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Gold/Mining/Energy : Fancamp Exploration Ltd. (FNC.V)

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From: stepup_keepup3/7/2014 2:16:01 AM
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Fancamp Exploration Ltd. (TSX-V: FNC) is a junior miner with ownership interests in several exceptional advanced-stage flagship properties that it originated and has since vended. FNC.V is positioned for potential extraordinary share price appreciation over the coming months and years as the reality of the large inherent value that the Company possesses is understood by the market and milestones by its partner companies are achieved.

Fancamp Exploration has been in business for 25 years advancing projects, and the business plan management initiated a couple years back appears about to yield results -- sizeable open market insider buying supports this. No capex is required by FNC.V to eventually reap substantial potential revenue from vended properties, and developments on multiple fronts are expected this 2014. Potential near-term production decision scenarios are developing at two partner companies that will entitle FNC.V eventually to sizeable royalty payments with conservative potential life of mine revenue to FNC.V in excess of $440 million.

Flagship assets involve properties that were originated by Fancamp, in order to meaningfully advance the projects and maximize shareholder value while avoiding share dilution, FNC.V sold the flagships assets for cash and shares to capable entities it refers to as 'partner companies', capable of raising money and taking projects to the next decision point. FNC.V retains equity positions in three public companies (partner companies), these shares can be sold at Fancamp's discretion to raise cash for itself if needed. Even more important for readers to understand is that FNC.V owns royalties on ALL properties, and some of these royalties, in part, hold staggering return potential for shareholders of FNC.V.

Flagship assets and key interests of Fancamp Exploration Ltd.:

1) FNC.V owns 15.025 million shares (representing ~10%) of Champion Iron Mines Ltd. + Royalty (CHM.TO -- trading at ~$0.35/share as of Feb 25, 2014). Champion has a preliminary feasibility study on its Consolidated Fire Lake North (CFLN) project within its Fermont Holdings in Quebec (delineated 5.1 Billion tonnes of NI43-101 compliant iron ore resources). FNC.V owns a 1.5% net smelter royalty (NSR) on the Fermont Iron Holdings. Champion has recently entered into agreement with Mamba Minerals to create a new iron ore company to be named "Champion Iron Limited". It is believed this new entity will be positioned to see projects through to fruition. An upcoming CFLN Feasibility Study will evaluate the potential to produce 20 Mtpa of iron concentrate, and according to Champion that is more than sufficient volume to economically support an independent railway. Champion has also increased and upgraded the project's Global Mineral Resource to 3.567 billion tonnes on the CFLN project compared to the PEA; using a 15% FeT cut-off grade it sits at 746 Mt at 31.1% FeT Measured & Indicated and 2,821 Mt at 28.8% FeT Inferred. In short, it is conceivable we may see CFLN producing within 5 years, assuming the upcoming feasibility and related decisions unfold as many expects it to.

Eventual royalty 1 -- near-term production scenario: FNC.V's 1.5% NSR on Champion's CFLN project will translate to large royalty payments; Mining MarketWatch Journal guesstimates that at 10 Mtpa it might translate to somewhere in the neighborhood of ~$6.5 million to FNC.V every year. The upcoming Feasibility Study is considering the potential at 20 Mtpa. We calculate potential NRS mine of life royalties to FNC.V on CFLN at conservatively $273.6 million.

2) FNC.V owns 6 million shares (representing 4.5%) of Argex Titanium Inc. + Royalty (RGX.TO -- trading at ~$0.82/share as of Feb 25, 2014). Argex has a patented and proprietary titanium extractive technology it plans to take to industrial production, it is the only TiO2 process that can effectively extract TiO2 from ores containing different contaminates such as MgO, V, Cr, etc. Argex also has a couple of properties that originated from FNC.V, including the La Blache Fe-Ti-V property in Quebec where the current combined initial NI 43-101 compliant mineral resource estimate totals 30.88 Mt grading 18.78% TiO2, 63.29% Fe2O3 and 0.45% V2O5 in the measured and indicated categories with an additional 2.87 Mt grading 18.67% TiO2, 63.06% Fe2O3 and 0.43% V2O5 in the inferred category. FNC.V had 9 million shares of RGX, and sold 3 million of its position last year for $2.1 million. FNC.V owns a 2% NSR on La Blache, rising to 4% two years after production. This 2014 FNC.V is entitled to, and expected to receive, $100,000 in advanced royalty payments from RGX in 2014.

