For junior mining companies, the path to generating revenue, let alone achieving profitability, is often a long and winding road. But if Forge Resources (CSE:FRG) continues to reach the objectives it has set for its flagship assets, it might just become a member of that exclusive club.
The assets in question include a Yukon gold project named Alotta, located near Western Copper and Gold’s renowned Casino deposit, and the La Estrella coal project in Colombia, a fully permitted asset poised for revenue generation (Forge holds a 40% interest and can acquire up to 60%).
Canadian Securities Exchange Magazine spoke with Forge Chief Executive Officer PJ Murphy and Chief Operating Officer Cole McClay in early December to learn more about the company’s goals and how Forge has positioned itself to build value and minimize dilution at the same time.
It is rare to see a junior resource company on the cusp of funding its own exploration. Can you tell us how this all came together?
Cole McClay (CM): We initially acquired the Alotta project after stepping away from our previous exploration efforts in Mexico. After evaluating several prospects, Alotta stood out due to its strategic location just 40 kilometres from Western Copper and Gold’s Casino deposit, within the same geological setting.
In November 2023, we negotiated an option agreement with Strategic Metals to acquire 60% of the project and commenced our maiden drill program. The property was previously undrilled, and our first hole revealed 211 metres of 0.46 grams per tonne gold near surface, which was very promising. Following that, we drilled two holes in late 2023 and another four between May and July 2024, all of which showed near-surface porphyry-style mineralization.
While still in the exploratory phase, we’re gaining a clearer understanding of the project’s structure. Our next phase of drilling is planned for May 2025, once weather conditions in the Yukon are favourable.
As for the La Estrella coal project, it came to us through a colleague in Colombia. The project was already fully licensed, with production and environmental permits in place, which made it an attractive opportunity. We negotiated an option to acquire and have since obtained the surface rights and conducted additional drilling to update the 43-101 report. Currently, we’re conducting underground bulk sampling to further refine our understanding of the resource.
It sounds like you’ve got a busy year ahead in 2025. PJ, could you share the strategic focus for the company over the next three to six months?
PJ Murphy (PJM): Right now, our primary focus is on Colombia. Cole, a few team members and I just returned from overseeing construction of the portal and the start of underground operations at the La Estrella property. It’s an exciting stage for Forge.
To get into production at La Estrella, initially we don’t have to go very deep, only about 50 metres underground to reach our first cross-cut, which allows access to six of the eight large coal seams. We’re moving forward with a bulk sampling program, and we have an offtake partner for that coal.
The bulk sample alone is expected to be revenue-generating, which is a crucial step toward full production. The property is fully permitted for 180,000 tonnes of coal production annually with the potential to scale up to 360,000 tonnes per year. According to a historical SRK Consulting NI 43-101, we are sitting on an estimated 22.5 million tonnes of coal – measured, indicated and inferred – in the ground and a mine life of about 45 years. The project has significant potential.
For now, our focus is on advancing the Colombia asset to a revenue-generating stage, which would help us to self-finance our exploration work in the Yukon. For a junior mining company, reaching a point of profitability and positive cash flow is rare. It’s even more uncommon to be able to self-fund exploration, but that’s exactly what we’re aiming to do with the Yukon project.
Speaking of the Yukon, we’ve already drilled six holes there and hit mineralization in every one. As Cole mentioned, we’ve identified where the next drill holes should go for the upcoming season. If La Estrella is revenue-generating as anticipated, we’ll be well positioned to fund a more extensive drill program and further define the resource.
We’ve reviewed the initial six drill results and the property’s geological signature. With that information, we can strategically target shallow drill holes to maximize value and further prove the Yukon asset’s potential. Though it might seem unconventional to have both a gold-copper project in the Yukon and a coal project in Colombia, there’s real synergy between the two.
Profitability is a term we don’t often hear in the junior mining space. Could you walk us through Forge’s path to profitability?
PJM: Our immediate focus is on developing the underground infrastructure for a bulk sampling program. Initially, we estimate that we can extract 20,000 tonnes of high-grade coal for sampling and analysis. The key here is that we can also sell the coal we extract for analysis purposes. We already have an offtake partner lined up, ready to take that coal Free on Truck. This bulk sampling program is a significant step toward generating revenue and moving closer to profitability.
There’s talk of the world moving away from coal, but demand, particularly from Asia, India and Europe, tells a different story. Could you explain where the demand is coming from and why Colombia is positioned to help meet it?
CM: The demand for both thermal and metallurgical coal has never been higher, and I think global demand will remain strong for decades.
As long as the world needs concrete and steel, metallurgical coal will be essential. Similarly, thermal coal will continue to be required as long as countries build coal-powered electricity plants. What’s particularly advantageous about this project is that we have access to both high-grade thermal coal and metallurgical coal at depth, positioning us to meet a wide range of global demand.
PJM: Globally, coal demand remains strong, especially in Southeast Asia, where up to 43% of electricity is coal-derived. Despite this, rolling brownouts and blackouts persist due to insufficient power generation, highlighting the ongoing need for coal.
Colombia, with coal as its top resource export, provides a favourable regulatory environment and access to world-class coal miners and engineers. At La Estrella, we’re progressing toward our bulk sampling phase, where we anticipate extracting coal at a total cost that we expect will help us to maintain favourable margins. We’re noting that metallurgical coal currently commands a strong spot price, and assuming that remains the case, it gives us reason to be optimistic.
Moving to Canada, there seem to be similarities between the Alotta property and the Casino deposit. Can you talk about these and how that might be shaping your next steps?
PJM: The Alotta property shows striking similarities to the Casino deposit, which is incredibly encouraging. We’re just 40 kilometres away and based on what we’ve staked and the geological signature at Alotta, we’re very encouraged. The initial results from our first six drill holes have been very promising and are driving us to move forward with more extensive exploration to truly prove out the asset.
Finally, what makes Forge a unique proposition at this stage?
PJM: When you look at Forge Resources as a small-cap junior mining company, we are on a unique path moving toward potential revenue generation through a bulk sample program, progressing to full production, and potentially self-financing our drilling exploration in the Yukon. This combination is incredibly rare.
Forge has consistently set clear goals and benchmarks, and we have delivered on what we’ve promised every step of the way. This track record not only cements our credibility but also sets us apart in the industry. It’s an exciting journey for both us and our shareholders, and we are committed to continuing to deliver value.
This story was featured in Canadian Securities Exchange Magazine.
Learn more about Force Resources at https://www.forgeresourcescorp.com/.