Issued shares and "diluting" existing shares is a very safe way going forward that companies can adopt instead of borrowing from a bank at hefty interest and being at the mercy of a banker that has his interests at heart. IE as long as the RBI index is high, so is their support. When the RBI wavers temporarily, they call in their 'dosh', then the company issues more shares to pay its debt and you get this double whammy.
SO, IMO, if you have read and listened to all the happenings, and with the quality of management behind the wheel like DT and the BEE interests working behind the scenes, we can all see that things are progressing well and truly in line with expectation. The bureaucracy is easily dealt with, and when in SA that is key.
I have spoken to senior management and they are just as frustrated at the SP, but changes are progressing at a faster pace than the market can truly value.
So we will take the 3.6 billion shares on offer, Therefore, if the company is generating say US$75,000,000 free cash by the end of 2011 and early 2012, then at a coservative pe of say 10,
that's $750,000,000 cap / 3.6 billion shares = 21 c per shares. No value for Botswana, further upside. plus other mine development in the pipeline.
So i would rather this scenario of shares being issued to fund growth than knocking on the banks door and getting double hammered. My only request would be that any future cap raising must include existing SH base, so each individual can chose whether to participate in the raising based on their level of exposure they prefer. choose to be diluted or participate and keep your position.
But they will have available to them a host of funding options. further EDF / KORES coal loans, smaller bank loans etc.
CCC Price at posting:
69.0¢ Sentiment: Buy Disclosure: Held
