Altona Mining (ASX:AOH) announced it has entered into an agreement with Bolliden whereby Bolliden acquires all of Altona’s assets in Finland for a total cash consideration of approximately A$100M. An initial $10M has been placed in an escrow account, and the transaction is expected to close in the fourth quarter of this year.
Altona plans to treat its shareholders quite well with the sale, as it expects to pay reward its shareholders with A$80M which will be used to fund a dividend, share buyback and capital reduction. As Altona Mining still is a mining company –which is a very capital-intensive sector – we aren’t sure a shareholder ‘treat’ is the right capital allocation, especially not if there would be taxation owed on the dividend (and a double dividend tax for its overseas shareholders). The mining sector still is in a downturn, and we’d actually prefer Altona to use its cash to acquire new projects (or at least fund Little Eva if it wants to go ahead with that project), as this definitely is a buyer’s market. We’ll be keeping a close eye on Altona’s development and whether or not the management team might change its mind about how it’ll spend the cash.
> Click here to read the press release
Disclosure: The author holds no position in Altona Mining. Please see our disclaimer for current positions.
