Formation Metals’ flagship is the N2 gold project, an Archean orogenic gold system located approximately 25 km south of Matagami in Quebec’s Abitibi Greenstone Belt, sitting along the Casa Berardi Deformation Zone and about a kilometre east of the historic Vezza gold mine. The company also holds the Nicobat nickel-copper-cobalt-PGM project in Ontario and the Rio titanium project in Quebec, both currently on the back burner. The conversation focused mainly on the active 75,000 metre drill program at N2, the maiden NI 43-101 resource estimate planned for Q3 2026, the recent financing, and Varshney’s stated strategy to sell the project within two to three years.

TL;DR

Formation is pushing hard on N2 to deliver a maiden resource in Q3 2026, with Varshney telling us he expects to come in north of 1 million ounces in the base case, somewhere between 2 and 3 million ounces in the bear-to-base case, and 3 to 5 million ounces in the bull case. The historic resource is around 810,000 ounces across multiple zones plus another 61,000 ounces at the RJ zone, all non-compliant and dating back to the 1990s. They just closed a sizeable financing, now have about 147.6 million shares outstanding, a roughly C$54 million market cap, and the company is funded to keep drilling without raising again until sometime in 2027. Varshney was upfront that the goal is to sell the asset in 2027 or 2028, ideally to Agnico Eagle, on the thesis that nearby developments like Maple Gold, Cassa Berardi, and Wallbridge’s old assets will need shallow, cheap ounces to pay back their capex.

What have they done for shareholders lately?

Since optioning the project from Wallbridge, they have drilled around 15,000 metres of an expanded 75,000 metre program, with two rigs turning and plans to add a third and eventually a fourth. Varshney said 13 out of 13 holes in the initial A zone program returned gold, with typical intercepts in the range of 31 metres of 2 g/t, 15 metres of 2 to 2.5 g/t, and 21 to 25 metres of 1.5 g/t. They also hit visible gold in a deeper hole roughly 400 metres back from the main vein set, which opened up a new tertiary target. On the corporate side they closed a large non-brokered unit financing with institutional participation, and Varshney noted his last open-market buy was about 100,000 shares at 40 cents roughly three weeks before the interview.

How much money do they have and what are they spending it on?

CEO Varshey didn’t give a specific cash balance, but said they were going to run out of flow-through this quarter before the raise, and that they are now funded to drill non-stop and won’t need to raise again until sometime in 2027. The current 75,000 metre program is costing just over C$300 per metre all-in. He estimated another C$15 to C$20 million of drilling will be required after the maiden MRE, which would take them to roughly 150,000 metres total. Hard money from the recent raise is also earmarked for potential M&A on nearby ground, plus accelerating the option payments on N2, which still has 2 million shares and C$450,000 in cash owed to Wallbridge. Marketing spend was C$1.2 million in the most recent period, paid up front and running over time, and Varshney said the spend will likely stay at current levels rather than increase.

Upcoming catalysts

Technical catalysts: a steady stream of assays from the ongoing 75,000 metre program at N2, including stepouts to the east and west of the A zone, deeper holes testing the tertiary vein set, and twin holes (8 to 12 planned) to support the maiden MRE. The maiden NI 43-101 resource estimate is targeted for Q3 2026, with the caveat that it could be delayed if drilling results justify capturing more ground first. Internal metallurgical work is also planned to confirm the historical 91.7% free-milling recovery figure.

Operational catalysts: additional drill permits expected to be filed through the summer and fall as they expand drilling along the 8 km strike. A third rig is planned to be added during the program, with a fourth to follow.

Corporate catalysts: Varshney mentioned additional board and advisory appointments in the works, and he flagged that they have already had inbound interest from majors on buying the project, though he doesn’t intend to engage seriously until after the MRE.

Risks

The biggest risk Varshney flagged himself is missing on drill results, particularly as they push outfill drilling east and west into areas where historical operators found gold but never connected the dots. The 3% royalty on the northern corridor is a structural drag, though he plans to try to negotiate it down. The historic resource is non-compliant and dates to 1994, so it carries inherent uncertainty until the new MRE lands. Grade variability is a concern in the underground RJ zone given its nuggety character, though Varshney said the open-pit A zone material is more consistent at 1 to 2 g/t. Assay lab delays were mentioned as an issue earlier in the program, though he said labs are now back online. Macro risk is real given the company’s exit strategy depends on continued strength in gold prices and on nearby developers like Maple Gold, Orezone (Cassa Berardi), and Wallbridge moving their own projects forward to create the buyer pool.

Formation Metals CEO Interview

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