Lundin Mining (TSX: LUN) has cut its dividend for shareholders. The cut is part of a strategy change on providing returns to shareholders, with capital instead to be allocated to more share buybacks rather than the issuance of higher dividends.
In connection with the policy changes, annual allocations to shareholder returns have been set at $220 million, of which $150 million has been allocated to share buybacks. To allow for the increase in buyback spend, Lundin has cut its quarterly dividend from $0.09 per share to $0.0275 per share.
Lundin has stated that if it fails to spend $150 million on buybacks in a given year, it will issue a special dividend to account for the shortfall.
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“Through these means of dividends and buybacks, the Company has returned over $1.4 billion to shareholders. We remain in a strong financial position to sustain approximately $220 million in annual shareholder returns through a formal strategy that now integrates share buybacks alongside dividends, thereby enhancing the financial and operational metrics on a per-share basis,” commented Jack Lundin, CEO of Lundin Mining.
As part of the changes, Lundin has also removed the policy that the minimum dividend payout of the equity should equal 40% of attributable operating cash flow after capital expenditures and contingent payments. Since the inception of the dividend policy in 2017, $1.2 billion has been paid out in dividends, while just $227 million has been spent on share buybacks.
Year to date, the company has spend $70 million repurchasing shares, resulting in the cancelation of 8.0 million common shares.
Lundin Mining last traded at $12.57 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
