Frontier Min Share Discussion Threads

[vizz] 28/7/2014 12:13

It's worth quoting my post on iii this morning and adding comments for perspective.

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"Anyone thinking that FML might not receive the funds from its Baitemir disposal have been conjuring up fear out of nothing. The only unknown was whether the new owner would be a private company or a Kaz government agency - that decided by the usual regulatory process.

Absolutely nothing has materially changed with FML's position from last week, only temporary relief felt by some of the more nervous and less savvy fan clubbers before the usual share price decay for most of this year resumes."
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As always with small-cap stocks with any news that seems positive, there are blinkered punters chasing dreams who see more than is there and of course "monkey see-monkey do" chancers who buy into any share price bounce, then later bail out after the expected payday fails to materialise.

Jascat (known as Dot Commie on iii), a PI who cannot be faulted for not putting his money where his mouth is, has more to gain (and lose) than most punters with his declared 8m+ shares. However, his all in or nothing roll of the dice with fingers crossed is not the sensible stance of anyone wishing to survive long term in this game. Maybe he and others of the same mind-set who have thrown all caution to the wind will eventually come out smelling like a rose in the same fashion as a lottery winner, but it's predominately luck and not intelligence that rules.

On iii 10 March, Dot, under the thread "Now is the time to buy", said, "I believe this to be the low point.", referring to FML's share price In the 4+ months since, the share price has fallen roughly 50% or to view it another way, it will take a 75% rise from now for the share price to just get back to where it was in March. Those who patiently held their shares or bought more as Dot advised have had a hard lesson.

Hereford29 has been criticised for making quite valid observations about the risk of FML being taken private or some other exploitive action against the interests of rank and file shareholders. I have always held such concerns, which is why I restricted myself these past several years to only trading FML, as opposed to investing. Up to about a year ago it had been quite profitable for me, but the steady share price decline and being unable for FML to be shorted has basically made me a bystander.

FML is a company with 75% of the shares and voting rights held by only a couple people. That alone is a red flag of danger and just one reason why no institution will touch FML shares. AIM shares are risky enough as a group without venturing out onto thin branches of the tree seeking prized fruit.

Roll on the winter of 2014/15 when the story and risk should be transparent.

[hereford29] 28/7/2014 10:47

So you mean people could be selling, but no-one is buying? Meaning the MMs are taking up the stock at these levels to hold on their own books? Which mans they could be acting for third parties or nominees I suppose. What do you know about UMT?

[jascat] 28/7/2014 10:38

hereford. " ? For every sale there has to be a buyer."
True for the more liquid stocks, certainly not, in the case of aim stocks such as FML.
The MM's are in control.

[hereford29] 28/7/2014 10:29

? For every sale there has to be a buyer.

[temmujin] 28/7/2014 10:11

gonna blow soon..plenty buying

[hereford29] 28/7/2014 10:05

Why are you being so antagonistic? It is a valid concern. If you the company is successful, I will be very happy. If they are taken private and de-list I will lose a lot of money.

[temmujin] 28/7/2014 09:50

get lost hereford...hereford fc are the only ones delisting

[hereford29] 28/7/2014 09:42

XCAP Securities "Great time to buy" - 3rd February 2012 (BUY, 10p Target)

Investment and capital markets firm Hume Capital Securities hit an all-time low this week with the small-cap losing 15 per cent of its value to trade at 0.1p.
The broker formerly known as Xcap had been struggling for a while, although its pre-tax loss of £3.7m in the year to August was a slight improvement on its £4.5m pre-tax loss in 2012.

So these and similar brokers produce wildly optimistic reports that ignore the underlying possibilities of manipulation because their revenues depend on being paid to do so.

[hereford29] 28/7/2014 09:34

It was a serious post, based on my recent experience at Sunkar which had related founders and controlling sharholders. You don't think there is any chance of FML de-listing then? Or selling to a trade buyer at a low point in the share price to "prevent insolvency"? This is what it looks like to me. I hope I am wrong, because I invested a lot of money in this company, and I have lost most of it at today's price, but I haven't sold any of my shares.

