future prices of gold, uranium, silver and other metals;
future currency exchange rates;
tonnage, grades and metallurgical characteristics of ore to be mined and processed;
anticipated recovery rates of gold, uranium, silver and other metals extracted from the ore;
anticipated capital expenditure and cash operating costs; and
required return on investment.
Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such studies and estimates. Operating costs and capital expenditure are to a significant extent driven by the cost of commodity inputs consumed in mining, including fuel, chemical reagents, explosives, tires and steel, and also by credits from by-products, such as silver and uranium.
There are a number of uncertainties inherent in the development and construction of a new mine or the extension to an existing mine. In addition to those discussed above, these uncertainties include the:
timing and cost of construction of mining and processing facilities, which can be considerable;
availability and cost of mining and processing equipment;
availability and cost of skilled labor, power, water and transportation;
availability and cost of appropriate smelting and refining arrangements;
requirement and time needed to obtain the necessary environmental and other governmental permits; and
availability of funds to finance construction and development activities.
The remote location of many mining properties, permitting requirements and/or delays, and/orthird-party legal challenges to individual mining projects and broader social or political opposition to mining may increase the cost, timing and complexity of mine development and construction. New mining operations could experience unexpected problems and delays during the development, construction, commissioning and/orand commencement of production. The global demandFor example, a number of targets for mininggreenfield exploration were missed in 2010, especially those relating to resource drilling and processing equipment may resultprefeasibility studies at La Colosa and Gramalote in long lead times for the supply of such equipment. Finally, operating costColombia and capital expenditure estimates could fluctuate considerably as a result of changesat Central Mongbwalu in the pricesDRC. The total number of commodities consumed and mining equipment usedmeters drilled in Colombia was significantly lower than expected due to delays in the constructionapproval of the necessary environmental (water use) and operationaccess permits. Contractual and legal issues delayed the start of mining projects.
Accordingly, AngloGold Ashanti’s future development activities may not result in the expansion or replacement of current production, or one or more new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all.loss-making. The company’s operating results and financial conditionscondition are directly related to the success of its project developments. A failure ofin the company’s ability to develop and operate mining projects in accordance with, or in excess of, expectations could negatively impact its results of operations, as well as its financial condition and prospects.
Mining companies face uncertainty and risks in exploration, feasibility studies and other project evaluation activities.
AngloGold Ashanti must continually replace Ore Reserve depleted by mining and production to maintain or increase gold production levels in the long-term. This is undertaken by exploration activities that are speculative in nature and feasibilitynature. The ability of the company to sustain or increase present levels of gold production depends in part on the success of its projects.
Feasibility studies and other project evaluation activities necessary to determine the current or future viability of a mining operation are often unproductive. TheseSuch activities often require substantial expenditure on exploration drilling to establish the presence, extent and grade (metal content) of mineralized material. AngloGold Ashanti undertakes feasibility studies to estimate the technical and economic viability of mining projects and to determine appropriate mining methods and metallurgical recovery processes. These activities are undertaken to estimate the Ore Reserve.
Once mineralization is discovered it may take several years to determine whether an adequate Ore Reserves exist,Reserve exists, during which time the economic feasibility of the project may change due to fluctuations in factors that affect both revenue and costs, including:
future prices of metals and other commodities;
future foreign currency exchange rates;
the required return on investment as based on the cost and availability of capital; and
applicable regulatory requirements, including the:environmental, health and safety matters.
Feasibility studies also include activities to estimate the anticipated:
tonnages, grades and metallurgical characteristics of the ore to be mined and processed;
recovery rates of gold, uranium and other metals from the ore; and
capital expenditure and cash operating costs.
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AngloGold Ashanti undertakes annual revisions to its Ore Reserve estimates based upon actual exploration and production results, depletion, new information on geology, model revisions and fluctuations in production, economic assumptions and operating and other costs. These factors may result in reductions in the Ore Reserve estimates, which could adversely affect the life-of-mine plans and consequently the total value of the company’s mining asset base. Ore Reserve restatements could negatively affect the company’s results of operations, as well as its financial condition and prospects.
The increased demand for gold and other commodities, combined with a declining rate of discovery of new gold Ore Reserves, hasReserve in recent years, has resulted in the accelerated depletion of the existing Ore ReservesReserve across the global gold sector. AngloGold Ashanti therefore faces intense competition for the acquisition of attractive mining properties. From time to time, the company evaluates the acquisition of an Ore Reserves,Reserve, development properties andor operating mines, either as stand-alone assets or as part of companies. AngloGold Ashanti’s decision to acquire these properties has been based on a variety of factors including historical operating results, estimates and assumptions regarding the extent of the Ore Reserve, cash and other operating costs, gold prices, projected economic returns and evaluations of existing or potential liabilities associated with the relevant property and its operations and how these factors may change in future. Other than historical operating results, these factors are uncertain and could have an impact on revenue, cash and other operating costs, as well as the process used to estimate the Ore Reserves.
As a result of these uncertainties, exploration and acquisitions by the company may not result in the expansion or replacement of current production or athe maintenance of its existing Ore ReservesReserve net of production or an increase in Ore Reserves.Reserve. AngloGold Ashanti’s results of operations and its financial condition are directly related to the success of its exploration and acquisition efforts and its ability to replace or increase the existing Ore Reserves.Reserve. If the company is not able to maintain or increase its Ore Reserves,Reserve, its results of operations as well as its financial condition and prospects could be adversely affected.
Mining companies face many risks related to itstheir operations that may adversely impact cash flows and overall profitability.
Gold mining is susceptible to events that may adversely impact a mining company’s ability to produce gold and meet production and cost targets. These events include, but are not limited to:
environmental, as well as health and safety hazards, including dust generation, discharge of metals, pollutants, radioactivity or hazardous chemicals; industrial accidents or accidents during transportation;
ground and surface water pollution;
19social or community disputes or interventions;
security incidents;
surface or underground fires or explosions;
electrocution;
falls from heights and accidents relating to mobile machinery, including shaft conveyances and elevators, drilling blasting and mining operations;
labor force disputes and disruptions;
loss of information integrity or data;
activities of illegal or artisanal miners;
material and equipment availability;
mechanical failure or breakdowns and ageing infrastructure;
failure of unproven or evolving technologies;
energy and electrical power supply interruptions or rationing;
unusual or unexpected geological formations, ground conditions, including lack of mineable face length, and ore-pass blockages;
water ingress and flooding;
process water shortages;
metallurgical conditions and gold recovery;
unexpected decline of ore grade;
unanticipated increases in gold lock-up and inventory levels at heap-leach operations;
fall-of-ground accidents in underground operations;
cave-ins, sinkholes, subsidence, rock falls, rock bursts, or landslides;
failure of mining pit slopes, heap-leach facilities, water or solution dams, waste stockpiles and tailings dam walls;
legal and regulatory restrictions and changes to such restrictions;
safety-related stoppages;
gold bullion theft;
corruption, fraud and theft;
seismic activity; and
Seismic activity is of particular concern in underground mining operations, particularly in South Africa due to the extent and extreme depth of mining, and also in Australia and Brazil due to the depth of mining and residual tectonic stresses. Despite modifications to mine layouts and support technology, as well as other technological improvements employed with a view to minimizing the incidence and impact of seismic activity, seismic events have caused death and injury to employees and contractors and may do so again in future.
Seismic activity may also cause the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, environmental damage and potential legal liabilities in South Africa and elsewhereat operations where seismic activity may be a factor. As a result, these events may have a material adverse effect on AngloGold Ashanti’s results of operations and financial condition.
In the past, floods have also disrupted the operations of some of our mines. For example, unprecedented heavy rains in February and March 2011 in Australia flooded the Sunrise Dam Gold Mine and forced a temporary shutdown of operations. The flood event impacted underground production for approximately four months and open pit production for approximately six months. Full costs were incurred despite the shutdown, as the mining contractors worked on remedial activities to repair damage and rehabilitate flooded areas. The considerable remedial work required adversely impacted cash costs per ounce and the impact of the flood event and the pit wall failure together significantly reduced planned production at the plant.
Water scarcity has been identified as a significant risk at AngloGold Ashanti’s US operation. Production at the Cripple Creek & Victor Gold Mining Company’s Cresson Project continued to be affected by a severe drought in 2011. The lack of water reduced percolation through the heap-leach pad, which curtailed production and productivity.
Mining companies’ operations are vulnerable to infrastructure constraints.
Mining, processing, development and exploration activities depend on adequate infrastructure. Reliable rail, ports, roads, bridges, power sources, power transmission facilities and water supply are critical to our business operations and affect capital and operating costs.
Interferences in the maintenance or provision of infrastructure, including unusual weather phenomena, sabotage and social unrest, could impede the company’s ability to deliver its products on time and adversely affect AngloGold Ashanti’s business, financial condition and results of operations.
Establishing infrastructure for the company’s development projects requires significant resources, identification of adequate sources of raw materials and supplies, and necessary co-operation from national and regional governments, none of which can be assured.
AngloGold Ashanti has operations or potential development projects in countries where government-provided infrastructure may be inadequate and regulatory regimes for access to infrastructure may be uncertain, which could adversely impact the efficient operation and expansion of our business. There is no guarantee that AngloGold Ashanti will secure and maintain access to adequate infrastructure in the future, nor that it can do so on reasonable terms.
We face strong competition from our peers.
The mining industry is competitive in all of its phases. AngloGold Ashanti competes with other mining companies and individuals for specialized equipment, components and supplies necessary for exploration and development, for mining claims and leases on exploration properties and for the acquisition of mining assets. These competitors may have greater financial resources, operational experience and technical capabilities than AngloGold Ashanti. Competition may increase AngloGold Ashanti’s cost of acquiring suitable claims, properties and assets, should they become available to the company.
Mining companies are subject to extensive health and safety laws and regulations.
Gold mining operations are subject to a variety of industry-specific health and safety laws and regulations depending on which jurisdiction they are located.in. These laws and regulations are designed to protect and improve the safety and health of employees.
From time to time, new or improved health and safety laws and regulations are introduced in jurisdictions in which AngloGold Ashanti operates. Should compliance with new standards require a material increase in expenditure or material interruptions to operations or production, including as a result of any temporary failure to comply with applicable regulations, the results of operations and the financial condition of the company could be adversely affected.
In South Africa, for example,some of the jurisdictions in which we operate, the government has introducedenforces compulsory shutdowns of operations to enable investigations into the cause of accidents at those operations. Certain of the company’s operations have been temporarily suspended for this reasonsafety reasons in the past.
AngloGold Ashanti’s reputation as a responsible company and employer could be damaged by any significant governmental investigation or enforcement of health and safety standards. Any of these factors could have a material adverse effect on the company’s results of operations and financial condition.
Mining companies are increasingly required to consider and ensure thetake steps to develop in a sustainable development of,manner, and to provide benefits to the communities and countries in which they operate.
As a result of public concern about the perceived ill effects of economic globalization, businesses in general and large multinational mining corporations such as AngloGold Ashanti in particular face increasing public scrutiny of their activities.
These businesses are under pressure to demonstrate that while they seek a satisfactory return on investment for shareholders, human rights are respected and other stakeholderssocial partners, including employees, host communities surrounding operations and more broadly the countries in which they operate, also benefit from their commercial activities. Such pressures tend to be particularly focused on companies whose activities are perceived to have, or have, a high impact on their social and physical environment. The potential consequences of these pressures includeand the adverse publicity in cases where companies are believed not to be creating sufficient social and economic benefit may result in additional operating costs, reputational damage, active community opposition, allegations of human rights abuses, legal suits and social spending obligations.
Existing and proposed mining operations are often located at or near existing towns and villages, natural water courses and other infrastructure. As the impacts of water pollution or shortage, in particular, may be immediate and directly adverse to those communities, poor management of either the supply or the quality of water can result in community protest, regulatory sanctions or ultimately in the withdrawal of community and government support for company operations. For example, opposition to mining activity in the Tolima province of Colombia, which hosts the La Colosa deposit, has centered on the perception that large-scale mining activity will have a detrimental impact on the region’s river systems. Mining operations must therefore be designed to minimize their impact on such communities and the environment, either by changing mining plans to avoid such impact, by modifying mining plans and operations, or by relocating the affected people to an agreed location. TheseResponsive measures may also include agreed levels of compensation for any adverse impact theongoing mining operationoperations may continue to have upon the community.
In addition, as AngloGold Ashanti has a long history of mining operations in certain regions, issues may arise regarding historical as well as potential future environmental impacts to those areas. For example, certain parties, including NGOs, community groups and institutional investors, have raised concerns about surface and groundwater quality, among other issues, in the area surrounding the company’s Obuasi and Iduapriem mines in Ghana, including potential impacts to local rivers and wells used for water from heavy metals, arsenic and cyanide as well as sediment and mine rock waste. Following temporary shutdowns at both mines in 2010, the company has made improvements in effluent quality management and constructed new tailings impoundments to reduce the risk of incidents that have the potential to degrade local water sources. AngloGold Ashanti is continuing to investigate allegations of impacts by the company’s operations on water quality in mining areas and to consider, as appropriate, potential additional responsive actions such as remediation, engineering and operational changes at the mine sites and community outreach programs.
Disputes with surrounding communities may also affect mining operations by the restriction of access to supplies and of the workforce to mining operations. The mines’ access to land may be subject to the rights or asserted rights of various community stakeholders, including indigenous people. In some cases, AngloGold Ashanti has had difficulty gaining access to new land because of perceived poor community compensation practices. For example, compensation remains a significant area of concern in Siguiri in Guinea. In 2011, a violent community protest interrupted operations for three days, which contributed to the project’s decline in production as compared to 2010. Delays in projects attributable to a lack of community support can translate directly into a decrease in the value of a project or into an inability to bring the project to production.
The cost of these measures and other issues relating to the sustainable development of mining operations could place significant demands on personnel resources, could increase capital and operating costs and therefore could have an adverse impact upon AngloGold Ashanti’s reputation, results of operations and financial condition.
Mining companies are subject to extensive environmental laws and regulations.
Mining companies are subject to extensive environmental laws and regulations in the various jurisdictions in which they operate. These regulations establish limits and conditions on producers’a producer’s ability to conduct their operations. its operations and govern, among other things, extraction, use and conservation of water resources; air emissions (including dust control) and water treatment and discharge; regulatory and community reporting; clean-up of contamination; worker safety and community health; and the generation, transportation, storage and disposal of solid and hazardous wastes, such as acids, radioactive materials, and mine tailings.
The cost of compliance with environmental laws and regulations is expected to continue to be significant to AngloGold Ashanti.
For example, in 2010 AngloGold Ashanti’s Obuasi mine in Ghana suspended gold processing operations for five days to implement a revised water management strategy aimed at reducing contaminants contained in its discharge. Furthermore, following a temporary suspension of operations at the Iduapriem mine, the company with the approval of the Ghana Environmental Protection Agency constructed an interim tailings storage facility for tailings deposition for a year while the greenfields tailings storage facility was being constructed. In addition, the company is currently investigating allegations of impacts on water quality in the area of these mines.
Failure to comply with applicable environmental laws and regulations may also result in the suspension or revocation of permits. AngloGold Ashanti’s ability to obtain and maintain permits and to successfully operate in particular communities may be adversely impacted by real or perceived effects on the environment or human health and safety associated with AngloGold Ashanti’s or other mining companies’ activities.
For example, in Colombia various plaintiffs, including associations that represent local communities, have brought legal proceedings against AngloGold Ashanti Colombia S.A. (AGAC) alleging that AGAC has violated applicable environmental laws in connection with the La Colosa project. If the plaintiffs were to prevail, AGAC’s three core concession contracts relating to the La Colosa project may be canceled, the company would be required to abandon the La Colosa project and all other existing mining concession contracts and pending proposals for new mining concession contracts of AGAC, but not also those of other companies of the AngloGold Ashanti group operating in Colombia, would also be canceled. In addition, AGAC would be banned from doing business with the Colombian government for a period of five years. See “Item 8A.: Consolidated statements and other financial information – Legal proceedings“.
Environmental laws and regulations are continually changing and are generally becoming more restrictive. In particular, the use of sodium cyanide in metallurgical processing is under increasing environmental scrutiny and prohibited in certain jurisdictions. Changes to AngloGold Ashanti’s environmental compliance obligations or operating practices could adversely affect the company’s rate of production and revenue. Variations in laws and regulations, assumptions made
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For example, the use of sodium cyanide in metallurgical processing is under increasing environmental scrutiny and is prohibited in certain jurisdictions. As there are few, if any, effective substitutes in extracting gold from the ore, any ban or material restrictions on the use of sodium cyanide in mining operations in the jurisdictions where AngloGold Ashanti conducts its operations could adversely affect the company’s results of operations and its financial condition. In addition, leaks or discharges of sodium cyanide or other hazardous materials could result in clean-up liabilities that may not be covered by insurance.
AngloGold Ashanti’s operations are heavily dependent upon access to substantial volumes of water for use in the mining and extractive processes and typically are subject to water-use permits that govern usage and require, among other things, that mining operations maintain certain water quality upon discharge. Water quality and usage are areas of concern globally, but are particularly significant for operations in Ghana and South Africa, and for exploration projects in Colombia, where there is significant potential environmental and social impact and a high level of stakeholder scrutiny. Any failure to secure access to suitable water supplies, or achieve and maintain compliance with the requirements of the permits or licenses could result in curtailment or halting of production at the affected operation. Incidents of water pollution or shortage can, in extreme cases, lead to community protest and ultimately to the withdrawal of community and government support for the company’s operations.
Mining and mineral processing operations generate waste rock and tailings. The impact of a breach, leak or other failure of a tailings storage facility can be significant. An incident at AngloGold Ashanti’s operations could lead to, among others, obligations to remediate environmental contamination and claims for property damage and personal injury. Incidents at other companies’ operations could result in governments tightening regulatory requirements and restricting mining activities.
In addition, mining companies are required by law to close their operations at the end of the mine life and rehabilitate the lands they mine.mined. Estimates of the total ultimate closure and rehabilitation costs for gold mining operations are significant and based principally on life-of-mine profiles, changing inflation and discount rate assumptions, changing designs of tailing storage facilities and current legal and regulatory requirements that may change materially. Environmental liabilities are accrued when they become known, probable and can be reasonably estimated. Increasingly, regulators are seeking security in the form of cash collateral or bank guarantees in respect of environmental obligations, which could have an adverse impact on AngloGold Ashanti’s financial condition.
Costs associated with rehabilitating land disturbed by mining processes and addressing the environmental, health and community issues are estimated and financial provision made based upon current available information. Estimates may, however, be insufficient and further costs may be identified at any stage. Any underestimated or unidentified rehabilitation costs would reduce earnings and could materially and adversely affect the company’s asset values, earnings and cash flows.
Compliance with emerging climate change regulationregulations could result in significant costs to AngloGold Ashanti and climate change may present physical risks to thea mining company’s operations.
Greenhouse gases or GHGs,(GHGs) are emitted directly by AngloGold Ashanti’s operations, and indirectly as a result of the consumption of electricity purchasedwell as by external utilities from external utilities.
21determined.
Compliance with emerging ‘conflict minerals’ legislation could result in communitiessignificant costs.
There is increasing legislation and initiatives relating to ‘conflict’ and ‘responsible’ gold that include the: US Dodd-Frank Act; World Gold Council Conflict Free Gold Standard; Organization for Economic Cooperation and Development Due Diligence Guidelines for Responsible Supply Chain of Minerals from Conflict-Affected and High-Risk Areas; and London Bullion Market Association Responsible Gold Guidance. This may result in close proximitythe increased cost of demonstrating compliance and difficulties in the sale of gold emanating from certain areas, such as the Democratic Republic of the Congo (DRC) and its neighbors. The complexities of the gold supply chain, especially as they relate to its operations.
Mining operations and projects are vulnerable to supply chain disruption and AngloGold Ashanti’swith the result that operations and development projects could be adversely affected by shortages of, as well as the lead times to deliver, strategic spares, critical consumables, mining equipment or metallurgical plant.
AngloGold Ashanti’s operations and development projects could be adversely affected by both shortages and long lead times to deliver strategic spares, critical consumables, mining equipment and metallurgical plant. Import restrictions, such as those introduced by the Argentine government in 2011, can also delay the delivery of parts and equipment. In the past, the company and other gold mining companies experienced shortages in critical consumables, particularly as production capacity in the global mining industry expanded in response to increased demand for commodities. AngloGold Ashanti has in the pastalso experienced increased delivery times for these items. These shortagesShortages have also resulted in unanticipated price increases in the price of certain of these items. Shortages of strategic spares, critical consumables, mining equipment or metallurgical plant, could result inand production delays and production shortfalls, and increases in prices resulting in an increasea rise in both operating costs and in the capital expenditure necessary to maintain and develop mining operations.
Individually, AngloGold Ashanti and other gold mining companies have limited influence over manufacturers and suppliers of these items. In certain cases there are a limited number of suppliers for certain strategic spares, critical consumables, mining equipment or metallurgical plant who command superior bargaining power relative to the company. The company could at times face limited supply or increased lead time in the delivery of such items.
The company’s procurement policy is to only source mining and processing equipment and consumables from suppliers that meet its corporate values and ethical standards.standards although risk remains around the management of ethical supply chains. In certain locations, where a limited number of suppliers meet these standards, further strain is placed on the supply chain, thereby increasing the cost of supply and time of delivery.
Furthermore, the effects ofsupply chains and rates can be impacted by natural disasters and other phenomena, such as earthquakes, weather patterns and climate change. For example, the 2011 earthquake and tsunami in Japan could havehas had a limited knock-on effect on the supply of equipment, extending lead times and potentially increasing costs of certain supplies. If AngloGold Ashanti experiences shortages, or increased lead times in the delivery of strategic spares, critical consumables, mining equipment or processing plant, the company’scompany might have to suspend some of its operations and its results of operations and its financial condition could be adversely impacted.
Diversity in interpretation and application of accounting literature in the mining industry may impact AngloGold Ashanti’s reported financial results.
The mining industry has limited industry-specific accounting literature. As a result, there is diverse interpretation and application of accounting literature toon mining specific issues. AngloGold Ashanti, for example, capitalizes drilling and costs related to defining and delineating a residual mineral deposit that has not been classified as a provenProven and probable reserveProbable Reserve at a development project or production stage mine. Some companies, however, expense such costs.
As and when this diverse interpretation and application is addressed, the company’s reported results could be adversely impacted should the adopted interpretation differ from the position it currently follows.
A breach or breaches in governance processes, or fraud, bribery and corruption may lead to regulatory penalties, loss of licenses or permits, and loss of reputation.
Since AngloGold Ashanti operates globally in multiple jurisdictions and with numerous and complex frameworks, its governance and compliance processes may not prevent potential breaches of law, accounting or other governance practices. AngloGold Ashanti’s Code of Business Principles and Ethics, among other standards and guidance may not prevent instances of fraudulent behavior and dishonesty, nor guarantee compliance with legal and regulatory requirements. Such a breach or breaches may lead to regulatory fines, litigation, and loss of operating licenses or permits, and may damage the company’s reputation.
Breaches in information technology security and governance process may adversely impact business activities.
AngloGold Ashanti maintains global information technology and communication networks and applications to support its business activities. Information technology security processes may not prevent future malicious actions or fraud, resulting in corruption of operating systems, theft of commercially sensitive data, misappropriation of funds and business and operational disruption. Material system breaches and failures could result in significant interruptions that could in turn affect AngloGold Ashanti’s operating results and reputation.
Risks related to AngloGold Ashanti’s results of operations and its financial condition as a result of factors specific to the company and its operations
AngloGold Ashanti has removed the last of its gold hedging instruments and long-term sales contracts, which exposes the company to potential gains from subsequent commodity price increases but exposes it entirely to subsequent commodity price decreases.
AngloGold Ashanti removed the last of its gold hedging instruments in October 2010 in order to provide greater participation in a rising gold price environment. As a result, AngloGold Ashanti no longer has any protection against declines in the market price of gold compared with previous years.
A sustained decline in the price of gold could adversely impact the company’s operating results of operations and its financial condition.
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AngloGold Ashanti’s right to own and exploit mineral reservesMineral Reserves and deposits is governed by the laws and regulations of the jurisdictions in which the mineral properties are located. Currently, a significant portion of the company’s mineral reservesMineral Reserves and deposits are located in countries where mining rights could be suspended or cancelled should it breach its obligations in respect of the acquisition and exploitation of these rights.
In all of the countries wherein which AngloGold Ashanti operates, the formulation or implementation of government policies may be unpredictable on certain issues includingmay be unpredictable. This may include changes in laws relating to mineral rights and ownership of mining assets and the rightsright to prospect and mine, and in extreme cases, nationalization. nationalization, expropriation or nullification of existing concessions, licenses, permits, agreements and contracts.
For example, the Guinean Governmentgovernment has announced in media reports that it will seek to increase its equity interest in mines and there is a call for a debate on nationalization and increased state ownership in South Africa. Any existing and new mining and exploration operations and projects are subject to various national and local laws, policies and regulations governing the ownership and the right to prospect or mine or develop proposed projects. For more details on the risks surrounding ownership of mining assets, see the section entitled “Title to AngloGold Ashanti’s properties may be uncertain and subject to challenge”.
If AngloGold Ashanti is not able to obtain or maintain necessary permits, authorizations or agreements to prospect or mine or to implement planned projects, or continue its operations under conditions, or comply with all laws, regulations or requirements, or within time frames,time-frames that make such plans and operations economically viable, or if the laws impacting the company’s ownership of its mineral rights, or the right to prospect or mine were to change materially, or should Governmentsgovernments increase their ownership in the mines or nationalize them, AngloGold Ashanti’s results of operations and its financial condition could be adversely affected.
In South Africa, mining rights are linked to meeting various obligations that include the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry, referred to as the Mining Charter. The Mining Charter was amended in 2010 (the Revised Charter). Compliance with the MiningRevised Charter, measured using a designated scorecard, requires that every mining company achieve 26 percent ownership by historically disadvantaged South Africans (HDSAs) of its South African mining assets by May 2014, and achievesachieve targeted levels of participation by HDSAs in various other aspects of management.
The outcome of the first phasereview of the reviewMining Charter five years after promulgation was made public in June 2010, while results from the final review were made public in September 2010. According to these reviews, AngloGold Ashanti isWhile compliant with the Mining Charter’s requirements relating to ownership of its assets by HDSAs. The company is also currently compliant with the Mining Charter’s requirements relating to, among others, human resource development, mine community development, and sustainable development and growth. Whilst AngloGold Ashanti is compliant with the Mining Charter’s ownership targets to be achieved by May 2014, itAngloGold Ashanti must make further progress to achieve future targets, set under the Mining Charter, including further participation by HDSAs in various aspects of management, the upgrade of housing and accommodation at the company’s mines, further human resource development, mine community development, sustainable development and growth as well as procurement and enterprise development, certain of which are also included under the Code of Good Practice for the Minerals Industry and Housing and Living Conditions Standard, as defined and discussed below and which targets must also be achieved by May 2014. AngloGold Ashanti expects to be compliant with these provisions by May 2014.
As required by the South African Mineral and Petroleum Resources Development Act (MPRDA), the Minister of Mineral Resources published a Code of Good Practice for the Minerals Industry (Code) and the Housing and Living Conditions Standard (Standard) in April 2009. The Code was developed to create principles to facilitate effective implementation of minerals and mining legislation and enhance implementation of the Mining Charter applicable to the mining industry. The Standard aims to include the provision of housing as an integral part of infrastructure during the development of a mine. Both the Code and the Standard provide that non-compliance equates to non-compliance with the MPRDA. It is unclear whether non-compliance with the Code or the Standard would lead to the cancellation or suspension of a mining right or whether they would be considered legislation under the MPRDA.right. Subsequent to the publication of the Code and the Standard, representatives of the Department of Mineral Resources, organized labor and the South African mining industry have engaged in discussions in an effort to address the concerns of the mining industry and to possibly amend the Code and the Standard. Furthermore, discussions related to the Code and Standard have also become related to the review of the Mining Charter. It is anticipated that the contents of the Code and Standard will ultimately be amended to bring them in line with the amendments to the Mining Charter that have resulted from its review.Revised Charter. Details of the final Code and Standard are currently uncertain.
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Title to environmental managementAngloGold Ashanti’s properties may be uncertain and subject to environmental damage, degradation or pollution resulting from their prospecting or mining activities. challenge.
AngloGold Ashanti has a policyoperations in several countries where ownership of evaluating, minimizingland is uncertain and addressingwhere disputes may arise in relation to ownership. Certain of the environmental consequencescompany’s properties may be subject to the rights or the asserted rights of various community stakeholders, including indigenous people. The presence of those stakeholders may have an impact on AngloGold Ashanti’s ability to develop or operate its activitiesmining interests. For example, in Australia, the Native Title Act (1993) provides for the establishment and consistent with this policyrecognition of native title under certain circumstances. In South Africa, the Extension of Security of Tenure Act (1997) and the MPRDA, conducts an annual reviewRestitution of Land Rights Act (1994) provide for various landholding rights. Such legislation is complex, difficult to predict and outside of the environmental costscompany’s control, and liabilities associatedcould therefore negatively affect the business results of new or existing projects. Where consultation with its South African operationsstakeholders is statutorily or otherwise mandated, there can be no assurance that relations will remain amicable, and disputes may lead to reduced access to properties or delays in lightoperations.
Title to the company’s properties, particularly undeveloped ones, may also be defective or subject to challenge. Title insurance generally is not available, and title review does not necessarily preclude third parties from contesting ownership. Where surveys have not been conducted, the precise area and location of applicable requirements.
AngloGold Ashanti may experience unforeseen difficulties, delays or costs in successfully implementing its business strategy and projects, and its strategy may not result in the anticipated benefits.
The successful implementation of the company’s business strategy and projects depends upon a number ofmany factors, including those outside its control. For example: the successful management of costs will depend on prevailing market prices for input costs; the ability to grow the business will depend on the successful implementation of the company’s existing and proposed project development initiatives and continued exploration success, as well as on the availability of attractive merger and acquisition opportunities, all of which are subject to the relevant mining and company specific risks as outlined in these risk factors.
AngloGold Ashanti may prove unable to deliver on production targets, including in potentially critical areas, such as the Obuasi turnaround plan in Ghana, as well as on key capital project execution, including at the Tropicana project in Australia and with regard to the implementation of the company’s new Enterprise Resource Planning (ERP) system. For more details on the risks surrounding the ERP implementation, see the section entitled “The implementation of an integrated Enterprise Resource Planning (ERP) system could have an adverse effect on AngloGold Ashanti’s operational results and its financial condition.”
AngloGold Ashanti cannot give assurance that unforeseen difficulties, delays or costs will not adversely affect the successful implementation of its business strategy, or that the strategy and projects will result in the anticipated benefits.
Any acquisition or acquisitions that AngloGold Ashanti may complete may expose the company to new geographic, political, social, operating, financial and geological risks.
AngloGold Ashanti may pursue the acquisition of producing, development and advanced stage exploration properties and companies. Any such acquisition may change the scale of the company’s business and operations and may expose it to new geographic, geological, political, social, operating, financial, legal, regulatory and contractual risks. For example: there may be a significant change in commodity prices after the company has committed to complete the transaction and established the purchase price or share exchange ratio; a material orebody may prove below expectations; AngloGold Ashanti may have difficulty integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls; the integration may disrupt the company’s on-going business and its relationships with employees, suppliers and contractors; the acquisition may divert management’s attention from AngloGold Ashanti’s day-to-day business; and the acquired business may have undetected liabilities which may be significant. Furthermore, we operate and acquire businesses in different countries, with different regulatory and operating cultures, which may exacerbate the risks described above.
In the event that the company chooses to raise debt capital to finance any such acquisition, the company’s leverage will be increased. Should the company choose to use equity as consideration for an acquisition, existing shareholders may suffer dilution. Alternatively, the company may choose to finance any acquisition with its existing resources, which could decrease its ability to fund future capital expenditures.
There can be no assurance that the company would be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Failure to implement our acquisition strategy or to integrate acquired businesses successfully could have material adverse effects on the company’s growth and business results.
Ageing infrastructure at some of AngloGold Ashanti’s operations could adversely impact its business.
Deep level gold mining shafts are usually designed with a lifespan of 25 to 30 years. Vertical shafts consist of large quantities of infrastructure steelwork for guiding conveyances and accommodating services such as high and low tension electric cables, air and water pipe columns. Rising temperatures in the deeper mining areas can also lead to increased cooling requirements in the form of upgraded and expanded ice plants. Maintaining this infrastructure requires skilled human resources, capital allocation, management and planned maintenance.
Once a shaft has reached the end of its intended lifespan, higher than normal maintenance and care is required. Incidents resulting in production delays, increased costs or industrial accidents may occur. Such incidents may have an adverse effect on the company’s results of operations and financial position.
