HiBased on the recently published Pre-Feasibility study, in...

Hi
Based on the recently published Pre-Feasibility study, in particular for the first 10 years:
(a) annual production of 540,000 oz ; and (b) average AISC of Aust $ 1,280 what is the implied forward EPS and PE, at the current price of $0.98 ?

Clearly the exchange rate and the POG will have significant affects on the answer. However, based on the current exchange rate of Aust 1$ =US$ 0.68 and SOI of 1.41 Billion my spreadsheet shows the following:

At POG US 1,700 the implied forward EPS is $0.33 and the PE 3;
At POG US 1,600 the implied forward EPS is $0.29 and the PE 3.41;
At POG US 1,500 the implied forward EPS is $0.25 and the PE 3.95;
At POG US 1,400 the implied forward EPS is $0.21 and the PE 4.69:
At POG US 1,300 the implied forward EPS is $0.17 and the PE 5.79:
At POG US 1,200 the implied forward EPS is $0.13 and the PE 7.54:
At POG US 1,100 the implied forward EPS is $0.09 and the PE 10.83.

NB The figures look better for the first 5 years as annual production is higher - however, to be conservative I have based the analysis on the average 10 year data.

IMO, based on the above, DEG is cheap at the current price. Moreover, provided the exchange rate remains at approx. the current level, the POG could fall significantly, e.g. to US 1,300 and the current price would still be cheap.

Regards


Old Fisherman