

 (31,867 )

Other comprehensive income

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 1,016

 

 

 

 -

 

 

 

 1,016

 

Balance as at September 30, 2021

 

 

 699,950,059

 

 

 $ 318,434

 

 

 $ 25,053

 

 

 $ 21,628

 

 

 $ (376 )

 

 $ (135,783 )

 

 $ 228,956

 

Balance as at December 31, 2021

 

 

 700,200,059

 

 

 $ 318,499

 

 

 $ 25,063

 

 

 $ 22,219

 

 

 $ 410

 

 

 $ (142,266 )

 

 $ 223,925

 

Proceeds from private placement

 

 

 17,749,868

 

 

 

 5,325

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 5,325

 

Private placements share issuance cost

 

 

 -

 

 

 

 (231 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (231 )

Flow-through share premium liability

 

 

 -

 

 

 

 (1,351 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (1,351 )

Settlement of RSUs (Note 10(e))

 

 516,664

 

 

 120

 

 

 

 -

 

 

 

 (120 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

Shares issued on acquisition of Duparquet Project (Note 3)

 

 

 79,169,460

 

 

 17,394

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 17,391

 

Shares issued in connection with mineral property tenure (Note 5)

 

 

 4,400,324

 

 

 1,191

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 1,189

Share reduction due to expiry

 

 

 (118,029 )

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Share-based payments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 2,115

 

 

 -

 

 

 

 -

 

 

 2,115

Loss for the period

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 (8,148 )

 

 (8,148 )

Other comprehensive loss

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 (4,459 )

 

 

 -

 

 

 (4,459 )

Balance as at September 30, 2022

 

 

 801,918,346

 

 

 $ 340,942

 

 $ 25,063

 

 

 $ 24,214

 

 $ (4,049 )

 

 $ (150,414 )

 

 $ 235,756

 

 

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

 

 
4

 

 

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 and 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 acquired a 100% interest in the Duparquet Gold Project in September 2022 and is developing plans to advance the project along with its nearby Duquense and Pitt Projects in Québec. The Company holds a 15% equity position in Treasury Metals Inc. which is advancing the Goliath Gold Complex toward construction and a 19% equity position in Big Ridge Gold Corp. which is advancing the Hope Brook Project as a joint arrangement. First Mining’s portfolio of gold projects in eastern Canada also includes the Cameron project. In addition, the Company holds a 30% interest in PC Gold Inc., the 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 September 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.

 

In preparing the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 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. 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.

 

These unaudited condensed interim consolidated financial statements were approved by the Board of Directors on November 9, 2022.

   

 
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)

  

3.  ACQUISITION OF DUPARQUET

 

On September 15, 2022, the Company completed the acquisition of all the outstanding 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 Québec, Canada (the “Beattie Transaction”), that are not already owned by the Company or Clifton Star Resources Inc. (“Clifton Star”). The total consideration of the Beattie Transaction was $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 51,532,516 First Mining Shares.

 

Concurrent with completing the Beattie Transaction, the Company completed the acquisitions of 2699681 Canada Ltd. (“269 Canada”) and 2588111 Manitoba Ltd. (“258 Manitoba”), (together the “Concurrent Transactions”) through Clifton Star. The total consideration of the Concurrent Transactions was $2,500,000 in cash and the issuance of 20,000,000 First Mining Shares.

 

As a result of acquiring Beattie, 269 Canada and 258 Manitoba, the Company now owns 100% of the Duparquet Gold Project.  

