FCO 101 for Beginners - RepostReposted for those new to FCO.
The FMI Story:
1. Rising need & price for cobalt - currently at $22.00/lb. Price got to $23.00/lb a few months ago which was the high for 2009. Price got to $50 a pound in 2008. FMI average production cost estimated at $7.73/lb. Unlike moly, there are few new cobalt mines expected to open in the near future.
2. Located in a stable country, Idaho needs the jobs due to 8.9% unemployment rate in October 2009, community support for the project.
3. All environmental permits have been obtained.
4. Many building components already purchased and delivered to the area. See photos at website.
5. Good ethical management team.
6. Start of construction anticipated January 2010 - after close of financing which is anticipated by January 15, 2010.
7. Operating refinery near the mine site - originally purchased by FMI at a discount. FMI will be the only integrated cobalt facility in the U.S.
8. Cobalt is a "green" product.
9. The Cobalt that will be produced by FMI is the higher grade more valuable super alloy high purity cobalt.
10. Cobalt classified as a strategic metal.
11. Stock price for mining companies typically increase in value once construction commences. See chart within presentation at the FMI website. Chart was recently posted at this message board.
12. Only part of the Idaho Cobalt property has been drilled. Potential for increase in mine life & reserves. Currently 2.636 million tons of proven & probable reserves with an average grade of 0.559% cobalt, 0.596% copper, and 0.014 oz. per ton gold. Contained metals include 42.6 million pounds of cobalt, 49.1 million pounds copper, and 56 thousand oz. gold.
13. The only high purity cobalt mine operation in North America. Most competing mines are in unstable areas.
14. Much of the engineering design for the project has been completed.
15. Peter Grandich recently commented that the financing plan is a good one.
16. Project has 20 distinct target zones. Only 4 have been drilled. Of the 4, only one zone (Ram) is being used in the calculations of reserves and resources.
FMI believes that there is considerable interest in the debt offering. Although this is not a "bought deal" considerable interest has been expressed in the investment offering. Jennings Capital is heading up this effort. Close of financing is waiting for an approx. $30 million deposit into the financing account. Cash has to be actually received by FMI in order to close the financing.
FMI believes that some construction work can be efficiently commenced January 2010. Once the financing deal closes, FMI will be obligated to repay the debt, and the sooner they can get the mine into operation the sooner FMI can pay off the debt obligations. Therefore, although there are certain inefficiencies in constructing during the winter freeze, it is my understanding that at least some work can be commenced following the close of the financing.
Do you own due diligence prior to buying or selling any FMI shares.