FCR – Musings

I decided to take a look at Myles (Miles) Campion on Linkedin to see if there was any information that could prove useful.

He has recently updated his profile to show the following:

Executive Director

Company Name Ferrum Crescent Limited

Dates Employed Nov 2017 – Present

Employment Duration 3 mos

Ferrum Crescent is a [1] European explorer/developer, [2] based out of London and quoted on both the [3] AIM and the ASX, we are focused on the Toral Pb/Zn deposit in northern Spain. The deposit currently has a large database of over 44,000m of drilling covering a strike extent of over 3.5km and extends to a depth of 800m, [4] it has expansion possibilities both down dip and along strike.

Current work is ongoing to define a maiden JORC resource to supply a platform for [5] further exploration and evaluation of the deposit and to define the [6] opportunity that exists within the Toral deposit.

I have added the [] for ease. My ‘interpretation’ or ‘guess’ 🙂 on this linkedin entry FWIW is

[1] – it is no longer an Australia explorer – it’s roots are now in Europe – and longer term not just Spain. It is also a developer – which shows intent to move to production in the future – this is where the big bucks are!

[2] – I expect the head office to move to London and for  future GM’s to also be based in London , I expect office Admin to move to London – except where outsourced e.g. Company Secretarial duties.

[3] AIM and ASX but no mention of JSE. Interesting but not surprising. Probably some way off but at some point I reckon FCR will de-list from the JSE and close down any other costs associated with RSA.

[4] The JORC 2012 is just the beginning. Looks like FCR expect the asset to be much bigger – the statement is quite affirmative – which is great news and ties in with Colin Bird’s comments 

[5] Reinforces [4]

[6] Defining the opportunity –  I see as FCR looking for a way to move it along the stages required to get it to production.

And then..

Over the last few weeks we have had two great days, and some minor pull back. I call that healthy market mechanics. The first jump was prior to the announcement that Colin Bird would become chairman. I doubt all the market knew that was happening but some momentum guys probably jumped on board the rising tide in any case. However if the reason for the increase was purely leakage of CB’s appointment then it would indicate the market overall showing strong approval – for me it never is one reason so I’ll reserve judgement.

We are of course still waiting for the JORC 2012 which Laurence squawked ‘‘Work with our independent geological consultant remains on track to produce our maiden JORC 2012 resource on the Toral project.’ On track means by 31st January. If this slips a tad I’ll groan but will not be too concerned. I am sure there are some market participant who might get annoyed/emotional etc which could present an opportunity, markets are, after all, a way of transferring wealth from the impatient to the patient. Apparently. Thinking about it – maybe that’s why they will be annoyed / emotional – crafty!

DYOR. All IMO. GLA.

Zinc Market and Spanish Acquisition

Interesting video and worth a watch IMO.

Appears way behind the curve compared to FCR .. but already worth a multiple of FCR, but reinforces the opportunity that Northern Spain has in Zinc.

The comments about low depth mining – at or near surface – being low capital intensive to kick things off gets some thoughts running on mobilisation costs post JORC 2012 for FCR.

Interesting comments on a 8.3mt Brazil asset as well.

Interview with Myles Campion

The Vox Markets Podcast today was very good.

Miles appears to be a rare hybrid – very experienced in geology as well as finance and investment. A very good combination to have on the FCR board.

The Toral resource in Spain is clearly a very sizeable asset with an already existing compliant  NI 43-101 resource estimate of 8.6mt @ 10% – described by MC as a very good start.

Miles believes the company is undervalued and states that it is one of the reasons he joined the FCR board to take the asset it to where it should be.  Improving FCR’s market capitalisation was my interpretation. At this point in the podcast I could  not help but think that there needs to be a big economic interest and incentive for Myles and Laurence to push FCR to the limit in the future – and that this will no doubt come in the form of share options once they have got the company on an even keel. Note at this point they are not taking salaries! Brownie points indeed from all shareholders IMO. I hope this gets rectified in the new year.

