TO THOSE WHO DRINK ALONE

For those doing their due dilligence phone calls, you know many profitable events are about to be unleashed on FNC and Champion. Legally, we don't know the details, but you don't need to predict the inches of rainfall to know you are going to get wet.

This reminds me of a hike I took in the Amalfi Coast. While the tour buses stopped at the obvious sites, I hiked as high as the roads would take me. From the tops I saw the storm coming, sweeping across the ocean, across the hills, and towards me. A kind cliff dweller took me in and offered homemade wine and goat cheese, and home grown olives. I commented about what seemed a lonely life. He said the irony is his crops were more abundant then the farms often frequented by tourists. The wine was less then average, but the experience was Rothschild.

The two companies, Champion and Fancamp, have so much background action and anticipated NR's, yet have so little posts. I suspect one is hesitent to post because 1) it may be a betrayal of the source, 2) events will occur with or without drumming up interest online, so why bother, 3) (I'm discovering) the longer you are here the more handy the phone becomes. The regulars here did what they could to guide newcomers and help some prep to regain losses. At this point, one must put up an umbrella with a glass of wine and let news rain down.

To those who drink alone, I interpret the lack of posts to mean you are in good company. Exciting profitable finish to this year is fast approaching. Finally, I might add for those longsuffering FNC shareholders, And for US participants in Canadian stocks, the rebublicans have helped with the capital gains for another year. They may block Obama efforts, but one must find the silver lining in the storm clouds.

LAC LAMALEE WILL BE SOLD PRIOR TO FIRELAKE NORTH

My assumption is Lac Lamalee will be sold first. SG, you’re crazy, they haven't drilled it. This is my logic:

I don't think Smith intends to drill. You've got to conclude that deals are being presented because a) Smith is showing little immediate interest in drilling it, b) there are no winter drilling issues to cause delay in beginning a hole, and c) he loves this property more then any other. No action means he doesn't need to or he's got a longer time-line then Champion. If he's willing to fly airial geophysics over beauce, he'd be willing to sink a hole or two at Lac Lamalee. Also, we know Sheridan wants to sell Lac Lamalee, as he's already sold his interests in Champion. So I assume, that if he doesn't need to drill, he's got an offer in progress. But from whom?

If I were a major, would I offer for Fancamp's Lac Lamalee before Champion's Firelake North? It's cheaper right? No, because you know you've got to deal with Champion's first right of refusal for Lac Lamalee. Plus you go for the known ore before the assumed ore in LacLamalee. LacLamalee makes a bid for CHM's Fermont properties messy. Eventually they'll have to offer a bid to FNC and go through CHM first refusal rights. If they are already making a friendly deal with CHM, this gets messy as they'd be in competition with a friend and partner. Therefore, if I were a major I'd want Champion to acquire LacLamalee first before or as part of the deal to acquire FireLake north and/or the rest of Fermont. Therefore Champion will make an offer for LacLamalee before they announce that they have an offer. If CHM is in contract with a company that requires CHM's acquisition of LacLamalee, isn't CHM required to show Smith the offer details as Smith is part owner of the Fermont properties? If he already knows the terms of an offer, he would feel no need to drill. Who really knows what's going on, except a storm is brewing.

ASSUMPTIONS

Now, this logic assumes a few things -Champion is considering a package deal with a Major, instead of selling off individual properties. Champion could maximize property value by selling individual properties. But, they could expedite a sale with a package deal of properties. Plus, if you were a major dumping money or swaps in an offer for Firelake North, wouldn't you want to snag as many extra Fermont properties as you can in the deal?

This also assumes Champion wants to sell and not develop. I can only assume they want to sell as they are drilling holes like mad. Actually it's a key assumption. Two CEO's have told me they think Champion intends to sell, but Larsen hasn't directly. I think it's a safe assumption.

