RE: RE: No Dividend If people here are really shareholders and not just people writing for conversation then I am sure the BUSINESS focused people would know that implementing ANY dividend now could very well be suicide for the balance sheet.
If this company continues to grow as it is doing it will take 4-5 years before the balance sheet is back to where we are now....IN NOMINAL TERMS. If they keep Tumipampa it will most certainly cost money to develop. How much is yet to be determined. If it is a small deposit with high grades it could make sense to keep it. If it is a large deposit with low grades then sell it to one of the neighbors.
Now I will grant everyone that we have yet to see the MOST RECENT DRILL RESULTS. However, Dale has said that "IF THEY RECEIVE ANY CORE RESULTS THAT ARE GANG BUSTER THEN THEY WOULD DUE A STOCK HALT AND PUBLICLY RELEASE THE RESULTS". Since this has yet to happen one can only guess that they may be decent results but to date nothing worthy of a halt.
If this company entertains my thinking ALL SHAREHOLDERS WOULD BENEFIT GREATLY OVER 2 YEARS NOT 4-5 YEARS. The math is the math and this company is to small as it stands now. Yes it is growing, but it will be a long while before everything is up and running. The dates originally given for this new ore processing plant to be up and running has now been pushed forward in 2014 due to the DELAYS with the last rounds of permits...FACT.
The longer the construction takes, the longer it will take for initial free cash flow to take place from this plant. and sustainably grow on the balance sheet.
If they buy a "current" processing company in the NORTH where much of the next big expansion will be coming from. Then they will be in the right spot at the best time to cash in. With the many deposits that are developing in the North.... I know for a fact many do not have enough capital to process there own ore...nor due they have the contacts to borrow any sizable amount for ore processing status. These companies are signing contracts as we speak with the 3 currently processing in the area. All three of these companies could and need to be overhauled to achieve maximum efficiencies. This with the current spot price of silver,copper, gold gives a great opportunity to buy a PRODUCING asset right now. Again once the takeover goes through on paper they should apply for processing ore expansion. We ALL know it will take a while to get the plant expansion permit. So in the mean time this plant currently under way should be constructed and producing.
If they kept the mill currently in operation (call this plant #1) plus the new one constructed (call this plant #2) and processing we would be able to afford the growth to the north. Hence 2 years over double the stock price as long as they do not increase the float. With current markets as they are, borrowing is the best way to go. Rates are historically low for companies with CLEAN balance sheets and free cash flow. Free cash flow going only furthers the negotiating power Dynacor would have...not the lender.
Once the efficiencies are made to the plant (call this plant #3) they would have the flexibility to shut down or reduce the processing at the current plant (plant #1).
IT WOULD BE FOOLISH TO SHUT DOWN (plant #1) Completely WHEN THE SECOND IS UP AND RUNNING. They are making profit with this site now and with a slight reduction in hours of operation and other cost reductions they could improve the efficiencies while maintaining additional income to pay down the debt. This is key for the company to move into the north with out stretching the balance sheet.
Do the math on the ore currently being produced.....at the current cash costs (plant #1)...future ounces being produced from the site on hold waiting for the final permit (plant #2)..... and you have the math(income) for the company to take out a asset in the north.
After a strategy like this a dividend COULD be implemented but would have draw backs. As I have mentioned before, other people/companies are watching this story very very closely. Again if my plan was put into action then I would bet ALL CURRENT SHAREHOLDERS would be bought out in less then 3 years. It just makes to much sense for many players in the country now.
One final note. I know many big players that have said out lout many times. "If a company is paying a dividend that is usually a signal that management does not know what to do with the money to continue GROWTH AT CURRENT LEVELS."
If you want a case in point just take a look at ALL OF THE GREAT COMPANIES OFFERING DIVIDENDS CURRENTLY. They all went down recently in the market correction. There was NO difference if the company paid a dividend or not.
So why would you ask the company to take on a strategy that would stress the balance sheet out if the underlining commodities it produces are currently not stable. Very poor and risky thoughts.
Regards