Ann: Operation and Exploration Update , page-2

From the announcement:

"Reserves as at 30 June 2010 are 421,650 ounces and Resources total 950,220 ounces".

Also this:

"Conversion of Inferred Resources to Reserves has
historically been very high (+90% conversion rate) for both the M1 and M2 Shoots".

Is the following calculation correct? - If 90% of the 950,000 ounces of resources are converted to reserves the mine life in theory goes from 4 years to 11-12 years if production remains at 100 Koz/annum?


My understanding is that there is a reasonable cost involved in conversion of resources to reserves. It is common practice for companies not to "prove up" everything all at once even though the resources are highly likely to be converted to reserves in the future (90% conversion rate in this instance).

(I say this in response to some posters on Hotcopper have been saying the mine life is only 4 years)

DIVIDENDS
The announcement did not mention dividends but with the 9000-10000 ounces/ month being produced at the moment DOM should continue to pay dividends as it has been doing. (Some posters have cast doubt on this too...)

At the present price of 2.10 the dividend yield is between 5.7 and 6.7% based on a 12 and 14 cents/ share dividend. The final dividend is due to be paid in September.

From the announcement:

"Development continues on track to sustain access to these higher grade M2 stopes with production for the 6 months ended 31 December 2010 expected to exceed 50,000 ounces".


With no debt, no hedging and $23.4 million in cash/bullion and with gold currently at 1350 AU and cash costs at around $600/oz DOM is going to continue to be a very profitable Gold miner...

The current price is not reflecting the above facts...

I am glad that management has broken their silence as the "no comment" policy has definitely not helped stabilize the plummeting share price of late.

Its a buy.