CHM NR SOON TO INCREASE IRON ORE

How much can Smith and Sheridan get for Lac Lamalee? Realistically having not drilled? How much can Champion afford? When do they strike? What is the tipping point? Assuming there is no rush from the Major interested, I'd wait for maximum SP for a minimum dillutive shareswap. Therefore, expect a Champion NR soon to increase that SP to as high as the risk investors are willing to tolerate. Again, my assumption is that they'll pass 1 billion in a week or two and Champion will hit $4. This can be concluded from drill placements and too much detail to go into. Perhaps the more GEO minded can explain.

STRATEGY

Assuming Champion will make a bid on Lac Lamalee, get and execute another Major to offer for Lac Lamalee first. Spending no money, but making salesmanship phone calls, could increase Champions first right refusal bid. Realistically, why wouldn't Arcelormittal or Wisco want Lac Lamalee? According to Wisco's press release, they need double what Consolidated Thompson can provide for them and they can get it from Champion. Are there smaller development groups interested? refer to examples at the end for potential suitors. Firelake North took everyone by surprise. And Peter Smith's genius strikes again. A certain Mital board member expressed annoyance that Peter snagged this land from under their nose. But no one realized that Champion would surpass 1 billion tons on just one of their 15 properties. All it takes is proactive salesman skills to get a Lac Lamalee offer.

WATCH OUT - TAKEOUT

$230million and CHM can own 100% of Fermont including the NSR.

Unfortunately, the NPV for Firelake North and Firelake makes the assumed LacLamalee NPV (contradiction in concepts) too much for a fair offer, way exceeding 4 times the current CHM market cap and FNC market cap. I know Larsen and Smith are hoping a Major plays nice and buys the property rather then take out the entire company. Offering $100 million to FNC and Sheridan (50% is FNC) for LacLamalee translates to $1/share which could happen if Smith included the NSR. However, offering $200 million to we FNC shareholders ($2 per share) for a company hostile takeover would be 4 times the current SP and I suspect Mineralfields would accept. Certainly Sheridan has already demonstrated a willingness to take a lot less from his interest in Champion. Then CHM, would not only get Magpie and all other properties, they'd get FNC's 17.5% interest and give CHM 100% control in 15 of 16 Fermont properties, including 50% interest in Lac lamalee. At CHM $4.00 per share, dillution might be worth it. Now with 100% control of Fermont properties and 50% control of LacLamalee, offer 30 million to Sheridan for the rest and you control all of Fermont. For a grand total of 230 million, Champion is now ready to execute what ever deal they've cooked up with a Major.

No, I wouldn't be happy waiting all this time for only $2.00 per share. But I don't think the take-over scenario is realistic. I think much of this is friendly and Majors will go for individual properties. But this scenario gives a realistic limit on how much one can expect for Lac Lamalee alone. It's not going to be $2/share. More like $1.00 and then we need to hope Smith distributes most of the dividends. But after a $1.00 dividend we still own 17.5% of CHM Fermont to profit from whatever deal they're entertaining.

FNC = MULTIPLE GAINS

What is clear is that Fancamp’s strategy is unclear. I’m glad Smith has met CHM obligation with the recent financing, but what is the rest for -perhaps additional work on Magpie to put an iron Magpie/Lac- Lamalee package together? I am clear on one thing. We are all in for a multiple gain soon. After writing this, I'm not sure it's possible to write a more convincing post to help investors get multiples from FNC. What companies have given better clues then the series of events that will lead to FNC multiples? FWR had some good clues: Cliffs entering KWG then Mac drilling like mad. The SP didn't reflect Mac’s understanding Cliffs integrated plans for chromite. The only question you have to ask yourself, do I invest in Champion or Fancamp, as both will do well. Which one will give you more multiples prior to end of this tax year or at the beginning of next?

