Australia's largest stock trading and investment forum Australia's #1 stock forum

DRM

1.80%

54.5¢ doray minerals limited

The coy has no net debt. T2 of the CR was banked after the Qly...

First 27 Last

Share
Profile

Follow
smartdude

1,684 Posts.

103

26/04/18

13:04

Post #: 32693791
Share

Originally posted by plough ↑

Yes going to get interesting , three scenarios I see over Andy Well (AW) are
1) status quo with plant and mine staying mothballed .
2) After obtaining finance in the short term or once there is sufficient funds from cash-flow reopen AW with extending the decline down to 100 meters below the ore body
3) Break up the assets at AW , with the plant re-sited at to for example the Rothsay gold project (RGP) with a 10 EGA for 8 DRM script offer to EGA shareholders , and then eventually sell off Andy Well in-situ resource.

Both options 2 and 3 seem more viable now as the company is proving to be a low cost operator .
Option 2
I feel the MD LJ has shown he has more ability in lowering AISC by future proofing production at Deflector , than the previous MD at AW given this last quarter looks like before taking into account the placement cash injection, Deflector had a positive cash-flow of between $7 to 8 M, with development still pushing ahead of stopped panels and step out drilling still taking place . which makes opening AW seem more viable if there is sufficient OVM after development costs .
Option 3
LJ's talent could be just as applicable in lowering AISC if he were to be running RGP or a similar project and unlike with AW which in the short term would not need to be financed and/or having a placement, the likes of RGP could be done with a script offer if the right negotiating team of board members were involved .

Further into the future :
The Net debt is near zero , it would be good to borrow money if the return and risk on a future project was worthwhile from a WACC view point.
If by combining leveraged equity with a project having a greater than a 1.5 ratio of NPV to Enterprise value (assuming low intrinsic risk after sufficient due diligence ) then a strong business case could be made for buying into that project .
That strong business case is further enhanced as spreading admin costs and talent over more than one mine should result in admin costs per oz becoming lower so there is a possibility for a 3 mine scenario further down the track - maybe MGV with a tolling agreement with West Gold ?
My over riding reservation though is while I am confident in LJs ability at running Deflector I am not confident in the Board's recent individual historic ability at negotiating deals with other companies although welcome to be proven wrong for the future .
LJ has enough on his hands with organic expansion rather than M&A so at this stage so I see Option 1 of mothballing AW and concentrating on Deflector, and exploring tenaments close by as still the best option .

The above is not investment advice , I have no hard rock mining experience and I welcome to be contradicted

Expand

The coy has no net debt. T2 of the CR was banked after the Qly Report.

DRM Price at posting: 30.5¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

HMI

Global Lithium up 13% as it joins the ranks of battery metal players pivoting to gold

OAR

Chris Judd's Talk Ya Book: Orthocell building on 'enormous potential' with steady growth - and US push to come

There are more pages in this discussion • 2 more messages in this thread...

First 27 Last

Add DRM (ASX) to my watchlist

The coy has no net debt. T2 of the CR was banked after the Qly...

Top Stories

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

Global Lithium up 13% as it joins the ranks of battery metal players pivoting to gold

Chris Judd's Talk Ya Book: Orthocell building on 'enormous potential' with steady growth - and US push to come

Featured News