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Is this fast-growing miner an option for dividends?
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Investors looking at Sayona Mining Ltd (ASX: SYA) shares may be wondering whether it could be a source of dividends.
The mining sector is a popular and bountiful place to find dividend-paying shares such as Fortescue Metals Group Limited (ASX: FMG), BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), New Hope Corporation Limited (ASX: NHC) and South32 Ltd (ASX: S32).
Sayona Mining describes itself as an emerging ASX lithium share with projects in Quebec, Canada, and Western Australia.
In Canada, its assets comprise North American Lithium together with the Authier lithium project and the Tansim lithium project, supported by a strategic partnership with American lithium developer Piedmont Lithium Inc (ASX: PLL). It also has a 60% stake in the Moblan lithium project.
In Western Australia, it has a large tenement portfolio in the Pilbara region, where it’s looking for gold and lithium. The lithium projects are subject to an earn-in agreement with Morella Corporation Ltd (ASX: 1MC).
The miner hasn’t paid any dividends yet. At the moment, that isn’t the focus for the leadership team.
Sayona Mining shares are getting a lot of attention for its growth potential and that’s where the business is spending shareholder capital to grow value – on the mining projects.
The company may pay dividends eventually, but it needs to generate operating profits first – dividends are paid from profit. Generating positive operating cash flow could also help fund future dividends.
One of the building blocks to generating a profit is North American Lithium (NAL). It was announced last month that the restart of NAL operations has picked up speed, with around 30% of plant and equipment upgrades now completed, including the arrival of the magnetic separator and crusher.
It said that construction work is on schedule, with 50 construction works currently on-site, with this number expected to double by September.
The project is on track to deliver its first spodumene (lithium) concentrate production in the first quarter of 2023, which is in line with the government plan to develop 100% of the local battery supply chain.
It would become the only local supplier in North America after having committed around $100 million to the restart.
Sayona managing director Brett Lunch said at the time:
It is extremely pleasing to see the rapid progress at NAL as we ramp up towards the recommencement of lithium production.
With virtually all of the NAL operation powered by hydroelectricity, this is truly one of the world’s most sustainable lithium operations, an important differentiator in an industry that aims to facilitate global decarbonisation.
Adding yesterday’s 13% gain to the last few weeks, the mining business has risen almost 20% in the past month. The Sayona Mining share price is also up 121.4% since the stat of 2022.
Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. 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 Scott Phillips.
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