[induna123] 28/7/2014 09:15

hehe, he's a tease, isn't he.

It's all about recognising trends. This could be the very bottom of the cycle. When the nal sale is completed we should see a decent rise in the sp, removes a lot of uncertainty.

[temmujin] 28/7/2014 09:10

hereford...delisted? filtered for being a prat

[induna123] 28/7/2014 09:09

Looks like they'll survive. If they can demonstrate the new production methods that Adam suggested then a £15m market cap looks extremely cheap. Could be a great recovery stock.

[hereford29] 28/7/2014 08:58

That means hitting the forecast sales would still only generate about half of the pre-tax profit needed to repay the interest on outstanding loans, even after the sale proceeds? It looks to me as though the share price is being left to drift down so that the company can be taken private and de-listed. I wonder if there is any way to prevent this happening? Can it be blocked by the minority free float?

[induna123] 28/7/2014 08:07

Here's a great post on the iii bb. Very realistic imo.

Thu 18:13 Re: Revenue from sales BmouthTrader 6
UQ,

I tend to agree. I think 0.70 is as low as FML will go, in other words I don't think it is going bust this year. FML was so horrendously cheap at 1p that even Vizz dipped his toe in the water WITHOUT the long awaited proof of production volumes or a turnaround in sentiment. Not enough people followed Vizz to stop the rot, but at .75p the obvious risks start to become worth accepting for the potential rewards.

Surviving 2014?
All FML needs to do this year, to make buying at today's price a no-brainer, is survive. I would put survival at 3.0 kt production. More, for instance the 4.8 kt predicted in the year end update, would be great. But given the extensive cost cutting and the reasonable price of Copper atm, 3.0 kt should provide enough gross profit to cover this years interest payments. Last year interest payments totalled $10m on $95m of outstanding debt. Assuming that the $30m from the Naimanjal sale can be used to repay the more expensive debts, interest payments should be less than $7m this year.

Last Year
Revenue was $10m on sales of 1.5kt, a realised price of $7k/t. (1.7kt produced, but 0.2kt inventory at year end).
Production costs were $4k per tonne, totalling $7m. Fixed costs were approximately $5m.

For 2014 sales of 3.0kt would generate $21m revenue at a cost of $12m. $5m fixed costs leaves a profit of $4m. Not quite enough to cover the total interest, but not bad.

Debts
Management have proved remarkably efficient at raising new loan notes or rolling over existing ones as required, so I am not worried about the large amount of debt due on 31st Dec 2014.

2015
Adam Moroney was always very clear that the winter of 2014/2015 was the real test for FML. There wasn't time to include all of the potential mitigations against the Kaz winter in the heaps laid at the end of 2013, instead this last winter was a trial to prove that the basics work, such as the 6m heap. Triallied in a smaller area, was the forced aeration. What I am looking for is proof that these worked, and have the potnential to work better with further improvements. The real test is this winter ahead, when FML have had all of 2014 to prepare several heaps at full height incorporating all possible methods to maximise winter production. If FML can produce enough to survive in 2014, it will be that first operational update this time next year, that could well turn DC in to a very rich man and me in a to slightly more wealthy individual. An update in the next mnth or two to show we are on the right track, should get us back towards 1.5 - 2p and keep us there until the real money can be made.

[temmujin] 28/7/2014 07:19

the great 100 bagger plan coming together...last chance sub 1p

[jascat] 28/7/2014 05:24

It is a catch 22 type situation. FML have just about maxed out their borrowing & had to curtail capex required to extract & process the copper at the plants capacity.
The only way to now provide this needed cash is by producing sufficient amounts of copper.
Provided the asset sale goes through ok & production is around 4,000 tons this year, then the cycle will be broken.
Leach pad 5 should be completed & pad 6 started.
I am optimistic.

[hereford29] 27/7/2014 12:39

That's right - but the majority owners haven't even managed to exploit what they have found profitably yet, so why would they prove to be any more competent at realising shareholder value from South Benkala? There can only be two scenarios 1. They want to run the business profitably but they don't know how to do it 2. They are receiving sufficient payment by other means to make this unnecessary.

