Rare Opportunity for "Stupid Cheap" MEP

Here's another note from Tony Locantro, dealing with Minotaur this time.

Seems like his other missive in the RDM thread was appreciated, so will share this one here as it contains good info.

I trust Tony won't mind this being shared now.

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In my initial opinion piece on MEP I suggested a speculative BUY around 6.8c. The stock managed to run to a high of 9.3c before the Olympus drilling results were released and the stock was poleaxed. The third drill at Bullwinkle (no sign of Rocky anywhere) was another dud, however the selling was pretty much exhausted and the share price has stabilised for now. The team at MEP were responsible for the discovery at Prominent Hill (now OZL) and apart from the Mutooroo magnetite discovery and some good hits at Artemis MEP has continued its run of technical successes. Very rarely are you presented with such opportunities to buy a junior with some of the best targets you will ever see in the one company at a stupid cheap price. I believe ...both RDM and MEP as core holdings in a speculative portfolio, and the reasons for buying MEP are listed below.



At a ridiculous price of 5.9c I am recommending MEP as a VERY STRONG SPECULATIVE BUY based on,

· Strong management with technical expertise. MEP as around $4m in cash, $600,000 in investments and is only capped at $12.5m. For a junior of such quality this is beyond an insult, however it does take time to recover lost ground when drilling results disappoint. I doubt many would realise that the upside case was well beyond 20c, yet we haven’t really suffered too badly with the recent fall. The really big discoveries are rare and the last one was Sirius with Nova/Bollinger 4 years ago.
· MEP have recently announced a 77,000 ounce gold resource at Chameleon. This beat my expectations and is more than a handy start for MEP considering the potential for toll treating and/or eventual trade sale. Whilst the scope is somewhat limited this alone could eventually justify the current share price on its own.
· OZ Minerals have teamed up with MEP in Cloncurry and the surrounds of the Prominent Hill mine. MEP has literally become an exploration arm of Oz Minerals and this serves to highlight the high regard that OZL have of MEP’s geological expertise.
· MEP has delineated two new exceptional drill targets 5km north of the Eliose copper mine. Iris North and Iris South are compelling drill targets and the aim is to have these drilled ASAP.



A number of high risk/high reward targets have also been generated surrounding the Prominent Hill Mine where regional exploration hasn’t turned up anything thus far. The rocks haven’t changed since the Olympus dud, and these represent very exciting targets that could a multiple share price re-rating. At a recent industry breakfast Dr Tony Belperio (the one handed the discovery results at Prominent Hill) spoke highly of the SA targets along with the potential for Iris North/South to represent another Eloise.
· MEP’s industrial division (Kaolin, gypsum and other goodies) that is rarely discussed helps to underpin the $12.5m market capitalisation along the iron ore discoveries along the Braemar formation.



The best time to BUY and SELL a stock is when you don’t really want to. With MEP you are buying all the bad news a throwaway price, yet could provide a discovery and re-rating in similar ilk to the Artemis hits in 2014 that saw the share price hit 30.5c. The gold resource of 77,000oz is very handy and adds value, along the JV’s with OZL and JOGMEG. Take into consideration MEP’s technical expertise and ground with multiple “powerball” targets and you have one of the most attractive risk/reward profiles in the junior resource sector. VERY STRONG SPECULATIVE BUY up to 6.5c if required.