"both ADN and MEP have significant other interests and tenements I think someone has previously mentioned the idea of demerging GW from both and seperating out the other assets into an exploration type vehicle"
Ah, that would be me!
I called it MEPII. I still think there's a chance ADN will bid for MEP. MEPII is a way to keep the MEP board happy since a merger fails without their support.
There was a question of relative valuation.
One guess is that the mkt is thinking ADN is overvalued and is trying to close the gap via shorting. IMHO there's a big CR coming. That has implications for MEP. But before we go there let's take a look at another valuation methodology.
I know nothing about FYI. It is a contender in the HPA4N space and has a MC of $170m. James Marsh thinks ADN has a better HPA4N project. Could it be valued at $170m? ADN has a better quality feedstock and what appears to be a proven technology. We should know more soon.
ADN's MC is ~$400m. Let's accept JMs assertions and value ADNs HPA potential at $170 then GW is worth $230m and on that basis MEP is worth $76m. Current MC is ~$58m FD. Mt Hope could be worth $10m. What's the premium for being project operator remembering that ADN will get a 3-5% management fee from MEP.
I don't buy that valuation calculation but I thought I'd put it out there for comment.
Another leftfield speculation: What if you knew ADN was about to make a scrip bid for MEP? Is it worthwhile shorting ADN since buying MEP might bring you to the attention of ASIC? Nah, that sounds farfetched! Yep, CR sounds the most logical and I have had confirmation that the Morgans network had a presentation last week. Beware!
Re the CR: JM has said new CAPEX will be ~$100m. From what I have been able to glean from various interviews/presentations JM has said the plant will be built to specifications for a 500ktpa plant except for the additional hyrdocyclones. I have no idea what they cost. So I'm going with $100m. Based on what I know funding will be around 60/40 debt/equity, definitely not higher and perhaps 50:50 which is where I land based on bankers being wary of opaque markets.
So it looks like MEP will need to raise ~$15m. Are you ready for that?
Maybe it's time to bring in a cornerstone investor or kaolin/halloysite mkt player.
They are going to get a high quality project very cheap. That's the advantage of being an industry insider. Fund managers & brokers haven't got a clue about kaolin & halloysite so it's left to retail. Unfortunately, a lot of retail investors think MEP is a copper/gold play. Witness the selldown last year during the SPP at 5c when Bigfoot/Seer drilling turned up dust.
Perhaps our best exit is via a takeover from Imerys or Sibelco for 25 cents.