 

Management has concluded that the acquisition of Duparquet, consisting of Beattie, 269 Canada and 258 Manitoba, has been recorded as an asset acquisition when applying the guidance within IFRS 3 Business Combinations. In accordance with IFRS 3, the purchase price has been allocated to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date. Upon closing, the fair value of identifiable assets acquired from Beattie, 269 Canada and 258 Manitoba were as follows:

 

Mineral Properties

 

 $ 24,166

 

Accounts Payable and Accruals

 

 

 (71 )

Net assets acquired

 

 $ 24,095

 

 

The consideration paid by the Company was comprised as follows:

 

Fair value of 71,532,516 common shares issued for Beattie, 269 Canada and 258 Manitoba

 

 $ 15,368

 

Cash paid

 

 

 8,727

 

Total consideration paid

 

 $ 24,095

 

   

 
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)

 

4. INVESTMENTS

 

The movements in investments during the nine months ended September 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

 

 

 -

 

 

 

 110

 

 

 

 -

 

 

 

 110

 

Disposals

 

 

 (4,406 )

 

 

 (1,810 )

 

 

 -

 

 

 

 (6,216 )

Loss recorded in other comprehensive loss

 

 

 -

 

 

 

   (936)

 

 

 -

 

 

 

(936

 )

Loss recorded in net loss

 

 

(1,630)

 

 

 -

 

 

 

 -

 

 

 

(1,630

 )

Balance as at September 30, 2022

 

 $

2,365

 

 

 $

2,350

 

 

 $ -

 

 

 $ 4,715

 

 

 

 

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 nine months ended September 30, 2022, the Company:

 

·

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

·

Sold a total of 1,477,300 common shares of other marketable securities for net proceeds of $1,766,000 resulting in a realized gain on sale of $654,000 based on the original cost at the time of initial recognition.

·

 Received 1,544,944 shares of Westward Gold (initial recognition - $110,000), in connection with the Earn-in Agreement associated with the Turquoise Canyon Project in Nevada, USA.

 

 
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)

 

5. MINERAL PROPERTIES

 

As at September 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 5(a))

 

 

Cameron

 

 

Duparquet

(Note 5b)

 

 

Duquesne/

Pitt

 

 

Hope Brook

(Note 5(c))

 

 

Pickle Crow

(Note 5(d))

 

 

Others (1)

 

 

Total

 

Balance December 31, 2021

 

 $ 104,065

 

 

 $ 1,320

 

 

 $ 32,329

 

 

 $ 3,098

 

 

 $ 7,244

 

 

 $ 18,027

 

 

 $ -

 

 

 $ 3,934

 

 

 $ 170,017

 

Acquisition

 

 

 1,662

 

 

 

 455

 

 

 

 -

 

 

 

 30,490

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 32,607

 

Concessions, taxes and royalties

 

 

 252

 

 

 

 -

 

 

 

 15

 

 

 

 2

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 269

 

Salaries and share-based payments

 

 

 2,605

 

 

 

 438

 

 

 

 66

 

 

 

 152

 

 

 

 3

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 3,264

 

Drilling, exploration, and technical consulting

 

 

 6,520

 

 

 

 385

 

 

 

 69

 

 

 

 119

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 7,093

 

Assaying, field supplies, and environmental

 

 

 6,348

 

 

 

 17

 

 

 

 34

 

 

 

 10

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 6,409

 

Travel and other expenditures

 

 

 1,711

 

 

 

 87

 

 

 

 4

 

 

 

 2

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 1,804

 

Total Expenditures

 

 $ 19,098

 

 

 $ 1,382

 

 

 $ 188

 

 

 $ 30,775

 

 

 $ 3

 

 

 $ -

 

 

 $ -

 

 

 $ -

 

 

 $ 51,446

 

Disposal, impairment, reclassification or option payments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 (2,175 )

 

 

 -

 

 

 

 (92 )

 

 

 (2,267 )

Balance September 30, 2022

 

 $ 123,163

 

 

 $ 2,702

 

 

 $ 32,517

 

 

 $

$33,873

 

 

 $ 7,247

 

 

 $ 15,852

 

 

 $ -

 

 

 $ 3,842

 

 

 $ 219,196

 

 

 

 

Springpole

 

 

Birch-Uchi

 

 

Cameron

 

 

Duparquet

(Note 5b)

 

 

Duquesne/

Pitt

 

 

Hope Brook

 

 

Pickle Crow

 

 

Others (1)

 

 

Total

 

Balance December 31, 2020

 

 $ 87,907

 

 

 $ -

 

 

 $ 31,875

 

 

