All I can say is.... I agree
But, as I posted earlier, the market is..... pretty much a grumpy impatient s&*t stirrer... so, unless news is actually, unexpected, or well north of what even the most optimistic market participant (note... not shareholders in a lot of cases) could throw around on HC.
Would I have liked to see 10m ounces announced just for Hemi today, hmmm.. yep. We will, just not quite yet, within 12 months seems almost a certainty, which in itself is an amazing and 16 months ago, would have just been laughed at even on the DEG threads to some extent.
I enjoyed watching the share price today. A real tug of war, which, I again feel very confident in saying, rarely occurs when an initial MRE is announced by any gold explorer. Just look at what happened to BRB or OKU, ouch.
Within the next 12 months, if DEG continue to drill with a lot of rigs (I am guessing we won't be going above 12 rigs, as really, at some point, you need to be allowing your results to better guide your targeting), then I think we can conservatively say they can add another 3m ounces to the MRE, the more interesting thing for me, is how much more they can move into the indicated category, and can the keep the grade above 1g/t. I think yes, but.... always the caveat, nothing is truly certain.
I do also find it interesting that the scoping study is following so quickly. As, if I am right about the further increases in MRE, it will only be a starting point (I suppose BGL has done something similar, but smaller scale of course). 9m ounces should see them able to producer upwards of 400k p.a.
At 12m ounces, with perhaps 6m in what could be classified as reserves, you are talking about 500k p.a for 12 years. That... is Tier 1.
I consistently look at GOR as the best comparison for DEG in the short term. Yes, if DEG find another Hemi, then.... sure, we are looking at a new Newcrest, but... lets look at only what we have or (almost certainly have...).
GOR has 1.6m ounces at 1.24g/t in reserves. That is $762 AUD per ounce for reserves.
Resources of 4.5m ounces. $271 per ounce.
Production currently under 300k p.a. (net 140-150k to GOR).
Aiming to get closer to 350k p.a (net 175k to GOR).
10 year mine life, etc.
Now, GOR is a producer, albeit, the simple fact is, that the bigger you are, the more the market will, on average, pay a premium for your shares. Newcrest is the easiest to show this, then, just go down the list. NST, EVN etc. Harder to know if GOR receives any other premium for NOT running the mine, but on balance, I believe yes.
DEG is basically always going to trade at what many will perceive to be a premium, but.... it deserves it.
Single large open pits, are, almost every time, the most profitable operations in any resource sector. They get a premium. I know there are quite a few posters that have a different viewpoint, and they are welcome to it.
Here is an open question.... (I don't really have a strong view either way at this stage)
Should DEG now raise $500m, to ensure they are basically, fully funded to production (obviously some sort of debt component would be included to complement this) like what AVB did a few years back, or perhaps BGL and others to a lesser extent? Or... just keep doing what I suppose could be called the 'norm', keep drilling, raising a smaller amount, do another MRE, complete a DFS, then raise etc.
As I believe, that if DEG was sitting on $500+m, then, its MC would still likely be at or over $2b.
(20min delay)
