Havilah Resources plans to return up to $44.6 million to shareholders through a fully franked Sandfire share dividend and proposed capital reduction. The final distribution will depend on Sandfire’s share price before the 31 December record date, while the capital return still requires shareholder approval.
- Up to $44.6 million value to be distributed in Sandfire shares
- 7.514 cents per Havilah share fully franked dividend
- Additional 5.085 cents per share capital reduction subject to AGM approval
- Indicative ratio of one Sandfire share for every 268 Havilah shares
- Final ratio based on Sandfire’s five-day VWAP before 31 December
Havilah Resources Limited (ASX:HAV) is preparing to hand shareholders up to $44.6 million in Sandfire Resources Limited (ASX:SFR) shares, turning part of its Kalkaroo deal proceeds into a sizeable in-specie return rather than a cash payment.
The package comprises a fully franked dividend worth approximately $26.6 million, or 7.514 cents per Havilah share, plus a proposed capital reduction of about $18.0 million, equivalent to 5.085 cents per share. Together, the two components represent an indicative 12.599 cents per Havilah share, although the capital reduction must first clear a shareholder vote at the annual general meeting on 17 December.
Kalkaroo consideration converted into shareholder value
The distribution is funded by the non-refundable Stage 1 upfront consideration Havilah received under its earn-in agreement with Sandfire for Kalkaroo. The earlier $105 million Kalkaroo upfront payment formed part of the transaction that gave Sandfire an 80% interest in the South Australian project.
Havilah Chairman Simon Gray said the return would pass a significant portion of the realised value to shareholders while leaving the company with what the board described as a robust balance sheet. Havilah also said it intends to retain 20% project equity and continue exploration across its Curnamona Province tenements.
Sandfire share ratio remains variable
At an indicative Sandfire price of $20.18, the scrip dividend equates to roughly one Sandfire share for every 268 Havilah shares held. That is not the final ratio: the number of Sandfire shares distributed will be calculated using Sandfire’s five-trading-day volume-weighted average price immediately before the 31 December 2026 record date.
Fractions will be rounded down or disregarded, and Havilah’s own share count will not change. The dividend component is scheduled to go ex-distribution on 30 December, with eligible holders receiving the Sandfire shares on 8 January 2027. The capital reduction is intended to use the same distribution method if approved.
Tax treatment awaits ATO ruling
Havilah describes the dividend as fully franked, with the filing specifying a 30% corporate tax rate for the associated franking credits. The company says both the dividend and capital reduction are expected to be tax effective for most shareholders, but that position remains subject to a ruling being sought from the Australian Taxation Office and to each shareholder’s circumstances.
The immediate attraction is clear: shareholders are being offered exposure to Sandfire shares while Havilah preserves its listed equity structure and avoids issuing new Havilah stock. The less tidy detail is that the value delivered will move with Sandfire’s price until the final VWAP is fixed, and the capital-return portion remains conditional on the December vote.
Bottom Line?
The headline value is substantial, but shareholders will need to distinguish the locked-in dividend commitment from the proposed capital reduction and recalculate the final Sandfire entitlement once the VWAP is known.
Questions in the middle?
- Will shareholders approve the proposed $18.0 million capital reduction at the 17 December AGM?
- Where will Sandfire’s five-day VWAP place the final distribution ratio relative to the indicative one-for-268 estimate?
- What will the ATO ruling mean for the tax treatment of the dividend and capital return across different shareholder groups?