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AngloGold considers higher dividend as gold price boosts earnings

AngloGold Ashanti CEO says the company will focus on cutting costs and capital management as it seeks to widen margins and increase reserves

AngloGold Ashanti has said it will consider paying a higher annual dividend after reporting a more than 200% jump in first-half earnings, driven by higher gold prices.

AngloGold, which has operations in Australia, Brazil and Tanzania, said its headline earnings per share for the six months ending June rose 234% to 97 cents, against 29 cents a year earlier, despite output disruptions caused by COVID-19.

The company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed 59%.

“Cash flows are extremely robust, demonstrating the significant operating leverage we have to this strong gold price,” Kelvin Dushnisky, chief executive of AngloGold, said on Friday.

Prices hit an all-time high

Dushnisky, who steps down in September, said the company would focus on cutting costs and capital management as it seeks to widen margins and increase reserves through exploration and expansions.

Spot gold has roared past $2,000 an ounce for the first time, giving South African gold miners a lifeline after the disruption caused by the spread of COVID-19.

AngloGold, which pays an annual dividend of 10% of its free cash flow before growth capital, said free cash flow had increased more than fourfold to $324 million.

Better returns

“If gold prices stay at these levels, and we continue to manage our margins well and we continue to generate increasing free cash flow, we will see increased dividends,” Dushnisky said in an interview.

If prices remain supportive and the company strengthens its balance sheet, the board could also consider changing its dividend policy, Dushnisky said.

AngloGold, which is completing the sale of its last South African assets, said it had lost roughly 85,000 ounces of output because of COVID-19, 63,000 ounces of that from South Africa.

Production during the period was 1.469 million ounces, compared to 1.554 million ounces for the first six months of last year.

Dushnisky said the board was considering moving its primary listing from the Johannesburg Stock Exchange but its current focus was on navigating the pandemic.

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