I ran through numbers a few months ago and predicted 2 - 2.3 Million AUD in Net royalty income. With the announcement 2 weeks ago by the company that doesn't at all seem possible as they discussed a fall in production of around 12%, but they did mention a raise in realized prices. Also CAD-AUS hasn't moved much as it just has tread water and fallin a penny recently.
With this taken into consideration I would estimate the royalty income showing between 1.7 and 1.9, which is a little lower than last quarter and therefore does not cover a 2 cent dividend.
It costs about 2.1 mil to cover 2 cent dividend, 1.7 mil covers a 1.5 cent dividend. It will continue to be interesting if management continues to keep a 2 penny distribution, or lower to 1 cent, they have never given a partial penny distribution but it would really be prudent if they did especially in current climate.
On the positive side is that they are projecting to increase production going forward with new wells which apperently should have started already. We likely see minor effects next quarter, but more so in the February-March announcements
As stated before 6 cents distribution per year seems like a better expectation than the 8 cents currently projected, so a bounce down doesn't feel concerning as they will likely bump back up a few months later. The dividend is not very consistant and should not be expected as so.
The treasury that is pulled from when the income does not cover the distribution has about 5 cents per share of undistributed cash avalible.
I'm still long as for a small investment this seems like a good risk reward at the moment, I haven't myself thrown a stop-loss on yet, but it's likely a good idea. I was hoping for a bit more share price gain before I threw some measures of safety at this.
We know the market doesn't like dividend cuts and the stock price fell 20% after a 66.6% dividend cut was already paid out but before announcing a doubling of that lower distribution. It was an odd move and more than likely larger retail investor exited a sizeable position as they grew tired of the inconsistency and a few smaller guys followed or hit thier stops. (Which is when I entered at .40)