Mining company to pay dividends in physical gold

By Filip Karinja

In a world first, shareholders of ASX listed Resolute Mining (ASX:RSG) can receive dividend payments in the form of gold bullion.

The gold miner announced it would resume dividend payments for the 2016 financial year at $0.017 per share under the new gold sales-linked dividend policy.

The dividend payments will total $11.1M which represents 2% of RSG’s FY2016 gold sales revenue of $555M.

Shareholders of RSG will be given the option to receive dividends in cash or in gold from the Perth Mint.

The partnership with the world renowned Perth Mint will sees shareholders holding more than 5,000 or more ordinary shares in RGS on the record date being offered the gold payment option.

The agreement allows eligible shareholders to convert their gold balances into a range of bars and coins available at the Perth Mint.

dividends gold Resolute mining

John Welborn, Managing Director and CEO of Resolute Mining, with Richard Hayes, CEO of The Perth Mint with part of the dividend payment in gold bullion.

The unique offering by RSG is likely to appeal to gold bugs who are seeking exposure to the monetary metal through the stock market but also invest in the commodity itself.

As many gold enthusiasts currently convert their profits from the paper markets into physical gold.

Now investors can receive physical gold as a dividend payment whilst leaving their money in the company, saving on broker fees and costs of buying both stocks and metals at a spread.

FY2016 saw RSG post a record profit of $213M and reduce its debts by $91M, seeing the balance sheet up finish $102M in the black.

The strong performance from the gold miner over the past year saw the share price move from $0.25 per share at the beginning of the year to reach a high of $2.10 at the beginning of August, an 840% gain.

The share price performances of RSG should not be used as a guide to future performance and any investment decision should not be based solely on this information.

Will other miners follow suit?

Whilst uranium investors are likely to pass on the idea, receiving a gold or silver coin/bar has an appeal for investors who not only believe in the company that they are investment in but the precious metal resource itself.

Bold moves from metals miners has seen previous success with silver miner First Majestic Silver Corp (TSE:FR) who operates on the Canadian stock exchange, previously suspending sales of 35% of its silver production due to low prices in commodity.

The outspoken CEO of First Majestic, Keith Neumeyer claiming the metal was being manipulated lower through the paper markets.

Proving a hit with silver bugs for his daring move, Neumeyer’s First Majestic has had a stellar 2016, starting the year at $4.80 per share to reach a high of $24.16 in August, before selling off as the silver price dropped back.

The share price performances of First Majestic should not be used as a guide to future performance and any investment decision should not be based solely on this information.

No doubt other mining companies took note of First Majestic’s stance and success that followed.

The same applies to the gold dividend payment scheme with RSG that if proven to be a success could see other companies follow suit in an attempt to attract investors.

The publicity that RGS has received from the latest dividend move has been worth its weight in gold, as too are its dividend payments.