Pic: ONOKY - Fabrice LEROUGE/Brand X Pictures via Getty Images
Ground Breakers: Fortescue’s revolving door spins out CEO Fiona Hick
Mining
share
- Fortescue continues to bring the drama with the sudden departure of metals CEO Fiona Hick adding to the intrigue
- Total dividends for the iron ore giant came in at over $5 billion despite the revolving door in its C-Suite
- Gold miners Gold Road and Ramelius sneak in nice profit and dividend lifts
Fortescue’s (ASX:FMG) new metals CEO Dino Otranto faced a volley of fire on his maiden financial results call at the helm of the ASX 20 iron ore miner, as Andrew Forrest’s $60 billion digger revealed the shock departure of CEO Fiona Hick after just six months in the role.
The former COO, previously the COO of Vale’s base metals division, joined Fortescue Energy CEO Mark Hutchinson with WA billionaire and FMG exec chair Forrest not presenting to analysts and media as the revolving door in its C-Suite continued to spin.
That, along with a big impairment on its new Iron Bridge magnetite mine, clouded what was otherwise a solid set of numbers, especially in light of the profit hits to compatriots and competitors BHP (ASX:BHP) and Rio Tinto (ASX:RIO) this reporting season.
FMG delivered US$10 billion in underlying EBITDA (6% down on FY22), the third highest result in its history, underlying NPAT of US$5.5b (11% down on FY22), net cash flow of US$7.4b and free cash flow of US$4.3b in FY23 on record iron ore sales of 192Mt.
Its final payout comes in at $1 per share, with total FY23 dividends slipping 15% to $1.75 or $5.4b. Around $2 billion of that will head into the pockets of Forrest and separated wife Nicola, whose decision to ‘live separate lives’ was revealed around a month ago after it emerged FMG shares had been transferred into a company registered under Nicola’s name.
At 65%, the FMG payout ratio was 13% lower than the 75% paid out in 2022, though statutory profit after tax fell 23% to US$4.8b thanks to a US$726 million non-cash impairment on Iron Bridge.
It was revealed the project capex bill had risen another US$100m to US$4b, with life of mine C1 costs lifted from US$38/t to US$45/t.
Does Fortescue Energy get any less confusing?
Many of the questions on today’s call centred around concerns from analysts the full story had not been told on Fiona Hick’s sudden departure.
It had been reported to the ASX this morning as a mutual decision, with Otranto’s internal hire expediting his move to the top of its iron ore division.
“It was a mutually agreed between her and the board, I respect that, and I wish Fiona well in whatever she does next,” Hutchinson said, giving up little info about what prompted the move.
In other radical changes to the business, Fortescue’s green energy arm will no longer receive 10% of NPAT from its iron ore sales.
FMG expects its Energy division to have net opex of US$800m in FY24 along with capex and investments of US$400m, with the business to compete with metals investments for capital allocation going forward.
“We will compete for capital, we want to make sure the shareholders gets the best possible return, so there is no preconceived idea about how much we spend on the energy business going forward,” Hutchinson said.
“It just makes sure that we actually compete … the best projects we’ll make sure that they have the right returns for shareholders here.”
Both Hutchinson and Otranto played a straight bat to questions as well on relationships between staff after the AFR revealed shortly after the news about Forrest and his wife Nicola was reported that the Fortescue board had conducted a review into whether Dr Forrest had a relationship with an employee which made no adverse findings.
That board has been refreshed today as well, with the news that Mark Barnaba, its deputy chair and lead independent director, would relinquish his role as lead independent but remain as deputy chair during 2024.
Dr Larry Marshall, the head of the CSIRO for eight years until June 2023, will come on as a non-executive director.
Fortescue (ASX:FMG) share price today
And some other stuff happened today
The drama around Fortescue, which fell 5.16% even as higher iron ore prices sent BHP and Rio into the green, is so all-consuming it’s easy to forget other companies had their reports today.
Precious metals producers Gold Road Resources (ASX:GOR) and Ramelius Resources (ASX:RMS) were two of the big miners plodding along under the radar today.
GOR lifted its half-year payout from 1c to 1.2c after reporting a lift in NPAT from $39.9m to $55.7m from its half share of the Gruyere gold mine in WA in the first six months of 2023.
Its sales lifted from 79,606oz to 80,115oz, with operating cash flow up from $69.5m to $110.3m and free cash flow up from $44.6m to $74.6m.
Full year guidance at Gruyere, half-owned and operated by South African giant Gold Fields, has been set at 320,000-350,000oz and AISC of $1540-1660/oz.
“The six months to 30 June 2023 has broken several financial records for Gold Road with the strong result reflecting the consistent performance of the processing plant, a supportive Australian dollar gold price and Gold Road’s production being fully unhedged,” Gold Road MD Duncan Gibbs said.
“The Company continued to return income to shareholders in the form of six-monthly dividend payments, and the Board has determined to pay a dividend for the six months to 30 June 2023 of 1.2 cents. In determining the dividend, your Board has considered the potential requirements to support growth and future operating conditions.”
Also upping its dividend is Ramelius, which will pay out 2c per share fully franked, double last year’s final return.
That came on the back of production of 240,996oz of gold at an AISC of $1895/oz, a 5% lift in revenue to $631.3m, 23% rise in EBITDA to $256.7m and 396% lift in statutory net profit to $61.6m.
RMS delivered underlying NPAT of $75.3m in FY23, up 3% on FY22, with underlying EBITDA down 6% to $276.3m and cash and bullion on hand up 57% to $272.2m.
Pre-tax cash flow lifted 23% to $226.3m as the introduction of ore from the high grade Penny mine and high Aussie dollar gold prices paid off.
RMS also went unconditional on its offer for Musgrave Minerals (ASX:MGV), owner of the +900,000oz Cue gold project, though boss Mark Zeptner warned there remained uncertainties around the macro economic environment.
“While FY24 continues to present some uncertainty in terms of local and global inflationary pressures, we expect both our production centres to generate positive operating cashflows, which will fund the exciting prospects we see at the Rebecca and Roe sites as well as at Mt Magnet, where the development pipeline continues to expand,” he said.
“Ramelius is also pleased to announce the declaration of a fully franked 2.0 cent per share dividend. This is now the fifth consecutive annual dividend for Ramelius shareholders with a total of A$71.6M being returned over that period. The Company continues to strive for superior returns for its shareholders via both capital growth and dividend yield.”
