FOCUS VENTURES LTD. V.FCV

Pre-feasibility NAV estimate

[calmandquiet]

If you are getting a large number like $300M+ (NAV5%), could you please show your work.

My calculation is based on 300,000 tons per year DAPR only as stated in the July news release.

Annual production: 300,000 tons 
Revenue/ton: $170
Revenue: $51,000,000
Cost/ton: $120
Opex: $36,000,000
Margin: $50
EBITDA: $15,000,000
Net income: $10,000,000
Attributable to FCV: $7,000,000

The question is, what discount rate to use and what CAPEX. Assume CADUSD = 0.72 and 116,000,000 shares outstanding.

8% discount
$50,000,000 CAPEX
NAV8% = $17,000,000
= CAD$0.20/share

5% discount
$30,000,000 CAPEX
NAV5% = $54,000,000
= CAD$0.64/share

So I think the NAV should come in somewhere between $17M and $54M or 0.20 to 0.64 $CAD/share. I think the share price will stay between 0.1 to 0.3 multiple of NAV, or 0.02 to 0.19 $CAD/share, until cash flow starts.

The reason I'm here is because I think there will be an offtake agreement sooner than expected, after which I hope the multiple to NAV will improve to 0.2 to 0.5, or 0.04 to 0.32 $CAD/share. My thought is based on the July news release, the upgrading of PEA to PFS, and the small, continuous insider buying with significant insider ownership.

At $0.115/share, this represents a risk/reward of -100% on the downside (it's the TSXV after all) and 278% to the upside, or about 3:1, with a timeframe of 2-5 years. The 3:1 risk/reward does not take into account the scalability of the deposit.

Finally, the technicals. It looks like a base is forming at 0.11-0.12, although that breakdown to 0.10 is discouraging. 

I'm long at 0.12 and will double down at 0.08.

[wayned]

  Nicely laid out presentation. You do a better job than the guy they have running IR ( Ralph ). I would only add that we were holding in nicely around .20 till a very nice offering was announced for insiders at a price well below market plus a warrant .  A stab in the back to long timers and obviously there was insider knowledge as there was a half million share day just before the

[Sinusitus]

your opex and capex figures appear very high.  OPEX Costs shgould be more in the $60/ton range...Capex in the 10-20MM range

[calmandquiet]

Ok, using opex of $60/ton, and revenue of $120/ton (as stated in the news release of Sept 21) yields a margin of $60/ton. The risk/reward ratio remains about 3:1.  If you think the odds of a buyer being found are greater than 1/3, the expected value is positive and the investment should be made.  The primary risk in my opinion is whether or not they find a buyer for 300,000 tons of

[Sinusitus]

I think they need a strategic partner. By that I mean a company who invests in FCV and provided non dilutive financing,  is in the agricultural business, can providemarketing and distribution  scale,  help them market theiir products to third parties and also purchase their products directly. Otherwise, if they are left to finance their growth on their own through financial

[wayned]

I agree with your thinking except that the 3 main insiders own over 9.5 million shares between them . Most were purchased in the market or at financing at much higher prices . These three continue to buy almost daily . Cass not as much as Ridgway and Szotlender. I also think a big chunk of the last financing went to these two . My info is only current to last Sept . I can`t see them doing that if

[wayned]

I meant to add that we were supposed to get info on this in Dec. and as far as I can tell it`s mid December .

[bulava]

Where is the news on the PFS? Heard that it was on-track for December release, but its the 22nd and the holidays are near.