Hello TrueCanuke.
Hello Eudaimonia.

On 11 November 2014, TrueCanuke posted the message:

Teleprobe,
Tell us more about Argex Titanium, Inc.

Thanks, TC

Thank you for asking. I apologize for the ridiculously long time it’s taken me to reply. Sometimes, I take my sweet time to think things over before speaking up. But never anything like the more than a month this time. That’s because, this time, thinking things over had nothing to do with it. The reason was due to my preoccupation with a personal and pressing legal issue, which had inflexible court dates attached to it.

Also, this is a tough subject to cover briefly and thoughtfully and intelligently. First of all, I have close to zero expertise on the subject of Argex. Nor do I aspire to acquire it. But the subject requires consideration (by other Fancamp Shareholders as well as myself) in-so-far as the fact that Fancamp owns millions of dollars worth of Argex shares as well as an even-more-valuable Argex NSR holding.

I will confine my contribution to the discussion of Argex to what I think of Dr. Smith’s recent spending in Southeastern Quebec, in light of the fact that the money for it, very possibly, will wind up coming from the eventual sale of all or a substantial number of our remaining Argex shares. Eudaimonia, yesterday, raised much the same subject, “Why on Earth would we incur these costs on a grassroots project when we should be preserving capital to weather these conditions?”

http://agoracom.com/ir/Fancamp/forums/discussion/topics/629726-d-amico-not-longer-with-company-as-of-dec-31st-2014/messages/1975554#message

Thank you, Eudaimonia, for asking the question and for your straightforward and well-reasoned opinions (even though I disagree with them). You said, “I would put my bet on a better ROI on Argex and KWG then blowing a half million on these grassroots projects.” As for me, I would place the opposite bet.

So far as “preserving capital to weather these conditions,” I understand and appreciate your sentiment. But it’s not mine. The very fact that many companies are facing tough challenges “to weather these conditions” is what is putting “these grassroots projects” on the market, for the buyer to acquire on such attractive terms. Also, our most recent acquisitions have the added attractiveness of being located south of the St. Lawrence, matching what we’ve acquired in the last two years.

So far as KWG, the shares we sold are only a tiny part of the equation. The main parts are the NSR (which we retain under most eventualities) and the money KWG is obligated to pay us directly as well as in exploration and development expenses to earn its share of the project.

The one real comparison to make here is the value of our liquid Argex share holdings compared to what other better or worse purposes Dr. Smith can use for that money. In my mind, that’s pretty much the main question on this subject.

I make that statement even though I know full well that I’ve been second to none—over the last three years—when it comes to the harsh degree and frequency of my criticism of Dr. Smith’s misguided leadership. However, keep in mind, I confined those criticisms to the narrow (albeit critically important) subjects of Dr. Smith’s incomprehension of shareholder relations and Dr. Smith’s incomprehension of the value of studiously informing investment institutions about us. Would we be anywhere near where we are today had Dr. Smith studiously attended to (what I often told him was) his duty to shareholders of building a dedicated investment-institution following?

Also, when it comes to several of his mineral exploration decisions, Dr. Smith has earned well-reasoned and well-justified criticisms (by others, not me). Nonetheless, the way I look at it, outside of his mindless disregard and disrespect of the causes of his own Shareholders, in every other respect, he has exhibited exceptional genius, time and time again (but not every time).

So far as the Argex shares, yes, they’re more significant than the KWG shares. However (as is the case with KWG)—if Argex ever pans out—the NSR, arguably, will wind up benefiting us much more than the shares (we dispose of or continue to own). My point is—even if we were to cash in all our Argex shares—it would not be the end of the world. For one thing, most of our Argex upside would remain (due to our NSR). For another thing, the Argex upside, in the first place, is not a foregone conclusion.

As I said, at the beginning of my message (“first of all”), I am far from an authoritative source of Argex information or Argex expertise. Nonetheless, I do know how to count. I don’t think there’s much question that our properties (Titanium and otherwise) are far greater and more valuable than those of Argex. I am a value investor. That’s my orientation. That’s how I think.

