Shares in Australia's largest lithium producer Pilbara Minerals have rallied after it declared its first ever dividend from a growing pile of cash.
Strong lithium market conditions on soaring demand for electric car battery ingredients have underpinned a $1.24 billion net profit for the six months to December 31, up from $114 million a year earlier.
Shares in Pilbara added 11 cents or 2.46 per cent to $4.59 in morning trade on Friday as the company rewarded shareholders with a dividend six months earlier than promised.
A stellar first half reported on Thursday after the market closed was underpinned by a record operating performance from the Pilgangoora Project in WA, as well as rising prices as the United States and Europe vie with China for lithium raw materials.
"This is just the beginning," Managing Director and CEO Dale Henderson said.
"The stage is set for Pilbara Minerals to take massive growth steps in the months and years ahead."
The hefty profit was achieved despite higher unit operating costs amid labour shortages in the WA mining sector, supply chain disruptions, inflationary pressures and higher royalty costs linked to higher pricing.
Production almost doubled to 309,255 dry metric tonnes (dmt) of spodumene concentrate and shipments were up 68 per cent.
A 647 per cent increase in sales revenue to $2.18 billion was realised from the sale of 286,876 dmt of spodumene concentrate at an average realised price of $US4,993/dmt compared to $US1,232/dmt a year earlier.
This delivered a $1.67 billion (or 959 per cent) increase in the gross margin from operations to $1.85 billion.
Setting up sustainable returns to shareholders, the company said it was targeting a dividend payout ratio of 20-30 per cent of free cash flow.
Franking credits start being earned when the company commences paying tax this month.
The fully franked dividend of 11 cents per share will be paid in late March.
