2021-05-27

Dacian

I was unlucky and bought days before the raise, but I like the risk/reward setup. It looks like a bottom formed over the past 2 years with "weak" hands having sold already to "strong" hands who have an average price that is below 50 cents (over the past year, most volume in the mid 30-cent range). 

There is risk of a spike down that marks capitulation because there is no support below. That will flush all the remaining weak hands that bought over the past 2 years. It would hopefully be a V-shape that takes DCN back into this range. A breakdown accompanied by negative news means the bottom is somewhere lower, with no support since everyone holding DCN share will be underwater at that point.

The bull case is the company raised $40 million, has a $230 million market cap and will produce 150,000 oz per year. It goes without saying that management has destroyed value to this point and one must assume more destruction is coming with this crew, but if gold can hit a new high, they'd be pulling in about $120 million gross profit over their AISC. Beyond and they will be pulling in substantial cash. This stock is extremely levered to the gold price.

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