Black Hole...you did see what the grade was right?It may not...

Black Hole...you did see what the grade was right?

It may not look like much but think of what 25 g/t g/t would be in equivalent ounces at 2-3 g/t when considering the mining costs.

One overly simplistic way (ie not even considering the CAPEX) to do it would be to take the expected mining costs of DRM...by say using NST's or RMS's (both good grade) current mining cost as a benchmark, then take a low grade (2-3 g/t) mine's mining costs. Then take DRMs resource and work out the total operational cashflow. Then work out what oz of the low grade stuff, using the low grade results, would be required to achieve the same total operational cashflow.

Example:

Say DRM cash cost is $300 per oz and low grade mine is $800 per oz (both reasonable estiamtes imo). Say DRM resource is 170G oz as per ann(not the 130G you mentioned). Assume gold price of $1,300 per oz.

So DRM total operational cashflow (non discounted), is $170M.

The low grade mine has a postive cash flow per oz of $500. So divide $170M by $500 and you get 340,000 oz.

And that is very simplistic...it gets better for DRM when you consider the lower capital cost that will be required to produce equivalent ozs per annum as the low grade oepration. That is, low grade operation means much much higher processing throughput and therefore much higher capital cost to build.

Not to mention lower grade mines generally rely on several small deposit in the same area, much more expensive to develop than Wilber which is all just in one big lode straight down. Take a look at some of the low grade mines but not their total resource...look at their resource per 'location'...often you will see they are made up of several mines, usually one main one and several sattelite deposits.

You could find that DRMs 170G oz is probably the equivalent of 500G oz of 2-3 g/t dirt. Perhaps more.

In my view, based on this resource alone DRM is cheap (particularly considering it has over $20M i the bank).

Now take into considertion the exploration potential?

My prognosis: I'd by buying back any shares if I sold.

Of course, that's me, and therefore not a recco...DYOR as usual.

Cdchi1