Hello Fishercat.

Thank you for directing to me the very important question and the very challenging question, which you asked me in the last two sentences of your last message, “The only holding that I can imagine generating the big bucks, and by that I mean north of $10 per share, is Magpie. Any other scenarios?”

The “other scenarios” are the NSRs and (to a far lesser degree) the shares we hold (with their future valuations). I talked about those “other scenarios” recently on this Message Hub. In a few years, the NSRs (even individually) conceivably could generate annual income well beyond the present Market Capitalization of the whole company. But, in answer to your question, right now (in terms of the sheer numbers we know), Magpie adds up to “north of” fifty dollars.

Before I crunch the Magpie numbers (to back up my point), I will suggest that you also think about something else. Fancamp probably will not just sit there as an independent company forever. So, it’s likely, we’ll receive an offer, sooner or later. I believe the odds would favor a merger offer, rather than a cash offer (designed to steal the company).

Stranger things—than a share exchange and share combination—have been known to happen. Entirely based on my idle imagination, Champion comes to mind. They’ve already paid a much-higher-than-present price to own a piece. I—for one—would approve a non-cash combination that would situate our Great Sovereign outside the palace walls.

Having said that, I will get back to Magpie. Let’s crunch the numbers. The way I look at it—if you own shares in a mineral resource company—it’s not a bad idea to know something about the market prices of the mineral resources.

When the mineral resources are not widely followed, it takes some patience to find and crunch the online materials. But it’s worth it, for the deeper understanding of the subject.

I’ve taken the following numbers from our 1 June 2012 NI 43-101 Magpie Press Release. I have no chemical or metallurgical or geological expertise. This is purely an exercise in arithmetic:

Magpie #2 Deposit In Pit Resource at 15% FeT (Total Iron) Cut-Off (in metric tonnes)
635.2 million tonnes Indicated – Fe2O3 60.78% – TiO2 11.20% – Cr2O3 2.61% – V2O5 0.30%
293.2 million tonnes Inferred – Fe2O3 60.49% – TiO2 11.21% – Cr2O3 2.54% – V2O5 0.32%

433.75 million tonnes = Our share from our 46.72% ownership of Combined Indicated and Inferred
Fe2O3 60.69% – TiO2 11.20% – Cr2O3 2.59% – V2O5 0.31%

After rounding off and after currency conversion to Canadian dollars and after lowering the prices of the TiO2 and the Cr2O3 from the online referenced pure metal prices to compensate for the higher weights of the oxide resources (compared to the pure metal weights):

http://www.infomine.com/investment/metal-prices/iron-ore-fines/6-month/
http://www.metal-pages.com/metals/titanium/metal-prices-news-information/
http://www.metal-pages.com/metals/chromium/metal-prices-news-information/
http://www.metal-pages.com/metals/vanadium/metal-prices-news-information/
http://www.geol.umd.edu/~piccoli/probe/molweight.html

FeO3 = $28,167,000,000 (263.24 million metric tonnes X $107 metric tonne)
TiO2 = $250,187,000,000 (48.58 million metric tonnes X $5150 metric tonne)
Cr2O3 = $83,102,000,000 (11.23 million metric tonnes X $7400 metric tonne)
V2O5 = $16,616,000,000 (1.34 million metric tonnes X $12,400 metric tonne)

$378 Billion = Adding it all up and leaving out all the odd millions.
$7.56 Billion = After deducting an early-exploration-company 98% discount.

Of course, the $378 billion check is not in the mail. Of course, the arithmetic of the spot market doesn’t instantaneously wind up in our bank account. But some small percentage (for virtually every mineral resource company except Fancamp) generally does get factored into stock price immediately.

That small percentage often is in the nature of 2% (after a 98% discount), give or take, for an early exploration company. Of course many factors go into how much to discount the in-situ resources. So far as Fancamp, I would argue, the discount should be lower, with the percentage credited being higher than 2%. But I’m not going to make my argument in this message.

For now, frame the issue of the higher or lower discount in your own mind without my feedback and without the feedback of anybody else. Just one thing. When thinking of the value of what’s in Magpie, keep in mind, pound-per-pound, Titanium costs approximately 48 times as much as Iron.

$6.95 Million = The Market Capitalization of Fancamp.
$7.56 Billion = Two percent of the Magpie $378 Billion In-Situ Mineral Resources.

Multiplying $6.95 million by 1088 gives you $7.56 billion.

This is not what’s known as pennies to the dollar.
This is a fraction of one-tenth of a penny to the dollar.

Even if you question my methods or my reference materials, it’s hard to make the case that this is a company that should be valued in the millions instead of the billions.