Medallion Resources Report: There’s Rare, Unearthly Value In This Hidden Rare Earth Gem

MiningWEALTH released a report highlighting Medallion Resources Ltd. (TSXV:MDL, OTCQX:MLLOF), who is is pursuing monazite purchase agreements and processing partnerships, and plans to build a rare earths processing facility in North America.
As quoted from the report:

Medallion Resources (TSX.V: MDL) (OTCPK: MLLOF) is designing a business based on extracting REEs from the monazite sand found in heavy mineral sands tailings waste.  Monazite sand is a rich source of REEs, yet large mineral sands mining companies don’t find it worthwhile to extract the REEs themselves because the market is small and specialized (such a pursuit would be akin to BHP pursuing a $50 million project that takes years to develop–it simply won’t happen).  So it makes perfect sense for small entrepreneurs to come in to do this processing.
The company’s stock is also relatively inexpensive with a price of just C$0.03/share and 66.4 million shares outstanding.  While REE stock prices have lost tremendous value Medallion’s valuation is particularly low.  I believe this reflects a belief on behalf of REE investors that most of the value left in these stocks is in the optionality value of these companies’ deposits.  Medallion may not have a deposit (it actually has an early exploration project in Labrador whose optionality value is negligible) yet we will see it’s model incorporates other forms of optionality that are arguably greater than that realized by owning in-ground ore.  More importantly, the company has an economic project in today’s market environment.  It also has considerable leverage to higher REE prices, as we will see presently.
The market valuation reflects the fact that investors do not understand the incredible advantage that Medallion has with respect to its peers given these attributes.  Once investors realize that Medallion is a front-runner rather than a laggard the stock price will rise to reflect this reality.  I will look at a couple of valuation scenarios presently, but it is safe to say that the potential return on an investment today is extraordinary.  Note that most REE companies are trading at valuations that are 5-10 times higher despite the fact that they have relatively high risk projects that don’t make sense given current prices.  Even the most valuable companies–Lynas, Ucore and Northern Minerals–are all working on projects whose economics are dubious in today’s market environment.  There’s no reason why Medallion should trade at a discount to virtually all of its peers, yet several justifying a premium valuation for the space.

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