smh on rms & drm

Ramelius to sing Do-Re-Mi?

Barry FitzGerald
October 26, 2011 - 9:29AM

Sometime in December Doray Minerals boss Allan Kelly will release an upgraded resource estimate for Doray's Andy Well high-grade gold discovery to the north of Meekatharra.

The initial resource estimate was 211,000 tonnes grading a super-impressive 25.3 grams of gold a tonne for some 172,000 ounces of contained gold.

Drilling results to date suggest that the December upgrade will take the mineralisation estimate to around the 500,000 tonne mark, the unknown at this stage being the grade of the material..

That unfolding potential has attracted the interest of Ramelius Resources (ASX: RMS) which has crept on to the Doray share register. Ramelius put its hand up as the owner of 5.4% of Doray on October 13, a holding it increased to 6.63 per cent on October 7. More recent trading patterns suggest it might now be 7 per cent.

Ramelius owns Australia's highest grade gold operation, the Wattle Dam gold mine near Kambalda which runs out of ore in 2013 unless extended by exploration success. It has been good to Ramelius and is why the company is sitting on $89 million in cash and gold.

Ramelius obviously sees Andy Well as a replacement project for Wattle Dam, one that along with its planned revitalisation of the Mt Magnet goldfield, would make doubly sure it hits its group annual gold production target of 200,000 ounces from 2013/2014.

We know Ramelius sees Andy Well as a replacement for Wattle Dam as in a company presentation lodged with the stock exchange on October 19, Ramelius actually refers to Doray as being in its ''project pipeline.''

Kelly – who with fellow directors speaks for 17 per cent of Doray – would have other ideas about that. Any way it is cut, 7 per cent of Doray does not mean it is Ramelius' pipeline just yet.

A full bid for Doray would fix that. At its last sale price of $1.36 a share, Doray is a $102 million company which is holding $16 million in cash.

But Kelly ain't waiting on Ramelius. He is intent on adding value to the Doray via the drill bit, spending $6 million on exploration this year and another big program planned for next year.

Apart from Andy Well, results from the Side Well and Abbotts prospects elsewhere in the northern Murchison region suggest that if Ramelius does come knocking, $1.36 a share won't do it by a long shot.

Read more: http://www.smh.com.au/business/summer-ma-offensive-looms-20111026-1mis9.html