AngloGold Ashanti has said it would consider paying a higher annual dividend after reporting a more than 200% jump in first-half earnings, driven by higher gold prices and a weaker local currency.
In a release sited by the Vaultz media, AngloGold, which has operations in Australia, Brazil and Tanzania, said its headline earnings per share for the six months ended June rose 234% to 97 cents against 29 cents a year earlier, despite output disruptions caused by Covid-19.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) also climbed to 59%.
Chief Executive of AngloGold, Kelvin Dushnisky said,
“Cash flows are extremely robust, demonstrating the significant operating leverage we have to this strong gold price.”
Dushnisky, who steps down as Chief Executive in September, said the company would focus on cutting costs and capital management as it seeks to widen margins and increase reserves through exploration and expansions.
“While the recent rally in the gold price is welcome, tight cost and capital management will continue to be the key focus areas for us as we work to capture this widening margin and increase reserves”
Spot gold has roared past $2,000 an ounce for the first time, giving South African gold miners a lifeline after the disruption caused by the Covid-19 pandemic.
AngloGold, which pays an annual dividend of 10% of its free cash flow before growth capital, said free cash flow had increased more than four-fold to $324 million.
Dushnisky said again that,
“If gold prices stay at these levels, and we continue to manage our margins well and we continue to generate increasing free cash flow, we will see increased dividends.”
He added that, If prices remained supportive and the company strengthens its balance sheet, the board could also consider changing its dividend policy.
The bullion miner, which is completing the sale of its last South African assets, said it had lost around 85,000 ounces of output due to Covid-19, with 63,000 ounces of that from South Africa.
Production during the period was 1.469 million ounces compared to 1.554 million ounces for the first six months of last year.
Dushnisky said the board was considering moving its primary listing from the Johannesburg Stock Exchange but its current focus was navigating the pandemic.
The release also said that AngloGold Ashanti is investing in the redevelopment of its Obuasi Gold Mine, as well as exploration and ore reserve development to increase its operating flexibility and increase reserves.
The Obuasi Redevelopment Project continued to ramp up, delivering 50,000oz in the first half of 2020 despite delays in receiving equipment and the arrival of certain critical skills to the site as a result of lockdowns in various jurisdictions. The second Phase of the ramp-up is expected by the end of the first quarter of next year.
Interim CEO, Christine Ramon will continue to focus on the inward investment programme, with rigorous capital allocation guidelines including leverage and return targets.
