DCN – Citi rates the stock as Downgrade to Neutral from Buy

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Citi only initiated coverage with a Buy/High-Risk rating and a $3 target in May, about three weeks ago, so there will be a number of unhappy faces at the office. The company management has downgraded production guidance in a significant manner.

Citi analysts today respond by saying they are “disappointed”; what else are they supposed to say? The recommendation has been pulled back to Neutral/High Risk. Target price falls to (wait for it) $0.60 as the analysts express their concern about the “low Reserve-to-mill reconciliation for gold ounces across the whole operation”.

Estimates have been reset, with the analysts explaining what essentially has occurred is that projected output in ounces went down -30% on +41% in costs, while valuation multiples were reduced on top.

Sector: Materials.

Target price is $0.60.Current Price is $0.55. Difference: $0.05 – (brackets indicate current price is over target). If DCN meets the Citi target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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