aggressively expanding into a falling gold $, page-56

Slapshot.

So you'd like FML to cut costs NOW and hence production, with gold still $400 AUS more than the start of last year?That's worrying in itself.

1/OK,lets stop milling lowgrade stuff,forget the site trash,the pits and what's beneath them,that can wait until it's uneconomic(unlike now) to get to depth with them and get at the real resources beneath.In other words forget them FOREVER.30 koz/yr coming-now gone POOF.We don't need new highgrde underground mines at the bottom of these pits do we?

2/Let's see all contractors offsite as their contracts expire,forget TI and all other exploration.Ignore the pits and only touch 5g/ton ore and above.Cre can be allowed to stagnate as well,in the same way.CRE of course ceases operations altogether in any rampback first.Remember that CRE share buyers,your the expendibles,first into battle and first to die are always the low value troops,often abandoned in the field to their own devices as the battle shifts elsewhere.Greatest reward for least investment,with the bonus,if their dead,you don't have to feed them(apologies to any returned vets-no insult intended)

3/with the surplus milling capacity,we can rent that out.

Trouble is ------GOLD OUNCES FALL----to 50koz at a guess
TOTAL Cashflow-FALLS
But CASH STACKS UP.

and ultimately grade falls just like my prior comparison,when higher grade ores have been had.
Great for cash hoarding.
Not so good for the future prospects.
Very silly thing to do with dirt YOU HAVE TO MOVE ANYWAY IN THE FUTURE,when it pays for its removal NOW but probably won't later.Pits get bigger,then join together,then go deeper,don't they,especially when your only drilling down 30mtrs to justify the economics of starting to mine.

I've got cash,what i wanted for my cash when it got plonked in FML is FUTURE PROSPECTS AND GROWTH,WITH A SAFE FALL BACK OPTION ----IN PLACE and a company squeezing every last ounce of productivity from it's existing plant at better than cost with big upside with grade in a rising/risen price.

I can read that simply and boringly
-contractors doing lowgrade ore and the humping and very expendable.
-FML staff doing highgrade mining and running the mill and in nice secure longterm jobs with prospects in a downturn.
-A CONTRACTION STRATEGY IN PLACE as a matter of normal GOOD business pratice.Unless CRE starts it's underground mine up,it will cease mining at 1.5g/ton along with all sources of lowgrade ore FML included.

well i've got a big upside coming with GRADE at FML sites and 3 TIMES THE TONS from 1.2MT to 3.6MT if the goldprice stays near to where it is,for a $40m fundraising and giving away 1/4 of my holding in the company in a takeover of CRE.Woopedy do,am i upset,HELL NO,and they threw in another 1.2MT mill looking for a home.Better less of a bigger fish in a bigger sea than 100% of a sprat in a pond.

even with a fallback-gold at $1600ish now is still $400 above the start of last calendar year.It's only got to last another 12-18 months and FML can cream it in and then shutdown CRE with its money back,if need be.
Fml's margin is atleast twice CRE's.
FML's the money maker,Cre a little cream on top,while golds hot with bones worth picking over at a later date,when it's not,in an orderly FML manner.

jan 2011 1.2MT FML plant half full with mined ore
to 2.2MT+ ore milled to dec 2011 and FML 1.3 MT plant full
to 3.6MT next year 2012 or near + FML mill expansion?
to 3.6MT- 4.8Mt 2013 possibly if they only reactivate the old mill.

or 2013 1.8MT - 2.4MT+ milling capacity,soley on FML highgrade tenements in a downturn.CRE boxed up.

No TI and no other company growth or aquisition.No expansion of FML mill.No further fundraising.

GROWTH ISN'T JUST MAGIC,it costs and it's price in funds from shareholders has been minimal since the plant was commissioned.YIP,uptil then FML was on the bones of it's ass,just like NST.
Most has come from PRODUCTION that you wish to cease now there's an even larger margin in it.Without that joint input FML would have a pile of ore,looking for someone to mill it and be worth $40m tops.


SLAPSHOT-you must be an accountant.My mentor said let an accountant control and run a business and watch it get run at full speed into the ground in the name of economising operations to maximise profit and cashflow.

NO THANKS-I can see the writing on the wall with such a narrow minded strategy-it only works for SO LONG.
That's how most of these GOLD MINERS tenements ended up abandoned last time around.

BHP,RIO.NCM haven't trebled their planned operational output for the coming year going forward
-------FML has------
yet each has made opportunist investments,as has FML,for incremental improvement.

Listen to Don Taig.
He said,we hope to get Cre costs down to $1100.
There is a lot he doesn't say and that figure is the base gold price i hold as the drop-out base gold price for this gold cycle from proprietry analysis.

DT and Co. have their own analysis -Hence the welltimed investment in a marginal producer during a pricing spike.

I believe FML couldn't care less about CRE as a corporate entity,other than they have to appear to when you make an investment,until it's over,it's just a pity,they can't just do what i believe really want to with it's assets--Yet.
It doesn't make them anymore valueable to CRE holders.
In fact it's more a case of let them sit until required at a far future date when FML's so much stronger.
It's a gold price punt at the moment of course,but there are three resaons i can think of for the CRE investment.
They have control of the company,the rest will come within time.Fml have 85% of the assets plus surety over them for $13m.Essentially Cre in a downturn is a worthless shell,if it doesn't have $13m cash to pay back FML.That can easily happen.

FML costs $8-900 bracket gives a $2-300 FML margin before exploration/development and expansion.A healthy 20% margin on base case estimations.Naturally cost bases are continually eroding that margin going forward.It'd be nice if it too moved with inflation,but it won't.

DYOR+DYODD Know why your IN-know why your OUT