Some of AngloGold Ashanti’s technologies are unproven and failure could adversely impact costs and production.
AngloGold Ashanti has teamed up with various specialists to engineer new solutions to environmental management, mine design, rock breaking and underground logistics, among others. The company has invested in new technologies, including phyto-technologies to reduce seepage and address soil and groundwater contamination, and in mine support technologies to minimize the impact of seismic activity. The company is also attempting to develop technologies to access the deeper reaches of South African mines. One of the chief initiatives expected to be implemented in 2012 is a vertical transport optimization project to accelerate the delivery of consumables and other essential items to work crews, in order to increase production time at the face.
Some aspects of these technologies are unproven and their eventual operational outcome or viability cannot be assessed with certainty. The costs, productivity and other benefits from these initiatives, and the consequent effects on AngloGold Ashanti’s future earnings and financial condition, may vary from expectations. Failure of the company’s condition to realize the anticipated benefits could result in increased costs, an inability to realize production or growth plans, or could adversely affect its operational performance.
The level of AngloGold Ashanti’s indebtedness could adversely impact its business.
As at December 31, 2010,2011, AngloGold Ashanti had gross borrowings (excluding the mandatory convertible bonds)bonds amounting to $760 million) of approximately $1.9$1.7 billion.
AngloGold Ashanti’s indebtedness could have a material adverse effect on its flexibility to conduct business. For example, the company may be required to utilizeuse a large portion of its cash flow to pay the principal and interest on its debt, which will reduce funds available to finance existing operations, the development of new organic growth opportunities and further acquisitions. In addition, under the terms of the company’s borrowing facilities from its banks, AngloGold Ashanti is obliged to meet certain financial and other covenants. The company’s ability to continue to meet these covenants and to service its debt will depend on its future financial performance which will be affected by its operating performance as well as by financial and other factors, certain of which are beyond the control of the company.
Should the cash flow from operations be insufficient, AngloGold Ashanti could breach its financial and other covenants andcovenants. Covenant breaches, if interpreted as events of default under debt agreements, could allow lenders to accelerate payment of the debt. Any such acceleration could result in the acceleration of indebtedness under other financial instruments. As a result, the company may be required to refinance all or part of the existing debt, use existing cash balances, issue additional equity and/or sell assets. AngloGold Ashanti cannot be sure that it will be able to do sorefinance its debt on commercially reasonable terms, if at all.
Certain factors may affect AngloGold Ashanti’s ability to support the carrying amount of its property, plant and equipment, acquired properties, investments and goodwill on the balance sheet. If the carrying amount of its assets is not recoverable, AngloGold Ashanti may be required to recognize an impairment charge, which could be significant.
AngloGold Ashanti reviews and tests the carrying amount of its assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. The company values individual mining assets at the lowest level for which cash flows are identifiable and independent of cash flows of other mining assets and liabilities.
If there are indications that an impairment may have occurred, AngloGold Ashanti prepares estimates of expected future cash flows for each group of assets. Expected future cash flows are inherently uncertain, and could materially change over time. They are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditure.
If any of these uncertainties occur, either alone or in combination, management could be required to recognize an impairment, which could have a material adverse effect on the company’s financial condition and results of operations.
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AngloGold Ashanti’s existing Board-approvedboard-approved development projects and exploration initiatives will require significant funding. These includeinclude: Tropicana in Australia,Australia; the Cerro Vanguardia heap leach project in Argentina,Argentina; the Mponeng Ventersdorp Contact Reef, ProjectsMponeng CLR and Zaaiplaats projects in South Africa,Africa; Córrego do Sítio and Lamego in BrazilBrazil; and the mine life extension project (MLE1) at Cripple Creek & Victor in the US.
Potential future development projects will also require significant funding if and when approved by the AngloGold Ashanti Board.board. These include thethe: La Colosa and Gramalote projects in Colombia, theColombia; Kibali and Mongbwalu projects in the DRC, the Mponeng CLR and Zaaiplaats projects in South Africa, theDRC; Cerro Vanguardia underground mining project in Argentina, theArgentina; Nova Lima Sul project in Brazil, theBrazil; Sadiola Deeps project in Mali,Mali; Cripple Creek & Victor further mine life extension project (MLE2) in the US,US; as well as various other exploration projects and feasibility studies.
AngloGold Ashanti estimates that over the next three years, growth initiatives will require project capital expenditure (excluding stay in business and Ore Reserveore reserve development capital expenditure) of approximately $2.5$3.4 billion (subject to escalation). The company’s capital expenditure plans and requirements are subject to a number of risks, contingencies and other factors, some of which are beyond its control, and therefore the actual future capital expenditure and investments may differ significantly from theirthe current planned amounts.
AngloGold Ashanti’s operating cash flow and credit facilities may be insufficient to meet all of these expenditures, depending on the timing and costscost of development of these and other projects as well as its operating performance and available headroom under its credit facilities. As a result, new sources of capital may be needed to meet the funding requirements of these developments, to fund ongoing business activities and to pay dividends. AngloGold Ashanti’s ability to raise and service significant new sources of capital will be a function of macroeconomic conditions, the condition of the financial markets, future gold prices, the company’s operational performance and operating cash flow and debt position, among other factors. The company’s ability to raise further debt financing in the future and the cost of such financing will depend on, among other factors, its prevailing credit rating, which may be affected by the company’s ability to maintain its outstanding debt and financial ratios at levels acceptable to the credit ratings agencies, its business prospects or other factors. As a result, in the event of lower gold prices, unanticipated operating or financial challenges, any dislocation in financial markets or new funding limitations, AngloGold Ashanti’s ability to pursue new business opportunities, invest in existing and new projects, fund its ongoing business activities and/orand retire or service outstanding debt and pay dividends, could be significantly constrained, all of which could adversely impact the company’s results of operations and its financial condition.
AngloGold Ashanti does not operate some of its significant joint venture projects and other interests. If the operators of these projects do not perform effectively and efficiently, the company’s investment in these projects could be adversely affected and/orand its reputation could be harmed.
AngloGold Ashanti’s joint ventures at Morila in Mali and at Kibali in the DRC are operated by the company’s joint venture partners.partner Randgold Resources Limited (“Randgold”). In addition, certain of AngloGold Ashanti’s exploration ventures are operated by the relevant joint venture partner. AngloGold Ashanti’s marine gold joint venture with De Beers is operated by an independent company jointly owned by AngloGold Ashanti and De Beers, with a significant part of the technical input subcontracted to De Beers or other marine service providers.
In South Africa, AngloGold Ashanti’s Ergo operations are currently operated by Ergo Mining, a subsidiary of DRDGOLD Limited (DRDGOLD). The Ergo operations were sold in 2007 to DRDGOLD and DRDGOLD has been managing and operating the assets pending the transfer of the mining rights from AngloGold Ashanti to DRDGOLD.
While AngloGold Ashanti provides strategic management and operational advice to its joint venture partners in respect of these projects, the company cannot ensure that these projects are operated in compliance with the standards that AngloGold Ashanti applies in its other operations. If these joint ventures are not operated effectively or efficiently, including as a result of weaknesses in the policies, procedures and controls implemented by the joint venture partners, the company’s investment in the relevant project could be adversely affected. In addition, negative publicity associated with ineffective and inefficient operatorship, particularly relating to any resulting accidents or environmental incidents, could harm the company’s reputation and therefore its prospects and potentially its financial condition. Further, any failure of joint venture partners to meet their obligations to AngloGold Ashanti or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse impact on AngloGold Ashanti’s results of operations and its financial condition.
25 In particular, the company and Randgold retain equal representation, with neither party holding a deciding vote on the board of the two companies that have overall management control of
the Morila project in Mali and the Kibali project in the DRC, respectively, and all major management decisions for each of these two projects, including approval of the budget, require board approval. If a dispute arises between the company and Randgold with respect to the Kibali or Morila project and the parties are unable to amicably resolve such dispute, it may be difficult for the parties to make strategic decisions relating to the project affected by such dispute, the day-to-day operations and the development of such project may be adversely affected and the company may have to participate in arbitration or other proceedings to resolve the dispute, which could adversely affect the company’s results of operations and financial condition.
Some of AngloGold Ashanti’s mineral deposits and mining and exploration operations are located in countries that have experienced political instability and economic uncertainty. In all of the countries where the company operates, there is a focus on resource nationalism with governments seeking to get more economic benefits from the high commodity prices. This entails review of mining codes and stability agreements, which were designed under different economic environments. The formulation or implementation of government policies may be unpredictable on certain issues. These include regulations which impact its operations and changes in laws relating to issues such as mineral rights and asset ownership, royalties, taxation royalties,and taxation disputes, ‘windfall’ or ‘super’ taxation, and non-recovery of taxation refunds, import and export duties, currency transfers, restrictions on foreign currency holdings and repatriation of earnings.
For example, the Argentine government has introduced stricter exchange controls, which may limit the company’s ability to repatriate dividends from its Argentine subsidiaries. In addition, on March 15, 2012, the Mwanza office of the Tanzania Revenue Authority notified Geita Gold Mine Limited (Geita Gold Mine) that it intends to issue additional tax assessments against Geita Gold Mine and in connection with such assessments it also challenged the validity of the existing mining development agreement (MDA) relating to the Geita gold mine, which was entered into with the Tanzanian government in June 1999. In the event that the MDA is held to be invalid, the tax burden on the company’s Tanzanian operations would increase and the company would have to pay additional taxes for prior periods.
Any existing and new mining, and exploration operations and projects that the company carries out in these countries will continue to be subject to various national and local laws, policies and regulations governing the ownership, prospecting, development and mining of mineral reserves, taxation and royalties, exchange controls, import and export duties and restrictions, investment approvals, employee and social community relations and other matters.
If, in one or more of these countries, AngloGold Ashanti were not able to obtain or maintain necessary permits, authorizations or agreements to implement planned projects or continue its operations under conditions or within time frames that make such plans and operations economic, or if legal, ownership, fiscal (including all royalties and duties), exchange control, employment, environmental and social laws and regimes, or the governing political authorities change materially, resulting in changes to such laws and regimes, this could have a material adverse affecteffect on AngloGold Ashanti’s operating results, financial condition, and, financial condition.
Certain of the countries in which AngloGold Ashanti has mineral deposits or mining or exploration operations, including the DRC, Mali, Guinea and Colombia, have in the past experienced, and in certain cases continue to experience, a difficult security environment as well as political instability. In particular, various illegal groups active in regions in which the company areis present may pose a credible threat of military repression, terrorism, civil unrest, extortion and kidnapping, which could have an adverse effect on its operations in these and other regions for example, in March 2012 Mali, one of the countries in which the company operates, experienced a military coup. Although on April 6, 2012, the opposing factions reached a settlement, agreed to reinstate the Malian constitution and implemented certain transitional political arrangements, the country continues to be exposed to significant political instability and security threats. In some instances, risk assessments categorize threats as serious enough to require resort to public security forces, such regions.as national police or military units on a near-permanent basis. In the event that continued operationsoperation in these countries compromise the company’s security or business principles, AngloGold Ashanti may withdraw from these countries on a temporary or permanent basis. This could have a material adverse impact on AngloGold Ashanti’s results of operations.
Since 2009, the company has recorded an almost five-fold increase in the instances of injury to security personnel, including members of AngloGold Ashanti’s internal security, private security companies and public security forces in certain jurisdictions. The rise in the number and severity of security incidents has come as a result of both increased illegal and artisanal mining and an increase in the level of organization and funding of criminal activity around some of the company’s Continental African operations, spurred on by an escalating gold price. The most significant security challenges occur in areas where there is endemic poverty and high levels of unemployment. If the security environment surrounding the company’s operations that are most exposed to these challenges does not improve or further
deteriorates, employee, third-party and community member injuries and fatalities could also increase. Any such increase could disrupt the company’s operations in certain mines and adversely affect its reputation and results of operation.
Furthermore, the company has at times experienced strained relationships with some of the communities in which it operates. This couldAngloGold Ashanti operates in several regions where poverty, unemployment and the lack of access to alternative livelihoods mean that the creation and distribution of economic benefit from mining operations is a significant area of focus for community and government. Conflict with communities has led to community protests and business interruptions, particularly at the Siguiri mine in Guinea, where community members protested in four separate incidents in 2010 over issues relating to electricity supply, land compensation and employment, and a violent community protest interrupted operations for three days in 2011.
AngloGold Ashanti may be impacted by the outcome of elections in jurisdictions in which it has operations and ancillary political processes leading up to elections. Presidential elections are planned in the United States, Mali, Ghana, and Guinea during 2012.
Political instability and uncertainty or government changes to the fiscal terms governing AngloGold Ashanti’s operations may discourage future investments in certain jurisdictions, which may have a materialan adverse impact on AngloGold Ashanti’s results of operations.
Early in Guinea after2011 the death of the country’s long-standing president Lasana Conte. On December 3, 2009, President Camara was shot and injured in an apparent assassination attempt and subsequently signed a transition agreement allowing for presidential elections and the transfer of Guinea backGuinean government confirmed its intention to civilian rule. A new transitional government was appointed while elections were held. The first round of elections was held but, as a clear winner did not emerge, a second round of elections took place after a prolonged delay on November 7, 2010 and ultimately Alpha Conde was sworn in as Guinea’s president on December 21, 2010. Some unrest and protest accompanied and followed the elections. However, the elections were deemed successful and Conde was installed as Guinea’s first democratically elected president. In early 2011, Conde confirmed his commitment to a review of all mining contracts under the auspices of international law, indicating that Guinea would seek to own a stake of at least a third of all mining projects located in Guinea. Currently the Government of Guinea holds a stake of 15 percent in the Siguiri Gold Mine. The review process has not yet commenced and AngloGold Ashanti is currently unable to predict the timing and outcome of such review. On April 26, 2011, it was announced by Reuters that a copy of the new draft mining code includes a compulsory 15 percent stake for the government in operations, with an option to acquire an additional 20 percent. Also according to Reuters, included in the draft mining code are provisions for a new “Local Empowerment Fund”, which will be funded from tax levies, and changes to the price reference point used for tax purposes from the free-on-board to a rolling three-month average from the London Metals Exchange. AngloGold Ashanti continues to monitor the situation.
In Guinea, Mali and Tanzania, AngloGold Ashanti is due refunds of input tax and fuel duties which remain outstanding for periods longer than those provided for in the respective statutes. In addition, the company has other outstanding assessments and unresolved tax disputes in a number of countries, including Brazil, Argentina and Ghana. If the outstanding VAT input taxes arevalue-added tax on inputs is not received, the tax disputes are not resolved and assessments favorable to AngloGold Ashanti are not made, there could be an adverse effect upon the company’s results of operations and its financial condition. AngloGold Ashanti may also be impacted by the outcome of elections in jurisdictions in which it has operations and ancillary political processes leading up to elections.
The company expects elections to occur in the DRC in 2011 and in South Africa in 2014.
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In November 2011, the lower house of operations.
Illegal and artisanal mining occurs on AngloGold Ashanti’s properties, which can disrupt the company’s business and expose the company to liability.
Illegal and artisanal miners are active on, or adjacent to, some of AngloGold Ashanti’s Continental African and South American properties, which leads at times to interference with the company’s operations and results in conflict situations that present a security threat to property and human life. Artisanal mining is associated with a number of negative impacts, including environmental degradation, flouting of land rights, poor working practices, erosion of civil society, human rights abuse and funding of conflict. The environmental, social, safety and health impacts of artisanal mining are frequently attributed to formal mining activity, and it is often assumed that artisanally-mined gold is channeled through large-scale mining operators, even though artisanal and large-scale miners have distinct supply chains. These misconceptions impact negatively on the reputation of the industry.
The activities of the illegal miners, which include theft and shrinkage, could cause damage to AngloGold Ashanti’s properties, including pollution, underground fires, or personal injury or death, for which AngloGold Ashanti could potentially be held responsible. Illegal mining could result in the depletion of mineral deposits, potentially making the future mining of such deposits uneconomic. The presence of illegal miners could lead to project delays and disputes regarding the development or operation of commercial gold deposits. Illegal mining and theft, including by AngloGold Ashanti employees or contractors, could also result in lost gold reserves, mine stoppages, and have a material adverse effect on AngloGold Ashanti’s financial condition or results of operations.
In 2011, the company recorded an increase in the number and severity of security incidents, due in part to a greater level of organization among criminal elements and syndicates in AngloGold Ashanti’s areas of operation as well as an increase in artisanal, small-scale and illegal mining activity in general.
Labor disruptions and/orand increased labor costs could have an adverse effect on AngloGold Ashanti’s results of operations and financial condition.
AngloGold Ashanti employees in South Africa, Ghana, Guinea and some South American countries, are highly unionized. Trade unions, therefore, have a significant impact on the company’s labor relations, climate, as well as on social and political reforms, most notably in South Africa. There is a risk that strikes or other types of conflict with unions or employees may occur at any of the company’s operations, particularly where the labor force is unionized. Labor disruptions may be used to advocate labor, political or social goals in the future. For example, labor disruptions may occur in sympathy with strikes or labor unrest in other sectors of the economy. In late July 2011, AngloGold Ashanti miners joined others in the South African petroleum, coal and diamond industries in a wage-related strike. The action at AngloGold Ashanti’s operation lasted five days and the subsequent ramp-up of production was slower than expected. The resulting payroll increases have impacted the financial performance of all South African operations. Material labor disruptions could have an adverse effect on AngloGold Ashanti’s results of operations and financial condition.
In South Africa, it has become established practice to negotiate wages and conditions of employment with the unions every two years through the Chamber of Mines of South Africa. South African employment law sets out minimum terms and conditions of employment for employees, which form the benchmark for all employment contracts. As at December 31, 2011, approximately 61 percent of the company’s workforce, excluding contractors, or approximately 52 percent of its total workforce, was located in South Africa.
An agreement was signed with the unions in July 2009,August 2011, following negotiations between the Chamber of Mines and the National Union of Mineworkers (NUM), the United Associations of South Africa, (UASA) (on behalf of some clerical and junior management staff) and Solidarity (on behalf of a small number of miners). The next roundmining unions and gold mining companies signed a two-year agreement for an increase of negotiations is expected to take place in 2011.
In Ghana, a three-year, wage agreement for the years 2009 to 2011, effective from January 1, 2009, was reached towards the end of 2009. The next round of negotiations is expected to take place in 2011.April 2012. As at December 31, 2011, approximately 11 percent of the company’s workforce, excluding contractors, or approximately 12 percent of the total workforce, was located in Ghana. AngloGold Ashanti cannot give assurance that it will be able to renegotiate this agreement on satisfactory terms when it expiresfollowing its expiry at the end of December 2011.
In Argentina, where the collective bargaining agreement that applies to the company’s employees at Cerro Vanguardia is due to expire in May 2012, the trade unions have requested significant salary increases. The company and the unions have entered into a transitional agreement that provides for an average salary increase across all wage categories of approximately 17 percent and expect to negotiate a final salary increase in connection with the new collective
bargaining agreement. The company may not be able to renegotiate this agreement on satisfactory terms when it expires. In particular, the new agreement may result in significantly higher labor costs for the company’s Argentine operations. The unions may also resort to industrial action in connection with the renegotiation of the agreement.
Labor costs represent a substantial proportion of the company’s total operating costs and inat many operations, including its South African, Ghanaian and Tanzanian operations, is the company’s single largest component of operating costs. Any increases in labor costs have to be offset by greater productivity efforts by all operations and employees, failing which such increase in labor costcosts could have a material adverse effect on AngloGold Ashanti’s results of operations and its financial condition.
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Results may be further impaired if the company incurs penalties for failing to meet standards set by labor laws regarding worker rights. For example, employment law in South Africa imposes monetary penalties for neglecting to report to government authorities on progress made towards achieving employment equity in the workplace, and Ghanaian law contains broad provisions requiring mining companies to recruit and train Ghanaian personnel and to use the services of Ghanaian companies. In Australia, the federal government has recently introduced a new industrial relations system that includes “good faith bargaining” obligations for employers, fewer restrictions on the content of collective agreements and an enhanced role for union officials as bargaining representatives, parties to agreements and participants in dispute resolution.
AngloGold Ashanti uses contractors at certain of its operations to mine and deliver ore to processing plants. Consequently, at theseplants as well as for other purposes. At mines employing mining contractors, contracting costs represent a significant proportion of the total operating costs of these operations and the company does not own all of the mining equipment. For example, increased contractor rates at the Sadiola mine in Mali contributed to a significant rise in total cash costs in the final quarter of 2011.
AngloGold Ashanti’s operations could be disrupted, resulting in additional costs and liabilities, if the mining contractors at theseaffected mines have financial difficulties or if a dispute arises in renegotiating a mining contract, or if there is a delay in replacing an existing contractor.contractor and its operating equipment to meet business needs at expected cost levels. Increases in contract mining rates, in the absence of associated productivity increases, will also have an adverse impact on the company’s results of operations and financial condition.
In addition, AngloGold Ashanti’s reduced control over those aspects of operations which are the responsibility of contractors, contractor failure to comply with applicable legal and regulatory requirements, and their inability to manage their workforce could adversely affect AngloGold Ashanti’s reputation, results of operations and financial position, and may result in the company incurring liability to third parties due to the actions of the contractor.
AngloGold Ashanti competes with mining and other companies for key human resources.
AngloGold Ashanti competes on a global basis with mining and other companies, to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to operate its business. This is further exacerbated in the current environment of increased mining activity across the globe, combined with the global shortage of key mining skills, including geologists, mining engineers, metallurgists and skilled artisans.
The retention of staff is particularly challenging in South Africa, where, in addition to the impacts of global industry shortages of skilled labor, AngloGold Ashanti is required to achieve employment equity targets of participation by HDSAs in management and other positions.
The recruitment of skilled workers is becoming increasingly competitive in Argentina as well, as more mining development occurs nationally and regionally. Also material is the scarcity of skills in the resource sector of Western Australia due to the mining boom currently underway in the region, particularly with regard to safety management. If safety systems and training cannot be strengthened to ensure that operators achieve the required level of competence, the incidence of accidents may rise.
There can be no assurance that the company will attract and retain skilled and experienced employees. Should it fail to do so or lose any of its key personnel, the business and growth prospects may be harmed and this could have an adverse impact on AngloGold Ashanti’s results of operations and its financial condition.
The treatmentprevalence of occupational health diseases and the potential costs and liabilities related thereto may have an adverse effect uponon the business and results of operations of AngloGold Ashanti and its financial condition.
The primary areas of focus in respect of occupational health of employees within the company’s operations are noise inducednoise-induced hearing loss (NIHL), and occupational lung diseases (OLD), which includesinclude pulmonary anddiseases such as tuberculosis (TB), from various causes and silicosis in individuals exposed to silica dust. These require active dust management strategies in underground operations, particularly in South Africa where a significant number of silicosis cases by current and former employees alleging past exposures are still reported each year to the board for statutory compensation. AngloGold Ashanti provides occupational health services to its employees at its occupational health centers and clinics and continues to improve preventative occupational hygiene initiatives.initiatives, such as implementing various dust control measures and supplying its employees with respiratory protection equipment. If the costs associated with providing such occupational health services, implementing such dust control measures or supplying such equipment increase significantly beyond anticipated or budgeted amounts, this could have an adverse effect on the results of operations of AngloGold Ashanti and its financial condition.
A claim filed by waya former employee of a cabinet resolution in 1999, proposed a possible combinationAngloGold Ashanti’s predecessor, Vaal Reefs Mining and alignment of benefits of the Occupational Diseases in Mines and Works Act (ODMWA) that provides for compensation to miners who have OLD and/or TB, and the Compensation for Occupational Injuries and Diseases Act (COIDA), that provides for compensation of non-miners who have OLD. It appears less likely that the proposed combination of the two acts will occur but some alignment of benefits may be considered. COIDA provides for compensation payments to workers suffering permanent disabilities from OLD, which are classified as pension liabilities if the permanent disability is above a certain threshold, or a lump sum compensation payment if the permanent disability is below a certain threshold. ODMWA only provides for a lump sum compensation payment to workers suffering from OLD as well as the payment of medical expenses over the claimant’s lifetime.
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As a result of the Constitutional Court decision permitting miners with OLD to sue their current or former employers for damages outside the statutory compensation scheme, AngloGold Ashanti could be subject to numerous similar claims, including a potential class action or similar group claim. AngloGold Ashanti is studying the details of the Constitutional Court judgment and will defend the case and any subsequent claims, on their merits. As a result of the Constitutional Court decision, AngloGold Ashanti could be subject to numerous similar claims, including potentially by way of a class action or similar group claim. These too would be defended by the companyif and adjudicated by the Courtswhen filed, on their merits. In view of the limitation of currentlimited information for the accurate estimation of a liability,currently available, no reliable estimate can be made for this possible obligationpotential liability at this time. Should AngloGold Ashanti be unsuccessful in defending the claim of Mr. Mankayi’s executor andactions by any other individuals or groups that lodge similar claims thisin the future, such claims would have an adverse impact on AngloGold Ashanti’s financial condition which could potentially be material.
In light of the Constitutional Court judgment, AngloGold Ashanti is calling for the industry to engage with government (and other stakeholders) to seek an appropriate industry-wide solution. AngloGold Ashanti can provide no assurances that an industry-wide solution can be reached or that the terms thereof will not have a material adverse affecteffect on AngloGold Ashanti’s financial condition.
In response to the effects of silicosis in labor-sending communities, a number of mining companies (under the auspices of the Chamber of Mines of South Africa) together with the NUM, which is the largest union in the mining sector in South Africa, and the national and regional departments of health, have embarked on a project to assist in delivering compensation and relief by mining companies under the Occupational Diseases in Mines and Works Act (ODMWA) to affected communities.
AngloGold Ashanti faces certain risks in dealing with HIV/AIDS, particularly at its South African operations and with tropical disease outbreaks such as malaria, and other diseases which may have an adverse effect on the company’s results of operations.
AIDS and associated diseases remain one of the major health care challenges faced by AngloGold Ashanti’s South African operations. AccurateWorkforce prevalence data for AIDS is not available owing to doctor-patient confidentiality. The South African workforce prevalence studies however, indicate that HIV prevalence rates among AngloGold Ashanti’s South African workforce may be as high as 30 percent. AngloGold Ashanti continues to develop and implement programs to help those infected with HIV and prevent new infections from spreading. Since 2001, the company has offered a voluntary counseling and HIV testing program for employees in South Africa. In 2002, it began to offer anti-retroviral therapy or ART,(ART) to HIV positive employees who met the current medical criteria for the initiation of ART. From April 2003, AngloGold Ashanti commencedbegan a roll-out of the treatment to all eligible employees desiring it. As ofat December 2010,2011, approximately 2,5002,400 employees were receiving treatment using anti-retroviral drugs.
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Such diseases impair the disease could have an adverse impact uponhealth of workers and negatively affect productivity and profitability levelsas a result of workers’ diminished focus or skill, absenteeism, treatment costs and allocated resources. AngloGold Ashanti’sAshanti cannot guarantee that any current or future medical program will be successful in preventing or reducing the infection rate among its employees or in affecting consequent illness or mortality rates. AngloGold Ashanti may incur significant costs in addressing this issue in the future, which could also adversely impact the company’s results of operations located in these regions.
The costs and impacts associated with the pumping of water inflows from closed mines adjacent to the company’s operations could have an adverse effect uponon its results of operations.
Certain of AngloGold Ashanti’s mining operations are located adjacent to the mining operations of other mining companies. The closure of a mining operation may have an impact upon continued operations at the adjacent mine if appropriate preventative steps are not taken. In particular, this can include the ingress of underground water where pumping operations at the adjacent closed mine are suspended. Such ingress could have an adverse effect uponon any one of the company’s mining operations as a result of property damage, disruption to operations, additional pollution liabilities and pumping costs and consequently could have an adverse impact upon its results of operations and financial condition.
The potential costs associated with the remediation and/orand prevention of groundwater contamination from the company’s operations or due to flooding from closed mines adjacent to the company’s operations could have a material adverse effect uponon the results of operations of AngloGold Ashanti and its financial condition.
AngloGold Ashanti has identified groundwater contamination plumes at certain of its operations. Numerous scientific, technical and legal studies have been undertaken to assist in determining the magnitude of the contamination and to find sustainable remediation solutions, and, based thereon, the company has instituted processes to reduce seepage and to address soil and groundwater contamination, including monitored natural attenuation by the existing environment and phyto-technologies. Subject to the completion of trials, and the technology being a proven remediation technique, no reliable estimate can be made for the potential costs of remediation and prevention of groundwater contamination at AngloGold Ashanti’s operations. Should these costs be significant, this could have a material adverse impact upon AngloGold Ashanti’s results of operations and its financial condition.
Deep groundwater contamination is a significant issue in South Africa, where groundwater in some older mining regions has infiltrated mined-out workings. It becomes acidic if exposed to sulfide minerals in these workings, presenting a potential contamination risk to shallow groundwater and eventually surface water resources if allowed to spread. AngloGold Ashanti has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West Rand goldfields in South Africa.goldfields. AngloGold Ashanti’s Vaal River operations are part of the Klerksdorp goldfield and its West Wits operations are part of the Far West Rand goldfield. Various studies have been undertaken by AngloGold Ashanti since 1999. Due to the interconnected nature of underground mining operations in South Africa, any proposed solution needs to be a combined one supported by all the companies owning mines located in these goldfields. As a result, the South African Department of Mineral Resources and affected mining companies are now involved in the development of a “Regional Mine Closure Strategy”.
In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made at this time for this possible obligation, which could be material and have an adverse impact on AngloGold Ashanti’s financial condition.
The occurrence of events for which AngloGold Ashanti is not insured or for which its insurance is inadequate may adversely affect cash flows and overall profitability.
AngloGold Ashanti maintains insurance to protect only against catastrophic events which could have a significant adverse effect on its operations and profitability. This insurance is maintained in amounts that the company believes to be reasonable depending upon the circumstances surrounding each identified risk. However, damage and third-party claims arising from catastrophic events may exceed the limit of liability on insurance policies the company has in place. Furthermore, AngloGold Ashanti’s insurance does not cover all potential risks associated with its business and may exclude certain parts of its business. In addition, AngloGold Ashanti may elect not to insure certain risks due to the high premiums or for various other reasons, including an assessment that the risks are remote.
The company may not be able to obtain insurance coverage at acceptable premiums. Insurance for certain risks in particular, such as loss of title to mineral property, environmental pollution, or other hazards resulting from exploration and production, is not generally available to mining companies on acceptable terms. The availability and cost of insurance coverage can vary considerably from year to year as a result of events beyond the company’s control or from claims, and this can result in higher premiums and periodically being unable to maintain the levels or types of insurance carried.
The occurrence of events for which AngloGold Ashanti is not insured will adversely impact its cash flows, its results of operations and its financial condition.
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AngloGold Ashanti is subject to the risk of litigation, the causes and costs of which are not always known.
AngloGold Ashanti is subject to litigation, arbitration and other legal proceedings arising in the normal course of business and may be involved in disputes that may result in litigation. The causes of potential future litigation cannot be known and may arise from, among other things, business activities, environmental and health and safety concerns, share price volatility or failure to comply with disclosure obligations. The results of litigation cannot be predicted with certainty but could include fines, and the loss of licenses, concessions, or rights, among other things.
A claim filed by a former employee of AngloGold Ashanti’s predecessor, Vaal Reefs Mining and Exploration Company Limited, seeks approximately R2.6 million for damages resulting from silicosis allegedly contracted while working on a mine. In March 2011, the Constitutional Court rejected the lower court’s decision that the claim was precluded by statutory compensation and granted leave to the decedent’s executor to proceed with his case in the High Court and seek a claim for damages under common law against AngloGold Ashanti. In Colombia, the company is also involved in an action in the Administrative Superior Court of the Cundinamarca District against the Environmental Ministry following the issuance of a fine against AngloGold Ashanti; and six class action lawsuits flowing in part from the alleged breach of Article 34 of the Mining Code and in part from allegations that activities in ‘restricted areas’ contravene environmental legislation. See “Item 8A.: Consolidated statements and other financial information – Legal proceedings“.
Should the company be unable to resolve disputes favorably or be able to enforce its rights, this may have a material adverse impact on the company’s financial performance, cash flow and results of operations.
Sales of large quantities of AngloGold Ashanti’sAshanti‘s ordinary shares and ADSs,American Depository Shares (ADSs), and the perception that these sales may occur or other dilution of the company’s equity, could adversely affect the prevailing market price of the company’s securities.
The bulk of AngloGold Ashanti’s shares are held by a relatively small number of investors with the top four institutional holders controlling around 24 percent of free float.
