why i'll vote no!, page-8

Hi Recyug,

When FML raised $45m and then went and loaned out a portion of that to CRE then used more of it to turn CRE around, FML ran out of money to do what they said they would do with that money. That $45m was suppose to get Coolgardie running at 135k oz's and drilling TI. Now we are in a position where we are running tight and the management are in a spot and need more cash to run the company. To get where we are, they doubled the shareholder base to double production by aquiring CRE but they left 40-50k oz's on the table because they spent the $45m in the candy shop.Now management still need more cash just to sustain this doubled production.

So fast forward to the present day. We are about to double the size of shares on issue again to get $227m.

Now fast forwward 12 months. What is to stop the FML BOD and management from spending this money on a company that produce about 150k oz/y? That is what you would get for $227m. Now if they spent up that money on a deal that was too good to pass up, they still might need to raise capital in the short term to make sure they could continue exploration and not to run so close to the wind. Sound familiar?

If they promised to stop spending and stop putting the company so close to the wind then I might be interested. All I can see in the letter from DT is more aquistions and more spending ie more of the same which leeds me to no shareholder wealth creation, just a bigger company.

What would I do?

I would have held off on this deal, said sorry, not good enough.

I would have been frugal through this gold run up, I would have let the shareprice run for once. The value of FML could be seen by shareholders.

I would then take a huge risk. If TI is all it is cracked up to be, Pinto and CW talk highly of it from their dealings with the FML exploration team, I would drill it. I would tell the team, that I want 10 holes at 500m a piece. It would be affordable after a period of frugality.

The shareprice would have risen during the period of frugality as FML makes the extra margin on the higher gold price. Then a kicker from the drill program would have seen the price at 10c. If I get the hit that we all wanted, I would raise enough money at around 12c to get a quick drill campaign to get a huge JORC out within 12 months. Take on a major shareholder/company for 20% to develop TI.

I think that I could have gotten all of that for 5.4B shares and producing 300k oz/y @ a $900 margin @ a gold price of $1700 all within a period of 3 years. Sp would be 30-40c.

But that is all just my opinion. This is just my dream of what I would try and do. There are many variables that could easily change for better or worse. Under my circumstances, FML could have been taken over before I completed the 3 years.

This is IMO another option.