DVP - Business Model/Strategy

Forum Topics DVP DVP Business Model/Strategy

Pinned straw:

Last edited 8 months ago

21-March-2024: Mining-Services-set-to-generate-c$175m-Revenue.PDF

22-March-2024: Resource-Upgrade-Paves-Way-for-Funding-Production-Strategy.PDF

The market is having a dummy spit today, despite new record highs in the USA overnight, and DVP has traded so far today in a range between $2.37 and $2.41 compared to yesterday's close of $2.40. They closed up just 1 cent (+0.42%) yesterday and they look to be in a shorter term uptrend within a longer term downtrend on this chart below, but they look worse on a 3 year chart (further down, below the MIN chart).

They have recently been making higher lows and look to forming a "pennant" which I think they are more likely to break out of to the upside than the downside, but a lot of that will depend on sentiment. DVP are a bit of a hybrid type of company in that they are part mining services and part mining (mine owners and operators). Their MD, Bill Beament, has done both in previous roles, working for mining services companies before moving into mine ownership and management with NST (Northern Star Resources) which he took from nothing through to being a multi-billion-dollar company and Australia's second largest gold mining company at the time he left (July 2021).

DVP should be trading with a good management premium because of Bill, however mining services as a sector is not particularly sexy in the eyes of the market at this point, and the types of metals and minerals that dominate DVP's various mining projects (lithium and base metals mostly, like zinc) have also been "on the nose".

The market, and in particular funds and brokers, also tend to dislike uncertainty, so they do prefer to deal with companies that just do one thing and do it well, rather than a mining and mining services hybrid like DVP. For reference, that's exactly what Mineral Resources (MinRes, MIN.asx) is, and MIN's SP has tended to trend well both up and down as sentiment waxed and waned.

Typically, in a calendar year, you'll see between one and two uptrends and between one and two downtrends only, which was the case in both 2021 and 2022, however 2023 was different because MIN were in a downtrend for the entire calendar year, except for the first few days of January and the bulk of December '23 where their SP was rising, but arguably still within that wider downtrend as I've shown there. You could also argue that they're trading sideways right now within a $58 to $70 band, but I prefer to think they've re-entered another uptrend. Time will tell. Everyone has an opportunity to be an expert with the benefit of hindsight.

DVP has also trended nicely both up and down, but mostly down during the past 14 months:

And they've broken to the downside out of a channel that was already heading down, so sentiment is very bearish on DVP clearly.

I personally see this as an opportunity, based almost entirely on Bill Beament and his exemplary management skills and prior track record at NST. When he first took over NST and they had just the one mine (Paulsens), Bill showed incredible patience and foresight, waiting until the right time to embark on M&A to grow the company. He never overpaid for assets and he tended to focus on organic growth when the gold price was rising and sentiment was bullish, and on acquisitions when the gold price was falling and sentiment was bearish. In other words, he followed Buffett's advice in relation to being "Fearful when others are greedy, and be greedy when others are fearful.” - except in Bill's case it wasn't fearful when others are greedy, it was patient. He bought assets when the price was good and he knew that he - and his company - could add significant value to those assets. It was his mining services background that gave him a real edge in relation to knowing just how much more efficient the actual mining and processing could become in every scenario. He also surrounded himself with capable and well-incentivised people, something that he is clearly doing again at Develop.

I believe that accumulating DVP shares at current levels will prove to be a profitable move down the track, so I hold DVP both here and in my real money portfolios as well.

Bear77

Added 8 months ago

21-March-2024: The Money of Mine (MoM) podcast lads discussed the new DVP contract at Karora Resources' Beta Hunt gold mine, which is situated quite close to a number of Bill's other DVP projects and contracts so he's developing a little "hub" of sorts there in that Kambalda/Southern Goldfields district of Western Australia south of Kalgoorlie (maps included below).

Beta Hunt is located 25km from the Mt Marion lithium mine where Develop has an initial A$46m underground development contract, and Mt Marion is located 40km south-west of Kalgoorlie. Both Beta Hunt and Mt Marion are less than 100km from Develop’s Pioneer Dome Lithium Project (see maps below).

From: The Report that Shaved $250 Million from IGO Today (youtube.com)

[Money of Mine podcast video, Thursday 21st March 2024]

To skip straight to the DVP discussion - use this link: https://www.youtube.com/watch?v=0RPcQEn8yMc&t=947s

"We started the show by dissecting a bearish report written on IGO, before discussing the latest news from Develop (DVP)."

"Next, we pulled apart Sierra Rutile (SRX) in one of the year’s most fascinating M&A stories, then moving to another M&A story that is drawing to a close, we spoke about the Battle for Nyanzaga (ORR, PRU, SVM.t)."

"Meteoric (MEI) & Australian Strategic Materials (ASM) both received non-binding hand outs from the US Export-Import Bank which was worth a chat, before we flew through announcements at Spartan (SPR), Calidus (CAI), Firefly (FFM) and lastly Global Lithium (GL1)."

CHAPTERS

0:00:00 Introduction

0:00:38 More pain to come for IGO?

0:15:47 Develop announce Karora deal

0:23:41 The years most fascinating M&A deal (SRX)

0:34:48 The Battle for Nyanzaga is almost done (ORR, PRU, SVM.t)

0:36:30 MEI & ASM get big government boost

0:40:24 Why the board changes at Spartan?

0:47:11 Calidus rattle the tin

0:52:34 Firefly's copper equivalents

0:53:35 Global Lithium find drill results

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DISCLAIMER

All Money of Mine episodes are for informational purposes only and may contain forward-looking statements that may not eventuate. The co-hosts are not financial advisers and any views expressed are their opinion only. Please do your own research before making any investment decision or alternatively seek advice from a registered financial professional.

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Source: 2019: https://www.karoraresources.com/2019-08-13-RNC-Minerals-Announces-Filing-of-Technical-Report-for-Beta-Hunt-Gold-Resource-Update

Source: https://www.mining-technology.com/projects/mount-marion-lithium-project/ [April 2021]

Source: https://stgm.com.au/projects/lithium-star or Lithium Star – WA Projects | St George Mining Limited (stgm.com.au) [Current website; I do not hold SCQ shares, they closed at 2.2 cps today and their market cap is less than $23 million.] DVP's Pioneer Dome Lithium project is shown there below Mt Marion.

Mt Marion Lithium Mine and Processing Plant - Source: https://thewest.com.au/business/mining/mineral-resources-hands-develop-global-46m-mt-marion-contract-c-12747402 or Mineral Resources hands Develop Global $46m Mt Marion contract, as Delta hoovers up lithium rights | The West Australian [01-Dec-2023]