The following analysis indicates a fair share price of $2.00 to $4.00 for DNG in 2012.

The entire financial and stock market industry agrees that the best way of measuring the true value of a stock including DNG is the Price earnings ratio. This ratio is used to determine whether DNG is overpriced or under priced when you buy it.

Price Earnings Ratio (PER) = Price of Stock divided by one year earnings per share (EPS) of the company.

So a PE Ratio of 12 means you’re paying twelve times the earnings of the stock and so it will take you 12 years to make your money back and be in profit. To provide meaning to the Price Earning Ratio Professor Robert Shiller of Yale University reconstructed the S&P 500 back to the 1880’s which is over one hundred years of data. The following is based on his work.

PE Ratio under 10 – Stock price is Under Valued

PE Ratio 10 to 15 – Stock price has a Fair Value; So about 12

PE Ratio 15 to 18 – Stock price is Over Valued

PE Ratio over 18 – Stock price is in a Bubble

So using the above PE Ratio information lets estimate and project what the DNG fair value stock price is for a PE Ratio of 12 after each quarterly financial report;;

The assumptions made were as follows:

-Continue to operate 200 tonne Acari mill full capacity to Dec 31/2012.No additional source of revenue.

-Earnings per share (EPS) for the year are based on the past or trailing four quarterly financial reports.

-Future quarterly earnings per share are based on .07 per share which was the previous actual quarterly earnings for June 30/2011.

-Adjustment to EPS – based on price of gold rising 15.9% and silver 18.8% each year on average over the last 10 years.

Many fund managers, analysts and investors rely on the EPS from the trailing four quarterly reports to make buying decisions.If the trailing four quarters of EPS is negative, I don’t think DNG will show up on their radar. There are hundreds and thousands of companies to choose from so why look at DNG . When they try filtering DNG from their data bases, it is unlikely DNG will come to their attention until 4 trailing quarters of earnings combined are positive.

In my opinion and based on my analysis once the Dec 31/2011 quarter is released we should be trading in the $2 to $4 range in 2012.

GLTA Hold Long and Prosper