The DGR Global Ltd (ASX: DGR) share price has more than doubled over the past week, turning the stock into a fabled "10-bagger" over the past year.
The company's shares have traded as low as 0.3 cents in the past 12 months, but hit a high of 4.6 cents earlier in the week, on news that one of its portfolio investments had received a takeover proposal from a Chinese company.
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Chinese bid rejected
DGR told the ASX in a statement released earlier this week that the London Stock Exchange-listed SolGold Plc (LSE: SOLG) had last week rejected a conditional and non-binding takeover bid from Jiangxi Copper (Hong Kong) Investment Company Ltd (JCC).
The bid was priced at 26 pence per SolGold share, with the SolGold share price shooting beyond that level to be trading at 30 pence currently.
This is good news for DGR, as it is a major shareholder in SolGold along with some heavy hitters in the resources sector.
As the company said:
DGR is the fourth largest shareholder of SolGold holding a beneficial interest in 204 million shares or 6.80% of SolGold behind JCC with 366 million shares (12.18%), BHP Billiton with approximately 311 million shares (10.36%) and Newcrest International with 309 million (10.3%). DGR's holding in SolGold is DGR's largest asset, forming 95% of the marked to-market asset base of DGR.
DGR's shareholding in SolGold, calculated at the 30 pence share price currently, is worth about $123 million, which is about triple the value of DGR shares listed on the ASX, with the company's market capitalisation coming in at just $39.7 million.
Major project shaping up well
SolGold, which was founded by DGR and listed on the London Stock Exchange in 2006, owns the Cascabel project in northern Ecuador, "on the prolific Andean Copper Belt, the northern Chilean sector of which hosts an estimated 25% of the worlds copper resources and production''.
As DGR said this week:
Based on consensus metal pricing at 16 February 2024, of just US$1,750/oz gold and US$3.85 /lb copper, an independent prefeasibility study into the staged development of the core of (the) Alpala deposit at an 8% discount rate, an initial 12 million tonne per annum underground production rate and a pre-production capex of US$1.55 Billion was completed and demonstrated an after tax net present value of US$3.2Billion and an after-tax internal rate of return of 24% on just 18% of the resource being mined over just the first 28 years. At the then current consensus pricing, the project showed the modelled delivery of over US$7.1 Billion in free cashflows over the first 10 years of production.
DGR said the project had not been reassessed at more recent long-run gold and copper prices, or with the addition of a new open-pit project nearby.
DGR chair Peter Wright said the takeover approach by JCC indicated the value in SolGold's flagship project.
DGR shares were changing hands for 4.4 cents on Thursday morning, up from 1.8 cents before the JCC approach was revealed.
