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TmT - Hmm I did buy shares in Greatland yesterday and today. £400 pounds worth is all the spare cash I had and circa 3000 shares. I'm very happy with my meagre holdings. Yachts just a yacht at the end of the day. A caravan on water is a common analogy. Sunsets are fantastic. Just need a lady to share it then life's complete.
TmT the biggest thing against share buybacks is that it boosts eps and triggers lots of directors bonuses, and options become more valuable. Not sure we have those problems though.
HG. Haha, I would drink the bolly first, then the Rioja and watch the recording in the morning!
@MissLoreal. MercI
"What would you advise?"
Steal their yacht, sell it, and buy GGP shares. Since you didn't do this today, you will suffer all night from FOMO.
Why will people never ask advice until it's too late?
Sorry Jerry , but I must respectfully disagree with your thinking.
Exploration companies are an investment gamble. They invite investors to gamble their cash on a hope. 19 out of 20 EP's go bust and you lose your cash.
When the ( not the 1 in 20 ), but the 1 in 1000 hits the bulls eye , the cash rolls in, They only need so much cash to continue the exploration , so the balance can be redistributed ( as a one off special divi ) back to reward the original backers including the CEOs who also put in major sums.
The wise investor handles his own individual tax situation,- best if in a SIPP or an ISA. Then use the cash to reinvest in more shares back in the Co. at their reduced share price if you wish - and if it is a company like GGP with a host more fantastic prospects, then time and more discovery re-
instates the SP - and hope for the same again.
No-one is a loser. The " gambling " investor has won.
If it is a one off gold strike, one invests the divi in a new venture.
But the fact is , with a 1 in a 1000 type GGP, not seen before by me in a lifetime , GGP will see me out on their journey of discovery ,operating in a totally stable economic and political environment, in one of the largest and richest mineral resource regions on the globe, owning a string of potential super dicoveries; so why not - discover , - JV with the largest and the best, - sell out and move on to the next project. In this style of company the SP and the M Cap will both continue to grow. There are very few gold explorers with M Caps of £550 Mil.( and growing )
Loads of cash flow,- pay your loyal shareholders fair special one off divis , - in my view a journey I am very happy to make for me and my children and grandchildren.
Leave the mining and processing to the specialist big boys.
Tig
@Jerry
Here's a pretty useful "layman's terms" article on share buybacks: https://www.investopedia.com/articles/financial-advisors/121415/stock-buybacks-good-thing-or-not.asp
As always with investopedia it's US-centric but the logic is sound. Most of the "cons" listed would not apply to the GGP scenario we've been discussing. The only potential drawback to buybacks that they mention that would hold any weight with me is that sometimes the short-termers / traders benefit more than the LTHs. If the buyback is gradual that's less of an issue.
The other concern I have about buybacks is that they are tax efficient and don't have the costs of administering a dividend, but they do not necessarily have a proportionate impact on share price. Due to the relative illiquidity of AIM shares (and even as active as GGP is, I think this applies), you won't necessarily get the boost in SP that you'd expect from the buyback. It doesn't give new investors a real reason to buy, but it does give existing investors a reason to sell into the rise in SP.
This has been argued round and round, of course. From a purely selfish perspective, since all of our shares are held in SIPP & ISA, I'd prefer the dividend.
Here's hoping Hav is big enough that this decision must be made someday.
Drink both and set your alarm! Sorted! ????
Welcome back Jerryspaniel. I'm in a tricky situation. The people on the yacht next door have just left me with all there groceries as they are flying back with pikey airways flight FR9059 to Manchester. I have to decide whether to drink a half bottle of ARTESO Rioja or finish the bollinger they opened before they left but I don't want to miss Sandeeps presentation. What would you advise?
Tigger, how can the mkt cap remain unaffected after the payment of a dividend? Share prices always fall on going ex (assuming no other events that affect the sp). If a company is worth £100m the day before it goes xd, and pays a £5m div, it has to be worth £95m on xd day.
Thats why indices have to change the divisor every time a constituent company goes xd - though appreciate thats getting a bit esoteric....
I am sorry that I havent been around to respond to those posting about the merits and otherwise of dividends. I thank Paddy and others for answering on my behalf as they have pretty much stated my case.
Firstly if a company had excess cash and no way of investing to create a higher return they should buy back shares as this is more efficient than paying dividends. Secondly if GGP got to that stage it would cease to have a lot of the things going for it that make it attractive now as an explorer. Thirdly, there are those who mistakenly think that dividends are free and have no cost to the company, which is clearly nonsense. Fourthly which sort of ties this all together if you want a dividend from any company just sell some shares to that equivalent. This may use part or all of your CGT allowance but as that is £12k+ and multiples of your div allowance, it gets you a higher net. For those who have everything in SIPP and/or ISA then you are indifferent to whether you sell shares or receive a div, but it still doesnt make that div zero cost to the company. And if anyone doesnt get any of this I am happy to explain further with some simple examples, as in HopefullyGolds words I am not out to 'roger' you but I would like to explain it and help you.
