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Gold/Mining/Energy : DROOY Durban Deep- Best S. African Mine -- Ignore unavailable to you. Want to Upgrade?

To: baystock who wrote (467)	2/14/2000 4:56:00 AM
From: baystock	Read Replies (1) \| Respond to of 851

<<Durban Roodepoort Deep today announced that it had acquired a 19.9% shareholding in the Australian listed, Papua New Guinea gold producer Dome Resources. DRD paid Aus$0.30 each for 28.66 million shares in Dome, >> So if 20% of the company is 28.66 million shares then there must be a total of 143 million shares <<Durban Roodepoort Deep today announced that it was bidding for the 80.1% of Dome Resources it does not already own. DRD is offering 1 DRD share and A$0.80 in cash for every 9 Dome shares>> For the 115 million shares of Dome it doesn't own, DROOY has to issue 12.7 million new shares. So DROOY's total shares outstanding will increase to 116 million My estimate is that the total purchase price for the entire 100% of Dome is equivalent to 21 million shares if one includes the cash component in the bid for the remaining 80% and also the cost for the initial 20% purchase. This works out to an 18% dilution in the company for an increase in production of 6.25%, if one uses the current production figure of 80,000 oz/yr for Dome. Doesn't exactly seem like a good deal to me on the surface. Certainly seems to me to be a deviatiation from Durban's stated mission to be the world biggest miner of low grade ore (translation...the worlds biggest marginal mining company). On the other hand if Dome has hidden potential that allows it to increase production from 80,000 to 200,000 oz/yr, this will turn out to be an excellent purchase indeed. Only time will tell.