The market price of the company’s securities could fall if large quantities of ordinary shares or ADSs are sold in the public market, if there is divestment by certain types or groupings of investors, or if there is the perception in the marketplace that such sales could occur. Subject to applicable securities laws, holders of AngloGold Ashanti’sAshanti‘s ordinary shares or ADSs may sell them at any time. The market price of the company’s ordinary shares or ADSs could also fall as a result of any future offerings AngloGold Ashanti makes of its ordinary shares, ADSs, or securities exchangeable or exercisable for the company’s ordinary shares or ADSs, or the perception in the market place that these salesofferings might occur. AngloGold Ashanti may make such offerings, including offerings of additional ADS rights, share rights or similar securities, at any time or from time to time in the future.
Fluctuations in the exchange rate of currencies may reduce the market value of AngloGold Ashanti’s securities, as well as the market value of any dividends or distributions paid by the company.
AngloGold Ashanti has historically declared all dividends in South African rands. As a result, exchange rate movements may have affected and may continue to affect the Australian dollar, the British pound, the Ghanaian cedi and the US dollar value of these dividends, as well as of any other distributions paid by the relevant depositary to investors that hold the company’s securities. This may reduce the value of these securities to investors.
AngloGold Ashanti’s memorandum and articles of association allowsallow for dividends and distributions to be declared in any currency at the discretion of the board of directors, or the company’s shareholders at a general meeting. If and to the extent that AngloGold Ashanti opts to declare dividends and distributions in US dollars, exchange rate movements will not affect the US dollar value of any dividends or distributions. Nevertheless, the value of any dividend or distribution in Australian dollars, British pounds, Ghanaian cedis or South African rands will continue to be affected. If and to the extent that dividends and distributions are declared in South African rands, exchange rate movements will continue to affect the Australian dollar, British pound, Ghanaian cedi and US dollar value of these dividends and distributions. Furthermore, the market value of AngloGold Ashanti’s securities as expressed in Australian dollars, British pounds, Ghanaian cedis, US dollars and South African rands will continue to fluctuate in part as a result of foreign exchange fluctuations.
The announced proposalannouncement by the South African Governmentgovernment to replace the Secondary Tax on Companies with a withholding tax on dividends and other distributions may impact the amount of dividends or other distributions received by AngloGold Ashanti’s shareholders.
On February 21, 2007, the South African Governmentgovernment announced a proposal to replace Secondary Tax on Companies withthat a 10 percent withholding tax on dividends and other distributions payable to shareholders. Althoughshareholders would be implemented. In his budget speech on February 22, 2012, the South African Minister of Finance announced that the withholding tax on dividends and other distributions payable to shareholders will be 15 percent effective April 1, 2012.
This withholding tax replaces the Secondary Tax on Companies and although this may reduce the tax payable by the company’sAngloGold Ashanti’s South African operations, thereby potentially increasing distributable earnings, the withholding tax couldon dividends and other distributions will generally reduce the amount of dividends or other distributions received by AngloGold Ashanti shareholders.
AngloGold Ashanti may not pay dividends or make similar payments to shareholders in the future.
AngloGold Ashanti pays cash dividends only if there are sufficient funds available for that purpose. Fund availability depends upon many factors that include the amount of cash available in relation to AngloGold Ashanti’s capital expenditure on existing infrastructure and exploration and other projects.
Under South African law, companies are entitled to pay a dividend or similar payment to its shareholders. shareholders only if the company meets the solvency and liquidity tests set out in legislation, and the company’s articles of association.
Given these factors, including the capital and investment needs of the company, and the board of directors’ discretion to declare a dividend that includes the amount and timing thereof, cash dividends may not be paid in the future.
The proposal was expectedimplementation of an integrated Enterprise Resource Planning (ERP) system could have an adverse effect on AngloGold Ashanti’s operational results and its financial condition.
AngloGold Ashanti is implementing a single, global ERP system to besupport all operations managed by AngloGold Ashanti. The ERP system is being implemented over a three-and-a-half-year period which commenced in 2010, butAugust 2011. The contemplated implementation of an ERP system on a global basis is inherently a high-risk initiative due to the potential for implementation cost and time overruns. In addition, such implementation could affect the ability of AngloGold Ashanti to report and manage information if difficulties in the implementation and operation of the system are experienced, which could have an adverse effect upon AngloGold Ashanti’s operational results and its implementation has been delayed to April 1, 2012.
31financial condition.
AngloGold Limited was founded in June 1998 with the consolidation of the gold mining interests of Anglo American. The company,American plc. AngloGold Ashanti Limited, as it is now,the company exists today, was formed on April 26, 2004 following the business combination between AngloGold and Ashanti Goldfields Company Limited. AngloGold Ashanti is currently the third-largest gold producer in the world based on ounces sold.
CURRENT PROFILE
AngloGold Ashanti Limited is headquartered in Johannesburg, South Africa, is a global goldAfrica. The company with a portfolio of long-life, relatively low-cost assets and differing orebody types in key gold producing regions. The company’s 20 operations are located in 10 countries (Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania and the US), and are supported by extensive exploration activities. The combined Proven and Probable Ore Reserves of the group amounted to 71.2 million ounces as at December 31, 2010.
Its registered office is at 76 Jeppe Street, Newtown, Johannesburg, South Africa, 2001.
While AngloGold Ashanti’s primary listing is on the Johannesburg Stock Exchange (JSE), the company is also listed on the London Stock Exchange (LSE), the New York Stock Exchange (NYSE), the Ghana Stock Exchange (GhSE) and the Australian Securities Exchange (ASX).
AngloGold Ashanti delisted from Euronext Paris on December 23, 2011 and from Euronext Brussels on December 30, 2011.
HISTORY AND SIGNIFICANT DEVELOPMENTS OF THE COMPANY
Below are highlights of key corporate activities from 1998:
1998
Formation of AngloGold Limited through the consolidation of East Rand Gold and Uranium Company Limited; Eastvaal Gold Holdings Limited; Southvaal Holdings Limited; Free State Consolidated Gold Mines Limited; Elandsrand Gold Mining Company Limited; H.J. Joel | ||
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1998-2004
Expansion of AngloGold Limited’s operations outside of South Africa.
2004
Concluded the business combination with Ashanti Goldfields Company Limited, at which time the company changed its interests in No. 2 Shaft Vaal River Operationsname to African Rainbow Minerals (ARM) and made an unsuccessful take-over bid for Normandy MiningAngloGold Ashanti Limited.
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2009
Anglo American plc sold its remaining shareholding to Paulson & Co. Inc.
2010
AngloGold Ashanti eliminated its hedge book, thereby gaining | ||
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| 4B. | BUSINESS OVERVIEW |
AngloGold Ashanti realized net proceedsis a global gold company with a portfolio of $68 million fromassets and differing orebody types in key gold producing regions. The company is currently the sale of its entire holding of shares in Vancouver-basedthird-largest gold producer B2Gold Corp.
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PRODUCTS
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OPERATIONS
AngloGold Ashanti’s 20 operations are located in 10 countries (Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania and the United States). These include six deep-level mines and one surface operation in South Africa as well as a combination of surface and underground mining operations in the Americas, Australia and elsewhere on returns
EXPLORATION
The group’s exploration program, which covers greenfield, brownfield, and more recently, marine exploration, is conducted either directly or in collaboration with partners. The group’s foremostmost recent greenfield discovery is the La Colosa deposit in Colombia (see map for regions of active greenfield exploration).Colombia. Brownfield exploration is conducted around existing operations. In October 2009, the group established a joint venture to explore for marine mineral deposits on the continental shelf. This complements AngloGold Ashanti’s existing terrestrial exploration and mining activities.
DEVELOPMENT
AngloGold Ashanti utilizes its exploration team to build on its record of new gold discoveries and to grow its gold endowment. The company has surfaceincreased its capacity to fund a significant project pipeline by incurring longer-term debt, while maintaining capital discipline and underground mining operations in the Americas, Australia and elsewhere on the African continent. The Tau Lekoa mine in South Africa was sold during 2010. In addition to gold, valuable by-products — silver, sulfuric acid and uranium — are produced in the process of recovering the gold mined at certain operations.
MARKETING
Once processed to the doré (unrefined gold bar) stage at AngloGold Ashanti’s operations, this product is dispatched to various precious metal refineries where the gold is refined to a purity of at least 99.5 percent, in accordance with the standards of ‘good delivery’ as determined by the London Bullion Market Association. It is then sold to bullion banks or refiners. Gold has been a much sought after source of wealth over the centuries, be it as an investment, a store of value, or as jewellery. AngloGold Ashanti campaigns actively to promote the demand for gold.
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GOLD MARKET
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In 2011, the gold market continued to be profoundly influenced by ongoing economic turmoil, particularly in 2002, entrenched their position as a vehicle for retail and institutional investors. ETF investment activity was once again strong during 2010, with overall holdings continuing to grow, albeit at a slower rate thanthe United States of America in 2009.
Investment market
As 2011 drew to a close, the gold price failed to respond favorably to the worsening crisis in Europe. Nevertheless, ETF holdings grew over the course of the fourth quarter of 2011, improving on a sluggish first quarter and reversing the negative trend of the second and third quarters.
As at December 31, 2011, aggregate holdings for the major ETFs totaled almost 78 million ounces, which represents a 7 percent increase of 5.2 million ounces for the year. This growth is modest when compared to the significant increases in ETF holdings of 2009 and 2010 (19.84 million ounces and 9.97 million ounces respectively). Combined ETFs rank sixth behind official sector
More traditional gold investment products such as bar and bar hoardingcoin experienced a very mixed year. In India, the world’s biggest single gold market, gold price volatility and a weakening rupee severely dampened gold demand in both nations.
Jewellery markets
The key jewellery markets of pure gold jewellery, which holds superior investment appeal toIndia and China both experienced mixed fortunes during the 18 carat variety known in China as K Gold. Nevertheless, the K Gold market also showedyear. After a gain of 5 percent, following a 10 percent decline in 2009. Consumer psychologyrecord year in 2010, was marked by the growing perception that gold is an important component of any asset portfolio. This view was previously the domain of wealthy Chinese,India’s first two quarters remained strong but the middle class began to exhibit a similar tendency. Chinese consumers showed little aversion to the higher price of gold, given the investment appeal of pure gold jewellery and a bullish outlook on the gold price.
COMPETITION
As gold mining is a mature and regulated industry, and very significant volumes of gold and gold derivatives trade in the secondworld markets independent of gold mine supply, AngloGold Ashanti does not consider that competition for sales plays any role in its operations as a gold producer. However, gold producers do compete against each other for acquisition of mining assets, exploration opportunities and third quarters before stagnatinghuman resources.
INTELLECTUAL PROPERTY
AngloGold Ashanti, as a group, is not dependent on intellectual property for the conduct of its business as a whole.
STRATEGY
At the end of March 2008, AngloGold Ashanti adopted a new business strategy. The company defined its strategic focus in five components:
Promote the organizational development of the group as a strategic value driver;
Maximize marginsby managing both revenue and costs to ensure delivery and protection of returns throughout the economic cycle;
Manage the business as an asset portfolioby using capital deployment optimization approaches to support delivery of return targets;
Grow the business by having a definite strategy for both organic growth and growth by acquisition and be opportunistic in seeking value accretive targets; and
Embrace sustainability principles by developing business and social partnerships based on mutual value creation, while maintaining a focus on ensuring the safety and well-being of employees and managing environmental and other impacts.
The key features of each of these components of the company’s strategy are:
Promote the organizational development of the group
AngloGold Ashanti recognizes the strategic importance of the group’s organizational development and through its:
Mission, it seeks to define a clear view of the organization;
Vision, its seeks to reflect a clear and consistent view of the organization’s future;
Values, it recognizes that the process used to achieve results is as important as the results themselves;
Business Process Framework, it seeks to define the policy, standards and operating framework necessary to establish a flexible and responsive work model within which people have the opportunity to be creative and realize their potential; and
Organizational model, it seeks to ensure that the right person, does the right work, in the final three monthsright way and at the right time.
Maximize margins
AngloGold Ashanti seeks to maximize margins by actively managing revenues and costs. In particular, it seeks to maximize value from its products by:
offering exposure to spot prices;
delivering products of a consistent quality and on time;
seeking to maintain cost inflation below the industry average; and
applying resource development strategies to maintain operating margins over the lifecycle of an asset.
Manage the business as an asset portfolio
AngloGold Ashanti seeks to optimize capital deployment by investing only in assets and growth opportunities that offer attractive returns. The company ranks each asset and project as part of its business planning process, both in absolute terms and relative to its peer group, with the aim of:
ensuring that individual assets and projects meet or exceed specified risk-adjusted rates of return;
identifying the strengths and weaknesses of the yearportfolio, with a particular focus on portfolio risk;
implementing strategies to optimize orebody capability;
applying methods and design to optimize operating performance;
ensuring the application of detailed planning and scheduling, together with the use of best-practice operating methods associated with each asset;
optimizing returns from existing assets and growth opportunities; and
selling those assets that no longer meet the company’s criteria at approximately 2,100 tonnes, or around 68 million ounces.attractive valuations.
Grow the business
AngloGold Ashanti seeks to further enhance shareholder value by:
Greenfield exploration: building upon its asset portfolio and landholdings to develop new projects, whilst continually reviewing and analyzing potential opportunities;
Brownfield exploration and project development: promoting organic growth in ETFs for 2010 was around 330 tonnes, in line with annual average growth rates since 2003. In 2009, however, ETF holdings grew by 617 tonnes in a year that saw a 24 percent rise inand utilizing the gold price. In 2010, ETF growth was significantly slower despite a 30 percent rise in the price of the metal. However,existing infrastructural base;
Mergers and acquisitions: selectively pursuing value accretive merger and acquisition opportunities; and
Other commodities: maximizing the value of other commodities within the gold ETF market grewcompany’s existing and developing asset portfolio.
Embrace sustainability principles
AngloGold Ashanti’s sustainable development framework seeks to address a number of interlinked issues that are critical to business sustainability. In particular:
In a climate of increased resource competition, this framework seeks to enable countries and local communities in which the company operates to derive sustainable economic benefits from the company’s mining operations by 55 percentdeveloping mutually-beneficial partnerships with host governments and local communities and participating in the co-design of projects that contribute to $34 billion.
41achieving local development goals.
As mining requires, among other things, energy, water and access to land, the company seeks to manage these resources in a way that limits any adverse impact on community relationships and production costs.
The company is committed to Johannesburg and Istanbul to Dubai, among others. In the second half of 2010, China permitted domestic institutional investors to investrespecting human rights as reflected in international ETFs, broadening global investment channels for gold and — given the Chinese appetite for gold — generating significant potential for a fresh, largely untapped demand source. In India, the ETF market doubled in volume to around 16 tonnes.
As effective stakeholder engagement is required to support the company’s management of these agreements,its sustainability initiatives, the company continues to work on devising and implementing a company-wide engagement standard to improve performance in effect since September 27, 2009, limits signatoriesthis area.
The implementation of this business strategy has resulted in the significant restructuring of the company’s portfolio of operations as well as the strengthening of the company’s balance sheet and created the operating and financial foundation to annual salesachieve production growth. In addition, operating cash flow has increased markedly following the elimination of 20 percent less than the previous agreement.
Project ONE, which the company also developed in 2008, consists of two integrated initiatives: the System for People (SP) and the strong performance of gold, itBusiness Process Framework (BPF). The SP is unsurprisinga managerial effectiveness system focused on ensuring that there was little central bank selling in 2010. In the first full yearindividuals at each level of the third CBGA, just 6 tonnes of sales were reported against the annual quota of 400 tonnes excluding sales by the International Monetary Fund (IMF).
In 2008, AngloGold Ashanti also remains involvedbegan developing and implementing its Safety Transformation, an initiative that seeks to embed the concepts of physical risk, health and wellbeing into both components of Project ONE. More recently, in independent projects2010, the board of directors approved a policy for the transformation and localization of labor, which aims to grow jewellery demand in partnership with companies including Tanishq, a subsidiarytake into account the legislative framework of the TATA Group. AuDITIONS,host countries, as well as the company’s own global gold jewellery design competition, promotes improved gold jewellery designvalues, in order to redress historical imbalances, promote gender equality and has become a well-recognized corporate marketing tool. Seeemployment of local citizens at all levels, as well as the competition website at www.goldauditions.com.
AngloGold Ashanti reviews its business strategy regularly to determine progress in 2010
Achieving strategic and performance objectives will be impacted by utilitiesany portfolio changes and the launch of a physically backed ETF for uranium.
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44“Note regarding forward-looking statements”.
AngloGold Ashanti’s rights to own and exploit Mineral Reservesmineral reserves and deposits are governed by the laws and regulations of the jurisdictions in which these mineral properties lie.
There are in some cases certain restrictions on AngloGold Ashanti’s ability to independently move assets out of certain countries in which it has operations, and/or transfer assets within the group, without the prior consent of the local government or minority shareholders involved.
For more information on the Presidentrisks and uncertainties associated with AngloGold Ashanti’s mining rights, see “Item 3D.: Risk factors”, in particular the risk factor entitled “AngloGold Ashanti’s mining rights in the countries in which it operates could be altered, suspended or canceled for a variety of reasons, including breaches in its obligations in respect of its mining rights”.
South Africa assented to
The MPRDA and the Revised Mining Charter
The Mineral and Petroleum Resources Development Act (MPRDA), which had been passed by the Parliament of South Africa in June 2002 and came into effect on May 1, 2004. The objectives of the MPRDA are, among other things, to allow for state sovereignty over all mineral and petroleum resources in the country, to promote economic growth and the development of these resources and to expand opportunities for the historically disadvantaged. Another objective of the MPRDA is to ensure security of tenure for the respective operations concerning prospecting, exploration, mining and production. By virtue of the provisions of the MPRDA, the state ensures that holders of mining and prospecting rights contribute to the socio-economic development of the areas in which they operate.
The Mineral and Petroleum Resources Development Amendment Act (MPRDAA) was passed by Parliament in 2008 and has been signed by the State President and published, but is not yet in effect. Its purpose is to amend the MPRDA in order to, inter alia:
make the Minister the responsible authority for implementing environmental matters in terms of the National Environmental Management Act, 1998 (NEMA) and specific environmental legislation as it relates to prospecting, mining, exploration, production and related activities incidental thereto on the prospecting, mining, exploration or production area;
align the MPRDA with the NEMA in order to provide for one environmental management system;
remove ambiguities in certain definitions;
add functions to the Regional Mining Development and Environmental Committee;
amend transitional arrangements so as to further afford statutory protection to certain existing old order rights; and
provide for matters connected therewith.
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The objectives of the Mining Charter are to:
promote equitable access to the nation’s mineral resources by all the people of South Africa;
substantially and meaningfully expand opportunities for HDSAs, including women, to enter the mining and minerals industry and to benefit from the exploitation of the nation’s mineral resources;
use the industry’s existing skills base for the empowerment of HDSAs;
expand the skills base of HDSAs in order to serve the community;
promote employment and advance the social and economic welfare of mining communities and the major labor-sending areas; and
promote beneficiation of South Africa’s mineral commodities.
The Mining Charter envisages measuring progress on transformation of ownership by:
taking into account, among other things, attributable units of production controlled by HDSAs;
allowing flexibility by credits or offsets, so that, for example, where HDSA participation exceeds any set target in a particular operation, the excess may be offset against shortfalls in another operation;
taking into account previous empowerment deals in determining credits and offsets; and
considering special incentives to encourage the retention by HDSAs of newly acquired equity for a reasonable period.
Under the Charter, the mining industry as a whole agreed to assist HDSA companies in securing finance to fund participation in an amount of Rand 100 billion over the first five years. Beyond the Rand 100 billion commitment, HDSA participation will be increased on a willing seller-willing buyer basis, at fair market value, where the mining companies are not at risk.
Following a review, the DMR amended the Mining Charter and the Revised Mining Charter was released on September 13, 2010. The requirement under the Mining Charter for mining entities to achieve a 26 percent HDSA ownership of mining assets by the year 2014 has been retained. Amendments to the Mining Charter in the Revised Mining Charter include, inter alia, the requirement by mining companies to:
facilitate local beneficiation of mineral commodities;
procure a minimum of 40 percent of capital goods, 70 percent of services and 50 percent of consumer goods from HDSA suppliers (i.e. suppliers of which a minimum of 25 percent + 1 vote of their share capital must be owned by HDSAs) by 2014, these targets being, however, exclusive of non-discretionary procurement expenditure;
ensure that multinational suppliers of capital goods put a minimum of 0.5 percent of their annual income generated from South African mining companies into a social development fund beginning in 2010, to contribute to the socioeconomic development of South African communities;
achieve a minimum of 40 percent HDSA demographic representation by 2014 at executive management (board) level, senior management (EXCO) level, core and critical skills, middle management level and junior management level;
invest up to 5 percent of annual payroll in essential skills development activities; and
implement measures to improve the standards of housing and living conditions for mineworkers by converting or upgrading mineworkers’ hostels into family units, attaining an occupancy rate of one person per room and facilitating home ownership options for all mineworkers in consultation with organized labor, all of which must be achieved by April 30, 2014.
In addition, mining companies are required to monitor and evaluate their compliance with the Revised Mining Charter, and must submit annual compliance reports to the DMR.
The government takes a “Scorecard” approach to the different facets of promoting the objectives of the Charter. It uses the Scorecard when considering applications for the conversion of existing old order rights into new order rights. The Scorecard was designedsets out the requirements of the Charter in tabular form which allows the DMR to function as an administrative“tick off” areas where a mining company is in compliance. It covers the following areas:
human resource development;
employment equity;
migrant labor;
mine community and not a legislative tool. Its objective was to find a practical framework for the Minister to assess whether a company measured uprural development;
housing and living conditions;
ownership and joint ventures;
beneficiation; and
reporting.
The new Scorecard attached to the intentRevised Mining Charter makes provision for a phased-in approach for compliance with the above targets over the 5-year period ending April 30, 2014. For measurement purposes, the Scorecard allocates various weightings to the different elements of the Revised Mining Charter. Failure to comply with the provisions of the Revised Mining Charter will amount to a breach of the MPRDA, may result in the cancellation or suspension of a mining company’s existing mining rights and Mining Charter.
On April 29, 2009, as required by section 100(1)(b) of the MPRDA, the Minister published the CodesCode of Good Practice for the South African Mineral Industry (the Code). The purpose of the Code was to set out administrative principles to enhance implementation of the Mining Charter and the MPRDA. The Code is to be read in combination with the Mining Charter and other legislation relating to measurement of socio-economic transformation in the South African mining industry.
A mining right will be granted to a successful applicant for a period not exceeding 30 years. Mining rights may be renewed for additional periods not exceeding 30 years at a time. A mining right can be canceled if the mineral to which such mining right relates is not mined at an “optimal” rate.
AngloGold Ashanti holds eight mining rights in South Africa, five of which have been successfully converted, executed and registered as new order mining rights at the Mineral and Petroleum Resources Titles Office (MPRTO). ThreeOne old order mining right has been converted and executed and is currently awaiting registration in the MPRTO, whilst two old order mining rights being a non-core mining right, a surface operation that has been sold and a right which is an extension of an existing operation, are still awaiting conversion by the DepartmentMinister of Mineral Resources (DMR), oneResources. The deadline for the conversion process from old to new order rights was the end of which has been executed,April 2009 and is awaiting registration in the MPRTO.
A prospecting right will be granted to a successful applicant for a period not exceeding five years, and may only be renewed once for three years. The MPRDA also provides for a retention period of up to three years after prospecting, with one renewal up to two years, subject to certain conditions.
AngloGold Ashanti holds three prospecting rights, one of which is in the process of being converted into a mining right. Six new prospecting right will be grantedapplications have been submitted to the Department of Mineral Resources (DMR) since the end of March 2011, after the moratorium on the issuing of rights was lifted. AngloGold Ashanti also holds a successful applicantmining permit for a period not exceeding 30 years. Mining rights may be renewed for additional periods not exceeding 30 years at a time.
AngloGold Ashanti applied for and has been granted a refining license and an import and export permit by the South African Diamond and Precious Metals Regulator.
The BBBEE Amendment Bill
In December 2011, the Department of Trade and Industry (DTI) published the Broad-based Black Empowerment Amendment Bill, 2011 (the BBBEE Amendment Bill) for public comment. If enacted, the BBBEE Amendment Bill will amend the Broad-based Black Economic Empowerment Act 53 of 2003 (the BBBEE Act) to provide a framework of principles, strategies and guidelines aimed at promoting the broad-based socio-economic empowerment of HDSAs across the South African economy and society in the form of ownership, management, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. The public comment period expired in February 2012 and the BBBEE Amendment Bill is still pending in parliament. If enacted in its current form, the BBBEE Amendment Bill will introduce a number of changes to the current framework under the BBBEE Act, including:
amending and clarifying the definition of the intended beneficiaries of such framework;
amending the definition of “Broad-Based Black Economic Empowerment”, or BBBEE, to introduce the concept of sustainable BBBEE and to indicate that preferential procurement includes the promotion of local content procurement, which refers to locally produced goods, services or works that meet a certain minimum local content threshold;
expanding the scope of the Codes of Good Practice, and the related transformation charters, on BBBEE matters that the Minister of Trade and Industry can issue under the BBBEE Act for specific sectors of the South African economy and making it compulsory for public authorities, governmental agencies and other public entities to apply such codes;
introducing into the BBBEE Act itself the definition of fronting BBBEE practices, which to date has been developed outside of the BBBEE Act and has now been expanded to capture the more sophisticated and unsuspecting fronting transactions, making fronting a criminal offense that is punishable with imprisonment and fines under certain circumstances, reasserting in the BBBEE Act the common law remedies for misrepresentation and more generally enhancing the enforcement mechanism against fronting;
establishing a BBBEE Commission responsible for overseeing, supervising and promoting compliance with the BBBEE Act, as well as receiving and investigating BBBEE-related complaints; and
introducing a new clause providing that in the event of a conflict between the BBBEE Act and any other South African law, the BBBEE Act will prevail.
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To date, mining companies operating in South Africa have been required to comply with the BBBEE regime set out under the MPRDA and the Revised Mining Charter, which is specific to the mining industry. See “–The MPRDA and the Revised Mining Charter”. Currently, there is uncertainty as to whether and to what extent the BBBEE Amendment Bill, if and when enacted in its current form, will add to and conflict with the BBBEE requirements applicable to mining
companies under the Revised Mining Charter. The potential implications of any such additional or conflicting regulatory requirements are also unclear. In addition, in connection with BBBEE-related matters mining companies may become subject to the regulatory authority of the DTI and the BBBEE Commission in addition to that of the DMR, which may increase the regulatory burden and compliance costs for mining companies.
The Mineral and Petroleum Resources Royalty Act, 2008, or the Royalty Act, was promulgated on November 24, 2008 and came into operation on March 1, 2010. The Royalty Act imposes a royalty on refined and unrefined minerals payable to the State.
The royalty in respect of refined minerals (which include gold and platinum) is calculated by dividing earnings before interest and taxes, or EBIT, as calculated under IFRS, by the product of 12.5 times gross revenue calculated as a percentage, plus an additional 0.5 percent. EBIT refers to taxable mining income (with certain exceptions such as no deduction for interest payable and foreign exchange losses) before assessed losses but after capital expenditure. A maximum royalty of 5 percent of revenue has been introduced for refined minerals.
The royalty in respect of unrefined minerals (which include uranium) is calculated by dividing EBIT by the product of nine times gross revenue calculated as a percentage, plus an additional 0.5 percent. Where unrefined mineral resources (such as uranium) constitute less than 10 percent in value of the total composite mineral resources, the royalty rate in respect of refined mineral resources may be used for all gross sales and a separate calculation of EBIT for each class of mineral resources is not required. For AngloGold Ashanti, this means that currently the company will pay a royalty based on refined mineral resources (as the unrefined mineral resources (such as uranium) for AngloGold Ashanti for 2011 constituted less than 10 percent in value of the total composite mineral resources). The rate of royalty tax payable for 2011 was 2.97 percent of revenue of the company’s South African operations.
CONTINENTAL AFRICA
Democratic Republic of the Congo
The mining industry in the Democratic Republic of the Congo (DRC) is regulated primarily by the Mining Code enacted in July 2002 and its ancillary regulations (the Mining Regulations, promulgated in March 2003)2003 (DRC Mining Code). The DRC Mining Code which repealed the Mining Code of April 1981, vests the Minister of Mines with the authority for the granting, refusal, suspensionto grant, refuse, suspend and termination ofterminate mineral rights. Mineral rights may be granted in the form of exploration permits for an initial period of four years andor in the form of mining permits which are granted for an initial period of 30 years. An exploration permit may, at any time before expiry, be transformed partially into a mining license or a small-scale mining permit. Exploitation permits are granted followingupon successful completion of exploration and satisfaction of thecertain requirements, necessary for the award of such permit including approval of an environmental impact study and an environmental management plan.
The holder of a mining permit is required to commence development and mine construction within three years of the award of a miningsuch permit. Failure to do so may lead to forfeiture or payment of penalties.the mining permit. A permit holder must comply with specific rules relating to, among others, protection of the environment, cultural heritage, health and safety, construction and infrastructure planning.
To protect and enforce rights acquired under an exploration or mining permit, the DRC Mining Code provides, fordepending on the nature of a dispute or threat, administrative, judicial and national or international arbitral recourses.
The DRC Mining Code sets out taxes, charges, royalties and other fees payable to the treasury by a mining title holder in respect of its activities. The Mining CodeIt also provides for a level of fiscal stability. Existingstability, in that existing tax, customs, exchange and benefits applicable to mining activities are guaranteed to remain unchanged for a period of 10 years in favor of a mining title holder in the event that amendment ofamendments to the DRC Mining Code resultswould result in less favorable payment obligations.
AngloGold Ashanti holds the majority stake and is the operator of Ashanti Goldfields Kilo (AGK) (86.22 percent), an exploration and mining joint venture with Société MiniéMinière de Kilo-Moto (SOKIMO) (13.78 percent), a DRC governmental mining agency. AGK is engaged in exploration activities in the north eastern DRC.
AngloGold Ashanti also holds an effective 45 percenta stake in the Kibali gold project located in north easternnortheastern DRC. The Kibali gold project is operated by Randgold Resources and is owned by Randgold Resources (45 percent), AngloGold Ashanti (45 percent) and SOKIMO (10 percent), which latter share represents the interest of the DRC government in the Kibali gold project.
Ghana
The Constitution of Ghana as well as the Minerals and Mining Act, 2006 (Act 703) (the GMM Act) provide that all minerals in Ghana in their natural state are the property of the State and title to them is vested in the President on behalf of and in trust for the people of Ghana, with rights of prospecting, recovery and associated land usage being granted under license or lease.
The grant of a mining lease by the Minister of Mines is normally subject to parliamentary ratification unless the mining lease falls into a class of transactions exempted by Parliament.
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The Minister of Mines has the power to object to a person becoming or remaining a ‘shareholder controller’, a ‘majority shareholder controller’ or an ‘indirect controller’ of a company which has been granted a mining lease if he considers thatthe Minister believes the public interest would be prejudiced by the person concerned becoming or remaining such a controller.
Stability agreementsagreement
The GMM Act provides for stability agreements as a mechanism to ensure that the incentives and protection afforded by laws in force at the time of the stability agreement are guaranteed for a period of 15 years. A stability agreement is subject to ratification by Parliament.
Prior to the business combination between AngloGold and Ashanti in April 2004, AngloGold and the government of Ghana agreed on the terms of a stability agreement to govern certain aspects of the fiscal and regulatory framework under which AngloGold Ashanti would operate in Ghana following the implementation of the business combination. The stability agreement necessitated the amendment of the Obuasi Mining Leasemining lease which had been ratified by Parliament.
Under the stability agreement, the government of Ghana agreed:
to extend the term of the mining lease relating to the Obuasi mine until 2054 on terms existing prior to the business combination;
to maintain, for a period of 15 years, the royalties payable by AngloGold Ashanti with respect to its mining operations in Ghana at a rate of 3 percent per annum of the total revenue from minerals obtained by AngloGold Ashanti from such mining operations;
to ensure the income tax rate would be 30 percent for a period of 15 years. The agreement was amended in December 2006 to make the tax rate equal to the prevailing corporate rate for listed companies; and
to permit AngloGold Ashanti and any or all of its subsidiaries in Ghana to retain up to 80 percent of export proceeds in foreign currencies offshore, or if such foreign currency is held in Ghana, to guarantee the availability of such foreign currency.
The stability agreement also stipulates that a sale of AngloGold Ashanti’s or any of its subsidiaries’ assets located in Ghana remains subject to the government’s approval. Furthermore, the government retains its special rights (Golden Share) under the provisions of the GMM Act pertaining to the control of a mining company, in respect of its assets and operations in Ghana.
