Boseto completed within budget & ramping up as planned By 30 June 2012, DML had produced 552t of concentrate grading 30% copper and 500g/t silver and sold its first concentrate shipment. Steady state operation at design rates is expected to be achieved at Boseto by the end of July 2012. Commissioning will continue through to the end of September 2012. The Boseto project was completed within budget. At 30 June 2012, DML had cash of US$59.3m, having fully drawn debt finance of US$180m and a US$25m working capital facility. We’ve made no changes to our earnings estimates or recommendation as a result of this report. Exploration success continues On 20 July 2012, DML announced that drilling to depths of around 170m at the Mango prospect had intersected the thickest high grade copper-silver mineralisation discovered to date. Mango within 25km of the Bosteo concentrator and has the potential to support an expansion of the existing project or new project development. Significant results included: 33m at 1.1% Cu, 13g/t Ag; 23.9m at 1.4% Cu, 17g/t Ag; 19.6m at 1.4% Cu, 8g/t Ag; 17m at 1.3% Cu, 16g/t Ag; and 20m at 1.1% Cu, 11g/t Ag. Investment thesis – Buy, Target Price $1.90/sh We expect DML to re-rate as the Boseto project is commissioned and reaches its design rates of production. DML is scheduled to update its resource and reserves estimates by the end of 2012. An expanded resource could support the expansion of DML’s copper production from 36ktpa to >50ktpa rates. DML has a large, highly prospective, tenement package (11,000km2) in the Kalahari Copperbelt in Botswana. Our target price of $1.90/sh is the average of our base case (36ktpa) and upside case (50ktpa) valuations.
DML Price at posting:
$1.35 Sentiment: LT Buy Disclosure: Held
