thoughts on financial strategy

There have been a number of ideas floated for how OZL might grow itself etc, but I thought I would give some thought to financial strategy.

OZL have heaps in the bank, is debt free, outstanding tax credits and some 3.3billion shares.

Our aim is to grow share price and returns to shareholders.

On the current strategy OZL is potentially missing out on a whole tranche of shareholders, and that is those who rely on dividends for income eg retirees. Capital growth with its requirement to trade isn't an option for them, or at least is not their preferred way.

So to my simplistic mind, if OZL start paying dividends, more investors will invest, forcing the share price up. Having said that, the outstanding tax credits andits consequence of not being able to provide franked dividends is a problem, as paying unfranked dividends whilst eating up the tax credits effectively means shareholders are paying tax twice. So on this point I would favour no payment of dividends until tax credits are paid out. I would like to see an announcement though that OZL will pay out as dividends its total profit this year once the tax credits have been exhausted. Not sure how much that is expected to be (HT may be better placed) but I believe it would be in the order of 8 - 10c per share. That would certainly send a signal to the market.

I am not in favour of a share buy back. It seems counter productive to me, apart fom tidying up minor shareholders who are expensive to maintain. Why py out your reserves that would be required to build the company, and then later have to do a capital raising (issue more shares) or take out loans for plant or new mines (look where taht got us last time). At 3.3billion shares, this is not excessive. eg PNA has 2.8billion shares.

The cash reserves also provide a level of insurance against unforeseen events, like GFC, natural disaster etc. This helps protect our share price. I do hope they are using the money properly eg lending to banks at very high rates, and more clarity on the money's use would be good.

The cash reserve is irrelevant for any takeover as its value is always discounted in a takeover when assessing company value.

If management are disciplined, and the current lot seem to be, having a large cash reserve is good.

Should the cash reserve be in $US or $AUD? Who knows, but I expect the $US will start to appreciate soon as it starts to raise interest rates, although China will/is probably dumping its $US reserves as quickly as possible. Some hedging may be in order or even hoarding some of its own gold somewhere.

Anyway thesse are some thoughts on financial strategy I hope they promote discussion, and I am happy to be corrected or called to account for my views.

In any event without any other good news, having an appropriate financial strategy should help the Share Price increase this year.

Regards