I've gone cold on the wisdom of a share buyback for SLR. A SBB will theoretically firm up the SP and improve the EPS, but what will that achieve? - not dividends or institutional support. The money for the SBB would have to come from cash reserves, and hence the overvalue of the company wouldn't change.
The money for the SBB would have to come from cash reserves, and hence the overvalue of the company wouldn't change.
The core problem for SLR is its high AISC's and other (additional) costs associated with developing and maintaining its 'challenging assets', so that it may maintain its gold production. Its got competent management, a highly modern efficient gold plant, and is close to Kalgoorlie and its potential supply of goods, services and skilled labour.
What SLR needs are better assets that will increase productivity and profits. This can only be done via successful exploration and M&A. SLR has a commitment to the former, and a reasonably good track record, but is yet to find an 'elephant' that will be a company maker.
Growth for growth sake is ultimately futile, and such policies resulted in the disastrous Murchison and Great Southern misadventures which almost destroyed SLR in 2013/14.
Cool Hand has a long time association with the Kalgoorlie area and is surely on the lookout for local prospects. He has a good track record as both a manager and strategic thinker and is unlikely to bet the house on anything but a relatively sure thing. He disappoints many shareholders who want more words to complement actions.
SLR appears to be good value at these levels, but will not become compelling value till it can significantly increase its production from long-life assets and significantly reduce its costs of production. Until then, the best thing you can say is that SLR will remain a major employer in the Kalgoorlie area and continue to make a significant contribution to the WA economy, but don't expect dividends or significant SP appreciation.
Mines are a wasting asset, and if production is not replaced they eventually stop and close. If a mine lasts only 10 years and pays you 10% dividend for 10 years, you've merely got your investment back, but now your shares are worthless. Those holders of NST which pays 2%, will not get their money back for 35yrs if the company doesn't increase in size and absolute amount of dividends. The average life of companies is way less than 35yrs.
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