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Doray Minerals (DRM) - Impairments And Impediments

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Doray Minerals (DRM) reported its full year result with a net loss of $35m after a non-cash impairment charge of A$46.8m on the Andy Well and Deflector assets. Revenues of $70.2m were 4% less than the previous period and were 23% less than Argonauts forecasts due to the awaited sale of the copper-gold middlings (worth up to $15m at current spot prices). Our recent site visit to Deflector confirmed the operation is running well and above nameplate throughput capacity. We believe the stock trades at a discount to its peers due to the near term re-financing of its debt facility and the ongoing high cost production issues at Andy Well. We maintain our HOLD recommendation and revise our target price to $0.38ps ($0.59 prior) pending the resolution of short term impediments including the re-negotiation of debt and the sale of the copper-gold middlings.

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