The Government of Ghana agreed that AngloGold Ashanti’s Ghanaian operations will not be adversely affected by any new enactments or orders, or by changes to the level of payments of any customs or other duties relating to mining operations, taxes, fees and other fiscal imports or laws relating to exchange control, transfer of capital and dividend remittance for a period of 15 years after the completion of the business combination. For fiscal years 2009 and 2010,example, AngloGold Ashanti has been exempted from the government, throughapplication of the National Fiscal Stabilization Act 2009 (Act 785), (NFS Act). The NFS Act
imposed a 5 percent levy on all profits before tax for mining companies for fiscal years 2009 and 2010, as a temporary measure to raise additional revenue to meet critical expenditures, while maintaining the government’s fiscal objectives. In theits 2011 Budget Statement and Economic Policy, delivered on November 18, 2010, the Government extended the application of the NFS Act for another fiscal year. AngloGold Ashanti has howeveralso been exempted from the application of this Act by virtue of its Stability Agreement. Inthe March 2010 the Parliament of Ghana passed an amendment to the Minerals & Mining Act, 2006 (Act 703), namely theGMM Act. The Minerals and Mining (Amendment) Act, 2010 (Act 794), which amended section 25 of the Minerals & Mining Act, by fixing fixed the royalty rate at 5 percent, instead ofwhereas the previousprior GMM Act provision whichhad stated that royaltyroyalties payable shallwould not be more than 6 percent or less than 3 percent of the total revenue of minerals obtained by the holder. By this,
Foreseeable impact of Ghana’s 2012 Budget Statement on AGA operations in Ghana
According to the November 2011 Budget Statement, Corporate Tax for mining companies are nowwill be increased from 25 percent to pay royalties35 percent and a further Windfall Profit Tax of 510 percent of total revenue of minerals obtained. AngloGold Ashanti has once again been exemptedwas imposed on profit with effect from the application2012 Ghana fiscal year, which commenced January 2012. This will have the overall effect of this amendmentincreasing mining companies’ tax liability by virtue20 percent. Additionally, when determining chargeable income for tax purposes, the costs incurred by a mining company in one contract area or site will not be allowed to be set off against profits from another contract area or site belonging to such mining company.
While the stability agreement (as amended) between AGA and the Government of Ghana caps AGA’s Corporate Tax liability at 30 percent and precludes AGA from being adversely affected by any new enactments that would impose obligations upon AGA or any of its Stability Agreement.
Retention of foreign earnings
AngloGold Ashanti’s operations in Ghana are permitted to retain 80 percent of their foreign exchange earnings.earnings in an offshore foreign exchange account. In addition, the company has permission from the Bank of Ghana to retain and use dollars, outside of Ghana, required to meet payments to the company’s hedge counterparts which cannot be met from the cash resources of its treasury company.
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A detailed program must be submitted for the recruitment and training of Ghanaians with a view to achieving ‘localization’, which is the replacement of expatriate personnel by Ghanaian personnel. In addition, the holder must give preference to Ghanaian products and personnel, to the maximum extent possible, consistent with safety, efficiency and economies.
Except as otherwise provided in a specific mining lease, all immovable assets of the holder under the mining lease vest in the State onupon termination, as does all moveable property that is fully depreciated for tax purposes. Moveable property that is not fully depreciated is to be offered to the State at the depreciated cost. The holder must exercise his rights subject to such limitations relating to surface rights as the Minister of Mines may prescribe.
Mining properties
Obuasi
The current mining lease for the Obuasi area was granted by the Government of Ghana on March 5, 1994. It grants mining rights to land with an area of approximately 334 square kilometers in the Amansie East and Adansi West districts of the Ashanti region for a term of 30 years from the date of the agreement. In addition, the application for a mining lease over the adjacent 140 square kilometers has also been granted, resulting in the total area under mining lease conditions increasing to 474 square kilometers, (the Lease Area). The company is required to pay rent to the Government of Ghana (subject to review every five years, when the rent may be increased by up to 20 percent) at a rate of approximately $5 per square kilometer and such royalties as are prescribed by legislation, including royalties on timber felled within the Lease Area. The Government of Ghana agreed to extend the term of the mining lease relating to the Obuasi mine until 2054. The mining lease was formally ratified by Parliament on October 23, 2008.
Iduapriem and Teberebie
Iduapriem has title to a 33 square kilometer mining lease granted on April 19, 1989 for a period of 30 years. The terms and conditions of the lease are consistent with similar leases granted in respect of the Obuasi mining lease. Teberebie has two leases, one granted in February 1998 for a term of 30 years, and another granted in June 1992 for a term of 26 years. In January 2009 Iduapriem obtained a new mining lease, the Ajopa Concession, for a period of 10 years. The concession covers an area of 48.34m2.
Guinea
In Guinea, all mineral substances are the property of the state. Mining activities are primarilycurrently regulated by the Mining Code, 1995. However, a new Mining Code was promulgated on September 9, 2011 and published in the official gazette in January 2012 (New Mining Code). The New Mining Code will come into force once a presidential decree has been published. See “New Mining Code” below.
The right to undertake mining operations can only be acquired by virtue of one of the following mining titles: surveying permit, small-scale mining license, mining prospecting license, mining license or mining concession.
The group’s Guinea subsidiary, Société AngloGold Ashanti Goldfields de Guinée SA (SAG), has title to the Siguiri mining concession area which was granted on November 11, 1993 for a period of 25 years. The agreement provides for an eventual extension/renegotiation after 23 years for such periods as may be required to exhaust the economic Ore Reserve.
At Siguiri, the original area granted of 8,384 square kilometers was reduced to a concession area of four blocks totaling 1,495 square kilometers.
SAG has the exclusive right to explore and mine in the remaining Siguiri concession area for an additional 22-year period from November 11, 1996 under conditions detailed in a Convention de Base which predates the new Guinea Mining Code.
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The Republic of Guinea (the State) holds a 15 percent free-carried or non- contributory interest; is entitled to a royalty of 3 percent based on a spot gold price of less than $475 per ounce; and is owed 5 percent of the value of gold exported, based on a spot gold price above $475 per ounce, as fixed on the London Gold Bullion Market;
A local development tax of 0.4 percent is payable on gross sales revenue;
Salaries of expatriate employees are subject to a 10 percent income tax;
Mining goods imported into Guinea are exempt from all import taxes and duties for the first two years of commercial production; and
SAG is committed to adopting and progressively implementing a plan for the effective rehabilitation of the mining areas disturbed or affected by operations.
The Convention de Base is subject to early termination if both parties formally and expressly agree to do so,it, if all project activities are voluntarily suspended for a continuous period of eight months or are permanently abandoned by AngloGold Ashanti’s subsidiarysubsidiary; or if SAG goes into voluntary liquidation or is placed into liquidation by a court of competent jurisdiction.
New Mining Code
Pursuant to the exportNew Mining Code, existing mining titles in effect on the date on which the New Mining Code comes into force remain valid for their duration and for the substances for which they have been issued.
The New Mining Code provides for the establishment of a State mining company which will hold the interests that the State has in all the mining companies present in Guinea. The granting of a mining title by the State gives rise to a State shareholding of 15 percent in the mining company, which may not be diluted. This interest is acquired upon signing of the mining title and no financial contribution may be requested from the State in return. The State further reserves the right to acquire an additional share of 20 percent in cash in accordance with the terms established with each company concerned, which could bring the total shareholding of the State to 35 percent.
The provisions contained in the New Mining Code concerning mining tax, payablecustoms duties, transparency, anti-corruption and labor (Mandatory Provisions) shall apply within 60 days following the effective date of the New Mining Code to all mining companies having reached the exploitation phase. The New Mining Code does not provide for transitional, stability or harmonization provisions concerning these Mandatory Provisions. To the extent that non-mandatory provisions of the New Mining Code are inconsistent with the Convention de Base, the Government of Guinea a royalty on productionand AGA are required to work together as soon as possible after the New Mining Code comes into force to harmonize the Convention de Base with the New Mining Code.
The aforementioned Mandatory Provisions may be payableapplicable to AGA as it is currently in exploitation phase. To date, AGA has not received any formal communication from the Government of Guinea relating to the International Finance Corporation (IFC) and to Umicore SA, formerly Union Miniere (UM). Pursuantrenegotiation of its Convention de Base.
The New Mining Code also contains a formal commitment to the option agreement between UMprinciples of the Extractive Industries Transparency Initiative (EITI). The EITI sets a global standard for oil, gas and Golden Shamrock Mines Limited (GSM), a royalty on production may be payablemining companies to UM by Chevaning Mining Company Limited (CMC) or GSM, which payment obligation has been assignedpublish what they pay and for governments to AngloGold Ashanti (Ghana) Limited, on a sliding scale of between 2.5 percent and 7.5 percent, based on the spot gold price per ounce of between $350 per ounce and $475 per ounce, subject to indexing from January 1, 1995, to a cumulative maximum of $60 million.disclose what they receive. In addition underto binding the terms ofgovernment to EITI, the restructuring agreement withcode requires all mining companies working in Guinea – even those from countries that have not committed to EITI – to respect the IFC, a sliding scale royalty on production may be payable to the IFC, calculated on the same basis but at half the rate payable to UM, to a maximum of $7.8 million. The royalty payable to the IFC was fully discharged in January 2008,initiative's principles and the royalty payment payable to Umicore was fully discharged in December 2010.
Mali
Mineral rights in Mali are governed by Ordinance No. 99-32/P- RM of August 19, 1999 enacting the mining code, as amended by No. 013/2000/P-RM of February 10, 2000 and ratified by Law No. 00-011 of May 30, 2000 (the Mining Code), and Decree No. 99-255/P-RM of September 15, 1999 implementing the Mining Code.
Prospecting activities are carried out under prospecting authorizations (authorization de prospection), is an exclusive right for. The authorizations give an individual or corporate entity the exclusive right to carry out prospecting activities over a given area for a period of three years renewable without a reduction in the area ofcovered by the authorization. ResearchExploration activities may be carried out under researchexploration permits (permis de recherché)recherche). The latter are granted to corporate entities only by order of the Minister in charge of Mines. ResearchExploration permits are granted for a period of three years, renewable twice for additional three-year periods. Each renewal ofrequires the research permit requires a relinquishment ofholder to relinquish 50 percent of the area covered by such permit. The entity applying for such a permit must provide proof of technical and financial capabilities.
An exploitation permit (permis d’exploitation) is required to mine a deposit located within the area of a prospecting authorization or a researchan exploration permit. The exploitation permit grants an exclusive titleright to prospect, researchexplore and exploit the named substances for a maximum period of 30 years renewable three times for an additional 10 years. The exploitation permit is granted only to the holder of an exploration permit or of a prospecting authorization and covers only the area coveredgoverned by the exploration permit or the prospecting authorization. An application must be submitted to the Minister in charge of Mines and to the National Director of Mines.
As soon as the exploitation permit is granted, the permit holder of the exploitation permit must incorporate a company under the law of Mali. The permit holder of the permit will assign the permit for free to this company. The State will have a 10 percent free carried interest.interest in the company. This interest will be converted into priority shares and the State’sState's participation will not be diluted in the case of increasing thean increase in capital.
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Applications for prospecting authorizations and researchexploration permits must contain various documents attesting to the financial and technical capacity of the applicant, a detailed works and costcosts program, a map defining the area which is being requested and theproviding geographical coordinates, thereof, the exact details relating to the identity of the applicant and evidence of the authority of the signatory of the application. Such titles are granted by ministerial order. Any refusal to grant such titles shall be notified by letter from the Minister in charge of Mines to the applicant.
All mining titles mentioned above all require an establishment convention (convention d’etablissement)d'etablissement) to be signed by the State and the titleholder defining their rights and obligations. A standard form of such establishment convention has been approved by decree of the Head of Government.
AngloGold Ashanti has interests in Morila, Sadiola and Yatela, all of which are governed by establishment conventions covering exploration, mining, treatment and marketing in a comprehensive document. These documents include the general conditions with regard toprovisions regarding exploration (work program, fiscal and customs regime)framework) and exploitation (formation of a local limited liability company and mining company, state shareholdings, theState interest, fiscal and customs regime duringframework governing construction and exploitation phases, exchange controls, marketing of the product, accounting regime, training programs for local labor, protection of the environment, reclamation, safety, hygiene and settlement of disputes)dispute settlement).
As the establishment conventions contain stabilization clauses, the mining operations carried out by the AngloGold Ashanti entities in Mali are subjectedsubject to the provisions of the previous mining codes of 1970 and 1991 but also, for residual matters, to the provisions of the Mining Code of 1999.
AngloGold Ashanti has complied with all applicable requirements and the relevant permits have been issued. Morila, Sadiola and Yatela have 30-year permits which expire in 2022, 2024, 2020 and 2030,2024, respectively.
Namibia
The Minerals (Prospecting and Mining) Act of 1992 (the MPM Act) provides that all rights to minerals in the Republic of Namibia vest in the State. In orderThe Mining Rights and Mineral Resources division of the Directorate handles all applications for and allocation of rights in relation to minerals in the Republic of Namibia.
Prospecting and mining activities are regulated by the MPM Act which, among others, provides for the granting, refusal, suspension and termination of rights in relation to minerals. The right to undertake prospecting and mining operations can only be acquired by virtue of one of the following mining titles:
Non-exclusive Prospecting Licenses;
Reconnaissance Licenses;
Mining Claims;
Exclusive Prospecting Licenses;
Mineral Deposit Retention Licenses; and
Mining Licenses.
To enable a company to prospect or mine, the Ministry of Mines and Energy initially grantsmay grant an exclusive prospecting licenseExclusive Prospecting License (or a Mining Claim in some instances). Upon application and on presentation of a feasibility study, the Ministry then grants a mining license is then granted, takingMining License. Licensing decisions take into account the abilities of the company including(including its mining, financial and technical capabilities,capabilities), projected rehabilitation programs and the payment of royalties. Mining Licenses are only awarded to Namibian citizens and companies registered in Namibia, which includes foreign companies registered with the Namibian registrar of companies.
In 2011, the government adopted the New Equitable Economic Empowerment Framework (NEEEF). The relevant license was grantedobjectives of the NEEEF are aimed at redressing past inequalities and providing measures for empowerment. No legislation implementing the NEEEF has to date been enacted. In addition, the Chamber of Mines is in the process of negotiating its own charter with the government.
AngloGold Namibia (Pty) Ltd was granted the necessary licenses in respect of its mining and prospecting activities in Namibia. TheIts current 15-year mining licenseMining License expires in October 2018. ApplicationAn application has been submitted to the Ministry of Mines and Energy during 2010 for the extension of the aforementioned Mining License to 2030. This application includes the mining area known as the Anomaly 16.
Taxes
The Namibian Government appears to include anomaly 16 as well ashave withdrawn or deferred the mining tax proposals that it made in 2011. These proposals included, amongst others, a requirement for mines to pay a value added tax of 15 percent on the export value of unprocessed minerals, a 5 percent export duty and an extensionincreased corporate tax rate of 44 percent, up from 37.5 percent. The minimum historic corporate tax rate on mining companies is 25 percent. Most mining companies currently pay between 25 and 40 percent, with diamond mines taxed at 55 percent. A corporate tax of 40 percent applies to profits from non-mining activities. There is a 10 percent withholding tax on interest earned by foreigners on their deposits held with Namibian banks or unit trust schemes. There is also a 25 percent withholding tax on certain services, management and consultancy fees rendered by foreigners.
An amount received from the sale or other disposal of a mineral license or the shares in a company holding a mineral license is deemed to be an income source in Namibia for purposes of calculating income tax, regardless of where the transaction takes place.
Royalties
In 2008, the Government confirmed a royalty schedule that originally had been introduced in 2004. Since then all mining companies, at the discretion of the mining licenseMinister of Mines and Energy, pay a royalty of between 3 percent and 10 percent on the market value of base, precious, and rare metals and non-nuclear mineral fuels. AGA currently pays a royalty of 3 percent. The government also introduced a windfall royalty, which is payable at the discretion of the Minister, and a new type of royalty in respect of all minerals other than precious stones and dimension stones, which might function as a penalty royalty. For example, this penalty may be imposed on minerals that are not in their most refined state that have been or are about to 2030.
Tanzania
Mineral rights in the United Republic of Tanzania are principally governed by the Mining Act of 19982010 (the Mining Act), and the Mining Regulations, 19992010. The Mining Act and propertythe Regulations came into force in November 2010. Ownership of and control over minerals are vestedon, in or under the land vest in the President of the United Republic of Tanzania. ProspectingNo person is allowed to prospect for theminerals or carry on mining of minerals,operations except petroleum, may only be conducted underpursuant to the authority of a mineral right license granted, byor deemed to have been granted, under the Mining Act or its predecessor acts.
To enable a company to prospect or mine, the Ministry of Energy and Minerals (the MEM) initially grants an exclusive prospecting license. Upon presentation of a feasibility study, together with certain other environmental, social and financial assurances, the MEM may then grants a form of license for mining. Licensing decisions take into account the abilities of the company (including its mining, financial and technical capabilities), projected rehabilitation programs, environmental compliance and the payment of royalties.
The following licenses can be applied for under this Act.the Mining Act:
Licenses for Exploration:
Prospecting license;
Gemstone prospecting license; and
Retention license.
Licenses for Mining:
Special mining license (if the proposed capital investment is equal to at least US$100 million);
Mining license (if the proposed capital investment is equal to between US$100,000 and US$100 million); and
Primary mining license (reserved for Tanzanian citizens).
Licenses for Ancillary Activities:
Processing license;
Smelting license; and
Refining license.
For purpose of mineral rights most often encountered, whichAngloGold Ashanti’s Geita Gold Mine, only prospecting, retention and special mining licenses are also those applicable to AngloGold Ashanti, are:
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metallic minerals;
energy minerals;
gemstones other than building materialskimberlitic diamonds; and gemstones,
kimberlistic diamonds.
An application for a prospecting license is made to the Commissioner for Minerals and the license is valid for a period of threefour years. Thereafter, the license is renewable for twothree further periods of– the first period being for three years and the second and third periods being for two years each. OnUpon each renewal, 50 percent of the area covered by the license must be relinquished. Before application is made for a prospecting license with an initial prospecting period (a prospecting license), a prospecting license with a reconnaissance period (a prospecting reconnaissance) may be applied for a maximum area of 5,000 square kilometers. This is issued for a period of two years after which a three-year prospecting license is applied for.
If the holder of a prospecting license has identified a mineral deposit within the prospecting area whichthat is potentially of commercial significance but that cannot be developed immediately for reasonsbecause of technical constraints, adverse market conditions or other economic factors of a temporary character, it can apply for a retention license. A retention license which will entitlecan also be requested from the holder thereofMinister after the expiry of a prospecting license period, for reasons ranging from financial to apply for a special mining license when it sees fit to proceed with mining operations.
Holders of prospecting or retention licenses over a tenement will not automatically have first right to any mining license granted over that tenement. However, in practice, they will be best positioned to meet the requirements to be granted a form of license for mining.
Mining is mainly carried out through either a mining license or a special mining license, both of which confer on their holder the exclusive right to conduct mining operations in or on the area covered by the license. A special mining license is granted for the shorter of either the estimated life of the ore body indicated in the feasibility study report or such period as the applicant may request. It is renewable for a further period not exceeding the estimated life of the remaining ore body.
Except in the case of a special mining license, a mineral right may be freely assignedtransferred by theits holder thereof(in whole or in part) to another person or entity by notifyingwithout requiring consent from the MEM. However, the Commissioner for Minerals exceptmust be notified of any transfer of a prospecting or retention license and will refuse to register the transfer unless the transferee proves that it meets the financial and technical capability criteria required to apply for such licenses. The assignment of a special mining license which must havegenerally requires the approvalprior consent of the MinistryMEM, such consent not to be assigned. However, this approvalunreasonably withheld or delayed. There are limited exceptions to the requirement for the assignment of a mining license will not apply if the mining license is assignedMinister’s consent (such as transfers to an affiliate company of the license holder or to a financial institution or bank as security for any loan or guarantee in respect of mining operations.
Special mining licenses have certain fiscal and other advantages over mining licenses, as the holder of a mineral rightspecial mining license may enter into a mining development agreement with the Ministrygovernment of Tanzania to guarantee the fiscal stability of a long-term mining project and make special provision for the payment of royalties, taxes, fees and other fiscal imposts.
AngloGold Ashanti has compliedconcluded a development agreement with all applicable requirements and the relevant licenses, which have been issued for 25 years, expiring in 2023.
AUSTRALIAAUSTRALASIA
Australia
In Australia, with a few exceptions, all onshore minerals are owned by the Crown (in right of the State). The respective Minister for each State and Territory is responsible for administering the relevant Miningmining legislation enacted by the States and Territories.
Native Title legislation applies to certain mining tenuretenures within Australia. Australia recognizes and protects a form of Native Title whichthat reflects the entitlement of Aboriginal people to their traditional lands in accordance with their traditional custom and laws. Should Native Title claims or determinations exist, certain Native Title processes and procedures will apply under the Native Title Act 1993 (Cth) before the tenure is granted.
52 Tenure may be granted subject to conditions relating to Native Title rights. In the mining context, Native Title matters are managed as part of the tenement grant process. If disputes arise in relation to the grant of a particular tenement, they can be referred to the National Native Title Tribunal, established under the Native Title Act, for resolution.
AngloGold Ashanti’s operating properties are located in the state of Western Australia.Australia where tenure is issued under, and mining operations are governed by, the Mining Act 1978 (WA). The most common forms of tenure are exploration and prospecting licenses, mining leases, miscellaneous licenses and general purpose leases. In most Australian states, if the holder of an exploration license establishes indications of an economic mineral deposit in the area covered by the exploration license and complies with the conditions of the grant, the holder of the exploration license has a priority right against all others to apply forbe granted a mining lease which gives the holder exclusive mining rights with respect to minerals on the property.
Mining tenures will be granted with conditions relating to protection of the environment. Exploration and mining operations may also require separate approval from the State, Territory or Federal Environment Minister under environmental impact assessment and protection legislation prior to commencement. Further, an operating license under the State or Territory environmental protection legislation may also be required for certain mine processing or mining-related operations.
It is possible for an individual or entity to own an area of land and for another individual or entity to be granted the right to explore for or mine any minerals located on or under the surface of the same area. Typically, the maximum initial term of a mining lease is 21 years and the holder has the right to renew the lease for an additional 21 years. Subsequent renewals are granted at the discretion of the respective State or Territory’s minister responsible for mining rights. In Western Australia, mining leases can only be assigned with the prior written consent of the minister.
Government royalties are payable by the holder of mining tenure in respect of minerals obtained from the relevant area of land, at the rates specified in the relevant legislation in each State or Territory. The royalty on gold production in Western Australia is payable quarterly at a fixed rate of 2.5 percent of the royalty value of gold metal produced and sold. The royalty value is calculated by multiplying the amount of gold produced during a given month by the average gold spot price for that month. In addition, the holder of mining tenure may be required to pay annual rent in respect of the tenure. In Western Australia there is a minimum annual expenditure requirement for prospecting and exploration licenses and mining leases. Exemptions from the expenditure requirement can be obtained if certain conditions are satisfied.
AngloGold Ashanti owns the mineral rights and has been granted 21-year term mining leases with rights of renewal to all of its mining areas in Australia, including its proportionate share of joint venture operations.operations and accordingly it has, together with its joint venture partners where applicable, the exclusive right to mine in those areas. Both the group and its joint venture partners are fully authorized to conduct operations in accordance with relevant laws and regulations. The mining leases and rights of renewal cover the current life-of-mine at AngloGold Ashanti’s operations in Australia.
ARGENTINAAMERICAS
Argentina
Land ownership & mining legislation, mines arerights
The Argentine Mining Code governs mining activity in the private propertycountry. Special regimes exist for hydrocarbons and nuclear minerals. In the case of most minerals, the Mining Code establishes that the owner of the nationland is not the owner of the mineral rights; these are held by the national or a province, dependingprovincial governments (depending on where they are located. Individuals are empowered to explore for and to exploit and disposethe location of minesthe minerals). The national or provincial government, as ownersapplicable, is required by means of a legal license granted by a competent authority under the provisions of the Argentine Mining Code. Code to grant whomever discovers a new mine title to the mining concession.
The Argentine Mining Code regulates exploration permits and mining concessions. Exploration permits grant their holders exclusivity rights to any mineral discoveries, including those made by a third party within the exploration area covered by the permit. Exploration permits are limited in time and as to the extent of the exploration area, are subject to the payment of a single-time fee, and also require a minimum exploration work program and schedule to keep the permit in force.
The Argentine Mining Code also regulates mining concessions, or exploitation rights. Priority for receiving a mining concession is given to the registered discoverer of the mine, which holds the exploration permit. Once the application for a mine has been submitted, the applicant may commence works and must submit a legal licenses grantedsurvey of the units requested for the exploitation of mines are valid for an undetermined period, provided thatnew mine. The application and the mining title holder complies with the obligations settledlegal survey may be opposed by third parties following specific proceedings set forth in the Argentine Mining Code. In Argentina,Approval and registration of the usual wayslegal survey by the Provincial mining authority constitutes formal title to the mining concession.
Any mining company wishing to commence or modify any mining-related activity, as defined by the Argentine Mining Code, including prospecting, exploration, exploitation, development, preparation, extraction, and storage of transferringmineral substances, as well as property abandonment or mine closure activity, is required to prepare and submit to the competent Provincial environmental authority an Environmental Impact Assessment (EIA) prior to commencing the work. Each EIA is required to describe the nature of the proposed work, its potential risk to the environment, and the measures that will be taken to mitigate that risk. If accepted by the competent authority, the EIA is used as the basis to create a right overDeclaration of Environmental Impact (DEI) to which the mining company is required to adhere during the mining-related activity at issue. The DEI is required to be updated at least on a bi-annual basis. Sanctions and penalties for non-compliance with the DEI are outlined in the Environmental Protection section of the Argentine Mining Code, and may include warnings, fines, suspension of quality certifications, restoration of the environment, temporary or permanent closure of activities, and withdrawal of authorization to conduct mining-related activities.
Holders of mining license are:concessions must comply with three main conditions: payment of an annual fee, investment of a minimum amount of capital, and the carrying out of a reasonable level of exploitation. Failure to selldo so could lead to forfeiture of the license,mining concession, which would then revert back to lease such a license, or to assign the right under such a license by a beneficial interest or Usufruct Agreement. Province.
In the case of Cerro Vanguardia, — AngloGold Ashanti’s operation in Argentina, — the mining titleconcession holder is itsAngloGold Ashanti’s partner, Fomicruz, and in terms of the Usufruct Agreement signed between them and Cerro Vanguardia SA onFomento Minero de Santa Cruz S.A. (“Fomicruz”). On December 27, 1996, the latter has theFomicruz entered into a usufruct agreement whereby Cerro Vanguardia S.A. was granted an irrevocable right to exploit the exploitation of theCerro Vanguardia deposit for a 40-year period, of 40 years. This agreementwhich expires on December 27, 2036.
In Brazil, there are two basic mining rights:
Recent and potential regulatory changes
On September 30, 2010, the National Law on Minimum Requirements for the Protection of Glaciers was enacted in Argentina, banning new mining exploration and exploitation activities on glaciers and “peri-glacial” areas. The law also subjects the ongoing mining activities to an environmental audit. If such audit results in material impacts on glaciers and “peri-glacial” areas, the relevant authority is empowered to take action, including suspension or relocation of the activity. The law establishes a broad definition of “peri-glacial” areas that, together with glacial areas, must yet be surveyed by an existing national Government Agency specifically appointed to this end. The constitutionality of the law has been challenged by the Province of San Juan (which hosts large mining projects) resulting in the granting of injunctions that have suspended the application of the law in that Province. The National Supreme Court of Justice of Argentina presides over the case, which is in its early stages.
On October 26, 2011, Decree 1722/2011 (the “Repatriation Decree”) was issued, which imposes on oil, gas and mining companies operating in Argentina the obligation to repatriate all the proceeds of their exports from Argentina and to exchange such proceeds for Argentine legal currency in the domestic banking system. All exporters, other than oil, gas and mining companies, have been licensedoperating under such regime since late 2001. Mining companies, on the other hand, were entitled to two exceptions: (i) a decree of 2003 applicable to mining companies with tax, customs and foreign exchange stability certificates obtained prior to the date on which such a decree was enacted (which is the case of Cerro Vanguardia S.A.); and (ii) a decree of 2004 applicable to mining companies with tax, customs and foreign exchange stability certificates obtained after the date on which such decree was enacted. Both exceptions have not been formally superseded by the competent environmental authority.
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Ten provinces in whose territories the main mining projects of Argentina are located, signed a document with the Federal Government entitled Federal Mining Agreement, or FMA. The purpose of the FMA is, among other things, to increase provincial revenues from the mining industry by creating legal entities owned by provincial governments that would work in association with private mining companies. This scheme is not new in Argentina and it has been used by some provincial governments, among them Santa Cruz Province (through Fomicruz), in the Cerro Vanguardia project. The FMA also contemplates other forms of revenues such as the formation of special trusts to be funded by mining companies in order to finance education, health and other programs. Increase in royalty rates is not specifically contemplated in the FMA. The Provinces that signed the FMA had previously formed a special association of provinces, supported by the SecretaryNational Government.
In Argentina, the current regulatory regime of Minesroyalty payments is expected to change and several different options and payment thresholds have been discussed. However, no immediate change is anticipated.
Brazil
Land ownership and mining rights
General legal aspects
The Brazilian Constitution of 1934 states that, for purposes of exploration and exploitation, deposits and other mineral resources constitute property separate from the Ministrysoil and belong to the Federal Union. Exploration and exploitation of Minessuch mineral resources may take place only with the Federal Union’s authorization or concession and Energy) are validin such a way as to protect the national interest. Federal law sets out penal and administrative sanctions for an undetermined period untilconduct and activities deemed to be harmful to the depletion of reserves, provided that the mining title holder complies with current Brazilian mining and environmental legislation, as well as with those requirements set out byenvironment.
In Brazil, the National Department of Mineral Production (DNPM) which acts asis the inspecting entity for mining activities. ObligationsState body within the Mines and Energy Ministry (MME) that is responsible for: (i) the registration of the titleholder include:
Under the current Mining Code, there are two kinds of mines: (i) claimstake mines (“Minas Manifestadas”), for which rights were acquired before 1934 and exist independently of any mining license or authorization from the public administrationFederal Government, and (ii) granted mines, which are those that rely on grants from the Federal Government for mineral exploration or exploitation (pursuant to withdraw a mine manifest than a mining concession. Although, in practice, it is possible for a manifest to be cancelled or to become extinct if the abandonment of the mining operation is formally proven.Constitution). All of AngloGold Ashanti’s operations in Brazil are granted mines.
Mining activities in granted mines must be performed in two defined stages: (i) exploration, which entails defining and evaluating the deposit and determining the feasibility of exploitation, and (ii) exploitation, which involves coordinating operations aimed at the industrial exploitation of the mineral deposit, from the extraction of useful minerals to their processing. Exploration authorizations issued by DNPM are valid for one to three years. Extensions can be obtained if necessary. In contrast, exploitation rights, once granted, are valid for the lifetime of the deposit, provided the mining titleholder complies with all legal requirements. Pursuant to these requirements, for example, titleholders must (i) start work on mineral exploitation within six (6) months from the date of publication of the Exploitation Concession, (ii) continue their mining activities until the mineral deposit has been exhausted, in accordance with the Economic Exploitation Plan (Plano de Aproveitamento Econômico) approved by DNPM and (iii) refrain from suspending mining activities without prior notice to DNPM.
During the exploration period, the mining titleholder has to pay an Annual Rate per Hectare (TAH – Taxa Anual por Hectare), subject to a maximum value set by law. In the exploitation period, regardless of the legal regime governing the project (whether claimstake or granted mines), the mining titleholder has to pay the Financial Compensation for Exploiting Mineral Resources (CFEM – Compensação Financeira pela Exploração Mineral). The CFEM is currently calculated based on revenues, minus some deductions authorized by mining law.
At the end of 2011 and the beginning of 2012 the States of Minas Gerais, Pará and Amapá created a new tax (duty) on research, extraction and exploration activities as well as on the use of mineral resources carried out in those States. This tax could range from BRL3.00 to BRL6.50 per ton. In the State of Minas Gerais, however, gold ore was exempted from the collection of this new duty.
Potential regulatory changes
The Federal Government is contemplating changes to mining legislation. Its goals would be to (i) strengthen the role of the Federal Government in regulating the mining industry, (ii) attract more and better investments to the mineral sector, (iii) encourage maximal use of mineral reserves and (iv) encourage members of the industry to add value to mineral products.
The government’s proposals have indefiniteinstitutional, legal and financial facets. Institutionally, the proposals would create a National Council of Mineral Policy to advise the Presidency of Brazil and the MME on, and develop guidelines and directives for, the mining licenses.
On the legal front, the proposals would change the rules governing access to mining titles. While exploration authorizations would be effective for a longer period of five (5) years, they would be renewable for only one extra year, at the discretion of authorities. Companies would also have to demonstrate that they are investing in exploration activities on a yearly basis. Exploitation rights would be limited to 35- or 40-year grants renewable at the discretion of authorities. The granting of rights would become a more discretionary process and would result in a Formal Adhesion Contract for Exploitation rather than in an open-ended concession.
