a question of cash cost, page-21

morning kal,

yes it appears that I have been thinking differently to others - several of whom I respect and like.

I too like an attractive balance sheet and a solid pot of cash - but it is indeed just like an attractive body - it attracts. So there are positives and negatives to it.

I now realise that some of my friends don't agree with my expected timeframe for shareholder return of about 4 or 5 years.

Well, I would like it sooner as well - but I can't see that it is possible (unless one sells out at a higher sp - but that is not my interest).

I cannot for the life of me see that the company would be interested in a capital return in the next 12 months - why would you go to the bother of raising apx. $40m only to give it back to shareholders in such a short time?
The exception would be if you had a plan and the plan fell over and you had no use for the capital.
Also, as I said - we only have just got 8 rigs going - why would you just set them up and run them for a short time and then close em down? It makes no sense.

Many have been vocal about the low reserves and resources in fml - well the reality is this - drilling gives you both, unless you process what you find - and the stated position from CB is that we should 'NEVER' expect to have more than 2 or 3 years reserves.

So, with 8 rigs drilling and not expecting more than 3 years reserves --------------- what does that mean?

To me - only one thing - more gold production - a lot more. The only physical restricting factor in that case would be - mill availability.

I note with interest that 3 mile can grind a lot more than it can treat.
I note that Barnicoat can treat but it can't grind.

Is this coincidence?

Also into this mix comes grade - and if one looks at the grades that are coming on line now - things must start climbing dramatically - after all we aren't going to leave it on the pad are we? CB has told us that - very clearly. So those higher grades are going to be going to just one place - the mill or mills, end of story.
I also have been meaning to list all the dirt production areas - the list must be extensive now and all quality ground - and with 8 rigs going all the time - how long will it be before we hit 10 to 20 grams over a large interval? It is only a matter of time - and my guess is we will divert resources to that area almost immediately and get it into production pronto - that's what we do normally.
What will that make the following couple of quarters look like :)


Anyway to me this all sounds like growing fruit - for the first 2 years you have to cut and shape the trees and then for the next year you only get a small crop - only after that do you get a sizable return and from then on the trees look after you for years and years with enormous bounty.
You could of course make some money in the first year or two - but only if your neighbor likes your trees and you dig them up and sell them to him - then he has to wait the 4 years.
Of course you could sell the whole farm to the Chinese bloke down the road - but if he is anything like the Chinese I know - he sure gets a bargain - every time.

One other thing made me think lately - the constant stream of chatter that fml boards are always positive - well, I thought about that, I thought well, maybe I am looking through rose glasses.
But then I thought - there are two issues here - technical and fundamental.

Technically markets spend about 2/3 time in a bull phase and 1/3 in a bear phase - and that seems to be the way in most time cycles - so in fact we should be feeling positive about 2/3's of the time and down 1/3 - and or we should realise that this is all normal and just look at the fundamentals anyway.
As to the fundamentals ------------ well in reality - if we don't feel 95% positive about the companies we are in - then imo 'we shouldn't be in them'.

Carl Marks - "Question Everything" Pinto - "Once you get the answers, act with strength and stay the course"

enough rant
have a great day all

pinto