judgement day in two weeks, page-40

Hello Isladar,

This is a good question you ask. The mine has striking similarities to Flying Fox in geological terms (Western Areas ASX-WSA). The feeder zone from this type of volcanic deposit is usually the higher grade portion of the resource. Grades of up to 20% Ni have been recorded at nepean from memory and the past production at 2.2% was based on diluted ore and old technology.

To assist you you could try this link: http://www.westernareas.com.au/phoenix.zhtml?c=169423&p=irol-forrestania

WSA have done the hard yards still in front of FML. All in good time you can't build such a project without the right piece of ground. Some Ni fundamentals:

Concentrate Supply
Reliable nickel concentrate supply dwindling
Quality nickel sulphide is difficult to find
Global nickel grades in decline
Tightness in smelter supply to be experienced from 2013
Laterites & Nickel Pig Iron do not fill the void

The above from: http://media.corporate-ir.net/media_files/IROL/16/169423/WSA_Presentation_%20January_2012_DS.pdf

WSA has built a $1B market cap company off their project.

How much is this worth for FML and to FML? We see when the feeder zone is hit and a strong wide intersection confirms the geology. $1 is pretty absurd frankly and you can't say it is worth $1B either. They are the extremes. The value also depends on the Ni price which could rise substantially over time and hence the lack of priority the last few years at FML.

A spin off with a healthy slice retained by FML is the best option as we want the FML Board to concentrate on gold at this stage. The likely base value to FML at present is intrinsic - perhaps $30M - $50M based on a cap raising to fund early stage development in a spin off and the amount to be retained by FML. This is all off the top of my head from memory and based on Ni prices at a similar level to now - $18k / tonne.

Over time the return can be far greater than the current market cap of FML IMO. All has to go well to achieve this so a healthy discount is appropriate at this stage. Nice to see you frame this as a question Isladar and hence my answer. It is too soon to be too concerned with Nepean IMO but if you look at 12 months and further out then you are right to be getting a feel for the approximate worth of the project.

Cheers,
CW
DYOR&DD