Kaiser Express 96-2

February 26, 1996

Botswana Elephant Hunt gets Funded

In the January-February 1996 issue of the Kaiser Bottom-Fishing Report dated February 14 I made a strong case for investing in Fancamp Resources Ltd (FNM-V: $1.19) and Freewest Resources Canada (FWR-TM: $1.15) as a speculative bet on an elephant longshot in Botswana. At the time of writing Fancamp was still at $0.60 and Freewest at $0.80, so I felt reasonable buy limits were $0.80 and $1.25 respectively in the absence of a financing earmarked for the Botswana Elephant Hunt. This is a grassroots exploration play on the recently inferred Kalahari Suture Zone, which is believed to have potential for nickel-copper deposits similar to those of the suture zone that hosts Voisey Bay and the Thompson nickel deposits. A detailed writeup can be found in the Jan-Feb issue. On Friday, February 23 Fancamp announced that Sprott Securities had agreed to broker a private placement of 2 million units at $1. Each unit consists of 1 share and a 1/2 warrant exercisable at $1.25 for 6 months and $1.50 for 12 months. At present the deal is a best efforts issue, though Sprott has the option of underwriting the deal and scooping 200,000 warrants as a bonus on top of the 10% commission. Sprott has been an aggressive fundraiser for companies like Intl Curator and Atna, to whom it introduced the deep pockets of Adolf Lundin. The speed with which Peter Smith has secured this financing is a very bullish sign for Fancamp and Freewest. Bob Mason, the academic from Queens who recognized the Kalahari Suture Zone and who has been busy teaching Canadian geologists all about exploration methodology, is rolling up his sleeves for a lesson in applied theory. As Diamond Fields investors cash in their chips, the Botswana Elephant Hunt of Fancamp and Freewest is a natural substitute for a portion of those profits. Fancamp plans to start flying the 100% owned 1.6 million acre Gemsbok block first, after which it will fly the remaining 1.8 million acres it shares 50:50 with Freewest. We probably won't see an orebody before next year, which makes this a perfect long term play. I think the audience for Fancamp's Botswana Elephant Hunt has just begun to develop and that much higher prices are in store. What is a reasonable valuation at this stage? Fancamp and Freewest will each have about 16 million fully diluted shares and $2 million working capital. At current prices the implied project value is $30 million for the shared ground, $15 million for Fancamp's 100% ground. Given that NDT Ventures boasted a $200 million implied project value for its comparatively small coverage of the Nain/Churchill suture zone, a target of $3-4 supported by another round of financing is not unreasonable for Fancamp and Freewest. While there is not yet a Voisey Bay deposit known in the vicinity, if there is such a deposit, Fancamp currently owns at least half of it.