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AngloGold says dividends may return next year

Johannesburg - AngloGold Ashanti [JSE:ANG] will consider resuming dividend payments next year after a four-year hiatus as a higher bullion prices, weaker currencies in countries where it operates and lower interest payments boost the free cash flow of the world’s third-largest miner of the metal.

"We’re getting closer, every quarter or six months as we go, to resuming dividends," AngloGold chief executive officer Srinivasan Venkatakrishnan said on a call with reporters on Monday.

"Whatever we do would be sustainable and obviously would not be from borrowed money."

The board will meet to discuss what to do with excess cash toward the end of this year and announce any new policy early in 2017, Venkatakrishnan said. AngloGold last paid a dividend in the first half of 2013 as the price of the metal slumped 28% that year.

Gold has soared 26% this year to about $1 340 an ounce as the US dialled back expectations for increasing interest rates and central banks in the developed world moved to negative rates.

That boosts the appeal of the metal, which pays no interest and is a haven in times of economic turmoil.

That’s helped AngloGold’s revenue, as did first-half weakness in the currencies of South Africa, Brazil, Australia and Argentina, countries where the company has mines and pays costs.

Cash flow

Cash flow tripled to $108m in the first half of the year while net debt dropped 32% to $2.1bn, the Johannesburg-based company said in a statement on Monday.

Adjusted headline earnings were $159m in the first half of the year compared with $61m in the same period a year earlier.

The dividend "is likely to be based on a percentage of free cash flow," Venkatakrishnan said. Other uses of cash would include paying down net debt and investing in mine-expansion projects in Guinea, Mali and Australia.

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