Why isn't the comparison to buying back their own shares to create PER SHARE increases in value?
Agree that they should pursue world-class assets and use balance sheet responsibly...but assuming you are tier 1 and have world class assets already (not all, but at least some right?), then isn't the shareholders only focus on how much of the production/reserves/EBITDA I'm getting per share? And buying shares gets me to the same place as a shareholder, with a lot less risk?
And especially on a risk-adjusted basis, if can buy own shares at 5x EBITDA or buy another asset at 5x, buying more of own shares seems like no brainer? No deal/geological/integration risk. Just push a button and create value.
Basically, if company buys back 50% of shares (helped by responsibly using balance sheet capacity) over a few years, and per share production/reserves 2x, isn't that just as good as buying another asset to 2x production?
Obviously rare chances to own unique/HQ assets, but bar should be VERY high..
If I understand correctly, you’re advocating that mining majors acquire smaller companies for cash, _not_ that they embark on major greenfield expansion a la QB2, is that correct?
Because when it comes to greenfield expansion, I like the idea of “waiting until the market screams for tonnes,” which I currently don’t see being the case based on spot prices.
Why isn't the comparison to buying back their own shares to create PER SHARE increases in value?
Agree that they should pursue world-class assets and use balance sheet responsibly...but assuming you are tier 1 and have world class assets already (not all, but at least some right?), then isn't the shareholders only focus on how much of the production/reserves/EBITDA I'm getting per share? And buying shares gets me to the same place as a shareholder, with a lot less risk?
And especially on a risk-adjusted basis, if can buy own shares at 5x EBITDA or buy another asset at 5x, buying more of own shares seems like no brainer? No deal/geological/integration risk. Just push a button and create value.
Basically, if company buys back 50% of shares (helped by responsibly using balance sheet capacity) over a few years, and per share production/reserves 2x, isn't that just as good as buying another asset to 2x production?
Obviously rare chances to own unique/HQ assets, but bar should be VERY high..
Which management would you bet on (to move first) GLENCORE?
Sibanye comes to mind....very strategic but long term play
If I understand correctly, you’re advocating that mining majors acquire smaller companies for cash, _not_ that they embark on major greenfield expansion a la QB2, is that correct?
Because when it comes to greenfield expansion, I like the idea of “waiting until the market screams for tonnes,” which I currently don’t see being the case based on spot prices.