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Thursday, March 25, 2010

 

 

Peter Grandich Client Update on Formation Metals




Client Update -- Enough is Enough When It Comes to Formation Metals

Posted by Peter Grandich at 12:12 PM on Wednesday, March 24th, 2010

I spoke with FCO (T-FCO $1.22) management today to see if they had any insight for me on their recent rapid decline in share price. The short answer is no. They, like me, have been fielding a lot of enquiries lately and are quite stumped at this market reaction. I could sense the frustration in their voice, when they have worked diligently to get their 100% owned Idaho based cobalt mine to the final permitting and construction stage only to see a lackluster response in their share performance. According to this persistent management, there is no material reason for the panic selling we've seen of late. At the risk of being wrong on defining a "bottom" of any stock, it seems to me the stock is over done to the downside.

Management pointed out to me the valuation given them by a respected independent mining analyst as recently as last month. Readers can check out their website to track down this source. Remember, this valuation was made when the then current proposed financing arrangements ($60 million in equity and $100 million in high yield notes) was much more dilutive than today's proposed financing arrangements.

Regarding their financing efforts, it seems they have changed paths at least three times in as many months, and although this may have sent a confusing message to the public, each time the terms were re-done under more seemingly favorable conditions for the existing shareholders (less equity to issue, and/or better terms on the debt) -- although once again, the markets failed to react favorably to this.

At the end of the day management decided to go it alone on a small equity raise (the current $8.6 million non-brokered equity financing at $1.50 announced March 18), as they have been working with commercial banks on the debt side versus dealing with hedge funds and high yield notes. It seems that cobalt's recent listing on the LME has given cobalt some credibility in the markets and has drawn the attention of commercial banks to funding the project, although this won't likely happen overnight. This should be very good news for the shareholders as commercial bank rates are usually far better than the previously proposed high yield notes. They have also informed me that there exists a lot of interest in off-take arrangements (selling product forward) for all of their proposed production metals, namely copper, gold and of course cobalt. This is another way management is seeking to minimize equity dilution in raising the funds to build the mine.

They still have time to pull this off without impacting their proposed production start-up date of Q2, 2010. Stage I of construction, designed for the winter months, is underway and is comprised of surveying, site preparation and tree clearing -- you can review some of this progress in new photos posted on their website. Stage II is planned for later in the spring, when the bulk of the snow is off the hills and breaking ground and concrete pouring starts. They won't need to raise the bigger dollars until then, and this current smaller financing is designed to get them to that stage. Stage III expected to start later in the summer or in the fall, and is the final stage of construction. It is at this stage management hopes to have the bank debt in place to take their first draw down, and the later the better for that move as, logically, they are looking to minimize the time between starting to pay interest and starting to generate cash flow from mining operations.

As far as upcoming news goes, most likely it can be finance related as management is anxious to get this behind them. This could either be regarding current non-brokered equity financing, or news on commercial bank debt financing and possibly associated off-take arrangements.

They could also put out news on an update on Stage I of construction although that is no secret and would unlikely have an effect on the share price. As well, they could announce an update on their Athabasca Basin Virgin River Uranium Project, joint ventured with Cameco and AREVA, where two rigs have been turning. Cameco (the operator) has been spending al lot of time and money defining the extent of their Centennial Deposit on that project, where quite spectacular results have been coming from in the past. That program must be drawing to a rapid close with the approach of spring breakup.

FCO Management has taken a number of hits over the years, and they appear not about to back down now. This is one persistent and dedicated group of people. It seems more patience is the current prescription for ailing FCO shareholders.

Remember it's always darkest before the dawn.

http://grandich.agoracom.com/2010/03/client-update-enough-is-enough-when-it-comes-to-formation-metals/
You can also view this News Release on our website at:
http://www.formationmetals.com/s/News.asp?ReportID=391330
 

    

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Formation Metals Inc.

