Base Resources’ underlying profits in the year just ended were ahead of expectations at US$159m with realisations on its sales volumes better than had been expected.
The mineral sands miner also announced an A$0.04/share dividend, which was unexpected but the broker believes this is a small negative - counter-intuitively it seems.
“Unfortunately, the payment of a dividend, we assume, is due to management seeing no imminent return to site works at its Toliara project, meaning the final investment decision remains at least 12 months away.”
Peel Hunt had hoped that the settlement with Rio's QMM operation would see a fast resolution over fiscal terms between Base and the Malagasy government for the project, but this still seems some way away given the decision to pay a final dividend.
The target price is 17p with a ‘buy’ rating.