UPDATE 1-Norilsk Nickel Board Recommends $1.3 bln 2009 Dividend

MOSCOW, May 27 -- The board of Norilsk Nickel (GMKN.MM: Quote) recommended a bumper $1.3 billion dividend on 2009 results, enabling its shareholders, including two Russian tycoons, to cash in on the mining giant's return to profit.

"Despite the fact that we had a recommendation to pay out 20-25 percent of net profit, it was decided to pay 50 percent, or $1.325 billion," Chief Executive Vladimir Strzhalkovsky told reporters after Thursday's board meeting.

That works out at 210 roubles ($6.79) per share.

Shares in Norilsk, whose two main shareholders are Vladimir Potanin and Oleg Deripaska, were up 3.4 percent by 1024 GMT in Moscow, outperforming a 1.3 percent rise on the MICEX metals and mining index .

Norilsk also said it planned to issue 100 billion roubles of bonds as part of a long-term borrowing strategy. In the short term, however, the company plans to pay back $1.8 billion of debt by end-June.

The fact that dividends are back on the agenda at the world's leading nickel and palladium miner is a further sign that a recovery is under way among Russian miners, who were hard hit by declining demand for base metals when the economy soured at the end of 2008.

Norilsk posted a return to profit in 2009, as it cut costs and avoided a repeat of one-off charges.

Before the 2008 loss, the company, which supplies 20 percent of the world's nickel, had generally paid out a quarter of net profit as dividends. ($1=30.91 Rouble)