Loving your work, gh. We have a good mix of contributors on this...

Loving your work, gh. We have a good mix of contributors on this forum, with the ‘reporters’ keeping everyone up to date with relevant information about the sector. It is greatly appreciated.

I’ve commented on this before: I believe FAR’s Board will have a bigger company valuation than suitors but that the numbers will converge the further we go.

Guinea Bissau - and Kenya for that matter - have been forgotten in the hullabaloo over SNE and A2, but on any other day either would be an extraordinarily attractive prospect in a junior’s portfolio, let alone both. Yet here we are with neither accorded any value by the market. Nor does the market value A2, which I find bearish to the point of ignorance.

Instead, here we sit at 7.9 cents with SNE valued at the base level set by COP’s dodgy deal, an allowance for cash, and bugger all else.

Speaking of COP’s failure to offer a PE deal, Cath famously said FAR were “not stupid people” and were prepared to consider an offer. It will be the same for a takeover. FAR’s Board table will be groaning under the weight of spreadsheets showing probable reserves, proven resources, prospective resources, timetables to discovery/appraisals/production, the likely costs of hitting those milestones, the permutations of various PE outcomes, the funding options available, the dilution of equity required, future earnings, etc etc. Cath and her Board will also be holding lots of conversations with friends (gotta be careful there), enemies (safer ground, you can count on them to screw you), suitors (aka your new best friends), and Governments. Through this exhaustive process, FAR will be firming up its assessment of the value it is prepared to accept at various stages. These numbers will always - always - be discounted by the value FAR is prepared to forego. Unless you are Kerry Packer talking to Alan Bond, you need to leave some value on the table for the next bloke.

Some here believe a deal could be struck pre-PE and A2, but I don’t agree. Yes, the apparent undervaluation of SNE - Malcy says double the eight cents - opens up arbitrage, but I just can’t see FAR even considering an offer without resolving PE and sticking A2. The unknowns are simply too large.

I said elsewhere that Malcy’s bucket list has good form. He has stuck with FAR through thin and thin and still holds his betting ticket, convinced that value will win out. I am too. I don’t believe we will make production ... unless the growing number of suitors marking our dance card are as stingy with their valuations as is the ASX at present. But with SNE, Samo, GB, the FANs (suddenly back in the frame), SNES South and North (new lower reservoir), DJ, A5 and corporate reputation all in the kit bag, I think FAR will get its ‘acceptable’ price at some point not too long after PE and A2.

Early 2019 as a warm favourite; late 2018 as a hedge.

OOO