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Highlights
- At 3.02 PM AEDT, Pilbara's shares were trading at AU$4.97 each, up 2.90% on ASX.
- This outperforms ASX 200 Materials index, which was 0.69% up at 17,480.30 points.
- Pilbara provided information about its capital management framework (Framework) today.
Shares of ASX-listed materials company Pilbara Minerals Limited (ASX:PLS) are trading in the green territory today (16 November).
At 3.02 PM AEDT, the company's shares were trading at AU$4.97 each, up 2.90% on ASX. This outperforms ASX 200 Materials index, which was 0.69% up at 17,480.30 points.
This follows an announcement made by the company today. Pilbara provided information about its capital management framework (Framework), including its initial dividend policy, in an ASX filing. The adoption of this Framework comes when Pilbara Minerals continues to profit from favourable market conditions for lithium raw materials, which support strong operational performance and have helped the company's cash balance increase significantly to AU$1.375 billion as of 30 September 2022.
The company has set a target dividend payment ratio of 20–30% free cash flow. In addition to reflecting the early stages of Pilbara Minerals' growth cycle, this target payout ratio is created to give shareholders a stable dividend return. The remaining cash flow can then be allocated to organic and inorganic growth opportunities that align with the company's growth and diversification strategy to create long-term shareholder value.
In February 2023, Pilbara Minerals will start paying income tax after using all prior year tax losses. To pay a fully franked dividend for the 2023 Financial Year, the company anticipates using its target dividend payment ratio of 20–30% free cash flow for the first time.
However, yesterday's ASX closing price for Pilbara shares was AU$4.83, down 8.70%. (15 November). Several lithium miners had double-digit declines after outperforming the overall market for a sizable period of the year.
A look at the recent development by Pilbara
Last week (11 November), Pilbara announced through an ASX filing that it had secured a 10-year debt facility (Facility) from the Australian Government.
To assist the growth of its Pilgangoora Operation in the Pilbara region of Western Australia, the credit will be made available through the Export Finance Australia (EFA) and Northern Australia Infrastructure Facility (NAIF) agencies.
While NAIF has committed to contribute up to AU$125 million in funding in response to the NAIF Board's Investment Decision, EFA has approved financing in the amount of US$ equal to AU$125 million. With this financing, the Australian Government shows its readiness to assist companies in supplying vital minerals that will speed up the world's shift to renewable energy sources. The following projects will be supported by the senior secured Facility of up to AU$250 million:
Image source: © 2022 Kalkine Media®
Data source- Company announcement dated 11 November 2022
Pilbara further informed that the final agreement on the parameters of the Facility, the execution of the specific financing instruments, fulfilment of preconditions for financial closing and drawdown, and final approval of the Western Australian government's NAIF funding are all conditions precedent to the Facility. The Facility's key terms, anticipated to be finalised this Quarter, are expected to reflect current market conditions for the type and amount of debt being supplied.
With this help from the Australian government, Pilbara Minerals' capital structure will be strengthened, and it will have more financial flexibility as it aims to diversify and develop its business to take part in the battery materials supply chain at a lower level.
