[miningmx.com] – ANGLOGOLD Ashanti CEO, Mark Cutifani, risked
incurring the displeasure of some critics who think the company’s dividend policy errs
on the side of parsimony, especially as the company doubled headline earnings in the
first quarter of its financial year (March quarter).
Announcing the company’s March quarter earnings and production figures for the
period today, the Australian stuck to his guns, however, saying a 13 US cents/share
(100c/share) dividend would be paid to shareholders.
This is the level he forecast at the company’s last quarterly presentation, a payout
criticised in some quarters as “too stingy”. Cutifani added, however, that the firm
would proceed with three new gold mining projects that would require a $1.9bn capital
outlay which undoubtedly informs the level of the dividends.
The three projects – an expansion of the US-based Cripple Creek and Victor mines,
and perhaps more riskily, the development of the Mongbwalu and Kibali projects in
the Democratic Republic of Congo – promise to deliver an additional 500,000 ounces of
gold. Cutifani said AngloGold production is forecast to total 5.4 million ounces and 5.6
million ounces by 2014.
First quarter earnings came in at $429m despite a 6% decline in production which
totalled 981,000 oz due to safety stoppages in South Africa. AngloGold said, however,
that the full year production target of 4.3 million to 4.4 million ounces remained
unchanged. For the second quarter, production is expected to be around 1.04 million
ounces at a total cash cost of $840/oz to $845/oz. Cash costs in the first quarter
totalled $794/oz which AngloGold said was better than guidance.
“The first quarter has shown that we continue to deliver the earnings and cash flow
we need to drive our growth plans and further diversify our portfolio,’’ Cutifani said in
comments to the company’s first quarter announcement.
“We’re now able to invest in our portfolio to deliver growth from an attractive suite of
projects which are each of manageable size and carry relatively low technical
execution risk,’ he said.
PROJECTS
AngloGold said it would invest $982m as its contribution to the 45%-owned Kibali
mine, which it shares with Randgold Resources (45%) and the Congo state-owned
company, Sokimo. First gold is expected end-2013 at a rate of 600,000 ounces
annually for the first 10 years.
The Mongbwalu project is a joint venture in the Congo in which AngloGold has an
86.22% stake, and in which $345m has been invested. Annual production of 130,000
oz/year, which is the level expected for the first three years, begins from end-2013.
“The company plans to quickly expand the operation as it adds more gold resources in
the area once first gold is produced,” AngloGold said in its announcement.
Some $557m will be invested over the next five years in the expansion of Cripple
Creek taking output to 400,000 oz/year until at least 2025. Thereafter production is
expected to plateau to at least 350,000 oz/year for another 10 years.
AngloGold has already announced the Tropicana project in Australia, a venture that is
expected to start production at the end of next year. The Corrego do Sitio mine in
Brazil is currently being commissioned.
