ANGLOGOLD Ashanti has broken its three-year dividend drought as the group reported continuing progress in a number of areas in the six months to end-December.
These included production and cost performance meeting guidance and even progress on the vexed issue of Section 54 safety stoppages on its South African mines.
The group has declared a dividend of 10 US cents for the year to end-December 2016 after free cash flow nearly doubled to $278m for the year and adjusted headline earnings nearly trebled to 35c a share from 12c in 2015.
According to CFO, Christine Ramon, the re-instated dividend policy is sustainable given the strength of the balance sheet and management’s confident outlook.
She said management had “looked through the cycle” in declaring the dividend despite volatile gold prices and added management was confident regarding future free cash flow generation and maintenance of the group’s capital and cost discipline.
There has even been some progress on the group’s South African mines which had a torrid time during 2016 during which 104,000 oz of gold production were lost due to safety stoppages – mainly S54 stoppages, but also including stoppages imposed by mine management itself.
The situation boiled over the second half of the year when AngloGold took legal action against the Department of Mineral Resources (DMR) and won its contention that the DMR had acted “without proportionality” in closing down the Kopanang mine.
As a result, mines minister Mosebenzi Zwane lashed out in January accusing AngloGold and Sibanye – which had also taken the legal route – of “refusing to comply with the mining laws of the country”.
AngloGold CEO, Srinivasan ‘Venkat’ Venkatakrishnan, indicated the situation around safety on the group’s mines had improved markedly since the start of 2017, but he chose his words carefully and evaded giving a direct response to Zwane’s allegations at a media conference held in Johannesburg this morning.
The official wording in the latest results announcement is “… where there is disagreement we will continue – as we have done – to use the proper appeal mechanisms and legal remedies available to do us under the Mine Health and Safety Act and associated legislation”.
According to Venkat, Anglogold management had no complaints with the application of Section 54s so far during 2017 commenting: “The Section 54s are working as they should”.
Asked whether he accepted the assessment by Nedbank mining investment banker, Paul Miller, that a state of lawfare now existed between the mines and the South African government, Venkat replied the real test of the status of the relationship would come “… in the next couple of months when the new Mining Charter is promulgated”.
Turning to Ghana, Venkat said all 12,000 illegal miners that had invaded the Obuasi mine had been removed from within the fenced-off operational site at the mine.
However, some illegal operations remained in the greater Obuasi concession area and these had to be removed before AngloGold would be in a position to outline its future plans for the mine.
Venkat said the international arbitration action that AngloGold had launched against the Ghanaian government was continuing but that management was now involved in discussions with the new “business friendly” administration in the country following last year’s elections.