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I’m sending you this Special Situations
Buy-Alert on Fireweed Zinc (FWZ)
and the timing could not be any more critical.
The company just released a very impressive resource update on its
Macmillan Pass zinc project in the Yukon to the tune of 6.5
billion pounds of zinc, 3.3 billion pounds of lead, and 55 million
ounces of silver. A strategic buy-window on FWZ has now
opened up ahead of the company’s forthcoming Preliminary Economic
Assessment (PEA)…due out in a matter of days. I urge you to read
this report in full and then conduct your own due diligence —
but you need to act quickly!
Fireweed Zinc is a company with a lot going on and a lot to say…and
I think we all need to be paying attention. |
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Here’s how the
incredible FWZ story came together…
As you’ll recall, back in 2015, the resource market was entrenched
in a deep bear cycle many of us metal heads thought would
never end. Fortunately, for each and every one of us—it did!
Yet, in the midst of that dismal multi-year slump, a small,
dedicated group of savvy industry players had their collective eye
on one of the most important base metals in the world:
ZINC!
These players – who would later become Fireweed’s founders
– were honing in on zinc’s emerging supply and demand fundamentals
while others continued to lament a flatlining gold price.
They foresaw a developing supply shortage for the metal that was
both large and unmistakable. And they were
right! Shortly thereafter, the zinc price began
racking up impressive double-digit gains—once again pushing the
metal back into the forefront of investor consciousness.
With zinc on the rise, as predicted, the next step for the Fireweed
team was simply... How Best to Play
It!
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They knew exactly what they
wanted...
A large zinc resource, with the
potential to get exponentially bigger, in a politically safe
jurisdiction with a history of approving mining
projects. |
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Let’s break that
down:
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A large resource, if purchased at a favorable price, allows
management to price early financings at a non-dilutive level – IF
the resource looks potentially economic. |
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The ability to grow the resource is also critical. It means
positive news flow and a reason to rerate the stock (and the
company’s value) upon each successive resource expansion. |
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The importance of jurisdiction cannot be overstated. In order
to maximize the potential impact of exploration and development
news, the project MUST lie in a favorable jurisdiction. After all,
prospective shareholders, as well as any potential acquirer of the
company, will have little interest in a project that holds poor
odds of getting permitted. |
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DON’T
FORGET… to add your email to our complimentary
HRA Profit
Advisory! |
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| Naturally, my HRA Journal
& Alert subscribers always see the best ideas first. After
that, members of my complimentary HRA Profit
Advisory list have priority. Right now, we’re researching
another profit-stock opportunity with similar potential to Fireweed
Zinc. When the timing is right, YOU will receive this advisory
along with a selection of our best trading ideas! |
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Simply CLICK to add your email…and you’re all set for profits
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Remember, all of this strategizing was happening way back in 2015
BEFORE the zinc price commenced its dramatic upside move. After
reviewing numerous opportunities, the Fireweed group zeroed in on
the Macmillan Pass (“MacPass”) Project in Canada’s
Yukon. At that time, the owner of the project, HudBay, had shifted
focus to large-scale copper projects and was henceforth willing to
listen to offers on MacPass.
A distinct advantage Fireweed held over other potential suitors was
the vast experience and credibility of its management team.
Fireweed’s management group includes a chairman who previously
served as chairman of the most successful resource developer active
in the Yukon in recent memory, Kaminak Gold – and a CEO who was,
literally, born in the closest town to the Macmillan Pass Project.
Fireweed’s management group benefits from credibility, not only in
the capital markets but also with stakeholder groups critical to
MacPass eventually being permitted.
A deal for MacPass was negotiated in late-2015—and a good one at
that. While the official paperwork wasn’t completed until months
later, HudBay displayed a great deal of class in sticking to their
original “handshake deal” made with Fireweed prior to zinc’s price
escalation.
I’ve no doubt that the brass at HudBay are more than comfortable
knowing the project is now in very capable hands…as is their large
shareholding in Fireweed Zinc (FWZ). |
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A Major
Score that just keeps getting BIGGER
Fireweed’s acquisition of the Macmillan Pass Project is proving to
be a major score indeed. The project covers two separate zinc
discoveries, Tom and Jason, about five kilometers
apart. Both have developed into sizeable high-grade
zinc-lead-silver resources! Having two separate resource areas
is a distinct advantage for reasons I’ll outline below.
