Red Hill’s royalty engine doubles profit and funds exploration

Onslow royalty drives 120% profit growth

Red Hill Minerals Limited (ASX:RHI) has turned a stronger production year at the Onslow Iron Project into a sharp lift in earnings, reporting FY2026 net profit after tax of A$20.06 million, up 120% from A$9.13 million. Royalty income rose 142% to A$28.76 million after the project reached nameplate capacity, while total income increased to A$31.56 million.

Red Hill holds a 0.75% FOB royalty over Onslow Iron, operated by Mineral Resources (ASX:MIN). The company said the royalty stream generated revenue broadly in line with its forecast, although shipping costs included in the royalty calculation increased during the year due to conflict in the Middle East. MinRes reported an annualised run rate of approximately 38.4 million wet tonnes in its June 2026 quarterly report, above the project’s 35 Mtpa nameplate capacity.

The result was also helped by a return to positive operating cash flow. Red Hill generated A$19.57 million from operations, compared with an outflow of A$32.86 million in the previous year, when tax payments were materially higher. The company finished June with A$62.77 million in cash and no borrowings, although its royalty receivable had grown to A$7.67 million.

Dividend rises as exploration spending accelerates

The board declared a final FY2026 dividend of 10.8 cents per share, fully franked at 30%. Combined with the 11.6-cent interim payment, that takes the financial year’s total dividend to 22.4 cents per share. The final dividend has an ex-dividend date of 15 September 2026, a record date of 16 September and a payment date of 30 September.

Chairman Joshua Pitt said the distribution reflected Red Hill’s policy of applying 50% of Onslow royalty receipts to dividends, while retaining funds for exploration and possible royalty acquisitions. The company paid A$11.62 million in dividends during FY2026, a much smaller cash distribution than the prior year, which included two large special dividends following the sale of its 40% interest in the Red Hill Iron Ore Joint Venture.

That retained capital is being put to work. Red Hill spent A$7.26 million on exploration and evaluation during FY2026, with A$6.81 million capitalised, and completed the A$6.5 million expenditure required to earn a 75% interest in the Curnamona Joint Venture across the Broken Hill and Anabama projects.

Curnamona drilling supplies the next test

The exploration portfolio remains early-stage, but the annual report identifies several specific follow-up points. At Anabama, drilling intersected 20 metres at 0.6% copper, 0.2 grams per tonne gold and 3.0 grams per tonne silver, including narrower higher-grade intervals. Two subsequent deep holes testing conductors along strike have been completed, with drilling data and assays expected in October.

At Broken Hill, the Dementus hole intersected more than 250 metres of prospective Broken Hill Type lode horizons. Results included 91.1 metres at 0.1% lead and 0.3 grams per tonne silver, followed deeper in the hole by 152.6 metres at 0.2% zinc and 1.3 grams per tonne silver. The company plans follow-up work, but these are exploration intersections rather than a defined resource or economic assessment.

Red Hill also continues to advance its wholly owned West Pilbara gold and base metals ground, while holding a 2% gross revenue royalty over Brightstar Resources’ (ASX:BTR) Sandstone Gold Project and a 1.5% net smelter royalty over Legacy Minerals Holdings’ (ASX:LGM) Thomson Project. Sandstone’s royalty area contains a reported 1.341 million ounces of gold, but production has not commenced and future contingent payments would absorb 50% of royalty receipts from the first eight quarters of production.

The investment case therefore still rests on a productive Onslow royalty doing most of the financial heavy lifting while exploration tries to create the next asset. Red Hill has the balance sheet to keep drilling, but the coming Anabama assays and the pace of development at its secondary royalty interests will determine whether that second act moves beyond geological promise.