Ann: Pantanillo Gold Project - Metallurgical Review and Update, page-3

Pantanillo potentially brings a 100,000oz of gold production annually project WITHIN "Capital Reach" of FLG

OK I haven't lost my mind - yet. IMO FLG is mispriced (just like all (most anyway) prisoners say they are innocent) and I do expect its MCap to grow (with obviously some shareholder dilution - there is no free lunch). So owing a smaller piece of a much bigger pie. It happens. It's called growth.

Forgetting about FLG for a minute, if a ~CAD$115 (so ~US$82M) gold explorer cum developer of an ~5Moz MRE ... so about US$16/oz MCap multiple compared to FLG ~AUD$15M (so US$10M) a gold explorer cum developer of an 1Moz MRE ... so US$10/oz

All very rough right. Both appear awfully cheap ... need to be closer to say US$50/oz ... so triple for my peer in US and quintuple for FLG
Now I'm looking at the peer as a US$240M company building a project on a 5Moz MRE and FLG as a US$50M company building 1Moz project. Scale size appears correct.

Peer company saying we need (min) US$320M capital at PFS ... 150% of (revalued) MCap ... certainly not out of reach.

So how does a peer company presently valued US$82M MCap company convince the Market that it is worthy of this new capital (remembering that capital flows towards the projects with the greatest return for the least risk in our free markets). Obviously some "market participants" will have to believe that it can succeed while the broader "market" misprices the stock for whatever reason (maybe they are right and this project and others like it (e.g Pantanillo) are no good).

This is a lot of text, I've highlighted what I believe is important (to me)

…our target when we started the PFS was we wanted 150,000oz/y for 15 years (50% bigger than Pantanillo presently) – that was the operating window that we wanted to get the mine plan into - and I think we've achieved that. We frontend loaded the grade because we wanted to push for a high IRR and low payback solution which had initial Capital that was in reach of a company like Liberty. We had higher Capital solutions, we had higher NPV solutions, but as I said we focused on this modest initial Capital – US$320M and a 3.3 year payback at US$2,000 gold. At spot, that payback reduces to about 1.5 years - that's pretty attractive. We see very clearly in the economics that this project is very highly leveraged to metal price (As is Pantanillo - see below). Our base case NPV was US$550M - that's US$2,000 dollar gold - that's an NPV5. That rises to US$2.3B NPV5 - this is after tax – at US$2,600 gold which is below current spot. This really is an asset that takes off in a rising gold environment and there's lots of improvement opportunities, but I think the PFS really gives you a good solid sense of what this is going to do in terms of upside. In the FS, we have a lull in metal production in the middle - midlife mine - we've already drilled out inferred resource sitting inside the reserve shell and that will fill that gap. We published earlier this week a discovery of some high grade near surface material sitting inside the resource shell that at the PFS level was considered waste and now is clearly mineralized and we expected for that to transition to ore in the FS. What that's going to do is, it's going to give us a little bit higher grade potentially earlier on, it's going to fill out that that gap in the middle and it's going to ultimately drop that strip ratio. We're at 1.3:1 strip ratio which is extremely competitive in the Great Basin. We see that going down even further as the price rises and as we as we sort of explore what's the cutoff grade going to do against a rising price. A lot of upside optionality for this project over the next year as we as we do the field work to get it into feasibility & engineering by the end of 2025 ...See if what is being said resonates with what FLG might also do (I've inserted blue text as my commentary)

Why is Pantanillo very highly leveraged to Gold Price?
From the Update

And continuing in this fashion



And so I'll repeat again what is going to happen when FLG is able to reduce the cutoff grade because they raise the price (go back and look at the Pantanillo 43-101 for the numbers that supported the MRE and mine pit shell). Think about the impact when it changes to be more reflective of present day circumstances. The below is NOT PL/FLG


Remember the plan. PL said it again:


What is being worked on now to get there?

Umm in English that would be getting cutoff grade right for MRE and figuring the strip ratio right (mining efficiency if you remember earlier statements) to be able to get a PFS based on today's parameters.

Are you not entertained?
No yet. FLG stock > $0.15 will begin a round of "polite applause". At $0.25 I'll get out of my seat and applaud. At $0.50 I'll start cheering and at $1.00 get a Mexican wave start. I expect out share count would have risen to minimum 500M shares (fully diluted) so right there is a ~US$300M company but I'm also expect our MRE to increase ... say to 1.5Moz Gold and the gold price to remain above US$3,000/oz ...

So is US$200/oz MCap multiple attainable with this project ... look around comparable RoM Heap Leach projects (aka dump leach) ... what do you think. You must research this and find peer comparisons you are comfortable with.

Good luck.