Ann: Dividend/Distribution - RMS, page-26

Personally, I think that mining companies should not be analysed from the perspective of EPS for the purpose of determining the dividends. The EPS is from accounting measures of profit and mining companies have substantial capital expenditures that can be capitalised on the balance sheet. Therefore, the cashflow and the impact on cash balance are timed differently to reported profits. Furthermore, mining companies are highly cyclical and their mine development expenses can be quite unpredictable and substantial. They may need to spend a lot when they do not have enough cash if they pay a lot out in dividends. I would not want to be holding a stock that pays good dividends then suddenly raise equity capital to spend on capex. I like the capital gains component more than the dividends component, otherwise I would invest in infrastructure and bank stocks instead.

Cheers,
Brian