Hi all,Silkyflows – great question to ask your broker but in my...

Hi all,

Silkyflows – great question to ask your broker but in my opinion, based on my own research and experience your broker is either part of the ruse or is inexperienced in that they believe junior company MD’s always tell the whole truth and that is where their research ends.

SFC1 has a right to be suss on these guys. I spoke to the ALS lab in Burnie, TAS early March and can confirm they are / have upgraded their fire assay capacity. I am pretty sure this is the lab FG1 is utilizing. FG1, once they pull their finger out (hopefully), would likely be the largest generator of gold samples in tassie so its likely they may have asked the lab for this expansion which is great as it should improve turn around times going forward though this doesn’t help or excuse their current 6 or 7 month turn around, awaiting samples drilled in Sept / Oct last year. Personally I have never heard anything like this !

Having worked in tassie previously I know the ALS lab there is basically a prep lab with a small fire assay capacity. They don’t do multi-element analysis there. Its pretty standard practice while exploring for Au to also assay for pathfinder elements so the usual procedures if using this lab is to have your samples prepared – crushed, homogenized and pulped in Tas, then the pulps either get sent to ALS labs in Brisbane or Townsville which ever has the least on thus giving the tassie clients the best turn around time. Even if FG1 didn’t want to do multi-elements on their samples (they absolutely should be to give them more data to hone in on any potential ore body in my opinion), they could have easily gone down this route to get their Au assays done on the mainland and back in a reasonable time frame.

There is only a few criteria a lab needs to meet to be a good lab. One is auditable, consistent and clean QAQC data and the other is turn around time. It’s a competitive business and outside specialty analysis, price points on most labs for standard fire assay and multi element analysis are very similar. ALS is a large professional organisation so their QAQC should, and always was fine when I dealt with them though if they told a prospective client their samples turn around times would be 6 or 7 months, surely that client would have to question that and either work with the lab to rectify it (see above, ALS Tasmania already have a procedure in place to avoid long turn around times) or talk with another lab to seek another option. Because FG1 have not done this, presumably FG1 are happy with such a long wait for results and I would argue, it is actually to their advantage with what they are aiming for or at least not a detriment to be worried about.

Further, I asked the lab manager in tassie if I were to drop 100 samples off to your door today (early March), when could I expect you to provide me the assay data. We discussed the lab expansion and prep to analyse in QLD pathway and I was advised the turnaround was in the order of 1 or on the absolute outside 2 months. I said is there any possible reason why samples would take 3 or 4 + months and was told no, results would definitely be back with you within 2 months. It can be quicker if you pay for priority analysis – ie front of the que in prep, express post, front of the que in QLD labs =a couple of weeks, three tops.

This makes little sense though as 31^st March FG1 announcement, the MD commented that assay turn around time is 3 to 4 months ! So either FG1 are not utilizing this lab and transporting their samples to the one of the operating mines on the west coast who run their own labs or in the case of Renison, have contracted SGS to do their analysis on site (though I don’t think they do Au?) or they are transporting their samples to the main land, or the lab manager in tassie has no idea what they are talking about or what is clearly the most likely scenario in my opinion that the FG1 MD has been documented not being exactly truthful to the market ie lying. But I would think that is illegal !

I emailed the company about this but they chose not to reply. I am unsure what advantages a company sees in not replying to share holders enquiries but I guess they have their reasons. I think its due to being uncomfortable being called out but who knows.

So… there is absolutely no plausible reason for this delay and the company did not reply to my enquiry. The company should have had these results months ago and easily could have if the so desired. = big red flag on this management ! dishonest and opaque so not a great reputation builder for their first time running a listed company.

On the positive side, management have done an exceptionally good job in acquiring their WA located ground prospective for Au and Li. Strangely though, they have taken 9 months since listing to even produce a presentation on the Li side ! Two of the tenements they have in the Pilbara had been granted prior to listing so they have had well over a year to start field work in one of the premier Au and more importantly in these times, Li provinces arguably in the world and have done nothing on them at all. Even though Li and most companies with Pilbara Li prospective ground have been going off their heads ! But not a single boot on the ground nor rock hit from FG1. Weird way to go for an exploration company I would suggest. Plenty of other companies ( like pretty much all of them in the region) have managed to do on ground exploration so either FG1 management are totally incapable of organising exploration programs or they don’t / didn’t have any desire to commence field work asap.

My theory is that the glacial pace of activities in the 10 months since listing may be on purpose. With the major holders shares in escrow until June 2023, there doesn’t seem to be any urgency or need to hit the ground running. This does not mean the projects are any less prospective. I am really looking forward to the drilling they have just started at Portland, there is massive discovery upside there in my opinion ! Likewise, it should be good once they pull their fingers out in WA and actually do something which from recent announcements should be in the coming months. The SP went intra day +50% on their preso that they had Li ground but has drifted unsurprisingly back to where it began as the market probably realized they are still months away from actually hitting a rock. The could have easily started field work ages ago but chose not to. Additionally, since listing, both Zn and Sn price is +50%. Again, they have done next to no work on their Sn ground in the NE Tas and nothing at all on their Zn ground on the west coast but I hope that changes soon.

Information found via Mineral Resources Tasmania suggests there are known JORC compliant Pb, Zn, Ag resources from near surface (incl measured resources with the open sulfide mineralization and many other high grade Zn sulfide occurrences on surface and in drilling) present within their ground, back of the envelope calcs sees these defined resources with an in ground value well in excess of 10x the current FG1 market cap though FG1 has not even told the market about them… maybe they have been too busy not effectively working on their other projects to bother, or maybe they don’t know about them. Possibly this is something they can have up their sleeve for the post major escrow release pump if the Au and Li results are duds ?

All in all a pretty piss poor performance from management so far and this is justifiably reflected in their share price some -25% from listing price but I remain hopeful. For one thing, the major holder has been propping the price up for them accounting for (prior to the Li preso pump) about 70% of the total on market buy volume ( to me this means a distinct lack of promotion to generate new investor interest but also sounds very much like a lifestyle company) but they do seem to be ramping up their activities so they may be able to generate some decent news flow towards the end of this year / beginning of 2023… if they wanted to.

Super frustrating for IPO investors / traders thinking the company would hit the ground running but as yet they have only shown the ability to work on one project at a time and clearly had the ability to work faster ( ie the ongoing ALS Golden Ridge drilling assay return fiasco) but have chosen not to. In 10 months they have drilled around 4000m and done a bit of mapping….. pretty lame effort in anyones language for mine ! Hopefully something will change, unfortunately it wont be management but hopefully we will see some SP appreciation towards the end of the year with an increased news flow and a welcome hand from the exploration gods !

Good luck to all. Hopefully this next quarterly may surprize to the upside ? they could be doing anything in the background, they’ve certainly not being doing much up front ! I certainly wont hold my breath with these guys coming clean as to the real reason for the assay delays but I hold for now and will look to buy some more around cash backing around the 7 or 8 c area if the major share holder allows it to get there. Soz for crapping on, I don’t post typically but thought as I have tassie specific knowledge I would pass that on. Cheers.