Jco19, Bigfatsirion has caught the historical contract part of...

Jco19,

Bigfatsirion has caught the historical contract part of it in his post. The interesting part comes when you delve into the strategies that are likely to be used by both MYL and Perilya in advancing their respective interests.

MYL have a license which entitled them to mine the existing pit material but that license is not sufficient for the scale of mining that MYL will initiate next year. IF, a party was interested in taking over MYL or in providing finance for the mine development, then the granting of the remaining licenses early 2020 would likely act as a catalyst. It is obvious from the arrangements struck by MYL and Perilya that both companies see the extraordinary upside of the Bawdwin project and that both parties see the potential for either path to unfold, finance or take over.

The last three months has seen continuing exploration which has dramatically highlighted the growth of high grade ore that will occur, probably for decades to come. MYL have only drilled a modest number of holes but the widths and grade discovered have been extremely satisfying. The obvious takeaway, (which many of the share holders, MYL and Perilya would have appreciated from day one) is that this is genuinely a wealthy mineral province and the rewards will be reaped for decades to come. Some estimations I have heard are a minimum of 50 years mining. They have proven the usefulness of EM exploration techniques in their region, they have started by finding two new discoveries within short distances of the main mineralised area within a few months with a modest exploration budget (imagine what they could have done if the focus was on exploration and not developing the China pit). The most recent looks like developing into a VERY High Grade copper/cobalt ore body. There are a further five areas pinpointed already and I personally have no doubt that there will significant further successes there. The next 12 month drilling will be revealing. There is also the suggestion that the entire mineralised region could have a high grade copper/cobalt footprint at depth. It has been my thought and hope since I started researching the area that this would be the case. So, MYL could end up with the 'world's best lead/silver project' underlain by a world class copper/cobalt resource (though still to early at this stage to verify that).

So back to possible strategies. Perilya's parent companies are listed Chinese public companies but which are majority owned by the Chinese government. The immediate parent, Zhongjin Lingnan is a a very large and successful company that is focused upon the mining and processing of lead, zinc and other metals. They own mines, smelters etc. They (Perilya/Zhongjin Lingnan) have deep pockets and access to Chinese capital at attractive commercial rates. They have expressed via the above contract with MYL that they are very interested in financing and/or taking over MYL post the BFS and anticipated final mining license. They also will be free to bid for the company in the event that another company makes an offer. Given those facts I believe that any other company that is interested will launch their offer post that final license. Strategically it will be good timing and an attractive premium might secure a tier one asset. It might also start an auction and the prize that is being competed for will be much larger than the current prize. 12 months leaves a lot of room for growth. On the valuation front, keep in mind that based substantially on China pit alone (20% of the asset), the current valuations are 40c per share, there is another 80% of the resource that will find its way into the valuation metrics as MYL follows through on scoping studies for underground mining and further exploration. Currently that valuation is discounted but by early next year the reasons for the discount will be removed and the resource will have grown. I expect by this time next year the valuations could be easily 5 times greater based on the known resource. Whatever the valuation is it will be many times higher than the current price. I can't imagine Perilya letting anyone else snatch this at a bargain price, not only because they know its true value and the Chinese play the long game but because they would be surrendering their existing 20% stake at a discounted price. This could get very interesting

For all the above reasons I am confident MYL will be a very good investment over the next 12 months and I continue to accumulate and will likely do so for the next 12 months. Day to day share prices might interest traders and those with a shorter term focus but for myself I am only focused upon that 12 month out target. My personal target is in the 70c to $1 range. I think the company is worth double that but the buyer will want upside. Then again, there could be an auction. The market price ultimately will be dictated by the value in the asset.