Bleeding shareholders – by Kip Keen ( – September 22, 2015)

Freeport-McMoRan Copper & Gold may sell another $1 billion in new shares.

Diluting majors: Cut to the straight-talk please.

These announcements of voluminous dilution in the middle of a limping mining market should come with apologies. Raw admissions of what you’ve done wrong. Not bland excuses about creating shareholder value and weak markets.

Today came another good example of lame PR work.

Freeport-McMoRan noted it had completed a $1 billion round of new-share sales and added that it might raise another $1 billion doing just that again. In describing the equity raises, Freeport stated the dilution was necessary “in the current period of weak and uncertain market conditions.”

It also said what it’s doing – cutting costs, yes, but also raising cash via new shares – are meant to enhance shareholder value and protect assets for better days when they come.

But really. The delivery of detestable levels of shareholder dilution here and elsewhere – notably from Glencore – is a mud pie of management’s own making. For Freeport management put the company in a position forcing it now to raise more cash amidst a terrible market for miners.

Now of course it’s true the market is weak. And yes, that’s a freebie for all miners to talk about right now. But in a case like Freeport, and others, that doesn’t get you off the hook.

In major dilutions like these there are invariably company specific reasons forcing the hand. Often it’s the end result of bad or ill-timed bets on one strategy or the other.

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