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Anglo dividend unlikely before 2011

Deutsche Bank
in London
London, England — MININGREVIEW.COM — 20 October 2009 – Anglo American Plc “’ the mining giant which owns stakes in the world’s biggest diamond and platinum producers “’ is unlikely to resume dividend payments before 2011 as its borrowings grow.

Making this prediction in a note here, Deutsche Bank analysts Grant Sporre, Tim Clark and Rob Clifford calculated that company debt would increase to US$12.2 billion (R96 billion) at the end of 2010 before project delivery and cash generation rapidly drove debt lower.

Deutsche Bank projected that net debt would be US$11.4 billion (R88 billion) at 31 December 2009. After Xstrata Plc withdrew its proposed merger bid last week, the bank re-instated its recommendation on London-based Anglo, with a “buy” rating, compared with a “hold” previously.

Anglo suspended its dividend in February and said it would cut 19 000 jobs after the global recession cut metal prices. The company still plans to invest US$17 billion (R130 billion) to expand copper, nickel, iron ore and other production on expectations that demand will recover.

“The resumption of dividend payments remains a key priority for the board,” Anglo spokesman James Wyatt-Tilby said by e-mail today.

“The anticipation of a resumption of dividends and normalisation of balance sheet conditions will be a significant potential catalyst for a re-rating of the Anglo stock recommendation,” Deutsche Bank said.