DMM - DMC Mining

[YOUNG_TRADER]

To add to what D Chrome said, it must be remembered the mkts are ineffcient beasts, where they effcient the opportunity to make profit would not exist


Share price movements while important as they reflect sentiment are hardly an accurate indication of fundamental value, especially at the Spec/Smaller end of the ASX list

I love DMM fundamentally and have said so from day 1 and have stuck to my guns (but like GCR) the mkt does not agree,

But to me eventually fundamentally undervalued stocks such as this must get re-rated, that is of course unless I've made a big error in my calculations/thoughts


So right now the mkts are weak and DMM's sentiment is clearly negative hence the falling SP and as we can see by soem of the posts this can create a snow ball effect, ie SP falls more and more holders question the stock, their assumptions and the fundamentals until they too capitulate and pull the plug


As D_Chrome said Rome wasn't built in a day and YML didn't go from 16c - $3 in a day, it took 6 months

 

[Sean K]

OK, my revised take on the basic funnies for this project:

3Mt DSO stage 1 ramping up to 11Mt DSO after 4 yrs.

New RIO price is $201.69, Fines $144.66. However, long term prices? The SS gives some figures to be mentioned later, but they seem crazily conservative to me.

From SS:

By international standards the iron ore grade is lower than typical for direct shipped ores and the impurity levels are higher than desired. However, this appears to be more a disadvantage than a project impediment. The ore may be amenable to upgrading by blending, selective mining or beneficiation during processing.

Stage 1 would see the construction of a crushing and screening plant to process haematite and produce direct-shipped-ore (DSO).

Added cost of beneficiation is not mentioned in SS, but we should assume is in the $200m Capex for Stage 1.

Also as pointed out future price movements? The SS gives three possibilities with spot, long term high and long term low potential for lump and fines.

Spot: $1.80/$1.80
High: $56.25/$45
Low: $31.05/$27

How they get a long term low price for lump at $31.05, I couldn’t even guess. What’s with the 5 cents anyway? Ridiculous.

From SS:
This is at the low end of prices realised from 1980 to 2004 and provides a reasonable estimate of the minimum revenue stream that could be realised.

1980 to 2004? What the?

Personally, I’m a stronger for longer on BRIC and resources for some years to come, and can’t see IO prices dropping back to the low prices between 1980 and 2004. Chindia was still living in mud huts in the 80s!!

So, for what it’s worth, their revenue projections:

Hematite totals for lump and fine:

3Mt pa on Spot/High/Low is:
$302.4m/$84.1m/48.4m

11Mt pa on Spot/High/Low is:
$1.1b/$308m/177.5m

Magnetite:

3Mt pa on Spot/High/Low is:
$361.8m/$149.2m/$76m

I think over the next 2-5 years we should see prices stay high, maybe even increase further, but as a broad pluck (any other plucks welcome to be tested) settle between $80-120 tn. So, I am going to use these figures as high/low for the hematite. Let’s even forget about the Mag for the moment.

So, at 3Mt a year on $80/$120 =
$240m/$360m pa

On 11Mt a year on $80/$120 =
$880/$1.32b

Capex:

$200m initial for 3Mt start up and $490m ish ramp up to 11Mt facility.
Assume half debt and equity add initial $100m to MC and $245 ramp up.
(Or, should it be all equity?) Also factor in additional funds to get through BFS up to ramp up, $40m.

Projected diluted MC at initial 3Mt start up and 11Mt:
$180/$305m.

Add 30% fudge = $234m expanding to $396m MC.

Opex for 11Mt facility is: $22 tn x 3/11Mt = $66-220m pa. The SS only gives costs for the 11 Mt facility which comes to $244m. (Bit different to my calcs) Can we assume $66m for 3Mt facility? I assume yes at this stage. Opposition?

Let’s add in 20% fudge in Opex to be conservative = $79/292m

Revenue (based on my High/Low for 3Mt and 11Mt operation)

3Mt pa:
Low $240- $79 = $161
High $360-$79 = $281

11Mt pa:
Low $880m - $292 = $588m
High $1.32 - $292 = $1.028b

80% ownership, revenue:

3Mt pa
Low $128.8m
High $224.8m

11Mt
Low $470.4m
High $822.4m

Tax…??

Current MC = 44m ish shares @ .70 = $30m MC

On projected MC to Cash flow.

$180m/$305 MC.

V

$128.8m - $822.4m Cash flow potential.

Lets slap a pe of 8 on them, potential MC of $1.03b - $6.58b.

Looks undervalued.


If anyone has another thought on those, we can amend.

In regard to the rail, the SS does not say that there will be a requirement to upgrade the capability of the line, only to extent it. We would have to assume the first shorter section from Dolisie to Mossendjo using 36 kg/m rail section (medium strength) is going to be OK. Up for argument I suppose. I am not sure how long this section is but it sounds like just one shortish section. If it is a problem, perhaps it will be upgraded as required during development?

 

[Duckman#72]

I'm prepared to wait for the share price to reflect real value.

Couldn't resist and bought some more this morning. They are getting sold down on a Green Day. Hope it doesn't lead me to a boulevard of broken dreams.

Duckman

 

[ans25]

I think Im realising that this one is for long term and not the short term, Its best to lock these up and not look at them for a while

 

[YOUNG_TRADER]

I really wish this mob would get some broker coverage/insto support behind them

Its currnet mkt cap is a joke for what it has,

Come on guys, great projects and delivering results is not all of the battle, you need good PR too so get to work!

 

[d_crome]

Any idea what to expect from DMM over the coming weeks? Announcements, drilling activity, JORC expansion etc?