Eventual royalty 2 -- potential near-term production scenario: A highly positive Feasibility Study was completed for the project (Oct/13) and Argex management now appears to be moving forward to put a mine into production – assuming ore from La Blache, this would mean royalty revenue for FNC. This would mean royalty revenue for FNC. The production forecast is for 50,000 tonnes of TiO2 per year for 25 years (1.25 million total tonnes). At a price of roughly US $3500 / tonne, this would generate annual gross royalty revenue of $3.5 million for the first two years (2%), with $7 million in royalty revenue (4%) for all subsequent production. Life of mine revenue would therefore be $168 million to Fancamp using the figures in the Feasibility Study, which represents only a portion of the total deposit.

3) FNC.V owns 43 million shares (representing 59.4%) of Lamelee Iron Ore Ltd. + Royalty (LIR.V -- trading at ~$0.17/share as of Feb 25, 2014) (formerly Gimus Resources, the subject of recent a reverse takeover performed by FNC.V). LIR.V is advancing the Lamelee South Iron Property in Quebec. In Q2-2013 FNC.V released an initial resource estimate on Lamelee South revealing Inferred Resources of 520Mt @ 39.5% Fe2O3 (27.6% FeT). The Lamelee South deposit is interesting from an economic point of view as it has a lot of iron formation squeezed into a relatively small area, a study indicates 100% of the Inferred Resources are in the pit shell (the area where the mining is expected to take place) (Note: DDH LS-12-23 yielded 333 m @ 41.7% Fe2O3 (29.1% FeT)). The team tasked with advancing Lamelee are the same individuals that started up the Consolidated Thompson's iron ore operation at Bloom Lake, they advance that project to buy-out, and in the process they brought the stock of Consolidated Thompson up to where they sold it for $17 per share in 2011. The plan is to replicate that success at Lamelee Iron Ore Ltd. The immediate plan for Lamelee is to delineate the deposit further, conduct metallurgy, and conduct a PEA, which should lead toward Feasibility in 2014, with a target of production in 36-48 months. FNC.V has retained a royalty of 1.5% of the net sales price of minerals extracted from the Lamelee Iron Property.

4) Koper Lake Project, Ring of Fire - Ontario, adjacent Noront Resources Eagle's Nest Discovery (~400 metres to the southeast) + Royalty. FNC.V is the original claimholder and is vendor to Bold Ventures Inc. which has an earn-in option agreement for up to 100% working interest on the Koper Lake Project. If Bold fulfills all its requirements the deal will generate $16.5 million cash to FNC.V, and a Gross Metal Royalty (GMR) on the project. The GMR entitles FNC.V to 2% (scalable up to 4% under certain conditions) of total revenue from the sale of all metals and mineral products. The Inferred Mineral Resources sits at 46.5 million tonnes grading 38.8% dichromium trioxide at 20% cut-off, and on-going metallurgical work shows chromite amenable to reduction into metalized chrome and iron using natural gas. Bold and its partner KWG Resources are advancing the project having announced plans to spend $2M to drill down-dip extension of the resources. FNC.V is owed $500K this year from Bold and will have a remaining ~$15 million due as the deal progresses.

