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Anvil to consider maiden dividend
David McKay
Posted: Tue, 29 Aug 2006
[miningmx.com] -- ANVIL Mining, the Toronto-listed copper miner and explorer, is considering paying a maiden dividend next financial year on the back of strong cash flows, and a relatively untested balance sheet.
On August 10, the company reported $22.5m in second quarter net earnings compared to $200,000 in the second quarter of the corresponding year, taking its consolidated first half net earnings to $30.7m. The performance reflected improvements at its operating mines Dikulushi and Kulu mines which are situated in the Democratic Republic of Congo (DRC).
And with only $1m in debt, it will consider rewarding shareholders, said president and CEO, Bill Turner. Speaking in an interview with Miningmx, Turner said: “If things keep going well we’ll consider it. It doesn’t have to be a big dividend, but it must be steady, progressive and reflect the growth in the company.”
Anvil
Mining wants to produce 100,000 tons/year of copper by 2010 ranking it in the mid-tier of world copper producers. It produced 19,235 tons of copper in concentrate in the first six months of the year matching output for 2005, according to a company presentation. Anvil is currently trading at its 52 week high of C$9.35/share.
“We’ll look at paying a dividend next year,” said Turner. Anvil Mining’s next financial year begins in January 2007.
Anvil estimates it will require $200m in bank finance to complete its projects to which it must add 30,000 tons from its new Kinsevere project, also in the DRC, by 2010. Some 50,000 tons will be supplied from its Kulu mine and a further 20,000 tons/year of copper from Dikulushi. There are no plans to issue more shares following a share issue in
January raising $16.4m. Outstanding shares are 55.5 million of which about 60% are institutional. Management owns about 3% of outstanding shares, said chief financial officer, Craig Munro.
There was speculation that Anvil might consider buying the Johannesburg listed diversified mining firm, Metorex. Metorex operates the Ruashi copper mine near the DRC’s Lubumbashi and near Anvil’s mines which are north of the city in the country’s Katanga province. But Turner said Anvil owned more than 140 square kilometres in mining property. “We’ve got a very good address and don’t really have much need for merger and acquisition,” he said.
However, Anvil and Metorex are hoping to share power supplies into the DRC’s electricity grid. There are also separate discussions regarding treating some of Anvil’s concentrate in Metorex’s smelting facilities which have spare capacity, said Munro.
Anvil announced on August 18 an agreement with a private Philippines firm to search for
gold as part of a diversification strategy. “The Philippines is close to Perth [where the company is headquartered] but it’s still an emerging country. We like to have first mover status,” he said. Anvil also hoped to invest in prospects in Vietnam.
Commenting on the DRC’s putative democracy, Turner said it was comfortable with the country risk. In addition, Anvil was the only mining firm to have secured political risk guarantees from the World Bank’s MEGA agency of some $13.3m.
“We’ve been in the Congo for 10 years. It’s been tough with all the unrest and military activity. But we had a perfect project in Dikulushi which was small but high grade and helped us get started,” he said.
Anvil Mining was caught up in controversy in June 2005 when it was reported its fuel, trucks and some food were used by the Congolese military in 2004. The military were later involved in the deaths of more than 100 villagers and some commentators believed Anvil had inadvertently
aided the military.
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