Fresnillo Says No Special Dividend Planned Given Capex Plans

03/06/2012| 05:51am US/Eastern

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- Fresnillo is sticking to its dividend policy of 50% profits payout and no more

- Says it has to fund a hefty capital expenditure plan of about $930 million in 2012

- Remains open to special dividend depending on how much gold,silver prices rise in light of capex plan

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By Alex MacDonald

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Mexican precious metals producer Fresnillo PLC (>> Fresnillo Plc) has no plans to declare another special dividend given its current hefty capital expenditure plans, the company's chief financial officer said Tuesday.

"This year we are not expecting an additional dividend to be paid," Mario Arreguín told reporters on a call about the company's full-year results. "We are planning to have quite a bit of capex this year," he noted.

However, the company's Chief Executive Jaime Lomelin said it would consider some sort of special dividend depending on the degree to which gold and silver prices rise in relation to the company's capital expenditure plans.

"If prices go to $50/oz and $2,000/oz we would definitely consider paying an addditional dividend but for the time being we aren't considering paying a dividend."

The company isn't considering a special dividend because it plans to spend about $200 million in sustainable capital expenditure in 2012 and the four years thereafter and plans to invest about $600 million in annual growth capital expenditure over the same period, Lomelin said.

It also plans to spend $360 million on exploration in 2012, bringing the grand total capital expenditure budget to about $930 million, Lomelin told analysts on another call. "That's a lot of money," he noted.

The company will therefore stick to its dividend policy of paying out 50% of its profits to shareholders, he said.

Fresnillo paid a second interim dividend of $300 million, equivalent to $0.4185 cents a share, Dec. 30 due to the strength of underlying metals prices and its strong balance sheet.

It also declared a final dividend of $0.40 on Monday, bringing the full-year dividend to $1.03 a share, up from $0.45 a share in 2010.

Analysts have said the company is generating more cash than it can spend and could end up accumulating $1 billion in cash by the end of 2012.

The company had $685 million in cash at the end of 2011 and no debt.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com

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