metals and miners rating, page-13

morning

re. "The only thing i'm not comfortable with was a comment which i believe came from the company during the agm or other presentation saying that they don't intend to ever have more than a few years of reserves in place. This tactic won't allow forward earnings potential and therefor an increase pe. Nor will it make them a great takeover target becuase although they have some great deposits they're not prepared to spend the money now to bring them out of indicated or other status into a more compliant status.
Its a different company with 500,000+ ounce reserves than 200,000+. So if they only ever have 200,000+, I.e. Producing 100,000/year and measuring up 100,000/year to constantly only have 200,000+ or thereabouts is not satisfactory to a large investor and so that big money won't come in my opinion until this changes. SP will never advance above the current pe."

The comment about reserves was made by Campbell (ceo) during questions at agm -

you may be right about a big investor not wanting in - but I doubt if you are correct - that is not what at least some of the management thinks --

this is a quote from one of them I spoke with at the agm "The clock is ticking" - meaning that things are so fundamentally good now and with potential elephants hiding in a couple of places - there is a lot of eyes looking at us. -I fully agree - I have had contacts ringing me up and recommending fml - of course not knowing I have a fair sized interest already.

I am with wooduk - if an offer comes at 8c - I will tell them they are dreaming - presently fml is worth far more than 8 imo.

As to your discontent about having 200k reserves - well, it is difficult with thin veins to do otherwise - and, if you have several reliable sources of decent dirt - why the hell not? Why do you have to play to the tune of the historical way a business is run? After all, mining companies in general and gold companies in particular are some of the most inefficient, badly run organisations around - so why not do it differently if you are in for the long run - why pander to superannuation funds and large investors who have their sights set on next week rather than next decade?
There was no suggestion that we would only have 200k in reserves - he said that we would only ever have about 2 years of reserves - so if we were producing 250k ounces a year - then we would have 500k in reserve - sounds ok to me - and at say $800 costs and $1400 sale price - under $150m market cap looks decidedly silly I would think.
I would have thought that numbers like that aren't many years away really - there will be some bigger moves to get to 250k per year - moves that might involve a partner or similar - after all, we would need more processing power for that - but we surely will have the dirt if we keep going the way we are going - and with TI, god knows what the potential might be.

Personally I am very happy with how fml is performing as a business - I really couldn't care a hoot if enough others can't see it enough to buy in and drive the price up. We are travelling nicely at present and have some extremely exciting times coming up - with high chance of game changing numbers imo.

I do agree it is a bit odd that we haven't heard about the aerial survey at all ------------ it is very very clear that we have targets from it - I can't really see any reason for at least giving us a superficial look at the results - even if they are still being worked on.

It is in the vein of how the company works though - they do not put out a picture unless it is complete normally - although they did release drill results halfway through a program a while back - but I guess that was because the numbers were really good - but I also note that we haven't see the rest of the results either? Maybe they were fizzers? It would be surprising if nothing came up though.

Nope - I am still very happy and hoping that fml stays as different to other goldies as it appears to be presently - for me, the perfect picture would be

gradual accumulation for me - cheap is good

sp - can do what it likes after that

next 5 years - continuous development, including at least 1 more mill.

around 4 or 5 years - begin a dividend stream

Let's face facts - if fml were to reliably start paying 1c per year dividend - who the hell would care whether the sp was 5c or 8c or 20c - if they had invested originally at sub 8?


Why can't we do it?? - No reason at all really. imo the only thing you have to do is if a bargain hunter comes to town - show them the door unless the offer is getting close to 20c - because that is probably about what fml is worth presently - and that will increase dramatically over the next 5 years or so.

have a great day and watch out for elephants crossing the road (or more accurately - the salt lake)

pinto

ps - My partner is the only one I can think of who would whinge at an sp that doesn't relect value in a dividend paying share - eg. I bought us a swag of a company in the guts of the gfc that is paying us about a 30% return presently and growing at 10 to 20 % per year - it is not very liquid so it certainly isn't a trading share - but it is a gold mine of cash - she whinges that the share isn't of higher value - so I said, what the hell difference does it make - we will never sell it anyway (unless something unforeseen goes wrong) -------- and her answer is - 'it would just make me feel better'!!

she doesn't seem to have a problem when the dividend cheque comes though :)