Central Asia Metals Share Discussion Threads

[zangdook] 26/7/2023 02:00

As with anything, buybacks can be good or bad depending how they're executed. There are companies which reduce shares in issue significantly at a low valuation and benefit remaining shareholders in a tax-efficient way, and there are companies which buy back a negligible proportion at high valuations and then give them to directors as an "incentive".

A buyback, put simply, is a reverse placing. If buybacks are always bad are placings always good? No, neither is true.

[lord gnome] 25/7/2023 18:16

By the way, in case you are wondering, the do-called Efficient Balance Sheet Theory is pants. It was invented by corporate stockbrokers in an attempt to con boards of directors into share buyback programs using debt, thus creating juicy commissions for themselves.

[lord gnome] 25/7/2023 17:51

Badly informed NChanning? Effing hilarious. I've been doing this for over forty years and done rather well, thank you. Just accept that you have no monopoly on wisdom and that there is more than one investment style. From personal observation over the decades I can say with a high degree of confidence that share buybacks rarely benefit PIs. They rarely seem to work for companies either as they tend to spend capital on shares at the top of the market and then raise fresh capital for growth / acquisitions at a discount. Current AV. Buyback might be a rare exception as this is returning surplus capital from restructuring at the bottom of the market with the dividend pool untouched and split over fewer shares. It pays a healthy dividend. You sell your shares,I'll keep spending my dividends.

[haywards26] 25/7/2023 17:10

Everything is about timing and managements astuteness.

*When to make an acquisition, what type of acquisition and how much to pay for an acquisition etc..
*Whether to pay special dividends or carry out a share buyback and at what share price levels.

Nobody can tell the future, but investing in companies who have strong management track records, reduces the risks of costly bad management mistakes IMO..

[dougmachin] 25/7/2023 15:15

Cu, Zn and Pb prices all up today. Cu back through 3.90. All looking good.

I like CAML's divi-policy. 30-50% of FCF. 40-45% seems about right to me.

Keeping 50%+ for acquisitions is also great.

I also see the merits of a buyback if the share price goes too low. Surely that results in a higher divi per share... fewer shares to divide the divi cash between.

[bluemango] 25/7/2023 10:50

Absolutely.

Rather than argue the toss about who is 'badly informed' or not, it's wiser to acknowledge there's no right answer that covers all investing styles and aims (capital, income, or both). And yes like Lord Gnome I'd far rather have the dividend rather than deplete the capital (when they decided to resume dividends it would be on less shares then, so would need to be a significantly higher new payment level to compensate - clearly you would not be in the 'same financial position')

[nchanning] 25/7/2023 10:24

Classic badly informed UK investor . If a company buys back 10% of its shares outstanding you can create a synthetic dividend by selling 10% of your shares and you will be in the exact financial position as if the company had paid a 10% dividend . The only difference is that investors not seeking income are not forced to pay income tax if they wish to rollover their investment . If you have good management they are able to increase the buyback when they know the shares are cheap rather than blindly paying a regular dividend . Lord Wolfson at Next has provided a model example

[lord gnome] 25/7/2023 09:06

How kind of you to propose the cancellation of my dividend. My personal capital allocation is quite rational, thank you. I only invest in companies offering a good yield which I believe have a decent prospect of capital growth - hence my investment here.Generally speaking I don't support shares buy-backs as these do nothing either for the company or shareholders. If the company is holding surplus cash it should be returned to shareholders by special dividend.In CAML's case I believe that cash is being held while they continue to search for an acquisition to grow the company. It is therefore quite rational. A share buy-back would therefore defeat their objective.

[gotabsirius] 25/7/2023 08:46

Excellent post

[nchanning] 25/7/2023 08:45

Sadly there are almost no UK boards that are interested in rational capital allocation . The ideal CEO would switch the dividend to a buyback whenever the stock got cheap and cancel the dividend and make a big acquisition whenever commodities got cheap . Sadly when asked in the recent interview what the strategic objective of the company is the CEO said something like to mine more base metals for the benefit of humanity instead of maximising shareholder value . They will just continue to pay out 30-50% of FCF as a dividend because investors 'like the dividend'

[pughman] 25/7/2023 08:06

A year ago on 25.7.22 the CAML share price was £2.41, with the FTSE at 7306, net cash of $45.6m and their pool of metals per tonne totalling $12,447. Today the share price is £1.81, FTSE 7680, net cash $50.6m and metals adding to $13,080 per tonne. Feels like there is value here that the market is overlooking.

[mrscruff] 24/7/2023 14:47

Mines upto 2039 is absolutely find given the margins. There is no rush for M&A and cash on the balance sheet these days pays interest. We just need the macros to get better and we will climb up very fast.

[kael] 20/7/2023 07:53

I agree with this and why a pivot to include exploration into the nlbusiness may be the better option.

[zebbo] 19/7/2023 16:12

This is where, IMHO they are failing. What do they actually value the shares at....

[nchanning] 19/7/2023 15:36

the board need to compare any potential acquisition with the value available in its own shares . CAML trades on a cash adjusted PE of ~5 , with some diversification in metals and jurisdictions, albeit with reasonably short mine lives . If they can't find a better value acquisition than this they should buy back their own shares with the cash

[dougmachin] 19/7/2023 10:27

Interview:

[pughman] 19/7/2023 08:39

Hearing that I wouldn't be surprised if they tweak their dividend FCF payout ratio, now they are debt free. He blamed the share price on high interest rates and tough metal prices. Metal prices look healthy to me, it is costs that have jumped. For years CAML prided itself on being in the lowest quartile of producers, that has changed to now being in the lowest half, that's a big difference. He has ambitions for CAML being in the FTSE 100, that's quite a stretch.

[zho] 19/7/2023 08:06

Anyone else having difficulty accessing Nigel's presentation, or have I got the wrong day?

[zebbo] 17/7/2023 17:38

There a number of ways Nige can get the share price moving. Wind up is one way. Big share buy back while the share price is so week. Surely there is value to release over than just divi's

[pughman] 17/7/2023 10:04

Everyone says the same, good management, well run, high dividends, but since the share price high was reached in expectation of the SASA deal, the share price has nearly halved. They will never find another Kounrad. SASA had been so-so, chances are another acquisition will be similar. I'd take the running down the life of the mines option, paying out 50p+ish a share a year over the next 15 years.

[danieldruff2] 17/7/2023 06:13

If they keep paying out so much in dividends, the company will struggle to expand, and a wind up in the 2030s looks on the cards. Sounds like some here would prefer that, I'd rather they had used the incredible economics of Kounrad to build a mid-tier miner.

[zangdook] 17/7/2023 02:48

If they can buy back a significant amount then the dividends will inevitably be higher in the long term. It's when they buy back 0.5% of the company and give it out to directors as "incentive" that it smells.

[bozzy_s] 17/7/2023 01:31

Share buyback being mulled? I'd prefer a commitment to a higher divi payout, maybe 50-60% of FCF from the existing 30-50%. Buybacks rarely seem to help in the long term. A higher long-term divi yield will help.