Dana Resources (DANR)

[stervc]

eom7 & ALL, very important with DANR…

With that DANR lawsuit, it was not really a lawsuit. It was only a draft given to them on Sep 29, 2009 from their former Chairman Moises Rosales in Peru as he never filed anything with the SEC to make anything official:
http://finance.yahoo.com/news/Dana-Resources-Provides-iw-2182885397.html?x=0&.v=1

The company, DANR, believes that the dispute is unfounded as they are seeking legal action even though there has not been any ”official” legal action filed against them with the SEC or anywhere since the draft was ever created a long while ago. I'm thinking that some kind of a resolution has transpired in favor of DANR since that issue was announced and filed back in Oct 2009 and the PR below was released after the fact on March 1, 2010:

http://finance.yahoo.com/news/Dana-Resources-Flagship-Gold-iw-524982017.html?x=0&.v=1
…The Collota gold deposit estimated resource totals 1,170,000 ounces of gold, equivalent to a current gross in-situ value in excess of $1.25 Billion. Efforts are underway to increase the size of the Collota Deposit to 3,000,000 ounces of gold. At recent global gold prices, Dana Resources can potentially reach in-situ levels close to $4 billion ($USD).

Dana Resources plans on processing the oxide zone first due to the low cost open pit heap leach process. Initially, Dana Resources expects to net over $18 per tonne of ore. The Collota gold deposit oxide zone has 27 million tonnes available to be processed using a cut-off grade of 0.25 grams per ton. At this cut-off, Dana Resources will net over $400 million profit from the oxide zone. The sulphide zone has over 13 million tons ready to be processed with expectations to net over $150 million profit.…

So, it appears that the company believes that this Collota property could very well be considered something a little different from the other original package of the patents and properties under dispute because the disputed properties were originally acquired back on June 3, 2008 which is indicated within the DANR Form 8-K filed on June 10, 2008 below:
http://knobias.10kwizard.com/filing.php?param=&ipage=5721949&DSEQ=1&SEQ=&SQDESC=SECTION_BODY&exp=

However, the acquisition of the Collota Deposit was completed well after the above acquisition of properties on July 29, 2009 as indicated within the PR below:
http://www.danaresources.com/news/2009/index.php?&content_id=39

From reading through their history, the company seems discipline enough to have not mentioned such within that PR above insinuating they own the property unless they truly know that they own it considering any previous disputes. This means that it should be fair to now consider the Collota Deposit to be under the ownership of DANR to consider the above ”combined” amount for Net Profit that was PR-ed and quoted above for DANR to be as stated below…

$400,000,000 + $150,000,000 = $550,000,000 Total Net Profit

Net Profit is synonymous with Net Income which is what I will use to derive the below Earnings Per Share (EPS).

Before I do this, I need to determine their Outstanding Shares (OS). According to their last 10Q, in 2010, their Outstanding Shares (OS) was 88,437,980 shares. They filed an S-8 for 40 million shares after such. If you were to add those 40 million shares to the already 88,437,980 shares issued and outstanding, that would give DANR an OS of 128,437,980 shares.

This is important because you have to divide the Net Income by the OS to get the EPS as follows…

$550,000,000 Net Income ÷ 128,437,980 (OS) = EPS

$4.28 = EPS

Since I do this for all other stocks I derive an EPS for, I guess it is only fair that I do it here with this DANR EPS although it appears to be a little mind boggling. When you multiply the above DANR EPS with a 12 conservative P/E Ratio, you get the share price below for where DANR could or even possibly should fundamentally trade…

12 Conservative P/E Ratio x $4.28 EPS = $51.36 per share

Heck… hmmmmm….???

I’ve been going over this logic for a while now and I seem to not find much to contradict these thoughts. I am posting these thoughts although they do seem a bit too good to be true, but we have seen a few too good to be true situations actually transform into being true. I derived the info above from my basic standard processes for deriving such data.

Heck, let’s say that the company was wrong and is off by 10 times that amount for what they believe their valuation to be. That still would warrant DANR to be worth the value trading in the $5.13+ per share range. Even if you say that the company is 100 times off by its valuation, such would still warrant DANR to be worth the value trading in the $.513+ per share range.

Again, from my research, the Collota Deposit is not part of any of the properties under dispute. Everyone ”must” do their own due diligence (DD), but it appears to me that something was resolved where there are no concerns. This means that the info from their slideshow below applies too:

http://www.danaresources.com/_resources/2009_07_Dana_Presentation.pdf

So, to conclude, in my opinion, once the selling of those 40 million shares have dried up, DANR could have a huge move to trade closer to where it should be valued in my opinion. Given yesterday’s volume of over 31 million shares, I would like to think that the S-8 shares are nearly completed. Keep in mind that at .0115 per share, this currently is a Market Cap of only $1,477,037 for DANR. I don’t know about anyone else, but that is unreal considering its potential. To add, observe the quote below from their PR released on March 15, 2010…

http://finance.yahoo.com/news/Dana-Resources-Provides-iw-3806065294.html?x=0&.v=1
Mr. Benjamin Nunez, General Manager of Dana Resources in Peru said, "We are very excited with the results of our due diligence on the Chota Silver mine. Both the sampling and data from the draft 43-101 report have surpassed our expectations. It is an exciting time for Dana Resources. Hosting both a 1.17 million ounce gold deposit and now a producing silver mine positions Dana Resources towards becoming a self sustaining mining company." …

Now consider this Market Capital Analysis on their Collota Deposit alone without even taking under consideration the Chota Silver Mine that is already in production. This Collota Deposit alone has reflected 1,170,000 million ounces of gold. With gold being over $1350 per ounce, that's a total of $1,579,500,000.

This means that DANR is "potentially" trading 742.5 below its present value as derived from below...

$1,579,500,000 Future Market Cap ÷ Current Market Cap $1,477,037 = 742.5 share price multiple

Current price of DANR = .0115 per share
Share Price Multiple = 742.5

.0115 x 742.5 = $8.54 per share

The Market Capital Analysis is a different fundamental assessment than that of deriving the EPS and P/E Ratio fundamental assessment. Still, the Market Cap Analysis for DANR reflects an undervaluation share price for DANR up until it reaches $8.54 per share. Also, this is considering they capture the valuation in one year versus over the entire life of the mine. Even if it takes a year or two or more, it still would justify trading in the dollars for the year. Considering BHP Billiton has completed concessions on their property, proves that we here are not the only ones who sees some potential in DANR. For inquiring minds, I think this means that we are in good company since BHP trades at $90.10 per share on the NYSE.

Bottom line, no matter how you slice the pie for DANR, I think it’s fair to think that the price of DANR is still undervalued. Below is the COLLOTA Critical Path to Fast Track into Production to view too:
http://www.danaresources.com/Collota_Critical_Path_timeline.pdf

v/r
Sterling