One alternative might be a share buyback. I’m generally not in favour as they seem to be done too often for the wrong reasons, but if the share price remains a long way south of the company’s true value it could be something to think about.
Chrisatbirdies
I'm with you on dividends (FWIW) as even if the SP does drop surely it would only (hopefully) be temporary until the next 'big find' (as we are an exploration company with plenty of other 'potentials' after all?) which would then see it re-rate again accordingly.
I for one would prefer to keep a hold of ALL of my 2m holding (unless of course someone wants to buy us out north of a £1 a share (when and if that happens) in which case I might have to reconsider.
My hope is that this share will provide myself and my family with future financial security some of which can hopefully be passed on eventually to benefit my teenage nephew (and his future family).
Here's hoping for some stellar news in tonight's presentation, followed by a considerable re-rate of the sp tomorrow.
GLALTHs!
I agree Paddy ..was just giving another view and like you I think GGP meet these conditions easily ! Lots to look forward to and sit in those hands :-))
If GGP arrives in a financial situation where it becomes a " reliable " annual distributor of a dividend of let us suppose approx 5% ( 1p divi would therefore reflect a 20p SP , and pro-rata ), then the share price would adjust and maintain its Market Cap. Exploration companies do not tend to be dividend companies. BUT, neither are they co's that hoard excessive cash. Investors go in to co's like GGP at some initial risk, and excess cash, over and above normal operational costs can be paid out as special divis, and as such,I am all in favour. I can use the cash to buy more shares - or to buy Speedy some decent wine . My choice. MC remains unaffected.
Tig
Nice rise into COP up 2.9%
Paddy.
@Chris - I might be wrong but I think Jerry's opinion is that the extra capital would be reflected in the Mcap and therefore in the SP of the company. If you want to take some profits then you just need to sell some shares and therefore the Mcap is not affected whereas issuing dividends every year would obviously reduce the value of the company by the subsequent amount.
Thanks for the explanation paddy.
That been the case if ggp dont find any more significant good fields, then it's pointless any new share holders joining, so the price would drop.
In my mind dividends are the way forward, but as they say wtfdik
Looking at Rio Tinto's presence in the area, I would be very surprised if they didn't try and buy GGP in the future. Perhaps after Scally results and MRE to get a fuller picture of the resource.
It's a good question, Prospector. I hope no LTH want the company to be hamstrung for cash. It would be great to have plenty to drill all we want (though with too much cash, you can lose discipline on targeted drilling).
So there's a lot to be said for retaining a lot of funds for growth. But there's another drawback -- if the share price is too low, someone like Rio or some venture cap firm comes in and buys us out to steal our share of Hav, Scall, etc. So boosting the SP might be important, too.
My view -- money for further exploration is a higher priority, but if there's enough to pay out some dividends as well, I'd do that. I'm hopeful that Hav is big enough to do both, but with emphasis on exploration. Others might have a different view, especially those who want the SP to be high because they've been waiting a long time and want to cash in. We do have LTHs like that and even a small dividend would be a boon to them, so it's something the BOD should consider. The BOD work for the shareholders, after all.
I would happily take a small special dividend following a sale. Say a buyout of Havieron was £1.5b, retain £1b for further exploration and development of future mines, then pay out the current market cap.
TMT, don't you think it would be better for GGP to hold cash for actual growth rather than just pumping the SP up? I would rather they use the cash for acquisitions and exploration, not just creating a fake company.
Personally, I don't want GGP to waste money on dividends. I would prefer they spend more on exploration.
"Hoe else does a company share its profits out amongst shareholders??"
Share buybacks, which in theory increase the price. Shareholders can then top-slice and the income is taxed as capital gains rather than dividends, which is more tax-efficient in the UK tax system (as it stands today).
Share buybacks have their own inefficiencies, however.
@Chris - I might be wrong but I think Jerry's opinion is that the extra capital would be reflected in the Mcap and therefore in the SP of the company. If you want to take some profits then you just need to sell some shares and therefore the Mcap is not affected whereas issuing dividends every year would obviously reduce the value of the company by the subsequent amount.
We'll see what transpires over the coming months & years but either way it should be lucrative for that LTH's in here.
ATB - Paddy
PG hi,
Thanks for your reply most appreciated.
Cheers
Tom :-)