CEO’S OBLIGATION vs. NEGLIGENCE

A ceo doesn't have to tell us anything until a letter of intent is signed. If something alters the ore or our financial situation, Smith must tell us. Hoov detailed material change on Noront, while everyone was suspecting Wes was withholding assays.

http://agoracom.com/ir/Noront/forums/discussion/topics/452360-real-deal-check/?message_id=1473152#message_1473152

http://www.wisegeek.com/what-is-a-letter-of-intent.htm

http://www.ibtimes.com/articles/88086/20101202/gryphon-resources-inc-gryo-signs-letter-of-intent.htm

MERGERS TO THINK ABOUT and KEEP ON YOUR RADAR

There are mergers to think about. Consider how Magpie benefits as it can add or sweeten a deal with Lac Lamalee. Think of all the other companies out there who have Iron properties but would like to be associated with where the action is at Fermont. If I had iron ore, but no attention, perhaps I'd call up Smith to talk about packaging properties together.

FANCAMP SUITOR

Here's an example of a partner that would make an interesting Fancamp suitor.

Link: http://www.adrianaresources.com/s/Board.asp

The New Player In Iron Ore
The Company's vision is to become a fully integrated iron ore producer through continued development of its iron ore port facility in Brazil, through acquisition of iron ore mineral resources in Brazil, and the advancement of its iron ore projects in Québec, Canada.

Adriana is developing an iron-ore port facility in Brazil with steel giant ArcelorMittal, and has iron-ore projects of its own in Quebec and Newfoundland, Canada.

"Palmiere is recognised as an aggressive leader by bringing a new level of management and making significant contributions at each of the companies he has worked," Beley said in a statement.

"His extensive management and operational experience, combined with his proven leadership skills, will play a key role as Adriana advances its corporate strategy at each of the company's iron projects and continues to expand into the future."

Palmiere has also previously served as treasurer of Northgate Exploration, CEO and CFO of Breakwater Resources, CFO of Zemex Corporation, and executive chairperson of Barplats Investments.

He resigned as CEO of HudBay a week before the firm's entire board was ousted in a proxy battle led by shareholder SRM Global Master Fund.

SRM launched its attempt to replace the board and Palmiere, after the firm's failed attempt to buy fellow Canadian base-metals miner Lundin Mining.

Edited by: Liezel Hill

IS ARCELORMITTEL TALKING THROUGH ALLEN?

Palmiere has partnered with Arcelormittel who has a mining next store to LacLamalee in the Fermont district. You can bet your bum Allen Palmiere is talking to Smith and/or Larsen. And one could assume Arcelormittel is talking through Allen. Consequently I might assume an offer is coming soon for LacLamalee for stated reason above.

Or

Would Arcelormittel make an offer for Fancamps 17.5 percent in Champion and make an offer for Lac Lamalee? This way they could assure themselves of a successful voter approval for a Champion offer .

BUT WAIT, ARE THE RUSSIANS COMING?

Could Champion or Smith be talking to Russians? I’ve been following and e-mailing Russians all year long. Perhaps a useless tact but it gives me impressions. I think Russians are dipping their nose in and it will make Champion act swiftly.

EXTRANEOUS LINKS

There are so many intersections:

http://www.metinvest.com/eng/

Need I say more? We’ve heard of these guys involved with Xstrata, who’s relationships are deeply imbedded in Champion’s BOD. Make a search of CHM BOD, Xstrata, and these guys and you may find intersections.

Metalloinvest Management Company LLC (Russian: Металлоинвест) is a Russian mining and metallurgy company specializing in the manufacture of steel. Metalloinvest was founded in 2006. The company is controlled by Russian oligarch Alisher Usmanov.

http://www.metinvest.com/eng/press-centr/press-relizi/metalloinvest-i-baosteel-group/

24 November, 2010 | METALLOINVEST

Metalloinvest and Baosteel Group Signed an Agreement of Cooperation Intent

Moscow, Russia – November 24, 2010 – Metalloinvest Holding, the largest iron ore producer in Russia and CIS, today announced that it has signed a cooperation agreement with Baosteel Group Xinjiang Bayi Steel INTERNATIONAL TRADE Co., Ltd. a leading state-owned Chinese steel producer.

