Amerigo Resources Ltd T.ARG

Suppose

[goldens]

I am not sure how free cashflow compares to net income but lets say they base the dividend on net income. Last quarter their net was just over $11 million so 46 million annually. If you take 60% of that and pay it out as a dividend based on 154 million shares you get about $0.27/share which translates to a 14% yield. That makes no sense so the share price would need to rise or the dividend needs to drop. To bring the yield back to the 7% range (still high) the share price would need to rise to just over $2.50/shr. A yield of 4% bring the sp to $4.50.

Their previous largest dividend (from website) was $0.13 annually in 07and 08 which represented 28% and 49% of net income respectively. During those 2 years their stock traded at a high of $3.43 and a low of $1.30 toward the end of 08.

Be interested for someone else to run a calculation based on what was said during the conference call with respect to a dividend. Personally I doubt we will see a share buyback as the float is small. Just my opinion.

[goldens]

Hate replying to my own message but I googled the FCF calculation and I forgot to subtract capital expenditures which I beleive are about $6 Million a year. Also the outstanding shares are 181 million. So the sp numbers are reduce in the calcuation to $1.90 for 7% yield and $3.33 for 4%.

[sclarda]

goldens wrote I am not sure how free cashflow compares to net income but lets say they base the dividend on net income. Last quarter their net was just over $11 million so 46 million annually. If you take 60% of that and pay it out as a dividend based on 154 million shares you get about $0.27/share which translates to a 14% yield. That makes no sense so the share price would need to rise or the

[goldens]

So basically once they announce the dividend in the next 30 days then something has to give. Either we are heading north of the existing share price or they are going to be extremely cautious with the dividend and hold of on returning the 60% mentioned in the conference call until after they pay off the loan. Either way I don't see much downside here.

[savyinvestor333]

I think you are correct on that. My guess is that we are trading above $1.50 the day the dividend is announced or the next morning if announced after close of trading.

[goldens]

And don't forget about Moly prices which are also on a tear. https://ycharts.com/indicators/molybdenum_spot_price

[sclarda]

goldens wrote So basically once they announce the dividend in the next 30 days then something has to give. Either we are heading north of the existing share price or they are going to be extremely cautious with the dividend and hold of on returning the 60% mentioned in the conference call until after they pay off the loan. Either way I don't see much downside here. --------------------------

[goldens]

Well put and I think you 9 million is conservative. One thing for sure is that they cannot sit on the cash or someone will come in and take it so I fully expect that they will announce a quarterly or semi-annual dividend to shed the cash. Once they announce the dividend you can be sure there will be some funds that will start looking at the yield. Nothing is guaranteed in the market like you said

[savyinvestor333]

I'm starting to think they also announce a share buyback at the same time as the dividend. I think it will help control the wild price swings we seem to have and will be a good home for all this extra cash that i think they are still reluctant to disperse completely by giving us a large dividend. 

[goldens]

I checked with IR and they are on track to announce by the end of the quarter as stated in the conference call. So whatever it is we will find out soon enough. GLTA Seeing some solid support in L2. Bids outnumber ask 3:1 as well