Transitions into a Revenue - Generating Gold Producer

• BLLG is up 692% YoY, outperforming gold (+70%), and the VanEck Junior Gold Miners ETF (+185%). The company has officially transitioned to producer status at Dome Mountain in B.C. It recently completed its first gold and silver sale, receiving $1M for 1,000 tonnes of mineralized material delivered to its milling partner, Nicola Mining (TSXV: NIM), for processing.  
• We believe the transition from exploration and development to producer supports a re-rating, as the market typically assigns a premium to producers. With regular trucking of mineralized material underway, visibility into production and revenue is improving. No additional financing is needed, and Nicola’s mill now operates exclusively as the processing facility for Dome Mountain, materially de-risking the mine.
• We believe BLLG could potentially mine and process 40,000–50,000 tonnes in its first year, producing 12–15 Koz of gold. First-year EBITDA is estimated at US$24–$30M.  BLLG is trading at 2.89x forward EBITDA vs a sector average of 6.77x, a 57% discount.

• Dome Mountain hosts a high-grade underground resource that we believe could support up to ~15 years of operations. The company intends to utilize production cash flow to fund a multi-stage exploration program. We believe there is significant resource expansion potential as the deposit remains open in multiple directions (laterally and vertically),  and 90% of the project area remains untested along a 18km strike length.
• With gold trading near record highs, we anticipate an increase in M&A activity over the next 12 months as larger companies target juniors. We maintain our outlook on gold, supported by US$ weakness and strong safe-haven asset demand amidst economic and geopolitical uncertainties.
• Upcoming catalysts include production ramp-up, an updated resource estimate, and additional exploration drilling.

Price and Volume (1-year)

* We will start presenting our revenue and EPS forecasts once commercial production is announced.

* Qualified Person: Ted Vander Wart, P.Geo., a consultant to Blue Lagoon Resources (BLLG)

* Blue Lagoon Resources Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. 

Portfolio Summary

Source: FRC

Dome Mountain Gold Project (100% interest)

After commencing underground mining in September 2025, BLLG achieved a major milestone in late December 2025, with its first gold and silver sale, generating $1M in revenue from 1,000 tonnes of mineralized material delivered to its milling partner, Nicola Mining, for processing. This milestone marks the company’s official transition to a gold producer.

Location Map

Source: Company

2022 NI 43-101 Resource Estimate

(QP: Dr. Gilles Arseneau, P. Geo., ARSENEAU Consulting Services Inc.)

Source: Company

Dome Mountain Existing Infrastructure

Merritt Mill and Tailings Facility

Source: Company

Nicola now operates exclusively as the processing facility for Dome Mountain material, following the end of its arrangement with Talisker Resources (TSX: TSK). We believe this reduces risk for BLLG by providing assurance that all of its material will be processed promptly and consistently.

Resource Expansion Potential 

The property’s principal mineralized zone is the Boulder Vein System, which includes the Boulder, Boulder East, and Argillite veins. The current resource estimate is limited to the Boulder Main vein.

Resource Expansion Potential

Major Veins

Source: Company

Exploring an 18 km Prospective Vein Trend

Source: Company

The company will reinvest operating cash to advance gold exploration. In H1-2026, it will drill more around the Boulder vein to see if the gold deposit can be extended, test a nearby target called the Argillite vein, and explore other areas across its large land package of about 22,000 hectares.

A major advantage is that no additional financing is required, limiting potential dilution. Management intends to allocate internally generated cash flow to both near-mine and regional exploration.

Receives 2026 PDAC Award for Indigenous Collaboration

BLLG has strong support from the Lake Babine First Nation, a partnership that has been crucial to the development and restart of the Dome Mountain project. We observed this during our site visit in July 2026 for the mine’s official reopening, where we met with management, local stakeholders, Lake Babine First Nation representatives, and key contractors overseeing operations and logistics.

This collaboration was recognized when BLLG received the 2026 PDAC Sustainability Award, highlighting its genuine Indigenous engagement and commitment to environmental responsibility. We believe this positions the company favorably as it pursues permitting for expanded mining operations and exploration.

Upcoming Catalysts

Project Timeline 

Source: Company

Financials

Source: FRC / Company

FRC Valuation and Rating

Source: FRC / S&P Capital IQ

Comparables Valuation

Source: FRC / S&P Capital IQ

We are reiterating our BUY rating, and adjusting our fair value estimate from $1.11 to $1.74/share (the average of our DCF and comparables valuations). BLLG’s transition to producer status, first gold sale, and secured toll-milling, position the company for near-term revenue and cash flow growth. Trading at a significant discount to peers, we believe BLLG offers an attractive opportunity ahead of upcoming catalysts, including production ramp-up, and an updated resource estimate.

Risks

We believe the company is exposed to the following key risks (not exhaustive):

• The value of the company is dependent on gold prices 
• Dome Mountain does not have a feasibility study
• Exploration and development 
• Permit upgrades are needed to expand mine capacity
• Operations and execution