focus valuation part 2 - acquisition, page-54

G'day Macros and all,

OK I have had discussion with the parties I wanted to talk to and still need to do some more work on this as I have been held up. I just went through 2 days of grrrr with an out of date Belk** router modem and rubbish service - been off the air and just back thanks to LINKS** who were great.

Great posting with negatives discussed and lots of angles, even angst or joy is OK, this is what HC is for.

Now my 2c worth:
This is all about the synergies of two undervalued miners combining to create more than the sum of each as individuals. One more bad luck event for CRE and they would have been in serious trouble as shown by the market valuation and down trend of SP of CRE over the past 12 months.

Some say this creates value but it also comes with risk, which can only be eliminated right now with the success of the combined entity. Some CRE holders might think they have so much upside that this is not fair however I would say take a look at what happens with another shock like the flood. Also key to this line of consideration - FML are cheap also and with nowhere near the risk. Most gold stocks are cheap at present so what. It is all about immediate upside and risk mitigation for me as a professional investor. Balance is there in this deal IMO so what upside, if any does the deal offer for both parties?

CRE gets a major helping hand from a successful operator. Many CRE holders may not have studied FML sufficiently to understand the underlying value or potential upside we can clearly identify as well researched holders of FML. They are getting a great deal but so is FML in so many ways as this provides flexibility and increased scale for the combined entity.

FML has immediate balance sheet capability and rising production / income with clear exploration upside which is being realized right now. This enables FML to increase head grade and income at this time on their own turf. CRE has excellent exploration upside under currently explored levels and on the ground position however with little current ability to achieve immediate outcomes due to their current balance sheet issues. Exploitation of the opportunity is enhanced, nay is achieved and risk decreased substantially under the combined entity.

I will have more to say after the take over is complete and to clients now - but this is clearly a win, win and win for FML, CRE and Barrick at Granny Smith as well, because they need the ore which was potentially in a precarious state as described above. I have some knowledge of the CRE area and a great deal about the FML land. I like it all, know full well that the mainstream views are different about both companies. They need to take a closer look without old prejudices, based on the work done to date and changing investment climate. In other words they need to do a clean sheet on FML + CRE too, just like all of us.

I have successfully called this gold and silver bull since 2001 and publicly on several occasions for the past 5 years and my research indicates we have hardly begun this wild ride.

CRE holders will get far better value by being at the right launch point now with FML than otherwise. FML are timing it well overall with their own operations and have the track record to do it for the benefit of all shareholders in the near term - 6 months out watch out.

Campbell knows the area very well and Don was a corporate trouble shooter with exceptional skills he will employ for the merged entity. Operational expertise has been added at CRE with Mark Heinz and FML will add substantially with this to achieve the necessary improvements.

Macro I think you are onto the right wavelength looking at increased combined value as a result of this transaction.
The merged entity will be able to absorb the issues that put strain on the present CRE operations. The merged entity will be a winner. So many aspects to add detail and have done the homework, but no time have to get back to work.

DYOR, best regards,
CW