Pilbara Minerals to hit dividend status in FY23: What does the payout look like?
Pilbara Minerals plans to pay 20-30% of its free cash flow as a dividend in FY23.
Source: iStock
Mentioned
KEY POINTS
- Pilbara Minerals will start paying dividends in FY23
- The company is targeting a payout ratio between 20-30% of free cash flow
- Based on Macquarie's FY23 earnings estimates, the dividend could sit between 19.7 cents to 30 cents per share
When you're selling cargos of lithium spodumene for US$8,000 a tonne and sitting on $1.4bn in cash, its unsurprising to see Pilbara Minerals (ASX: PLS) declare an inaugural dividend payment for FY23.
The largest ASX-listed lithium miner announced the details of a Capital Management Framework, which seeks to strike a balance between working capital, investment into growth initiatives and paying a sustainable dividend to shareholders.
The Framework is targeting a payout ratio of 20-30% of free cash flow, designed to 'provide a sustainable dividend return'.
"With strong cashflows being generated, it is pleasing to be in a position to seek to return value to our shareholders so early in our operational life via a maiden fully franked dividend for the 2023 Financial Year," said Managing Director Dale Henderson.
Macquarie's FY23 estimates
Macquarie analysts forecasted the following financials for Pilbara Minerals in FY23:
Full year | FY23e | FY22 | % change |
|---|---|---|---|
Revenue ($m) | 4,870 | 1,190 | 309.2 |
Adjusted net profit ($m) | 2,770 | 561 | 393.8 |
Free cash flow ($m) | 2,994 | 431 | 594.7 |
Source: Macquarie Research | Table: Market Index
Under the 20-30% dividend payout ratio and Macquarie estimates, Pilbara Minerals would be paying out between $598m to $898m in FY23.
The company currently has approximately 2.99bn shares on issue, which suggests a dividend per share between 19.7 cents to 30 cents.
Of course, FY23 actuals could be dramatically different, subject to changes in lithium prices, production and shipments, costs and other factors.
Growth opportunities
Pilbara Minerals produced 377,902 tonnes of spodumene in FY22 and targeting 540-580,000 tonnes in FY23.
The capital management framework noted future growth opportunities to which 'capital might be allocated in the near-term' include:
P680 Project: Expands production capacity at the Pilgangoora Project to 680,000 tonnes of spodumene concentrate. This project is currently in development
P1000 Project: Further expand production capacity at Pilgangoora to 1m tonnes per annum. A final investment decision is expected for P1000 later this year
Downstream JV with POSCO: A potential 43,000 tonne per annum lithium hydroxide monohydrate chemical facility in South Korea
Pilbara Minerals share price chart
