Cripple Creek - The
chief executive of
AngloGold Ashanti [JSE:ANG] said he expects gold prices to
hit $2 200 an ounce by next year and hinted the South African miner could boost
its dividend.
The bullish forecast from CEO Mark Cutifani on Sunday comes
as the uneasy economic landscape - including an unstable euro, recently
hamstrung Swiss franc and tenuous US debt situation - pushes investors into the
precious metal.
"Given that we've already seen $1 900 (per ounce) gold,
I don't think it's unreasonable to expect a price going up to $2 000, even $2
200," Cutifani told Reuters during a tour of AngloGold's Cripple Creek
& Victor mine in Colorado.
"It's based on what's happening in the markets, the
issues in the US and Europe."
The price of gold has jumped about 40% in the past 12 months
alone. Spot prices are currently trading around $1 800/oz.
"We're making cash at anything above $1 000 an
ounce," Cutifani said. "So we're pretty well positioned now."
Cutifani and other mining executives will meet in Colorado
Springs, Colorado, this week for the annual Denver Gold Forum, one of the
largest gatherings of its kind in the world.
Forecasts for the price of gold will be the talk of the
town, but many investors also will be peppering CEOs with requests for higher
dividend payouts.
While Johannesburg-based AngloGold raised its dividend last
month to 12 cents per share, its dividend yield is roughly 45% of Barrick
Gold's, the world's largest miner and a major competitor.
AngloGold had $839m in cash at the end of June, funds that
could help it lift its quarterly payout.
"We're already talking about the dividend policy with
the board," Cutifani said. "When you've got the free cash flow that
we've been generating lately, with our growth profile, it's obviously a front
and centre conversation.
Cutifani added there would be "some comments" at the next quarterly
earnings statement, set for November 9.
A higher dividend could help AngloGold combat a percolating
thought among gold industry investors that it is better to buy gold
exchange-traded funds (ETFs) than stocks in actual miners.
Buying ETFs lets investors take part in gold's rise without
being held back by strikes, power outages or other situations that can halt
production, some have argued.
SPDR Gold Trust and ETFS Gold Trust are two large gold ETFs.
The SPDR Gold Trust, for instance, jumped 41% in value in
the past 12 months compared with a 9% jump in shares of AngloGold traded in New
York.
"We think in terms of fundamentals we've demonstrated
we've outperformed the ETFs in terms of cash flow from operations,"
Cutifani said. "In time the market will get it, and we'll get credit for
that."
AngloGold shares jumped nearly 4% at the start of trade
on Monday following Cutifani's comments.
Shares of AngloGold were up 3.5% at R356.06, making the
miner the top percentage gainer among the JSE's Top 40 - (Tradeable)
[JSE:J200] index of blue chips.