Fenix Resources (ASX:FEX) share price up 7% on profit and dividend surge

A huge dividend could be on the horizon for shareholders in the iron ore producer.

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The Fenix Resources Ltd (ASX: FEX) share price surged on 13% to 30 cents within the first ten minutes of trading after the company released its unaudited FY21 results.

At the time of writing, shares in the iron ore junior are up 7.55% to 28.5 cents.

Fenix Resources share price surges on bumper profit results

At its highest point in the calendar year, the Fenix share price was up 97.8% to an all-time high of 45.5 cents. The company has hit a number of milestones this year as it transitions from an iron ore explorer to producer. Some key financial highlights include:

  • Unaudited sales revenue of $113 million
  • Unaudited net profit before tax of $62 million
  • Unaudited headline net profit after tax (NPAT) of $49 million

Dividend policy on watch

The company announced the finalisation of its dividend policy which provides, to the extent its dividends can be fully franked, a payout ratio of 50% to 80% of after-tax earnings.

With an unaudited headline NPAT of $49 million and market capitalisation of ~$132 million, this implies a price-to-earnings ratio of just 2.55 and a potential dividend yield between 19.58% and 30.6%.

Management commentary

Fenix Resources managing director Rob Brierley commented on the results, saying:

Our unaudited financial results illustrate the rapid and relatively seamless execution of our project delivery strategy. We have hit the ground running and taken advantage of robust iron ore prices. The iron ore swap arrangements we entered into in July are already in-the-money and these arrangements secure Iron Ridge’s future for FY22 and beyond.

What’s next for Fenix Resources?

Brierley said that the company is targeting the release of its audited FY21 financial result in mid-September.

This potential near-term catalyst for the Fenix Resources share price will also include the declaration of its maiden dividend.

Should you invest $1,000 in Fenix Resources right now?

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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