 $ 2,670

 

 

 $ 7,229

 

 

 $ 20,612

 

 

 $ 24,986

 

 

 $ 4,150

 

 

 $ 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

 

 

 

 114

 

 

 

 6

 

 

 

 44

 

 

 

 22

 

 

 

-

 

 

 

 3,685

 

Drilling, exploration, and technical consulting

 

 

 4,235

 

 

 

 269

 

 

 

 102

 

 

 

 270

 

 

 

 6

 

 

 

 16

 

 

 

 3,251

 

 

 

20

 

 

 

 8,169

 

Assaying, field supplies, and environmental

 

 

 5,194

 

 

 

 1

 

 

 

 80

 

 

 

 38

 

 

 

 -

 

 

 

 3

 

 

 

 -

 

 

 

(20)

 

 

 

 5,296

 

Travel and other expenditures

 

 

 1,512

 

 

 

 -

 

 

 

 34

 

 

 

 6

 

 

 

 -

 

 

 

 17

 

 

 

 -

 

 

 

-

 

 

 

 1,569

 

Total Expenditures

 

 $ 16,158

 

 

 $ 1,320

 

 

 $ 454

 

 

 $ 428

 

 

 $ 15

 

 

 $ 100

 

 

 $ 3,273

 

 

 $

0

 

 

 $ 21,748

 

Disposal, impairment, reclassification or option payments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (2,685 )

 

 

 (28,259 )

 

 

 (216 )

 

 

 (31,160 )

Balance December 31, 2021

 

 $ 104,065

 

 

 $ 1,320

 

 

 $ 32,329

 

 

 $ 3,098

 

 

 $ 7,244

 

 

 $ 18,027

 

 

 $ -

 

 

 $

3,934

 

 

 $ 170,017

 

 

(1)

Other mineral properties as at September 30, 2022 and December 31, 2021 include: A 1.5% NSR Royalty under the terms of the Treasury Share Purchase Agreement (defined in Note 6); and 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)

 

5. 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 September 30, 2022, the Company issued an aggregate of 444,887 common shares pursuant to the terms of certain Birch-Uchi option and earn-in 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. In Q2 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. In Q2 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 acquisition

 

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 $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. During the period ended September 30, 2022, the company issued 444,887 shares and made payments of $100,000 in cash under the terms of the Earn-In agreement.

  

 
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)

 

5. MINERAL PROPERTIES (continued)

 

iv) Birch Lake properties acquisition

 

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.

 

v) Stargazer properties acquisition

 

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) Duparquet Project

 

During the period ended September 30, 2022, the Company issued 71,532,516 common shares in connection with the Duparquet property acquisition.  The Duparquet acquisition costs recorded in Mineral Properties are broken down as follows:

 

 
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)

 

The Duparquet acquisition costs recorded in Mineral Properties are broken down as follows:

  

 

 

September 30,

2022

 

Mineral Properties – Central Duparquet

 

 $ 67

 

Investment in Beattie Gold Mines – Initial Recognition on Feb 7, 2022

 

 5,544

 

Equity Loss

 

 

 (1 )

Mineral Property Investments in 269 Canada and 258 Manitoba

 

 

 4,281

 

Fair value loss – FVTOCI

 

 

 (3,536 )

Mineral Properties – Initial Recognition on September 15, 2022

 

 

 24,165

 

Total acquisition costs recorded in Mineral Properties

 

 $ 30,520

 

  

c) 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

  

 
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)

 

5. MINERAL PROPERTIES (continued)

 

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.

 

On September 13, 2022, Big Ridge completed Stage 1 of the earn-in requirements necessary to satisfy the earn-in threshold set out in the Hope Brook option agreement. The Company received 15.0 million common shares of Big Ridge and the Company’s interest in the project decreased to 49%. See Note 8 below for further details of the equity accounted investment in Big Ridge.

  

d) 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 liability balance as at

 

September 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%.

 

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

  

6. 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 September 30, 2022.

