CAPITAL MANAGEMENT ; re buy back The Company maintained its...

CAPITAL MANAGEMENT ; re buy back

The Company maintained its disciplined approach to capital management during 2015, while continuing to meet ongoing investment requirements for capital equipment and research and development.
As a result, the balance sheet remained in a very strong position at the end of FY 2015 with net cash of $118 million and substantial undrawn debt facilities available.
This has since improved to a net cash position of $160 million, with no change to the undrawn debt facilities.
A strong balance sheet leaves the Company well positioned to pursue new development options in FY 2016, while still having due regard for general economic and commodity market conditions.
This outcome is entirely consistent with the Company’s approach to capital allocation, as explained in detail in the 2015 Annual Report.
One of the key principles behind the Company’s approach to capital allocation is to maintain a strong and conservative balance sheet that provides the flexibility to facilitate growth whilst protecting the business from the financial risks inherent in cyclic business segments such as bulk commodities.
As part of the Board’s ongoing considerations in this area, we also considered both the economic conditions and the Company’s short term capital expenditure and development requirements, in determining the level of dividends for FY 2015.

The decision to distribute a full-year fully franked dividend of 22.5 cents per ordinary share to shareholders, represents approximately 50% of after-tax earnings (after impairment charges) and is in line with the policy established when the Company first listed in 2006.

The present weakness of the share price has also caused us to consider the impact on shareholder value and we believe that there is a case for Mineral Resources to purchase some of its own shares at this point in the cycle.
We are also mindful of the desire of Australian retail shareholders to continue our dividend policy providing a franked dividend stream. To this end, the Board has resolved to allocate $40 million to a capital management initiative consisting of a $30 million onmarket share buyback plan to become effective from 7 December 2015 combined with an interim fully franked dividend package of $10 million for the first half.