If I may add to the responses provided to you by bulbuls etc, I think there are some important and subtle things to note with regard to the context of your question(s).
Firstly you ask "why spend so much buying back when the funds could be needed in the near future". There is an inherrent assumption that the company is actually going to spend a large amount of its cash to buy back shares. I would suggest to you that if you question this assumption then many of your other questions will also be answered.
Announcing a buyback simply allows the company to make on market purchases of its own stock should it think it predent to do so at any point in the next 12 months. They can't do so without announcing the buyback but by the same token announcing one doesn't mean that they will even spend a single dollar buying shares. In reality the outcome is likely somewhere inbetween.
The company is surely cognicent of the games that have been played with its stock and the impact that these have had on some of its small shareholders. It must also be very aware of how the stock is seen by many in the investment community and that the volatility of the stock does little to help the company achieve its objectives. While some benefit from the volatility, most don't and it should benefit all stakeholders to minimise this volatility.
Announcing a buyback is a clear signal to those that may think they can continue to short the stock that the company is backing itself and it has significant firepower should it need to use it. Shorters should play elsewhere.
Should the company deem that the message goes unheeded then one would expect another warning shot by enacting on-market purchases of stock. The company may simply deem that they need to show their intent to follow through and start buying back a small amount of the stock they recently sold for $4.00 at a much cheaper price. This doesn't necessarily imply that they will spend tens of millions buying back 10% of the company but without the threat nothing is likely to change.
You compare the $2 placement with the buyback at $3+ and ignore the more recent placement at $4. Each needs to be kept in context. The $2 placement appears to have been done under the belief that a cornerstone institutional investor was required to restore confidence and support the share price after the loss of confidence post August JORC. Right or wrong, they did it for a reason and that was the price at the time. We will never know what would have happened if they hadn't done that and if you look back at my posts from the time you will see that the idea was questionable.
I too questioned the need for the previous buy-back but concluded then as I do now that the company probably most interested in stablising the share price and discouraging those that toy with it. They may also seriously still believe that a takeover is possible and irrespective of what anybody else thinks about that, they may just want to avoid somebody picking up a starting stake too cheaply. If they happen to buy back some shares in the process then so be it. I don't expect them to spend huge amounts of money doing this but as always only time will tell.
I can't say for sure what is in their minds anymore than anybody else here can. I can however say that a buyback is a tool that can be used for more than just buying back stock. I can say that if they buy back a few shares for $3.30 that they only weeks ago sold for $4 that isn't a bad deal either. I can say that any interest the banks are giving on the cash raised wouldn't normally be described as "an excellent return" or most of us wouldn't be investing in stocks.
If anybody really wants to know their CDUs intentions then maybe somebody should call and ask. As long as they don't start buying back shares at or close to $3.80 then I'm happy. Stability over the next 12 months while we get closer to mining will surely be a comfort to many and that can't be a bad thing.
CDU Price at posting:
$3.42 Sentiment: Buy Disclosure: Held
