A couple of points:
What is the difference between receiving $1000 dividend with $300 franking credit or selling $1300 of shares and including $300 as a ‘tax credit’? Nil as far as I can see except that if I do not want to sell now I have $1300 as an asset base to grow. I am not even allowing for capital gains tax credit of paying less tax when sold which adds to personal benefit of making your own franking credit (when & only when you want to). I would much prefer this option than company gives me a dividend with a tax credit.
- Why is GXY doing consolidation? Very early AT said (from memory) that shares had to be a minimum $1.00 to trade on HK exchange. This has been a stated goal for the last 18months I have followed GXY v2 [& I lost a small fortune on GXY v1]. I do not know if this a listing rule or a “desired figure” on HK exchange like AUS exchange.
- The focus on HK exchange is to add liquidity and open up the register as I understand it another means to increase value. This is beyond my skill set as to understand how this works but given everything else AT and team has said and done in the last 18 months I believe him beyond question.
- There seems to be a common thread in topics of the great Australian dream of
dividends down the track . While I will be of retirement age in a decade or two, this is the worst option available. My mind set used to be the same [dividends are good] but after reading a few books of contrarian thinking is if profits can be invested better than as a dividend [even though imputation credits are accumulating] then do it. For a long time I found it hard to understand why companies who are in a growth phase paying little or no dividends continue to grow substantially in value and shares with high dividends ebb with the tide.
Importantly now the company has $1000 to invest and capitalise (does not need to be cash). Above is for example only – add as many zeroes as appropriate.
In the meantime somewhere down the track GXY [at least 5 to 7 grand finals away] GXY will be a very large pure international lithium play with sdv and jb. Whether rock is commercial then time will tell. Using our capital, management should look [or already will have] at either different income streams including vertical integration or different minerals – paying dividends means they cannot make a return on capital better than dividend. That will be a looooong way off (I hope) especially with this team.
While I read HC posts regularly I am a not an active contributor due to the amount of ‘brain dead’ noise that comes far too often (sometimes positive often negative).
My only negative comment on GXY’s performance in last 12 months should have been their biggest positive. They were 3 months late starting production and sending first shipment with no announcements during this period as to what was happening. When they finally restarted production they mentioned they had increased PRODUCTION CAPACITY by 100%. That is major – especially both in generating cash flow and now the opportunity to potentially self fund SDV rather than 20/30% joint venture initially discussed. This thought process would not be even entertained if production capacity was not doubled. Also all fixed costs per tonne dropped 50%. So even their negative was a major positive!
This is one reason why I do not particularly care if AT and team get all their bonus shares. While everyone agrees the bar is low – if they take the market cap from $600 million to $2 to $3 bil in next 3 to 4 years we will all be happy (or we should be). Yes my shareholding will be diluted [relatively minor] but still a good earn for investing in GXY. I can still do whatever I do 40 hours a week – it is critical that management team with its ‘team of silver hairs’ for SDV development [I love that expression first time I heard it from AT] is kept together. If their leaders receive a little too much I am OK with that compared to them chasing a buck and going somewhere else. I believe strongly we are on the cusp of something Galaxical but the management team put in place are almost as critical as the assets in the ground. Otherwise its just rock and brine.
Usual disclaimers – do your own research. Obviously only 1 view amongst many.
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