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%
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