The Pilbara Minerals Ltd (ASX: PLS) share price is recovering from a savage selloff on Tuesday.
In morning trade, the lithium miner's shares are up 1% to $4.91.
Image source: Getty Images
Why is the Pilbara Minerals share price rising?
Investors have been bidding the Pilbara Minerals share price higher today after the company unveiled its capital management framework.
With Pilbara Minerals generating significant free cash flow from its operations, it is now in a position to start thinking about capital management.
Pleasingly for shareholders, this means that dividends are expected to be paid from FY 2023, with management aiming to pay out 20% to 30% of its free cash flow to shareholders.
It notes that this leaves it with enough free cash flow to maintain safe and reliable operations, as well as support growth and productivity initiatives.
Management commentary
Pilbara Minerals' managing director and CEO, Dale Henderson, was pleased the company was in a position to pay a dividend so early in its operational life. He commented:
The strong dynamics we are experiencing for the lithium materials market and healthy production profile have quickly transformed the financial position of the business. With this comes the opportunity to bolster the growth path for the business and provide improved long-term value return for our shareholders – many of whom have stayed the course through both our ups and downs.
With strong cashflows being generated, it is pleasing to be in a position to seek to return value to our shareholders so early in our operational life via a maiden fully franked dividend for the 2023 Financial Year.
The established operating platform, expansion pathway and downstream participation opportunities place Pilbara Minerals in an enviable position to capitalise on the emerging demand for lithium materials. I am excited about what the future holds for the business, the opportunities this will bring to our stakeholders and all those who are connected with the business.