 

[ans25]

THe share price to further decline

I dont understand at all, All i know is that DMM is only for the patient

 

[Duckman#72]

THe share price to further decline

Hi Ans

Do yourself and other investors a favour and please don't look at the daily share price. It fell 2c today on bugger all turnnover.

Just chill out!!!

Duckman

 

[wogitalia]

I'm out of this one, market doesn't seem interested at all, will almost certainly be back when it wakes up to it, but for now no point having my money sitting stagnant in it.

 

[YOUNG_TRADER]

To add to what D Chrome said, it must be remembered the mkts are ineffcient beasts, where they effcient the opportunity to make profit would not exist


Share price movements while important as they reflect sentiment are hardly an accurate indication of fundamental value, especially at the Spec/Smaller end of the ASX list

I love DMM fundamentally and have said so from day 1 and have stuck to my guns (but like GCR) the mkt does not agree,

But to me eventually fundamentally undervalued stocks such as this must get re-rated, that is of course unless I've made a big error in my calculations/thoughts


So right now the mkts are weak and DMM's sentiment is clearly negative hence the falling SP and as we can see by some of the posts this can create a snow ball effect, ie SP falls more and more holders question the stock, their assumptions and the fundamentals until they too capitulate and pull the plug


As D_Chrome said Rome wasn't built in a day and YML didn't go from 16c - $3 in a day, it took 6 months

Thought the selling would have finished yesterday, but a few more stale bulls to go it seems

Sooner or later this ridiculously cheap mkt cap vs project has to change

 

[alankew]

I really wish this mob would get some broker coverage/insto support behind them

Its currnet mkt cap is a joke for what it has,

Come on guys, great projects and delivering results is not all of the battle, you need good PR too so get to work!

Supposed to be doing a roadshow in the next week or so but thats what I was told last week as well.After putting together a comprehensive report as they have(they quoted 1000s of manhours work) you would have expected them to be shouting from the rooftops and now after the SP hasnt gone the way they(and US)wanted they will have to pull out their finger

 

[d_crome]

I dare say this can only be put down to an extreme case of poor PR skills and zero marketing resources at DMM.

I also question the timing of the release of the schedule.

As a share I holder, I expect more from a company that I decide to invest my $ in. Hopefully management are in the process of realizing there is more to mining than just that - mining!

Come on PR firms, please actively chase these guys and say "Hey, it's ok, you do the science, the geo, the ground work - we'll make sure everybody else knows just how good you are and how great your project is".

As I say - Rome wasn't built in a day, but also the world knew where Rome was....

Again - DYOR, these are just my rumblings and I have no skill, talent or training in anything.

 

[eclectic_nish]

let it rest guys.

All in good time !!...now is the time to accumulate not sell !

Good luck...

 

[JTLP]

Fantastic announcement today.

Expansion of the board of directors...even got a native on board too!

DMM have so much going for it...and are getting cheaper by the minute LOL!

Looks like Mr Market is in a Coma...

Time to crank up that PR machine DMM (from zilch to maybe some chinese whispers to get this juggernaut moving.

What did all my other fellow sleeping beauties think about this announcement today?

 

[YOUNG_TRADER]

I found it interesting how 1 chap seemed like a well connected international tpye and the other seems to be a well connected Congo type with Govt links/relations,

I guess in Africa its best to have the Govt on your side,

With Iron Ore in such high demand and DMM trading on an EV Mkt Cap of like $30m I reckon it will only be a matter of time before someone takes a tilt at it

I remember back when U was hot I couldn't understand how MTN was so cheap given the size of the deposit it had, it sat for months at 50c and I kept saying either it gets re-rated or a corporate raider/take over will happen

Well sure enough it did and the SP reached an amazing high of $6.50, sadly I stagged it on the way up but still made a truck load,

For me DMM reminds me of MTN and I am sure 1 way or another the stock has to push towards $1.50

Time will tell, I still have a few months to be correct

 

[JTLP]

I agree YT...making all the right connections.

Who was talking about Broker Roadshows? Somebody better ply the DMC board with some ink beforehand so they can remember how to talk :

On a side note; i tried to be a smart a$@e yesterday and put in a buy order at 0.64 cents (small one for gags). Didn't have time to check anythign until 2 oclock today when I realise that i am now owning some extra DMM shares!

LOL that will teach me

Let's get some federal green happening DMM!

 

[d_crome]

Hate implying it - but it's not what you know it's WHO you know when you're dealing in some places on this earth.

These blokes definitely look like they're heavily connected.

I'm sure knowing somebodies second cousin, half removed who went to school with the neighbor of a guy who used to play golf every 4th sunday with ministers nephew certainly helps in a part of the world that isn't exactly stable....

 

[eclectic_nish]

Agreed YT, these guys are sorting out their connections well in advance. It is quite rightly said, in Africa..its who you know not what you know !.

Im very impressed with the anns but also intrigued by the OIL expert. I was lucky to pick up more at 62c

Good luck all

 

[Sean K]

I've had a quick look at the new guys CV and I'm thinking WTF!

It's like bringing in a soccer player to an aussie rules team.

At least he plays in the same country I suppose.

Maybe he was good at footy earlier on in life?

Let's hope he's not a basketballer.

 

[d_crome]

Kenna's - more to the point - I hope they played soccer on the same team as say some UNION LEADERS or LOCAL POLITICIANS did.

This guy could be an expert in underwater basket weaving for all I care - so long as he does his part to get DMM to production, thats as far as I'm concerned.

It's unfortunate that business ethics don't exist in some places in the world - but as they say, when in Rome....