"Paying out cash suggests management cannot come up with a better usage of the cash including buying EXS shares (which they say are under-valued)."
Not true. Buying back 100m of shares has effectively the same economic outcome for the company as returning 100m to shareholders. The decision depends on the most efficient tax outcome and maximizing the other asset that everyone seems to forget they have, I.e. Franking credits. There aren't many small mining stocks out there with any, so no-one appreciates their value.
Why go on market and pay a 30% premium for something worth 100m in the current market? This is a sure way to risk the farm. It's not like we are in the position of an Xstrata and have spare capacity that we need to fill. Holding cash while you search for an opportunity is inefficient - return it to shareholders and if you happen to see an amazing 100m opportunity down the track, then ask us for the cash back then. Let the shareholders decide what they wan to do with the cash in the meantime.
EXS Price at posting:
65.0¢ Sentiment: Buy Disclosure: Held
