questions for the agm, page-57

WB Pinto.

Interesting posts here by many on the board, given more TU this morning than all last week. I am undecided re the board, I actually like the way the way CRE turned out, and what has been done with production and costs. I thought the way CRE and this deal were handled was not so well. So I could also agree need more industry experience in there to deal like this, knowing more about the market and deeper contacts in the industry. All in all I would have to say now I want to concentrate on the current deal, voting no, and examining the consequences if it goes through. Sacking the board now would not help either goal, and I am happy with the direction they give in terms of managing the current assets.

I think the other stuff has been covered, regarding why SG did not do a full take over. Why the price is way to low for 51% control premium etc. As for the worst case if the SG offer goes through... Well lets ignore the small possibility that SG really put the boot in and sell us or spend the cash on their own portfolio. How about things just continue since the last capital raising April last year? Since then increased resources & reserves acquired, production is up, costs down, Gold up 20% on average, yet our share price is now 1/3 of what it was. So in 12 months from now, money spent, resources acquired, production up, costs down, gold price up and share price about 1/2 it is now. Take over offer at 60% premium at a share price of 2.8c would get enough interest I think to reduce liquidity and hope.

I do not think that FML can be delisted just on a decision from the board, I think in the CRE case it was based also on there being a low number of share holders, as well as % of shares, so for now not a worry although I saw it mentioned.

No one knows what will happen, but do not underestimate the worst case. As pointed out, money SG spend on this offer has no bearing towards any potential take over. This money goes to the company and if SG decide later to take over the company because the share price is low enough, then the money they spend now comes back to them in whatever form it is spent on. I can not see any justification from saying it would have been cheaper for them to do a full take-over when our share price was 4.5c (when this offer was announced), with a 60% premium even it may not have generated enough interest. Using the scenario outlined above would get them a takeover at 1/3 the cost, which is worth a bit of complication. I agree with you the best case scenario represents significant gains for everyone, and the offer could be just as it is taken at face value.

Given the market reaction to our 'capital raising at premium!' was to decrease share price until the premium is >40%, I think the risk weighting of the best and worst case scenarios demanded a 40% premium to our 4.5c share price to be worth considering. Therefore I still say vote no to the SG offer. If the board learns their lesson then they can stay, if they continue to throw themselves at the capital market while undervalued ...