I’ve held ADT since it was 20 cents and still not sold a share after 7 years. This should have ideally been a happy day but to be honest, it has been quite disappointing. At first glance, ADT seems to be leaving a massive amount on the tablefor DPM, especially taking into account the silver price
1/ Resistance breakout of 35
– A major horizontal resistance of $35 was recently crossed by silver. Another major resistance of 26 held silver back for a long time which was beaten by silver last year. These 2 levels were so significant that I actually spoke of it 5 years back as silver was starting its move in 2020
Why would we want to sell ADT now as silver is breaking major resistance?
2/ Commercial production
We were supposed to be declaring commercial production a long ago which kept getting delayed. Why would we be selling out now that commercial production is supposedly imminent
3/ Gold – silver ratio
Gold – silver ratio has been abnormally high at around 100. In genuine precious metal bull markets like 2010, 2016, 2020, the ratio takes a sharp tumbleas silver eventually catches and overshoots. Silver, recently showed signs of this. So why would be silver now as silver seems to be on the cusp of greater things
4/ Silver all time high of USD 50
Silver all time high is USD 50 in 1980 and 2010. Gold all time high of around USD 1910 in 2010 has been comfortably eclipsed. Do the math to see how much silver can shoot taking into account gold – silver ratio.
5/ Massive 45 year Cup and handle
Silver has formed a massive 45 year cup and handle and if it plays out, then on breakout of USD 50, it should ideally be destined for much higher than even USD 50
Tamesis recently said target price is 350p, bidding war could erupt and that 700 million GBP bid wholly undervalues the company
700 million GBP = 947 million USD
This bid is not that much higher at 1.25 billion USD
Seems like it is undervaluing us a lot still
7/ ASX vs TSX
Not sure but from what I see, even new DPM shares will be traded on TSX and not as ASX CDIs
8/ DPM – gold vs silver
Correct me if I’m wrong but isnt DPM more of a gold company than silver company.
If so taking into account what I mentioned above of gold and gold miners having a major headstart over the last year, then obviously we would lose that catch up potential that silver miners are now due
9/ Serbian assets, exploration upside, major expansion planned
No news at all of Serbian assets and how they fit into the valuation
No news of our major exploration potential
No news of how ADT plans for major expansion to be a major silver producer in years to come
How does all this fit into valuation?
10/ Silver historically overshoots
Go back to 2010, 2016 and to some extent 2020 and you’d see that silver and silver miners have a capacity to greatly overshoot as a frenzy develops in the miners.We seem to be losing all that potential
11/ Conclusion
I can come up with a lot more points if I have to but I can already see that many investors share the same sentiment as me. I’m not necessarily saying this is a bad deal as it gives some immediate certainty and maybe synergies for the combined company but at first glance, ADT is leaving a lot on the table with this deal.
Please DYOR as above is my best understanding at the moment, which may be hopelessly wrong, and maybe the initial disappointment is also clouding my thoughts
Maybe if DPM shares shoot up, then our share price could also go up.
Maybe another competitor will bid higher for ADT.
Not too sure at the moment, and shall have to reassess on a daily basis but yes, the initial reaction is certainly disappointment.
ADT Price at posting:
$5.00 Sentiment: None Disclosure: Held
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