On December 24, 2018, Doray Minerals Limited (ASX: DRM) announced that it has signed a binding contract to divest its two projects namely Andy Well and Gnaweeda Gold Projects to Westgold Resource Limited.
The key highlights of the following deal:
WestGold will pay up to an amount of $15 million in cash and shares. However, $9 million will be paid on completion of the two projects on the following terms.
- $2.5 million in cash will be paid with $6.5 million in Westgold shares on completion of the project which is expected in February 2019.
- $2.0 million in cash will be paid after production of one million ounces by WestGold from the gold projects.
- $2.0 million in cash will be paid after production of 2.5 million ounces by WestGold from the gold projects.
- $2.0 million in cash will be paid after production of five million ounces by WestGold from the gold projects.
However, this agreement with WestGold will not impact its merger with Silver Lake Resources via a scheme of arrangement. The divestment of the Andy Well and Gnaweeda Gold Projects will lead to greater value for the shareholders of Doray since WestGold Resource is a highly experienced mining company. The new agreement will deliver upfront and milestone payments to Doray and will expose its shareholders to a potential upside performance of the gold projects.
The new term-sheet with WestGold is a termination of previous announcement agreement with Galane. The Board of the company is positive about this new agreement and believe that this is to be a better outcome for the company than the previous agreement with Galane.
The company, total revenue stood at $159.23 million in FY 2018 as compared to $183.01 million in FY 2017. The net loss for the year stood at $14.768 million in FY 2018 as compared to $74.225 million in FY 2017. The balance sheet for the year-end recorded total assets number standing at $199.660 million in FY 2018 as compared to $225.217 million in FY 2017. The company had an inflow of cash from operations in FY 2018 with an amount of $38.283 million as compared to $59.130 million in FY 2017, however, the cashflow from investing stood at ($28.927) million in FY 2018 as compared to ($67.353) million in FY 2017.
Let us now quickly analyze the performance of DRM’s stock and the returns it has produced over the past few months. On December 24, 2019, the stock price of the company settled at A$0.345 per share with the market capitalization of circa$154.11 Mn. The stock opened with a day’s high price of $0.360 and touched a low of $0.345. It yielded a YTD return of 53.33% and produced 11.29% return based on the past six months. The stock has a 52-week high price of $0.420 and a 52-week low of $0.185.
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