Investment case31 Oct 2025 14:52
1) Dividends paid for a number of years.... if you ignore Saudi, Lithium, expansions, unknown knowns or unknown unknowns etc. and focus on "known knowns" - If I offered you tickets for £1 which paid you £1 every year for 10 years, how many tickets would you buy, and what price would you pay for it. Me, I'd bite your hand off, and pay probably up to £5, ending up with £10 for each £5, an IRR of 7.18% pa.
Here's your baseline case, of why the shares have value
2) What if I told you you could pay for the tickets now, and that they were on sale for 10p, but you had to wait two years before the payments would start. Interest would build up in the time before the payments began, and the price would appreciate accordingly. Some people would play this and sell their tickets on as more people hear of this magic money tree. But they have to buy at ever higher prices.
This is how the Lassonde Curve works.
3) The tickets probably end up paying you more than £1, but this is a known unknown - so speculatively I might pay more than £5 for a ticket. After a few years of ticket sales and payments, it's announced that the tickets now pay £2 a year, because there's another ticket machine and, well, your ticket gets you one of the new tickets too! I would now pay up to £10 a ticket.
That's the gold price increasing over time in a bull market and mining expansion at work - reinvestment of profits for growth.
4) In the 7th year, it is announced that payments will be made for a further 10 years, and payments will now be £5 per ticket, per year. I decide I will buy them up to £25 for a ticket, and begin buying all the tickets I can find under that price.
This is the next generation of mines that hugely profitable mid-tier mining companies seek out in order to continue growing.
Now, all the 10p tickets you bought, pay you a handsome income, and are worth many multiples of what you paid for them.
This is successful investing.
Roll up, roll up, buy your tickets here....
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