Anglo surprises market with dividend

IT WAS A mixed bag of results for JSE-listed global diversified mining house Anglo American which surprised the market with a dividend yesterday, while gold producer Gold Fields flagged that the stronger rand would result in its earnings decreasing for the half year to June.

Anglo, whose subsidiaries include Anglo American Platinum and Kumba Iron Ore, said yesterday that it had resumed dividend payment six months earlier than expected and established a dividend policy of paying out 40 percent of underlying earnings.

Mark Cutifani said: “We have nearly halved our net debt to $6.2 billion over the past year to take us well below our year-end target of $7bn.“Our materially improved balance sheet strength, with gearing at 19 percent and net debt to annualised Ebitda of 0.8 percent, has supported the decision to resume dividend payments six months early, establishing a pay-out policy at a targeted level of 40 percent of underlying earnings,” he said.

The dividend payment was 48 cents a share for the first half of the year.

Cutifani said Anglo would continue to focus on improving operational performance and costs as well as maintaining strict capital allocation discipline. “We are now in a position to consider value accretive growth options and capital returns from within our substantial undeveloped mineral endowment.”

Due to the weak commodity price environment Anglo had a major shake-up of its mining portfolio and moved to reduce its mining assets to 37 at the end of June 2017 from 68 assets in 2014. Anglo also placed poor performing assets on care and maintenance while it closed others.

In terms of the Mining Charter III, Anglo supported legal action by the Chamber of Mines.

“Anglo American is committed to meeting South Africa’s transformation objectives and has been a longstanding and major contributor to the country’s transformation, pre-dating such regulatory targets.

Cutifani also said Anglo American welcomed the decision by the ANC at its policy conference that further discussion on the charter was required with the mining industry in order to ensure that investment and employment levels were not negatively affected.

“Anglo American awaits clarity on how this discussion process will unfold and will also continue to engage through the Chamber of Mines,” he said.

Anglo’s share price gained 3.13 percent to close at R37.40 on the JSE, while Gold Fields’ share price was 0.28 percent up at R50.44.

Growth options