MINMET PLC FTSE MNT

Investtech.com actually categorize MNT as being within an approximate Horizontal trend rather than a long term down trend as follows:

' Watch candidate (27 Dec 2001) [Auto] Help
Has fallen 73% since the peak on 7 Sep 2000 at 40.00. Is within an approximate horizontal trend, which indicates further development in the same direction. Has reacted back after a possible false break of a inverse head and shoulders formation. A decisive break up through 12.02 will again give new positive signals to the stock, while a break on the opposite side of the formation will be a strong sell signal. High risk with an average difference between the lowest and the highest price of the month of 30%.'

As for Sungem, it looks highly promising with Zinc grading between 0.1 and 18.2% BUT we must not forget that it is a scout hole and crucially just one hole out of five. So much will depend on the results of the remaining holes and whether this confirms or contradicts the initial results.

Thereafter the company is expected, according to the Investec note, to carry out geochemical, IP and magnetic work before committing themselves (and funds) to further drilling. I assume this to mean finding both extent and precise location as part of "proving up" a resource. Only then can a realistic assessment be made as to whether the discovery is commercially exploitable or not.

If this is proved to be a resource, commercial viability will also depend on cost of production to a concentrate stage, presumably on site, and the ease / cost effectiveness of transportation to where the concentrates can be smelted by the buyers. Of course, Minmet may prefer to JV, go it alone or even sell the project collecting a down payment and an ongoing royalty.

To assume that the find is commercially exploitable at this early stage is highly dangerous. To dismiss it before production costs are known simply because of a depressed zinc price is, in my opinion, naive.

I continue to hold a long position in Minmet so do your own research very carefully as always.

Nigel Mutter
ps Thanks for the very informative post Richard.