Gold and other precious metals are screaming higher. During the first half of the year, the World Gold Council says investment demand reached a 30-year high.
In response, gold stocks have soared. The HUI and XAU gold indexes and have already increased about 180% for the year.
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But these markets are just getting warmed up.
The price of gold has found good support over $1,300 an ounce. But with growing financial and currency issues all over the world, the next leg up to $1,400 is likely right around the corner. And despite the great gains they have already seen, gold stocks still have plenty of room to grow.
With that in mind, I want to direct your attention to a gold company with a unique business model.
First Mining Finance Corp.
(TSX-V: FF)(OTC: FFMGF)
First Mining Finance is not a mining or exploration firm. And it’s not a royalty or streaming company. The company calls itself a “mineral bank.”
The idea was created by the company’s founding Chairman, Keith Neumeyer. Mr. Neumeyer is one of the most well-known names in the junior mining industry and also contributed to co-founding First Quantum Minerals (TSX: FM) and First Majestic (NYSE: AG)(TSX: FR) — the latter now being a premier name in silver mining.
The idea is actually pretty simple, yet very clever…
For the past few years, while the larger precious metals market was in a general bear market, First Mining Finance was buying and holding high-quality mineral properties.
The model has been to acquire mineral properties for discounted prices and hold those assets until the capital markets for mining improve. The company says, “At that point we would add value for our shareholders by entering into agreements with third parties that would move the projects forward.”
And it has.
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Shares of FF have increased over 100% since May. But as a longer-term position, I think shares are easily headed much higher.
First Mining Finance currently holds a portfolio of 28 projects in its mineral bank, which cover over 700,000 acres in North America with a focus on advanced-stage development and exploration projects.
The company’s flagship project is the Springpole Gold Project, located in northern Ontario, Canada. Springpole has an indicated resource of 4.6 million ounces of gold equivalent. In total, First Mining Finance’s projects contain 6.8 million ounces of measured and indicated gold resources.
The company has very little debt and approximately $37.3 million of cash on hand. Shares of the stock are highly liquid, although the share structure is a little bloated with over 500 million shares outstanding.
First Mining Finance has a unique and proven business model. It’s headed by some of the most talented and well-known people in the junior mining industry. The company owns a high-quality project in a market growing ever more hungry for the metals contained. Everything looks great for First Mining Finance going forward. Consider owning shares of First Mining Finance (TSX-V: FF)(OTC: FFMGF) for the mid-term.
For more information on the company, visit its website by clicking here or check out its latest corporate presentation here.
Stay tuned to Energy and Capital for more gold stock recommendations on the way.
Luke Burgess
Energy and Capital