EN DÉVELOPPEMENT
CODE : FCO.TO
ISIN : CA34637V1013
CUSIP : 34637L
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Présentations des Compagnies de Formation Metals Inc.
17/11/2007Research Report on Formation Capital
Financements de Formation Metals Inc.
13/04/2011Proposes to Extend Warrants
10/03/2011Completes $80 Million Equity Financing
03/03/2011Prices up to $80 Million Equity Offering
24/02/2011on $80,000,000 equity offering
20/12/2007Flow Through Financing Completed for Formation's Saskatchewa...
Nominations de Formation Metals Inc.
13/06/2013Leading Independent Proxy Advisory Firms Recommend Formation...
08/01/2008(Idaho Cobalt Project) Hires General Manager for Idaho Cobalt Project
Projets de Formation Metals Inc.
02/05/2013(Idaho Cobalt Project)' Defers Underground Development Decision for Idaho Cobalt P...
12/12/2012(Idaho Cobalt Project)' Idaho Cobalt Project Minesite and Refinery Update
12/07/2012(Idaho Cobalt Project)' Idaho Cobalt Project and Hydrometallurgical Plant Update
29/03/2012(Idaho Cobalt Project)' Idaho Cobalt Project Construction Update
21/12/2011(Idaho Cobalt Project)' Idaho Cobalt Project Geotechnical Drilling Complete
06/12/2011(Idaho Cobalt Project)' Idaho Cobalt Project Construction Update
22/11/2011(Idaho Cobalt Project)Secures Letter of Credit to Support Low Interest Bonds for I...
03/11/2011(Idaho Cobalt Project)Idaho Cobalt Project Senior Debt Facility Not Proceeding
06/10/2011(Idaho Cobalt Project)' Bond Issuers Extend Date for Idaho Cobalt Project Credit F...
14/09/2011(Idaho Cobalt Project)' Idaho Cobalt Project Construction Crew Resume Operations
08/09/2011(Idaho Cobalt Project)Provides Construction Update on Idaho Cobalt Project
26/07/2011(Idaho Cobalt Project)Begins Earthworks Construction at Idaho Cobalt Project Mine ...
31/05/2011(Virgin River)Drilling on Formation Metals' Uranium Project To Commence in...
13/05/2011(Idaho Cobalt Project)Idaho Cobalt Mine Construction on Track for Q2, 2011
28/04/2011(El Milagro)' Mexican Subsidiary Acquires Central Core Land Position on ...
07/04/2011(Idaho Cobalt Project)Cobalt Mine Commencement of Construction Targeted for Q2, 20...
21/01/2011(Idaho Cobalt Project)Extends Cobalt Deposit Strike by 14%
06/01/2011(Idaho Cobalt Project)Signs EPCM Letter of Intent with JDS for Idaho Cobalt Projec...
31/12/2010(Idaho Cobalt Project)Closes $77.7 Million Bond Issue for Idaho Cobalt Project
30/11/2010(Idaho Cobalt Project)Mandates BNP Paribas to Arrange Idaho Cobalt Project Debt
21/10/2010(Idaho Cobalt Project)Drills Cobalt Project to Optimize Mine Design
27/09/2010Engages Auramet for Cobalt Mine Finance
28/07/2010(Idaho Cobalt Project)Drills to Optimize Mine Design and Assess Rare Earth Element...
25/02/2010(Idaho Cobalt Project)Begins Construction of Idaho Cobalt Project
09/12/2009(Idaho Cobalt Project)Receives Approval from Forest Service to Begin Construction ...
06/11/2009(Idaho Cobalt Project)Critical Path to Finalize Formation's Idaho Cobalt Project M...
15/09/2009(Idaho Cobalt Project)Permanent Access Across Blackbird Mine Site Authorized for F...
30/06/2009(Virgin River)Conceptual Studies Commence on Formation Capital's Virgin Ri...
24/04/2009(Idaho Cobalt Project)Record of Decision Affirmed for Formation Capital's Idaho Co...
02/04/2009(Idaho Cobalt Project)Idaho Cobalt Project Permitting Process Expected to Conclude...
26/03/2009(Virgin River)Highest Grade-Thickness Intervals Intercepted to Date on For...
25/03/2009(Idaho Cobalt Project)No Appeals Filed Against Formation's Idaho Cobalt Project NP...
17/03/2009(Idaho Cobalt Project)Major Cobalt Producer, Xstrata plc, Appeals Idaho Cobalt Pro...
11/02/2009(Idaho Cobalt Project)Receives NPDES Permit and 401 Certification for Idaho Cobalt...
21/01/2009(Idaho Cobalt Project)Forest Service Issues Revised Positive Record of Decision fo...
28/11/2008(Idaho Cobalt Project)Expects Idaho Cobalt Project new Record of Decision in mid J...
17/11/2008(Idaho Cobalt Project)Resolves Appeals with Environmental Groups on Idaho Cobalt P...
08/09/2008(Idaho Cobalt Project)Idaho Cobalt Project 78% Complete on Engineering and Procure...
26/08/2008(Idaho Cobalt Project)Idaho Cobalt Project Appeal Resolution Process Underway
07/08/2008(Idaho Cobalt Project)Completes Modified Mine Plan of Operations on Idaho Cobalt P...
25/07/2008(Idaho Cobalt Project)Idaho Cobalt Project's Record of Decision Outlines Measures ...
27/06/2008(Virgin River)In-Fill Drilling on Virgin River Uranium Project Confirms Co...
29/05/2008(Idaho Cobalt Project)Biological Opinions Grant Endangered Species Act; Exemption ...
01/05/2008(Idaho Cobalt Project)Detailed Design and Procurement of Idaho Cobalt Project Mine...
