Ann: Presentation Strategic Merger - Dacian and NTM, page-87

Hi All,

It is interesting timing on the NTM transaction. I honestly see two plays, either DCN is confident in what it has already has and sees a future in NTM's assets as a project for further down the pipeline, therefore perhaps moving early - bit of FOMO. The other scenario, operational flexibility borne more from desperation.

DCN gains access to some easy access surface ore in this deal but taking that early will deteriorate the economics of a standalone project on the NTM tenements. I don't think DCN will cherry pick NTM acreage unless it needs too. It could be said the NTM oxide ore is a safety net for DCN, but it is just that a fall back option, not worthy of being a primary motivator IMO.

The transaction dilutes DCN holders as the path to $1 share price means the growth in the company means a much greater market cap. The size of the premium can only reflect a couple of things, the assets are worth more to DCN that what the market values them at or DCN overpaid. I would expect a premium was needed to get the deal done, but what size premium is needed is subjective. Maybe DCN priced in exploration upside, only a geo will know what upside there is. As it is a merger, lets assume the DCN geo's got access to NTM records and gave a recommendation to DCN board...

The underground mine feasibility is due Q1 2021, so let's be honest here. Insiders will know the direction of this one, it just needs to be worked through and finalised. Most engineering studies, the outcome is known, it just a question of showing it and getting enough accuracy to support the thesis. If the UG mine kicks into production and LOM pushes out, then NTM becomes the medium term pipeline of the project.

For me, if i think 5 years plus into the future, DCN needs a bigger tenement holding and would be great to have a second producing asset in the making. Current production issues need to be a thing of the past. If that happens and NTM is a pipeline project, then I think competition to secure the NTM assets now is a driver. Maybe KIN comes into the fold later as part of a consolidation play.

Short term - the debt is to be refinanced and that will probably involve a revolving door line of credit for flexibility. Hedge book has been spread into the future and that frees up cash flow to enable debt to be reduced/renegotiated from a stronger position. The hedge book was key to me and the debt is also key to me keeping optimistic about this management team.

I think DCN overall is a simple play, you either believe in the assets and in the management team or you don't. We can construct a narrative either way on NTM, but time will tell which way it goes. I hold and am taking a longer term view. I think gold stays high enough in AUD to make solid projects cash machines. But bad management destroys value in any market cycle.