The Toral asset benefits from an existing NI 43-101 and MC stated the intent to get the Toral asset stamped with a world recognised JORC 2012 resource report. My interpretation is this makes it easier for a wider range of companies, globally,  to show interest in the Toral asset.

In the recent Spain visit, Miles and the independent Addison Mining Services (charged with preparing the JORC 2012) reviewed cores –and discovered further assays – some of which are in the DB some of which are not. These are now being incorporated. My interpretation was that this was good news.

@3:10 in the recording Miles talked about the  Pictures from Laurence on VOX and said core was running at 30% Lead  Zinc-  strewth! – I had to play this several times to see if I heard that correctly! Is this anomalous? Either way he is also pushing the Silver angle and believes the silver grades are also very good and will be good for the asset. Let’s not jump the gun as shareholders, the Zn-Pb asset alone is very good, silver is a nice bonus.

In terms of comparable assets Myles mentioned that both the size of Toral and grade of mineral is very good – and that is’s a very good position to be in. He mentioned comparable assets in Italy – listed companies – e.g. 3.3m tonnes at 6.5% with a market cap 3-4 times FCR (I believe this is Energia quoted on ASX recently renamed to AltaZinc (‘to reflect the business they are now in’) with one asset – the Gorno Project – having a JORC 2012 which is where the key comparison is. Their remaning assets have no NI 43-10 or JORC 2012. We have Toral with 8-9Mt @ 10% (or more?) so go figure! It’s easy maths! For the record, as of 15th December Alta Zinc’s Market Cap is £8.13m and they have a great Zinc story.

Miles also mentioned that Central Asia Metals bought a Zinc asset in North East Macedonia [called Lynx resources] which was ‘similar’ to FCR’s but that FCR have a better grade. The SASA CPR is here. The Toral resource does indeed have superior grades of metal (over double), but smaller tonnage.  However what can be extracted is a function of grade and tonnage and one could argue that it is more efficient to mine higher grade  material!  so we’re getting there through far superior grades. Add in Lago (eventually) and we will likely exceed IMO.  The other difference is that the Macedonia asset is mature, and being mined. Even so, the CAM asset was sold for $400M which probably tells you where Myles head is at! No doubt there will be other mining companies out there who would see the Toral asset as an opportunity to put in best practices and machinery into a former mining area which has the skills and infrastructure to turn this gem into a working asset. Knock off a few quid to set up the mine (I jest) and there is a value in Toral which is way above the current £2m market capitalisation we currently have 🙂 IMO.

Note: The EBITDA for the first 6 months of 2017 for Lynx Resources was 61% (unaudited).  In addition, in 2016, the Lynx Resources Mine – SASA – produced 783,000 tonnes of ore which generated 22,515 tonnes of zinc in concentrate and 28,955 tonnes of lead in concentrate – which I think is about 6.6% overall and we have 10%+.  The SASA mine also has silver  as potentially does Toral. It looks to me like we are heading for a direct JORC 2012 comparison with the SASA mine but without the SASA mining operation.   The SASA mine is also one of Europe’s largest Lead-Zinc-Silver mines – so that gives you an indication of the size of the Toral asset. Maybe Lago will be similar in the future..?

Miles mentioned corporate restructuring activities and efficiencies to come. He said FCR will maintain the AIM listing, will review the other two on ASX and JSE and all operations to create efficiencies and to focus on the asset. My guess is that JSE and ASX will eventually be ditched, operations will regroup into the UK (great for the majority of shareholders and shareholder engagement) . This will likely save a large chunk of cash. He mentioned focusing on the Toral asset – I like it. IMO if the expense does not contribute towards FCR’s mineral assets like Toral or Lago then don’t do it! – be ruthless. In the meantime focus purely on Toral guys…

Summarising, Miles said the FCR Market capitalisation is low, but Toral is a well-advanced big enough asset in the right commodity, in a stable country which will warrant investment and scope for further expansion (which I interpreted as tonnage) as well as possible JORC 2012 silver possibilities which is an added bonus. Miles also mentioned the management team of him and Laurence Read which have done a lot in a short space of time and they will push for further advancements in the company. I believe they can do it.

