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AngloGold Ashanti Doubles Dividend Payout Ratio as Q3 Free Cash Flow Increases 290%

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Shares of AngloGold Ashanti Ltd. traded 9% higher after the company reported that Q3/20 free cash flow increased 290% YoY to $339 million allowing it to double its dividend payout ratio to 20%.

Global gold mining company AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) today announced that in the third quarter of 2020 ended September 30, 2020, it delivered a 290% increase in free cash flow. The firm stated that the improvement in cash flow has helped bring down its adjusted net debt to the lowest level in almost 10 years, which it advised supports the decision to double its dividend payout ratio.

AngloGold Ashanti reported that "it will pay shareholders 20% of its free cash flow before accounting for capital expenditure in growth projects, up from 10% previously." The company additionally indicated that going forward it will now pay dividends on semi-annual basis rather than annually.

AngloGold Ashanti's Interim CEO Christine Ramon commented, "We will continue to enforce capital and cost discipline to deliver strong cash flows in this elevated gold price environment...Doubling our dividend payout ratio demonstrates confidence in our ability to both improve direct returns to shareholders and to self-fund our growth projects and sustaining capital requirements."

The company stated that in Q3/20, free cash flow increased by 290% to $339 million, compared to $87 million in Q3/19. The firm said this was attributable to lower capital expenditure and operating costs and a 30% higher gold price received. AngloGold Ashanti noted that $200 million of the $329 million was derived proceeds from the sale of its South African operating assets to Harmony Gold on September 30, 2020.

The company added that in Q3/20, cash inflow from operations increased by 56% to $551 million, compared to $354 million in Q3/19.

AngloGold Ashanti reported that adjusted net debt was cut by nearly 50% to $875 million as of September 2020. The firm stated that in Q3/20 adjusted EBITDA increased by 72% to $803 million, compared to $468 million in Q3/19.

The company listed that in the three months ended September 30, 2020, it produced 837,000 ounces of gold at a total cash cost of $801 per ounce, versus 825 Koz Au at a total cash cost of $786 per ounce in the prior year's corresponding quarter. The firm added that in Q3/20, all-in sustaining costs (AISC) were $1,044/oz Au, compared to $1,031/oz Au in Q3/19.

The firm advised that it reinstated its annual guidance on September 21, 2020. AngloGold Ashanti stated that for FY/20, the company expects gold production of between 3.03 and 3.10 million ounces, which includes nine months of production from the recently sold South African operations. Excluding the South Africa assets, it estimates full-year production will range from 2.80-2.86 Moz Au on a continuing operations basis.

FY/20 AISC is expected to come in at $1,060-1,120/oz, including contributions from the South African assets to the end of September 2020, and $1,050-1,100/oz Au on a continuing operations basis.

AngloGold Ashanti Ltd. is headquartered in Johannesburg, South Africa, and according to the firm's website it is the third largest global gold producer and largest such firm in Africa, employing more than 34,000 people worldwide. The company indicated that its 2019 gold production exceeded 3.3 million ounces. The firm operates projects in nine countries including the Democratic Republic of the Congo, Ghana, Guinea, Mali and Tanzania in Africa, Australia, Argentina, Brazil and Colombia. The company is primarily a gold miner but also produces silver and sulfuric acid as by-products at some of its sites.

AngloGold Ashanti has a market capitalization of around $9.6 billion with approximately 416.6 million shares outstanding. AU shares opened 7.5% higher today at $24.88 (+$1.74, +7.52%) over Friday's $23.14 closing price. The stock has traded today between $24.46 and $25.36 per share and closed at $25.28 (+$2.14, +9.25%).


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