Hotly pursued junior producer Stanmore Coal has decided to up its cash returns to shareholders and undertake a share buyback.

The company (ASX:SMR) told investors this morning that it will give them 3c per share back in the form of a dividend. That equates to a total return to shareholders of $7.6m.

Stanmore only started paying dividends at the end of the 2018 financial year.

This latest return is already a 50 per cent hike on the full-year dividend it paid in November last year and this is just an interim dividend.

Stanmore also plans to buy back up to 10 per cent or up to 25.3 million of its shares.

The company is currently the subject of a hostile takeover bid by Indonesian company Golden Investments.

But Stanmore has urged shareholders to reject the 95c per share offer.

Golden Investments has so far managed to attain a nearly 22 per cent stake in the company.

Since the offer was announced in November, Stanmore’s share price has hit a peak of $1.08, and is currently trading around 95c.

Stanmore Coal (ASX:SMR) shares over the past year.
Stanmore Coal (ASX:SMR) shares over the past year.

Stanmore picked up Vale’s closed Isaac Plains mine in Queensland in 2015 for a measly $1.

This week the company upped its production target for FY19 for the second time to 2.15Mtpa, with costs estimated at $86 a tonne (excluding state royalties).

Coking coal shipped from Australia is fetching more than $US170 a tonne at the moment.

Stanmore said it upped its production guidance because the Isaac Plains mine continues to beat expectations.

The company estimates it will book between $140 and $150m in earnings before interest, taxes, depreciation and amortisation in FY19.

Featured Companies

You might be interested in