5) FNC.V has a 46.7% ownership interest in its private subsidiary Magpie Mines Inc. (advancing toward spin-off). The Magpie Iron-Titanium-Chromium-Vanadium deposit in Quebec is considered to be among the world's largest undeveloped titaniferous magnetite deposits. NI 43-101 Mineral Resource released in 2012 sits at 928.4 Mt @ 42.3% Fe(T), 11.2% TiO2, 2.6% Cr2O3, 0.3% V2O5. Resource growth potential appears readily achievable as the current compliant resource is only on one section of a larger historically-known deposit. The deposit has significant relief (a mountain rising from the ground) and appears ideal for an open-pit scenario. In Q4 2013 the Company signed a Memorandum of Understanding ("MOU") with the Pangang Group of China which included the possibilities of technology exchanges with respect to Pangang’s smelting and beneficiation processes and their possible applications for the Magpie deposit. Metallurgical work performed in 2013 by a scientific group from China, interested in perusing the Magpie deposit, has dramatically upgraded the economics of the project; Metallurgical test work from SGS Lakefield and Sichuan Non-Ferrous Metallurgical Institute of China has yielded a TiO2-grade to ~98%, and meets the specifications for marketable synthetic rutile products. In addition, a three-stage grinding/magnetic separation produced acceptable results for Fe-concentrate with a grade of 55% Fe and recovery rate of 89.5%. Further metallurgical test work will be performed on Vanadium and Chrome in the pig iron, as well as improvement on the aforementioned TiO2 beneficiation test results.

Magpie Mines Inc. is a private company right now, 47% owned by FNC.V and another 47% is owned by the The Sheridan Platinum Group Ltd which participated in its staking. FNC.V's objective is to spinout the entity in the next 12 months, obtaining cash, shares, and royalties as per its business model.

6) FNC.V owns NSR on Uracan Resources Ltd.'s Turgeon Lake Uranium Deposit. The deposit also goes by the name 'North Shore Project' in Quebec. The current NI 43-101 Mineral Resource sits at Indicated of 21.5Mt @ 0.014% U3O8 (3.1M Kg), Inferred of 140.7 Mt @ 0.012% U3O8 (16.8M Kg). FNC.V's owns a 1.5% NSR for the first two years of commercial production, increasing to 2.5% thereafter.

7) Desolation Lake Polymetallic Project, Ontario (advancing toward spin-off) (Ownership: 80% Fancamp, 20% The Sheridan Platinum Group). The project hosts a 15 km magnetic trend located in James Bay Lowlands and has potential of substantial mineralization. Recent drilling has yielded impressive numbers, including 422 m @ 28.6% Fe(T) or 40.9% Fe2O3. FNC.V has plans to perform further exploration to delineate the size of the mineralized system and produce a NI mineral resources on Iron, Limestone. FNC.V's objective is to spinout the entity, obtaining cash, shares, and royalties as per its business model.

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Cumulative discounted inherent net asset value of key interests listed above dictate Fancamp Exploration Ltd. will trade substantially higher

FNC.V has 139,189,153 shares outstanding (~171M fully diluted) and trades with a current market cap under $15 million. Tallying up the numbers, it appears FNC.V is dramatically undervalued and poised for upside revaluation; FNC.V owns over $17 million in with negotiable securities (listed above). FNC.V also has ~$1 million cash in the bank, and it does NOT have cash burn-rate issues as its best course of action on most everything is to monitor multiple partner company developments. Near-term cash availability (on top of current ~1M cash position); FNC.V is due $500K from the Koper Lake (Ring of Fire) deal this year, and is due $100K from RGX this year for advanced royalty payment, plus it has 6 million shares of RGX currently valued at $4.92 million.
Source copy used with permission:

FNC.V's market cap is less than its securities & cash value, ignoring interests in multiple properties that are significantly advanced, including potentially multi-millions per annum in royalty payments on the horizon with Champion at Feasibility, also ignoring the >$15 million earn-in payments due from Bold (Koper Lake deal) if taken to completion, and ignoring the inherent value of ~1 billion tonnes of iron ore at Magpie it will likely spin-off, among others.
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