First thought was: It has to be PMD somehow - but dropped letter that fell against the collar and imprinted itself on the high points of it to be passed onto this coin? (I know a very long reach there)
Part of the problem is that the images present us with a photographic illusion wherein the grooves in the reeding appear raised and the ridges of the reeding appear recessed. Once you mentally correct for this misperception, it's clear that these letters are confined to the ridges and that they represent contact marks from another coin. In other words, this is post-strike damage.
Things aren't the way they are on the first glance. Sometimes this gets me looking at pictures. I have to look away for a while before I can see it right.
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