AngloGold Ashanti will resume dividend payments following a hiatus of more than three years, after lower operating and interest costs helped it nearly double free cash flow to $278 million.
The company declared a dividend of approximately 10 US cents a share for 2016.
Adjusted Headline Earnings (AHE) were $143 million, or 35 US cents per share, compared with $49 million, or 12 US cents per share in 2015. The sharp improvements in free cash flow and earnings were achieved through strong ongoing focus on cost and capital discipline, as well a higher gold price.
AngloGold Ashanti has since 2013 used ‘self-help’ measures including asset sales and efficiency improvements to reduce debt and improve balance sheet flexibility without diluting shareholders. It has, at the same time, improved safety and cash-flow margins across its 17-mine portfolio.
The company has prioritised inward investment in high-return brownfield projects over acquisitions, as it seeks to improve the quality of its production base and extend mine lives.
“Production from our operations delivered a strong turn around in the second half of the year. We have again generated strong cash flows despite a volatile gold price, which has further strengthened our balance sheet and improved flexibility,” says Srinivasan Venkatakrishnan, AngloGold Ashanti Chief Executive Officer.
“We will continue to deliver on our strategy through the development of high-return, brownfield projects in order to continue to improve the underlying quality of our portfolio.”
All in Sustaining Costs (AISC) came in within revised guidance range at $986/oz, up from $910/oz in 2015.
The AISC reflects continued cost discipline and weaker local currencies in some jurisdictions, offset by an increase in sustaining capital expenditure and inflation.
Production of 3.6Moz was within the original guidance for the year ended 31 December 2016 at a total cash cost of $744/oz, compared to 3.8Moz (excluding discontinued operations) at $712/oz in the prior year.
Production was negatively impacted by weaker output from the South Africa mines due mainly to safety-related stoppages, lower grades from Kibali, a planned decrease in head grades at Tropicana and Geita, and no production contribution from Obuasi.
Both Mponeng and Moab Khotsong in South Africa delivered increased production over the prior year, along with Iduapriem and Siguiri in the Continental Africa Region, and Sunrise Dam in Australia. Mponeng delivered the best improvement, with a 16% increase in production and a 14% decrease in AISC year-on-year.