On the financial front, the proposals would raise CFEM rates for trade in gold ore from 1 percent on net invoicing to 2 percent on gross invoicing. They would also create new calculation methods and incidence hypotheses, notably with regard to transactions between related parties.
Colombia
COLOMBIALand ownership and mining rights
In Colombia, all mineral substances are the property of the State of Colombia. The underlying principle of Colombian mining legislation is first-in-time, first-in-right.
Mining activities are primarily regulated by the Mining Code, Act 685, 2001 and2001. Amendments to the Mining Code enacted in 2010 pursuant to Act 1382 2010.were found unconstitutional. The underlying principleConstitutional Court stayed its ruling for two years to give the government the opportunity to present a new law. The government is expected to make its new changes to the Mining Code public in the second half of Colombian mining legislation is: first in time, first in right.
The process starts with afiling of an exploration and exploitation proposal the presentation of which givestriggers a right of preference to obtain rights over the targeted area, provided it is available. The maximum extent of anSuch area covered by such a proposal iscannot exceed 10,000 hectares. OnceUpon receipt of a proposal, has been received, the relevant government agency undertakes an investigation to determinedetermines whether another proposal has been received regardingor contract already governs the area concerned or whether an existing contract forarea. If there are no pre-existing claims, the area is already in place. The government agency grants the applicant a “free zone” when the proposal made has a right of preference.
The concession contract
The government agency grants an exclusive concession contractcontracts for exploration and exploitation. Such a concession allows the concessionaireconcessions allow concessionaires to conduct the studies, works and installations necessary for establishingto establish the existence of minerals and to organize their exploitation. Upon being awarded a mining concession, a company must take out an insurance policy to cover any possible environmental damage as well as breaches of its mining obligations. It may then proceed with exploration activities. Once the exploration phase is complete, the concessionaire files a new plan regarding works and installations. An environmental impact study must also be filed and approved in order for the concessionaire to receive an environmental license prior to beginning construction and development.
The totalinitial term of such a concessionconcessions is 2030 years. Following an amendment, the extension of the concession contract for an additional 20-year period is no longer automatic. To receive thean extension, thea concessionaire must file a request the extension two years before the termination of the initial 20-year period,term, and must presentsubstantiate the application with economic, environmental and technical information. Because the extension is not automatic, the concessionaire must renegotiate the conditions of the extension.
AngloGold Ashanti’s core mining concession contracts at the La Colosa project provide that Ingeominas, the Colombian regulatory agency for mining activities, has been awarded, the discretion to declare the underlying concession void if AngloGold Ashanti Colombia S.A. (AGAC) breaches applicable environmental laws or regulations. If Ingeominas were to exercise such discretion against AGAC, AGAC would be required to abandon the La Colosa project and all of its other existing mining concession contracts. Pending proposals for new mining concession contracts would also be canceled and AGAC would be banned from doing business with the Colombian government for a period of five years. As a result, AGAC would be unable to conduct any mining exploration or development activities during such period. However, this would not affect other AngloGold Ashanti subsidiaries operating entity must take out an insurance policy to cover any possible environmental damage and its mining obligations.
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National parks;
Regional parks;
Protected forest reserves;
Paramus (included in Act 1382, introduced in 2010); and
Wetlands, pursuant to the Ramsar Convention.
Some forest reserves (these are not protected forest reserves‘protected’, but rather landare set aside for active forestry purposes), it is necessary to extract this area to start activitiespurposes. Such forest reserves must be ‘extracted’ after initial prospection, inmeaning that the exploration phase (ie. drilling). This extraction consists ofconcessionaire must obtain a specific permit to partially and temporarily change the use of the soil to permit suchbefore pursuing exploration activities.
Surface feeCannon fees and royalties
Cannon fees are due.
From 1 to 5 years: approximately $9.00 per hectare per year.
For years 6 and after, approximately $11.00 per hectare per year.
Once exploration is complete and the mining infrastructure is in place, the concessionaire must begin paying royalties. Royalties paid to the Colombian government is equivalent toconsist of a percentage of the exploited primary product the object of the mining title, and its sub-products.sub-products being exploited. For gold, the percentage of the royalty to be paid is 4 percent.
UNITED STATES OF AMERICAPotential regulatory changes
In 2012, the government is expected to modify the process for obtaining a mining concession. Instead of using a first-in-time, first-in-right approach in all cases, the government plans on subjecting some areas to a bidding process open to any qualified entity.
United States of America
Land ownership & mining rights
Mineral rights, as well asand surface rights in the USUnited States are owned by private parties, state governments or the federal government. MostAlthough not the case at Cripple Creek & Victor Gold Mining Company’s (CC&V) Cresson Project, the majority of land prospectiveutilized for precious metals exploration, development and mining in the western United States is owned by the federal government andgovernment. The right to mine on such land is obtained through a system of self-initiated location of mining claims pursuant togoverned by the General Mining Law of 1872, as amended. amended (General Mining Law). The General Mining Law allows mining claims on certain federal lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. Until 1993, unpatented mining claim holders could apply for patents to their claims from the federal government, and, if granted, those patented mining claims became private lands owned by the mining claimant, limited only by reservations and restrictions contained in the patent from the federal government, and subject to the same permitting, environmental and reclamation laws and regulations as other private lands.
Individual states, including Colorado, typically follow a leaseleasing system for state-owned minerals. Private parties have the right to sell, lease or enter into other agreements, such as joint ventures, with respect to minerals that they own or control. All mining activities, regardless of whether they are situated on privately- or publicly-owned lands, are regulated by a myriad of federal, state and local laws, regulations, rules and ordinances, which address various matters including environmental protection, mitigation and rehabilitation.
State permitting and reclamation
In addition to the permits required in connection with the laws and regulations described above, CC&V’s Cresson Project is subject to a number of state and local permitting requirements, including permitting requirements imposed by the Colorado Mined Land Reclamation Act (MLRA) and Teller County. Under the MLRA, the Colorado Mined Land Reclamation Board (MLRB) issues and enforces mining and rehabilitationreclamation permits for all non-coal mines in Colorado on state, federal or private lands. In carrying out the statutory requirements of the MLRA, the MLRB (i) reviews mine permit applications and amendments and related matters, (ii) inspects active mine sites and prospecting sites and (iii) ensures financial warranties are posted for the actual cost of reclamation.
CC&V’s Cresson Project is currently operating under a permit generally referred to as mine life extension one (MLE1) issued by the StateMLRB and Teller County. Among other things, MLE1 permits CC&V to continue active mining at the Cresson Project through 2016 and imposes reclamation requirements on CC&V, including requiring (i) the stabilization and re-vegetation of Colorado are life-of-mine permits.
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Potential regulatory changes
In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law. Among the significant features contained in previously proposed legislation were a production royalty obligation, new and more stringent environmental standards and conditions, additional reclamation requirements, extensive new procedural steps which would likely result in delays in permitting, and granting counties the ability to petition the Secretary of the Interior to make certain areas unavailable for the location of unpatented mining claims. The ultimate content of future proposed legislation, if enacted, is uncertain. If any of the above-referenced provisions were imposed, CC&V’s operations could be adversely affected. Although no such legislation has been adopted to date, there can be no assurance that such legislation will not be adopted in the future.
MINE SITE REHABILITATION AND CLOSURE
Closure, an integral part of operations
All mining operations eventually cease. An integral aspect of operating our mines is the on-going planning for closure planning, together with estimates of associated liability costs and the assurance of adequate financial provisions to cover these costs.
A group closure and rehabilitation management standard was completed in 2009 and all operations were required to comply with the standard by December 2011. The Continental Africa operations have been granted an extension to December 2012.
Closure planning is an activity that starts at the exploration and mine design stage and continues throughout the life of mine:
The evaluation of new projects takes into account closure and associated costs in a conceptual closure plan.
Our standard requires that an interim closure plan be prepared within three years of commissioning an operation, or earlier if required by legislation.
This plan is reviewed and updated every three years (annually in the final three years of a mine’s life) or whenever significant changes are made, and takes into account operational conditions, planning and legislative requirements, international protocols, technological developments and advances in practice.
For many of the older mines, closure planning and the evaluation of environmental liabilities is a complex process. This is particularly so in Brazil, Ghana and South Africa, where many of the long-life operations present environmental legacies that may have developed over a century or more.
A particular challenge is concurrent rehabilitation, which is carried out while a mine is still operational. This practice serves to decrease the current liability and reduces the final rehabilitation and closure work that must be undertaken, but has the potential to sterilize reserves, which the company conducts a focused worldwide exploration program.might wish to exploit should conditions, such as the gold price, change.
Our closure standard stipulates that closure planning must be undertaken in consultation with the community. In the course of these consultations, different issues are raised which require site-specific solutions. Livelihood preservation and infrastructure are often key requirements. Local people, who were previously employed at the mine, may receive education and training so as to seek viable employment alternatives. Communities also require information on rehabilitation of the landscape and on any lasting environmental impacts.
Our long-term remediation obligations include decommissioning and restoration liabilities relating to past operations, and are based on our environmental management plans and comply with current environmental and regulatory requirements.
Provisions for remediation costs are made when there is a present obligation, it is probable that expenditure on remediation work will be required and the cost can be estimated within a reasonable range of possible outcomes. These costs are based on facts currently available, technology expected to be available at the time of the clean-up, laws and regulations presently or virtually certain to be enacted, and previous experience in the remediation of contaminated sites.
Provision for restoration and decommissioning costs are made at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices and discounted at a pre-tax rate that reflects current market assessments of the time value of money. An assessment of closure liabilities is undertaken annually.
Discounted closure liabilities (excluding joint ventures) increased from $530 million in 2010 to $653 million in 2011. This change is largely attributable to a change in mine plans resulting in accelerated cash flows, change in economic assumptions and discount rates, change in design of tailings storage facilities and change in methodology following requests from the Ghana Environmental Protection Agency.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
In addition to post-mining land reclamation and closure requirements, AngloGold Ashanti is subject to extensive environmental, health and safety (EHS) laws and regulations in the various jurisdictions in which the company operates. These requirements govern, among other things, extraction, use, conservation and discharge of water; air emissions (including dust control); regulatory and community reporting; clean-up of contamination; worker health and safety and community health; and the generation, transportation, storage and disposal of solid and hazardous wastes, such as acids, radioactive materials, and mine tailings. In addition, environmental laws and regulations, including the requirements contained in environmental permits, are generally becoming more restrictive or more strictly enforced. Significant EHS requirements, risks and trends affecting our mining and processing operations are described below. For additional discussion of EHS performance on a mine-by-mine basis, see “Item 4B.: Business overview – Operating performance.”
Regulatory Compliance
Capital and operating costs to comply with EHS laws and regulations have been, and are expected to continue to be, significant to AngloGold Ashanti. AngloGold Ashanti could incur fines, penalties and other sanctions, clean-up costs, and third-party claims for personal injury or property damages; suffer reputational damages; and be required to install costly pollution control equipment or to modify or suspend operations, as a result of actual or alleged violations or liabilities under EHS laws and regulations. Failure to comply with applicable EHS laws and regulations may result in the suspension or revocation of permits. AngloGold Ashanti’s ability to obtain and maintain permits and to successfully operate in particular communities may be adversely impacted by real or perceived effects on the environment or human health and safety associated with AngloGold Ashanti’s or other mining companies’ activities.
AngloGold Ashanti is involved in two EHS-related legal proceedings in Colombia. See “Item 8A.: Financial information – Legal proceedings” for details.
Water Management
AngloGold Ashanti’s mining and processing operations are heavily dependent upon access to substantial volumes of water required for such operations. Typically, water-use permits or water rights in each country impose limits on the quantity of water that can be extracted from certain sources and require, among other things, that wastewater from mining operations meet certain water quality criteria upon discharge. Water quality and usage are areas of concern globally, but are particularly significant for operations in Ghana and South Africa, and for exploration projects in Colombia, where there is significant potential environmental and social impact and a high level of stakeholder scrutiny. Any failure to secure access to suitable water supplies, or achieve and maintain compliance with the requirements of the permits or licenses, could result in curtailment or suspension of production at the affected operation. Incidents of water pollution or shortage can, in extreme cases, lead to community protest and ultimately the withdrawal of community and government support for our operations.
Where feasible, we operate a “closed loop” system, recycling the water used in our operations without discharging it to the environment. In some areas, however, such as Ghana, high levels of rainfall and surface water runoff mean that a closed loop system is not feasible and that discharges, after water treatment, must take place. During 2011, we commissioned a reverse osmosis plant in the northern section of the Obuasi mine which functions in conjunction with complementary water treatment technologies to ensure that water released is compliant with Ghana’s water quality standards. At the southern section of the mine, additional equipment was commissioned in 2011 to increase the volume of water that can be recycled into the production process. At the Iduapriem mine, a plant extension was commissioned to ensure that the operation can release excess water while meeting effluent discharge standards.
Waste Management
Mining and mineral processing operations generate waste rock and tailings.
During open-pit mining, large volumes of soil and/or rock (overburden) are generated to expose the orebody. Similarly, waste rock is generated during drilling and developing access to underground ore bodies. Overburden and waste rock typically contain sub-economic levels of gold and are deposited as large waste rock dumps. Mine tailings are the process effluents generated once grinding and extraction of gold from the ore mined, by-productsis completed in the milling process and are deposited as slurry in large storage facilities specifically designed for this purpose.
The impact of a breach, leak or other failure of a tailings storage facility can be significant, and the company therefore monitors such facilities closely to ensure that their management is in accordance with national regulatory requirements and commitments made to local communities. The occasional well-publicized failure of a tailings facility and the potential impact of such failure also mean that these facilities are generally tightly regulated. An incident at our operations could result, among other things, in enforcement, obligations to remediate environmental contamination, and claims for property damage and personal injury. Even an incident at another company’s operations has potential to result in governments tightening regulatory requirements and restricting mining in response.
Groundwater Impacts and Environmental Remediation
AngloGold Ashanti has identified groundwater contamination plumes at certain of its operations. Numerous scientific, technical and legal studies have been undertaken to assist in determining the magnitude of the impact and to find sustainable remediation solutions. Based on those studies as well as discussion with regulators, the company has taken steps, including monitored natural attenuation and phyto-technologies, to reduce seepage and to address soil and groundwater contamination. Subject to the completion of trials and the technology being a proven remediation technique, no reliable estimate can be made for the obligation. Should these costs be significant, this could have a material adverse impact upon AngloGold Ashanti’s results of operations and its financial condition.
In addition, as AngloGold Ashanti has a long history of mining operations in certain regions, issues may arise regarding historical as well as potential future environmental impacts to those areas. For example, certain parties, including NGOs, community groups and institutional investors, have raised concerns about surface and groundwater quality, among other issues, in the area surrounding the company’s Obuasi and Iduapriem mines in Ghana, including potential impacts to local rivers and wells used for water from heavy metals, arsenic and cyanide as well as sediment and mine rock waste. Following temporary shutdowns at both mines in 2010, the company has made improvements in effluent quality management and constructed new tailings impoundments to reduce the risk of incidents that have the potential to degrade local water sources. AngloGold Ashanti is continuing to investigate allegations of impacts by the company’s operations on water quality in mining areas and to consider, as appropriate, potential additional responsive actions such as silver, uranium oxideremediation, engineering and sulfuric acid occuroperational changes at the Argentinean,mine sites and community outreach programs.
In addition, AngloGold Ashanti has identified a flooding and future pollution risk to deep groundwater in the Klerksdorp and Far West Rand goldfields in South Africa. AngloGold Ashanti’s Vaal River operations are part of the Klerksdorp goldfield and its West Wits operations are part of the Far West Rand goldfield. Various studies have been undertaken by AngloGold Ashanti since 1999 to better understand groundwater conditions in mined-out workings, including potential groundwater infiltration and acidification concerns. Due to the interconnected nature of underground mining operations in South Africa, any proposed solution needs to be a combined one supported by all the companies owning mines located in these goldfields. As a result, the South African Department of Mineral Resources and affected mining companies are now involved in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation. If material, obligations for this matter could have an adverse impact on AngloGold Ashanti’s financial condition.
Climate Change and Greenhouse Gas Regulation
Greenhouse gases, or GHGs, are emitted directly by AngloGold Ashanti’s operations, as well as by external utilities from which AngloGold Ashanti purchases power. Currently, a number of international and national measures to address or limit GHG emissions, including the Kyoto Protocol, the Copenhagen Accord and the Durban Platform, are in various phases of discussion or implementation in the countries in which the company operates. In particular, the Durban Platform extends the Kyoto Protocol for up to eight years and commits all parties to the UN climate convention to develop a global mitigation regime which could take effect in 2020, with the specific terms of that legally binding accord, including individual targets, to be finalized by 2015. These, or future, measures could require AngloGold Ashanti to reduce its direct GHG emissions or energy use or to incur significant costs for GHG emissions permits or taxes or have these costs or taxes passed on by electricity utilities which supply the company. AngloGold Ashanti also could incur significant costs associated with capital equipment, GHG monitoring and reporting and other obligations to comply with applicable requirements.
For example, the Australian government approved legislation that will implement a carbon trading scheme commencing in July 2012. Under the applicable requirements, approximately five hundred of Australia’s biggest emitters, including AngloGold Ashanti, will pay A$23 per tonne of carbon dioxide generated from July 2012. The charge will increase by 2.5 percent each year until 2015, when it will be set by the market under a trading scheme, similar to the existing Emissions Trading Scheme in the European Union.
In 2011, the South African government released a climate change response white paper. In February 2012, the South African Minister of Finance announced his intention to introduce a carbon tax in 2013, with a draft discussion paper setting out proposed details to be published in 2012. AngloGold Ashanti already pays a levy of ZAR0.025 per kilowatt hour of electricity that it purchases and that is generated from fossil fuels. The Minister of Finance also announced that this will increase to ZAR0.035 per kilowatt hour.
In 2010, Brazil launched sector-specific plans to meet a voluntary reduction target of 1.2 billion tonnes of CO2by 2020. Amongst other plans, it is intended to reduce de-forestation in the Cerrado biome, where AngloGold Ashanti operates, by 40 percent and expand renewable energy production and energy efficiency programs. The decree also provided for a Brazilian GHG trading scheme, which is yet to be designed. While Brazil is not yet formally regulating GHG emissions at the national level, some state environmental agencies have requested companies to voluntarily submit GHG emissions management plans.
In addition, potential physical risks to our operations as a result of climate change include changes in rainfall rates or reduced water availability, rising sea levels, higher temperatures and extreme weather events. Events or conditions such as flooding or inadequate water supplies could disrupt mining and transport operations, mineral processing and rehabilitation efforts, could create resource shortages and could damage the company’s property or equipment and increase health and safety risks on site. Such events or conditions could have other adverse effects on the company’s workforce and on the communities in the area around our mines, such as an increased risk of food insecurity, water scarcity and prevalence of disease.
Occupational Safety and Health and Tropical Diseases
AngloGold Ashanti’s operations are subject to a variety of laws and regulations designed to protect and improve the safety and health of employees. In some of the jurisdictions in which we operate, the government enforces compulsory shutdowns of operations to enable investigations into the cause of accidents at those operations. Certain of the company’s operations have been temporarily suspended for safety reasons in the past. In South Africa, in particular, so-called Section 54 safety stoppages have become a significant issue. In 2011, the State Inspector of Mines ordered the shutdown of entire mines in cases of relatively minor violations, which had a material impact on production at these mines. In particular, the Inspector issued Kopanang 11 Section 54 directives during the year. Each directive resulted in Kopanang suspending operations either fully or partially in order to comply with the inspector’s recommendations on safety. A working group comprising the inspectorate, the mining industry and organized labor has been formed to address the trend of increasing safety stoppages. AngloGold Ashanti is also in the process of implementing an enhanced safety program, including improved incident investigation and reporting systems, which could result in significant additional costs for the company.
In addition, AngloGold Ashanti is subject to health and safety regulations relating to occupational disease. The primary areas of focus in respect of occupational health of employees within the company’s operations are noise-induced hearing loss (NIHL) and occupational lung diseases (OLD), which include pulmonary tuberculosis (TB) from various causes and silicosis in individuals exposed to silica dust. This issue has been particularly prevalent in South Africa and has also arisen at the company’s Continental Africa and Brazilian operations, respectively.
The South African government, by way of a cabinet resolution in 1999, proposed a possible combination and alignment of benefits of the Occupational Diseases in Mines and Works Act (ODMWA) that provides for compensation to miners who have OLD, and the Compensation for Occupational Injuries and Diseases Act (COIDA), that provides for compensation of non-miners who have OLD. It appears less likely that the proposed combination of the two acts will occur in the short to medium term, but some alignment of benefits may be considered in the future. COIDA provides for compensation payments to workers suffering permanent disabilities from OLD, which are classified as pension liabilities if the permanent disability is above a certain threshold, or a lump sum compensation payment if the permanent disability is below a certain threshold. ODMWA only provides for a lump sum compensation payment to workers suffering from OLD as well as the payment of medical expenses over the claimant’s lifetime. If the proposed combination of COIDA and ODMWA were to occur, this could further increase the amount of statutory compensation that miners employed by AngloGold Ashanti could claim, which consequently safety remainedcould have an adverse effect on AngloGold Ashanti’s financial condition.
On November 23, 2010, the highest priorityChamber of Mines of South Africa applied to the North Gauteng High Court for a declaratory order as to whether or not the company.Compensation Commissioner may include in the levy to be paid by any specific mine under ODMWA any amount that is intended to be used for funding benefits payable to: (1) ex-mine workers who had never worked at that mine; or (2) ex-mine workers who used to work at the mine, but no longer work at the mine. On April 29, 2011, the Honorable Judge Zondo dismissed the Chamber’s application with costs. The judge concluded that the Compensation Commissioner has authority under ODMWA to address an historical or actuarial deficit in the Compensation Fund by increasing the levy payable by current mines and works to cover the shortfall in respect of all ex-mine workers. The Chamber is considering whether to appeal the judgment. Should the Chamber’s appeal be unsuccessful this could further increase the levy payable by AngloGold Ashanti to the ODMWA fund, which could have material adverse effect on its business, financial condition or results of operations.
In October 2006, Mr. Thembekile Mankayi instituted legal action against AngloGold Ashanti in the South Gauteng High Court, claiming approximately R2.6 million for damages allegedly suffered by him as a result of silicosis allegedly contracted while working on a mine of Vaal Reefs Mining and Exploration Company Limited (Vaal Reefs). Vaal Reefs was renamed AngloGold Limited in 1998 and AngloGold Ashanti Limited in 2004. On June 26, 2008, judgment was rendered in the company’s favor on the basis that mine employers are indemnified under ODMWA and COIDA against claims by employees against employers for damages relating to compensable diseases. Mr. Mankayi’s appeal to the Supreme Court of Appeal of South Africa was dismissed. On August 17, 2010, the Constitutional Court of South Africa heard Mr. Mankayi’s application for leave to appeal to the Constitutional Court. The Constitutional Court rendered its decision on March 3, 2011, granting the application for leave to appeal and then addressing the matter as a full appeal. The Constitutional Court rejected the lower court’s decision that Mr. Mankayi’s claim was precluded by statutory compensation, and granted leave to Mr. Mankayi’s executor, as the plaintiff was deceased prior to this judgment in the Constitutional Court, to proceed with his case in the High Court and seek a claim for damages under common law against AngloGold Ashanti. This will comprise, amongst other elements, providing evidence that Mr. Mankayi contracted silicosis as a result of negligent conduct on the part of AngloGold Ashanti or its predecessor. AngloGold Ashanti will continue to strivedefend this case on its merits.
As a result of the Constitutional Court decision permitting miners with OLD to improve its safety performance across its global asset basesue their current or former employers for damages outside the statutory compensation scheme, AngloGold Ashanti could be subject to numerous similar claims, including a potential class action or similar group claim. AngloGold Ashanti is studying the details of the Constitutional Court judgment and will defend any subsequent claims, if and when filed, on their merits. In view of the limited information currently available, no reliable estimate can be made for this focus continuedpotential liability at this time. Should AngloGold Ashanti be unsuccessful in 2010. The company’s approachdefending actions by any other individuals or groups that lodge similar claims in the future, such claims would have an adverse impact on AngloGold Ashanti’s financial condition which could potentially be material.
In light of the Constitutional Court judgment, AngloGold Ashanti is calling for the industry to managing riskengage with government (and other stakeholders) to seek an appropriate industry-wide solution. AngloGold Ashanti can provide no assurances that an industry-wide solution can be reached or that the terms thereof will not have a material adverse effect on AngloGold Ashanti’s financial condition.
In addition to OLD, AIDS and enabling employeesassociated diseases remain major health care challenges faced by AngloGold Ashanti’s South African operations. Workforce prevalence studies indicate that HIV prevalence rates among AngloGold Ashanti’s South African workforce may be as high as thirty percent. AngloGold Ashanti continues to work safely in a supportive work environment is based on adevelop and implement programs to help those infected with HIV and prevent new conversational culture, where many voices participate and make a meaningful contribution to designing the way in whichinfections from spreading. Since 2001, the company workshas offered a voluntary counseling and protects itself from both knownHIV testing program for employees in South Africa and, unexpected risks. The success ofsince 2003, has offered anti-retroviral therapy, or ART, to HIV positive employees who met the current medical criteria and who desire this approach depends on four key factors — leadership; engagements; systemstreatment.
Malaria and learning. For these factors to be effective, they need to occur in an enabling environment. The focus on safety transformation process is on moving the organization towards a culture of engagement and learning that stimulates awarenessother tropical diseases also pose significant health risks at all of the naturecompany’s operations in Central, West and East Africa where such diseases may assume epidemic proportions because of risk.
Such diseases impair the company reports that 15 employees lost their lives in work related accidents in 2010 (2009: 16 fatalities).health of workers and negatively affect productivity and profitability as a result of workers’ diminished focus or skill, absenteeism, treatment costs and allocated resources. AngloGold Ashanti remains focused on decreasingcannot guarantee that any current or future medical program will be successful in preventing or reducing the long-term trendinjury and illness rates amongst its employees or in affecting consequent morbidity or mortality rates. AngloGold Ashanti may incur significant costs in addressing this issue in the future, which could also adversely impact the company’s results of fatal accidents.operations and financial condition.
ANGLOGOLD ASHANTI GLOBAL OPERATIONS: 2011
OPERATING PERFORMANCE
Group description
AngloGold Ashanti’s operations are divided into four regions:
South Africa – operations in Vaal River and West Wits;
Continental Africa – operations in Ghana, Guinea, Mali, Namibia and Tanzania;
Australasia – operation in Australia; and
Americas – operations in Argentina, Brazil and the United States.
The above four regions also correspond to AngloGold Ashanti’s four business segments.
Performance
In 2011, AngloGold Ashanti produced 4.33 million ounces of gold (2010: 4.52 million ounces) as well as 1.38 million pounds of uranium, 2.96 million ounces of silver and 206.54 tonnes of sulfuric acid as by-products. In all, 61,242 people, including contractors, were employed.
Given the focus on optimizing operational performance and maintaining costs, AngloGold Ashanti continued to invest significantly in capital expenditure. Capital expenditure, including equity accounted joint ventures, for the yearin 2011 amounted to $1,527 million (2010: $1,015 million).
Safety
Regrettably, there were 15 fatalities across the group’s operations in 2011. The all injury frequency rate improved to 9.76 per million (2009: $1,027 million).
56hours worked compared to 11.50 in 2010 and 12.88 in 2009.
