DEG

3.75%

$1.16 de grey mining limited

Hi slates7I agree with your detailed comments regarding the...

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Old Fisherman

139 Posts.

22/10/21

10:12

Post #: 56991741

Originally posted by slates7: ↑
This raise all seems quite reasonable to me. The scoping study outlines their need for $835m in capital leading up to the start of production in 2025. I am unsure, on why the large increase in expenditure this last 3 months but they have stated they were down to $30m in cash so this fund raising will get them through the next 12-18 months to expand their drilling (and hopefully find some more gold) and complete the PFS. I'm not sure how anyone could expect an explorer to develop a project of this size without tapping the market and/or banks to work through the design and development stages. Given they don't have any established assets to leverage off, a capital raising is probably their best option and a way to retain ownership of what they have found.

Only making it available to insto's is a bit of a shame for retail, however there is significant effort and cost to the company to include a SPP so I respect this decision. Stating that retail have already had their chance is somewhat true but still not great work by their public relations team... Anyway, the ratio for a SPP would have been approx. 1:12 so the dilution is not significant and for those who wish to top up, the share price is likely to drift lower towards $1.10 anyway over the next few weeks. Or otherwise just grab them at $1.20 if you don't want to miss out. If/when they do a raise for the $800m to develop the mine, the cost to include a SPP would be justifiable and I would hope their approach would be different.

I appreciate that some will be feeling disappointed if they have bought in at higher values when it was up around $1.60 and are now being diluted but that is not any fault of DEG - they don't set the market price. The $1.60 price tag was likely due to the higher gold price at the time but also some hysteria regarding potential increases to grade and volumes. I believe that the current price of $1.20 still offers reasonable value given the stage they are at and the risks still involved before they get to production. Below is my research - happy to take on comments for those interested in some balanced discussion. Note the yellow boxes are my assumptions/estimates for this journey so certainly keen for any other thoughts on those numbers.
Current Share Volume (inc raise) 1,406,600,000
1 Share price $1.21
2 Market cap $1,701,986,000
3
4 Capital required (note this is the full amount from the scoping study - this may drop but I am unclear on how much of this raise is directly off this total and how much is for other exploration). 835,000,000
5 Price at raising $1.25
6 New shares 668,000,000
7 Updated Volume to develop mine without debt. 2,074,600,000
8
9 Initial Production volume (oz) 473,000
10 Gold Price (AUD) $2,400
11 AISC $1,111
12 Profit per Oz $1,289
13 Annual EBITDA $609,697,000
14 Allowance for tax etc 30%
15 Earnings estimate including allowance for tax $426,787,900
16 EPS $0.2057
17
18 PE ratio estimate 10
19 Share Price $2.06
20 Dividend pay-out estimate 70%
21 Dividend Total $298,751,530
22 Dividend per share $0.14
23 Yield 7.00%
Expand
Hi slates7

I agree with your detailed comments regarding the recent CR. However, with a projected short payback period the mine development, IMO, will. and should be, fully debt funded. A 70% dividend pay-out ratio sounds good - but IMO, is unlikely for a mining company. 30%-40% pay out with the remainder applied to further exploration seems most likely.

Regards

Old Fisherman

DEG Price at posting: $1.11 Sentiment: Buy Disclosure: Held

7 Upvote

0 Great analysis

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Last $1.16		Change -0.045(3.75%)		Mkt cap ! $2.678B

Open	High	Low	Value	Volume
$1.19	$1.20	$1.15	$9.740M	8.347M

Buyers (Bids)

No.	Vol.	Price($)
13	173161	$1.16

Sellers (Offers)

Price($)	Vol.	No.
$1.16	19742	2

View Market Depth

No.	Vol.	Price($)
12	150929	1.155
34	435452	1.150
14	214305	1.145
26	340357	1.140
7	108620	1.135

Price($)	Vol.	No.
1.165	113620	9
1.170	152994	4
1.175	119878	5
1.180	120465	4
1.185	60817	4

Last trade - 16.10pm 21/05/2024 (20 minute delay)


Last $1.16		Change -0.045 ( 4.86 %)
Open	High	Low	Volume
$1.20	$1.20	$1.15	1517029
Last updated 15.59pm 21/05/2024 ?

DEG (ASX) Chart

Hi slates7I agree with your detailed comments regarding the...

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	Current Share Volume (inc raise)	1,406,600,000
1	Share price	$1.21
2	Market cap	$1,701,986,000
3
4	Capital required (note this is the full amount from the scoping study - this may drop but I am unclear on how much of this raise is directly off this total and how much is for other exploration).	835,000,000
5	Price at raising	$1.25
6	New shares	668,000,000
7	Updated Volume to develop mine without debt.	2,074,600,000
8
9	Initial Production volume (oz)	473,000
10	Gold Price (AUD)	$2,400
11	AISC	$1,111
12	Profit per Oz	$1,289
13	Annual EBITDA	$609,697,000
14	Allowance for tax etc	30%
15	Earnings estimate including allowance for tax	$426,787,900
16	EPS	$0.2057
17
18	PE ratio estimate	10
19	Share Price	$2.06
20	Dividend pay-out estimate	70%
21	Dividend Total	$298,751,530
22	Dividend per share	$0.14
23	Yield	7.00%

Hi slates7I agree with your detailed comments regarding the...

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