I have been accumulating these since 2006 in small parcels as an investment for the family trust. Truthfully it has been a disappointment. My average price is around 80c and the movement is sluggish. Why it trades at such a huge discount I also cannot understand. It did pay a dividend a while back (and one of the reasons I was interested) as it is a discipline so many companies do not have and therefore cash management may be poor.
When I grew up in the sixties miners and mining houses paid good dividends whereas these days cap growth is paramount. Much prefer to make the decision myself by reinvesting or not.
However I think that the banks that lend on margin do not support it which is part of the problem to me. If I could gear future purchases by 50% and the company paid a reasonable dividend it would be a good LT hold as the interest cost is a write-off against other dividend receipts if one seeks income.
The other sort of similar company I have invested in is GMI which I am well up on. GMI invests in more "upmarket" mining companies and is less risky. It is also a good way into some blue chips like BHP. Furthermore gearing is available from ASB with whom I deal. At the moment the GMI discount to NAV was not much when I last looked.
Both imo are good investments and not dealing opportunities and as I have mentioned before on the LRF post a good place to squirrel away those dealing profits.
I am no investment advisor but now and then get it right. When I'm wrong it's someone else's fault.
LRF Price at posting:
63.0¢ Sentiment: LT Buy Disclosure: Held