| Attributable tonnes | Attributable gold | Total cash costs | Attributable Capital Expenditure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| treated/milled (Mt) | Average grade recovered (g/t) | Production (000oz) | ($/oz) | ($m) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vaal River | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Great Noligwa | 0.7 | 0.9 | 1.4 | 5.99 | 5.73 | 7.33 | 132 | 158 | 330 | 894 | 791 | 458 | 24 | 24 | 26 | |||||||||||||||||||||||||||||||||||||||||||||
| Kopanang | 1.6 | 1.6 | 1.6 | 6.13 | 6.74 | 6.82 | 305 | 336 | 362 | 613 | 408 | 348 | 61 | 58 | 47 | |||||||||||||||||||||||||||||||||||||||||||||
| Moab Khotsong | 1.0 | 0.8 | 0.6 | 9.03 | 9.36 | 9.31 | 292 | 247 | 192 | 586 | 421 | 375 | 120 | 104 | 89 | |||||||||||||||||||||||||||||||||||||||||||||
| Tau Lekoa | 0.6 | 1.2 | 1.2 | 3.32 | 3.32 | 3.58 | 63 | 124 | 143 | 905 | 718 | 524 | 10 | 17 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
| Surface operations | 10.2 | 9.7 | 7.9 | 0.54 | 0.53 | 0.36 | 179 | 164 | 92 | 486 | 378 | 446 | 3 | 3 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mponeng | 1.7 | 1.9 | 1.9 | 9.48 | 8.66 | 10.02 | 532 | 520 | 600 | 452 | 331 | 248 | 122 | 109 | 86 | |||||||||||||||||||||||||||||||||||||||||||||
| Savuka | 0.1 | 0.2 | 0.3 | 5.30 | 5.45 | 6.28 | 22 | 30 | 66 | 1,136 | 1,133 | 424 | 9 | 13 | 11 | |||||||||||||||||||||||||||||||||||||||||||||
TauTona(1) | 1.1 | 1.5 | 1.6 | 7.01 | 7.29 | 8.66 | 259 | 218 | 314 | 699 | 532 | 373 | 75 | 57 | 60 | |||||||||||||||||||||||||||||||||||||||||||||
CONTINENTAL AFRICA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Iduapriem | 3.4 | 3.4 | 3.5 | 1.70 | 1.72 | 1.76 | 185 | 190 | 200 | 778 | 658 | 625 | 17 | 28 | 54 | |||||||||||||||||||||||||||||||||||||||||||||
Obuasi(1) | 2.6 | 4.6 | 5.6 | 5.16 | 5.18 | 4.37 | 317 | 381 | 357 | 760 | 630 | 636 | 109 | 94 | 112 | |||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests and exploration(6) | — | — | — | — | — | — | — | — | — | — | — | — | 1 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Siguiri (85 percent) | 8.8 | 8.8 | 8.6 | 0.97 | 1.11 | 1.20 | 273 | 316 | 333 | 656 | 513 | 468 | 10 | 22 | 18 | |||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests and exploration(6) | — | — | — | — | — | — | — | — | — | — | — | — | 2 | 4 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Morila (40 percent)(5) | 1.7 | 1.7 | 1.7 | 1.70 | 2.47 | 3.08 | 95 | 137 | 170 | 716 | 526 | 424 | 1 | 4 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Sadiola (41 percent)(4)(5) | 1.8 | 1.7 | 1.6 | 2.04 | 2.52 | 3.42 | 118 | 135 | 172 | 686 | 489 | 401 | 8 | 4 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
Yatela (40 percent)(3)(5) | 1.2 | 1.1 | 1.1 | 1.23 | 3.62 | 2.66 | 60 | 89 | 66 | 817 | 326 | 621 | 2 | 1 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Navachab | 1.5 | 1.3 | 1.5 | 1.8 | 1.58 | 1.43 | 86 | 65 | 68 | 721 | 677 | 559 | 14 | 20 | 12 | |||||||||||||||||||||||||||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Geita | 4.7 | 4.5 | 4.3 | 2.36 | 1.89 | 1.92 | 357 | 272 | 264 | 697 | 985 | 814 | 38 | 19 | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kibali (45 percent)(5) | — | — | — | — | — | — | — | — | — | — | — | — | 30 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | — | — | — | — | — | — | 2 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boddington (33.33 percent) | — | — | — | — | — | — | — | — | — | — | — | — | — | 146 | 419 | |||||||||||||||||||||||||||||||||||||||||||||
Sunrise Dam(2) | 3.6 | 3.9 | 3.8 | 3.22 | 2.87 | 3.46 | 396 | 401 | 433 | 692 | 631 | 559 | 29 | 31 | 19 | |||||||||||||||||||||||||||||||||||||||||||||
| Tropicana (70 percent) | — | — | — | — | — | — | — | — | — | — | — | — | 10 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Exploration and other | — | — | — | — | — | — | — | — | — | — | — | — | 1 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
AMERICAS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent) | 1.0 | 0.9 | 0.9 | 6.11 | 6.51 | 5.44 | 194 | 192 | 154 | 366 | 359 | 617 | 38 | 17 | 15 | |||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests and exploration(6) | — | — | — | — | — | — | — | — | — | — | — | — | 3 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AGA Mineraçáo(1) | 1.6 | 1.5 | 1.4 | 7.21 | 7.02 | 7.62 | 338 | 329 | 320 | 444 | 347 | 322 | 142 | 84 | 69 | |||||||||||||||||||||||||||||||||||||||||||||
| Serra Grande (50 percent) | 0.6 | 0.5 | 0.4 | 4.05 | 4.52 | 6.85 | 77 | 77 | 87 | 481 | 429 | 299 | 26 | 33 | 20 | |||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests and exploration(6) | — | — | — | — | — | — | — | — | — | — | — | — | 29 | 36 | 22 | |||||||||||||||||||||||||||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cripple Creek & Victor(3) | 20.6 | 18.7 | 22.1 | 0.43 | 0.46 | 0.49 | 233 | 218 | 258 | 500 | 371 | 310 | 73 | 87 | 27 | |||||||||||||||||||||||||||||||||||||||||||||
| Attributable tonnes treated/milled (Mt) | Average grade recovered (g/t) | Attributable gold Production (000oz) | Total cash costs ($/oz) | Attributable Capital Expenditure ($m) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vaal River | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Great Noligwa | 0.5 | 0.7 | 0.9 | 5.58 | 5.99 | 5.73 | 94 | 132 | 158 | 1,191 | 894 | 791 | 29 | 24 | 24 | |||||||||||||||||||||||||||||||||||||||||||||
Kopanang | 1.5 | 1.6 | 1.6 | 6.47 | 6.13 | 6.74 | 307 | 305 | 336 | 684 | 613 | 408 | 92 | 61 | 58 | |||||||||||||||||||||||||||||||||||||||||||||
Moab Khotsong | 0.9 | 1.0 | 0.8 | 9.39 | 9.03 | 9.36 | 266 | 292 | 247 | 688 | 586 | 421 | 147 | 120 | 104 | |||||||||||||||||||||||||||||||||||||||||||||
Tau Lekoa(1) | - | 0.6 | 1.2 | - | 3.32 | 3.32 | - | 63 | 124 | - | 905 | 718 | - | 10 | 17 | |||||||||||||||||||||||||||||||||||||||||||||
Surface operations | 10.7 | 10.2 | 9.7 | 0.48 | 0.54 | 0.53 | 164 | 179 | 164 | 665 | 486 | 378 | 5 | 3 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mponeng | 1.6 | 1.7 | 1.9 | 9.71 | 9.48 | 8.66 | 500 | 532 | 520 | 547 | 452 | 331 | 172 | 122 | 109 | |||||||||||||||||||||||||||||||||||||||||||||
Savuka | 0.2 | 0.1 | 0.2 | 6.69 | 5.30 | 5.45 | 49 | 22 | 30 | 857 | 1,136 | 1,133 | 8 | 9 | 13 | |||||||||||||||||||||||||||||||||||||||||||||
TauTona(2) | 1.0 | 1.1 | 1.5 | 7.55 | 7.01 | 7.29 | 244 | 259 | 218 | 816 | 699 | 532 | 79 | 75 | 57 | |||||||||||||||||||||||||||||||||||||||||||||
CONTINENTAL AFRICA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Iduapriem | 4.3 | 3.4 | 3.4 | 1.44 | 1.70 | 1.72 | 199 | 185 | 190 | 839 | 778 | 658 | 73 | 17 | 28 | |||||||||||||||||||||||||||||||||||||||||||||
Obuasi(2) | 2.0 | 2.6 | 4.6 | 4.82 | 5.16 | 5.18 | 313 | 317 | 381 | 859 | 760 | 630 | 132 | 109 | 94 | |||||||||||||||||||||||||||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Siguiri (85 percent) | 9.7 | 8.8 | 8.8 | 0.79 | 0.97 | 1.11 | 249 | 273 | 316 | 871 | 656 | 513 | 15 | 10 | 22 | |||||||||||||||||||||||||||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Morila (40 percent)(5) | 1.8 | 1.7 | 1.7 | 1.70 | 1.70 | 2.47 | 99 | 95 | 137 | 818 | 716 | 526 | 1 | 1 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Sadiola (41 percent)(4)(5) | 2.0 | 1.8 | 1.7 | 1.90 | 2.04 | 2.52 | 121 | 118 | 135 | 835 | 686 | 489 | 14 | 8 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
Yatela (40 percent)(3)(5) | 1.1 | 1.2 | 1.1 | 1.04 | 1.23 | 3.62 | 29 | 60 | 89 | 1,483 | 817 | 326 | 1 | 2 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Namibia | . | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Navachab | 1.4 | 1.5 | 1.3 | 1.46 | 1.80 | 1.58 | 66 | 86 | 65 | 939 | 721 | 677 | 48 | 14 | 20 | |||||||||||||||||||||||||||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geita | 3.9 | 4.7 | 4.5 | 3.98 | 2.36 | 1.89 | 494 | 357 | 272 | 488 | 697 | 985 | 58 | 38 | 19 | |||||||||||||||||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boddington (33.33 percent) | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 146 | |||||||||||||||||||||||||||||||||||||||||||||
Sunrise Dam | 3.6 | 3.6 | 3.9 | 2.16 | 3.22 | 2.87 | 246 | 396 | 401 | 1,362 | 692 | 631 | 27 | 29 | 31 | |||||||||||||||||||||||||||||||||||||||||||||
AMERICAS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent) | 1.0 | 1.0 | 0.9 | 6.23 | 6.11 | 6.51 | 196 | 194 | 192 | 403 | 366 | 359 | 73 | 38 | 17 | |||||||||||||||||||||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AGA Mineração(2) | 1.7 | 1.6 | 1.5 | 7.43 | 7.21 | 7.02 | 361 | 338 | 329 | 571 | 444 | 347 | 259 | 142 | 84 | |||||||||||||||||||||||||||||||||||||||||||||
Serra Grande (50 percent) | 0.6 | 0.6 | 0.5 | 3.59 | 4.05 | 4.52 | 67 | 77 | 77 | 851 | 481 | 429 | 22 | 26 | 33 | |||||||||||||||||||||||||||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cripple Creek & Victor(3) | 20.3 | 20.6 | 18.7 | 0.39 | 0.43 | 0.46 | 267 | 233 | 218 | 569 | 500 | 371 | 67 | 73 | 87 | |||||||||||||||||||||||||||||||||||||||||||||
| (1) | Sold effective August 1, 2010. |
| (2) | The yields of TauTona, Obuasi and, AGA Mineraç |
| (3) | The yields of Yatela and Cripple Creek & Victor reflect recoverable gold placed/tonnes placed from heap leach operations. |
| (4) | Prior to December 29, 2009 AngloGold Ashanti’s shareholding in Sadiola was 38 percent; |
| (5) | Equity-accounted | |
57
AngloGold Ashanti’s South African operations comprise six deep-level mines and onea surface operation. They are:
The Vaal River operations —– Great Noligwa, Kopanang, Moab Khotsong and the surface sources operations. The fourth deep-level mine in this region, Tau Lekoa, was sold during the course of the year;operation; and
The West Wits operations —– Mponeng, Savuka and TauTona.
Performance
These operations produced 1.62 million ounces of gold in 2011, or 37 percent of group production, (Vaal River operations, 51 percent and West Wits operations, 49 percent) and 1.38 million pounds of uranium as a by-product. The South African operations employed an average of 32,082 people in 2011.
Total capital expenditure in South Africa in 20102011 was $549 million (2010: $430 million). The bulk of this was spent at Mponeng $172 million, (2009: $395 million).
In 2011, all South African mines felt the impact of Section 54 safety stoppages imposed by the state mines inspector, as well as power-price increases, the industry-wide wage strike and resultant payroll increase, and increases in the price of steel, oil and fuel.
Geology:
The Witwatersrand Basin comprises a six-kilometer thick sequence of inter-bedded argillaceous and arenaceous sediments that extend laterally for some 300 kilometers north-east/south-west and 100 kilometers north-west/south-east on the Kaapvaal Craton. The upper portion of the basin, which contains the orebodies, crops out at its northern extent near Johannesburg. Further west, south and east the basin is overlain by up to four kilometers of Archaean, Proterozoic and Mesozoic volcanic and sedimentary rocks. The Witwatersrand Basin is late Archaean in age and is considered to be in the order of 2.7 to 2.8 billion years old.
Gold occurs in laterally extensive quartz pebble conglomerate horizons or reefs, generally less than two meters thick, andwhich are widely considered to represent laterally extensive braided fluvial deposits. Separate fan systems were developed at different entry points and these are preserved as distinct goldfields. There is still much debate about the origin of the gold mineralization in the Witwatersrand Basin. Gold was generally considered to have been deposited syngenetically with the conglomerates, but increasingly an epigenetic origin theory is being supported. Nonetheless, theThe most fundamental control to the gold distribution in the Basin remains the sedimentary features, such as facies variations and channel directions. Gold generally occurs in native form often associated with pyrite and carbon, with quartz being the main gangue mineral.
58
Safety
Regrettably, there were nine fatalities during the year. The all injury frequency rate (AIFR) improved to 15.56 per million hours worked in 2011 from 16.69 in 2010.
The South African operations’ ‘three-pillar’ strategy focuses on removing people from areas of risk, modifying behaviour and attitudes to risk and improving planning. Teams of employees have attended the Simunye training process. The introduction of the Safety Management Program is expected to assist in further improving safety through its requirements to ensure regular inspections, behavior observations, group meetings and frequent workplace risk assessments. Simunye translates as “we are ONE”, indicating its relation to Project ONE and the desired training outcome of safe and productive teams who are united in a common purpose.
Growth and improvement
Socio-economic development is an essential aspect of the South Africa region’s business strategy, both from the perspective of compliance to ensure the retention of mining licenses and because a downward trend in the region’s gold production profile, together with a strategy of removing employees from high-risk areas, will inevitably lead to significant reductions in the labor force over the medium term.
Following extensive stakeholder engagement, the region has designed a framework to integrate community development into core business activities, while providing support for national and international development policies and objectives, particularly those addressing youth unemployment.
South African Revised Mining Charter
The management teams of the South African operations have held and will continue to hold regular meetings with labor unions to track progress towards reaching the employment equity target of 40 percent of management roles held by historically disadvantaged South Africans.
Vaal River operations
Description:
The Vaal River operations consist of Great Noligwa, adjoins Kopanang, and Moab Khotsong and is located close to the town of Orkney near the Vaal River. The Vaal Reef, the primary reef, and the Crystalkop Reef, a secondary reef, are mined here.
Geology
In order of importance, the reefs mined at the Vaal River operations are the Vaal Reef, the VCR and the “C” Reef:
The Vaal Reef contains approximately 85 percent of the reserve tonnage with mining grades between 10 and 20g/t and comprises a series of oligomictic conglomerates and quartzite packages developed on successive unconformities. Several distinct facies have been identified, each with its unique gold distribution and grade characteristic.
The VCR has a lower grade than the Vaal Reef, and contains approximately 15 percent of the estimated reserves. The economic portion is mainly concentrated in the western part of the lease area and can take the form of a massive conglomerate, a pyritic sand unit with intermittent pebble layers or a thin conglomerate horizon. The reef is located at the contact between the overlying Kliprivierberg Lavas of the Ventersdorp SuperGroup and the underlying sediments of the Witwatersrand SuperGroup which creates a distinctive seismic reflector. The VCR is located up to one kilometer above the Vaal Reef.
The “C” Reef is a thin, small pebble conglomerate with a carbon-rich basal contact, located approximately 270 meters above the Vaal Reef. It has less than 1 percent of the estimated reserves with grades similar to the Vaal Reef, but more erratic. The most significant structural features are the north-east striking normal faults which dip to the north-west and south-east, resulting in zones of fault loss.
Vaal River —– Summary of metallurgical operations
| East Gold | ||||||||||||||||||||
| West Gold | Acid and | Noligwa | Mispah Gold | Kopanang | ||||||||||||||||
| Plant | Float Plant | Gold Plant | Plant | Gold Plant | ||||||||||||||||
Gold plants | ||||||||||||||||||||
| Capacity (000 tonnes/month) | 180 | 309 | 263 | 140 | 420 | |||||||||||||||
Uranium plants | ||||||||||||||||||||
| Capacity (000 tonnes/month) | — | — | 263 | — | — | |||||||||||||||
Pyrite flotation plants | ||||||||||||||||||||
| Capacity (000 tonnes/month) | — | 250 | 145 | — | — | |||||||||||||||
Sulfuric acid plants | ||||||||||||||||||||
| Production (tonnes/month) | — | 7,500 | — | — | — | |||||||||||||||
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| West Gold Plant | East Gold Acid and Float Plant | Noligwa Gold Plant | Mispah Gold Plant | Kopanang Gold Plant | ||||||||||||||||
Gold plants | ||||||||||||||||||||
Capacity (000 tonnes/month) | 180 | 309 | 210 | 140 | 420 | |||||||||||||||
Uranium plants | ||||||||||||||||||||
Capacity (000 tonnes/month) | – | – | 210 | – | – | |||||||||||||||
Pyrite flotation plants | ||||||||||||||||||||
Capacity (000 tonnes/month) | – | 250 | 145 | – | – | |||||||||||||||
Sulfuric acid plants | ||||||||||||||||||||
Production (tonnes/month) | – | 7,500 | – | – | – | |||||||||||||||
| Vaal River | ||||||||||||||||||||
| Moab | and West | |||||||||||||||||||
| Great Noligwa | Kopanang | Khotsong | Tau Lekoa(3) | Wits surface | ||||||||||||||||
2010 | ||||||||||||||||||||
| Pay limit (oz/t) | 0.36 | 0.41 | 0.49 | 0.01 | ||||||||||||||||
| Pay limit (g/t) | 11.69 | 13.08 | 15.87 | 0.29 | ||||||||||||||||
| Recovered grade (oz/t) | 0.175 | 0.179 | 0.263 | 0.016 | ||||||||||||||||
| Recovered grade (g/t) | 5.99 | 6.13 | 9.03 | 3.32 | 0.54 | |||||||||||||||
| Gold production (000 oz) | 132 | 305 | 292 | 63 | 179 | |||||||||||||||
Total cash costs ($/oz)(1) | 894 | 613 | 586 | 905 | 486 | |||||||||||||||
Total production costs ($/oz)(1) | 1,152 | 879 | 997 | 937 | 520 | |||||||||||||||
| Capital expenditure ($ million) | 24 | 61 | 120 | 10 | 3 | |||||||||||||||
Employees(2) | 3,225 | 5,484 | 4,651 | 374 | ||||||||||||||||
Outside contractors(2) | 90 | 454 | 1,801 | — | ||||||||||||||||
| All injury frequency rate | 21.63 | 21.86 | 19.72 | 5.99 | ||||||||||||||||
2009 | ||||||||||||||||||||
| Pay limit (oz/t) | 0.43 | 0.40 | 0.60 | 0.21 | 0.007 | |||||||||||||||
| Pay limit (g/t) | 14.90 | 13.85 | 20.57 | 7.27 | 0.225 | |||||||||||||||
| Recovered grade (oz/t) | 0.167 | 0.197 | 0.273 | 0.097 | 0.015 | |||||||||||||||
| Recovered grade (g/t) | 5.73 | 6.74 | 9.36 | 3.32 | 0.53 | |||||||||||||||
| Gold production (000 oz) | 158 | 336 | 247 | 124 | 164 | |||||||||||||||
Total cash costs ($/oz)(1) | 791 | 408 | 421 | 718 | 378 | |||||||||||||||
Total production costs ($/oz)(1) | 994 | 598 | 749 | 766 | 390 | |||||||||||||||
| Capital expenditure ($ million) | 24 | 58 | 104 | 17 | 3 | |||||||||||||||
Employees(2) | 4,612 | 5,612 | 4,334 | 2,700 | 228 | |||||||||||||||
Outside contractors(2) | 127 | 447 | 1,735 | 414 | 6 | |||||||||||||||
| All injury frequency rate | 17.51 | 22.71 | 28.82 | 26.39 | 9.10 | |||||||||||||||
2008 | ||||||||||||||||||||
| Pay limit (oz/t) | 0.29 | 0.32 | 0.69 | 0.17 | 0.007 | |||||||||||||||
| Pay limit (g/t) | 10.07 | 11.07 | 23.51 | 5.70 | 0.206 | |||||||||||||||
| Recovered grade (oz/t) | 0.214 | 0.199 | 0.271 | 0.104 | 0.011 | |||||||||||||||
| Recovered grade (g/t) | 7.33 | 6.82 | 9.31 | 3.58 | 0.36 | |||||||||||||||
| Gold production (000 oz) | 330 | 362 | 192 | 143 | 92 | |||||||||||||||
Total cash costs ($/oz)(1) | 458 | 348 | 375 | 524 | 446 | |||||||||||||||
Total production costs ($/oz)(1) | 564 | 500 | 641 | 720 | 478 | |||||||||||||||
| Capital expenditure ($ million) | 26 | 47 | 89 | 18 | 1 | |||||||||||||||
Employees(2) | 5,472 | 5,620 | 2,914 | 2,650 | 227 | |||||||||||||||
Outside contractors(2) | 271 | 411 | 1,823 | 384 | 7 | |||||||||||||||
| All injury frequency rate | 28.54 | 25.29 | 38.24 | 33.92 | 11.80 | |||||||||||||||
| Great Noligwa | Kopanang | Moab Khotsong | Tau Lekoa(3) | Vaal River and West Wits surface | ||||||||||||||||
2011 | ||||||||||||||||||||
Pay limit (oz/t) | 0.58 | 0.48 | 0.57 | 0.01 | ||||||||||||||||
Pay limit (g/t) | 13.14 | 10.93 | 12.84 | 0.21 | ||||||||||||||||
Recovered grade (oz/t) | 0.163 | 0.189 | 0.274 | 0.014 | ||||||||||||||||
Recovered grade (g/t) | 5.58 | 6.47 | 9.39 | 0.48 | ||||||||||||||||
Gold production (000 oz) | 94 | 307 | 266 | 164 | ||||||||||||||||
Total cash costs ($/oz)(1) | 1,191 | 684 | 688 | 665 | ||||||||||||||||
Total production costs ($/oz)(1) | 1,447 | 951 | 1,071 | 689 | ||||||||||||||||
Capital expenditure ($ million) | 29 | 92 | 147 | 5 | ||||||||||||||||
Employees(2) | 2,884 | 5,468 | 4,618 | 745 | ||||||||||||||||
Outside contractors(2) | 83 | 424 | 1,963 | - | ||||||||||||||||
All injury frequency rate | 23.92 | 23.18 | 20.48 | 21.32 | ||||||||||||||||
2010 | ||||||||||||||||||||
Pay limit (oz/t) | 0.36 | 0.41 | 0.49 | 0.01 | ||||||||||||||||
Pay limit (g/t) | 11.69 | 13.08 | 15.87 | 0.29 | ||||||||||||||||
Recovered grade (oz/t) | 0.175 | 0.179 | 0.263 | 0.016 | ||||||||||||||||
Recovered grade (g/t) | 5.99 | 6.13 | 9.03 | 3.32 | 0.54 | |||||||||||||||
Gold production (000 oz) | 132 | 305 | 292 | 63 | 179 | |||||||||||||||
Total cash costs ($/oz)(1) | 894 | 613 | 586 | 905 | 486 | |||||||||||||||
Total production costs ($/oz)(1) | 1,152 | 879 | 997 | 937 | 520 | |||||||||||||||
Capital expenditure ($ million) | 24 | 61 | 120 | 10 | 3 | |||||||||||||||
Employees(2) | 3,225 | 5,484 | 4,651 | 374 | ||||||||||||||||
Outside contractors(2) | 90 | 454 | 1,801 | – | ||||||||||||||||
All injury frequency rate | 21.63 | 21.86 | 19.72 | 5.99 | ||||||||||||||||
2009 | ||||||||||||||||||||
Pay limit (oz/t) | 0.43 | 0.40 | 0.60 | 0.21 | 0.007 | |||||||||||||||
Pay limit (g/t) | 14.90 | 13.85 | 20.57 | 7.27 | 0.225 | |||||||||||||||
Recovered grade (oz/t) | 0.167 | 0.197 | 0.273 | 0.097 | 0.015 | |||||||||||||||
Recovered grade (g/t) | 5.73 | 6.74 | 9.36 | 3.32 | 0.53 | |||||||||||||||
Gold production (000 oz) | 158 | 336 | 247 | 124 | 164 | |||||||||||||||
Total cash costs ($/oz)(1) | 791 | 408 | 421 | 718 | 378 | |||||||||||||||
Total production costs ($/oz)(1) | 994 | 598 | 749 | 766 | 390 | |||||||||||||||
Capital expenditure ($ million) | 24 | 58 | 104 | 17 | 3 | |||||||||||||||
Employees(2) | 4,612 | 5,612 | 4,334 | 2,700 | 228 | |||||||||||||||
Outside contractors(2) | 127 | 447 | 1,735 | 414 | 6 | |||||||||||||||
All injury frequency rate | 17.51 | 22.71 | 28.82 | 26.39 | 9.10 | |||||||||||||||
Key statistics —– Surface sources —- Uranium
| 2010 | 2009 | 2008 | ||||||||||
| Pay limit (lb/t) | 0.316 | 0.362 | 0.331 | |||||||||
| Pay limit (g/t) | 0.143 | 0.164 | 0.150 | |||||||||
| Recovered grade (lb/t) | 0.622 | 0.584 | 0.508 | |||||||||
| Recovered grade (g/t) | 0.282 | 0.265 | 0.231 | |||||||||
| Uranium production (000lbs) | 1,462 | 1,442 | 1,283 | |||||||||
| Capital expenditure ($ million) | 12 | 5 | 6 | |||||||||
Employees(2) | 185 | 194 | 193 | |||||||||
Contractors(2) | 28 | 27 | 36 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
Pay limit (lb/t) | 0.368 | 0.316 | 0.362 | |||||||||||||
Pay limit (g/t) | 0.167 | 0.143 | 0.164 | |||||||||||||
Recovered grade (lb/t) | 0.635 | 0.622 | 0.584 | |||||||||||||
Recovered grade (g/t) | 0.288 | 0.282 | 0.265 | |||||||||||||
Uranium production (000lbs) | 1,380 | 1,462 | 1,442 | |||||||||||||
Capital expenditure ($ million) | 29 | 12 | 5 | |||||||||||||
Employees(2) | 172 | 185 | 194 | |||||||||||||
Contractors(2) | 27 | 28 | 27 | |||||||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
| (3) | Tau Lekoa was sold effective August 1, 2010. |
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Description
Great Noligwa is a mature operation which adjoins Kopanang and Moab Khotsong and is located close to the town of Orkney, near the Vaal River. The Vaal Reef, the operation’s primary reef, and the Crystalkop Reef, a secondary reef, are mined here. This mining operation consists offrom a twin-shaft system and operates over eight main levels at an average depth of 2,400 meters below surface.
The mine shares a milling and treatment circuit with Moab Khotsong and Kopanang, which applies conventional crushing, screening, SAG grinding and carbon-in-leach (CIL) processes to treat the ore and extract gold.
Performance
Great Noligwa produced 94,000 ounces at a total cash cost of $1,191 per ounce in 2011, compared with 132,000 ounces from 158,000 ounces in 2009. This was largely asat a resulttotal cash cost of the redesign of the mine plan and layout, and a shift in operational focus to pillar extraction. This redesign resulted in a reduction in the extent of underground resources and in lower volumes being mined. Consequently, tonnages milled fell by 20 percent and reef development by 85 percent. The latter was also affected by the complex geological structures encountered. Yield rose by 5 percent with the mining of higher grade areas and an increase in gold produced from vamping operations.
The mine faced a challenging year duein 2011, with a combination of factors curtailing production and pushing costs higher. These included a lack of mineable face length caused by the intersection of unexpected geological features, followed by difficulties encountered in quickly re-establishing and equipping pillars. Ore-pass blockages caused by poor ground conditions further limited output.
An 81 percent improvement in contribution from uranium by-product output helped mitigate some of those headwinds, following an increase in the price for the nuclear fuel and opportunistic sales to take advantage of the higher prices.
Growth and improvement
Great Noligwa is a mature mine with little opportunity to significantly increase the production base. Growth initiatives in 2012 will consist mainly of vamping operations in old working areas and extraction of higher-grade pillars. The mine’s Crystalkop reef will be used to test technology which, if successful, may be used on other group mines. In the meantime, the rollout of Project ONE at the mine redesign, inflationary pressure on labor, poweraims to improve overall operating efficiencies by improving the capability and stores, royalty payments which came into effect on March 1,accountability of all crews and management, and enhancing planning and scheduling activities.
A high-grade block of ore, named Fish, within a large fault loss area, was initially identified in 2006. Access required extensive opening up, rehabilitation and re-equipping of old haulages in order to start development. Subsequent to initiation of access procedure, a seismic event caused extensive damage. The area was modelled from a rock engineering point of view during 2010 and a stronger currency.
Although reef meters improved from 2010 levels, improved flexibility is only expected to be realized in 12 to 18 months. Being a pillar mine, flexibility is partially created by development and partially by re-establishment of $24 million in 2010 was unchanged from 2009.
Pillar mining introduces a constraint on the mine achieving 1 millioncall factor mainly due to multiple ore handling stages before the product is delivered to the plant, as well as the effect of dilution in negotiating geological structures. Recovered grade remains fairly constant and is only disrupted by unforeseen anomalies, if and when they occur.
Safety
Tragically, one fatality was recorded in January 2011 during scraper winch operations.
The mine recorded 500,000 fatality-free shifts on November 5, 2010.during September 2011. The mine also achieved 269 white flag days, signifying the number of full days without a lost-time injury being reported on site.
61previous year.
Vaal River – Kopanang
Description
Kopanang almost exclusively exploits the Vaal Reef, the primary reef mined, is exploited at depths of between 1,300 meters and 2,600 meters below surface. Minoralthough minor amounts of gold are also extracted from the secondary Crystalkop Reef, located about 250 meters above the Vaal Reef.
Performance
Kopanang produced 307,000 ounces at a total cash cost of the reef and stoped on strike.
Progress was made in reducing the number of mine-wide safety stoppages through a resultforum comprising government, labor and management. During 2011, 20 shifts were lost compared with 29 in 2010. In addition, a combination of pipe failures underground, engineering work required to rehabilitate a portion of the stronger currency, lower production, lower grades, inflationary pressures on labor, power and stores, and royalty payments which came into effect on March 1, 2010.
Despite these challenges, the cost increase was contained at 12 percent with the help of an improved by-product contribution and a 6 percent increase in reef yield. The latter resulted from the operation’s improved efficiency rate, or mine-call factor, less reef dilution from tonnages treated atand higher mining grades compared with 2010. Geological drilling targets were achieved, which improved confidence in planning for face length and reef meters. Reserve availability also increased, improving the waste washing plant. A waste washing plant to reduce dust by washing the fines from waste rock was commissioned. Additional labor was recruited during the second quarter to make up production lost owing to safety-related stoppages during the first halfflexibility of the year. While these stoppagesoperation. Overall productivity improved 3 percent from 2010, despite the skills shortage. Additional apprentices were employed and training increased in order to obviate this scarcity.
Growth and improvement
Production at Kopanang is expected to remain stable. In addition there is continued focus on improving mine-call factor, which rose by two percentage points in the second half2011. This measure of the year, this initiative contributed 19,300 ounces towards the year’s total production.
Additional production crews will be used to sustain production targets when Simunye training continues. Pillar crews are expected to be in place by mid-year.
Life extension projects identified in 2010 were De Pont Landing and Altona, Gencor 1 East extension, Crystalkop Reef (C-Reef) Below 68 level,2011 include the Shaft Fault area, pillars and pillars.potential resources above 42 level, offlease opportunities and the Ventersdorp Contact Reef (VCR). Additional information will be obtained from ongoing exploration to generate Mineral Resources for conversionconvert resources to Ore Reserves. The mother hole drilled at the Gencor 1E area hadreserve. Reef was intersected the reef which will be sampled during 2011. Two more long inclined boreholes are planned from the same site for 2011.
The Shaft Fault drilling which added to the Mineral Resource during 2010, remains a very prospective target area for new Mineral Resource ounces and exploration here will continue during 2011.
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Six strategic thrusts – consistent daily blast, improving the quality of mining and the mine-call factor, meeting business expectations and life-of-mine extension, re-design of western mining front, and adoption of off-the-shelf technology to achieve productivity – have been identified to achieve targets and reduce unit costs.
Energy efficiency is expected to be addressed with the introduction of the cooling auxiliary project to reduce electricity usage by the refrigeration plants. This project also involves the implementation of compressed air valves to control pressure at the stations and to minimize power consumption during offpeak periods. In addition, water jets will be modified to reduce the pumping load, and thus energy demand.
Safety
Tragically, four fatalities occurred at the mine during the year. The first occurred in August when a tripartite forumrescue triage member was inundated by super-fine ore during silo maintenance. In October, a stope team leader was fatally injured in an accident during waterjet cleaning operations and in December a winch operator and an acting team leader were fatally injured in two separate fall of ground incidents. Specific new strategies for operating waterjets and for cleaning ore boxes and silos for maintenance purposes have been employed. Strategic plans to discuss topical issuesprevent falls of ground were also revised and rolled out. These accidents followed Kopanang’s achievement of more than 1 million fatality free shifts and more than a year without a fatality related to mining operations in North West Province.
Kopanang maintained its OHSAS 18001 and safety representatives, as well as unions and association representatives, meet with the state mine inspectors to discuss topical issues including regional health and safety statistics, focus areas and legislation trends.
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Description
Moab Khotsong is theAGA’s newest deep-level gold mine in South Africa. It is situated near Orkney, Klerksdorp and Viljoenskroon, about 180 kilometers southwest of Johannesburg.
The Zaaiplaats orebody in the Moab Khotsong continuedlease area presents a significant growth opportunity and capital has been allocated to ramp-upsupport its output. Production increased by 18 percent todevelopment in phases.
Performance
Moab Khotsong produced 266,000 ounces at a total cash cost of $688 per ounce in 2011, compared with 292,000 ounces in 2010, compared to 247,000 ouncesat a total cash cost of $586 per ounce the previous year. The operation is scheduled to reach full annual9 percent decline in production of 368,000 ounces in 2013.
Notwithstanding a difficult operating environment, the mine achieved a strong development performance which helped create more face length than that depleted and, as a result, maintain flexibility in terms of the area to mine in future years. Ore Reserve development and long-inclined borehole drilling (LIB) proceeded according to plan in 2011.
In order to obtain critical information on a timely basis, a comprehensive risk-drilling program was revised to include macro drilling up to three cross-cuts ahead of the current development ends, thus improving grade prediction and development planning. This allowed more proactive mine design and the opening up of reef, while the development of new raises provided additional grade information. Ore Reserve development and LIB drilling proceeded according to plan in 2010. The active drilling program employs a minimum of five LIB drilling and ten hydraulic drilling machines to ameliorate the risk of intersecting dip features within the 12-month mining plan. There was also a focus on critical-path scheduling
Moab Khotsong improved overall efficiency, evidenced in the improvement of its mine-call factor by two percentage points to 84.2 percent.
Growth and increased development to open up Ore Reserves and create flexibility.
The Simunye training component of Project ONE was launched October 27, 2010commenced midway through 2011 and will continue in 2012, with the aim of improving productivity rates. The continued ramp-up of Project ONE, and specifically its work management component, are expected to assist in mitigating cost inflation at Moab Khotsong.
The initialkey focus areas identified for Project ONE are the area mined in square meters, Ore Reserve development, reef development, tonnes hoisted and grade.
Project Zaaiplaats is designed to extend the operation’s life by exploiting the Zaaiplaats block southwest of Moab Khotsong included the exploitation of adjacent ore blocks, including Zaaiplaats to the southwest and some 400 meters deeper than the existing mine. The first phase of Moab Khotsong’s business plan, excluding growth projects, sees thecurrent mine, producing 3unlocking 5.4 million ounces of gold overgold. Phase 1, which was approved in August 2010, is currently underway. It will establish the lifeinfrastructure required for phase 2 which in turn will create a drilling platform to further increase the geological (structural) confidence of mine. a bigger portion of the Zaaiplaats orebody, while delivering first production from the project to bridge the gap between current mining activities and access to the main portion of the Zaaiplaats orebody.
Phase 1 is expected to conclude in 2012 with the establishment of the infrastructure to continue with phase 2. Phase 2 will follow with development of the eastern access. Redesign and supplementary studies will continue along the way, with changes incorporated from drilling information and practical experience of the use of trackless equipment. During phase 3, scheduled for 2014, full approval of the remaining phase of the Zaaiplaats project will be sought.
Phase 1 is currently in the implementation stage and access development has been completed ahead of schedule.
Construction of two 800 tonne ore-storage silos is in process and is expected to be completed in 2012. This crucial component of phase 1 will increase rock-handling capacity on 101 and 102 levels in anticipation of phase 2 and phase 3.
