5hareholder: The past five years has shown that an exploration company needs as much cash locked in as possible to make it in the big time.
out of interest, can you provide examples to demonstrate this statement? I'd like to know which explorers have made it to the big time during the past 5 years.
CDU's bank balance last week was around $121M with no debt. Pretty impressive. With this move, they are effectively cutting their cash balance by one third.
your concern would appear to be a common one. I'll try to address it.
CuDeco has the right to Buy Back up to 10% (approx 12.5m) of the company's issued shares within the coming 12 months.
IMO, CuDeco's intent is to take advantage of the current sp, being able to buy it back at a price lower than that which will be paid by Oceanwide, making money in the process and also reducing dilution. as others have suggested, I don't think CuDeco will buy anything above $4.
a fortunate side effect of the BB will be to stabilise the sp by absorbing any excess shares that people or corporations may wish to dispose of. the BB will also protect long term shareholders from ruthless traders using marginally legal instruments to take advantage of everyone else while the media continues to ignore CuDeco's achievements.
so, CuDeco is very unlikely to actually buy the full 12.5m quota. I would be surprised if they were to buy even 3m shares, but that depends on whether any generous corporation wants to let their shares go at today's prices, permitting the remaining shareholders to each earn more in dividends. 3m shares at $4 comes to just $12m, not the "one third" of $120m that you are suggesting.
if the sp doesn't rise far above $4 but remains stable around the $4 mark until the M.L. is awarded, I believe many long term shareholders will feel more secure and will be able to endure the market shenanigans long enough to share in future dividend rewards.
this new stability also means that people and corporations sitting on the sidelines will begin to seriously reconsider their positions. with the possibility of the sp dropping back to below $3 greatly reduced, they are more likely to buy in now rather than later.
stability and peace of mind. very nice things to have for Mum and Dad retail investors like myself who are more often than not victims of the system and fodder for the sharks (also referred to as crocodiles in Chinese culture).
Why? Just to put a floor under the share price? Surely Wayne is confident enough in his project to support the share price in it's own right?
I sympathise with people who believe that the share price reflects the value and performance of the company. it's a very dangerous belief. it used to be true, many many years ago, but today's internet-enabled market has brought about a disconnect between a company's value and its share value. through use of various computerised trading instruments, in combination with controlled and directed media reporting, the share price can often be manipulated in any direction regardless of the company's performance. anyone who has invested or traded shares for more than a few years will be very much aware of this.
if you still believe that a share's price is directly related to the company's value, then please take a closer look at your investments and be very very careful.
cheers.
