Has been said previously before but CR’s are absolutely a part of the public exploration company journey, the critical aspect for me will be what the level of support is for this one in particular, and more importantly what the proposed strategy is around deploying the funds.
Much has been raised and discussed on other DRE threads re the general state of play both here and abroad for resource and exploration Co's. Without wanting to delve into a broader discussion around the macro factors at play (as interesting as that whole topic is), I saw a presentation a while back from David Lotan (LHI Capital) speaking at a pre-PDAC mining event this year. Its well worth a watch:
The section discussion on global erosion of ‘specialist capital’ really does put things into perspective and help explain the lack of traction that many ExCo’s are facing. This graph showed specialist funds in UK and Canada…but the situation is the same here in Oz:
There is no doubt that with DRE the only way we are going to see and substantial and sustained re-rating is via the drill bit. How and where that may eventuate (or not) is the big unknown, the longer the timeline and the less access to capital the harder it gets.
DRE ramped up the spending rapidly in the wake of the Yin-discovery, and to be fair there was little choice but to do so. They also moved quickly to build exploration management and technical capability off the back of this, to be ready and able to progress to the next stage of evaluation. Much of what has transpired in the intervening period has been outside of DRE's control...We can’t change what's in the ground nor how the broader market conditions play out, so in that sense I don’t really see much wrong with how DRE have played their cards. But that doesn't change the harsh reality of the position we are now in...just the way the cards have fallen.
The reality is DRE is now a ~$76M MC explorer, stacked quite heavily (team and landholding) based on a trajectory that hasn't played out...(not saying wont play out, just that it is looking less likely in the near term).
They have a NEC, MD, 2 x NEDs, CS, CFO, COO and with half-a-dozen or so exploration geos and additional support staff…it is a relatively large group at least relative to peers in that sub $100M market cap ExCo bracket and based on the level of activity currently being undertaken and on the horizon.
For what it’s worth, its one of the better exploration teams out there imo, and I don’t think anyone can question the commitment and efforts being made.
Retention of skill and maintaining a core group of motivated and effective explorers is fundamental to any future success, but there is undoubtedly a fine-line between that and holding a full bench for a game that's no longer being played.
Now I don't know the answer, and no doubt it is an awkward discussion point , but it would be good for DT to address the current overhead position relative to future workplans (by address i simply mean justify/explain based on upcoming plans). As much as anything this includes rationalizing the size of the land holding and determining where is the most likely project to deliver organic drill-based value vs the cost of exploring. personally I would be interested to know the bottom line exploration cost (all in) for working in the Kimberly. Forget the fact that there is a drill for equity agreement and various Govt. claw back schemes...when you factor in the pre-drill heritage, mobilisation, camp costs, contractors, site prep, fuel, etc...how far does a dollar go in the Kimberly, relative to Mangaroon, relative to Central Yilgarn etc
Now it may be that despite the additional cost it is still the best chance at delivering success...but some guidance on what those differentials are would be useful to understanding the situation.
(20min delay)