Hi Guys,I have an indirect holding in MEY through a direct...

Hi Guys,

I have an indirect holding in MEY through a direct investment in Polo. I have been reading through the threads here recently to get feeling for MEY's prospects. I also have a direct holding in BMN for the last 18 months.

I have gone over many of the valuation scenarios of the miners in Namibia, and are more or less up-to-date on many of the issues surrounding the move from explorer to developer, in this country.

Initially, a couple of comments I would make:

(1) FSY have other assets apart from the Valencia deposit, which makes a direct valuation on ppms or lbs in ground impossible.

(2) EXT opex costs are much lower than BMN's (25 v. 38 ) because they have double+ the grade. I would imagine that the cost per tonne of raw ore processing would be similar.

(3) I do not know how AREVA have a opex of $20 /lb for Trekkopje. Due to shallow nature of deposit? i.e. I haven't seen a breakdown of cost of haulage + drilling + blasting costs...eg cost of getting ore to precessing plant.

What is the capex for MEY? Will it be a viable deposit to set up it's own processing plant? AREVA is the logical one to take MEY over, and use an existing plant. But they may be happy just to maintain a blocking stake in MEY, and wait till they actually need the ore to process. That could be 5 or 6 years away.

When PDN did their rights issue and raised $400M+, I thought there would be a general consolidation of these smaller deposits by the majors. EXT taken out by Rio; PDN take DYL; AREVA take out MEY, etc..... to date; NADA.

I think any company, in the next 3 to 4 years, that does not get an end user investor or off-take agreement, will struggle and ultimate fail. Whilst there is secondary supply of 30% available in the market, U3 price will remain flat.

Also, as the U3 price is pretty insignificant to reactor operating costs, I would imagine that big end users would be happy enough to lock into supply contracts with existing majors who can show consistency of mining and supply. When AREVA and the Koreans sell the reactor technology, they also sell the U3 supply.

The U3 sector, as I have discovered, is a far more complex and difficult area to invest in, than say coal or iron ore. Don't be fooled by that fact that a lbs-in-ground valuation
looks incredibly cheap, therefore the investment no-brainer.

Anyway, just some initial thoughts. Good luck.


Cheers, Skip