FMS - "The Foundation Customer", page-425

Hey All,

It's taken me a while to have the time to sit, read through recent announcements and try to understand where we are at. My thoughts(and this post), is likely to be a jumbled mess, but away we go...

Overall I see this as the start of negotiations, so I'm wary, but not overly concerned with the initial terms. There's still a long journey ahead of us and I'm sure the end result will be something nearer the middle. Like haggling in Bali/SE Asia, the key is understand and play the high/low ball game until (perceived)fairness is achieved. We(well OCJ) have the upper hand for the moment and there's a lot of detail remaining to be seen before we can make informed decisions.

However, a lot of thoughts are on my mind at the moment...

*Board Independence. Technically we now have an independent board. Practical independence is something we will have to wait as see. The board, management, and consultants however have cost shareholders significantly for little to no progress over the past few years. Shuffling positions to give technical independence and increasing the number of salaries to be paid will have to come with results.

*PwC Report: Refers ONLY to infrastructure solutions. Yet the term sheet uses this to jump straight into a total mine/production/transport/sale solution. Our freshly independent, well remunerated board/management does not get to wash it hands of it's responsibilities in this matter. I expect them to be pursuing and presenting options to shareholders on the mine, potential partners/JV, debt options, offtake agreements, etc. AND expect/look forward to the independent third-party review of any binding offers to be put to shareholder vote. "Binding Transaction Documents, if negotiated, will be subject to minority shareholder approval with an independent expert to determine whether fair and reasonable". My consideration of this report will hang on this expert being external.

*Loan Facilities: I urge management caution with a perceived reliance on the 'easy money' offered through these loan facilities, they are only ever delaying inevitable capital raisings and to remember that they in part led to the takeover panel's decision earlier this year. At some point we will have to take on debt, it if is to come from PIO they have already been given advice as to what is considered acceptable.

*Term Sheet: "Flinders’ interest in the joint venture to be free carried to Final Investment Decision (FID)". Yet immediately we are transferring our tenement into a new subsidiary and giving BBIG 10% voting interest. Not only that, we are giving them control of aspects of this project that are may not be favourable to FMS shareholders, are also the responsibility of our management(why else are we paying them), and erode our independence and arms length from BBIG & Todd. While I agree that BBIG would expect something for the work they are about to complete I feel this statement to be false and misleading. Especially given what occurs in the following phase. Others have spoken of wanting a payment to FMS shareholders to progress discussions. I see this $40-50M as that opportunity for stakeholder reparations, especially given we have already paid for a BFS and more again over the past few years fighting each other and watching this debacle drag out.

*Phase 2: Do I even? This is part of the haggle I see now as the big low ball. And that's fine. This is negotiations. They have to try. But let's wait and see what information, what factual numbers from our refreshed board come to light. Because I don't see BBIG spending $50M getting us to FID as free carried with what is proposed next. Is FMS independent enough to get carried to FID and then seek out/consider offers from other parties? Are we really that free?(rhetorical Qs obviously). As these terms currently stand does Todd not achieve an end goal of finally delisting and controlling not FMS, but PIOP??

*Foundation Partner: Partnerships mean sharing. We need their rail & port, they need our ore. If BBIG gets part of us, we should see a part of them. An economic interest that is. They should not be able to use our ore to bring a project to fruition that will result in profit from services rendered to other customers. Whether that's FMS having an economic interest in BBIG, or a royalty on ore transported for other players in the future I'm open to options.

*Into Production: If an agreement is reached for me the biggest question is "What will we(FMS) become?". I haven't ridden the highs and lows of this stock since FDL days to be some cashed up explorer, with a high cash burn and nowhere to go. I'm here to see our(Todd's, OCJ's, you, me, and everyone else's) iron ore dug from Anvil and Blacksmith, dumped into trains, loaded onto boats, and into money in our banks.

And just for interest sake, I guess this is the end cost to all shareholders given the tumultuous events with a failed delisting and legal proceedings against HotCopper posters(amongst general legal expenses)...

5 Income and expenses
2019 2018
$’000 $’000
Finance revenue:
Interest received 56 105
Administrative expenses:
Compliance (225) (149)
Depreciation - (22)
Insurance (338) (170)
Consultants (1,894) (471)
Administration costs (198) (213)
Salary and Wages
(including Director Fees) (1,424) (603)
Legal costs (1,280) (45)
Occupancy costs (75) (45)

Total: (5,434) (1,718)