First Class Metals shares have had a pretty awful week, and investors seem unprepared to step into the stock, despite the company’s range of promising projects.
First Class Metals shares have cratered 30% in 2024 so far, and we’re not even at the end of January.
The stock is down 69% over the past year.
This week’s sharp decline resulted from major investors dumping their entire stake in the company.
The disposal announcement was made on Wednesday, and First Class Metal shares haven’t been able to catch a bid since.
Focused on Ontario, Canada, the company has an attractive portfolio of projects diversified across lithium, copper, gold, nickel and PGMs.
In December, First Class Metals said they had encountered lithium-bearing pegmatites in all nine targeted drill holes in a recent campaign at the lithium ZigZag project. This would have been welcome news for investors with the license sitting in close proximity to Green Technology Metals’ Seymour Lake Project and Battery Age Minerals Limited’s Falcon Lake Project.
In addition, the company recently secured exploration permits for its Hemlo and Esa licenses which have visible gold and promising historical studies. First Class has confirmed high-grade showings in the vicinity.
There is a lot to be excited about.
However, as with all early stage mining exploration companies, there are high risks attached to First Class Metals.
First Class Metals has been clear the next stage in their ‘Big Four’ projects’ development will be drill campaigns later this year. This will be a capital-intensive exercise.
The company raised £603,000 via a placing at 6p in November after raising £1m at 10p in June. Investors may fear the company will need to tap the markets again to fund the development of their projects with shares at depressed levels.
With the market cap now down to £4m, meaningful funding rounds could be highly dilutive for existing shareholders. If shares continue to slide, the next placing could well be beneath 3p.
Investors will hope that anticipated results from the recent activity at the ZigZag lithium project provide a catalyst to move the share price higher.