 

 
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)

 

6. INVESTMENT IN TREASURY METALS (continued)

 

b) Equity Accounting Method for Investment in Treasury Metals

  

The Company has concluded it has significant influence over Treasury Metals. The Company is accounting for its investment using the equity method. As at September 30, 2022 the fair market value of the Company’s investment in common shares of Treasury Metals was $6,000,000, based on the Treasury Metals quoted market price. As at September 30, 2022, the Company owns approximately 20.0 million Treasury Metals Shares.

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

 $ 15,400

 

 

 $ 63,812

 

Acquisition – Initial Recognition on August 7, 2020

 

 

 -

 

 

 

 -

 

Equity loss

 

 

 (442 )

 

 

 (167 )

Dilution event in Q2, 2021

 

 

 -

 

 

 

 (5,000 )

Fair value adjustment of Investment in Treasury Metals Inc.

 

 

 (8,958 )

 

 

 (24,304 )

Distribution to shareholders

 

 

 -

 

 

 

 (18,941 )

Balance, end of period

 

 $ 6,000

 

 

 $ 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 September 30, 2022. The Company’s estimated equity share of Treasury’s net loss for the period ending September 30, 2022 was $442,000.

 

7. 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 September 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

 

 

 (35 )

 

 

 (3 )

Dilution of ownership - Stage 2 earn-in completion

 

 

 -

 

 

 

 (14,427 )

Balance, end of period

 

 $ 21,535

 

 

 $ 21,570

 

 

The subsequent equity accounting for PC Gold is based on audited results for the year-ended September 30,2021, and an estimate of results for the period of July 1, 2021 to September 30, 2022. The Company’s estimated equity share of PC Gold’s net loss for the interim period ending September 30, 2022 was $35,000.

 

 
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)

 

8. INVESTMENT IN BIG RIDGE GOLD CORP.

 

On September 13, 2022, Big Ridge completed Stage 1 of the earn-in requirements necessary to satisfy the earn-in threshold set out in the Hope Brook option agreement. Big Ridge issued a total of 15.0 million common shares to the Company with an aggregate fair value of $2,175,000, resulting in an increase in the Company’s common share ownership interest in Big Ridge to 19.5% on September 30, 2022 from 10.8% on June 30, 2022. Following the completion of the initial 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). 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.

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

 $ 1,491

 

 

 $ -

 

Acquisition – Initial Recognition on June 7, 2021

 

 

 -

 

 

 

 2,185

 

Equity loss

 

 

 (105 )

 

 

 (106 )

Dilution event in Q2 2021

 

 

 -

 

 

 

 (588 )

Completion of Stage 1 Earn-In

 

 

 2,175

 

 

 

-

 

Fair value adjustment of Investment in Big Ridge Gold Corp.

 

 

 (646 )

 

 

 -

 

Balance, end of period

 

 $ 2,915

 

 

 $ 1,491

 

 

The subsequent equity accounting for Big Ridge is based on audited results for the year end June 30, 2021 and an estimate of results for the period of July 1, 2021 to September 30, 2022. The Company’s estimated equity share of Big Ridge’s net loss for the period ending September 30, 2022 was $105,000.

 

9. 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. $30.8 million as at September 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

 

 
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)

 

9.  SILVER STREAM DERIVATIVE LIABILITY (continued)

 

($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 tranche (“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 September 30, 2022 is US$12,699,000 ($17,407,000), which is comprised of the Silver Stream obligation fair value of US$16,097,000 ($22,065,000) less the Advance Payment receivable fair value of US$3,398,000 ($4,658,000). 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).

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Balance, beginning of period

 

 $ (26,114 )

 

 $ (13,260 )

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

 

 

 -

 

 

 

 (9,808 )

Change in fair value during the period

 

 

 8,707

 

 

 

 (3,046 )

Balance, end of period

 

 $ (17,407 )

 

 $ (26,114 )

 

10. 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 as at September 30, 2022: 801,918,346 (December 31, 2021 – 700,200,059).

Preferred shares as at September 30, 2022: nil (December 31, 2021 – nil).

