IKN

I get these really boring anonymous hatemails (hey, on a blog like IKN they come with the territory) from this one guy and there always about Dynasty Metals (DMM.to). Another one came today, loaded with the usual selection of teethgnashing. But then I also get mails from normal people who ask me why I hold the stock, what with the Ecuador pol risk and the way it’s flatlined for the longest time. The simple answer is that I bought the stock when it was at $1.35 and at current prices that’s a 295% upside in around a year and a half. Hey, maybe not the kind of returns you could have got from Ventana Gold (VEN.to) in the same period, but really it’s not that shabby. Sure makes holding a value play that much easier, I can tell you :-).

And not only did I buy the stock back then but I also advised other people to buy it. Here’s the December 2008 NOBS report on DMM.to written by your author by way of proof. If you can’t be bothered to download the file (and I wouldn’t blame you; who needs to read a 18 month old report from a lunatic wonky blog ranter anyway?) here’s the conclusion section pasted out for you. DYODD, dude.

Conclusion
Dynasty has been severely affected by the local political scene in 2008, as well as suffering some of the effects of the wider market woes. However, as project economics still look sound and profitable, the decision to invest in Dynasty is a call on Ecuador mining and its future in the country.

NOBS has no doubts that the current discount for political risk at DMM is far too large. Once the new mining law is on the books DMM will almost certainly revalue. We expect an initial target of around $3, with $4.00 to $4.50 once Zaruma is operational. Market doubts will remain, especially about the size and shape of the windfall tax to be applied, but as total state burden is likely to be designed around 50/50 parameters the combination of “classic taxes”, the royalty burden and the WFT will not take much more away than in other countries….perhaps the final difference will be 10% of proceeds.

Socially and environmentally, there is still delicate ground to clear. However DMM enjoys strong local support and that should win the day (although there is a clear risk of political or protest actions from other groups in Ecuador).

Once in steady operation at Zaruma further price revaluation is likely. The NOBS medium-term target of $5.60 is based on the P/E ratio parameters discussed in the report. Once Zaruma is running, DMM will be in a position to grow organically, and can decide whether to move ahead at Jerusalem and then Dynasty Goldfields.

DMM.to is a speculative buy, and could almost be described as a “strong speculative buy” due to its compelling economics and the political situation which is on the road to stabilizing, but may still hold unpleasant surprises. But the bottom line is that reward far outweighs risk. DMM is an obvious buy for investors with a higher risk profile to their portfolios.