fundamentals

Today most of the postings have focussed on the DMA share price after the announcement, which is understandable if one of the following apply

1. You are a day trader
2. Trading on borrowed funds ( which I think one should not do)
3. Have a pre-disposition to worrying
4. Feel that you do not understand the fundamentals
5. Not sure whether the directors can meet future milestones

Worrying is something that does not help anybody and actually is unhelpful, as it leads to negative thinking and negative results.

What counts is to understand the fundamentals and check them with a competent geologist who has had success in the past.

Therefore, I would like to address points 4 and 5, noting that I am not a geologist but have asked several eminent geos a stack of questions about DMA's deposit and compared it with Brockman in some detail.

FUNDAMENTALS:

1. China and India are very hungry for Iron Ore. China has little or no Iron Ore, and its steel requirements going forward are very large. India has Iron Ore, but has significant local issues with its Iron ore.

2. BHP, RIO and Vale control the International Iron Ore Pricing and thus pricing has a floor. Most analysts are
predicting >$125 per ton till at least 2014. Even at a sale price of $67 ( assumption in Patersons October report) Brockman's profit per ton is estimated to be $23 a ton on production of 17mt per annum. So we are talking about large numbers even at a very low Iron ore price.

3. DMA has just announced a global resource of 1.4b tons. It is at least 50% as large as BRM ( in terms of final metal)

4. Beneficiation: This is one of the key doubts that both BRM and DMA had to prove. That it could cheaply bring the grade up to ~61%. DMA's beneficiation statement today is as follows:

Lab tests have proven that it can beneficiate to 61% Fe. But in addition, DMA has been fortunate to find that 50% of its Ore does NOT require the beneficiation process. This makes DMA process much cheaper ( ~$3 per ton) and also less open to unexpected problems with beneficiation.

On the other hand ALL of BRMs ore reqires beneficiation.

5. Transport: DMA Directors are not at all concerned about rail haulage. BRM's Definitive Feasability Study has has confirmed the profitability based on 17 mtpa, including building its own rail. Secondly DMA has as many rail options as BRM in addition to an interesting option with RIO that might reduce the cost considerably

6. Directors meeting Milestones: The directors of DMA have succeeded in going from an explorer to proving up a 1.4bn ton JORC deposit in just 16 months. They have also brought in a strong Chinese Steel partner in the midst of the lunatic actions of a Labor Govt. I have found that the directors have produced everything that they foreshadowed on time. That should bode well for future milestones.

7. As a bonus, DMA has a huge Basal Conglomerate deposit that it is confident of proving up ( perhaps as large as 4b t ) and has many other prospects that could lead to enlarging its small Marra Mamba resource

8. Paterson's report notes that in terms of Enterprise Value

"Brockman trades ( $1.18 per t ) at a large discount to the Iron Ore Sector sector average of A$4.00/t resource"

DMA is trading at $0.09 per ton

Eventually price should catch up with mining fundamentals.

It is matter of patience.