QIS Capital - New Feature Company - Fairmont Resources Inc. 2016 - February 18th 2016
QIS Capital - New Feature Company - Fairmont Resources Inc. (FMR:TSX-V)
Over the past few weeks, we have seen a small resurgence of interest in mining issues as the price of gold has moved up from $1150/oz to over $1200/oz. Despite this price improvement, we maintain our belief that the ability to finance conventional exploration will continue to be limited due to global economic pressures. Due to constrained capital, we have chosen to focus on companies with short-term production potential which can produce meaningful cash flow to shareholders within the next 1-2 years.
We are pleased to commence coverage of Fairmont Resources Inc. (FMR:TSX-V) (current: $0.025) which is working towards becoming a near-term producer of dense aggregate and various forms of silica. The company has fully permitted its Forestville quartzite property and management indicated in todays press release that Fairmont is in various stages of securing initial orders for its products. A full "Company Profile" will be available on the www.smallcaps.ca website by tomorrow.
Fairmont Resources is a Canadian industrial minerals exploration and development company that intends on building long term cash flow through production on its strategically located projects. Fairmont is currently primarily focused on its two dense aggregate properties and three quartz properties located within 100km of the Grand Anse sea terminal at the Port of Saguenay, Quebec.
Fairmont's focus on industrial minerals is intended to reduce long term volatility as seen in other metals, as well as reduce the capital, time and risk involved in project development. Industrial minerals also have lower pricing volatility, easier permitting, and lower development costs than precious minerals, often with no milling costs. Industrial minerals have a wide variety of applications including industrial, metallurgical, infrastructure, chemical, agricultural, etc.
Fairmont's 100% interest iron-titanium-vanadium properties are known as the Buttercup and Hearth properties, both of which are located in south central Quebec, 250 km north of Quebec City and approximately 70km by road to port. These properties are prospective for titano-magnetite which is a high density aggregate used as heavy weight ballast or incorporated into concrete. Some of the direct uses are railroad track ballast, onshore/offshore pipeline ballast, scour protection for underwater structures or pipelines, and ground stabilization to reduce piling.
In 1964 the Bersimis Mining Company, calculated a historical "drilled indicated tonnage" on lens "A" and lens "B" located within the Buttercup property. Both lenses were drill tested at depths less than 30m below surface. Lens A was drilled with 8 holes and indicated 2.8 million tons grading 48.4% Fe, 18.9% TiO2, and 0.67% V2O5. Lens B had 12 holes drilled indicating 759K tons grading 49.39% Fe, 19.07% TiO2, and 0.64% V2O5.
Fairmont announced in August 2014 that it had received permits from the Ministere des Forets, de la Faune et des Parcs (MFFP) for the Buttercup "BEX 1270" claim to commence site preparation and road construction. In December 2014, the company received the Certificate of Authorization which allows 300,000 tonnes annually of aggregate production from the property. Potential customers have visited the site to assess logistics for crusher locations to complete custom crushing on site. The current plan is to produce titano-magnetite aggregate from Lens A, and quarry towards Lens B thereafter. Net profits from production will be split 80% to the original vendor of the property and 20% to Fairmont until the vendor has received a total payment of $3.0 million. Thereafter the vendor will receive 5% of net profits and Fairmont will receive 95%. The commencement of production on the Buttercup Property is subject to the company obtaining sales contracts for the purchase of titano-magnetite aggregate and sufficient financing for operations which is estimated at about $250K.
On January 10, 2014 the company staked 96 claims near its Buttercup property called the Hearth Property. The Hearth Property contains the apparent strike extensions of the Buttercup mineralized zones and consolidates the area so that Fairmont should be able to continue exploration unencumbered.
On January 21, 2015 Fairmont acquired a 100% interest in the Forestville and Baie Comeau quartzite properties. The Forestville quartzite property is located 20 km north-northwest of the town of Forestville, Quebec. The Baie Comeau quartzite property is 8 km northwest of Baie Comeau, Quebec. The properties have been optioned for the purpose of testing the chemical and physical properties of the quartzite as a potential raw material for use in products such as high purity glass, fibre optics, ferro-silicon and silica metal. Silicon is widely utilized throughout our modern lifestyle in such products as weather stripping, cables, coatings, shampoo, cosmetics, paint, semi-conductors and lithium-ion batteries. Over 40% of worldwide silicon production is used as a hardening agent in aluminum and 10% is now used in solar products.
Fairmont is currently focusing on its Forestville property with an aim to commence permitting for ferro-silicon by the end of 2016. Forestville consists of pure to very pure quartzite horizons, where the average silica content ranges from 98.2% to 99.5%. Certain high purity quartzite horizons locally exhibit grades up to 99.7% SiO2.
During the year ended October 31, 2015 drilling on the Forestville property was carried out to confirm the size and quality of the SiO2 deposits. The assay results of that work was announced today which confirmed that the quartzite tested was suitable for ferro-silicon. Several new zones of quartzite were identified and extensions to historical and new zones have been staked. Permits have been applied to put a 7 km road into the main target zone on the property. Two potential customers have now visited the quartzite properties, with an additional three potential customers receiving material for testing.
As is the case with the Forestville Property, the Baie-Comeau property contains a quartzite derived from a metasedimentary package. Although chemically very similar to the Forestville property, the physical characteristics of the quartzite is quite different at Baie-Comeau. Historical sampling on the property has assayed up to 99.09% SiO2. The site has been visited by end users in the quartz countertop industry, and by producers of silicon metal and ferro-silica.
Lac Bouchette is another quartz silica property that Fairmont has optioned and is located about 400 km NE of Quebec City. The past producing Lac Bouchette Mine, which Fairmont's property surrounds, was in production as early as 1933. Historic production was 62,000 tonnes at an average grade of 99.8% SiO2, 0.06% Al2O3, 0.03% Fe2O3, and nil TiO2. The Lac Bouchette Mine was producing from a hydrothermal quartz vein, and was of higher purity than typical deposits in the region. The Lac Bouchette property is subject to a 2% gross royalty.
Management of Fairmont is very focused on cash flow producing properties that can be started up quickly with minimal capital requirements. The company has already fully permitted its Buttercup and Forestville projects and is currently working to secure purchasing partners to commence production.
Like the majority of small-cap resources, Fairmont will require additional capital to commence production and this remains a major risk to the future progress of the company. However, Fairmont has assembled world-class assets of dense aggregate and silica resources that are attracting the attention of major end-users of these products which have recently visited the properties and are in discussions with management. As Fairmont progresses towards commercial production, we expect to see a vast improvement in news and awareness for the company.
Fairmont currently has only 22.7 million shares outstanding and has a market capitalization of only $567K.
Michael Dehn, President & CEO
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