Hello Fishercat.

Regarding the Argex NSR, you asked me “to take a swing at what FNC’s NSR would translate to in real dollars if Argex does indeed come on line in two years as they promise.” Also, you asked me what I “think it would mean to the Fancamp investor (in price per share or dividends).”

Fancamp’s asset pool is so deep and wide and has so many streams feeding it; in terms of its huge scale, I think of it more in terms of what would be typical for a fund of companies to own, not one company to own. The longer the investor’s attention span, the easier and the faster it is to come to the realization that the price of FNC shares is completely disconnected from the underlying reality of FNC’s assets.

I believe my estimation of the situation is reasonable and realistic. All you need do—for the picture to become more and more unmistakably clear—is read the company’s publically disclosed information and take all the time it takes to add up all the numbers. While doing this, vanish from your consciousness the share price, whose only basis is ignorance (which is driven by the present disinclination of nearly all people to pay close attention to how they invest their money).

Not to put too fine a point on it, my conclusion is that—even on a speculative level—our assets are worth, as a whole, in the low billions of dollars, even with the limited information about them we presently have. Our “market cap gap” (to coin a phrase) is a thousand times over, when you compare our billions of dollars in assets to the millions of dollars in our market cap currency.

My confidence in having said that is not matched by any confidence I have in my ability to predict the manner in which the Shareholders will reap their rewards. But one way or the other, well-rewarded we will be. That sums up my answer to the second part of your question.

To answer the beginning of your question, first off, I don’t think Argex, likely, will “come on line in two years as they promise.” Indeed, optimistic timelines are predictive—insofar as being predictably wrong every time. Even if the promise were fulfilled, there are far too many unknowns and other variables, which, surely, will discredit any specific NSR forecast (of mine or of anybody else). When you’re talking two or more years down the road, in an uncertain environment (to put it mildly), it serves no good purpose to hazard guesses of how this or that will play out and what the actual numbers will wind up being. But, of course, that doesn’t mean the numbers are nonexistent; or that they’re going to be no better than zero.

By the way, I’ve developed investment guidelines, which, increasingly, serve me well. My experience with Fancamp and with other investments over the last three years are examples. Even though I’m way behind with Fancamp, I more than made up for it elsewhere. And that’s saying something!

So far as the long run, first, I trust market cycles and empirical evidence. Second (and less important), I listen to every word the CEO says and watch closely every deed the CEO does. So far as outsider opinions and forecasts, I’m uneasy when I’m in agreement with them. When the empirical evidence tells me to do something, I obey. But it’s even better when—in addition to (my kind of) empirical evidence being there—the investment prognosticators are on the wrong track and are recommending the direct opposite of what I did.

Concerning Argex, as well as others, in the middle of a message I posted in September, I referred (as part of a more general discussion about our undervaluation) to NSR statistics extrapolated from resource tonnages by Market Equities Research Group:

“We have NSR agreements with all four of our major partner companies (on top of long-shot NSR agreements with others). The NSR returns probably will wind up exceeding (by a wide margin) the value of the securities we hold.

“I realize estimating future NSRs is far from an exact science. But at least Market Equities Research Group lays out the rough ballpark figures and gives us the general idea (regarding two of the four major projects that we farmed out). On page 8 of their 18 page Fancamp Exploration report of April 15th, so far as just Lamêlée alone, ‘Although early stage, the 43-101 resource estimate provides an indication of what the royalty value may ultimately be under a production scenario.’

“The accompanying Market Equities chart (on the same page) gives $15 million as the estimated annual royalties and estimates $300 million as the royalties for the life of the Lamêlée project. Later in the report (on page 16), under the same kind of ‘production scenario,’ the Lac La Blanche Project at Argex is estimated to pay Fancamp annual royalties of $3.5 million in years one and two and $7 million annually thereafter. The estimated payout is $160 million for the life of the La Blanche Project.

“Adding together the Lamêlée and Argex NSRs, we get the very rough estimate of somewhere between $18.5 million and $22 million of annual royalties. If we were to include the Champion and KWG royalties (leaving out the long-shots), obviously our receipts would be higher (possibly much higher).”

Today, I will add the disclaimer that my personal ability (on my own) to estimate future NSR returns is nonexistent. The point I was making earlier (in the text of my earlier message, taken as a whole) concerned the broader question of how far disconnected our market cap is from the reality of our assets. So far as my own opinion of the possible future value of our NSRs—plain and simple—I haven’t any education (or even self-education) as to how to make the requisite estimates and do the requisite financial calculations.

My contribution to the discussion of this subject is only to encourage us all to give some serious thought to what we already know. Just because the nature of an asset is its likelihood (or unlikelihood) to be productive in the future does not mean its present worth is zero.

Obviously, the market is completely ignoring our NSRs. I cannot imagine that even their speculative value is not well up into the tens or hundreds of millions. As we all know, there are numbers of public mineral-royalty companies that are prospering with royalties as their sole source of income (even after writing off the royalty agreements that expire worthless).

I’m only pointing out the investment logic of the situation. So far as pinpointing the dollar income, all I can do is reference the others who have done the financial modeling (which doesn’t seem to me capable of producing unassailable hard numbers).

By the way, in my September message, I did not get around to quoting the figures Market Equities Research Group laid out on page 17 of their report.

“$168.0 million” = “Potential NSR Value” = “Lac La Blanche (RGX).”
“$273.6 million” = “Potential NSR Value” = “CFLN (CIA).”
“$201.5 million” = “Potential NSR Value” = “Lamelee Fe Property (LIR).”

“$100,000” = “Advanced Royalty” = “Lac La Blanche (RGX).”

“???” = “Potential NSR Value” = “Koper Lake (BOL.V, KWG.V).”
“???” = “Potential NSR Value” = “Turgeon Lake (URC).”