JOHANNESBURG (miningweekly.com) – There is every chance that the gold price could exceed $2 000/oz, said AngloGold CEO Kelvin Dushnisky on Monday.
Answering journalists’ questions during a virtual media roundtable, Dushnisky said that a gold price higher than $2 000/oz would not come as a surprise to him at all.
“Regarding the gold price reaching $2 000/z, do I think it could reach $2 000/oz? Yes, I certainly do, and I think that given quantitative easing we’re seeing, the likelihood of interest rates being lower for longer and all of those factors coming together, I think there’s every chance that the gold price could exceed $2 000/oz. That would not come as a surprise to me at all,” he elaborated.
But he made it clear that the Johannesburg- and New York-listed gold mining company he heads was not reliant on the gold price reaching such heights.
“We do our planning conservatively and nobody is happier than us to see a rising gold price because of our strong leverage to it. But to answer the question, yes, I certainly could see gold going higher than $2 000/oz,” he reiterated.
AngloGold’s diverse portfolio of 14 mines in nine countries has helped to limit to 11 000 oz the impact of Covid-19-related stoppages in the three months to March 31.
The company reported that first-quarter free cash flow before investment in growth projects – the measure on which dividend payments were based - rose 231% year-on-year to $94-million. Cash flow from operating activities rose by 227 % from $67-million to $219-million over the same period.
“Cash flow is strong, leverage is down, and all operations are running,” Dushnisky said.
AngloGold has a dividend policy of paying 10% of free cash flow before growth capital and as it is generating good operating cash flows on a strong gold price, margins are poised to increase.
Presuming all those fundamentals remain supportive, the company would hope to increase its margins and expect to be able to pay a higher dividend on a going forward basis.
It would be a board decision but there was unanimity around the board for the company to be an increasing provider of value in return to shareholders.
“So, at some point, there’ll be considerations to perhaps increasing the dividend pay-out but as we sit now, it puts us in a good position to ensuring we’re delivering those positive returns to our shareholders before we reinvest that back into growth,” Dushnisky added in response to Mining Weekly.