RE: Hello Core Posters ~ any of you knowledgeableI am not a pro and this is just my opinion - as the previous poster said, do your own research - go to tsx.com and put in fco and click on news releases, visit formcap.com or minesite or infomine or Grandich (be aware he does make money from companies he profiles- doesn't make him wrong, but it is good to know)
I am new to the stock, so I will tell you that when I purchased I looked a valuation and how MANY ways this stock can push 200-300% higher short term from when I purchased at under .23CAN.
1) The refinery is up and running, silver portion is at 70% capacity, with continuing expansion, additionally other metals areas are coming online - replacement cost on the building and equipment is a minimum of 20million (very conservative estimate). Figure minimum 5million for profitable 2006 (my estimate based on capacity and assumed growth)(this was purchased in the doldroms of the metals market several years ago when the company that owned it was filing for bankruptcy for less than 2million and 4million spent on upgrades) so with 10 times earnings and discounting fixtures to zero that is worth 50million market cap. Interim financials should be out by end of Jan (they were last year looking back through SEDAR) and they should put hard numbers in front of the bean counters - not about maybe, but about an operating company.
Additionally when that refinery starts processing the cobalt from the mine these guys are going to be seen as business visionaries - 100% ownership of product from the mine through the value added process right to market - complete control of distribution channel - the refinery will be making a ton cash as it's own entity - at that point it alone should be worth a 500million market cap as an operating profitable business with orders a year out and guaranteed supply.
2) approx 12 million in cash and precious metals assets as seen on their online SEDAR interim financials as well as 29million in exploration properties booked by asset value according to proper audited accounting principals - that is worth 41 million on liquidation.
So discounting the cobalt mine and exploration potential of the properties and all building and equipment assets set at zero we have a 12 month projected market cap of 91million
Now we are all waiting on the Uranium report from Virgin River which if this compares favorably (as cameco has indicated) to largest previous Uranium strike in the world, 10% is easily worth a 1billion market cap eventually. If the reports come anywhere near the expectation.
Essentially they are carried through 100% of the initial expediture phase so they will not have to pop any money (if ever) only after all the work is done to prove up presence of resources. They are carried through by the best heavy hitters in the Uranium business who are there because they see the potential of big money.
3) They have some really interesting silver properties, and if you are a silver bull these are hidden gems
4) of course they have the cobalt mine. Politically the region needs jobs, the US will need the resources and the hard assets as the dollar continues it's decline, and this company has spent time, effort and money putting this into place - bankable feasibility study shows they can mine high grade cobalt for 5-6.00 and even at it's worst -which BFS requires to be assumed can sell for 400million on - get this - the PARTIAL resource exploration they have done to date to get the ball rolling - 400million market cap.
Where could this stock go long term? Hard to say, I peg it at 20.00 per share as reasonable within a few years if things play out. But that is along ways away - and nobody really knows - too many variables, I just know it has room to grow bigtime.
Short term? Uranium assay office is really backed up - JNR put out completion of their project one day before Formcap did and they just got their results back, with holiday I expect it will be shortly after the first of the year - but if that is even half of what they say this should hit .50 on that alone. Then interim financials, if refinerey really is showing ANY cash flow that is worth another .10-.20 even if it is not stellar. Then the BFS which should, because delay allowed them to include better info, beat the market expectation - another .50. Spring is when the decline should be created for first stage mine approval and then August when forestry finishes up - they are going to make sure do their job thoroughly which prevents problems later. The ability to go into mining phase could easily kick the stock up 2-5.00 by itself depending on how in vogue commodites are at that date.
Downside is that there are alot of shares held by alot of people who are tired of waiting. Sadly for them, but good for buyers, many will sell just when things are finally happening. Talk to long term holders and they will tell you about the waiting, etc. Those who are tired of holding will take every exit point they get and sell into good news so the price of the shares may not move as vertical as we would like, but will have to climb a wall each time the company moves forward. By .80 though all current warrants should be executed cashing up the company to another 13millin or so without any need to offer additional private placements. From there things should get interesting.
Where it has been does not concern me as much as where it is going. I will benchmark progress and reevaluate as we go, but the bottom line is with assets and cash flow like this I believe we have seen the bottom so the downside is minimal, but the upside possiblity is huge.
I like this stock because there are lots of ways to make money in the near term and as we approach these event dates, speculators who left for greener pastures will come back for the quick run up in share price that good news will bring.
Cobalt, by the way, is essential for aircraft as well as many other things and it has no good substitute. Lots and lots of aircraft are on order right now - and they will need more cobalt than is available many times over. Additionally almost every other cobalt mine in the world is producing cobalt as a byproduct of copper etc and if the copper and base metal demand declines at all, the produced cost of cobalt for these mines will shoot through the roof because they will have to pull the cost of mining from the price of cobalt, not just sell the copper and give the cobalt away at 12.00 or 15.00. This mine will not be affected - it will just make a ton more money as the price of cobalt goes up and its cost of production stays flat because this is one of the only deposits in the world where cobalt is the primary metal.
Personally I expect cobalt price to hit 40.00 within 18-24 months but that is really more gut feeling and is not at all factored into the above numbers which assume cobalt to sell at it's low of 12.00 for the next 5 years - yeah right:)
Anyway - speculation means trust your judgment and watch your wallet. Know your facts and test the market performance against your benchmarks. Invest with discipline, take some profits along the way, and stay interested. Old sayings but still good ones when deciding where to place your money:)