The Mining Executive
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The $1.85 Billion dividend that shook the mining industry

Investing in mining can never be this good especially when the rewards are in excess of several hundreds of millions. After a season that saw iron ore producer Fortescue Metals Group’s (FMG) shares soaring by more than 7%, investors are receiving an iron-heavy-like return on investment. The special fully franked dividend of 60 cents per share was rewarded to its shareholders culminating in the colossal A$1.85 Billion dividend payout next month.

Founder and Chairman of Fortescue Metals Group (FMG) Andrew Forrest is all smiles to the bank as he is receiving an additional A$654 million franking credit dividend after having earlier on received A$327 Million in March this year from the company. Mr Forrest in early May donated around A$655 Million to his Minderoo Foundation and it seems his cash quiver has been quickly replenished. A holder of close to  35% shares within the company, Mr Forrest’s total dividend payments for 2019 alone will hit A$981 million after Fortescue’s cash flow generation skyrocketed in the March quarter, fueled by a 47 per cent increase in the average realised price of iron ore to A$102.20 a tonne. Added to that, this iron ore huge investor has made a paper profit of more than A$4.3 Billion since the beginning of the year as the FMG share price has been on a near exponential rise.

This has widely been seen as a way of eluding the budding crackdown franking credits as early as June 30th, 2019 by the Labor Party should they secure victory in the Federal Elections slated for this weekend. This current dividend has taken the market by surprise and been well timed considering the competitive advantage Iron Ore curtailed by the Vale woos which have reduced the Brazilian giant production significantly and propped the iron ore metal prices, steepening up to and an all high figure in 5 years.

“This dividend reflects Fortescue’s unwavering determine to deliver shareholder returns through dividends and investment in growth,” Fortescue chief executive Elizabeth Gaines said. Speaking from Spain where she is attending a Bank of America Merrill Lynch mining conference, Ms Gaines went on to say Fortescue was “generating franking credits every single day as we continue to pay tax” and would continue its policy of paying fully franked dividends regardless of changes in government policy. This by financial standards reflect FMG’s sound management of its balance sheet and capital. In the past 12 month, the company’s shareholder value has more than doubled jumping from $3.53/share in September 2018 to the current $8.95/share after the dividend announcement.

FMG is the third biggest iron ore miner in Australia utilizing some of the most sophisticated autonomous haulage systems, the first company of its kind to go full driverless on its Mining trucks in Australia. The company is developing the US$2.6 billion Iron Bridge Magnetite Project to add to its portfolio of three operations in northwest of Australia. The Project will deliver 22mtpa of high grade 67% Fe magnetite concentrate product, with first deliveries in mid-2022.

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