Nordgold has a transparent and disciplined capital allocation framework aimed at generating industry leading shareholder returns
Nordgold is committed to returning cash to its shareholders through superior sustainable dividends: the Company has a solid dividend payment history starting from 2013. For 2013 - 2020 in an aggregate the amount of returns totaled approximately US$0.5 billion, which includes dividends and share/GDR buybacks.
To increase the transparency of the dividend decision-making process, and add predictability into capital allocation, in March 2021 the Nordgold’s Board of Directors approved the following new dividend policy:
- For 2021 financial year only, Nordgold will pay a minimum dividend of US$ 400 million which will be paid in two equal instalments following the release of the interim and full year 2021 financial results, the dates of which will be communicated to shareholders with disclosure of the financial results;
- With effect from 2022 financial year, Nordgold intends to pay minimum dividends equivalent to 50% of free cash flow before growth capex, subject to Net Debt/ LTM EBITDA remaining under 1.5x;
- In any reporting period that the Net Debt/ LTM EBITDA ratio increases to above 1.5x the Board will exercise its discretion and may reduce the dividend below the minimum 50% of free cash flow, pre-growth capex. 2020 Net Debt/LTM EBITDA ratio is 0.2x;
- Nordgold intends to pay dividends twice a year on a semi-annual basis.
In applying this policy, the Board will have regard for a range of factors including the macroeconomic outlook, business performance, balance sheet position and growth outlook of the Company and may exercise its discretion and revise the calculated pay-out either up or down, to the extent these factors substantially impact the Company.
Nordgold’s updated capital allocation framework is aimed at guaranteeing sustainable dividend returns, maintaining a strong balance sheet, investing in the growth of the business, and further enhancing operational efficiency through technical excellence and increased automation and digitalisation.
Transparent Capital Allocation Framework
min. IRR threshold requirement of 15% at $1,250/oz
through lower costs, productivity, technology, tight working capital management and culture
Sustaining capital has a slightly declining profile in the LOM
We have tested our dividend policy against conservative gold price assumptions and see substantial room for attractive dividend payments even in a downside scenario
(1) Determined at Board’s discretion, if Net Debt / EBITDA is above 1.5x. Planned dividend for 2021 is US$400m
there is significant headroom to deliver key growth projects (i.e. Tokko construction and Gross expansion) in parallel with robust shareholder returns