[miningmx.com] — ANGLOGOLD Ashanti expects to pay a total dividend of 270c per share for 2011, almost double the 145c of 2010, but an analyst reckon the company’s backers should share significantly more in the spoils of gold’s record run.
AngloGold CEO Mark Cutifani on Wednesday introduced a quarterly dividend payment, announcing a payout of 90c for the three months to end-September, and said he was expecting to again pay the same for the fourth quarter. The company’s interim dividend also was 90c.
Cutifani told journalists that AngloGold would “share as much as we can’ without jeopardising investments in growth projects, referring to the company’s development portfolio in Australia, Brazil, Africa and the US to lift annual output by about a million ounces from the current 4.3 million ounces (Moz).
Cutifani said the company would not follow a fixed dividend cover policy nor link payouts to the gold price – a strategy followed by peer Newmont Mining.
“We’re focusing on cash flow,’ said Cutifani. “We still have to fund our growth story.and keep our balance sheet flexible.’
Commenting on AngloGold’s rising dividend, Imara SP Reid gold analyst Percy Takunda said it was a welcome statement of intent and should provide a boost to the company’s share price. However, he said the 270c/share total dividend would still be less than 10% of Anglo’s expected net annual profit.
“If they only pay 10% when gold is at a record high, how much would they pay if the price turns?’ he said. “Gold is now at a record and shareholders should now share in the upside.’
Takunda said a mature company like AngloGold do not need to invest more than 50% of profits in future growth. “They’re not an exploration company; they’re the third largest gold miner in the world,’ he said.
ADJUSTED OUTPUT GUIDANCE
The higher dividend was the result of AngloGold posting a 34% increase in adjusted headline earnings for the September-quarter, to $457m, or 118 US cents a share, compared with $342m (89 cents) in the previous quarter.
Gold production came in at 1.092Moz at a cash cost of $737/oz, against guidance of 1.11 Moz at $775/oz.
Cutifani has again revised 2011’s output guidance down to 4.33 Moz, from 4.45 Moz, saying the company’s “production engine’ has room for improvement.
“Drought continues to impact production from Cripple Creek, while Sunrise Dam’s recovery from flooding in the first half of the year was again slower than anticipated, as was the ramp-up of production following the five-day wage-related strike at the South African operation,’ read a company statement.
The total cost projection for 2011 was $735 to $745 per ounce.
Cutifani said AngloGold was not yet in a position to offer official production guidance for 2012, other than that it would be “flat’. However, the commissioning of the development projects was on track for 2013, which would lift output to 5.5 Moz in 2014.
GOLD OUTLOOK
AngloGold received $1,713/oz on average for gold sales during the third quarter.
Cutifani said a gold price north of $1,700/oz for the fourth quarter should be “a safe bet’, and reckons $2,200 within the next two years was attainable.
