Debt used to acquire assets that generate sustainable FCF makes sense.
Using debt to acquire underperforming assets & then having to partially repay debt via dilution of the registry doesn’t.
To talk about balance sheet strength is laughable.
Lucapa has a minority shareholding in a JV in Angola.
Cashflow from this operation is patchy, repatriation of funds is at the whim of a third party.
Mothae is a dud & Merlin on hold.
But sure sing, “we’re debt free” whilst holding less than impressive assets if that helps you cope.
Far East Capital - weekly commentary - 9 Dec 2023, page-23
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