MacPass boasted a historic resource (Indicated plus Inferred) of
almost 31 million tonnes at a grade of 10.6% zinc equivalent when
the deal was struck.
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| In other words, upon closing the deal with
HudBay, Fireweed was starting with one of the largest zinc
resources in the world not controlled by a major mining
company. |
Yet, Fireweed didn’t stop there.
Fireweed’s management, and the brokers who helped finance the deal,
were adamant that the company be set up differently from what most
traders are normally accustomed to. That meant a few key items of
interest:
- Founder’s shares to be locked-up (7.8 million shares subject to
3 year escrow agreement)
- Placement ahead of the IPO only large enough to cover necessary
expenses
- IPO shares going only to committed shareholders
- NO “unit placements” that include warrants
I’ve been well acquainted with Fireweed’s management and most of
its board for years, and all of this was laid out to me before
Fireweed went public. These are serious guys with a serious
set of goals in mind: Rapidly building one of the world’s
largest high-grade zinc resources – systematically proving its
economic viability to the market – then working toward development
of the project or a takeover by a larger company—whichever comes
first.
Let me just say, I was impressed then and I’m even more impressed
now. Fireweed Zinc (FWZ)
is the successful culmination of the right team, the right project,
and a remarkably tight share structure built to maximize
shareholder leverage.
Take a look at the company’s impressive stock chart below…and then
take it directly from me: We’re now being presented with an
advantageous buy-window prior to the release of the company’s PEA
of the Macmillan Pass Project. Do not miss this
window. |
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To date, Fireweed has completed just three placements open to
outsiders. I’ve personally purchased shares in all of them. And,
I’ve been recommending FWZ to my HRA subscribers from day
one.
FWZ listed just eleven months ago via a massively oversubscribed 50
cent IPO. Confident they’d get results allowing for a higher priced
financing later on, the company raised just enough IPO cash to
carry out its 2017 field program and to complete payments for the
MacPass property.
That confidence quickly proved to be well-founded.
In late-2017, Fireweed reported a number of very good step-out
drill intercepts confirming and expanding upon historic drill
results from the Tom and Jason properties. A number of holes
intersected notably higher grades and wider zones
than projected from historic data. The total area of the project
was also quadrupled to 21,939 Ha with an option for the adjacent
MAC claims.
Fireweed CEO Brandon Macdonald noted in a press release dated
December 27th, 2017, “These are excellent year-end results and
demonstrate how far Fireweed has come since our IPO in May. In
those short seven months we have quickly moved the MacMillan
Project forward with some major achievements including a number of
very wide and high-grade drill holes to verify and step out from
the known deposits, airborne geophysics to define critical geology,
and surface field work toward defining exploration targets and
potential new discoveries.”
The company’s stock – which has never traded less than 40%
above its IPO price – rallied significantly into year-end as
the market began to anticipate a solid resource estimate update.
The market was right!
2018: Major
Resource Expansion ahead of PEA
As mentioned, I’ve been following Fireweed in HRA since
before its IPO. As results of last year’s drill program were
released, I became even more positive about what FWZ’s resource
update would reveal.
That update is detailed in the table below. Not only is it both
very large and exceptionally high-grade—it by far surpassed my
already lofty expectations.
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| This new resource, published in January of
this year, contains over 6.5 billion pounds of zinc, 3.3
billion pounds of lead, and 55 million ounces of silver in
both the Indicated and Inferred categories. |
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Even better, the weighted average zinc equivalent grade of the
resource is 9.9%. That’s $300/tonne rock at
current zinc prices. And yes, we’re talking about 50 million tonnes
of it! |
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| HRA Journal provides you with in-depth analysis of
the companies on our active coverage list along with insightful
commentary on the metals and equities markets. As a recipient of
this Special Situations report, please click the SUBSCRIBE button
to access your exclusive savings. —Eric |
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This
table provides separate totals for higher confidence (based on
closer drill hole spacing) Indicated and lower
confidence Inferred for the Tom and Jason
zinc-lead-silver resources. Tom and Jason are located five
kilometers from each other. The current TOTAL resource for the
MacPass project of 50 million tonnes is calculated by adding
together the Inferred and Indicated tonnage for both the Tom and
Jason resources.
