Post by
jameske on Jun 16, 2023 10:51am
A dividend from the mine
My suggestion to the management and shareholders would be to forget about the share price. Keep promoting the company and hold the stock but don't hope for a higher share price with things as they are. In this market many big companies don't matter and the smaller ones even less. My suggestion would be for management to plan to take care of the share holders in another way. Get the mine up and running and pay a dividend per share each year with the pure profit. With 10 years of production everyone will make money from the shares. At the end of the mine life the company will be dissolved. No company needs to last forever. Fulfill the financial interests of the share holders with the dividend and wrap up the company when the mine is depleted. Any assets left over can be sold up and given as a final dividend after expenses.
The vast majority of investors don't buy small companies any more, and even large ones outside of inclusion in ETFs are on a hiding to nothing unless something totally out of the ordinary happens to them and they get lucky. A management policy to reward share holders with a dividend might attract interest from investors with a longer term horizon and a desire for regular yearly income without the need to time buying and selling shares to lock in profits. A strategy like this places support beneath the share price as a byproduct of fulfilling a duty to share holders to make them money. It would encourage current share holders to not sell shares, placing a support beneath the price. The value of holding shares will be the value of the dividends they get every year for a decade or longer.
Finally, doing something different, being the company that offers a path to steady yearly profits gives investors plenty of time to plan for other investments if they choose to reinvest their dividends. The management has been doing a good job of broadening the appeal of Abcourt - it is a much shinier object now than it once was. But to acquire new investors and committed share holders requires upping the bar a bit. A policy of dividend payments from the profits of the mine would fit the bill.