3SOF

Placed a $10.4 order yesterday and was going to upgrade it today, but came in the morning and found it filled! Will ride it with David now. I guees, it's a good sign that in the face of the turmoil in the market, DROOY actually held up pretty well.

Spoke to a South African colleague of mine..he feels that mining industry will be least affected by power shortages as they're key to revenue of the state. So i think the reaction is overdone. There may be some profit taking though due to the huge surge yday.

I think gold & gold miners is a good space to be in for now.

We've had this news affecting South Africa's stocks, as nicknite20 posted:

South Africa's power shortages threaten growth

I think this certainly will have an adverse impact on DROOY's operations, but it won't be a material one.

DROOY has been outperforming its South African peers:





GFI is a $9.8 B market cap company and HMY is a $4.3 B. DROOY is just $0.4 B.

In my $1.5 - $2.5 EPS estimate for DROOY in 2008 I've considered that the company just maintains its gold production levels (which I think is highly achievable, even with the power shortages) and that $gold averages $900 throughout the year. Gold closed at $910.7 on Friday.

I'll keep holding DROOY for the long term.

David,
So far so good on this one..whats ur price target for short / medium term on this one?
Once again..nice pick & happy bday.
Nick

We got these reports yesterday:

S. African miners expect output to resume this week

QuoteDavid,
So far so good on this one..whats ur price target for short / medium term on this one?

I think the stock should close 2008 around $40, if $GOLD remains above $900 or rises towards $1,000 (it closed yesterday at $927), but if I get $20 - $30 in six months I'll probably take it.

DROOY is a medium term investment, not a long term one.

QuoteOnce again..nice pick & happy bday.
Nick

Thanks Nick

Sounds good David..i took 25% off the table today though. Given my cost basis of low 9s..i thought its prudent to book some profits.

I'll let the rest ride for now.

I also have a position in AUY..so my exposure to gold miners is quite significant for now.

Quote from: nicknite20 on January 29, 2008, 10:42:51 AM
Sounds good David..i took 25% off the table today though. Given my cost basis of low 9s..i thought its prudent to book some profits.

I'll let the rest ride for now.

I also have a position in AUY..so my exposure to gold miners is quite significant for now.

Thanks for the info and good luck nicknite20 (ETFC has been doing well too )

It looks like South Africa's miners can resume production now, using 90% of their previous electricity capacity:

South African Gold, Platinum Mines Can Raise Power (Update2)

(thanks for posting this in PAL's thread pinoleropuro)

DROOY's share price wasn't negatively affected by the power failures (as other South African miners were), but I sure expect it to get an additional boost with this positive news.

I'll hold DROOY for the long term.

If one compares DROOY chart with other South African miners (like GFI and HMSY, for example), one clearly sees that DROOY is the best pick of the group, almost not affected by the electricity crisis in South Africa.

With $GOLD at $920 plus DROOY is at least a $20 stock.

DROOY reported results for the October-December quarter yesterday before the open and they were quite bad: DROOY quarterly report

The bad results were mostly attributed to temporary factors in management's comments.

Despite the bad news, the stock shot up 7.4% to a new 52 week high. I think this happened because investors are looking into 2008 results already and with $GOLD standing at $950 an ounce it is clear that DROOY will have a fat profit, something not seen in several years at that company.

Also the company has some new mining operations set to start in 2008, which can increase gold production, as you can read on the earnings release.

I'll keep holding DROOY for the long term.

DROOY rose 9% to a new high yesterday, with $GOLD at $962. No, I'm not selling DROOY, because I think that with $GOLD around $900 the stock is worth at least $20 and I'm not bearish on gold, just not extremely enthusiastic.

$GOLD may very well go to $1,200 rapidly, I certainly wouldn't short it. That would put DROOY in the $40 level.

I'll keep holding DROOY for the long term.

DROOY rose 9% to a new high yesterday, with $GOLD at $962. No, I'm not selling DROOY, because I think that with $GOLD around $900 the stock is worth at least $20 and I'm not bearish on gold, just not extremely enthusiastic.

$GOLD may very well go to $1,200 rapidly, I certainly wouldn't short it. That would put DROOY in the $40 level.

I'll keep holding DROOY for the long term.

DRDGold Cut To Sector Perform From Outperform By RBC >DRD.JO

Feb 29, 2008 07:40:09 (ET)


(MORE TO FOLLOW) Dow Jones Newswires

February 29, 2008 07:40 ET (12:40 GMT)

I just wanted to say that I'm bullish in DROOY but not in gold stocks in general. Of course, $GOLD closed yesterday at a new all time high just a bit shy of $1,000, but I believe most gold mining stocks have anticipated and discounted this surge in the precious metal. This explains gold mining companies extremely rich valuations even when $GOLD was around $500.

Stocks "knew" this was coming and now the Gold industry trades at 48 times earnings and 12 times annual revenues. 

But not DROOY. DROOY's market cap doesn't reflect $GOLD's advance, not yet.

With $GOLD at $1,000 I expect DROOY to profit no less than $2 per share in 2008, which puts it trading at 6.5 times earnings. I'm positive that DROOY will move up to at least $20 over the next 6 months. If $GOLD breaks out through $1,000 on its way to $1,200, then I say DROOY's fair value is something between $30 and $40.

At the current market price of $13 DROOY is an absolute buy in my view.

fyi

Zacks.com
Retain a Hold on DRDGOLD
Tuesday March 4, 2:22 pm ET
By Paul Raman, CFA


DRDGOLD Limited (NasdaqCM: DROOY) is an unhedged gold-producing company with operations in South Africa and Australasia [Australia + Asia]. The company has separated its South African and Australasian operations, thus becoming a more focused entity.

With minimal debt on its balance sheet, DROOY is well positioned to undertake expansion activities. However, there are some challenges faced by the company with respect to its aging assets, environmental laws, currency risks and power shortages. Thus, we rate the stock a Hold with a six-month target price of $14.50.

Currently, DROOY shares are trading at a 27.1x 2008 EPS estimate of $0.48, which is well below the industry multiple. DRDGOLD has low debt, strong liquidity, and a no-hedging policy. Although it has faced challenging times with its South African operations in the past, the company is recovering and is ready for a turnaround.

With its unhedged policy, the company is benefiting from the strong gold prices. However, the currency exposure to the Rand and aging assets in South Africa pose some risks for the stock.

QuoteCurrently, DROOY shares are trading at a 27.1x 2008 EPS estimate of $0.48, which is well below the industry multiple.

Considering DROOY's average costs and the current price of $GOLD, I think DROOY will make something more like $2 EPS in 2008, instead of the $0.48 EPS estimated by Zacks.

Therefore I'll keep holding DROOY.