  

Non-Brokered Private Placement Financing

 

On September 2, 2022, the Company completed a non-brokered private placement raising aggregate gross proceeds of $5,324,960 (the “September Offering”). Pursuant to the September Offering, the Company issued an aggregate of 17,749,868 flow-through units of the Company (the “FT Units”) at a price of $0.30 per FT Unit. In connection with

  

 
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)

 

10. SHARE CAPITAL (continued)

 

the September Offering, the Company paid issuance costs of $231,445 in cash. Each FT Unit consisted of one flow-through common share of the Company that qualifies as a “flow-through share” for the purposes of the Income Tax Act (Canada) (the “ITA”). An amount of $3,742,275 ($3,973,720 net of issuance costs of $231,445) was recorded in share capital and the remaining $1,351,240, representing the implied premium, was recorded as a flow-through share premium liability. As at September 30, 2022, the Company recorded a balance of $1,256,427 as flow-through share premium liability (see Note 11).

 

c) Warrants

 

The movements in warrants during the nine months ended September 30, 2022 as compared to the years ended December 31, 2021 and December 31, 2020 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

 

 

 $ 0.48

 

Warrants issued

 

 

 -

 

 

 

 -

 

Warrants exercised

 

 

 -

 

 

 

 -

 

Warrants expired

 

 

 (41,545,383 )

 

 

 0.57

 

Balance as at September 30, 2022

 

 

 50,347,237

 

 

 $ 0.35

 

 

The following table summarizes information about warrants outstanding as at September 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

 

 

 

 

 

 50,347,237

 

 

 $ 0.35

 

 

 

 1.90

 

 

There were no warrants issued during the nine months ended September 30, 2022.

 

d) Stock Options

 

The Company has adopted an amended and restated share-based compensation plan (the “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 (inclusive of other equity awards granted under the Plan). Stock options granted under the plan may be subject to vesting provisions as determined by the Board of Directors.

  

 
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)

 

10. SHARE CAPITAL (continued)

 

The movements in stock options during the nine months ended September 30, 2022 as compared to the years ended December 31, 2021 and December 31, 2020 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 forfeited

 

 

 (7,820,000 )

 

 

 0.75

 

Options expired

 

 

 (2,762,500 )

 

 

 0.39

 

Balance as at December 31, 2021

 

 

 45,140,000

 

 

 $ 0.44

 

Options granted

 

 

 15,335,000

 

 

 

 0.27

 

Options exercised

 

 

 -

 

 

 

 -

 

Options expired

 

 

 (12,258,750 )

 

 

 0.65

 

Options forfeited

 

 

 (1,581,250 )

 

 

 0.31

 

Balance as at September 30, 2022

 

 

 46,635,000

 

 

 $ 0.33

 

 

The weighted average closing share price at the date of exercise for the nine months ended September 30, 2022 was nil (September 30, 2021 – $0.45). There were no stock options exercised during the nine months ended September 30, 2022 (September 30, 2021 – 2,287,500).

 

The following table summarizes information about the stock options outstanding as at September 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)

 

$ 0.215 – 0.50

 

 

 41,785,000

 

 

 $ 0.34

 

 

 

 2.94

 

 

 

 33,805,000

 

 

 $ 0.36

 

 

 

 2.61

 

$ 0.51 – 1.00

 

 

 4,850,000

 

 

 

 0.60

 

 

 

 0.29

 

 

 

 4,850,000

 

 

$

 0.60

 

 

 

 0.29

 

 

 

 

 46,635,000

 

 

 $ 0.37

 

 

 

 2.67

 

 

 

 38,655,50

 

 

 $ 0.39

 

 

 

 2.32

 

 

During the nine months ended September 30, 2022, there were 15,335,000 (September 30, 2021 – 11,290,000) stock options granted with an aggregate fair value at the date of grant of $4,083,250 (September 30, 2021 - $4,718,400), or a weighted average fair value of $0.14 per option (September 30, 2021 – $0.23). As at September 30, 2022, 7,980,000 (September 30, 2021 – 9,488,750) stock options remain unvested with an aggregate grant date fair value of $1,404,938 (September 30, 2021 - $3,948,000).

