Fabled Silver Gold Corp T.FCO

Financing / Current News

[magic_gerbil]

Two points to be made here:

1) Current news in relation to the Tesla's Gigafactory / need for Cobalt does have an impact on Formation now. That being said no corporate lender would touch Formation with Cobalt at $14/ lb, nor does it even make sense for Formation to begin production until cobalt prices rise above $20 / lb.

2) Rick Honsinger needs to seize this opportunity to meet with Tesla's decision makers to discuss the possibility for a strategic partnership. The earlier the better, with the Gigafactory coming online in 2017, and Tesla clearly concerned about the volatility of input prices of raw materials required for rechargable batteries, now is the time for Tesla to lock in a fixed price, a price that could be even more beneficial than futures contracts. Focusing on Cobalt there are many reasons why Tesla should form a partnership with Formation, the first being the ability to source cobalt from a nearby mine in a stable nation, and the second being their ability to secure fixed pricing. Tesla is comitted to environmental sustainability, Formation is fully NEPA permitted, and is a source located within North America. Alternatively Tesla could import cobalt from the Philippines or the Democratic Republic of Congo, with Tesla stating it is not interested in sourcing materials from war torn countries such as the DRC, nor is Tesla too excited about importing materials from such a distance. An arrangement could see Formation obtaining enough financing to begin production of cobalt in line with the opening of the Gigafactory, in return Formation would gaurantee Tesla a fixed price, and payback would occur with long term discounted cobalt prices. This arrangement needs to be signed off soon, as Formation will need time to get the mine on-line, and Tesla would benefit from locking in fixed pricing sooner rather than later. Although not logical to a securities firm such as BNP Paribas, such an arrangement may just make sense for Tesla who does not always view risk as a primary barrier to entry.