Fortune Bay Corp., is 2026 the year?

In case one hasn’t noticed!, gold (“Au“) is +84% in the past year, and silver +252%. Therefore, many precious metal juniors, developers & producers have soared above their 52-week lows (see table, 20 Au players up 1,000%+, C$50M minimum market cap).

Bank of America just upped its Au price forecast to US$6,000 this Spring, as did SocGen (by end of year). Several people like Pierre Lassonde, Jamie Dimon & Ed Yardeni think meaningfully higher later this decade.

Anything north of $4,000 is icing on the Au cake! On average, producers are printing ~$3,500/oz above their AISCs!, with no end it sight. They’ve paid off debt, and are buying back shares. The only thing left is to make acquisitions.

Some companies, like Fortune Bay Corp. (TSX-v: FOR) / (OTCQB: FTBYF), remain significantly undervalued vs. peers (down 27% from its 52-week high, as gold hits an ATH).

Poma Rosa, a promising Mexican asset…

A possible reason might be its Mexican Poma Rosa project, which only has an historical resource on it, and is on the back-burner.

This article focuses on the 100%-owned Goldfields project in northern Saskatchewan, Canada. Fortune Bay has a few uranium assets farmed out, essentially free options on uranium discoveries. In my view, those prospects might be worth ~$C$10-$15M pre-discovery.

Management put out a detailed update on Goldfields on January 20th, see summary below. Full-financed to meaningfully advance the Project towards a PFS. Drill results expect this quarter. Post-tax NPV at $5,000/oz Au is ~C$2B….

In the following table, note that the Company’s two 100%-owned Au assets are valued at a combined C$18/oz, vs. C$112/oz (an 84% discount) for peer PEA & pre-PEA projects with grades under 1.5 g/t Au Eq.

Fortune Bay’s grade is 0.3 g/t higher than peers, and it has 68% fewer fully-diluted shares outstanding (just 80.6M). Notice that Newcore & Dakota Gold are valued near or above the average, yet have half the grade of Fortune Bay’s projects.

Also noteworthy is the top 4 names in the table, which are not included in the average EV/oz of C$112/oz, but shown as a frame of reference. All four are at the same PEA stage, two have Canadian flagships.

Fortune Bay is also vastly undervalued on an enterprise value (“EV”) to post-tax NPV (at $5,000/oz Au) basis. At spot prices, the NPV is ~C$2B/oz and the Company trades at just 3% of that NPV.

Moreover, that 3% of NPV ignores any value for Fortune Bay’s Poma Rosa, which (in my opinion) is worth at least C$26M.

Before readers take me to task for using spot pricing, note that I compare Fortune to other PEA-stage projects at the same Au price. I looked at about a dozen names, the range of EV/NPV ratios is 5% to 29%, averaging 18%.

Adjusting for Mexico, (an assumed fire sale of Poma Rosa at C$15/oz), the Company is trading at 2% of NPV. Either way, a very substantial discount on both EV/oz & EV/NPV.

Imagine these forecasts a year ago?!?

Are there red flags? It’s always possible I’m not accounting for one or more considerable risk factor, but speaking solely about Fortune Bay’s Goldfields, I think the Company faces routine early-stage exploration & development challenges.

In my opinion, the Top-3 risk factors are; 1) social license to operate, 2) infrastructure logistics (remoteness), and 3) ongoing funding requirements. As mentioned in my prior article on the Company, funding should NOT be a problem with Au around $5,000/oz!

Goldfields is in the Tier-1 province of Saskatchewan, which ranks #1 in Canada & #7 globally for “investment attractiveness” in the latest annual Fraser Institute rankings. But what about the remoteness? (some are likely thinking…).

Spoiler alert, it’s not THAT remote! Several major uranium mines/projects are ~350 km to the SE. Also, please look at the following table of peer Canadian mines/projects.

Fortune Bay’s Goldfields project is not that remote…

Perhaps a mediocre mgmt. team/board is causing the undervaluation? If so, that is clearly not warranted! Consider the following team members…

CEO Dale Verran has 25+ years intl. experience in project generation + exploration / development. Prior he held senior roles at Denison Mines, Remote Exploration Services & Manica Minerals. Dale has a Master’s in Exploration Geology & is a P.Geo.

