Taking profits is one of the main point of investing. Lossing money isn't
Another side is one new miners take time to get to.
Smaller mining companies typically start paying dividends when they achieve consistent profitability and have surplus cash flow beyond what is needed for sustaining and growing their operations. There is no fixed profit threshold across the industry, but several financial metrics and practices are commonly used as benchmarks:
Dividend Payout Ratio:Many mining companies set a target dividend payout ratio, which is the percentage of net profit or free cash flow paid out as dividends. For example, Pilbara Minerals targets a payout ratio of 20–30% of free cash flow6.Larger miners like Rio Tinto and BHP typically pay out 40–75% of underlying earnings45.For smaller miners, a payout ratio of 20–40% of net profit is often considered prudent, allowing for reinvestment and financial flexibility.
Dividend Cover Ratio:This measures how many times a company’s net profit covers its dividend payment. A cover ratio above 1 means the dividend is covered by earnings; ratios of 2 or higher are considered conservative and sustainable. For instance, Mitchell Services has a high dividend cover ratio of 3.4, indicating strong profitability relative to its dividend payments, while Grange Resources boasts a cover ratio of 8.3, reflecting ample profit buffer3.
Consistent Positive Earnings:Before initiating dividends, smaller miners usually need several reporting periods of positive net profit and stable cash flows. This ensures dividends are not funded by debt or one-off asset sales.
Free Cash Flow:Companies often wait until they generate free cash flow (operating cash flow minus capital expenditures) sufficient to fund both dividends and future growth.
I keep thinking about Gold Roads journey to paying Dividends as a road map for most of my Uranium Miners. Ditto for my Hyrdogen/graphite play.
*Forecasts for 2028 and beyond are less widely published, but revenue is expected to remain strong, supporting continued positive cash flow and profit.
My thoughts only of course :)
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