Always enjoy your posts. You are very good at spotting the devil in the detail, which I myself, often miss.
No doubt, you present some excellent arguments for the "NO" camp. You certainly have more invested than me, but for the sake of it, as I don't know your circumstances, let's call our respective investments - relative, as I think my opinions are as strong as yours (not saying they are as good, but I do speak with passion on this matter).
I no longer want to lose money, and whilst I see and appreciate your angles, there are a few realities which we must face up to.
1. Cap Raising Don has stated that without the Shandong Deal, they need to raise $30M. You say they don't need to, but that aside, we have 2 options available to us (Shandong or go to market for $30M). Raising that capital is going to place further pressure on the share price. If wish we had many other options to consider, but I can only look at what is on the table now. If you can pull something out of a hat, then please do so mate. I will be thankful.
2. Exploration Spend I am sure many companies can explore and develop very small areas of their tenements and be successful. I don't think FML can. In the past 9 months, they only spent $1.44M per month on exploration. Do you really think banking this will make a difference. If they diverted it to development, what will they get in return? I have spoken to many brokers in the past and seen the views of many on here, and something that keeps investors away is the life of mine data. It is not the be all and end all, but they are now chewing through ore quicker than they are finding it. We do our research and know the real story - there is plenty of it there to be had - but do others? Many investors have the good ole spreadsheet or whatever and they punch in the data they are given - that makes the decision for them - buy, hold, sell or don't touch. I reckon many potential investors that could push us north don't do so because the numbers don't stack up. I had one broker comment to me on the lack of reserves that FML currently has. I said he was right, but if you dig deeper, then you will find out that increasing that number is not that tough - he said "come back when the number is in black and white". As you did comment earlier however, I too wonder why they didn't give us the upgrades before presenting their data - hats off to you for picking that up.
I strongly disagree with you on this matter as if FML could show 5M or 10M of reserves, what would that do to the share price? I reckon it would sky rocket. I also have a spreadsheet, and it says to me, if we had those reserves, our current market cap for ounce would be so laughably low that everyone with a spare cent in their pocket would be scrambling to get on the bus - our bus.
3. Depressed Share Price Hard for me to say much here without attracting punishment. I have gone through the balance sheet, and yes, it does appear that costs have been over inflated because revenues are not exactly matched to costs when they are incurred. That is my view, and I agree with you here. I am not saying they are doing anything wrong, I most likely have my calculations wrong - hmmmm
4. Gold Price I know you didn't cover this off, but it links to your development spend using our current war chest - I mean, future war chest - if any. Whilst we can do very well out of an appreciating gold price, if it falls back to say $1500 for an extended period, what do we do then? How do we pay our bills? Do we put things into care and maintenance until it recovers? That is a sound business decision, but the market will read it as "we're @#$$!!@#" and vote accordingly with their feet by walking away. I go from month to month, quarter to quarter with FML. Why now should we not have some security to look at the bigger picture rather than wondering where the next Cap Raising / Loan will come from. Will we make any money next quarter. Will the market like our quarterly. I say, away with the quarterly worries for a while. Bring on the fortnightly drilling and development updates, bring on resource upgrades, bring on TI, bring on mill refurb etc.... That stuff is gold - that's what will help people sit up and take notice.
5. Regaining Equity I actually don't understand what you mean by this comment. Are we talking a % of ownership of FML or are we talking the value of your portfolio. For me, I would rather own 0.00001% of a company and be making xxx% returns each year than owning 50% and doing my ass. I seem adept at this as I do own 0.00001% (or whatever) of FML and am doing my arse. Quite an achievement.
6. The Risk Factor I may be a fool and I may be fanciful in thinking this will all work and result in me getting more than I have in the past. What I am not blind to is the risk factor. You have been a huge proponent of presenting the risks of giving away 51% ownership. You are 100% right in everything you have said along these lines. For me, it comes back to the 2 options I have now. Either we get $225M and lose 51%, or we get $30M from a Cap Raising, lower share price and lose 0%. Which is worse? Which is better? I think for our future, the 51% presents the most massive upside, but also the highest risk. The $30M raising - well, I ask myself, what can they actually generate from it. I know what they can do with it, but what will they generate?
I honestly would be 100% behind any deal which gave us say $216M for 49%, but where is that deal? If I lose the lot, then I lose the lot. I am staying on board knowing there is a new risk with the new owners moving forward. Risk / Return.
In closing, I also know that the cash will significantly de-risk FML. Instead of having risks around development, loans, cap raisings, reserves, milling costs, mill refurb et. al., I only have one risk moving forward, and that is Shandong. If this deal comes off, and that proved to be one risk too many, then only time will tell.
Have an awesome evening
FML Price at posting:
3.8¢ Sentiment: Buy Disclosure: Held
(20min delay)