I wanted to start this thread because I have noticed alot of confused posts on DEG today, some people saying it's a "scam" others not particularly grasping the size of this opportunity or the quality of people backing these plays, eric sprott, brent cook, john kaiser these people don't play around with pump and dumps.
Now I could go on and on about Witwatersrand, but lets keep this simple how will DEG go up in value from here? will it go up in value?and how far?
First thing to Look at is Novo/ARV how did they get to where they are? and how does that journey compare to DEG?
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Looking here we can see the initial 3 stages of exploration, we have prospectors finding nuggets, raking of creekbeds and Novo jack hammering directly into conglomerates proving they hold gold.
The market caps I have included were peaks directly after stage 3 announcement they don't factor in the recent live stream, cap raises or anything else since.
To account for the extra deeper unconfirmed comet well extensions I have divided the Novo Mcap by 4.8, that is generous considering they are much deeper under the thick hardy formation
Current valuations, for what was known just prudys.
$207,781,250 if Novo only had 1.5km at 100% ownership
$238,000,000 million if ARV had 1.5km at 100% ownership.
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DEG skipped stage 1 no need and stage 2 was a raging success and stage 3 will begin judging by Novo speed maybe within a month, they are also still prospecting other nearby areas they might find more.
So as DEG approach stage 3 next month, the big question will be do we think DEG will jack hammer a piece of that conglom and see golden heaven peaking out or not?
If you are confident in stage 3 than DEG is a buy buy buy all day long, if you ask me I think it's 100%, the fact the nuggets in the dry creek are watermelon seed nuggets there is no doubt in my mind they have come from the conglomerate sticking out the side of the hill.
Look at this picture you can see actually see a trail of nuggets that are currently on there way to the creek below it's basic issue of gravity the creek is the lowest point when it rain it's acts as a nugget trap, it's amazing if you don't believe those nuggets are an accumulation that came from the conglomerate poking out from the hill slowly being eroded away, I would love to know where you think they came from?
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This is not a conspiracy as people thing is just a logical conclusion, so as those Stage 3 visual confirmation comes in $200Mcap club here we come.
Next I want to talk about something no one ever thinks about costs, what are the costs associated with a deposit like prudys or DEG's?
First I went grade hunting what is highest grade big deposit I can find? the currently moth balled due to political issues fruta del norte project, fit the bill size and grade wise with 4.Moz in the mine plan for $623 AISC.
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Not bad $792 Australian AISC, no one would turn that down, but one big difference they have the grade, but they are mining 500m below the surface, big cost difference between underground and open pit.
So I see grade is good, but where do they mine like they will at prudys, no better option than beatons creek, Novo's small conglomerate deposit.
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Mining style will be quite similar to prudys it's a decent comparison when looking at costs around that $600/oz market Quentin said in the interview where I got the cost graphic from, thats very low.
When we look at majors with the world biggest best deposits in there pockets their, potential conglom costs school them in Australian dollars looking at $1122/oz AISC on average for the worlds best mines.
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Our weak comparisons are getting $600-$700/oz AISC costs, prudys/DEG with it's likely higher grades and low strip it could easily be in the sub $400/oz AISC range, that means mining one ounce at prudys pays 200% more than on your average major deposit.
Now thats all great compared to ARV and Novo it's a $200mill company at stage 3 confirmation and it will have industry low costs, but what are ARV and Novo actually worth once they get to stage 4 and 5.
What are stage 4 and 5 these are essentially the last things that can F-up things for Novo/ARV, stage 4 is diamond core drilling this is simply to test the thickness and the consistency of the gold zone, make sure it's anywhere from 5-20m all the way threw.
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Stage 5 is the big money stage this is when they do large diameter drilling will confirm grade and hopefully this drilling is large enough that we can sccop up enough nuggets and fine gold to give us a decent enough idea of what is down there, based on the amount of pink circles on the ground during live stream I like our chances.
So we confirm thickness consistency and grade put together a JORC wonderful, what does something like prudys above look like? well DEG on a 1500m strike with 400m width and 11m thickness something like this depending on grade.
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So how do we value past where Novo and ARV are currently what is ultimate success, what are those end game super juicy numbers?
I first looked for take out I found a few high grade large early stage billion dollar take outs but all deposits like that were found last sold in the 90's, how do you equate a billion dollar takeover in 1997, to 2017 where money flows like water? You can't.
So I looked for something in Australia something large I thought only thing quality I can think of was GOR.
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Our DEG resource estimate are some big numbers and big differences, so I am going to take the middle and use 15 g/t everyone can times by 4 or divide by 3 to see the upper and lower extremes.
The Key number $350mill cash for 1.7Moz share at an AISC cost of $945/oz, not bad so pretty simple 1.7Moz = $350mill, puts DEG 8.2 Moz at $1.69 billion on a 15 g/t grade.
Thats huge but remember our all in cost we worked out would be sub $600, likely even sub $400, lets just go with $500 AISC to be conservative, for every $685 profit GOR makes on an ounce, a DEG operation would be pulling in $1238 profit per ounce, thats almost double.
DEG ounces will be worth nearly twice as much, a valuation of $3.3 billion.
That seems crazy I know, but Novo was worth $150mill when prudys was discovered a month later it's worth $1.2 billion, based on stage 3 at prudys and a potential extension, if stage 4 and 5 come in you cannot tell me that $1.2 billion isn't going to multiply many times over.
If DEG keeps going and everything goes smooth end of the rainbow numbers are insane, I hope this post helped some people understand what we are dealing with here, this is a once in a life time event, if Novo drilling stage 4 and 5 is a success DEG will follow up the rainbow we will hit those big valuations, some risk in it of course, but on this one the reward is as good as it gets.
(20min delay)