strange trading...., page-28

Hi Buy1Hold, I appreciate your observation about FML, and please don't take this as negative feedback - I am not aiming to rubbish FML which clearly is an up-and-coming gold producer, with some very positive recent announcements about its gold production and recent refurbishment of the Three Mile Hill plant that clearly will result in even greater economies of scale, reducing cost of production etc.

I am making my observation about companies currently trading at a premium to fundamental values, which is based on a valuation of RESERVES (based on a discounted cash flow analysis). You may be aware that FML actually has minimal reserves, and I quote the latest quarterly of FML ..."Including surface stocks of 108,000t @ 3.9g/t, the total reserves and stocks position at the end of September (2009) was 767,000t @ 3.8g/t for 93,000 contained ounces."
[I realise that FML has a number of Indicated and Inferred Resources, but those have not been categorised into reserves at this point in time].

Quite simply FMLS's current reserve position can't support a current market cap of around $165 million even with its current cash position of A$19.4 odd million included.

With RED when I refer to the discounted cash flow I am referring to its RESERVES position, that totals around 850,000 ozs gold (plus silver as a bonus). If you work the numbers on that basis RED with a market cap around $100 million rising to say $146 million(how to refer to market cap in the midst of a capital raising is conjectural of course) is a significant discount to the current fundamental value.