Not surprisingly, the announcement of the updated resource kicked
off the next leg-up in Fireweed’s stock leading to new analyst
coverage and a large, and mostly institutional, financing.
With the enviable resource and cash position Fireweed now has, and
with the first economic study on MacMillan Pass just ahead of us, I
expect the list of analysts covering the company will grow
dramatically this year.
On the back of the new resource, Fireweed announced, then quickly
closed, another massively oversubscribed financing. The financing
was intended to be $10 million but was raised to $12.5 million in a
matter of hours due to heavy demand.
Worth mentioning is that the bulk of the financing came from a
single institutional investor, Resource Capital
Funds—a group well-known for engaging in heavy due
diligence prior to making an investment decision. That should tell
you a lot.
Now cashed up, Fireweed is busy designing an aggressive exploration
program for this year to upgrade and expand the resource yet again
while also looking for new deposits on the greatly enlarged
project.
Even with the large cash injection, FWZ remains an extraordinarily
tight stock. At present, there are only 30 million shares
outstanding with almost half of those held by Resource Capital,
HudBay, and management.
Remember earlier when I told you how the Fireweed team was
purposeful in setting up the company differently from what most
traders are used to seeing? Well, I think you’re beginning to
understand just how special this company is from an investment
standpoint.
So… how
does FWZ
stack up against its
peers?
The table below compares Fireweed to several companies in its peer
group utilizing current resources and
enterprise value (market value minus working
capital) as measures. As you can readily see, Fireweed stands out
as having by far the largest combined zinc-lead resource on the
list. |
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This
table compares Fireweed to a number of companies in its peer group,
based on reported zinc equivalent resources (zinc equivalent is
calculated by adding the value of zinc, lead, and silver resources
and dividing by the zinc price) and Enterprise Value. The height of
the vertical bar for each company is based on the size of its
Indicated (dark portion) and Inferred (orange portion) resources,
added together, with the scale shown on the left. The light blue
dot indicates Enterprise Value, calculated by taking the market
value and subtracting cash on hand and adding any debt on hand,
with the scale on the right. The lines below the table display the
average Measured & Indicated “M&I” and Inferred zinc
equivalent grade for the company’s resource.
Companies with smaller and/or lower grade resources are carrying
far larger market values than Fireweed. If you ask me, the main
reason for this discount (and it’s also the primary reason
you’re receiving this time-sensitive report) is the current
lack of economic studies on the MacPass Project. Think about
it. Companies that have projects with demonstrated positive
economics are carrying market values two to three times higher
than Fireweed despite the fact that MacPass holds resources that
are far larger and, in many cases, higher grade.
I believe that’s about to change. The first 43-101 compliant
economic study EVER to be produced on Macmillan Pass, a maiden PEA
(Preliminary Economic Assessment), is just around the corner. In
fact, I expect it to be published as soon as next week.
Once Fireweed publishes economics on MacPass – positive
economics that is – we should see another rerating to the
upside. And that’s just the start of the story…but I’ll save talk
of exploration and expansion
potential for our next report.
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For now, here are a few key reasons to expect a positive PEA that
will drive Fireweed’s market valuation higher:
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Size and grade: Obvious advantages that have
already been discussed in detail yet important not to forget! At 50
million tonnes and an overall zinc equivalent grade near 10%,
there’s a lot of room for profit built into the current $300/tonne
value. |
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Geometry: This one is vital. Tom and Jason,
which are physically separate resources, are close to vertical with
impressive thicknesses starting close to surface near ridge tops.
