Shares in mineral sands miner Base Resources (BSE:AIM) soared 25.1% to 14.7p after it shrugged off the impact of the coronavirus pandemic and declared a huge maiden dividend.
Base Resources said that consistent with its growth strategy, aiming to provide returns to shareholders through both long-term share price growth and appropriate cash distributions, cash not required to meet its near-term growth and development requirements, or to maintain balance sheet strength, could be expected to be returned to shareholders.
As a result, the company’s board of directors determined a maiden dividend of AUD 3.5 cents per share, to be paid on 7 October. Shore Capital estimates the yield, relative to the last closing prices, to be around 16.4% for the AIM-listed shares.
Base Resources is listed on both AIM and the ASX in Australia.
BASE SHRUGS OFF COVID IMPACT
It comes as the company felt only a small financial impact from the pandemic so far, with its mineral sands mining operation at Kwale in Kenya maintaining operational continuity during the pandemic and achieving the upper end of production guidance. Work also continued on its Toliara development project in Madagascar.
While in the year to 30 June, revenue was only slightly lower at $208.0 million, compared to $209.5million in 2019. A higher average product price of $445/t, compared to $401/t last year, was offset by lower sales volumes due to lower ore grades, with this financial being the company’s first full year of mining at its lower-grade South Dune project.
Importantly, operational cash generation was up compared to last year at $105.5 million while the balance sheet remained strong with net cash of $87.6 million, compared to $32.6 million at the end of December.
‘DETERMINED TO DELIVER CONCRETE RETURNS’
Base Resources managing director Tim Carstens said the miner declared the maiden dividend in light of its strong financial position, move to delay a final investment decision on Toliara until September 2021, and ‘our determination to deliver concrete returns to shareholders’.
Carstens said, ‘We believe a AUD 3.5 cent per share dividend strikes the right balance between delivering returns to shareholders, retaining balance sheet strength in uncertain times and allowing for the sensible progression of the Toliara Project as uncertainty resolves.’
