ANGLOGOLD Ashanti today declared a five-fold increase in the full-year dividend and set out plans for 5% higher annual gold production by 2025.
These measures are part of a strategy intended to mark the end of a difficult 2020 in which AngloGold parted ways with its CEO and chairman, both within six months of each other.
However, the company has not yet fastened down a permanent CEO following Kelvin Dushnisky’s August departure. Sipho Pityana, chairman of AngloGold Ashanti for six years until his surprise December resignation, was succeeded by Maria Ramos.
Last year was also historic in that AngloGold completed the sale of its remaining South African assets, divesting of Mponeng and Mine Waste Solutions to Harmony Gold for about $300m. AngloGold Ashanti was founded in 2004, but its history reaches back to when Anglo American started mining gold on the Witwatersrand.
“After several years of rationalising our portfolio, we have a clear and credible path to disciplined, high-return growth,” said interim CEO, Christine Ramon in a statement. “We’ve built a solid balance sheet, which allows us to continue self-funding our capital investment while rewarding shareholders.”
Headline earnings for the 12 months ended December came in at $1bn, equal to 238 US cents per share which compares to $379m (91 US cents/share) in 2019. The group consequently declared a full year dividend of 48c/share compared to 9c/share last year. In rand terms the full-year dividend was 705c/share (2019: 165c/share).
AngloGold pays out 20% of free cash flow before growth expenditure, a rate it doubled last year. Free cash flow increased to just over $1bn in the 2020 financial year.
Ramon said in a media conference call today that she was confident the dividend payout was sustainable despite the possibility of the gold price trending lower.
Based on certain organic growth projects, AngloGold Ashanti said it would grow annual production to between 3.2 million ounces and 3.6 million oz by 2025. Production for 2020 totalled 3.05 million oz. Production growth would come mainly from the ramp-up of its Obuasi mine in Ghana and incremental improvements elsewhere in the portfolio. There were also plans to approve the development of greenfield gold prospects in Colombia which it holds in joint venture with B2Gold, a Toronto-listed gold miner.
AngloGold said it had increased ore reserves by six million oz of gold through extensions of existing operations and brownfields exploration, especially at Obuasi in Ghana – by 1.8 million oz – and Geita in Tanzania (1.4 million oz). This more than replaced depletion from mining and extended the overall reserve life of the firm’s portfolio to 11 years.
Commenting in a media call, Ramon said the board understood the urgency of appointing a new CEO. “The board is seized with the matter,” she said.
Plans to change the company’s primary listing – it had previously been part of strategy whilst Dushnisky was CEO – was not an immediate priority. “It could add value at the right time,” said Ramon.