 

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 expensed during the periods ended September 30, 2022 and September 30, 2021 were classified within the financial statements as follows:

  

 
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)

 

10. SHARE CAPITAL (continued)

   

 

 

For the three months ended

September 30,

For the nine months ended

September 30,

 

Statements of Net Loss:

 

2022

 

 

2021

 

 

2022

 

 

2021

 

General and administration

 

 $ 219

 

 

 $ 229

 

 

 $ 1,059

 

 

 $ 1,026

 

Exploration and evaluation

 

 

 9

 

 

 

 19

 

 

 

 41

 

 

 

 225

 

Investor relations and marketing communications

 

 

 27

 

 

 

 57

 

 

 

 129

 

 

 

 201

 

Corporate development and due diligence

 

 

 28

 

 

 

 34

 

 

 

 125

 

 

 

 133

 

Subtotal

 

 $ 283

 

 

 $ 339

 

 

 $ 1,354

 

 

 $ 1,585

 

Statements of Financial Position:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Properties

 

 

 112

 

 

 

 142

 

 

 

 761

 

 

 

 716

 

Total

 

 $ 395

 

 

 $ 481

 

 

 $ 2,115

 

 

 $ 2,301

 

 

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:

  

 

 

Nine months ended

 

 

Year ended

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Risk-free interest rate

 

 

 1.80 %

 

 

 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)

 

 

 64.08 %

 

 

 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 nine months ended September 30, 2022, the Company granted 1,090,000 restricted share units (“RSUs”) under the 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 intends to settle all RSUs 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.

 

 
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)

 

10. SHARE CAPITAL (continued)

 

The following table summarizes the changes in RSUs for the nine months ended September 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

 

 

 (516,664 )

 

 

 0.40

 

RSUs forfeited

 

 

 (233,333 )

 

 

 0.40

 

Balance as at September 30, 2022

 

 

 1,890,003

 

 

 $ 0.31

 

 

f) Deferred Share Units

 

During the nine months ended September 30, 2022, the Company granted 356,000 deferred share units ("DSUs") under the Plan to certain 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.

 

 

 

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 September 30, 2022

 

 

 659,000

 

 

 $ 0.30

 

 

11. FLOW-THROUGH SHARE PREMIUM LIABILITY

 

The following is a continuity schedule of the liability portion of the Company’s flow-through share issuances:

 

 

 

August 26, 2022

 

 

September 2, 2022

 

 

Total

 

Balance, December 31, 2021

 

 $ -

 

 

 $ -

 

 

 $ -

 

Liability incurred for flow-through shares issued August 26, 2022

 

 

 1,181

 

 

 

 -

 

 

 

 1,181

 

Settlement of flow-through share premium liability upon incurring eligible expenditures

 

 

 (95 )

 

 

 -

 

 

 

 (95 )

Liability incurred for flow-through shares issued September 2, 2022

 

 

 -

 

 

 

 170

 

 

 

 170

 

Balance, September 30, 2022

 

 $ 1,086

 

 

 $ 170

 

 

 $ 1,256

 

 

As at September 30, 2022, the Company had $4,945,707 (December 31, 2021 – $Nil) of unspent flow-through expenditure commitments.

 

 
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

 

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 September 30, 2022

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

 $ 55

 

 

 $ 27

 

 

 $ 5

 

 

 $ 4

 

 

 $ 91

 

Consultants

 

 

 76

 

 

 

 -

 

 

 

 (4 )

 

 

 1

 

 

 

 73

 

Depreciation (non-cash)

 

 

 44

 

 

 

 63

 

 

 

 -

 

 

 

 -

 

 

 

 107

 

Directors fees

 

 

 78

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 78

 

Investor relations and

marketing communications

 

 

 -

 

 

 

 1

 

 

 

 184

 

 

 

 4

 

 

 

 189

 

Professional fees

 

 

 239

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 239

 

Salaries

 

 

 301

 

 

 

 28

 

 

 

 87

 

 

 

 48

 

