AngloGold to double dividend pay ratio after cash flow boost
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DURBAN – AngloGold Ashanti’s share price leapt by more than 10 percent on the JSE yesterday after the gold mining company said it would double its dividend payment ratio, boosted by a 290 percent increase in free cash flow to $339 million (R5.5 billion) for the third quarter to end September, up from $87m compared to the same quarter last year.
The share closed 10.52 percent higher on the JSE yesterday at R407.62.
The company said it would pay its shareholders 20 percent of its free cash flow before accounting for capital expenditure in growth projects, up from 10 percent previously.
It would also double the frequency of payouts from the current annual dividend declaration to semi-annual payments.
The increase of the free cash flow was boosted by lower costs from continuing operations, lower capital expenditure and a 30 percent higher gold price received.
The gold price received from continuing and discontinued operations during the quarter was $1 904 an ounce compared to last year’s $1 464 an ounce.
The free cash flow amount of $339m excluded $200m of proceeds received for the sale of its South African operating assets to Harmony Gold at the end of September.
Its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 72 percent to $803m while cash inflow from operating activities was up by 56 percent to $551m during the quarter.
AngloGold Ashanti interim chief executive Christine Ramon said the company would continue to enforce capital and cost discipline to deliver strong cash flows in this elevated gold price environment.
“Doubling our dividend payout ratio demonstrates confidence in our ability to both improve direct returns to shareholders and to self-fund our growth projects and sustaining capital requirements,” Ramon said.
AngloGold Ashanti said it had streamlined its portfolio and completed the sale of its operating assets in South Africa. It was progressing with the sales processes in Mali while prioritising reinvestment in its portfolio to increase reserves, extend mine lives and improve operating flexibility.
As a result, its adjusted net debt almost halved year-on-year to $875m at the end of September compared to $1.65 billion in the same quarter last year. AngloGold Ashanti said the ratio of adjusted net debt to adjusted Ebitda fell to 0.36 times, its lowest level since 2011.
“The company remains committed to maintaining a flexible balance sheet with an adjusted net debt to adjusted Ebitda target ratio of 1.0 times through the cycle,” the group said.
Gold production in the quarter increased by 1 percent 837 000 ounces while all-in sustaining costs (AISC) were $1 044 an ounce.
The group said the Covid-19 related impacts resulted in AISC being $51 an ounce higher in the third quarter due to $22m costs incurred and 18 000 ounces lost production at the South African operations.