Given the drilling to date has been done via depth-limited hand...

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acceler8

90 Posts.

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09/05/23

17:37

Post #: 67685019
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Originally posted by 2ic: ↑

I posted this back on 1st May about the MRE size and depth expansion potential being the last in a well planned and rolled out news flow pump.
https://hotcopper.com.au/posts/67540987/single
Not that it's not the real deal so far as ICD's are concerned, just that at some point further exploration doesn't materially add value beyond the current MC in context of the long feasibility journey and Lassonde Curve gravity. Savvy traders/investors anticipate the obvious (eg very large MRE announcement) and recognise when further upside spin simply spins share price in the mud of Disallowed profit takers who got set earlier in the pump. Like it or not, believe it or not, just my 2c worth.... but I note shares are still trading lower today despite even enlisting the Australian (who must be doing advertorials for invoices and/or to frontrun their BS) a couple of days ago to perpetuate the 'upside surprises still dropping'...

Readers should treat MRE's, as all ASX releases, with a degree of caution because they are subject to a certain amount of subjective assumptions which may add padding. I'm reminded of that with yesterday's Drilling Update release to chase the clays at depth and add even more tonnes to the already more than matters tonnage (although deeper pits are more economic and thus better obs). Case in point, the MRE they released was large, largely because they added 5m depth below all drill holes up to 25m total depth across the entire deposit. Given the average hole depth for the MRE is 10m they added 50% depth (and thus 50% extra tonnes) to the MRE on the assumption both the clay extended 5m below all mineralised drill holes and that this clay would leach the same as clay higher up the laterite profile (both at risk of failure)

The way I see this 100km AC drilling programme, is they now have to cross their fingers and hope drilling proves the extra tonnes added with the stroke of a pen exist and critically it leaches with similar recoveries as the clay higher up (ie used in previous met work by the Japs and MEI). HC is full of breathless praise at the MRE upside at depth, blissfully unaware the upside has already been added on 'in aggregate'...

In short, buyers are actually buying upside already included, at risk of even being downgraded, from sellers who are both taking profits on a well-run news flow campaigned and probably also in the know that everything including the kitchen sink has already been thrown at the upside story. Now comes the long slog to keep the CR's coming, paying out the vendors and proving reality at least matches the upside sales pitch.

GLTAH

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Given the drilling to date has been done via depth-limited hand augurs it is a reasonable assumption that they will be able to get deeper with proper drilling rigs. Adding an assumed depth (to a max of 5m) is theoretically aggressive but in practice is likely to still prove conservative given what they already know about the extent of the clays. And not to mention they have only drilled a small portion of their total acreage, and clays are most unlikely to stop at the current drilling boundary. Having said all of that, at some point more reserves become less relevant than tangible plans to mine

MEI Price at posting: 14.5¢ Sentiment: Buy Disclosure: Held
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