Jims101: Ref. post ID23085035
Your Question: What is the maximum number of shares a company can buy back, or the maximum percentage?
Answer: In Canada, we can only have 10% of outstanding shares repurchased in any given year.
You wrote that "we are shareholders who are entitled to a share of the profits. Re-investment of same, at some additional risk, in my opinion should only be part of the solution as to what to do with retained cash flow" ..…. I fully agree.
I do not intend to carry-on a tit-for-tat response to posted observations, but I have a sense that it may be useful to respond to a couple of your thoughts expressed in your recent post…..example:
You indicated that "ML's is one of the lower risk situations one can find...So any addition adds risk..."
I respectfully suggest (in the mining and mineral resources sector, which I accept as the context of your observation), that companies with a more fully integrated downstream operation would have reduced overall risk relative to Mercator, particularly with mineral purification and alloying activities. I am not suggesting that Mercator build these facilities with their free cash flow given their current operations’ size, but using cash flow to secure partnership agreements is certainly a useful consideration and, as we know, Mercator has moved strategically in this direction with respect to addressing the current worldwide roasting capacity limitations for molybdenum(bottleneck which could build unpleasant unplanned inventory at the concentrator site ).
Your assessment of the notion to expedite production plans and bring reserves to the surface more quickly and thereby add value was that…. "they did that –good"……
As a person who has worked many years in the business, I view such initiative as an unending challenge/opportunity for which return and rate of return needs on-going reassessment and decision-making.
The expressed idea that one should "Mine the mine, get the ore out, send the money back to shareholders and when its over turn off the lights....Thank you...Too simple??? Yes, probably."
I table for consideration, that if the strategic declared company objective is to "cash cow" an operation and then "turn-off the lights" a widespread marketplace practice of assigning growth expectation and growth premiums and "going concern" premium would be rapidly withdrawn from share price, strategic relationships with down-stream customers would compound this with potential direct consequences to product take-up and revenues, employees may question their career and earning ambitions/security, etc., etc…. This many be perfectly fine, but maximized shareholder value would be nothing close to assured through this strategy IMHO.
You asked the question…… What do I think? …..about your recommended that
"for every 10 million….for quicker production, operations improvements, company policy initiatives and consideration of product diversification, shareholders should get $10 million in share buy backs and double that in dividends."
My first thought is a question….what is the reason for the share buy-back in this proposal ?…….if shares are priced reasonably close to "correct value" then share buy-back should be neutral in terms of resulting share price impact, especially if the company has a declared strategy to "milk the operation and turn-off the lights at the end of the project". Company asset reduction through the exit of cash(payments for the share-buy-back) would simply reduce the value of the company such that the remaining shares should be approx. the same price as before the buy-back(all other things being approx.equal). If, for example, the answer is that the share price was significantly below "current operations correct value" then a buy-back may be a reasonable step.
In the case of dividend, there are many considerations…….what type of vision does the BOD and operating management have for the company ? What type of dividend (occasional and irregular or sustained and predictable under normal business circumstances ? or linked directly to earnings and profit sharing with shareholders ? etc… ) I have a sense that you may be asking Mercator management to make changes to critical company strategies, that they seem to have indicated to you through their responses, are not well aligned with your preferred desires as a shareholder. This is not a question of right or wrong, it is more in my opinion a question of understanding operating and business policies, communicating preferences and making individual shareholder decisions. I wish you well in your Mercator involvement and investments,
Peace,
Good Decision-making to All,
ElJ