This should make both Tom and Jason ideal candidates for ramp
access and efficient underground mining methods. With the potential
for both areas to be worked simultaneously, the engineers should be
able to utilize a production rate high enough to generate solid
economies of scale. |
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Easily Accessible High-Grade to Boost Returns and
Shorten Payback: In addition to being a very large and
very high-grade deposit, MacPass benefits from some particularly
high-grade areas that should be accessible early in the underground
mine-life which could turbocharge returns. |
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This
diagram shows a 3D version of the “resource blocks” that make up
the Tom East resource. The blocks are colored to correspond to
different NSR (net smelter returns) for each block based on
calculated grades. Net smelter return values were calculated by
taking the gross value per tonne of the zinc, lead, and silver
(adjusted to reflect the metallurgical recoveries for each metal) –
treatment charges levied by a third-party smelter that treats the
zinc and lead concentrates MacPass would produce – and the cost of
shipping the concentrate to the smelter.
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One particularly attractive area is the Tom East zone. Tom East
contains 800,000 tonnes of Indicated resources grading 20.3%
zinc-equivalent and nearly 1.7 million tonnes of Inferred resources
grading 27.3% zinc equivalent. These near surface resources
should be easily ramp accessible making them an optimum place to
start mining. Using a $1.10/lb zinc price, these zones represent a
gross metal value of over US$1.5 billion. Assuming
a mining rate of, say, 5,000 tonnes per day, this amount of
material could potentially be mined in the first couple years of
production, providing a solid front-end load to revenues that will
speed payback and increase the Net Present Value of MacPass. |
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Longevity: While we don’t yet know what mining
rate the engineers will use for the MacPass PEA, I expect it to be
in the range of 5,000 tonnes per day. The geometry and thickness of
the Tom and Jason zones should allow for this sort of underground
production. Even before Fireweed works to grow the zones further
with this year’s drill program, there is enough tonnage at MacPass
to sustain a very long mine-life.
This is important. Large mining companies entering a new area to
build a greenfield mining operation want to know they will be there
for a long time. MacPass has the sort of scale that should
attract large miners, and Fireweed has assembled a huge
amount of exploration ground surrounding MacPass. “Sedex”
(sedimentary exhalative) deposits are often found in camps that
contain several separate occurrences. Most of the exploration
ground around MacPass has never received a serious exploration
effort…and that’s about to change as well. |
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DON’T
FORGET… to add your email to our complimentary
HRA Profit
Advisory! |
|
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| Naturally, my HRA Journal
& Alert subscribers always see the best ideas first. After
that, members of my complimentary HRA Profit Advisory list have
priority. Right now, we’re researching another profit-stock
opportunity with similar potential to Fireweed Zinc. When the
timing is right, YOU will receive this advisory along with a
selection of our best trading ideas! |
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Simply CLICK to add your email…and you’re all set for profits
with HRA!
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Late Breaking
News
After quadrupling the size of the MacPass project last year,
Fireweed has doubled the size of the project AGAIN with two new
property deals. Fireweed now controls a property exceeding 46,000
hectares or over 180 square miles of premier exploration ground.
Lots of room for new discovery! |
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Road Access: While the Canol Road will need to
be upgraded for production, do not underestimate the advantage of
having an existing permitted road all the way into the site.
Fireweed didn’t need to use helicopters at all for its drill
program last year. The road will represent these same advantages
during development and production. |
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Power Costs: This is an issue everywhere in
the Yukon but recent advances in using LNG (liquified natural gas)
generator sets should lead to substantial power savings compared to
traditional diesel-power. This method of power generation has been
successfully deployed at other recent mine start-ups in the region.
BC and Alberta, to the south of the Yukon, are swimming in natural
gas, and prices are likely to stay cheap for the foreseeable
future. |
A Quiet
Confidence Surrounds Fireweed Zinc
Before Fireweed’s recent resource update, I’m certain anyone who
had the opportunity to talk with management would have been struck
by their quiet confidence. I’m pretty sure these guys KNEW
the resource estimate would blow away market expectations. And
while they certainly couldn’t say that at the time to analysts such
as myself, it was clear they were not even slightly concerned about
the potential for a negative resource estimate outcome.
Why does that matter? It matters because
management’s confident tone did not change as they shifted their
focus from resource estimate to the upcoming PEA.
Those who missed the clues before FWZ’s most recent resource update
missed out on some big gains. While base metals have been on a bit
of a mediocre ride of late, some of them, particularly zinc, are
catching a bid again. This hasn’t translated to Fireweed’s share
price as of yet—but it will. The current dip in price provides an
excellent entry point ahead of the MacPass PEA which I expect will
be released very soon.
