Sally Malay Mining Ltd’s revelations this week that it intends to pay a maiden dividend will no doubt impress shareholders, but it has some market watchers highlighting that the move exposes over-valued projects or companies.
Sally Malay has enjoyed strong profit growth off the back of high nickel prices.
In a presentation at the Diggers & Dealers conference this week, Peter Harold revealed that the miner’s net profit had increased 460 per cent in the past 12 months, up from $16 million last August to between $90 million and $100 million.
Sally Malay’s cash reserves sit at about $120 million, up from $31 million last August.
Mr Harold said the company intended to pay a maiden dividend this year.
DJ Carmichael & Co associate director Mike Munro said Sally Malay’s decision to pay-out a dividend was good news for shareholders, but it indirectly highlighted fully priced or expensive projects and/or competitors.
“It shows that projects are fully priced and they [Sally Malay] don’t see the need to pay top of the market prices for them,” Mr Munro said.
“This says that at the moment [company] share prices are too high or people want too much for their assets and Sally Malay is not willing to buy them so they will give some money back to their shareholders.”
Sally Malay also revealed this week that the mine life of the company’s namesake project had been extended by about one year following an increase in its reserves.
The 23 per cent reserve increase, or about 7,000 tonnes of contained nickel, at its Sally Malay project 240 kilometres south of Kununurra came after the nickel producer revealed an initial probable ore reserve for its Kambalda Deacon ore body.
Sally Malay said its Deacon ore body had an initial probable ore reserve of 1.7 million tonnes at a grading of 2.5 per cent nickel for 43,000 tonnes.
The nickel miner said work was progressing on a detailed mine plan, including the purchase of new mining equipment.
In its Diggers & Dealers presentation, Sally Malay said its goals were to “grow from within by unlocking the full potential” of its projects.
