THE BOURSE WHISPERER: Bauxite Resources (ASX: BAU) is proposing a capital return of four cents per share, following a funding requirements review of the company’s wholly-owned projects and projects with joint venture arrangements.
The company said the review determined it has sufficient funds to support its projects and JV arrangements in the near term.
As a consequence of this review, the company’s Board has identified surplus cash to its current requirements and therefore is proposing to return four cents per share to shareholders in the form of a capital return.
This equates to approximately 20 per cent of the Bauxite Resources’ total cash holding as at 31 March 2014 ($42.1 million).
Following the return of approx. $9.3 million to shareholders, Bauxite Resources will still have around $31 million in cash to finance development of the Fortuna deposit and make further progress with its Yankuang and HD Mining JV-led projects.
The company outlined one of its key strategic objectives is to deliver a bauxite direct shipping (DSO) ore operation from the Fortuna deposit, which has a current resource of approx. 39 million tonnes.
Bauxite Resources plans to target the Fortuna product as a DSO without the need for any beneficiation.
The company considers the deposit is differentiated from its peers by its location, its predominantly gibbsitic bauxite form and its low reactive silica qualities, which it said are the key reasons why Darling Range alumina refineries are among the most cost competitive in the world.
“With Western Australia currently the largest bauxite producing region in the world and logistically well placed to supply increasing demand from China following the recent Indonesian bauxite export ban,” Bauxite Resources CEO Peter Canterbury said in the company’s announcement to the Australian Securities Exchange.
“We are very keen to press ahead strategically with the development of our WA bauxite projects and allow our shareholders to benefit from the rising bauxite price and favourable global market conditions.
“We will continue to engage with potential offtake and development partners to assist in the commercialisation of this resource which is favourably located to its target export market.
“It is a priority of the company to develop this 100 per cent-owned resource either through direct development or a joint venture partnership with potential end users as part of unlocking value in the company’s bauxite assets for our shareholders.”