But be cautioned—this is a window I believe is set to close fast.
I’m anticipating a big rerating to the upside upon the PEA’s
release. And, I am expecting this to be followed by continued
strength as Fireweed lays out plans for an aggressive, already
funded, summer resource expansion and upgrading campaign in and
around the main resource area.
From my experienced vantage point, you don’t have much time
to take advantage of this profit opportunity. Act quickly.
I will produce an update on FWZ once the PEA is released. Adding
yourself to the HRA Profit Advisory list, if you’re not
already on it, will ensure your timely receipt of that
update!
Sincerely,
Eric Coffin, editor
Hard Rock Analyst
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| HRA Journal provides you with in-depth analysis of
the companies on our active coverage list along with insightful
commentary on the metals and equities markets. As a recipient of
this Special Situations report, please click the SUBSCRIBE button
to access your exclusive savings. —Eric |
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Subscribe to HRA
Journal
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HRA Special Delivery Alert
and the HRA Journal are independent subscriber-supported
publications produced and distributed by Stockwork Consulting Ltd.,
which is committed to providing timely and factual analysis of
junior mining and resource exploration companies. Companies are
chosen based on speculative potential for significant upside gains
resulting from asset and resource expansion and/or new discoveries.
These are high-risk securities, and opinions contained herein are
time and market sensitive. No statement or expression of opinion,
or any other matter herein, directly or indirectly, is an offer,
solicitation or recommendation to buy or sell any securities
mentioned. While we believe all sources of information to be
factual and reliable we in no way represent or guarantee the
accuracy thereof, nor of the statements made herein. We do not
receive or request compensation in any form whatsoever to feature
companies in HRA publications. The HRA Journal and HRA
Special Delivery Alert services are only distributed to paying
subscribers. On rare occasions, HRA agrees to assist companies by
producing Special Situation reports which it then
distributes to the HRA Free List and other lists that are chosen
and rented by HRA on behalf of the sponsoring company. HRA will
ONLY consider assisting with one of these campaigns for companies
that are already under active coverage in HRA publications.
Stockwork Consulting is compensated for these campaigns to cover
added expenses involved in producing the reports, renting third
party email lists and distributing the reports. HRA maintains
complete editorial control of the contents of Special
Situation reports, just as it does with its other
publications. Management of companies profiled in HRA Special
Situation reports do not have access to or ability to edit the
report prior to its publication. Fireweed and Stockwork have agreed
to a budget of US$75,000. This compensates Stockwork for writing
and producing two reports — one before and one after the release of
the Fireweed PEA — as well as covering outside copywriting,
graphics, html coding and the rental of outside email lists for
reports to be issued before and after the release of a PEA by
Fireweed. No representation or warranty, expressed or implied, is
given by or on behalf of Fireweed, its directors or officers as to
the accuracy or completeness of the information or opinions
contained in the reports; and no liability whatsoever is accepted
by the Company, its directors or officers or any other person for
any loss howsoever arising, directly or indirectly, from any use of
such information or opinions or otherwise arising in connection
therewith. We may, or may not, own securities or warrants to
acquire securities of the company mentioned herein. I do “eat my
own cooking” and tell shareholders if I have taken part in
placements of companies I follow in the newsletter, which I often
do. As noted in the body of this report, in the case of Fireweed
Zinc I have taken part in the last three placements and continue to
be a significant shareholder. This placement participation was NOT
tied to or incumbent on Fireweed undertaking this campaign.
Fireweed and Stockwork had not agreed a campaign would be
undertaken at the time I purchased shares in the placements. I pay
for stocks I buy in company placements out of my own pocket, just
like you. You should never invest in a speculative — or any other —
stock without doing your own rigorous due diligence and consulting
with an independent third-party investment professional. This
document is protected by the copyright laws of Canada and the U.S.
and may not be reproduced in any form for other than personal use
without the prior written consent of the publisher. This document
may be quoted, in context, provided proper credit is given. ©2018
Stockwork Consulting Ltd. All Rights Reserved. Published by
Stockwork Consulting Ltd. Box 85909, Phoenix AZ, 85071 |
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