Must be getting boring in the executive seat with such a "simple" and profitable business model as DRR. Management has to justify their existence, it's easy to spend what's not yours, shareholder money spending justifies their salaries, meets some bulls**t milestone 'targets' and it means they can dip even deeper into the piggy bank. Would they as managers have been better off purchasing DRR shares instead? Of course not, but shareholders would have.
All management had to do is sit there, do nothing, hoard cash and wait for the next business cycle before buying up. They can't even do that. Although I love the business model it would take an idiot to ruin it and we may just have more than one at the helm.
DRR only has 10% in cash of the total purchase price. And in the same breath they lower dividend payouts! What a total f*** up! Bunch of kids in there playing with monopoly money. Load of debt or shares on issue incoming. They are probably banking on rising commodity prices to justify the purchase .
I will note that their Kwale asset in Kenya is no longer producing, it is end of life and has been acquired by UUUU from the US. With most of Trident producing assets being Gold, and with Gold at such high levels, what is the reasoning exactly? gold going even higher? Is this a gamble on Gold price, lol? expecting continued gains while extraction cost remains neutral? Simple and wrong group think assessment in this acquisition is obvious. Yes gold price is up near 20% in the period since last financial report for Trident but so is the price at which shares have been purchased.
Purchase price is 2x book value of Trident while DRR is some 20x. Take from that what you will. They are effectively paying $0.95AUD per share (292M shares on issue with a purchase price of AU$276M) for a company that made US$0.0082 cents per share last finical year and lost US$0.0128 the year prior. So, they made no money in the last two years and even lost some. Let us say that they continue making one US cent from here on in, and that's generous, based on prior year results. That would mean they make AU 1.5 cents per share for a full year of operations on an asset that we paid a whole 95 cents for, which is a PE of 63! Even if they manage to double it or go back to 2020 boom times of 3 US cents, we are still at a PE near or over 20 at the very best! All this while DRR hovers at around a PE of 14. I would be granting management more credit that they deserve to assume they even thought this far into it! Just a few colourful slides on how good and how many assets Trident has, and they ripped a buy while looking at all the other bobble heads nodding profusely throughout the signing away of any value shareholders held in DRR.
I have looked at dividends paid by Trident over the last 4 years and not a single dollar of dividend was paid, nor a single share bought back for shareholders, but boy did they carry out a bunch of acquisitions! So, it's no wonder that DRR clown show has cut dividend policy by 50%. The only ones benefitting here is Trident shareholders, who would be wise to sell into this news. This is a perfect example of incompetent management who do nothing, produce nothing, but require through their own lack of self-esteem to prove themselves to themselves by doing stuff at our expense!
Who exactly voted for this acquisition? Will shareholders get to vote? What do Iluka, BlackRock, Perpetual and other top holders think of this, 25 of whom own over 50% of the company and the rest by the public. Any shares that directors hold is majority issued through rights and other incentive payments, of which they will probably be more of through this acquisition, if it goes through!
I was strongly inclined to owning DRR, although it was fairly priced and limited executive competence could be garnered from reports that I could see at the start of this year. After the reports I have seen today, the calibre of management has shown itself and I have no intention of owning until either management is changed or price falls ALOT.
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