With regards to the name ‘Ferrum’ I think there was a strong hint that the name will be changed. Anything that ties a company to the name of the resource type is not the way to go in the future IMO.

Given Miles financial and geological background I get the ‘feeling’ Miles knows the asset is better than the already compliant NI 43-101, and is worth a large chunk of money which at the moment is not recognised by the market.  I hope the JORC 2012 knocks it out of the park. I expect it will.

In the meantime I am convinced there are players taking advantage of the low share price, without moving the market whilst sentiment has been low. Hopefully MC and LR are starting to put things right. We shall see. I continue to accumulate. DYOR. IMO. GLA.

 

Maiden Jorc 2012 Resource

The Toral license has been extended. The JORC 2012 appears to be on target for year end.

I believe it’s logical to believe that the JORC 2012 will be better than the NI 43-101 resource estimate given the statements in the recent pro-active video. Just an opinion which I am backing with £.

In addition, and reading between the lines, there is a root and branch review of company costs. This is important because dilution without having cut costs is not the way to go!

It’s now all about prioritisation, solid focus on the key asset in Toral and strong execution. If the cost does not support focus on the Toral asset in terms of commercials or regulatory requirements then ditch it.

A great recovery play IMO.

 

Several Scenario’s – How much is FCR worth if it gets it act together

I might be talking out of my ass, and crazy, but believe that given FCR is now coming out of the last chance saloon, and the resource cycle is coming to favour resource companies, FCR is now likely to be sitting on very valuable assets in the shape of Toral and Lago in Northern Spain.

It begs the question of how much are those assets worth. The answer as always, is it depends.

Some of the ‘more realistic’ and simplistic future scenario’s IMO are:

  1. FCR simply sells off the assets as JORC 2012 assessments are received for both Toral and then (way in the future IMO) Lago.
    1. FCR needs a buyer.
    2. But Zinc is in demand.
    3. Price in the ground – undeveloped could be $400  per tonne – straight to FCR
  2. Toral – FCR goes into a JV – say 50:50 and mines. If the mine extraction cost is 50% then 50% of the fluctuating Zinc price, say $3200 per tonne * tonnage gives a ballpark value of the asset to be shared.
  3. Lago – ditto …

Now some caveats…

I am pricing it on Zinc only, and ignoring all the excitement coming out of FCR which indicates it could be higher tonnage. I have also seen higher tonnage estimates on BB’s but cannot find the original source.

So what are realistic estimates? How many tonnes are there in Toral ?  Well I found one older report from a previous owner that reckons 4m tonnes. This is Toral only.

So let’s price it on 4m Tonnes. And let’s assume every last option is taken up! There is an RNS that says 8m Tonnes BTW so I think 4m is prudent!

 

Scenario 1 is worth (say $400 * 4,000,000 Tonnes) /shares (3,055,281,439 + Bird Options  185,249,929  + Beaufort Options 50,000,000) = $0.49c = £0.37p

37 pence is a significant multiple of the current 0.0008 pence share price! 662 times !

Scenario 2 is worth ($3200/2 (extraction cost) then /2 (JV) = $800 tonne – after all you would expect to be paid for getting it out of the ground which equates to £0.74 per share or 1324 times!

More tonnage =  more value – and that’s just Toral – there is also Scenario 3 – Lago to consider

Spain Map

All eyes are now on the JORC 2012 for Toral – end of the year cannot come quick enough!

And that’s why it’s a sitter….. and the best recovery play on AIM at the moment… for the brave… I am accumulating…. 🙂

DYOR. And if there are assumptions that are more realistic then let me know…