Projected FY 2021-22 and Final dividends, page-185

What if we had a few crappy years and were forced to raise equity at a big discount to what we just bought back all those shares at? All that buyback cash just disappears in smoke.

Because that is a VERY realistic scenario for a commodity company, particularly one exposed to only a single commodity and that needs to keep spending capital to develop new mines. Some big bills coming up if we want to develop Vickery.

Even the Big 4 banks have been on the wrong side of that cycle in recent years, buying back shares at a much higher price than they've issued new shares at. There is a place for buybacks if the stock is undervalued but there's no way you can definitively say they are clearly always a better outcome than dividends, particularly fully franked dividends. I prefer a judicious mix of buybacks, dividends and retaining capital for future projects. Particularly for a company like WHC which has always operated in a complex market, and the last few years that complex market has got truly bizarre.

Someone earlier was arguing against retained capital on the basis that inflation would eat it away. While true that inflation would bite, that is nothing compared to a situation in which they dispense the cash to SHs and then need to raise equity at what could easily be a 90% discount to the current SP. Retained capital is important in this game too.