The agreement was signed at the Fifth Russian-Chinese Economic Forum which took place within the framework of the 15th regular meeting between the Prime Minister of Russia Vladimir Putin and the Premier of China's State Council Wen Jiabao.

From the side of Metalloinvest the Agreement was signed by Eduard Potapov, Chief Executive Officer of the company, from the side of Baosteel Group – by Mr. Caozhen, General Manager of Baosteel Group Xinjiang Bayi Steel INTERNATIONAL TRADE Co., Ltd.

According to the terms of the agreement, Metalloinvest will supply 2 million tonnes of iron ore and iron ore pellets to Baosteel Group during 2011. The goods will be delivered by sea and railways. Prices for supplied products will be linked to the international market rates as at the date of contract signing. In addition, both parties have agreed to conduct technological exchanges for maximum mutual benefits in use of iron ore materials.

Eduard Potapov, Chief Executive Officer of Metalloinvest Holding, commented: “Our significant resources and modern equipment allow us to produce high-quality iron ore materials which are in demand in the international markets. Our products are successfully marketed in Russia and CIS as well as in China. We are suppliers of the largest metallurgical companies of the country. I am confident that the Agreement signed today will serve as a basis of a long-term and mutually beneficial cooperation”. He also remarked that “long-term contracts for iron ore materials supplies allow planning investment programmes for the Holding’s plants”.

http://www.themoscowtimes.com/mobile/article/suek-opens-in-tokyo-while-metalloinvest-sells-to-china/424617.html

“Last month the company announced the securing of a $900 million credit line from a consortium of banks, in order to refinance existing debt.

Iron ore miner Metalloinvest agreed Wednesday to supply 2 million metric tons of ore, worth about $320 million, to Baosteel, as the Chinese giant diversifies its supply sources.

Metalloinvest chief executive Eduard Potapov told reporters the final terms of the agreement are still under discussion and that pricing will be determined on a monthly basis.”

Norilsk

Several of these names have popped up when talking about iron in Canada

http://www.nornik.ru/en/about/governance/directors_board/

http://www.steelguru.com/raw_material_news/Norilsk_Nickel_to_invest_in_iron_ore_mining_project_in_Russia/176312.html

Russia’s mining giant, Norilsk Nickel has decided to invest USD 2.6 billion in Bystrinskoye iron ore project which is invested by Norilsk Nickel and Russia’s government ahead of schedule.

The majority of funds will be spent on Bugdainskoye iron ore nearby Bystrinskoye; about USD 176 million will be used to build the railway.

Meanwhile, Russia’s government will pump USD 7.84 billion into this project as well.

Norilsk Nickel said that the railway will be completed by 2012; the mining and processing plant will put into the production during 2015 to 2016.

Once the project is finished, it’s expected that the production of fine iron ore in Bystrinskoye would reach 2.10 million tonnes that of fine molybdenum ore would be 98 million tonnes. The company hopes to strengthen the position in Asian market through the long term plan.

http://www.kplctv.com/Global/story.asp?S=13583313

http://www.steelads.com/view/articles/10861/Norilsk-Nickel-to-begin-mining-iron-ore-in-Russia-by-2016-Steel-Business-Briefing-subscription.html

Speaking of Rothschild, follow the coal and you end up at iron.

http://www.businessweek.com/magazine/content/10_50/b4207027620369.htm?chan=magazine+channel_news+-+companies+%2B+industries

To get there, Rothschild is leveraging his name, hedge fund experience, and a network that reads like a who's who of the commodities world. He's friends with Ivan Glasenberg, head of the commodity trader Glencore International; advises Russian aluminum billionaire Oleg Deripaska; and is on the board of Barrick Gold (ABX), the largest gold miner. "There's no global coal company today," says Rothschild, 39. "There's not a Barrick Gold in coal. That's where the opportunity is."

Thank you for indulging my long-winded ramblings,

-sg