13/03/2008(Idaho Cobalt Project)Receives Water Right Permit for Idaho Cobalt Project
07/03/2008(Virgin River)Highest Grade Uranium Mineralization to date Encountered on ...
09/01/2008(Idaho Cobalt Project)Completed Biological Assessment Significantly Advances Permi...
14/12/2007(Virgin River)Highest Grade Uranium Mineralization Encountered to Date on ...
15/11/2007(Idaho Cobalt Project)Engineering & Procurement Progressing Well on Formation's Id...
30/10/2007(Idaho Cobalt Project) Drops Water Right Notice of Protest on Formation's Cobalt P...
27/10/2007(Idaho Cobalt Project) Announces Court Ruling in Arizona is not Expected to Delay ...
Communiqués de Presse de Formation Metals Inc.
11/10/2013Secures Proceeds of US$12 Million From Sale of Refinery
16/09/2013to Sell Refinery for US$12 Million
05/07/2013Executes Mutual Release with Waterton
05/07/2013Executes Mutual Release with Waterton
06/06/2013Enters Binding Letter Agreement to Sell Refinery for US$9.0 ...
28/05/2013Welcomes New Board Member Gregory Hahn
13/05/2013Redeems US$43.6 in Bond Debt
17/10/2012Issues US$5 Million Convertible Note as Part of Larger Plann...
14/05/2012Capital Corporation, U.S. and Idaho Conservation League Anno...
02/05/2012Begins Processing Silver & Gold Concentrates
04/04/2012Drilling on Formation Metals' Uranium Project Continues to R...
22/03/2012' Cobalt Project Finance Update
29/02/2012Commences Trading on the OTCQX Market
07/02/2012Union Bank Takes Over as Lead Arranger for Formation Metals'...
12/01/2012Drilling on Formation Metals' Uranium Project to Continue in...
20/10/2011Enhances Management Team
29/08/2011Signs Agreement for Underground Mining Operations and Provid...
29/07/2011(Idaho Cobalt Project)Receives Commitment for Financing of Idaho Cobalt Project
16/06/2011' Earthworks Contractor Mobilizing Equipment for Idaho Cobal...
16/12/2010Stimulus Act Recovery Zone Bond Allocation Increased to US $...
16/09/2010Receives Stimulus Act Recovery Zone Facility Bond Allocation...
19/07/2010Client Update - Formation Metals Inc.
08/07/2010Uranium Project 2010 Winter Drilling Discovers Potential New...
12/05/2010Grandich Client Update - Formation Metals
26/03/2010Peter Grandich Client Update on Formation Metals
04/03/2010Receives First Term Sheet for Project Finance Bank Debt Faci...
07/01/2010Uranium Project 2009 Drilling Expands Centennial Deposit Min...
10/11/2009Announces Name Change and Share Consolidation
11/05/2009Receives Further Administrative Licenses and Approvals for C...
29/04/2009Closes Oversubscribed $8.56 Million Financing
03/04/2009Announces $6.25 Million Financing
27/02/2009Endorses Lemhi County Commissioners Establishment of Industr...
19/02/2009U.S. and Idaho Conservation League Announce Grantees of Cons...
05/02/2009Boom in battery sector anticipated
30/12/2008Closes Financing for Saskatchewan Uranium Projects
17/12/2008Receives Air Permit Pre-Construction Authorization
15/12/2008Receives Platinum Award for Corporate Excellence
24/10/2008on Operations
06/10/2008Confident Record Of Decision Will Be Quickly Corrected
15/09/2008No Material Reason for Share Price Decline
09/09/2008Courts Grant Formation Capital Access Across Blackbird Mine ...
18/08/2008and Idaho Conservation League Release Details of Conservatio...
14/08/2008and Idaho Conservation League Reach Agreement on Environment...
16/07/2008Clarifying News Release - Continuous Disclosure Review
10/07/2008Hires Key Personnel to Help Expedite Cobalt Project Engineer...
16/06/2008Forest Service Record of Decision Signals Green Light for Id...
02/04/2008 Receives Annexation Approval for Staging Property
15/01/2008Cobalt price soars as stockpiles run low
19/12/2007Former Idaho Governor & Secretary of the Interior Elected to...
27/11/2007Cobalt nears record $35 per lb
04/04/2007Sullivan Deeps SD3 Drilling Update; Top of the Lower Aldridg...
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TORONTO (FCO.TO)Other OTC (FCACF)
0,120+0.00%0,110+0.00%
TORONTO
CA$ 0,120
21/11 15:59 -
0%
Cours préc. Ouverture
0,120 0,125
Bas haut
0,110 0,125
Année b/h Var. YTD
0,090 -  0,260 33,33%
52 sem. b/h var. 52 sem.
0,070 -  0,260 50,00%
Volume var. 1 mois
63 013 -25,00%
24hGold TrendPower© : -44
Produit
Développe Cobalt - Copper - Gold
Recherche Cobalt - Copper - Gold - Lead - Silver - Uranium - Zinc
 
 
 
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Dernière mise à jour le : 19/10/2010
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LES PLUS LUS
Variation annuelle
DateVariationMaxiMini
201450,00%0,260,08
2013-68,00%0,280,06
2012-55,36%0,680,23
2011-77,33%2,600,41
201035,71%2,760,65
 
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