Forum Archive Index - November 2002

["Graeme Tangye" <gtangye@paradise.net.nz>]

"But tell me this - if in 1999 FOR showed a profit of 7 mill and managed 
a dividend of 4c on a share ranging between 50 and 60c - does that mean 
that if SLL can return a profit of 7mill, shareholders can expect a $1 
dividend and a share price of $15 ???
(Based very loosely on the 25 for 1 consolidation recently)… ever the 
optimist huh ?, 
there has to be more to it than this - so could someone please explain."

 

Very simple answer to this one ...

 

You have overlooked the dilution resulting from the SLLGA issue.  SLL head shares now

represent just 10% of the capital, with SLLGA representing the larger ( about 90%) proportion.

 

Thus on your figures a 10c dividend is more logical than a $1 dividend, and a $1.50 share price is more

logical than a $15 price.  It is more complex than that (and I disagree with some of your other assumptions)

but the 10 to 1 ratio is of more importance than other factors that would at most have a 2 to 1 impact either way.

 

People buying SLL at current prices are (from a fundament perspective) acting extremely unwisely.

One SLLGA notes is essentially worth two SLL shares. Paying near to the SLLGA price for a SLL

shares is paying double what is necessary to obtain the same debree of ownership.  By the time

conversion rolls around, or earlier if the market wakes up to reality, SLL holders have positioned

themselves to lose half their investment!