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AngoGold Ashanti declares first dividend in three years

Picture Credit: www.livetradingnews.com
Picture Credit: www.livetradingnews.com

AngloGold Ashanti‚ the world number three gold miner‚ declared its first dividend since 2013 on the back of improved cash flows.

The company outlined plans to invest in internal projects instead of looking for mergers or acquisitions to sustain its production.

AngloGold‚ which has 17 mines around the world and generates three quarters of its gold outside SA‚ posted 130c per dividend for the full year to end-December 2016.

AngloGold swung to a profit of $80m for the year compared to a $70m loss the year before. The company’s cash flow was stimulated by a higher gold price‚ reduced interest payments on debt after it removed its most expensive bond from its balance sheet and cost control measures.

Free cash flow for the year was $278m compared to $141m the previous year. It was the steady improvement in cash flow since the last dividend declaration in 2013 that gave the AngloGold board confidence it could sustainably return to paying cash to shareholders‚ said CFO Christine Ramon.

“We saw positive cash flow momentum in the group over the past three years and that’s given us comfort regarding the sustainable free cash flow generation in our business despite significant gold price volatility‚” she said‚ adding the company was well below debt covenant levels and had a strong balance sheet.

Net debt fell by 13% to $1.92bn in 2016.

AngloGold was looking internally for its growth rather than buying projects‚ said CEO Srinivasan Venkatakrishnan.

“The industry is coming to a point where companies either need to go into M& A or reinvest to shore up their portfolios and we are certainly in the reinvestment camp. We have a pipeline of very good‚ high-return brownfields opportunities which will improve the production mix going forward‚” he said.

The pipeline of projects was across Africa‚ including SA‚ Australia and South America‚ he said.

In SA‚ the company lost 104 000oz of gold to safety stoppages ordered by the Department of Mineral Resources and management. AngloGold won a court case against the department’s stoppage of the Kopanang gold mine last year.

At the heart of the matter was the proportionality of the offence and the extent of the stoppage the department’s inspectors had demanded‚ with AngloGold arguing the inspectors had acted out of proportion.

Since the start of the year‚ the safety stoppages the department had ordered at the company’s mines were proportional and AngloGold had no issue with the instructions‚ Venkatakrishnan said.

Output at the South African mines fell to 967 000oz compared to more than a million oz the year before‚ with the safety stoppages and lower grades and mined volumes the main reasons for the decline.

Total gold production of 3.628-million oz for the year was lower than the previous year’s 3.83-million oz.

Looking ahead‚ AngloGold forecast output of between 3.6-million oz and 3.755-million oz and an all-in sustaining cost of between $1‚050/oz and $1‚100/oz.

 

– TMG Digital

 

 

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