What is amazing is that the CEO was hinting at a loss at the last conference they attended, and now they post a gain?? I find this a bit perplexing and dishonest.
Havent had time to look in detail but looks like they covered their hedge or at least some of it. Will look into more details on that and post once i find.
Don't get me wrong. I'm not advocating a stock buyback for PAAS, but I disagree with your point that stock buybacks don't help long term holders. By removing the bought-back shares from float, it increases each remaining shareholder's proportional ownership of the company. If a company is holding a lot of cash and if the BOD determines that the stock is undervalued in the marketplace, a buyback of shares can make sense long term.
It's still not certain in the American Psyche that Quantitative Easing or (Vast Printing of Global Currencies) is a forgone conclusion. I have not the slightest doubt that Quantitative Easing has but merely just begun and that NEW PRINTING PRESSES have been ordered and are about to be delivered so that the effort can be multiplied by a factor beyond which noone has yet spoken about. Precious metals investing has really not looked this good since Richard Nixon ended the war in Vietnam. When silver investors seem the most glummy.. I begin to start feeling optimistic. But, that's just me.
Sentiment: Strong Buy
All good points. I am rarely a fan of stock buybacks as it only helps traders and not long termers. As long as they don't cut the dividend I can be quite patient. Silver will inevitably rebound even if not for years and the current 4.9% ( actually for me it is a tad over 5% because I paid $9.90 for my shares) is respectable by current standards. GLL
PAAS has few ways of moving forward. It can conserve cash hoping that it can last longer than silver stays low. It could be right. PAAS has lot of cash, about $400M and burning rate is about $50M/quarter; two years of more or less safe waiting. No one can predict when silver starts recovering. Who know… maybe tomorrow? No kidding, it is impossible to predict.
Another way would be operational change: close high-cost mines and reduce cash-burning rate. It is painful; it requires some money, one-time expense and, likely the most awful part for the management, it could involve relinquishing first place position (by total amount of silver) as pure silver producer (among U.S. listed companies). Also, company got too many candidates to close; it’s collected peculiar mix of mining operations, every spot got problems.
Also, company can try to re-invent itself and use cash buying new assets around. As of now company pipeline is very lean (no viable projects) and, moreover, present geopolitical mix looks very bad after Mexican tax robbery. The problem here is that management is picky. They want to buy silver only and feasible silver projects are one of the rarest things in mining world.
So, three roads are available and sorry, no one of them calls for share buybacks. On the contrary, every way assumes either strict conservation of cash of using it for different purposes.
I hold long term leaps so I obviously want PAAS to go up. Yet don't get your hopes up too high folks. this could be another set up by the big boys to devastate us on thurs morning. my worst case scenario is a 15c loss and suspension of the dividend. anything less than that we can live with. of course this would justify a quick drop on the opening thurs. don't quit your day job.
Plus you'll double your money for every share bought back in a takeover.
10 million shares off the market in one fell swoop and see it go the other way twice as fast. You don't need to buy anything else, you're the leader with such a tiny market cap producing 25 million ounces, buy your own shares, show some balls.
At this point in time paas doing a large share buy back to draw down their cash balance makes no sense to me. One of the reasons I'm still in this stock is because they have a rock solid balance sheet that will allow them to weather any further price drops in gold and silver. Even if you believe, as I do, that PM's will head much higher in the future that doesn't mean that they can't go lower first. Fact is, nobody really knows the exact timing of price movements. But I do know from experience that stocks and commodity prices can go crazy low and crazy high. So why not have some insurance if things get worse than they already are. Beside, paying a dividend in this market environment will support the share price and draw down the cash on the balance sheet.
I think anyone calling for a massive share buy back right now is really saying lets get this share price to pop a little so I can sell. I can't see it as prudent for the longer term.
Even if the company felt comfortable enough with the longer term cash flow to start spending I think that buying a good property would be money better spent. Much or paas's future growth is now located in south America and IMO that is dead money for the foreseeable future. Higher PM prices don't solve the problems that companies are facing in Argentina. Having said that, I'm not really sure where a good mining jurisdiction is right now. All countries seem to be happy to change the tax and royalty rules after investment have been made.
Or even better, buy back 250,000 shares a day, and buy 2.5 million in physical silver per day for the rest of the year.
With silver this low why sit on all that cash?
That's 175,000,000 for the rest of the year. This is the best use for the money right now. There's going to be a run on silver in my opinion because Silver Eagles from the Mint are going to be down for over a month and their allocations even seem to be running down earlier still.
What this artificial “firming things up a little” could achieve? Buying a million shares could mean about $10M expense and company already spends $19M per quarter to pay dividend. By the way, daily stock volume is 1.7M shares; 1M quarterly buyback would hardly make any dent.
I am sorry to say this but, usually, talk about buybacks on these boards serves purpose of hiding from real issues hurting share price. More specifically, PAAS low share price, comparing with e.g. past few years, is not caused by lack of buyback and, accordingly, PAAS management has more pressing issues on hands.
Please note, I could agree with you that if by some miracle company decides to buy 1M shares now and then (re: miracle) silver price starts going up strongly (back to 30s) tomorrow then, yes, it would be a small positive deal. However, I cannot see it as a serious investment-related proposal.
yea but the stock price will rise as silver rises....buying 1 millon shares a quater at these depressed prices could firm things up alittle and would be affordable
It would be reasonable for them, imho, to wait, at least, until silver really “rockets higher”. It makes sense, just to avoid possible situation when cash is wasted on buying worthless (for company) shares and silver is still low. PAAS already spends serious money (about $75M/year) trying to support share price with dividends.
Basically, dividend or share buyback are good things when they are paid out of free cash flow. In this case, market appreciates company desire to compensate shareholders for their loyalty. On the contrary, when dividend/buyback is paid out of treasury, market wonders how long it can continue and why these guys cannot find better use for this money.
I agree with one point (re: government reports and general propaganda): it would take a President from R party to have media coverage positive for gold. When Bush was in White House media explained tirelessly that everything is bad, end of world is near, unless Bush is thrown off, etc. It caused people to buy gold and price went up. No kidding, it was a real factor (not the only one, but still real) behind gold bull market.
Once D President entered White House media changed the course (big surprise, eh?) and everything is getting better and better, i.e. as long as our dear O has power. People feel confident (most guys get confidence by reading tabloids and watching TV); they don’t buy gold and price goes down.
Another point (incorrect, imho) is about “dollar index”. It is a poor idea to measure gold prospects based on it, because dollar index measures relative value of dollar against other currencies and other currencies are printed with the same speed as dollar. In other words, dollar index cannot have relation to gold even if gold price would be directly linked to amount of printed money (it is not, anyway).
the usd has been in a trading range easily since 2005. it is exactly where it was then and even in 1991,3,5. it can only go down long term until they stop the annual us deficits and compounding national debt. its range has been 73 to 87 with a strong macro bias to the downside. the other con is the latest jobs report. absolutely nothing our demoncratic party controlled government says, does, or reports is truthful. next year the metals may explode because of the upcoming health care caused chaos and economic decline. remember, Pres BO says Sebellius is doing a GOOD job. just imagine if she was doing a BAD job on our healthcare.
just a coincidence folks on the last trading day of the fund/inst year. and nobody since the 6/13 metals bottom knew this was going to happen until thursday? please.