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Gold is on an unprecedented run in 2025, trading near $4,000 per ounce and climbing another 2% this week as the Federal Reserve cut interest rates for the second time this year.
Central banks are buying at record levels, for 16 consecutive years, and for the first time in 30 years, foreign central banks now hold more gold than U.S. Treasuries.
But record prices create a supply problem.
To meet surging global demand, new production is essential. And that requires exploration companies committed to drill in proven mining districts where the geology supports large-scale discoveries.
Formation Metals (CSE: FOMO | OTCQB: FOMTF) may be a significant part of the answer.
The company has commenced drilling at its N2 Gold Project in Quebec's Abitibi Greenstone Belt, aiming to grow a historical resource of approximately 871,000 ounces of gold to over three million ounces. The historical resource estimates date back to the early 1990sl, but they provide a foundation for the current exploration program, with historical work having been completed by majors including Agnico Eagle ($113B MC), the world’s top performing gold producer this year. Formation Metals' goal is to validate and expand these zones through a fully funded 30,000-meter drill program and deliver three to five million ounces.
The company has approximately $13.7 million in working capital and no debt. Phase 1 drilling (10,000 meters) started in late September 2025, with initial results expected in December 2025.
The Abitibi: A Proven Gold District
The Abitibi has produced over 200 million ounces of gold since the late 1800s and hosts dozens of operating mines. Formation's N2 Project sits within the Casa Berardi Deformation Zone, a major structural corridor that hosts several significant deposits in the region, including Hecla Mining's Casa Berardi Mine (1.3 Moz) and the past-producing Vezza Mine (261,000 oz), located just 1.5 km away.
The project benefits from year-round road access, grid power, and proximity to operating mills, infrastructure that can reduce development timelines if the project advances.
The N2 Gold Project: Historical Work and Current Focus
The N2 property has been explored since the 1980s. Previous operators, including Cyprus Canada, Agnico Eagle, and Wallbridge Mining, completed 236 diamond drill holes totaling over 55,000 meters.
In 1993 and 1994, historical resource estimates were prepared:
- Main Resource (A, East, RJ-East and Central Zones): 18 Mt @ 1.4 g/t Au (~809,000 oz)
- RJ Zone: 243 Kt @ 7.82 g/t Au (~61,000 oz)
These estimates are historical and cannot be relied upon as current mineral resources. However, with 55,000 metres drilled, they confirm significant mineralization exists that Formation can build on through follow-up drilling.
Formation's current program focuses on two primary zones:
The A Zone has seen approximately 1.65 km of strike drilled historically, with over 3.1 km remaining open. Historical drilling showed that 84% of holes intercepted gold mineralization with a historic resource of ~522,900 ounces.
The RJ Zone has been drilled over approximately 900 meters of strike, with over 4.75 km remaining open. This zone returned some of the highest-grade intercepts on the property, including 51.26 g/t Au over 0.8 meters in historical drilling.
Most of the property remains untested, and the current program will also evaluate district-scale targets identified through reinterpreted geophysics.
What's Happening Now
Phase 1 drilling will focus on the “A” and “RJ” zones and includes confirmation drilling to validate historical results, step-out drilling along strike and down-dip to test for extensions, and testing of new targets from geophysical surveys.
Phase 2 (an additional 20,000 meters) is planned for 2026 and will further test the “A” and “RJ” zones and also include the RJE, Central, and East zones, where historical drilling showed success rates of 76%, 62%, and 93%, respectively.
Formation has stated that, inclusive of provincial tax credits from Quebec, its exploration budget for 2025-2026 is approximately $8.1 million with 30,000 metres fully funded.
Valuation and Peer Context
Formation Metals has a market cap of approximately $28 million with roughly 93 million shares outstanding. About 60% of shares are held by insiders, management, and strategic shareholders.
The company's enterprise value is approximately $14 million after accounting for cash, working out to roughly US$11.70 per ounce based on the historical resource estimate.
For context, other companies developing gold projects in Quebec's Abitibi include Sitka Gold Corp. (2.9 Moz @ 0.85 g/t, ~$396.64M CAD market cap) and Mayfair Gold Corp. (4.5 Moz @ 0.73 g/t, ~$261.11M CAD market cap).
Formation's historical resource has a higher average grade but has not yet been updated to current NI 43-101 standards. The current drill program is designed to address that gap.
Management and Timing
Formation Metals is led by Deepak Varshney, P.Geo., who has over 15 years of experience in capital markets and mineral exploration. The management team is part of the Varshney Family Office, which has founded and funded over $100 million in mining and real estate projects over the past three decades.
The first set of assay results from Phase 1 is expected in December 2025. If the program confirms historical results and extends known mineralization, the company intends to deliver an updated NI 43-101 resource estimate in Q2 2026.
Why This Matters Now
The gold market has fundamentally shifted. Central banks purchased over 900 tonnes in 2024 and are on track for similar levels in 2025, four consecutive years of record buying. With geopolitical uncertainty rising and confidence in traditional reserve assets waning, the demand for physical gold is structural, not cyclical.
But supply hasn't kept pace. Major producers are facing reserve depletion, and few new tier-one discoveries have been made in recent years. The Abitibi remains one of the few districts capable of delivering multi-million-ounce deposits in a mining-friendly jurisdiction, and Formation Metals is drilling there now.
For investors tracking junior gold explorers in a market where supply constraints are becoming acute, Formation Metals (FOMO.CN) (FOMTF) represents a company with a funded drill program, a historical resource base, and a property position in one of the world's most proven gold districts, at a time when the market needs exactly that.
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