trading halt 7pm, page-12

1. It is broadly agreed among DMM'sters that the scoping study announcement will be very positive - I think it would be fair to say that this part is a no brainer. This is why the T+3 traders were disappointed about 3 weeks ago when enthusiasm ramped it up from $0.80 to $1.10. Just bad luck for them. They will return next week with a bang I am sure after DMM's scoping study is released.

2. Some less informed and envious people will try to downplay DMM's potential over the next few days - either because they missed out as a holder at 7pm tonight or because they want to get their hands on some cheap stock come Tuesday or Wednesday. Those people who picked up shares recently in the range of $0.78-$0.90 ought to be very pleased with their positions.

3. There is very limited downside risk to this DMM scoping study. Clarity and transparency of the announcement and quality of resources are the two minor risks the holders. Those that follow the DMM stock will be able to recite the following TOP 10 upsides verbatim:

(i) Proximate infrastructure within 3km (compared to SDL)

(ii) Low mining strip ratio

(iii) Two resource types - 110MT-135MT haematit enrichment at 55-58% and 750-800Mt magnetite at 35-40%

(iv) Looking at production throughputs of up to 11MT per annum (anything even close will be very impressive!)

(v) Outlining of processes/parameters around both massive JORC's. Market understanding is always imperative.

(vi) Small market cap

(vii) Very tightly held share register (only 60m - including options)

(viii) Feasibility of being a producer in the next 2 years

(ix) Some big instititional holders have jumped on the register recently (Project Management International, England; Tanaka Mining Projects, South Africa) - which in some people's eyes should have been a good enough justification for even the most impatient of traders.

(x) Recent roadshow in Melbourne

** There are the building blocks of great companies - not $0.80-ish minnows.

From my perspective, the only possible disappointment will be that DMM does not give away enough details/transparency in the scoping study. I think this will not be the case since the report is several weeks overdue and they must have had enough time to analyse, digest and prepare this reports. GRD Minproc has had 5 months (since Jan 2008) to undertake this scoping study and has delayed since end of May 2008 - it will be good. Again a very limited downside risk.

4. The trading halt was also a mature and well timed management decision (albeit a bit cheeky on a Friday night! lol).

5. Perhaps the biggest question for next week will be how high will the share price climb upon release of the announcment? On the face of it and as a very crude measure without knowing the speccifics of the announcement, it is difficult to tell.

Based on the shareholders current ralistic expectations, I am positioning for the following scenarios come next week:

(a) Scenario 1: Base case $1.20
Will be cleared quite easily I think. Most will agree. A reasonable steady state result after post announcement spike. The market opinion - A roadmap for DMM is now in place and sizing/resource fairly clear - deserving of a 33% increase in shareprice (based on $0.90 average price over the past month). Not amazing though.

(b) Scenario 2: Mid-range case: $1.40 - strong result.
Exactly where the DMM believers and followers of the stock think that this company belongs in the very short term. Obviously it is a multi-bagger over the next 2 years - but the aforementioned qualities of DMM are well deserving of this. As more information comes to hand over July/August, share price will gradually climb further.

(c) Scenario 3: Top-range: $1.60 - exceptional result.
Investors will do their analysis over the weekend and compare the expected resource estimate and production climate to other comparable companies - like SDL. Reaching these peaks will depend on the quality and clarity of both the disclosure and the resource estimates. A nice, clear confirmatory scoping study will probably make the day-traders go dizzy with glee...us long term investors really don't care - in 2 years it is a $5 stock - why go chasing other pipedreams when DMM is right before us.

My 2 cents anyway. Have a nice weekend all!

JP