But that doesn’t mean I’m incapable of recognizing that there’s another side to the story. Again, I haven’t spent the time and effort to study Argex in depth (because its hard assets are only a fraction of ours). However, I do understand the relationship and collaboration Argex has painstakingly built over the years with PPG Industries could very well be a game-changer and make anything Fancamp manages to achieve in the future seem inconsequential in comparison. Then again, it’s possible nothing will come of it. What I don’t know would trouble me if I were an Argex Shareholder.

Where’s the huge capital investment coming from? When will the cash flow turn positive? What will be Argex’s share of the receipts?

I realize there’s been much ballyhoo made of Argex’s great scientific work concerning its proprietary process of separating out purified Titanium from Ilmenite Ore. Possibly, all the wonderful future possibilities will become tomorrow’s tried-and-true positive-cash-flow realities. I’m not a scientist. I don’t know. It could turn out that my cautious way of looking at it is completely wrong and is simply a consequence of being dumb and not being up on the latest science. I admit the science is out of my league. Yet I can’t help but wonder, if what Argex has come up with is so wonderful: How come the financing of it has remained an open question for so long? Market conditions? Maybe.

What’s also interesting to me is Fancamp’s own foray into Titanium-from-Ilmenite metallurgy. Fancamp has also announced unqualified great successes, proven time-after-time, with ever improving results. Our process is also patented and proprietary. The difference is Fancamp doesn’t have a resident metallurgical mastermind as does Argex. Instead, we’ve outsourced the brainpower of the world-class industrial-processing powerhouses, SGS and CORUM and Pangang Group.

http://agoracom.com/ir/Fancamp/forums/discussion/topics/616153-part-ii-changes-afoot-in-titanium-pigment-industry/messages/1930820

Strictly from the perspective of investing in unknowns that, possibly, can backfire, Argex is far from a sure thing. Even the greatest Argex optimist would have to admit it’s well within the realm of possibility that things are not guaranteed to be a certain success. Certainly, there’s some degree of possibility that the one great scientist Argex has on its payroll, conceivably, is not certain to have achieved better results than all the scientists of SGS and CORUM and Pangang Group who have also come up with well-tested successes.

Again, Eudaimonia, #1) when you consider that even after cashing in our shares, we will still retain most of our interest in KWG and Argex and #2) when you consider, our investments in KWG and Argex, conceivably, could turn out to be less than sure things, “blowing a half million on these grassroots projects” (as you put it) may not be as mindless as your first impression.

Revisit “these grassroots projects.” Consider the possibilities of success and compare that to sitting back and waiting for success at KWG and Argex. To bring the projects to fruition, compare the required capex of “these grassroots projects” to the capex of the KWG and Argex projects.

When making overall comparisons, also compare the valuation the market is giving to the KWG and Argex projects to the valuation the market is giving to “these grassroots projects.” That’s the whole name of the game. Question Number One is: Will the market significantly improve the valuations it presently gives KWG and Argex as their projects progress (or not progress)? In comparison, Question Number Two is: Being that Fancamp’s “grassroots projects” presently are valued at nil, what are the chances that Fancamp can develop evidence that the nil market valuations should be upgraded to something significant?

http://agoracom.com/ir/Fancamp/forums/discussion/topics/623177-lamelee-update-9-19-2014/messages/1953672#message

http://agoracom.com/ir/Fancamp/forums/discussion/topics/624940-fancamp-reports-assay-results-of-5-intercepts-from-3-holes/messages/1959646

I don’t think it fair to dismiss the Second Question out-of-hand. Also, even if the First Question fares better, we’re going to reap most of return from it apart from the shares we sell.

So far as our new ventures into New Brunswick, add that to what we’re doing in Quebec south of the St. Lawrence, at the same time keeping in mind, “The Company intends to apply to New Brunswick’s generous exploration grant system to finance preliminary work on both these properties.”

http://www.marketwatch.com/story/fancamp-acquires-options-on-bonanza-grade-gold-quartz-vein-property-in-the-st-quentin-area-of-nw-new-brunswick-together-with-a-brand-new-base-metal-discovery-property-in-the-same-district-2014-11-19-171732227