Ann: Quarterly Activities and Cashflow Report - A, page-15

re: Ann: Quarterly Activities and Cashflow Re... Your argumentation is a really odd.

Could you explain what effect do you expect on SP if the company bought back 1.4m of 323m outstanding shares? SP soaring by 0.43% or a tenth of a cent?

A share buyback is something a cashflow-positive company may consider but not one that has not established a single operation.
The question of how much shareholder revenue a buyback would create in the very short term compared to an investment in a sustainable long-term project is really stupid. Instead what needs to be asked in case of a company in its early stages of development is how much dillution (thus loss for shareholders) would a capital increase involve once the company requires cash compared to the shareholder value created by a buyback today and how much all the administrative and legal work of a future capital raising would cost.
You need to keep in mind that it will take at least 2 years from the time of an agreement until WEC can finally prove the viability of the BCB process (not to speak of how long it would take to bring a mine into production) and they obviously will not be able to return to the market for a capital increase before there is some cash-generating operation. So they must keep their powder dry until the first battle has been won.

If you look at my estimations of mid-term cash requirements you will probably realize that there is no scope for a buyback:

$10m usual yearly cash burn (salaries, R&D in Cessnock, exploration works)
$20m establshing 1 Mtpa production at Lake Philipson
$30m acquisiton of US mine
$20m building BCB plant for coal fines recovery at US mine
$20m*x equity contribution per South African JV
$25m purchase of a coal deposit in Indonesia + costs of development
____________________________________________________________

$125m minimum total


Any cash returned to shareholders by a buyback will mean less scope for profitable operations and it would be a wrong signal, too, since it indicates that management is incapable of bringing something profitable on stream. There is really no point of swapping future prospects for short-term shareholder profit.

Also the outlook for coal is not bad at all:
http://www.iea.org/newsroomandevents/speeches/121218MCMR2012_presentation_KSK.pdf

If you - in line with the market - really belive that WEC will invest its cash at a loss, you should definitely sell your shares immediately.