RE:Royalty Announcement Well we have our announcement. Depending on your expectations, this doesn't 'wow' or cover the dividend, but is rather inline and should be pretty predictable.
The number is growing the past 4 months with a small blip, but it is lower than BC (Before Covid). My question would be why is it lower than BC? I would assume it's more a lack of production be it drilling, pumping and some drop off. For a couple months oil price would be the obvious reason, but we are currently at a price above the BC level and it has been pretty steady over the past quarter. That said this is not overly concerning in my opinion.
June 1st, 21 - 1.933
Mar 2nd, 21 - 1.798
Dec 1st, 20 - 1.885
Sept 1st, 20 - 1.288
June 2nd, 20 - 2.355
Mar 2nd, 20 - 2.522
Dec 3rd, 19 - 2.201
(Millions Net AUD)
As a basic look, I would estimate September's royalty to be in the 2-2.3 range based on just what we see now as a prediction.
The current payment covers 1.7 cents of the 2 cent quarterly with the rest being covered by the "treasury". I would say this supports an ability to keep the dividend flat if they wish too.
The "Treasury" I find somewhat interesting, they say it is in "cash, cash equivalents and short-term investments" and it's rather simple to predict that if the royalty doesn't meet the dividend requirement than it comes straight from that account. That account does not seem to have much of a return, I wonder what the "short term investments" are. Maybe the return of this just covers buisness costs, which are pretty low. I would expect these investments are short term GIC/Bond types to stay somewhat liquid.
I see nothing overly concerning here, nor bullish, outside the straight up numbers not covering yet but trending towards covering our payouts. Of course we would like to see potential growth in our investment, but as of now we are looking at a straight up pass through entity. At the current 44 cents price, if everything stays flat, you would get back what you paid in 5.5 years + still hold what ever shares are worth at that time, not bad.
Does anyone know how much was originally paid to aquire the 2.5% royalty of Chu Chua?