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1.9¢ discovery metals limited

Why would you invest?, page-26

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jazz123

28 Posts.

16/07/14

09:31

Post #: 13665559
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Originally posted by allgood1 ↑

Happy to provide my thoughts Wanga. Companies like Transamine toy with management of companies like Discovery and play them off a brake. Back in 2010 Transamine purchased 25M Discovery shares at 76 cents each - at the moment they are losing $17.5M on that investment. At the same time the 2 companies entered into a sales contract agreement for Transamine to purchase all of Discovery's copper concentrate for the next 5 years. Perhaps there is a possibility that Transamine do very well from that agreement and it is in their best interests to keep DML afloat.
At the end of May this year, DML management arranged a further placement of shares to Transamine. They gave them another 84M shares @ .03451 cents a share and told the market this was at an 8% premium to market. Well at the current share price it represents a 50% discount so DML shareholders have been shafted again by the dilution process. Why would DML need $2.8M so urgently - maybe there was no cash in the bank to pay their own wages? Really you would think with their better production they could sell off some copper to raise a few bucks.
There is every chance that Transamine knew about the upcoming financial announcements and thought it was a great opportunity for them to recover some of their previous losses by buying a swag of shares at .034 cents. It has helped their balance sheet a little bit.
Wanga you and many other investors can support DML and dream of the day when they will be back to $1.75 again but I seriously doubt it. I am merely trying to warn investors of the danger in investing in companies with mining operations in other countries. Also incurring debt to pay off other debt is not a great strategy.

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Because their debt obligations required them to have a minimum cash balance of $3M?

The current debt re-profiling is a much better deal for shareholders than the massively dilutive transactions offered by others previously. Its also a better deal for the banks. So, we're all in the same boat, and that's a good thing in my view. The action yesterday has probably taken some of the short term speculation out of DML, which is also probably a good thing in my view

DML Price at posting: 5.4¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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