"up up and away..........

...in my beautiful, my beautiful balloon."

All of a sudden, Zinifex puts the pedal down. One thing that has gone on ever since it has listed has been the constant changes on the share register as the various hedge funds and creditors have either exited or increased their positions. In the meantime, ZFX has continued to bring the cash in, has issued a profits upgrade and then reported as increased in profits.

What people need to realise is that the extra cash is going to dramatically alter their balance sheet and generate a surplus of cash. This surplus can either be used to bolster the company's future by allowing new interests to be developed (or probably more accurately existing interests to be further developed etc) and therefore turn into new cash without them taking on board any leverage = even more cash.

At some point this company either will become over capitalised with the cash or will make more profits or maybe both. They cash will have to go somewhere. Hopefully they may start buying back shares (or have a formal share buyback of all sh'ers) and allow the remaining sh'ers an even bigger slice of the pie.

One thing that springs to mind is a newer version of a buyback at a certain level (eg 1:10 at market price etc), but allowing sh'ers to under or over participate depending on their circumstances. If you are a hedge fund and you need to sell, well you can do so without souring the price. If you are in it for the medium/long term, well you can increase your share of the pie by not participating and end up owning a large slice of the business. As long as your major sh'er is less than 20% and this buyback does not trigger a mandatory takeover bid by taking them past 20% well could be considered. Would really tidy up their register.

Food for thought.