WHAT THE BROKERS SAY: Kevin Andrusiak | January 28, 2008
Dioro Exploration (DIO) Fat ProphetsHold recommendationNo share price targetLast traded at $1.595DIORO had been one of the more investor-friendly gold stocks of late but it too couldn't avoid the roller-coaster ride on the share market. Fat Prophets gave the Dioro faithful more of a chance to get the stock at lower levels and wait for what should be continued upward momentum. Dioro has been busy itself, gearing the company for what looks to be a promising 2008 after raising more than $60 million to advance assets recently purchased from Harmony Gold and listing on the gold-friendly Toronto Stock Exchange.
"In our opinion, a sustained break back above $1.60 would improve the near-term outlook with further gains above $2 to signal a revival of upward momentum," Fat Prophets told clients last week. Fat Prophets also said it was a big plus for the company to have consolidated its share register with many short-term punters forced to desert the gold producer.
"The current price weakness presents an outstanding buying opportunity for astute investors in the near term," Fat Prophets said. "Dioro is all the more attractive because the Australian resource sector currently suffers from a relative dearth of quality emerging gold plays. Aussie investors increasingly have to chase overseas gold plays. When we deduct Dioro's current cash balance of around $26 million from its current market value of $123 million, we derive an enterprise value of approximately $97 million. This means Dioro's market value is worth less than $40 per resource ounce and $180 per reserve ounce. This is outrageously cheap in our opinion."
DIO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
