risk reward at fml

Hi all,
Some snippets of a Gold Members only file released today explaining why FML is lagging... with compliments...


RISK REWARD AT FML

Why is the FML share price lagging? This is the question I see all the time. The fundamentals of this stock indicate a much higher value to all that take the trouble to analyse it. This stock should be trading at 8c not 4.6c as I write this report. Sentiment is poor on Australia thanks to RUST and this has hurt mining stocks at present however FML has been lagging the market and the gold index.

and...

This Quarter the Source of the Problem
Production this quarter was always going to be hampered by a toll treating agreement FML did with La Mancha for 100kt (1 kilo tonne is 1,000 tonnes) of 1.8 gpt White Foil ore. This would yield approximately $3M to FML this quarter and cut their production time from 90 days to circa 60 days.
This was negotiated late last year when FML was planning the logistics of increasing mined ore from 400kt per annum to 1.2Mt per annum, a three fold increase.

and

...is way below the December quarter figure
which included toll treatment of their own ore next door.
Cash cost should reduce a little from the initial commissioning run last quarter so we might see...

and

Valuation
A $4M net profit for this quarter would average out at $16M in net earnings over the year and therefore the P: E would be estimated at 8 on a share price of 4.6c (M/C @ $131M). For a debt free hedge free operator this is quite low however we do not have stable production as yet.

and

...Investment funds will not value a company on asset value or P: E when...

and

...We would not want to be buying too early or when the funds were buying which would be too late.
Global debt markets are in turmoil, nearly as bad as they were in October 2008. Risk aversion is pushing down smaller stocks due to the situation in Europe and the fear of contagion. All this is presenting us with opportunity if we can withstand the risk. If we do pull the trigger or hold
through this risk what can we potentially look forward to...

and

Risk / Reward
The P: E ratios in Japan before the big 1987 crash averaged around 200. The P: E ratios reached ludicrous levels for Dot Com stocks in 2000 and in a gold mania anything is possible. At present we have undervaluation based on certain metrics which I have explained in full above.



Thanks to GoldOz for the free snippets. Any more was not considered fair to paying Gold Members but I think you can get enough of the message here to gain some value from what has been provided.

Cheers,
CW