FDR: Buese results pool & target price update frameworkOn Monday we will be 26 days from the date (July 31st) on which FDR’s Katie MacKenzie, VP Corp. Dev., estimated Buese results in 28-42 days during her discussion with Excel. Given I have no reason to doubt anyone involved in that last sentence, and I suspect none of you do either, these are happy days.
Meaning, we can now have some fun with guessing when during the next 12 trading days the Buese results will in fact hit the newswire. What choices would I make if I were in Padget’s shoes?
Complicating the question is whether he has an embarrassment of riches in the assay pipeline: are there additional Upper Antino results arriving around at the same time? Monday will also mark 18 days since the most recent Froyo Zone expansion. And we’ve had *two* drills at work there. (For reference, recall the next more recent Froyo results were 34 days ago, so we can see the good clip at which that zone is progressing.)
In the olden times, a company might choose to wait until people are returned to work in September before releasing news. A reasonable policy, to be sure. The mindset of many potential purchasers is not yet back in gear until then.
But, as we know, even the most modest-sized investor is now connected – almost regardless of geographical location – by smartphone to his broker. Indeed, he is directly connected to the (discount-broker) market itself, and all its news and social media dimensions. The last week in August can handle plenty of action if necessary.
On top of this is the potential for FDR to renew its old reputation for rapid and unexpected assay arrivals. Not that this is needed anymore – Founders has already got the market’s attention. But it is always a good time to improve upon one’s command of the field.
If two sets of results will be arriving before September 12, it would make the biggest impact to release additional Froyo news first. Doing the opposite risks being anti-climactic. If only Buese looms, this coming week looks to be the likely time we see it, if only because FDR has consistently under-promised and over-delivered. But whatever the order and amount of news arriving, it all feeds nicely into our amateur valuation work.
Speaking of which, I may soon need to revise my buyout price estimates. When last I worked my model, I came up with a Cdn$15-20 range (see my earlier commentaries). But that was when gold was $200-300 cheaper, and also before the promising new Lawa Zone emerged on the horizon.
I have been following the more conservative approach of revising the aggressiveness of my grade assumptions and rock volume estimates steadily lower as drill results fill in the blanks on zone sizes, rather than simply letting my resource summation automatically float higher. And I think this is the sensible stance.
Most investors would choose greater certainty over greater payoff, even in the gold explorer sector. Thus if x is probability of profit and y is size of profit, preference would be for 2x * y rather than x * 2y. A bird in the hand still being worth two in the bush, last I checked.
But to each his own. There is room for all types of participants in a stock like FDR. Day-traders, hold-until-buyout types, and everyone in between can all co-exist peacefully, even if we might get on each-others’ nerves from time to time.