Haven't posted here for a while, and thought id give my thoughts...

Haven't posted here for a while, and thought id give my thoughts on a consolidation - Bring it on!

One of the first things i thought after the announced takeover of CRE for FML script was, here we go, after the takeover NO DOUBT there will be a consolidation (IT ONLY MAKES SENSE).

We are now a successful producer, with growing profits, and our share price should reflect this, currently at 7.3c.

From some calculations I've done we should be expecting a profit of about $40m (EBITDA)which equates to about 1.5c per share (pre takeover). Consolidation would multiply this figure by 10 (10 for 1 consolidation) and allow the company to have earnings of 15c per share, this would suggest the company be valued way in excess of $1 (P/E of 10 = $1.50) and i believe it is more likely for the market to rate a producer of this type when their share price shows in excess of $1 than when its sub 10c.

10c indicates a company exploring, a hit or miss type investment, FML represents a sustained growth stock (showing this over the last 3 years) and now with a huge ramp up in resource and production (due to takeover) it would only be logical to consolidate and put a price tag on FML that would show 70c rather than 7c, and let the market do what it does.

While people complain about being burnt by past share consolidations, again it depends on how 'rubbish' the company was, if its not worth that price than the market would push down the share price regardless of it being consolidated or not.

Recent examples from memory:
BLY - mid 30c -> 10 for 1 --> went to mid $4 (currently dipped over a year after the consolidation under $4)

CCC - was over 7.5c board said might consolidate in the short term future (6-9months ago) had consolidation taken place, it would have been blamed for pushing the share price from 75c to 35c (yet consolidation hasn't come up since, and the share price went to 7.5c to 3c.. what do we blame now?)

Consolidation DOESNT MATTER - Its all just perception, the company Market Cap is what determines the value of the company, and a market of well informed investors will act on this information not share price. If you have dreams of FML being a $1 stock without consolidation, then dont worry, youre dreams can turn into a $10 stock with consolidation - ITS ALL THE SAME!

-If one of those sounds more possible than the other, then you're kidding yourself and shouldn't be investing in shares.

Personally i had target prices of FML before the purchase of CRE for about 13.5-16c for this year, and about 20 over the next few years.

With the takeover, and if they can manage CREs costs to the same rate as the current FML costs per ounce, i have 2012 targets of 25-30c.

Let the directors worry about consolidation, but in the end, it doesn't matter.