However the 'discards from the majors' (if North Parks becomes available at a reasonable price) would be better than a 'jump to Africa'; this is my opinion based on gut feeling rather than anything empirical.
And on another note; I am also supportive of the 'hold and wait' approach.
But there may be some scope for a little 're-framing' of the M&A reserve.
The current M&A reserve may be renamed the 'Development and other purposes Reserve'. As 'Development' occurs in reasonable predictable stages it should be possible to estimate when large sums of cash will be required. This will allow some of the reserve to be invested at much higher interest rates until the cash is required. The current M&A reserve that is not required for 'staged development' may be retained; but it may not be enough for significant M&A.
So TB may conduct an exercise to determine the amount of the reserve that may be returned as capital to the shareholders. If the cash is not capital then (in may case) it will be taxed. To return M&A cash to me and then only have it taxed at a minimum of 30% is unacceptable.
After allowance for 'development' and assuming the $ cannot be returned to shareholders 'nearly tax free', invest the remaining M&A as a long term 'Company and Other Purposes Reserve'; but at a significant interest rate in $Aus. This may increase NPAT available for distribution just enough to give an extra cent dividend; and support any 'future borrowings' for M&A.
Once OZL knows that it will have the cash available 'when necessary for development', there is less pressure on the exact size of the NPAT from Prominant Hill that is necessary for timely 'development' within PH and at Carrapateena. This assurance of 'cash availability for timely development may facilitate a change of the 'OZL dividend policy'; change from 40-60% to 40-70%.
Once again Huge, lets 'hold and wait' but with a little more structure and refinement of the M&A cash reserve. HC42
OZL Price at posting:
$7.12 Sentiment: None Disclosure: Held
