Business model, Credibility and Valuation

Hi all,

Its a long stretch to suggest the business model works. One success out of seven? No distribution of asset sales?

Of the six remaining coys, more than $255m has been raised (includes SOLG's 3m pds) with very little to show. On the basis of raising exploration capital, it has certainly been successful, but from a shareholder basis, it has been a disaster. That $255m now has a combined Mkt cap of about $120m so a 53% loss on value for all shareholders but it is closer to approximately 85% if pre-IPO shares/capital are excluded.

We all know that DGR trades at an embarrassing 70%ish discount to NAV. This is because the market has seen the continuous erosion of shareholder value with the spin-offs and a lack of any sign that management will monetise these assets for the direct benefit of shareholders.

It is simple really. If DGR gave back some (2-3c) via capital distribution or buy-back, it would signal that these assets do have some value to DGR shareholders and the discount would reduce considerably.

This is a rare opportunity for DGR management to show to shareholders that their model can and does work for the benefit of shareholders. Otherwise they will be messaging a continuation of eroding 70+% of any assets that come within the DGR camp....including cash.

In one move, they could create a rare pillar of Credibility and improve that valuation discount at the same time.

There are no rational commercial arguments to keep all the cash. DGR have not shown they can value-add for DGR shareholders by spending it on their pups. Its also a bit of a message that the one company that they supported the least, did the best (OBS). At some point, management must decide that some of these pups must survive on their own or be mercifully put down.

This is a tough market and only those who make the tough decision will survive.

Cheers,