The proposed acquisition of the Narrabri royalty, a 1% gross revenue royalty interest in the Narrabri coal project operated by Australian Stock Exchange listed Whitehaven Coal Limited, has provided the Board with an opportunity to further review the dividend policy while recognising that the royalty income from Kestrel in the fourth quarter of 2014 was well below the Company’s previous expectations due to lower than expected mining in our royalty lands at the Rio Tinto Kestrel mine as previously announced.
The Board’s priorities are to deliver a progressive dividend policy at a level which is affordable and appropriate as well as funding the Company’s royalty investment opportunities and maintaining a strong balance sheet.
The Board is considering the recommendation of a final dividend for the year ended December 31, 2014 of 4p following the completion of the acquisition of the Narrabri royalty.
In the medium term, the Board is committed to a minimum annual total dividend of 8p subject to, amongst other things, the level of adjusted earnings, proceeds from the disposals of non-core assets and prospective investment opportunities.
In the longer term, and subject to the same factors, the Board intends to adopt a dividend policy paying dividends representing a minimum of 65% of adjusted earnings.
(Adjusted earnings represents the Company’s underlying operating performance from core activities. It excludes all valuation movement, non-cash impairment and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs and any associated deferred tax. It also excludes any profit or loss on non-core asset disposals as these are not expected to be ongoing.)
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