Davo,Excellent post thank you, covers way more than I had time...

Davo,

Excellent post thank you, covers way more than I had time to read and now it is bed. I would like to check up on the top 20 shareholders, but have had no response to any of my questions from management. Someone else had previously commented in one of my posts that they new some institutions were in favour of the deal and increasing their holdings. Looking at these new figures though there has not been enough market volume to account for that significant change, and no change of holdings either. It could not have been an off market sale to a single interested party (such as Shandong) or another holder because they would not only need to report it, but it would also not change the top 20 holdings. Maybe a mistake is the only possibility, or maybe it counts the institutional holdings back down to their individual funds or clients?

Check out my post on the forward sales price of gold, and costs, there is something strange there as their figures add up to give almost zero or negative net profit after 2014. If you use other analysts gold price forecasts it is a very different story. Costs in 2014 are also abnormal, which almost halves the valuations.

A further difficulty I see is in the premium for control, which shows a clear linear trend, but has been averaged, rather than taking the latest value for 2011, which would imply a 40% premium for control not 20%.

I do not see how the cash position could be responsible for our market discount, since FML has been operationally cash positive for two quarters now, and a net profit in the latest. It is expected that at this stage any cash is best invested in increasing production and reducing costs, which is what they did. Increasing their 2013 and 2014 gold price by their 10% margin and using the costs forecast in the last 2 quarterlies gives significant cash for FML. It is also clear that the share price was increasing in response to this, until the Shandong offer that is. There was an earlier sharp drop in May which was also the time FML went out seeking this funding.

It seems to me this report is trying desperately to justify the Shandong offer price as being reasonable. But I can not imagine Shandong making the offer if this was the report they had based it on. I think you are right that the report deliberately refrains from stating the offer is in the best interests of shareholders, because it could be contested.

Once again thank you for your efforts, I can sleep a bit easier now. (well maybe, I just watched Prometheus...)