The Zaaiplaats project provides an additional 5 million ounces (164 tonnes) and a life extension of some 15 years, as well as the potential to include additional blocks that rely on the new project infrastructure.
Safety
Tragically, a fatality was recorded at Moab Khotsong as a result of a tramming incident. Despite this, the option to fundamentally changemine sustained a year-on-year improvement in the orebody extraction approach by applying different technologies.
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Moab Khotsong mine recorded 1.96 million fatality-free shifts in August 2011, a new record for this operation. There were also 2.5 million fall-of-ground fatality-free shifts, which milestone was achieved over a period of 2010, while an aggressive and rigorous audit protocol further improved safety in individual workplaces. A safety workshop was held and three strategic safety pillars identified. Action plans to address these were devised with the related implementation dates being the focus of 2011. These pillars include:
The mine retained its OHSAS 18001 and ISO 14001 accreditationcertification during 2011.
Vaal River and West Wits – Surface operations
Description
The surface operation (metallurgy) extracts gold from marginal ore dumps and tailings storage facilities at surface as there is more metallurgical capacity than reef mined. Uranium is produced as a by-product. In addition, backfill product is produced for mining operations. Operating units are: Noligwa Gold Plant, which takes feed from the Vaal River mines and processes marginal ore-dump material; Mispah plant, which also treats marginal ore-dump materials; Kopanang Gold Plant, which treats marginal oredump material and Kopanang reef; West Gold Plant, which treats marginal ore-dump material; East Gold Plant, which treats feed from the Sulphur Pay dam and environmental clean-up material; Mponeng Gold Plant, dedicated to reef from the Mponeng mine; Savuka Gold Plant, which services TauTona and Savuka and treats dump material; South Uranium Plant, which operates in reverse leach mode with Noligwa Gold Plant; and Nufcor, which undertakes Calcining of South Uranium Plant’s final product. Metallurgy also has rail transport infrastructure, the Vaal River and West Wits Laboratories and tailings management facilities.
Performance
The surface operation produced 164,000 ounces of gold at a total cash cost of $665 per ounce in 2011, compared to 179,000 ounces at a total cash cost of $486 per ounce the previous year. Uranium production was 1.38 million pounds compared with 1.46 million pounds the previous year.
Following unseasonal rains, the water containment circuits were receivedunable to manage the amount of water resulting in a number of overflows. A new water management regime was introduced to improve available stormwater dam capacity. Since its introduction, there have been no overflows. Later in the year, unseasonal late rainfall resulted in a water shortage which necessitated a stoppage of the East Gold Plant for three days. Short-term action minimized the impact. In addition, a pipeline is being installed which will make it possible to take some mildly saline water from neighboring third-party operations, currently discharged into the Koekemoerspruit, into AngloGold Ashanti’s metallurgical circuit. A second project has been undertaken which will allow well-field water to be pumped into the metallurgical circuit.
Surface operations experienced 12 reportable environmental incidents during 2010 following external audits.
The failure of the Mispah mill further impacted production, motivating the redesign of the lubrication system on this and similar mills. The unexpected decline of grade in marginal ore dumps is a concern and has been met with unions actively consultedincreased focus on matters affecting their membersoptimizing mill use, while an additional dump was equipped for mining to improve flexibility. Poor reliability of oxygen and wherever possible involvedlime supply also affected production. An oxygen plant has now been built on site to ensure supply and a new lime-slaking facility has been constructed to facilitate the use of powdered instead of unslaked lime.
Growth and improvement
Project ONE – and in strategic issues affecting the operation. National Union of Mineworkers’ representatives hold monthly meetings with management while ad hoc engagements are expedited quickly to discuss issues of immediate concern. Workforce transformationparticular its business process framework component – has been rolled out at all plants in line with South Africa’s employment equity goals remains a strategic thrust for the mine and the company as a whole and will receive continued attention during 2011.
There are three focus areas for growth and efficientlyimprovement, namely:
Uranium Expansion Project to immediate community needs, Moab Khotsong has a management representative onupgrade infrastructure to transport Kopanang ore to the local area committee (LAC). This committee was established by the AngloGold Ashanti FundSouth Uranium Plant to disburse charitable donations to communities neighboring the company’s operations. In addition to LAC funding, Moab Khotsong made donations during the year to:recover additional uranium. Completion is scheduled for July 2012;
Replacement of the new chilled-water reservoiruranium solvent extraction section within the plant to ensure sustainable operations over the life of the operation. Completion is in progress and was completed byscheduled for the end of February 2011.the third quarter 2013; and
Uranium tailings storage facility (TSF) project designed to recover uranium and dirty water separationgold from existing tailing storage facilities.
A project was completed. This project aimedinitiated to reduce dirty water inflows into the dam and determine the ultimate volumes required for the second dam.
Community complaints were received regarding dust in the Vaal River area. ItA “best practice” guideline was developed regarding dust mitigation and is close to the town of Orkneybeing implemented. The initial focus was on the North West Province sidewestern extension TSF which contributes most of the Vaal River. Unlikedust. Capital of $0.2 million was made available for phase 1, involving the other Vaalinstallation of wind curtains and water spray systems on this TSF. This has been completed. Phase 2, which involves the grassing of high-risk areas on the TSF, is due for completion in 2012.
Safety
Metallurgy holds the following certifications:
ISO 14001 – Environment;
OHSAS 18001 – Occupational Health and Safety;
ICMI – Internal Cyanide Management Institute Certification; and
ISO/17025/IEC – International Standard for Testing Laboratories (Vaal River operations, the major reef mined at Tau Lekoa is the Ventersdorp Contact Reef. Mining operations are conducted at depths ranging from 800 meters to 1,743 meters.
65laboratory).
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Description:
The Mponeng, Savuka and TauTona mines are situated on the West Wits Line near the town of Carletonville, straddling the border of Gauteng and North West Province. Mponeng has its own gold processing plant, while the Savuka and TauTona operations share a plant.
| Mponeng | Savuka | TauTona | ||||||||||
2010 | ||||||||||||
| Pay limit (oz/t) | 0.28 | 0.56 | 0.60 | |||||||||
| Pay limit (g/t) | 9.14 | 17.86 | 19.27 | |||||||||
| Recovered grade (oz/t) | 0.276 | 0.155 | 02.04 | |||||||||
| Recovered grade (g/t) | 9.48 | 5.30 | 7.01 | |||||||||
| Gold production (000 oz) | 532 | 22 | 259 | |||||||||
Total cash costs ($/oz)(1) | 452 | 1,136 | 699 | |||||||||
Total production costs ($/oz)(1) | 580 | 1,409 | 996 | |||||||||
| Capital expenditure ($ million) | 122 | 9 | 75 | |||||||||
Employees(2) | 5,732 | 952 | 4,137 | |||||||||
Outside contractors(2) | 46 | 29 | 472 | |||||||||
| All injury frequency rate | 15.93 | 7.69 | 19.03 | |||||||||
2009 | ||||||||||||
| Pay limit (oz/t) | 0.25 | 0.78 | 0.74 | |||||||||
| Pay limit (g/t) | 8.53 | 26.74 | 25.33 | |||||||||
| Recovered grade (oz/t) | 0.253 | 0.159 | 0.213 | |||||||||
| Recovered grade (g/t) | 8.66 | 5.45 | 7.29 | |||||||||
| Gold production (000 oz) | 520 | 30 | 218 | |||||||||
Total cash costs ($/oz)(1) | 331 | 1,133 | 532 | |||||||||
Total production costs ($/oz)(1) | 404 | 1,400 | 766 | |||||||||
| Capital expenditure ($ million) | 109 | 13 | 57 | |||||||||
Employees(2) | 5,926 | 1,019 | 3,842 | |||||||||
Outside contractors(2) | 103 | 35 | 451 | |||||||||
| All injury frequency rate | 14.31 | 13.23 | 15.84 | |||||||||
2008 | ||||||||||||
| Pay limit (oz/t) | 0.22 | 0.43 | 0.44 | |||||||||
| Pay limit (g/t) | 7.61 | 14.91 | 15.05 | |||||||||
| Recovered grade (oz/t) | 0.292 | 0.183 | 0.253 | |||||||||
| Recovered grade (g/t) | 10.02 | 6.28 | 8.66 | |||||||||
| Gold production (000 oz) | 600 | 66 | 314 | |||||||||
Total cash costs ($/oz)(1) | 248 | 424 | 373 | |||||||||
Total production costs ($/oz)(1) | 327 | 515 | 519 | |||||||||
| Capital expenditure ($ million) | 86 | 11 | 60 | |||||||||
Employees(2) | 5,482 | 1,179 | 3,849 | |||||||||
Outside contractors(2) | 203 | 45 | 774 | |||||||||
| All injury frequency rate | 14.29 | 19.82 | 19.00 | |||||||||
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Geology
Operating review:Mponeng’s goldand production increased by 2 percent to 532,000 ounces in 2010, compared to 520,000 ounces in 2009. A 9 percent increase in grade contributed todata for West Wits operations
| ||||||||||||
| Mponeng | Savuka | TauTona | ||||||||||
| ||||||||||||
2011 | ||||||||||||
Pay limit (oz/t) | 0.41 | 0.46 | 0.78 | |||||||||
Pay limit (g/t) | 9.16 | 10.36 | 17.63 | |||||||||
Recovered grade (oz/t) | 0.283 | 0.195 | 0.220 | |||||||||
Recovered grade (g/t) | 9.71 | 6.69 | 7.55 | |||||||||
Gold production (000 oz) | 500 | 49 | 244 | |||||||||
Total cash costs ($/oz)(1) | 547 | 857 | 816 | |||||||||
Total production costs ($/oz)(1) | 691 | 918 | 1,135 | |||||||||
Capital expenditure ($ million) | 172 | 8 | 79 | |||||||||
Employees(2) | 5,624 | 785 | 4,023 | |||||||||
Outside contractors(2) | 164 | 30 | 484 | |||||||||
All injury frequency rate | 15.39 | 8.39 | 13.36 | |||||||||
2010 | ||||||||||||
Pay limit (oz/t) | 0.28 | 0.56 | 0.60 | |||||||||
Pay limit (g/t) | 9.14 | 17.86 | 19.27 | |||||||||
Recovered grade (oz/t) | 0.276 | 0.155 | 0.204 | |||||||||
Recovered grade (g/t) | 9.48 | 5.30 | 7.01 | |||||||||
Gold production (000 oz) | 532 | 22 | 259 | |||||||||
Total cash costs ($/oz)(1) | 452 | 1,136 | 699 | |||||||||
Total production costs ($/oz)(1) | 580 | 1,409 | 996 | |||||||||
Capital expenditure ($ million) | 122 | 9 | 75 | |||||||||
Employees(2) | 5,732 | 952 | 4,137 | |||||||||
Outside contractors(2) | 46 | 29 | 472 | |||||||||
All injury frequency rate | 15.93 | 7.69 | 19.03 | |||||||||
2009 | ||||||||||||
Pay limit (oz/t) | 0.25 | 0.78 | 0.74 | |||||||||
Pay limit (g/t) | 8.53 | 26.74 | 25.33 | |||||||||
Recovered grade (oz/t) | 0.253 | 0.159 | 0.213 | |||||||||
Recovered grade (g/t) | 8.66 | 5.45 | 7.29 | |||||||||
Gold production (000 oz) | 520 | 30 | 218 | |||||||||
Total cash costs ($/oz)(1) | 331 | 1,133 | 532 | |||||||||
Total production costs ($/oz)(1) | 404 | 1,400 | 766 | |||||||||
Capital expenditure ($ million) | 109 | 13 | 57 | |||||||||
Employees(2) | 5,926 | 1,019 | 3,842 | |||||||||
Outside contractors(2) | 103 | 35 | 451 | |||||||||
All injury frequency rate | 14.31 | 13.23 | 15.84 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results – Total cash costs and total production costs”. |
| (2) | Average for the year. |
West Wits – Mponeng
Description
Mponeng is located between the rise in production.
Performance
Mponeng produced 500,000 ounces at a total cash cost of schedule$547 per ounce in 2011, compared with 532,000 ounces at a total cash cost of $452 per ounce the previous year. The decline in production was due to a combination of factors which interrupted normal operations at various periods throughout the year and higher than- anticipated temperatures in linethe deeper mining areas. An upgrade and expansion of the ice plant on surface, which contributed to higher costs, was necessitated by the increased cooling requirements as underground operations at Mponeng deepened. Work on this upgrade began in 2010 and was completed in 2011.
The Mponeng operating teams contended with the breakdown of a winder and also trackless equipment used for the deepening project. An increase in the number of Section 54 safety stoppages, ordered by the state mine inspector, caused considerable disruption during the year. Management teams have intensified efforts to avoid these stoppages by continuing to improve overall safety at the mine and ensuring compliance with all relevant safety regulations. Improving development performance remains a key area of focus.
Growth and improvement
Mponeng hosts the most significant of the group’s South African investments in its below 120 deepening project, plan. The estimated completion date is 2013 and full production is scheduled for 2016. The project is anticipated to recover 2 million ounceswhich will extend the life of gold at a cost of R2 billion.
The CLR portion of the project will ultimately access 11.3 million ounces and the VCR another 3.2 million ounces. Phase 1 refers to the VCR below 120 project, currently being implemented to develop four declines from 120 level to the 126/127 levels to exploit the VCR orebody. It includes the installation of the supporting infrastructure (refrigeration, backfill, decline equipping, etc) required to service a 10,000m2/month production plan.
The feasibility study is underway for phase 2, which will focus on the CLR on two levels from 120 level down to 126 level. The access design showing best fit with existing infrastructure and schedule, as well as the best returns and potential for expansion, is the construction of a central ramp, supported by an extension of the SS2 shaft for long-term transportation of men and material. The rock will be trucked up the ramp from 126 and 123 level to 119 level and 126 levels firsthoisted to surface through the SS1 shaft rock hoisting system. Phase 2 is expected to be mined at a rate of 12,000m2 per month. The dedicated decline ramp from 120 level will provide fast access to ounces and will minimize the dependence of phase 2 on phase 1 infrastructure, making phase 1 infrastructure available for a phase 3 project opportunity. Phase 2 will be implemented following board approval which is anticipated during 2012.
At the existing Mponeng operation, additional exploration was undertaken to gain greater knowledge of the orebody and its geological structures in order to bring gold forward. This initial phase could potentially recover 3.5 million ouncesimprove planning, scheduling and confidence in production targets. Along with this program, a decision has been taken to minimize ongoing mining activities in the lower-grade eastern sections of gold.
The grade mined at Mponeng during 2010. Twowas marginally higher than that achieved in 2010 following the decision to move crews from the eastern areas of the mine, where values were found to decline significantly. The mine call factor improved marginally to 79.2 percent.
The introduction of Project ONE at Mponeng will focus on safety transformation to reduce injury rates and eliminate disruptive stoppages; improvement of compliance with mining cycles; improving blast frequency; and optimizing vertical transport. Gains in these areas are expected to result in ongoing productivity improvements at the mine through improvements in face advance, mitigating occasional shortages in certain underground mining skills. Rail-bound drill rigs will also be introduced to accelerate development rates and – as with all the mines in the South Africa region – work crews will undergo the Simunye training program.
New technologies that are introduced at Mponeng to increase productivity are the use of high pressure drill rigs and drill jigs that achieve better development advancement compared to conventional mining equipment. Ore handling improvements at Mponeng are achieved through the use of bigger hoppers that transport higher tonnage of ore and the use of front driven trains. Wi-fi communication was installed underground to assist with better scheduling of handling of material and ore to save time and cost.
Water and waste management in the West Wits region is another key area of focus. Construction of storm water diversion trenches, containment evaporation ponds, waste water control dams and the upgrade of the salvage yard were initiated in 2011. The only work completed in 2011 was the salvage yard upgrade and about 70 percent of the storm water diversion trenches.
During 2011 the majority of the cooling towers were converted from potable to service water use as part of the goal of cutting potable water consumption to 120,000 kiloliters a month. This was surpassed, with use now stabilized at between 80,000 kiloliters and 100,000 kiloliters a month.
A similar focus will be placed on energy use in 2012, with targets set for the reduction of compressed-air and pumping costs. The flow meters installed at each level help to minimize pumping during Eskom’s high-demand times, thus assisting with reduced power consumption.
Safety
Tragically, two fatalities were recorded at Mponeng. In May 2011, an employee died when a seismic event of undetermined causes0.6 magnitude resulted in a fall of ground. In August 2011, another employee died when a seismic event of local magnitude 2.0 again led to an extensive fall of ground.
Management believes that the improved planning and are still pending classification upon completionscheduling that stem from Project ONE, as well as the more cohesive and productive teams resulting from the Simunye training, will help achieve further improvements in safety. Crews have also been initiated into the Simunye training process. The introduction of the DMR enquiry. Thesafety management program is expected to assist in further improving safety through its requirements to ensure regular inspections, behavior observations, group meetings and frequent workplace risk assessments.
During 2011, the all injury frequency rate deterioratedimproved to 15.9315.39 per million hours worked, from a rate of 14.3115.93 in 2009.
Mponeng has the roll-out of the Safety Transformation program; promotion of consecutive injury free days; miner, artisan, team-leaderfollowing certification:
ISO 14001 – Environments; and safety representative meetings; empowering of safety representatives and finally the application of the SANDLA safety system, which focuses on procedures, personal protective equipment and tools and equipment.
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The company plans to have employees and second advance assessments were conducted in January and July 2010, with Mponeng retaining accreditation on both occasions.
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West Wits – Savuka
Description
Savuka lease area is constrained to the north and northwest by DRDGOLD Limited’s Blyvooruitzicht Mine, to the east by TauTona, to the west by Harmony’s Kusasalethu mine, and to the south by Mponeng.
Performance
Savuka produced 49,000 ounces at a total cash cost of $857 per ounce in 2011, compared with 22,000 ounces at a total cash cost of gold during 2010, compared with 30,000 ounces$1,136 per ounce the previous year. Total cash costs increased by 3 percent to $1,136 per ounces, from $1,133 per ounces in 2009.
Growth and improvement
The mine’s infrastructure was mothballed at the end of 2011. Ongoing maintenance is required in future.order to continue water pumping activities for AngloGold Ashanti’s remaining mines in the immediate vicinity.
Safety
Savuka has received the following certifications:
ISO 14001 – Environment; and
OHSAS 18001 certification following an audit that was conducted during the course of the year.
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Description
Performance
TauTona sharesproduced 244,000 ounces at a processing planttotal cash cost of $816 per ounce in 2011, compared with Savuka. The facility currently has259,000 ounce at a monthly capacitytotal cash cost of 180,000 tonnes$699 per ounce the previous year.
A decision was taken early in 2011, following a significant seismic event, to cease mining of the Ventersdorp Contact Reef (VCR) shaft pillar and uses conventional milling to crush the ore and a CIP plant to treat it. Once the carbon has been removedremove it from the ore, it is transportedimmediate mine plan in the interests of safety. This decision contributed to the gold plant at Mponeng for elution electro- winning, smeltingdecline in output.
The increase in costs resulted from lower production, replacement of equipment and the final recoveryadditional shifts needed to claw back some of the gold.lost production.
Production crews were deployed to focus on increased sweeping and vamping of old production areas to capture valuable ore-chips and gold displaced after blasting and left behind after work areas were vacated. This helped improve the overall mine-call factor of the operation. Increased geological drilling enhanced the overall knowledge of the orebody and contributed to the improved grade in the second half of the year.
Growth and improvement
In line with the rollout of the Project ONE business improvement initiative across the South African operations in 2011, continued focus will be placed on productivity improvements through improved scheduling and planning, as well as continued training of work crews through the Simunye initiative.
One of the chief initiatives expected to be implemented in 2012 is a vertical transport optimization project to accelerate the delivery of consumables and other essential items to work crews, in order to increase production time at the face. Similarly, management expects that the Carbon Leader transfer system will significantly reduce times for horizontal transport, or tramming, due to the reduction in tramming kilometers and elimination of inter-level transfers.
The following energy projects are currently being undertaken:
Installation of a pre-cooling tower at the surface fridge plant – this project was started and completed in 2011. The pre-cooling tower results in improved power consumption in ambient temperatures, as the fridge plant does not have to be activated.
Operating review:Compressed air automationProduction at TauTona rose – this project is expected to be completed in the third quarter of 2012 and should also result in lower power consumption.
Energy recovery turbine – this project is expected to be completed by 19 percent to 259,000 ounces during 2010, compared with 218,000 ounces the previous year. Cash costs rose 31 percent to $699 per ounces, from $532 per ounces in 2009, due mainly to inflationary pressureMarch 2012.
There will be continued emphasis on the costmanagement of labor, powerseismicity to further improve safety and stores, royalty payments which came into effect on March 1, 2010limit production interruption.
Following the success achieved in 2011, additional geological drilling will be undertaken to enhance knowledge of geological structures. Plans and a stronger currency.
AngloGold Ashanti has also reached an agreement to drill in 2010 (2009: $57 million).
Safety
There were no fatalities in January 2009. A decision was made to limit the scope of the project to the development of the rock decline to 123 level. As a result of unfavorable geological drilling results and a significant increase in the latest cost estimate, the project has been suspended. The project area may be accessed at a later date from Mponeng.
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TauTona has received the mine.
ISO 14001 first advancement assessment audit was conducted at TauTona in September 2010, with the operation retaining its accreditation.– Environment; and
OHSAS 18001 – Occupational Health and storage, thereby improving recycling capacity;
73Safety.
AngloGold Ashanti has eight mining operations in its Continental Africa region:
Iduapriem and Obuasi in Ghana;
Siguiri in Guinea;
Morila, Sadiola and Yatela in 2010, equivalent to 33 percent of group production. In all, they employed 15,761 people, including contractors, 494 more thanMali;
Navachab in 2009. Total attributable capital expenditure for the region was $232 million (2009: $196 million).Namibia; and
Geita in Tanzania.
AngloGold Ashanti also conducts an active greenfield exploration program, principally in the Democratic of the Republic of the Congo (DRC), focused on the Mongbwalu concession and the Kibali joint venture with Randgold Resources and the DRC government. This is in addition to brownfield exploration being conducted in and around its existing operations. For further information on the group’s exploration program in Continental Africa, see “Item 4B.: Business overview – Global exploration”.
Performance
Combined production from Continental African operations increased by 5 percent to 1.57 million ounces of gold in 2011, equivalent to 36 percent of group production. Declines in production at the Global exploration section isSiguiri, Obuasi, Yatela and Navachab operations were offset by increases at Geita, Iduapriem, Sadiola and Morila. Production at Geita rose by 38 percent. In all, these operations employed 16,539 people, including contractors, 778 more than in 2010. Total attributable capital expenditure for the region was $418 million (2010: $232 million). The bulk of this report.
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Safety
Regrettably, three contractors were involved in fatal occupational accidents during 2011. The AIFR for the year was 3.03 per million hours worked, a significant improvement on the 5.26 recorded in 2010.
GHANA —- Summary of metallurgical operations
| OBUASI | ||||||||||||||||
| Sulfide Treatment | Tailings Treatment | Oxide Treatment | IDUAPRIEM | |||||||||||||
| Plant | Plant | Plant | PLANT | |||||||||||||
| Capacity (000 tonnes/month) | 200 | 200 | 150 | 375 | ||||||||||||
| OBUASI | IDUAPRIEM PLANT | |||||||||||||||
| Sulfide Treatment Plant | Tailings Treatment Plant | Oxide Treatment Plant | ||||||||||||||
Capacity (000 tonnes/month) | 200 | 200 | 150 | 375 | ||||||||||||
Ghana – Iduapriem
Description
Iduapriem, wholly owned by AngloGold Ashanti since September 2007, comprises the Iduapriem and Teberebie properties on a 110km2 concession. The mine is situated in the western region of Ghana, some 70 kilometers north of the coastal city of Takoradi and 10 kilometers southwest of Tarkwa.
Iduapriem is an open-pit mine and its processing facilities include a CIPCarbon-in-pulp (CIP) plant.
Geology:
The Iduapriem and Teberebie gold mines are located along the southern end of the Tarkwa basin. The mineralization is contained in the Banket Series of rocks within the Tarkwaian System of Proterozoic age. The outcropping Banket Series of rocks in the mine area form prominent, arcuate ridges extending southwards from Tarkwa, westwards through Iduapriem and northwards towards Teberebie.
Operating and production data for Iduapriem
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.04 | 0.04 | 0.04 | |||||||||
Pay limit (g/t) | 1.47 | 1.45 | 1.43 | |||||||||
| Recovered grade (oz/t) | 0.050 | 0.050 | 0.051 | |||||||||
| Recovered grade (g/t) | 1.70 | 1.72 | 1.76 | |||||||||
Gold production (000 oz) 100 percent | 185 | 190 | 200 | |||||||||
Total cash costs ($/oz)(1) | 778 | 658 | 625 | |||||||||
Total production costs ($/oz)(1) | 1,027 | 795 | 740 | |||||||||
Capital expenditure ($ million) 100 percent | 17 | 28 | 54 | |||||||||
Employees(2) | 729 | 727 | 732 | |||||||||
Outside contractors(2) | 754 | 720 | 1,048 | |||||||||
| All injury frequency rate | 9.73 | 12.26 | 13.95 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.03 | 0.04 | 0.04 | |||||||||
Pay limit (g/t) | 0.92 | 1.47 | 1.45 | |||||||||
Recovered grade (oz/t) | 0.042 | 0.050 | 0.050 | |||||||||
Recovered grade (g/t) | 1.44 | 1.70 | 1.72 | |||||||||
Gold production (000 oz) | 199 | 185 | 190 | |||||||||
Total cash costs ($/oz)(1) | 839 | 778 | 658 | |||||||||
Total production costs ($/oz)(1) | 1,080 | 1,027 | 795 | |||||||||
Capital expenditure ($ million) | 73 | 17 | 28 | |||||||||
Employees(2) | 741 | 729 | 727 | |||||||||
Outside contractors(2) | 802 | 754 | 720 | |||||||||
All injury frequency rate | 6.61 | 9.73 | 12.26 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the period. |
Performance
Gold production declined by 3for the year totaled 199,000 ounces, an 8 percent increase on production in 2010, due in large part to 185,000 ouncesthe increase in 2010. The declinevolumes milled. Record monthly throughput of 404,000 tonnes was achieved in productionAugust 2011. This was mainly duedespite a deterioration in the average grade over the year to 1.44g/t, which was 15 percent lower year-on-year.
A highlight of the year was the commissioning of the new tailings storage facility (TSF) in the first half of the year – a stoppage from February 11, to April 20, to improve and increasetimely development given the declining capacity of the site’sinterim tailings storage facilities (TSF). However,facility.
A critical operating challenge was the repeated failure of the newly installed high pressure valves, installed on the plant tailings discharge line going into the new TSF facility tailings pumps. This resulted in a significant portion ofhalt to production lost dueat the plant as the pumps operate off the same pipeline. A separate pipeline is to be installed from the stoppagepumps and is expected to be commissioned in May 2012. In the interim, the existing valves will be closely monitored and maintained. Another challenge during the year was recovered by re-planning mining operations and achieving designedthe heavy rainfall, which required plant throughput.
Total cash costs per ounce increased by 188 percent from the previous year to $778$839 per ounce, dueowing primarily to higher fuel and power prices as well as increased employeecosts. Total capital expenditure for the year was $73 million, including $60 million for the TSF and maintenance related costs.
Growth and improvement
Work began on the implementation of the BPF component of Project ONE in August 2010 at the CIP plant. Performance relating to the process is being measured and monitored and has improved overall mill throughput, whichcurrently reached the stabilization stage. Plant output is also being measured and recorded. Analysis and optimization was initiated to identify the key causes of production losses in the plant. As a record of 423,000 tonnes in December 2010, in line with the upgraded plant design specification.
The emphasis in 2012 will be to stabilize and minimize downtime at the operational stoppage between February and April 2010 and based on a review of capital spend,crushing plant, to improve the initial amount of $31 million budgeted forprimary crusher feeding rate.
In 2012, the Ajopa project and other projects was deferred.
A scoping study will examine the expansion of the open pit operation by increasing throughput. Long-hole drilling is also planned in 2011 to determine if there is an economic resource sufficient to support underground mining.
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A new cyanide sparging plant was commissioned in August 2011 as part of the infrastructure development required for compliance with the cyanide code.
Safety
For the third consecutive year, occupational injuries have continued to yield approximately 324,000 ounces over 24 months.decline. The changefocus in projected Ajopa ounces is due to changethe year was on contractor engagement in planning parameters leading to increased volume to be mined.
An OHSAS 18001 certification audit was conducted during August 2011 and the discharge standard for release of excess water from the operations.
Ghana – Obuasi
Description
Obuasi, wholly owned by AngloGold Ashanti, is located in the Ashanti Region of southern Ghana, approximately 60 kilometers south of Kumasi. It isMining operations are primarily an underground, mine operating at depthsto a depth of up to 1.5 kilometers, thoughkilometers. However, some surface mining in the form of open pit and tailings reclamation also occurs. Two treatment plants processed ore this year:Obuasi currently treats sulfide ores from underground at the South Treatment Plant, which is a Float-BIOX®-CILsouth plant, for treating hard rock sulfides and tailings; and afollowing the decommissioning of the tailings treatment plant using CIL to treat only tailings. The tailings treatment plant was shut down in October 2010. The south plant also treats sulfide tailings and was impaired. Tailings will be treated through the South Treatment Plant to increase gold recovery.
Geology:
The gold deposits at Obuasi are part of a prominent gold belt of Proterozoic (Birimian) volcano-sedimentary and igneous formations which extend for a distance of approximately 300 kilometers in a north-east/south-west trend in south-western Ghana. Obuasi mineralization is shear-zone related and there are three main structural trends hosting gold mineralization: the Obuasi trend, the Gyabunsu trend and the Binsere trend.
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quartz veins which consist mainly of quartz with free gold in association with lesser amounts of various metal sulfides such as iron, zinc, lead and copper. The gold particles are generally fine-grained and occasionally are visible to the naked eye. This ore type is generally non-refractory; and
sulfide ore which is characterized by the inclusion of gold in the crystal structure of a sulfide material. The gold in these ores is fine-grained and often locked in arsenopyrite. Higher gold grades tend to be associated with finer grained arsenopyrite crystals. Other prominent minerals include quartz, chlorite and sericite. Sulfide ore is generally refractory.
Operating and production data for Obuasi
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t)(1) | 0.19 | 0.21 | 0.29 | |||||||||
Pay limit (g/t) | 6.60 | 7.26 | 9.35 | |||||||||
Recovered grade (oz/t)(1) | 0.150 | 0.151 | 0.127 | |||||||||
Recovered grade (g/t) | 5.16 | 5.18 | 4.37 | |||||||||
Gold production (000 oz) | 317 | 381 | 357 | |||||||||
Total cash costs ($/oz)(2) | 760 | 630 | 636 | |||||||||
Total production costs ($/oz)(2) | 1,003 | 848 | 863 | |||||||||
Capital expenditure ($ million) | 109 | 94 | 112 | |||||||||
Employees(3) | 4,225 | 4,408 | 4,259 | |||||||||
Outside contractors(3) | 1,497 | 1,351 | 1,463 | |||||||||
| All injury frequency rate | 2.86 | 4.73 | 6.36 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t)(1) | 0.19 | 0.19 | 0.21 | |||||||||
Pay limit (g/t) | 5.85 | 6.60 | 7.26 | |||||||||
Recovered grade (oz/t)(1) | 0.141 | 0.150 | 0.151 | |||||||||
Recovered grade (g/t) | 4.82 | 5.16 | 5.18 | |||||||||
Gold production (000 oz) | 313 | 317 | 381 | |||||||||
Total cash costs ($/oz)(2) | 859 | 760 | 630 | |||||||||
Total production costs ($/oz)(2) | 1,288 | 1,003 | 848 | |||||||||
Capital expenditure ($ million) | 132 | 109 | 94 | |||||||||
Employees(3) | 4,163 | 4,225 | 4,408 | |||||||||
Outside contractors(3) | 1,375 | 1,497 | 1,351 | |||||||||
All injury frequency rate | 2.37 | 2.86 | 4.73 | |||||||||
| (1) | Pay limits and recovered grade refer to underground ore resources. |
| (2) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (3) | Average for the period. |
Performance
Obuasi achieved its production decreasedtargets in 2011, despite facing significant operating challenges. This achievement followed focused intervention from the multi-disciplinary taskforce appointed to effect the turnaround of the operation. Additional planning, design and scheduling of work is required to further improve operational performance. Ore Reserve development improved in 2011. Nevertheless, the ability of the mine to adapt to changing circumstances remains a key challenge for this operation. Underground tonnages came in at 1.84 million tonnes (2010: 1.80 million tonnes).
