Does anyone remember this?
To: Ken Benes (1518 )
From: Roman de Guzman Thursday, Dec 19 1996 10:44PM ET
Reply # of 3825
"My Response"
Just as you think that Fairmile would start picking up steam, stock went down for some negative posts. I do not understand how the stock could go down more with its potential. Let us summarize the positive aspects of Fairmile on top my head:
1. It has proven up 600,000 ounces of gold with 20,260 hectares ofmineable property.
2. Kjeld Thygessen, the most successful gold stock fund manager
according to Forbes magazine, November 4 issue, holds a substantial position in FLA
3. Its property is surrounded with gold producing companies, the
closest neighbor being Santa Fe Gold which hit the Antler sequence
4. There are so far 8 majors interested with FLA's geological
formation and its resources.
5. It was included in Nesbitt Burns list of junior stocks on their Gold Review for Dec.9
6. The company has enough capital to complete its major drilling
program as early as January 6,1997.
7. The company has another 90 % of unproven resources which can
be translated to approximately 5,000,000 ounces if all is proven up.
8. Bill Rutledge, a member of the Board, not an IR said to me
during the shareholders meeting in Edmonton, AB, that the company may be bought out during the first 2 quarters of 1997.
9. Joe Kizis, their geologist said to one of the shareholders that the company was very much undervalued.
10. Delmar Newman told me yesterday that when the stock went
down to $3.50, he picked up some shares (I did not ask how many)
11. One of the shareholders from Texas, Richard Westfall, made a
visit to the mine site at Buffalo Valley and he was convinced himself of its potential. The members of the drilling crew told him that they were holding shares of Fairmile Gold.
12. Yesterday, Delmar told me also that there are other fund
managers who are interested in picking up FLA shares. So let us once again, evaluate their own resources, never mind the hope of getting taken over by the majors. Let us just use the conservative
566,000 ounces of gold. At a conservative $100 US an ounce in the
ground, that is worth $56,660,000. So, using 22,000,000 shares, fully diluted. Nesbitt Burns reported it as 19.5 million. Let us translate the resource value in Canadian dollars. That will be equivalent to $76,410,000. How much is this now worth per share? 76,410,000/22,000,000= $3.47. Now let us look at the Future. Remember investors look at the future of the stock and not at its Present Value. The reason why P/E ratio for gold stocks or resources in general are higher than blue chips is due to the anticipation of the investors that the company is mining more resources. If you see a resource stock with a P/E ratio of less than 20, it means that the stock is not venturing for any more gold mines in the future.
So what the future holds for us investors is the 5,000,000 ounces that Fairmile is proving up starting January 1997. Therefore the future price of this stock is 5,000,000/566,000*3.47=$30.65 CDN.
No matter how you look at it, the stock is worth more than the
current price of $1.53. Ken, your post is greatly appreciated, however, I do not agree with you that the majors are not interested in buying out a company with less than 1 million ounces of Au. The majors are looking at the total resources of Fairmile and not the 10% of its potential. Does that sound logical to you and every body in this forum?
To all that I have made friends with during the course of my
participation and to Fairmile Staff and Fleming, Merry Christmas,
Maligayang Pasko, y Feliz Navidad. May our Champagne be all bubbly for celebrating the true spirit of Christmas which is giving and forgiving.
Roman de Guzman |
