Mark Cutifani, Chief Executive of multinational mining company Anglo American

JOHANNESBURG – Diversified mining and marketing company Anglo American on Thursday announced its intention to return up to US$1-billion to its shareholders through an immediate on-market share buyback programme to reduce the company’s issued share capital.

The programme, which will be executed in two US$500 million tranches, will end not later than March 31.

Investment bank Morgan Stanley, which will act as principal, will buy the shares on the Johannesburg Stock Exchange and on UK trading venues, in line with the proportion of Anglo’s shareholder register in the two countries. The purchased shares will be cancelled.

Anglo FD Stephen Pearce said the additional return of US$1-billion recognized the resilience of Anglo’s financial position and builds on the US$3.4-billion of cash returned to shareholders since the company reinstated the dividend in mid-2017.

“We have a disciplined and value-focused approach to capital allocation that is designed to fund the sustainability of our existing business and our base cash dividend for shareholders. With a strong balance sheet in place, we then consider the appropriate balance of options for any discretionary capital, in terms of growth investments and additional returns,” said CE Mark Cutifani, adding that the share buyback programme demonstrated the board’s confidence in the business.

Pearce pointed out that the company’s balance sheet had been extensively deleveraged in recent years and expressed confidence in the ability of the company to fund the portfolio of near- and medium-term growth opportunities.

Given the current levels of cash generated in the business, along with the further value potential we see, the company deemed it appropriate to prioritise returning excess cash to shareholders through the buyback programme, Pearce added in a statement.

Anglo was given authority at its annual general meeting in April to purchase 210.6-million ordinary shares, with this programme involving the purchase of some 36.6-million ordinary shares.