Value Microcaps Junior Miners

[CrocHntr]

FMA.TO - First Metals - Undervalued Copper producer?

This one looks pretty good to me. It's currently trading at .78.

Positives:
- current producer (as of Dec)
- Should produce 2m lbs per month (23 million total due to start up in Jan/Feb)
- 20m drilling campaign to add to reserves
- Exploration Upside with Duprat project
- Any outstanding warrants are >= $1.35 / sh
- Safe region - NW Quebec
- Cash flow positive (recently reported by mgmt)

Negatives:
- Small resource life of approx 5 years
- 20m long-term debt
- Somewhat of a high cost producer
- Fabie Bay will be depleted by Q2 of 2009. Plans are to have Magusi River U/G running by then to take up where Fabie Bay leaves off (and add some zinc/gold/silver revenues as well). This could lead to a disruption in production levels in 2009.
-Capex required for Magusi - Current cash flow should help with much of the costs

Using current prices and estimated costs, I get the following:

43m shares outstanding (AFTER the 10% distribution to Globex required at commercial production stage) / Does not include warrants out of the money

23MM lbs Cu in 2008
Est Cu price: $3.25 (it's $3.75 today)
Est "all in" cash costs $1.50-$1.75 - I'll use $1.75 to be safe

Total Cash Flow: $34.5m
Trading at 1.25 x cash flow

It seems fairly undervalued to me.