Tuesday, April 23, 2024

Windfall for local shareholders as Lucara opts for progressive dividend

Canadian mining company, Lucara Diamond Corp has wowed to maintain a progressive dividend policy as a direct translation from the gems it has been recovering of late from Botswana mines. However, it warned it would terminate the payouts in case of insolvency.


A progressive dividend policy is one where the dividend is expected to rise at least in line with increases in earnings per share. However, if earnings per share fall, the dividend will not be reduced. The company anticipates it will declare an annual dividend of Canadian $0.06 per share in 2016 to be paid in four equal payments at the end of each financial quarter. But the amount of any dividend declared will remain the discretion of the Board of Directors.


The dividend policy replaces the Company’s current policy, which contemplates a semi-annual dividend payment and a potential performance related dividend.


“The Corporation shall aim to maintain a progressive dividend with the intention of maintaining or increasing the total Canadian dollar value of dividends per share paid each year,” said Lucara. 


However, the corporation’s dividend policy may be amended or terminated at any time at the discretion of the board of directors of the Corporation. This includes when the company is insolvent, which under the BCBCA means “unable to pay the company’s debts as they become due in the ordinary course of its business.” 


“Directors are personally liable for any dividend paid while the Corporation is insolvent or which causes the Corporation to become insolvent,” Lucara said. 


The company has already declared a semi-annual dividend of C$0.02 per share, which will be paid on December 17, 2015 to holders of record of the company’s common shares on December 4, 2015. Common stock holders normally cannot be paid HYPERLINK “https://en.wikipedia.org/wiki/Dividend” \o “Dividend”dividends until all preferred stock dividends are paid in full. Lucara said shareholders on the Botswana share register will be paid in Botswana Pula based on the prevailing exchange rate on the Record Date, as determined by reference to Lucara’s bank, Standard Chartered Botswana Limited, being BWP 8.0816 to C$1.00. 


“Accordingly, the gross dividend will be BWP 0.1616.per share. A net dividend payment will be made after the deduction of applicable withholding taxes imposed in accordance with Canadian taxation laws.”


The Botswana Stock Exchange (BSE) quoted company last week told its shareholders it will rake in over US$ 200 million (P2.4billion) in revenues next year buoyed by the continuous recovery of exceptional stones from its Karowe mine in Orapa. 

The baseline revenue is supported by Karowe’s consistent recovery and yearly sales of its current diamond profile, including specials (+10.8 carats) and its exceptional diamonds.


“In determining the rate of the total dividend, in Canadian dollars per share, the Board of Directors will consider current operating results and outlook, the need to invest to maintain profitable long term growth, the external environment and any other factors deemed relevant,” it said.


“This dividend policy replaces the Company’s current policy, which contemplates a semi-annual dividend payment and a potential performance related based on performance.”


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