ANGLOGOLD Ashanti has capped a strong year of share price gains unveiling today an upgraded dividend policy in which it would pay 50% of free cash flow and a base dividend of 50 US cents per share.
The base dividend means that during financial years of no free cash flow, the company would pay out a minimum $250m in dividends. The base dividend would be paid quarterly. The company’s existing dividend is for 20% of free cash flow after capital projects.
“This new policy brings us in line with our North American peers,” said AngloGold CFO, Gillian Doran. “The policy speaks to our desire to offer more competitive returns,” she said.
The dividend improvement also underpins AngloGold’s overhaul since falling under the management of CEO Alberto Calderon in 2021. Calderon’s focus was improving AngloGold’s cash cost performance by means of an ongoing review he termed ‘full asset potential’.
Cash costs for the 2024 financial year were $1,187 per ounce, a 2% increase year-on-year. Over the four years, however, – adjusting for US CPI – cash costs were contained to a 5% increase compared to a 13% average increase for AngloGold’s peer group, said Calderon.
Calderon was commenting during the group’s 2024 financial results presentation in which it reported a massive turnaround in headline earnings which came in at $954m compared to a $46m loss in the previous year. In addition to cash cost containment, a major portion of the improved earnings – about $405m – were registered in the fourth quarter in line with elevated gold pricing.
Adjusted net debt of $567m as of December 31 more than halved year-on-year. At an adjusted net debt to adjusted Ebitda of 0.21 times, AngloGold’s leverage is at its lowest since 2011, the company said.
AngloGold has targeted gold production of between 2.9 to 3.2 million oz for the current financial year, an increase over 2.6 million in the 2024 financial year. The increase is down to Sukari, the Egypt mine AngloGold acquired through its successful $2.5bn cash and shares offer for UK-listed Centamin in September.
Analysts asked whether AngloGold had considered a share buy-back programme which has been favoured by some US gold producers.
Calderon replied that the decision to go with a proportion of free cash flow supported by a base dividend was the best response to gold price volatility and investor and shareholder demands in meetings over the last nine months.
“We did spend a lot of time in putting forward a policy that is sustainable in time and can withstand volatility in the gold price,” said Calderon. “One big ask (from shareholders) was make it (dividend policy) predictable; not only a percentage, but a predictable rain-or-shine which is where the $250m (base dividend) commitment comes in,” he said.
“It’s only binding if gold price starts going down … we looked for robustness in the down turn. For the upside what is binding is the 50% and if gold price continues we will probably be in a different world,” he said, adding that in such a scenario, paying 50% of free cash flow would probably become the minimum requirement.
