Bye MEL, page-3

tomh - my take on your points:

- by loaning the 7.8m to BYE, MEL have a caveat over BYE's share of SM 70/71. i.e if they can't repay we appear to be a secured creditor.
- the 7.8m MEL is 'committed' to pay is a convertible note, earning the company 2% in advance and 12% in arrears on the drawn funds.
-if BYE don't draw a portion of the funds within 6 months they lose access to the undrawn amount

Bivouac Creek looks like a good project, however anticipated flow rates - if the amounts quoted are gross, appear to be quite low for the drilling cost.

This to me is a good first entry. No ongoing expenditure needed - allowing MEL to generate revenue while looking for more options. It also allows the company to tap into the upside of BYE through the options, and gives them optionality through the first preference farm-in partner part of the deal.

In essence we really do have the better end of this deal. SM71 looks like a cracker (so many zones with shows), with the successful well derisking MEL's investment considerably. A successful well also means cashflow, so even if BYE for some reason go under MEL's caveat on the lease will more than make up for it.

It appears as though you skimmed over the interest and caveat parts of the deal. This really does appear to be a financial investment, with the option of acquiring exploration potential if desired. This isn't a case of paying cash to another entity and not getting anything back.

The only thing that has me a bit concerned is the flow rate anticipated at Bivouac Creek, however even at anticipated rates and costs it would be a 3 year payback period, which is not too bad given the size of the anticipated resource.

All in all a good deal for mine; just a shame that the SP has suffered as a result of what appeared to be entities such as KBC buying up in the hope of a wind-up and distribution.

My quick maths says that with the 20.9 million earning 3.3-3.7% and the convertible note fully drawn there would be scope for 0.25 cents per share of free cash per annum which could be distributed or invested further.