I hear you I just hold a different view. The Chinese government is not Chinese business. Business in this case is mandated to go forth and prosper, a commercial arm of China Inc. The two are separated for good reason - like the giant sovereign wealth funds of other nations.
The Chinese government requires income and assets - both! Big profits coming home to SGG will he high on the list of priorities like any western business. They do this better than us, at least as well if not better than the USA and that is saying a lot.
Prospering means a number of things. Increase in book value of shares is a balance sheet issue and of great value for other expansion globally. SGG could not view a stagnant SP as good. In this regard also they have the same aspirations as us IMO.
As profits rise per ounce and as ounces produced rise then share price increases and SGG look good and successful (reality) in this case so it is what they want. I am not guessing this is just pure commercial reality.
Income from dividends can and will be used by SGG to go forth and buy other assets. It does not make sense that SGG just wants to rape FML as this would not be good business. If FML are producing significant revenue it will want to distribute dividends and also to expand production further within the bounds of commercial reality and good commercial practice. They will also most likely assist us in future with T/O activity but work to do first.
They may want gold off-take at the going rate - fine it takes supply from the rest of the market and keeps pressure under the gold price. That happens to be good for FML and the existing shareholders.
FML currently support dividends however this was a long way off at the rate we were going. Would you rather send DT back to Aussie Funds who are prepared to stump up $50M between them at a discount - and associated SPP to appease shareholders every time we want to expand? As DT said they are not long term either as they would merely view us as an investment. The commercial reality of this is that you raise money at a discount, hold back share price and create a potential stock overhang EVERY TIME. Not optimum and DT has managed to find a way past this and this is an excellent achievement IMO.
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These are 5 possible reasons that deserve attention - that would delay dividends. Free cash flow is one thing but this is serious opportunity and significant capital.
If you want divvies you are in the wrong stock. FML are building a mining house and the SP will rise IMO. We have to see the deal first - get the money, build the Reserves (rock talk is appropriate here), expand the production and hope to see gold price going up as well :-) From your excellent article I am vindicated that China is creating opportunity for us!
Have a great weekend, CW DYOR&DD
FML Price at posting:
3.7¢ Sentiment: LT Buy Disclosure: Held
