Sprott initiates coverage of Firefinch, page-62

Missed most of the action today, just catching up now.

It is actually a thoroughly researched report. A few errors (such as Domba being drilled by BGS) however they have zeroed in on our main attributes.

They spend some time on our management. Whilst you do need a good asset, IMHO management is THE most important thing.

Then they spend considerable time on our exploration potential. Our plan to get back into production is being executed flawlessly, must admit my main focus has been on that, the bigger picture as Doc has mentioned time & time again in his webinars is these deposits don’t just stop. Our 600+ sq km tenements have not been properly explored. As a minnow, BGS did not have the funds to properly explore our tenements as we will soon be able to do.

Talk of finance/placements. They say we’ll need A$50m between Jan ’21 and end of Q2 ’22 to finance US$86m (A$112m) in capex. In the updated Reserve Report we laid out our projected required capex of US$51-67m.including US$30-40m for dewatering & main pit cutbacks (obviously the cutback the main expense). That also included US$5m for short to medium term Tailings facilities (TSF). We said longer term was being assessed. I assume Sprott’s US$86m includes the long term TSF and is very conservative.

They are assuming we’ll do all that capex before mining the main pit. Firstly the Morila pit is massive, we don’t need to do the whole cut back to the new pit shell on day 1 to start mining (Q2 2022 is day 1). Doc has said as soon as the water level allows we’ll drill the shoulders, the same for mining, we’ll do it incrementally. The satellite mining will be a massive boost to free cash, the start of main pit mining even more so. I have no doubt Doc’s plan is to fund this capex from operations by carrying out the capex incrementally. The upcoming LOM plan will clarify this. The same for the TSF, that also can be done incrementally or certainly deferred a few years. It’s possible we might need a short term loan facility as Doc suggested, the last thing he wants as a large shareholder is another cap raise - just won’t happen.

Interestingly in a previous report, Westoz mentioned Emerald as being their preferred gold stock but also mentioned us. Sprott have a target price of $1.15 for EMR compared with the current sp of 83c (38% upside). Our valuation 50c compared with the present 27c (85% upside). Sprott rate both Mali & Cambodia as high risk, with the uninterrupted mining history of Mali, I’d choose it every time over Cambodia.

Goulamina valued at US$100m or A$150m, but they only apply half that value to our 50c share valuation. I’d suggest although many analyst valuations are not realised by the market ( eg our 27c market price compared with the 50c valuation), when an asset goes under the hammer, bidders will pay a premium to get hold of the asset. I think this is especially true in light of the current projected lithium prices & supply shortfalls. So I expect more than $150m for Goulamina.

I think this report has been very important in raising our profile to the wider market. Euroz reports mean little because the market knows there is self interest in the promotion. Sprott is different, the market will listen. The market has listened.