Patience is Key, the price is getting us all down I know, but this junior company has a lot going for it, so many positives.

 

  • The grade is high and the costs are low (usually a recipe for success). Proven, our costs are only 44% of 'another' junior in the same space. The PEA has a large contingency, so actual costs are likely to be even lower still.
  • We have a decent flake distribution, the majority is large/med flake. Purity is a little above industry averages. We have a comparable $/t price to others, but probably lower costs.
  • We have very credible agreements in place with IREQ, utilising proven upgrading processes and look to higher value markets.
  • Our PEA prices and volume are supported by customer negotiations/EOI. Proven, we are in on-going discussions with numerous potential customers that currently support 46,600/t of normal and high grade production. This volume would position us as the world’s 7th largest producer by volume (2011), Roche would not allow ‘fairyland’ production numbers in the PEA, there has to be some substance to push you into the top 10 Graphite companies, even at PEA.
  • These discussions could very well produce an off-take without a BFS, and suggestion to the contrary shows a lack of understanding of the industry (please note ‘could’ not ‘will’). This is not an Iron Ore or Gold mine and Graphite is not a commodity product. Iron is iron and gold is gold. Graphite is not just graphite. Our potential customers do not need to wait for metallurgical results from a BFS. They have their own bulk samples and undertake their own internal testing to ensure the source is good for their own tailored production. We have seen it in the past with Graftech and Ballard. The product was fully tested and confirmed as fuel cell compliant, before talk of an FS. If the customers find the product suitable and the price is right (as it can be with our costs), I believe we will see agreements being finalised.
  • Other companies have signed an off-take before FS. One example (from the small no of stock I am familiar with) is LGO (Scoping 2007, 75% debt finance early 2008, Offtake with Glencore May 2008, FS Aug 2008). There we go, it can be done.
  • We have a Chairman (on the inside) who continues to support the stock at considerable personal expense. Hundreds of thousands of $ committed to this, consistently over a long period.
  • Grafoid/Rutgers/CVV, REE, other high grade graphite claims, vertical and horizontal integration, strong strategy.
  • Quebec, Canada, power costs, infrastructure.
  • Focus has delivered the NI43-101 resource estimate. In line with expectations.
  • Focus has delivered a PEA with a $246m NPV10, $316m NPV8. Again, in line with expectations.
  • GE/Team have delivered these to holders. Yes, some mistakes have been made (MCTO), but the project is essentially economically robust. This is the critical aspect imo.
  • We are drilling to increase and improve resource classification. We are looking to move to a 40 year mine life.
  • If we increase resources to a 40 year mine life our current NPV8 increases to $360m. (I ran a NPV to confirm).
  • We can expect updates from costings of own upgrading plant, where upgrading costs have been estimated internally to be considerably less than outsourced used in PEA, no mark-up paid to 3rd party for starters. I would take note of the internal cost calculations and indications from GE. He was spot on for the PEA. GE comments $350. PEA $434, with 25% contingency is $347 with no contingency, so GE looks to have accurate costs nailed down. The very figures he noted outside of NR (OTC Issue!) are there for all to see in black and white in the PEA, checked by Roche.
  • Therefore if own costing (Varennes) reduce upgrading costs by about 50% from outsourcing, our NPV8 on the 40 years hits just under $1b on current PEA production levels only . (I again ran a NPV to confirm).
  • This can get very profitable, very quickly.
  • GE has imo delivered on comments so far to NI43 standards. Grade is confirmed, low cost is confirmed, agreements are in place (IREQ) or taking shape (as per Roche). Yet people on this board are always making out GE is a BS merchant. If I were a betting man (and clearly I am) I would suggest that his comments on off-takes and agreements are highly likely to be as correct as the other stuff he has said, that is now proven to be fact.

 

Even on the current PEA numbers, I expect FMS to get to production. Have a look at other TSX mining juniors further along than us, look at the NPV, IRR, capital requirements and payback of those projects. Our NPV10 & 8, from very conservative numbers (contingency and upside to come), compares well with many companies that have ‘made it’ through financing, to breaking ground and construction.

 

Patience is key, but I’m here until we are selling Graphite and hopefully Graphene too, so for me at least it will be a good while yet. I certainly do not think i'm a deluded pom pom shaker anyway.

 

 

All IMO, DYOR as risk exists.