 

 

 464

 

Share-based payments

(non-cash) (Note 9(d))

 

 

 219

 

 

 

 9

 

 

 

 27

 

 

 

 28

 

 

 

 283

 

Transfer agent and filing fees

 

 

 16

 

 

 

 -

 

 

 

 2

 

 

 

 -

 

 

 

 18

 

Travel and accommodation

 

 

 52

 

 

 

 (17 )

 

 

 12

 

 

 

 14

 

 

 

 61

 

Operating expenses total

 

 $ 1,081

 

 

 $ 111

 

 

 $ 313

 

 

 $ 99

 

 

 $ 1,604

 

Fair value adj. of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 2,180

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 $ 3,784

 

 

For the three months ended September 30, 2021

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

 $ 86

 

 

 $ 17

 

 

 $ -

 

 

 $ -

 

 

 $ 103

 

Consultants

 

 

 21

 

 

 

 25

 

 

 

 29

 

 

 

 -

 

 

 

 75

 

Depreciation (non-cash)

 

 

 43

 

 

 

 41

 

 

 

 -

 

 

 

 -

 

 

 

 84

 

Directors fees

 

 

 160

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 160

 

Investor relations and marketing communications

 

 

 -

 

 

 

 1

 

 

 

 252

 

 

 

 -

 

 

 

 253

 

Professional fees

 

 

 198

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 198

 

Salaries

 

 

 243

 

 

 

 50

 

 

 

 68

 

 

 

 63

 

 

 

 424

 

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

 

 

 229

 

 

 

 34

 

 

 

 40

 

 

 

 35

 

 

 

 338

 

Transfer agent and filing fees

 

 

 210

 

 

 

 -

 

 

 

 3

 

 

 

 -

 

 

 

 213

 

Travel and accommodation

 

 

 5

 

 

 

 6

 

 

 

 7

 

 

 

 2

 

 

 

 20

 

Operating expenses total

 

 $ 1,195

 

 

 $ 174

 

 

 $ 399

 

 

 $ 100

 

 

 $ 1,868

 

 

 
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 nine months ended September 30, 2022

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

 $ 225

 

 

 $ 92

 

 

 $ 16

 

 

 $ 5

 

 

 $ 338

 

Consultants

 

 

 325

 

 

 

 9

 

 

 

 -

 

 

 

 1

 

 

 

 335

 

Depreciation (non-cash)

 

 

 133

 

 

 

 176

 

 

 

 -

 

 

 

 -

 

 

 

 309

 

Directors fees

 

 

 233

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 233

 

Investor relations and

marketing communications

 

 

 -

 

 

 

 3

 

 

 

 561

 

 

 

 8

 

 

 

 572

 

Professional fees

 

 

 586

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 586

 

Salaries

 

 

 916

 

 

 

 154

 

 

 

 258

 

 

 

 143

 

 

 

 1,471

 

Share-based payments (non-cash) (Note 9(d))

 

 

 1,059

 

 

 

 41

 

 

 

 129

 

 

 

 125

 

 

 

 1,354

 

Transfer agent and filing fees

 

 

 81

 

 

 

 -

 

 

 

 16

 

 

 

 -

 

 

 

 97

 

Travel and accommodation

 

 

 62

 

 

 

 16

 

 

 

 88

 

 

 

 18

 

 

 

 184

 

Operating expenses total

 

 $ 3,620

 

 

 $ 491

 

 

 $ 1,068

 

 

 $ 300

 

 

 $ 5,479

 

Fair value adj. of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 9,604

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 $ 15,083

 

 

For the nine months ended September 30, 2021

 

 

 

General and administration

 

 

Exploration and evaluation

 

 

Investor relations and marketing communications

 

 

Corporate development and due diligence

 

 

Total

 

Administrative and office

 

 $ 270

 

 

 $ 83

 

 

 $ 59

 

 

 $ 1

 

 

 $ 413

 

Consultants

 

 

 110

 

 

 

 27

 

 

 

 75

 

 

 

 -

 

 

 

 212

 

