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33.0¢ demetallica limited

@flaming i dont understand your post on a valuation basis -...

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goldbear77

9,781 Posts.

3485

28/08/18

11:51

Post #: 35230886
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Originally posted by flaming ↑

Thanks
@kyngdominion

I would buy back some but not all of my allocation, just for a trade. I am a bargain hunter and I don't consider DRM share prices a bargain at this level (all in comparison with some superior peers).
My assessment is based on the share price of those superior peers right now. If those superior peers run faster and harder than DRM( which I think they will all things being equal in the gold market)
then I will sell them and put that money to work in DRM. I like DRM and I strongly believe there is money to be made here......but for the moment I like those superior peers more based on share price.

The brutal take down in the last few weeks have created extra ordinary opportunities in the mining sector.
Some were thrashed indiscriminately and totally unjustified. The fundamentals and the health of some of those companies have never been better. Putting in straight words those miners are in a position today where I think DRM will be in the next 3-4 years.(Assuming everything going well with DRM operation during that time). They are trading at a lower Enterprise Value compared to DRM.

I am fully aware that my assessment could be wrong and will never get a chance to fully buy back in DRM.
I am still happy as DRM made me some money. I was hoping and wishing more but that is all the Godfather's could spare. These Godfather's can do unbelievable things at times, like the last take down from 0.385 to 0.30

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@flaming

i dont understand your post on a valuation basis - superior peers trade at 8-10x gross margin/enterprise value (ie thats multiple you are paying to buy the gross cashflow - ie how many years it takes for company to generate its EV in gross revenue. this removes cash position from the equation and doesnt factor asset values - based on current aud spot price)

DRM trades at 3.3x

by comparison
SAR - 9.5x
SBM - 7.9x
EVN 7.7x
RRL 8.5x

I can see an argument for buying higher quality as a defensive play or for lvg of larger operators if you expect a bull run in aud gold - but there isn;t an argument that they are cheaper on a cashflow basis.

MOY and SLR are peers - no quality difference - MOY is on 5.8 but if its hits plan would be on 2.6x

So i dont see your reasoning immediately

DRM Price at posting: 35.5¢ Sentiment: Buy Disclosure: Held
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