Wade Dawe, Executive Chair, has 25+ years experience. He’s an expert entrepreneur, financier & investor. Founded or Co-Founded several successful companies, including Brigus Gold, which was taken out for C$351M. Dawe’s leadership combines deal‑making experience with capital markets insight.

Gareth Garlick, BSc, P.Geo, is VP of Tech Services, bringing 25+ years to the table. He has extensive expertise in exploration, resource estimation and other areas, successfully bridging early-stage discovery with operations. Gareth is recognized for results-driven geology & mine development.

Ron Halas, P.Eng, is Senior Mining Advisor with 35+ years of global mining & project development experience. Prior, he was COO of Lumina Gold, guiding it through operational & strategic growth until its acquisition last year. Ron has expertise in project execution, & operational optimization.

Goldfields has established infrastructure including; roads, green, long-term, low-cost hydroelectric power, mining services, a commercial airport, and barge/ice road access. It has a provincially-approved Environmental Impact Statement (“EIS“) that remains valid.

The Company has restarted baseline studies, community engagement & routine permitting work to address the latest regulatory requirements and positive changes to the Project’s scope.

Management states it has “well-developed community relationships,” as evidenced by its November 2022 Exploration Agreement providing consent up to and including a Definitive Feasibility Study, probably delivered in 2H/27.

The higher the Au price, the better the backdrop for productive, collaborative community engagement, a win-win-win for the immediate region, the Province & shareholders. There are numerous investment boxes with check marks in them.

In my view, Goldfields could grow to 100,000 ounces/yr for 15+ years given it has several years of drilling before production starts. It’s already slated to deliver 100k/yr in the initial years. Increasing output above 100k/yr would require additional permitting steps.

At 100k/yr, and assuming the Project’s AISC rises to US$1,500/oz from the PEA’s $1,300, at a price of ~$5,000 annual cash flow would approach C$500M/yr! Compare that to Fortune’s enterprise value {market cap + debt – cash} of ~C$57M.

This is not meant as a forecast, nearly C$500M/yr of cash flow, just a frame of reference. Obviously, a lot has to go right between now and the possible outcome, including the Au price remaining strong. And, there will be equity dilution along the way.

Given the *potential* economics in an ongoing bull market, many companies should be interested in acquiring Fortune Bay despite its early stage. No, I don’t think the mgmt. team/board is in a rush to sell anywhere near the current valuation.

Equity dilution is a necessary evil, but need not be too severe as upfront cap-ex isn’t a billion dollars+, but a much more reasonable C$301M.

Even if that cap-ex figure rises along with the NPV on higher Au prices, normal mining cost inflation, and an increase in mine life, it would still be quite manageable.

Just some of the potential acquires of Fortune Bay…

See the following table of a list of prospective bidders for Fortune Bay. While the Majors probably would not acquire tiny Fortune Bay, mid-tiers want to acquire robust projects in strong jurisdictions to become more attractive to the Majors.

A tsunami of M&A is coming in N. America. Although Fortune Bay might not be taken out this year, many peers will, which will drive valuations higher, making the Company’s stark undervaluation even more apparent.

Wrapping things up, I noted in the first image of this article 20 companies up more than +1,000%. A few things strike me about that. First, Fortune Bay has ample room to run without anyone wondering if it’s overvalued.

Goldfields is truly impressive at $5,000 gold!

Second, stocks up so much could easily pull back 30%-50%, Fortune Bay is not likely to pull back so much. Third, if I was leading a company up 1,000%+, I would be looking to use my equity as a currency to make acquisitions. M&A this year & next will be intense.

No matter how the market goes, Fortune Bay benefits in a M&A boom, perhaps more than peers as it’s so undervalued.

Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Fortune Bay, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Fortune Bay are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Fortune Bay was an advertiser on [ER] and Peter Epstein owned no shares in the company, but may acquire shares in the open market in the near future.

Readers understand and agree that they must conduct due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

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