AngloGold Ashanti Ltd. will double its dividend payout ratio after gold prices surged this year and the company’s borrowings fell to the lowest in nearly a decade.
AngloGold rose the most in three months in Johannesburg after the world’s third-largest gold producer said it will now return 20% of free cash flow before growth capital to shareholders. The payout frequency was also doubled to twice a year. Free cash flow rose nearly fourfold to $339 million in the three months through September.
AngloGold joins other gold miners, including No. 1 producer Newmont Corp., in increasing dividends. Interim Chief Executive Officer Christine Ramon said AngloGold remains bullish on the outlook for bullion, but could also sustain the payouts through price cycles. The company has spent the past two years refocusing on its most profitable mines in Africa, Australia and the Americas, and is still weighing whether to shift its primary listing from Johannesburg.
Increasing the payout puts AngloGold “on a more comparable footing to international peers ahead of a potential foreign listing,” according to RMB Morgan Stanley analysts including Jared Hoover.
AngloGold will further bolster its cash position when it repatriates $359 million in profits that are locked up in the Democratic Republic of Congo where it jointly owns the Kibali mine with Barrick Gold Corp. The company is also seeking to repatriate $130 million in value-added-tax receipts from Tanzania, Ramon said.
AngloGold rose as much as 9.8%, the most since July. The stock has gained 26% this year.
The discount at which AngloGold trades compared with some of its peers could narrow as the company focuses on some of its biggest projects including Obuasi in Ghana and Geita in Tanzania, Ramon said in an interview.
The company is searching for a new CEO after Kelvin Dushnisky announced his departure in July.
AngloGold maintained its most recent production forecast of 3.03 million to 3.1 million ounces this year. Adjusted net debt fell 47% from a year earlier to the lowest level since 2011.
(By Felix Njini)