BullMarketRun.com

Part 1

“We want to be self-sustaining and paying a dividend,” Fairmont Resources‘ (FMR, TSX-V) President and CEO Michael Dehn told us in an interview.  That’s a lofty goal for any Venture-listed junior resource company, but it’s one that’s within the realm of possibility for Fairmont as it continues to harness the power of high-grade industrial minerals with a suite of attractive properties surrounded by excellent infrastructure in Quebec.

There are many private companies in this space in North America that are profiting handsomely, and Dehn is clearly on track with Fairmont given the rate of progress on the acquisition and permitting fronts since early last year.  There are multiple commercial applications for a range of products – basic to high-end – that are targeted from FMR’s growing inventory of properties led currently by the advanced Buttercup Project.

Dehn sees no shortage of demand, and he learned during the difficult “Bre-X years” while at Goldcorp just how important industrial minerals can be.

Keeping it simple – Fairmont’s Buttercup Project near the Port of Saguenay is permitted for aggregate production from high-grade titano-magnetite, and the company will attempt to leverage success there to advance a growing suite of industrial mineral properties surrounded by excellent infrastructure in Quebec.

“Like now, those were tough days for the Gold sector,” he recalls, “compounded by a strike at one of our mines.  But we had two industrial operations that generated really good, steady cash flow.  Those operations kept the office going and the exploration going.  They were critical. 

“If you look at our population and how much concrete that’s needed just for bridges in Canada, or how much pavement is put down on roadways, how many gravel roads there are, on a per capita basis we’re talking thousands of tonnes of industrial minerals per year for every Canadian just to keep infrastructure in place.  Then there’s the fancy chemicals we need for everything from paint to toothpaste and all the other products we require to make our lives comfortable.  Is there a big opportunity in this sector for Fairmont with the type of properties we have and their logistical advantages in Quebec?  You bet there is.”

Further to our observations regarding Fairmont in today’s Morning Musings, when you’re evaluating whether to invest in a Venture-listed company it’s always critical to begin by taking a close look at the President and CEO.  Dehn is focused and genuine.  He has a very strong command of the business he’s in, developed through more than two decades in the mining industry (senior geologist to CEO) including a dozen years at Goldcorp during which he consolidated the eastern and western ends of the Red Lake Camp under the leadership of Rob McEwen.

In other roles in the mining and exploration sector, Dehn has been instrumental in positioning companies for strategic and operational success – two specific and more recent examples being Nayarit Gold, a forerunner of AuRico Gold, and Argex.  With the latter, he took it from an exploration company to a technology company with a five-fold increase in share value and more than $5 million raised in financings in less than 18 months.

Dehn has consistently followed a strategic game plan with Fairmont, creating a business model that makes a lot of sense in the current and future junior resource environment.  Industrial minerals may not be as glitzy as diamonds or Gold, but they’re a lot easier and less expensive to extract.

We’ll have more in the days ahead on this speculative but intriguing opportunity.