Rio Tinto offer special dividend after smashing half-year records

Gold & Silver

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(Kitco News) - Rio Tinto shares trade marginally higher this morning following a record-breaking half-year performance report. Iron ore was Rio’s main driver of profits, accounting for almost 85 per cent of net income. This was underpinned by very strong demand in China.

In terms of numbers, six months to June on revenues of $33bn. This lead to $9.1 billion in dividends. The miner declared a special dividend of $1.85 per share and an interim dividend of $3.76 per share, beating expectations by around 6%. Adding to this, Rio swung to a net cash position of $3.1bn from net debt of $664m at the end of 2020

Looking ahead the company wants to capitalize on the movement into green projects. Chief Executive Jakob Stausholm said, “We are making progress on our four priorities, identifying opportunities for operational improvement, advancing our ESG agenda, taking important investment decisions, and stepping up our external engagement,”.

It is not all smooth sailing for Rio Tinto. The Financial Conduct Authority (FCA) is investigating if the company breached listing rules in disclosures about the value of Oyu Tolgoi in 2018 and 2019, according to people familiar with the situation.

Rio announced in July 2019 that the underground expansion of Oyu Tolgoi would require an additional $1.2bn-$1.9bn in capital and the project would be delayed by 16 to 30 months. However, some investors and a former employee claimed Rio Tinto knew the expansion of the copper mine was in trouble months before the problems were disclosed to investors.

Chief Financial Officer Cunningham declined to comment on whether the miner had been contacted by any regulators after a report by the Financial Times that a U.K. financial watchdog is conducting a probe into its $6.75 billion underground copper project in Mongolia.

Looking at the share price, there has not been any material push higher following the news. Ther price is in the middle of its current consolidation distribution zone. A break of either trendline could be telling over the coming days. The next level on the upside is the consolidation high of 6187 and if that breaks the high on the chart of 6788 could be tested. On the downside, the trendline looks firm but the consolidation support stands at 5279 and there is a bank of support ahead of that at 5702.

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