Tony Trahar, CEO, Anglo American
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Anglo $3bn share buyback in 2007

Posted: Wed, 21 Feb 2007

[] -- ANGLO AMERICAN, which reported record operating profit of $9.8bn in 2006, will buy back a further $3bn of its shares in 2007 after last year's $7.5bn buyback and return to shareholders as the company continues to benefit from high platinum, base and ferrous metal prices.

This comes on top of an increased dividend payout for 2006 of 42%, bringing the total dividend, including a special dividend of $0.67 and a final dividend of $0.75, to $1.75 a share. Shareholders vote on the dividend on 17 April at the annual general meeting where CEO Tony Trahar steps down.

Some analysts had been expecting a larger share buyback after last year's $6bn scheme.

JP Morgan said on Monday there was a good possibility of a $4bn buyback as debt continues to fall.

"The group has announced a 2007 share buyback of $3bn - commendable but mildly disappointing relative to market expectations of $4bn plus," said Simon Toyne from Numis Securities.

"However, we note the final dividend has been increased 21% to raise the full year yield to 2.1%," he said in a note. "Overall, the results and update suggest 'on track' financial and strategic progress but no more than that."

Anglo posted underlying earnings per share of $3.73 against market expectations of $3.83.

Anglo expects global economic growth to slow in 2007 because of weak US growth, but this will be offset by China and India, which are growing strongly, as well as an improvement in European and emerging markets, Trahar said in a statement.

"This should provide a supportive climate for commodities in the near term," he said.

The global economy has grown strongly over the past four years, and the consensus is that the growth rate will be slightly lower this year but without "undue pressure" on inflation rates and interest rates, he said.

Cynthia Carroll, who joined Anglo in January from Alcan, will replace Trahar.

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Anglo is divesting from what it sees as non-core assets, including gold, paper abd some ferrous metals businesses.

AngloGold Ashanti, in which Anglo holds a 42% stake, has called for clarity on how Anglo intends disposing of the stake. The share price of the world's number three gold miner has underperformed its peers because of the overhang of shares in the market.

"Anglo American continues to explore all available options to exit AngloGold Ashanti in an orderly manner," Trahar said.

"Further restructuring, especially progress on the disposal of the remaining 42% stake in AngloGold Ashanti, would imply significant upside to cash return potential through the year," Toyne said.

Anglo is demerging its paper and packaging group Mondi, which will have a dual listing in Johannesburg and London from mid-2007. Anglo has received approval in principle from the South African regulatory authorities for the transaction.

Anglo generated net cash of $8bn from $6.8bn in 2005. Its net debt has fallen by $1.7bn to $3.3bn.

It had by 20 February bought back $3.2bn worth of shares in the $4bn share buyback it announced at its interim results.