DROOY Durban Deep- Best S. African Mine Message Board

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Gold/Mining/Energy : DROOY Durban Deep- Best S. African Mine

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To: Ray DeMoss who wrote (469)	2/24/2000 10:51:00 AM
From: baystock	Read Replies (1) of 851

From one of the very few people I have seen who knows how to logically analyze gold stocks: Date: Thu Feb 24 2000 09:48 John Disney ( the DRD situation .. hope this is clear enough ) ID#24148: Copyright ¸ 1999 John Disney/Kitco Inc. All rights reserved DRD update .. You can look back at the earlier numbers I did for DRD on Feb 08 13:46 .. I calculated the 4th quarter costs at 279.5 $/oz at an exchange rate of 6.16 .. The rand has eased to 6.34 .. so this drops the cost to 279.56.16/6.34 = 271.5 .. Now .. although I defended what DRD had done to their hedge book against the vigorous attack of Steveis .. I really wish they had not panicked at the low gold price and locked in where they did .. they did the best they could to recover by buying calls .. but they're not in the money till 315 to 325 as I recall .. so at 300 the calls will be worth more but not dollar for dollar. .. Fourth quarter revenue was 282 .. lets assume that a $300 gold price increases attainable revenue to 295 .. If you dont like that number .. you can revise the rest of the calculation by yourself .. .. ( 295 revenue - 271.5 cost ) = 23.5 total profit 1.2 mill oz/ divided by 103 mill shares = $0.27/Share @ a 10 pe = $2.70 rather than 1.60 .. to complicate things we have the dome deal .. lets say .. it contributes NOTHING to earnings and adds 17 mill stock .. so we get 23.51.2/120 = 0.235 or $2.35 a share .. so even with gold at 300 .. I think DRD is undervalued .. oddly enough with the hedges they have in place they are also much LESS vulnerable to a fall in price to say 290 .. their revenue would come off to maybe 285 .. and profitability would fall to 13.51.2/120 or 0.135 a share and set the price level at $1.35 in a worse case.. .. falls below that level hurt very little as the hedges will tend to limit the effect of furthur falls in the gold price on revenue. Nevertheless .. I dont understand the New guinea episode .. and I think they may be smoking some funny stuff in the board room lately. When a man sits in a country with over half the worlds gold .. why does he go looking for more in head hunter country ???

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