Firesteel nears production at Laiva in Finland

Firesteel Resources (TSXV: FTR; US-OTC: FIEIF) will start mining its wholly owned, past-producing Laiva gold mine in central Finland this August, just two months after releasing a preliminary economic assessment (PEA) on the project in June.

“Although it’s a PEA we’re confident on the decision to go forward,” Firesteel president and CEO Michael Hepworth says in a sit-down interview with The Northern Miner in downtown Toronto.

He attributes Firesteel’s confidence to a few factors.

The company has a fully built and permitted 6,000-tonne-per-day mill and mine site that the previous operator, Nordic Mines Marknad, spent more than €220 million developing.

Hepworth says it’s a “real Rolls-Royce of a mill.”

He also admits that the trickiest part about resurrecting the project was figuring out the resource.

“One of the reasons the previous company got into trouble is they didn’t understand how to mine it, and we’ve spent a lot of time understanding how to mine it,” Hepworth says.

Before it shut down in early 2013, Laiva produced 75,000 oz. gold. The project contains swarms of gold veins that Hepworth says are fairly high grade, but very narrow. There are large areas of waste rock that Firesteel has to move so that it can access the veins.

Pit construction at the past producing Laiva gold mine in Finland. Credit: Firesteel Resources.

“We’re really going to mine this like an underground mine, although it’s an open-pit mine,” Hepworth says.

He says Nordic mined the deposit with 60,000-tonne blasts that mixed ore and waste together. Firesteel intends to blast away the waste, and then blast the ore in 5,000-tonne-per-day chunks.

The company starts mining the first week of August and aims to pour first gold by Oct. 24, 2018. 

The project contains 3.79 million measured and indicated tonnes grading 1.23 grams gold for 151,000 oz. gold, as well as 9 million inferred tonnes grading 1.53 grams gold for 445,000 oz. gold as of an August 2017 estimate.

“The previous company had a JORC report that said there were a million ounces there,” Hepworth says. “We’re not allowed to use the JORC report, but assuming they were reasonably accurate, there’s probably a lot more gold to be discovered here than what we’ve got in our resource.”

Firesteel based its resource on 3,500 drill holes by previous operators. In February it began a nearly $1-million infill drill campaign. It’s focused on the north side of the north pit and the northwest side of the south pit. Drilling began in February and will continue into production. So far the company has drilled 3,500 metres.

The deepest holes at Laiva extend 150 metres below surface. The deposit is open at depth and to the east. Firesteel aims to start exploration drilling in 2019, when it either has raised more money or has cash flow.

It will target three prospective zones: Kaukainen, less than 3 km southeast; Musunneva, less than 3 km south; and Oltava, 12 km south. The three zones combine for 43 square kilometres.

Kaukainen and Musunneva show the same mineralization style as Laiva, and Firesteel sees potential at both locations for more open pits. Previous operators drilled Oltava, but never enough to define a resource. It shares a similar geochemical signature with Laiva.

The tailings pond at Firesteel’s near-production Laiva gold mine. Credit: Firesteel Resources.

The project has a $68.9-million, after-tax net present value at a 5% discount rate and a 36.5% after-tax internal rate of return. Firesteel expects to produce 456,600 oz. gold over a six-year mine life at a $974 per oz. all-in sustaining cost, with payback in 2.1 years.

The Finnish government approved a $155-million tax loss provision when Firesteel acquired the mine in 2017 that it could use to offset future taxes if the mine goes to production.

The project requires $7.1 million in pre-production capital expenses to refurbish the mine. Hepworth says Firesteel has already spent half of that.

“The cyanidation tanks need repair, there are some conveyor belts that need work — things like that,” he says. “In the grand scheme of things [the repairs are] relatively small.”

The company is fully funded, with around $9 million in the bank thanks to a $20.6-million gold-forward sale last December with Pandion Mine Finance. The company will provide 67,155 oz. gold at spot price less a discount over five years from the time the deal closed.

“It’s never more than 20% of our production, so we’re profitable, even though we’re paying that out,” Hepworth says. “The financing was arranged on all the previous data. They were confident the resource was good and that this was worth investing in.”

Shares of Firesteel shares are trading at 15¢, in a 52-week range of 5¢ to 16¢. The company has a $21-million market capitalization.

Firesteel is changing its name to Nordic Gold Corp., and will later change its ticker symbol.