[jascat] 25/7/2014 12:26

Just doing some calculations re. the copper resource at Benkala
Known deposits of copper at Benkala & South Benkala total $14 billion.
They continue to track the deposits & have not yet found the full area.

[hereford29] 24/7/2014 09:29

I use heroes in the journalistic sense, my point being that this company has a small free float, which could indicate the owners had little confidence in or no intention of remaining in the market in the first place, and there may have been been a predefined timetable to let the share price slide until it is taken private for a fraction of its' recent valuations. Or it could mean that the management are genuine and actually trying to do what they say on their website. As PIs, we don't know, nor can we find out. For the majority of AIM listed miners, there is no evidence that management make any attempt to reach the stated goals at all, and many of these companies end up at very low share prices and market caps compared to the IPO or refinancing prices, or being delisted, or being put into bankruptcy, without ever generating an operating profit or managing to secure the promised investor or trade sale to realise shareholder value. Adam is a Consultant and probably has given good advice within the limits of his access and influence, but he's only a Consultant. He isn't running the company.

[watfordhornet] 24/7/2014 08:32

Induna123Think that is a bit premature. We have no idea whether he has been the hero - a good story has been suggested but we have heard of no results.Last November they announced they would conduct winter trials? What have those trials shown - no idea!Let's hope you are right but to say he has saved the company is not right unless you have some insight the normal PI does not

[induna123] 24/7/2014 08:00

Incorrect, Adam Moroney will be the hero. If it wasn't for his input and insight last year then the scenario you just described would've have happened. As it is, Mr Moroney just may have single-handedly saved this company. He's given the company a fighting chance to survive. He's the superman you're looking for. The men from Kazakh should salute him, as should we.

[hereford29] 23/7/2014 10:37

If people are selling company shares in large blocks, it could indicate that vested interests are offloading these shares while their house brokers try to keep the share price propped up as high as possible before a suspension of trading. At least looking at many other AIM mining companies, this would appear to have been the pattern. The majority of AIM small cap miners peaked at around Q1 2011, and have seen a continual share price decline since then, a few of them have recently been delisted or are in the process of delisting under circumstances that disenfranchise private investors. Photos on a website are not at all helpful for guidance, they are not a statement of performance and don't make any legal commitment in terms of Regulatory news. Possibly the company have turned the corner and will stabilise and regain upward momentum. Possibly they are bankrupt, staving off this admission until the last possible moment, when they will suspend trading and announce a low cash offer for the outstanding shares, or a trade sale, or possibly insolvency. Because the company do not reply to requests for updated information, and no updates have been given on production figures and cash flow since the year end results numbers, this is not possible to comment on other than by guessing. If it is the latter (suspension followed by delisting), then it can only be as a result of deliberate deception with the collusion of advisors, since it is impossible that management and advisors are unaware of the real situation. If it is the former, then it will be a heroic turnaround by a hard-working and honest management team.

[induna123] 21/7/2014 21:16

It looks as though they've halted the losses and are now producing copper and generating revenue to cover the costs of Benkala, (see final results released a couple of weeks ago). As far as debt, I think it stood at $80m last time I looked, they're waiting for the sale of Naimanjal to go through, that will knock $30m off that debt bill.

It's a question of whether they are now producing enough copper to not only cover the running costs of the plant but to actually make a profit for the first time ever. If this is the case then they can begin to start paying off that debt and eventually increase capacity of Benkala.

Looking at the recent photos it seems they might be finally getting their act together but until we get an operation update on what they've been doing since Dec 31st we still don't know for sure but imo it looks like they may have come back from the brink.

Still, somebody has been selling for weeks now in 500k and 250k chunks. Why? I don't know, maybe they need their cash for something else. But they could be selling at the very bottom of the cycle.

[tippa1] 19/7/2014 12:15

The debt compared to the realise able assets ratio, how does it look? What is the cash situation? Is it still losing a lot of money? The CEO statement said the are looking for an investor and alternative finance didn't it?

[temmujin] 15/7/2014 11:26

looks good so topped up today