Ann: Doray Clarifies September Quarter Gold Produ, page-5

re: Ann: Doray Clarifies September Quarter Go... according to Fosters...

Doray Minerals (DRM, $0.67, Mkt cap $100m). Starting on the right track. Trading Buy.

•Doray recently reported its inaugural quarterly production, achieving 14koz at 11.5g/t at its Andy Well mine. C1 cash costs for August/September were A$510/oz, while C3 costs were A$880/oz. This positions DRM as one of Australia’s lowest cost gold producers.

•Production was achieved within budget and expected timeframe, which attest to management capability, given that many mining projects usually go over budget and /or experience delays when commissioning. Costs disclosed for August/September were also in line with those of the BFS.

•In many ways we see Doray having the potential to be like Northern Star Resources when it first acquired Paulsens. The deep vertical, plunging structure of that deposit meant that resources could only be defined from underground and therefore relatively limited ahead of production . However the strong management, low costs, and continual extension of the life of the mine all aligned to rerate the company. We believe that Doray can similarly replicate success at the similarly structured Andy Well deposit.

•Current resources at Andy Well are 441koz at 11.2 g/t, with life of mine estimated at 3.7 years. DRM expects average annualised production of 74ktpa. Following start of mining, the company has recommenced exploration. Andy Well’s Wilbur Lode remains open at depth, while the higher grade Judy Lode is not yet accounted for in reserves.

•We rate DRM a Trading Buy.