Halloysite, Halloysite and Halloysite!!, page-529

Fundamentally ADN is a dividend growth play.

Conceptually ADN are building a cash printing machine not a mine. That cash machine will be paid for within about 15 months of construction starting. Low capex, fast ramp up and growth.



Looking at project scope from technical session they ramp up to full capacity in year 2 ( starting mid 2023 ). I think that means the first financial year they would consider paying dividends is the financial year starting mid 2025. That allows 1 year at full production to boost cash reserves.

Then dividends I think conservatively at a 30% payout ratio as a proportion of NPAT. That's the payout ratio GOR have used for first dividends.

That would mean the other 70% of after-tax earnings reinvested into the business to fund growth ( Paints & Coatings, Concrete Rheology Modifier, HPA, blue sky natural nanotech ). Some of these will be modest CAPEX and fast to bring online, others will be more expensive in terms of CAPEX but by then ADN / MEP will have strong cashflow from high margin premium ceramics to fund growth.

Within 8 years of first dividends NST grew dividends 5-fold because they self-funded growth ( see below chart ). Look at the share price growth in that timeframe ( 8 years totalling over 1000% growth of share price ).




( the red on this chart is the franking credits, blue the dividends  )

DFS and subsequent funding of the mine ( aka cash machine ) are the inflection point for ADN’s growth and growth of likely income to shareholders.

Too many focus on the share price in the short term and not the long term strategy. Strategy is first build a foundation for the business on ceramics which will be high margin and low risk to get to production.  Then supercharge growth by self-funding a number of other high margin income streams.

I’m more interested in the income a company like ADN will be generating in 5-10 years, not what the SP will be doing next week.