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Gold/Mining/Energy : DROOY Durban Deep- Best S. African Mine
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To: POLARBEAR who wrote (448)2/6/2000 2:19:00 PM
From: baystock  Read Replies (1) of 851
 
PB, Durban is also my #1 holding. It should do very well if the POG continues to go up. But I doubt very much that I will stick around for a 2 digit share price, let alone a 3 digit one. Though their Harties acquistion has been great, there are a couple of other things they have done that I am not too pleased with. First they over extended themselves and were forced to increase their hedging drastically at historic low prices in the POG. Second I don't like their Australasia expansion strategy very much. They are paying premium prices and diluting the heck out of their stock to buy low cost but small producing mines. Take a look at the DOME purchase where they are issuing much more new shares percentage wise than the incremental production that DOME will bring. DROOY is supposed to be a marginal producer with a huge leverage to POG and this is why most investors buy their shares. But they are changing this and paying more than they can afford to do so by issuing tons of shares while their share price is at historic lows. I would support this Australasia expansion strategy if they instead were buying undeveloped gold resources and developing them themselves out of cash flow as that became available. They are already up to 115 million shares and they haven't even reached 1/2 their target of 400-500K from Australasia. The company has not provided a rationale for this expansion into Australasia...makes we wonder if this was just another Kebble self-enrichment scheme at the expense of shareholders, like that whole JCI restructuring fiasco.

-Ram
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