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(Alliance News) - Rio Tinto PLC on Thursday upped its interim dividend by 19% even as profit fell in the first half of 2019 on impairment charges from the Oyu Tologi mine.
Shares in the FTSE 100 miner were down 2.8% at 4,562.75 pence on Thursday.
For the six months to the end of June, pretax profit was USD5.19 billion, down 23% from USD6.73 billion the year before. This was on revenue that rose to USD20.72 billion from USD19.91 billion the prior year.
Profit was hurt by impairment charges rising to USD2.35 billion the the period, compared to USD123 million the year before, mostly relating to the Oyu Tolgoi copper and gold underground project in Mongolia.
In 2018, geotechnical data from Oyu Tolgoi revealed that "potentially significant changes" to the design of future elements for the mine would be needed.
First production from the mine is expected to be delayed by between 16 to 30 months from the original start date in 2020.
As a result of the delay, the development capital spend for the project may increase by between USD1.2 billion and USD1.9 billion, above the original project budget of USD5.3 billion.
For Oyo Tologi, Rio Tinto expects to publish a definitive estimate for development capital spend and production timeline in the second half of 2020.
The company's first half underlying earnings before interest, taxes amortisation and deprecation rose by 11% to USD10.25 billion from USD9.20 billion the prior year.
Revenue growth, was helped by a substantially stronger performance from its iron ore products mainly due to higher prices, despite a dip in contributions from all other products.
Rio Tinto declared an interim dividend of 151.0 cents per share, up 195 from 127.0 cents the year before.
Looking ahead, Rio Tinto has left its 2019 production guidance unchanged, and expects capital expenditure for the year to be USD6.0 billion in 2019, and at around USD6.5 billion for 2020 and 2021.
"Our financial performance was driven by our Pilbara operations with a 72% Ebitda margin, underpinned by strong iron ore prices. We are taking actions to protect the Pilbara Blend and optimise performance across our iron ore system, following the operational challenges which emerged in the first half, said Chief Executive Jean-Sebastian Jacques.
"Our world-class portfolio and strong balance sheet serve us well in all market conditions. This, together with our disciplined capital allocation, underpins our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term," Jacques added.
In a separate announcement, Rio Tinto said drilling is ongoing at the Winu project in Paterson, Australia, with eight diamond rigs and three reverse circulation rigs.
In June, the group reported the discovery of copper-gold mineralisation at the Winu project, and expects to report further drilling results in the first quarter of 2020.
The reverse circulation drilling is focused on defining the extent of Winu's supergene zone, while the diamond drilling tests the extents of the deposit.
