2020 Belonged to CHN DEG; 2021 belongs to ?, page-4

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BluAmEye

645 Posts.

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08/05/21

00:11

Post #: 53031811
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Originally posted by paulgf: ↑

I think DEG is likely to grow out a resource somewhere between 10-20 M ounces but you wont see that play out in 2021. If the initial MRE for Hemi comes out at around 7 - 8 million ounces I will be very happy as that will put us near 10 million total M&I resources. That is a very serious gold resource by Global standards but I don't expect it will stop there and they have a lot of sanukitoid sheers to drill out yet over the coming years. The key but will be how to turn the wider hemi resource into a credible mining path.

I for one don't want a company that becomes obsessed with drilling just for the sake of it for ever more after its clear there is a very large open pit resource there that would relatively cheap to mine , possibly sub $1,000 per Oz in terms of ASIC. That wouldn't be fair to existing holders particularly when gold is likely on a track to over $2,000 per Oz in the next couple of years if not sooner . They therefore need to then pivot en and turn their focus to building out a successful mine that takes advantage of our resource, its likely cheap cost to mine and favorable price conditions that could see us printing $1,000 plus per Oz margins within a couple of years. If they scale to 500,000 Ozs per year in throughput that could see an ebitda cashflow of over $500 M per annum and you would then see valuations likely in excess of $ 5 / share using a conservative PE ratio of a mere 10.

Once they have done that , they can explore till the cows come home without the need for further equity dilution as the exploration will be self funding. You are then in a virtuous circle of pushing some of that earned money into further drilling along our vast tenements which could easily see the resource grow out to 20-30 M ozs over the next 5 years but you are then not racing to finding it before your cash runs out.

Second to that I also can see why given the amount of resources they now have at their disposal in terms of cash on hand why they cannot start doing a bit with the KingCol Lithium asset. No reason why a company of Degs size now cant walk and chew gum at the same time.
There is a whole EV revolution getting underway and that lithium resource could be worth some serious money in the near term and they should be at least exploring its potential . If they have no desire to do it themselves then how to JV it. That money could be used then for likely future mine capex or further drilling campaigns. It is really not acceptable given we are paying management to be strategic to ignore a possible large scale lithium asset on our books when the world is about to undergo the largest change in transport in the last hundred years that will require a lot of lithium, that is now looking to be clearly in a shortage situation within the next couple of years.

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upside and downside to that.
If we are in a 5 year bull market then our production just gets going as the bulls stop running.
In the meantime we have not increased our resource significantly due to production focus.
on the other hand, we continue to explore and triple or quadruple our resource whilst the bulls are still running....kaching$$$$$$
on the other other hand...we do both.....giddy up

DEG Price at posting: $1.49 Sentiment: Buy Disclosure: Held
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2020 Belonged to CHN DEG; 2021 belongs to ?, page-4

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2020 Belonged to CHN DEG; 2021 belongs to ?, page-4

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