Fortune Bay (FOR) - Re-Evaluated 2011 PFS: New Hope?

September 30 2020, 13:08 GMT+01:00

Fortune Bay (FOR)

  • TSX-V: FOR
  • Shares Outstanding: 29M
  • Share price C$1.28 (14.09.2020)
  • Market Cap: C$36M

We are currently experiencing the highest gold prices ever. Gold briefly peaked over a US$2,000/oz, and there is plenty of money to be made if investors pick the right companies. One potential candidate is Fortune Bay: a gold-focussed explorer and developer with two 100%-owned advanced gold projects in Canada and Mexico. Both projects are claimed to have 'exploration and development potential'.

Fortune Bay's aim is to become a mid-tier gold explorer and developer. The company's strategy appears to be a traditional approach of development. It intends to systematically advance its existing projects whilst also considering strategic M&A opportunities to create catalyst moments. The result could be a 'pipeline of opportunities.' What is creating most of the traction for this story right now appears to be the planned revision of a 2011 PFS for the Canadian Goldfields Project. This appears to be the primary source of hope for the company.

It is important to understand a company's corporate history before giving it any of your money. Fortune Bay has existed in its current incarnation since June 2016, but it has a long history. It roots can be traced back to October 1999, the start of a series of public transactions spearhead by the company's Executive Chairman, Wade Dawe. This all started with the formation of a company named Linear Resources, which quickly became Linear Gold Corp. The company made a transaction for the Mexican Ixhuatán property with now-defunct Swiss miner, Xstrata PLC.

Exploration was conducted at Ixhuatán between 2004 to 2007, with Linear announcing a +1.7Moz gold discovery. Linear was clearly making some waves at the time, raising in excess of C$75M to fund exploration activities. That is considerably more than Fortune Bay is worth today.

Goldfields came into the fray in August 2009 for $5M. It hosts a +1Moz gold deposit. In 2010, Linear formed a conglomerate with Apollo Gold: Brigus Gold Corp. This new company operated assets like the Black Fox gold mine in Ontario, Canada, alongside its 2 existing projects.

Fortune Bay was founded in 2014 via a merger JV between Primero Gold and Brigus Gold to focus on the company's development-stage assets, with cash for gold players at a premium at the time.

In 2016, Fortune Bay acquired 100% of Ireland-based software developer, Kneat Solutions Limited, changing the company's name to kneat.com, inc. It then spun out its gold exploration properties to form the new Fortune Bay.

Goldfields Project and Ixhuatán Project

So, time for some numbers. on the face of it, there is a good amount of potential here. Not only does Fortune Bay have a combined historic resource of 2.1Moz M&I, but it also claims to have an exploration upside. This will be key to unlocking share price.

Goldfields is the clear priority right now, with its potential being underpinned by open-pit amenable targets. The numbers from the 2011 PFS: 1.03Moz of M&I gold. However, a reinterpretation/optimisation of this PFS, earmarked for Q1/21, could shake things up a bit. Expect Fortune Bay to spend most of Q4/20 identifying opportunities, looking for data gaps and making all the operations necessary for a new PFS to be rolled out.

Verran was drafted into this story back in June to become the company's CEO. He is a nice guy, based on our first impressions of him, but he is going to need to leverage all of his 20-years of experience in the mining industry to bring focus and urgency to this story. Fortune Bay has experienced share uptick recently, but it has since tailed off a little. Patient shareholders will want to see the growth story continue.

To power the company through this growth phase, Verran and his team recently raised $2.7M (May 2020). Fortune Bay currently has around $1.8M in the treasury and the balance sheet looks like and tight. This should see the company through its new resource estimate and high-level PFS reanalysis, but when new data needs to be collated, it will need to seek out some capital.

Investors are clearly buying into the under-explored nature of Goldfields, and Verran's involvement has brought a sense of security to the stock. We will be keenly keeping an eye on this story as it develops because some good numbers could completely change the value proposition on offer for investors. What are you thinking? Would you invest?

You can also hear our thoughts on the company at cruxinvestor.com/club. On there is an engaged community of friendly investors who have exclusive access to institutional grade company reports (broken down into digestible and easily understood investing rationale); training courses (to help you be better analysts); company interview summaries (to save you time); macro commentary (from experts from around the world); and stories of everyday investors (what they have learnt along the way). Try the 7-day trial.

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