Depreciation (non-cash)

 

 

 128

 

 

 

 114

 

 

 

 -

 

 

 

 -

 

 

 

 242

 

Directors fees

 

 

 239

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 239

 

Investor relations and marketing communications

 

 

 -

 

 

 

 1

 

 

 

 1,168

 

 

 

 -

 

 

 

 1,170

 

Professional fees

 

 

 982

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 982

 

Salaries

 

 

 712

 

 

 

 163

 

 

 

 283

 

 

 

 211

 

 

 

 1,370

 

Share-based payments (non-cash) (Note 9(d))

 

 

 1,026

 

 

 

 225

 

 

 

 201

 

 

 

 132

 

 

 

 1,585

 

Transfer agent and filing fees

 

 

 346

 

 

 

 -

 

 

 

 37

 

 

 

 -

 

 

 

 381

 

Travel and accommodation

 

 

 7

 

 

 

 8

 

 

 

 7

 

 

 

 3

 

 

 

 24

 

Operating expenses total

 

 $ 3,820

 

 

 $ 621

 

 

 $ 1,830

 

 

 $ 347

 

 

 $ 6,618

 

Fair value adj. of non-current assets (non-cash) (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 23,555

 

Loss from operational activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 $ 30,173

 

 

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 September 30, 2022 and December 31, 2021 is as follows: Canada - $251,168,000 (December 31, 2021 - $209,739,000) and USA - $134,000 (December 31, 2021 - $226,000).

 

 
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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)

 

14. RELATED PARTY TRANSACTIONS

 

The Company’s related parties consist of the Company’s Directors and Officers.

 

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

  

Service or Item

 

Three months ended September 30,

 

 

Nine months ended September 30, 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021 

 

Directors’ fees

 

 $ 78

 

 

 $ 80

 

 

 $ 233

 

 

 $ 239

 

Salaries and consultants’ fees

 

 

 433

 

 

 

 398

 

 

 

 1,849

 

 

 

 1,329

 

Share-based payments (non-cash)

 

 

 316

 

 

 

 171

 

 

 

 1,433

 

 

 

 974

 

Total

 

 $ 827

 

 

 $ 649

 

 

 $ 3,515

 

 

 $ 2,542

 

 

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 September 30, 2022 and was therefore considered to be Level 1.

 

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.

 

 
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 fair value of the Option – Pickle Crow Gold Project as at September 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.

 

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

 

 

 

September 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)

 

 $ 4,715

 

 

 $ 4,715

 

 

 $ -

 

 

 $ -

 

 

 $ 13,386

 

 

 $ 13,386

 

 

 $ -

 

 

 $ -

 

Mineral property investments

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 6,435

 

 

 

 -

 

 

 

 -

 

 

 

 6,435

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Silver Stream derivative liability (Note 8)

 

 

 17,407

 

 

 

 -

 

 

 

 -

 

 

 

 17,407

 

 

 

 26,114

 

 

 

 -

 

 

 

 -

 

 

 

 26,114

 

Option – PC Gold (Note 4(c))

 

 $ 4,347

 

 

 $ -

 

 

 $ -

 

 

 $ 4,347

 

 

 $ 4,347

 

 

 $ -

 

 

 $ -

 

 

 $ 4,347

 

 

During the nine months ended September 30, 2022 there has been a transfer out of level 3 in the fair value hierarchy related to the Company’s acquisition of the remaining 90% interest in each of 269 Canada, 258 Manitoba and Beattie Gold requiring a reclassification from Mineral Property Investments to Mineral Properties.

  

16. SUBSEQUENT EVENTS

 

On October 11, 2022, the Company paid $50,000 in cash and issued 250,000 in common shares on the second anniversary date of the earn-in agreement between the Company and Pelangio Exploration Inc. The agreement gives the Company the right to earn, through Gold Canyon, up to an 80% interest in Pelangio’s Birch Lake and Birch Lake West properties.

   

Subsequent to September 30, 2022, 762,500 stock options with a weighted average exercise price of $0.42 were cancelled. 

 

 
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