Production declined by 17 percent to 317,000 ounces in 2010. The reduced gold production was mainly attributable to underground tonnages declining by 8just over 1 percent, as planned, to 313,000 ounces as the taskforce worked at formulating a result of reduced flexibility in developed Ore Reserves. Total development meters were 19 percent lower, due largelystrategy to realize the poorer-than- expected performance offull potential for the contractor.
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Gains in efficiencies and volumes failed to translate into improved total cash costs, which were 13 percent higher year-on-year at $859 per ounce. The higher costs reflected the effects of lower grades and increases in the price of steel, oil, fuel and other consumables.
Growth and improvement
The Obuasi taskforce has made good progress in putting measures in place to effect a turnaround at the operation. A 12-hour shift was introduced and fully rolled out at all underground and processing functions to provide more productive time at work. The BPF component of Project ONE has been fully rolled out in mining, processing and transport.
A development contract is currently being finalized with the existing contractor, under a new framework and structure, and new equipment for development was purchased and is ready for use. Ageing infrastructure at the mine underwent itsand plant is being repaired or replaced where necessary.
Although there is some indication of higher costs initially on implementation of the BPF, trends indicate that appropriate maintenance should result in cost reductions and improved performance of the mining fleet and infrastructure. In the medium term, this should have a positive impact on mining flexibility and lead to increased throughput and higher production.
Underground drilling to explore the Obuasi Deeps below 50 level and the southern extensions of the current mining areas above 50 level continued in the year.
Safety
Regrettably, three contractor employees lost their lives in occupational accidents during 2011 at Obuasi mine. The Obuasi management team conducted investigations into the circumstances that contributed to these incidents. Measures have been put in place to help ensure that such incidents are not repeated.
Good strides were made with employee safety and occupational health, with the Continental Africa region safety strategy being implemented and 22 safety standards executed. The emphasis has been on the creation and communication of a deliverable vision for fatality elimination by identifying and increasing the focus on high-potential near-fatal events. Through training and awareness creation, there has been an attempt at reinforcing safe behavior, and the AIFR for the year was 2.37, an improvement of 17 percent on the previous year. This was bolstered also by the employee engagement process aimed at improving communication and performance, which was rolled out in phases during 2011.
The OHSAS 18001 certification was successfully completed during January 2012, and an ISO 14001 surveillancerecertification audit will be held in November after successfully completing2012.
GUINEA
Guinea – Siguiri
Description
Siguiri, a certification audit in December 2009.
AngloGold Ashanti hasholds an 85 percent interest in Siguiri and the government of Guinea holds the balance of 15 percent. Siguiripercent is a multiple open-pit, oxide gold mine situated inheld by the Siguiri district in northeastGovernment of the Republic of Guinea, about 850 kilometers northeast of the capital, Conakry. Siguiri’s open pits are operated by mining contractors using conventional techniques. Mineralization at Siguiri is hosted within the Birimian System. The plant processes at a rate of about 30,000 tonnes of ore a day.
Geology:
This concession is dominated by Proterozoic Birimian rocks which consist of turbidite facies sedimentary sequences. The two main types of gold deposits which occur in the Siguiri basin and are mined are:
laterite or CAP mineralization which occurs as aprons of colluvial or as palaeo-channels of alluvial lateritic gravel adjacent to, and immediately above; and
in situ quartz-vein related mineralization hosted in meta-sediments with the better mineralization associated with vein stockworks that occurs preferentially in the coarser, brittle siltstones and sandstones.
The mineralized rocks have been deeply weathered to below 100 meters in places to form saprolite or SAP mineralization. With the percentage of available CAP ore decreasing, a carbon-in-pulp (CIP) plant is used to treat predominantly SAP ore.
Operating and production data for Siguiri
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.02 | 0.02 | 0.03 | |||||||||
Pay limit (g/t) | 0.66 | 0.71 | 0.93 | |||||||||
| Recovered grade (oz/t) | 0.028 | 0.032 | 0.035 | |||||||||
| Recovered grade (g/t) | 0.97 | 1.11 | 1.20 | |||||||||
Gold production (000 oz) — 100 percent | 321 | 372 | 392 | |||||||||
Gold production (000 oz) — 85 percent | 273 | 316 | 333 | |||||||||
Total cash costs ($/oz)(1) | 656 | 513 | 468 | |||||||||
Total production costs ($/oz)(1) | 733 | 601 | 565 | |||||||||
Capital expenditure ($ million) — 100 percent | 12 | 26 | 22 | |||||||||
Capital expenditure ($ million) — 85 percent | 10 | 22 | 18 | |||||||||
Employees(2) | 1,531 | 1,492 | 1,489 | |||||||||
Outside contractors(2) | 1,639 | 1,481 | 1,444 | |||||||||
| All injury frequency rate | 6.15 | 5.54 | 9.42 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.01 | 0.02 | 0.02 | |||||||||
Pay limit (g/t) | 0.51 | 0.66 | 0.71 | |||||||||
Recovered grade (oz/t) | 0.023 | 0.028 | 0.032 | |||||||||
Recovered grade (g/t) | 0.79 | 0.97 | 1.11 | |||||||||
Gold production (000 oz) – 100 percent | 293 | 321 | 372 | |||||||||
Gold production (000 oz) – 85 percent | 249 | 273 | 316 | |||||||||
Total cash costs ($/oz)(1) | 871 | 656 | 513 | |||||||||
Total production costs ($/oz)(1) | 992 | 733 | 601 | |||||||||
Capital expenditure ($ million) – 100 percent | 18 | 12 | 26 | |||||||||
Employees(2) | 1,718 | 1,531 | 1,492 | |||||||||
Outside contractors(2) | 1,948 | 1,639 | 1,481 | |||||||||
All injury frequency rate | 1.27 | 6.15 | 5.54 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the period. |
Performance
Attributable gold production declined by 149 percent to 273,000 ounces, due249,000 ounces. Lower-than-anticipated grades had the most significant impact on production. A number of challenges were encountered during the year, mainly with regard to the increasing number of illegal miners in the Siguiri mining areas. Mining operations were also hampered in the year by a community protest over issues relating to electricity supply, land compensation and employment, which interrupted production for three days, while mining the Sanutinti push back hampered excavator productivity, with the wet ground conditions encountered resulting in increased mining costs. Other challenges were the lower grade in the saprolite stockpile, which also contained some hard oxide materials, causing delays in material supply.
Throughput tonnes in 2011 were 10 percent higher year-on-year at 9.7 million tonnes (2010: 8.8 million tonnes), helping to mitigate the impact of lower grades. Recoveries in the plant were marginally down to 89 percent, attributable mainly to the mininglower grades and higher throughput, and a leach tank maintenance program.
The lower volumes drove costs up, with unit cash costs 33 percent higher at $871 per ounce (2010: $656 per ounce). Higher labor costs and fuel prices also contributed to increased cash costs.
Growth and improvement
In mid-2011, a program was initiated to accelerate the upgrade of lower grade ore. The decline in grade was a result of lower overall grades minedthe inferred oxide resource to an indicated resource. This program aims to partly replace depletions in the SintrokoOre Reserve. An assay laboratory upgrade and Tubani pits. Production was also affected by lower drawdown rates, which affected geotechnical stability and caused the failure of the main ramp of Sintroko pushback 1. This delayed mining operations in the affected area from August to November.
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A new growth strategy provides for the expansion of mine.
Environmental management remains a critical area of focus and Probable oxide Ore Reservesongoing initiatives are in place to control dust and emissions, and also to ensure compliance with all the relevant legislation. Siguiri contributed to the management of dust by the watering of linking roads between villages at Siguiri are around 2 million ouncesa total cost of gold at 1.28g/t$619,000. No reportable environmental incidents were recorded in the year. A pipeline from the operation’s pits and 1.77 million ounces at 0.55g/t from stockpiles and spent heaps. Thistailings facility, which previously contributed to the bulk of incidents, is sufficientexpected to feed the plant at a rate of 10.2 million tonnes a year for three to four years. Studies are planned for 2011 to determine options available to improve plant throughput.
Safety:Siguiri had one fatality in January 2010 when a collision occurred between two trucks. Management implemented an action plan whereby contractors are closely managed and monitored with regards to safety.
The all injury frequency rate for the year was 6.15dropped to 1.27 per million hours worked (2009: 5.54).
OHSAS 18001 recertification will be made to enforce basic safety rules and standards in contractor management, management visibility at the workplace, and operator training and awareness.
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MALI
AngloGold Ashanti has interests in three gold mining operations in Mali, namely, Sadiola, Yatela and Morila. It manages two of these operations, Sadiola and Yatela.
Mali – Morila(attributable (attributable 40 percent)
Description
The Morila mine is situated some 180 kilometers southeast of Bamako, the capital of Mali. The operation currently treats low- grade stockpiles. Thelow-grade stockpiles while the plant, at Morila, which incorporates a conventional CILcarbon-in-leach process with an upfront gravity section to extract the free gold, has an annual throughput capacity of 4.3 million tonnes. Since mining was concluded in 2009 with the depletion of the orebody, operations at Morila currently involve processing of the stockpile which stood at 1.8 million tonnes per annum.
AngloGold Ashanti andhas an effective 40 percent stake in Morila, as does Randgold Resources Limited each have a 50 percent stake, giving AngloGold Ashanti an effective interest of 40 percent in Morila.(which manages the mine). The governmentGovernment of Mali owns the remaining 20 percent. Randgold Resources manages the mine.
Geology:
Morila is a mesothermal flat lying shear-zone hosted deposit which, apart from rising to the surface in the west against steep faulting, lies flat. The deposit occurs within a sequence Birimian metal-arkoses of amphibolite metamorphic grade. Mineralization is characterized by silica-feldspar alteration and sulfide mineralization consists of arsenopyrite, pyrrhotite, pyrite and chalcopyrite.
Operating and production data for Morila
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.02 | 0.04 | 0.06 | |||||||||
Pay limit (g/t) | 0.67 | 1.21 | 2.17 | |||||||||
Recovered grade (oz/t) | 0.050 | 0.072 | 0.090 | |||||||||
Recovered grade (g/t) | 1.70 | 2.47 | 3.08 | |||||||||
Gold production (000 oz) 100 percent | 238 | 342 | 425 | |||||||||
Gold production (000 oz) 40 percent | 95 | 137 | 170 | |||||||||
Total cash costs ($/oz)(1) | 716 | 526 | 424 | |||||||||
Total production costs ($/oz)(1) | 768 | 577 | 500 | |||||||||
Capital expenditure ($ million) 100 percent | 3 | 10 | 3 | |||||||||
Capital expenditure ($ million) 40 percent | 1 | 4 | 1 | |||||||||
Employees(2) | 476 | 518 | 605 | |||||||||
Outside contractors(2) | 415 | 535 | 1,098 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.02 | 0.02 | 0.04 | |||||||||
Pay limit (g/t) | 0.60 | 0.67 | 1.21 | |||||||||
Recovered grade (oz/t) | 0.050 | 0.050 | 0.072 | |||||||||
Recovered grade (g/t) | 1.70 | 1.70 | 2.47 | |||||||||
Gold production (000 oz) 100 percent | 248 | 238 | 342 | |||||||||
Gold production (000 oz) 40 percent | 99 | 95 | 137 | |||||||||
Total cash costs ($/oz)(1) | 818 | 716 | 526 | |||||||||
Total production costs ($/oz)(1) | 859 | 768 | 577 | |||||||||
Capital expenditure ($ million) 100 percent | 3 | 3 | 10 | |||||||||
Capital expenditure ($ million) 40 percent | 1 | 1 | 4 | |||||||||
Employees(2) | 435 | 476 | 518 | |||||||||
Outside contractors(2) | 385 | 415 | 535 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
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Growth and improvement
A large part of the lower production and higher costs for reagent and also for fuel burnt in power generation.
Closure preparations continue, including implementation of the social plan. An employee assistance fund has been created and is managed by the unions. An agri-business project aims to treat only low-grade ore. Attributablesustain livelihoods post closure, although some land ownership issues still require resolution. Management is in negotiations with the local authorities and government to this end. Other pilot projects include animal husbandry, poultry farming, honey production is expected therefore to decrease.
Safety
Safety statistics for Morila are reported by Randgold Resources, the operator, and are not included in AngloGold Ashanti’s statistics.
Mali – Sadiola(attributable (attributable 41 percent effective December 29, 2009, previously 38 percent)
Description
The Sadiola mine is situated in the far southwest ofwestern Mali, some 77 kilometers southsouth-southwest of the regional capital Kayes. SadiolaThe mine is a joint venture in whichbetween AngloGold Ashanti (41 percent) and IAMGOLD each have a 41 percent interest(41 percent) and the government of Mali 18 percent.
Geology:
The Sadiola deposit occurs within an inlier of greenschist facies metamorphosed Birimian rocks known as the Kenieba Window. The specific rocks which host the mineralization are marbles and greywackes which have been intensely weathered to a maximum depth of 200 meters. A series of north-south trending faults occur that are the feeders to the Sadiola mineralization. As a result of an east-west regional compression event, deformation occurs along a north-south striking marble-greywacke contact, increasing the porosity of this zone. North-east striking structures which intersect the north-south contact have introduced mineralization, mainly with the marble where the porosity was greatest. The Sadiola Hill deposit generally consists of two zones, an upper oxidized cap and an underlying sulfide zone. From 1996 until 2002, shallow saprolite oxide ore from the Sadiola Hill pit was the primary ore source. Since 2002, the deeper saprolitic sulfide ore has been mined and in future will progressively replace the depleting oxide reserves.
82
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.04 | 0.04 | 0.07 | |||||||||
Pay limit (g/t) | 1.28 | 1.46 | 2.18 | |||||||||
Recovered grade (oz/t) | 0.060 | 0.074 | 0.100 | |||||||||
Recovered grade (g/t) | 2.04 | 2.52 | 3.42 | |||||||||
Gold production (000 oz) 100 percent | 287 | 354 | 453 | |||||||||
Gold production (000 oz) 41 percent(1) | 118 | 135 | 172 | |||||||||
Total cash costs ($/oz)(2) | 686 | 489 | 401 | |||||||||
Total production costs ($/oz)(2) | 737 | 585 | 587 | |||||||||
Capital expenditure ($ million) 100 percent | 20 | 10 | 8 | |||||||||
Capital expenditure ($ million) 41 percent(1) | 8 | 4 | 3 | |||||||||
Employees(3) | 790 | 705 | 634 | |||||||||
Outside contractors(3) | 981 | 827 | 876 | |||||||||
| All injury frequency rate | 1.65 | 2.31 | 4.37 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.02 | 0.04 | 0.04 | |||||||||
Pay limit (g/t) | 0.53 | 1.28 | 1.46 | |||||||||
Recovered grade (oz/t) | 0.055 | 0.060 | 0.074 | |||||||||
Recovered grade (g/t) | 1.90 | 2.04 | 2.52 | |||||||||
Gold production (000 oz) 100 percent | 295 | 287 | 354 | |||||||||
Gold production (000 oz) 41 percent(1) | 121 | 118 | 135 | |||||||||
Total cash costs ($/oz)(2) | 835 | 686 | 489 | |||||||||
Total production costs ($/oz)(2) | 868 | 737 | 585 | |||||||||
Capital expenditure ($ million) 100 percent | 34 | 20 | 10 | |||||||||
Capital expenditure ($ million) 41 percent(1) | 14 | 8 | 4 | |||||||||
Employees(3) | 846 | 790 | 705 | |||||||||
Outside contractors(3) | 998 | 981 | 827 | |||||||||
All injury frequency rate | 2.44 | 1.65 | 2.31 | |||||||||
| (1) | Effective December 29, 2009, the company increased its interest from 38 percent to 41 percent. |
| (2) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (3) | Average for the year. |
Performance
Gold production decreased by 13 percentincreased to 118,000 ounces, from 135,000121,000 ounces in 2009, mainly as2011 (2010: 118,000 ounces) with tonnes treated increasing to 2 million tonnes from 1.8 million tonnes, countering a result of a 127 percent decline in head grade.
Total cash costs increased by 40were 22 percent tohigher at $835 per ounce (2010: $686 per ounce, owing mainlyounce), driven by increases in fuel prices and higher dollar prices for a number of consumables.
Growth and improvement
Productivity initiatives focused on a number of activities, from truck and shovel utilization to haul road optimization, along with the lower-grade feed supplied to the priority plant. In addition, mining contractor costs were higher as a resultimplementation of the longer haulage distance, higher maintenance costsfleet management system which provides a dispatch and increases inhigh-level data capture system for analysis.
In the fuel price.
The BPF component of the Project ONE initiative was introduced during 2010activated at Sadiola in the fourth quarter of 2011. The operation is currently stabilizing and with better planning, resourcing and scheduling, it is anticipated that plant availability will improve, which should have a positive impact on production. Sadiola’s focus will be on mining the FE3 and FE4 pits in 2012. Mining is then expected to be fully entrenched during 2011. Initial BPFextend into the Tambali and level 3 pits.
Preparatory work will be directed at optimizing processing activities so as to increase availability, utilization and throughputon the detailed design of the plant.
The Environmental Study and Impact Assessment (ESIA) has been approved for the project and work on the Oxide Expansionassociated powerline is currently in progress. Long-lead items, including mining equipment, have been ordered and are expected to start arriving on site in 2012. Operations at the Sadiola Sulfide Project are expected to begin towards the end of 2012. The project is the latter currently undergoing a prefeasibility study.
Safety
An increase in finger injuries prompted a finger safety campaign at Sadiola. A comprehensive and integrated safety program focused on leadership, the plant will be modified to treat only sulfide material at a capacityreinforcement of 7.2 million tonnes per year. The Deep Sulfide project will extend the mine’s life and add 4.2 million ounces to Sadiola’s current life of mine production profile.
83
Mali – Yatela conduct their local community initiatives jointly.
Description
Yatela is 80 percent owned by the Sadiola Exploration Company Limited, a joint venture in whichbetween AngloGold Ashanti and IAMGOLD, giving each have an interest of 50 percent, giving AngloGold Ashanti an effective stake ofa 40 percent stake in Yatela. The balance of 20 percent is owned by the government of Mali.
The Yatela mine is situated in western Mali, ownssome 25 kilometers north of Sadiola and approximately 50 kilometers south-southwest of the regional capital Kayes. Ore extraction has been conducted from a number of pits including the Yatela main pit, Alamoutala, four Alamoutala satellite pits, KW18 and the North-west Extension.
Mining in most of these pits has been completed. For the remaining 20 percent stakeyears of the life of mine, the focus will be on a final cutback in Yatela Main pit (Pushback 8) as well as a new pit north of the mine.
Geology:
Yatela mineralization occurs as a keel-shaped body in Birimian metacarbonates. The ‘keel’ is centered on a fault which was the feeder for the original mesothermal mineralization, with an associated weakly mineralized diorite intrusion. Mineralization occurs as a layer along the sides and in the bottom of the ‘keel’. The ore dips almost vertically on the west limb and more gently towards the west on the east limb, with tight closure to the south.
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| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.01 | 0.04 | 0.04 | |||||||||
Pay limit (g/t) | 0.45 | 1.52 | 1.34 | |||||||||
Recovered grade (oz/t) | 0.036 | 0.106 | 0.078 | |||||||||
Recovered grade (g/t) | 1.23 | 3.62 | 2.66 | |||||||||
Gold production (000 oz) 100 percent | 150 | 222 | 165 | |||||||||
Gold production (000 oz) 40 percent | 60 | 89 | 66 | |||||||||
Total cash costs ($/oz)(1) | 817 | 326 | 621 | |||||||||
Total production costs ($/oz)(1) | 883 | 416 | 636 | |||||||||
Capital expenditure ($ million) 100 percent | 5 | 3 | 8 | |||||||||
Capital expenditure ($ million) 40 percent | 2 | 1 | 3 | |||||||||
Employees(2) | 308 | 298 | 305 | |||||||||
Outside contractors(2) | 570 | 505 | 583 | |||||||||
| All injury frequency rate | 2.28 | 5.54 | 6.13 | |||||||||
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | ||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.02 | 0.01 | 0.04 | |||||||||
Pay limit (g/t) | 0.55 | 0.45 | 1.52 | |||||||||
Recovered grade (oz/t) | 0.030 | 0.036 | 0.106 | |||||||||
Recovered grade (g/t) | 1.04 | 1.23 | 3.62 | |||||||||
Gold production (000 oz) 100 percent | 73 | 150 | 222 | |||||||||
Gold production (000 oz) 40 percent | 29 | 60 | 89 | |||||||||
Total cash costs ($/oz)(1) | 1,483 | 817 | 326 | |||||||||
Total production costs ($/oz)(1) | 1,552 | 883 | 416 | |||||||||
Capital expenditure ($ million) 100 percent | 2 | 5 | 3 | |||||||||
Capital expenditure ($ million) 40 percent | 1 | 2 | 1 | |||||||||
Employees(2) | 323 | 308 | 298 | |||||||||
Outside contractors(2) | 620 | 570 | 505 | |||||||||
All injury frequency rate | 1.52 | 2.28 | 5.54 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
Performance
The mine plan was adjusted in 2011 to allow for the completion of the Yatela main pit. Mining, which has now been completed, was originally scheduled for closure in 2010, though the life has since been extended. Attributable gold production at Yatela dropped by 33 percent from 2009 levels to 60,000 ounces in 2010. The decline in production was due mainly to a decreasethen advanced in the headAlamoutala main and satellite pits. As Yatela approaches closure, the grade of the ore stackedhas declined incrementally. The increase in tonnages mined failed to compensate for the lower grades, which had a knock-on effect on gold production which declined to an attributable 29,000 ounces.
Total cash costs rose to $1,483 per ounce as a result of non-conformity athigher input costs, including efforts to extend the bottom of mineralized structures in Alamoutala.
Growth and improvement
Yatela plans to mine at two pits, the Yatela main pit and Yatela North during 2012. Mining in the main pit was delayed in 2011 with the re-optimization of the Inferred Mineral Resourcemain pit in Yatela North, whereorder to reduce stripping ratios and maintain practical mining widths. There is an intense focus on optimizing residual opportunities.
Management has focused on putting in place steps to foster sustainable development in surrounding communities as the opportunity liesmine approaches closure. Voluntary retirements were encouraged during the year, and the only positions which have been filled are those critical to production targets. The temporary labor complement is also being reduced by 5 percent annually, and no contracts are being renewed. A closure consultant was appointed in 2011. The rehabilitation target to date is 312 hectares, of which 214 hectares have been rehabilitated. This is below target as a result of changes in the northeastmine plan and northwest extensions. Furthermore, a focused exploration program will be undertaken over the next year to ensure continuationunavailability of the mining operation.
Safety
The all injury frequency rate for the year improved to 2.28(AIFR) was 1.52 per million hours worked (2009: 5.54).
85
NAMIBIA
Namibia – Navachab
The Navachab gold mine is situated near the town of Karibib, some 170 kilometers northwest of the capital Windhoek and 171 kilometers inland on the southwest coast of Africa.
Navachab, which began operations in 1989, is an open-pit mine with a processing plant which includes a mill as well as CIP and electro-winning facilities, all with a monthly capacity of 120,000 tonnes.
Geology:
The Navachab deposit is hosted by Damaran greenschistam-phibolite facies, calc-silicates, marbles and volcanoclastics. The rocks have been intruded by granites, pegmatites and (quartz-porphyry dykes) aplite and have also been deformed into a series of alternating dome and basin structures. The mineralized zone forms a sheet-like body which plunges at an angle of approximately 20 degrees to the north-west. The mineralization is predominantly hosted in a sheeted vein set (±60 percent) and a replacement skarn body (±40 percent). The gold is very fine-grained and associated with pyrrhotite, and minor to trace amounts of pyrite, chalcopyrite, maldonite and bismuthinite. Approximately 80 percent of the gold is free milling.
Operating and production data for Navachab
| 2011 | 2010 | 2009 | ||||||||||||||
Pay limit (oz/t) | 0.06 | 0.07 | 0.051 | |||||||||||||
Pay limit (g/t) | 2.00 | 2.53 | 1.55 | |||||||||||||
Recovered grade (oz/t) | 0.043 | 0.052 | 0.046 | |||||||||||||
Recovered grade (g/t) | 1.46 | 1.80 | 1.58 | |||||||||||||
Gold production (000 oz) | 66 | 86 | 65 | |||||||||||||
Total cash costs ($/oz)(1) | 939 | 721 | 677 | |||||||||||||
Total production costs ($/oz)(1) | 1,121 | 779 | 723 | |||||||||||||
Capital expenditure ($ million) | 48 | 14 | 20 | |||||||||||||
Employees(2) | 790 | 687 | 578 | |||||||||||||
All injury frequency rate | 2.00 | * | 25.60 | 26.30 | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.07 | 0.051 | 0.04 | |||||||||
Pay limit (g/t) | 2.53 | 1.55 | 1.29 | |||||||||
Recovered grade (oz/t) | 0.052 | 0.046 | 0.042 | |||||||||
Recovered grade (g/t) | 1.80 | 1.58 | 1.43 | |||||||||
| Gold production (000 oz) | 86 | 65 | 68 | |||||||||
Total cash costs ($/oz)(1) | 721 | 677 | 559 | |||||||||
Total production costs ($/oz)(1) | 779 | 723 | 632 | |||||||||
| Capital expenditure ($ million) | 14 | 20 | 12 | |||||||||
Employees(2) | 687 | 578 | 482 | |||||||||
Outside contractors(2) | — | — | — | |||||||||
| All injury frequency rate | 25.60 | 26.30 | 20.63 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
| * | 2011 only includes medical treatment cases and lost-time injuries and excludes all first aid and dressing cases. |
Performance
Gold production increased by 32of 66,000 ounces was 23 percent tolower than the 86,000 ounces in 2010, due to greater volumes mined fromproduced the bottom of the pit and the treatment of high-grade concentrate from the DMS plant.
A mining fleet has been contracted for a three-year period to complete the year was $14 million (2009: $20 million).
Growth and improvement
The BPF component of Project ONE was rolled out at Navachab during the second half of the current east pushback.year in an effort to generate improved efficiencies across the operation.
Work has begun on a prefeasibility study, scheduled for completion by mid-2012, to determine the viability of achieving planned production targets as well as optimal mine and process options. The west cutproposed expansion is expected to be mined from 2013improve economies of scale and focus on cost control and continuous improvement initiatives. It is also expected to access the hanging wall mineralization. create additional jobs.
Exploration during 2011 will focusthe year focused on pit expansion drilling so as to increase confidence in the down plunge extension of the existing orebody, of the main pit. Drilling will focusto follow up on the North Pit 2geochemical anomalies and the down plunge extension, while also exploring the strike extent of the satellite target areas where previous exploration indicated potential, as well as the western limb of the fold hinge at anomaly 16.
Safety:
The all injury frequency rateannual safety plan was implemented, supported by a road show, safety awareness campaigns and observer training, which is ongoing. There were no fatalities during 2011. The AIFR improved dramatically, declining from 25.60 per million hours worked improved from 26.30 in 20092010 to 25.602.0 in 2010.
Navachab complied withreceived ISO 14001 certification during 2011. The OHSAS 18001 assessments conducted in March and October 2010.
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TANZANIA
Tanzania – Geita
The Geita gold mine is located in the Lake Victoria goldfields of the Mwanza region of Tanzania, about 120 kilometers from Mwanza and 4 kilometers west of the town of Geita. The mine is wholly owned and managed by AngloGold Ashanti.
The Geita gold deposit is an Archaean mesothermal orebody, largely hosted in a banded ironstone formation. Itmine is a multiple open pit operation with underground potential and is currently serviced by a 5.2 million tonnes per annum CIL processing plant.
Geology
Geita is an Archaean mesothermal mainly BIF-hosted deposit. Mineralization is located where auriferous fluids, which are interpreted to have moved along shears often on BIF-diorite contacts, reacted with the BIF. Some lower-grade mineralization can occur in the diorite as well (usually in association with BIF-hosted mineralization), and approximately 20 percent of the gold is hosted in the diorite.
Operating and production data for Geita
| 2010 | 2009 | 2008 | ||||||||||
Pay limit (oz/t) | 0.07 | 0.09 | 0.10 | |||||||||
Pay limit (g/t) | 2.38 | 3.08 | 3.10 | |||||||||
Recovered grade (oz/t) | 0.069 | 0.055 | 0.056 | |||||||||
Recovered grade (g/t) | 2.36 | 1.89 | 1.92 | |||||||||
Gold production (000 oz) | 357 | 272 | 264 | |||||||||
Total cash costs ($/oz)(1) | 697 | 985 | 814 | |||||||||
Total production costs ($/oz)(1) | 874 | 1,191 | 1,004 | |||||||||
Capital expenditure ($ million) | 38 | 19 | 53 | |||||||||
Employees(2) | 1,874 | 1,990 | 2,130 | |||||||||
Outside contractors(2) | 1,391 | 1,196 | 986 | |||||||||
| All injury frequency rate | 5.38 | 5.56 | 8.52 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
Pay limit (oz/t) | 0.06 | �� | 0.07 | 0.09 | ||||||||||||
Pay limit (g/t) | 2.06 | 2.38 | 3.08 | |||||||||||||
Recovered grade (oz/t) | 0.116 | 0.069 | 0.055 | |||||||||||||
Recovered grade (g/t) | 3.98 | 2.36 | 1.89 | |||||||||||||
Gold production (000 oz) | 494 | 357 | 272 | |||||||||||||
Total cash costs ($/oz)(1) | 488 | 697 | 985 | |||||||||||||
Total production costs ($/oz)(1) | 674 | 874 | 1,191 | |||||||||||||
Capital expenditure ($ million) | 58 | 38 | 19 | |||||||||||||
Employees(2) | 1,721 | 1,874 | 1,990 | |||||||||||||
Outside contractors(2) | 1,820 | 1,391 | 1,196 | |||||||||||||
All injury frequency rate | 3.60 | 5.38 | 5.56 | |||||||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
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The overall production performance for the year was further aided by higher grades mined at the Nyankanga Cut 6 and operation of the ball mill in single stage, which offset extended downtime of the SAG mill during unscheduled shutdowns in May and June to repair the feed end and during October to replace the SAG mill discharge end-plategearbox.
The fleet rationalization program continued to deliver productivity improvements in engineering stores, fuel and labor cost. This included completion of the larger light-weight truck tray project, the resultant phasing out of aged trucks and reducing the fleet from 34 to rebuild27 trucks, and manpower rationalization resulting from improved training and performance. Improved drill and blast performance contributed to improved mining performance and significant cost reductions. Average broken stocks have increased from 150,000bcm to 500,000bcm while the crusher dump-pocket. Productionnumber of drilling rigs decreased from 14 to 8. Powder factors reduced from 0.95kg\bcm to 0.72kg\bcm while achieving improved material fragmentation. Continued progress was made on the reagent optimization started in 2010, with improved gravity recovery and optimization of the CIL circuit further contributing to lower reagent consumption. The tire life optimization program also supported byachieved success through improved grades fromtire management, equipment operator training and improved haul road conditions. Mining operations were undertaken in three areas. Mining recommenced at the Star and Comet satellite pit, using contractors, after production was stopped in early 2010. Nyankanga pit which delivered an average gradecutback 5 was completed and cutback 7 began. Cutback 6 was the main source of 3g/t.
Growth and improvement
From the base year 2010, production and productivity have already increased by more than 20 percent. The target is to maintain production at 500,000 ounces a year and focus on improving employee productivity through focused specialized training to improve employee capability in role. The success achieved at Geita is largely due to the implementation of the BPF component of Project ONE. The operation is now strongly cash costpositive, with a plan focussing on stability and delivery. The key area of focus is asset reliability, with the team on site receiving strong support from the teams conducting the group-wide asset integrity audit. Capital expenditure has been approved, among others, for the year improved by 29 percentreplacement of the SAG-mill.
Work is also ongoing to $697 per ounce, mainly as a result of lower reagent costs,create opportunities for mine-life extension from surface and underground sources, as well as a reductionfor on-lease growth by establishing sustainable satellite- and refractory-ore open-pit projects that complement proposed underground projects. Emphasis will be placed on cash flow margins and returns on invested capital.
Key initiatives to reduce real costs which have been incorporated in general and engineering stores.
Other cost containment and production improvement initiatives include: improvement of mining practices to reduce ore loss to the waste dump; stabilizing and improving SAG-mill feed once a re-designed run-of-mine padnew mill is installed, from 612 tonnes per hour, to 650 tonnes per hour; optimizing the gravity circuit to increase gold recovery through improved availability of the plant; achieving higher fleet productivity by raising shift output; and optimizing liner design.
Challenges include scarce critical skills, particularly engineers, geologists and technicians. An internal pipeline of skills has been created, with 15 people a year enrolled in a graduate training program and 60 people on an integrated technical mining training program. Succession planning, talent management and increased focus on placing Tanzanians in key roles and reducing expatriate recruitments are areas of focus for management.
During the year, the company engaged with the local miners’ union, Tamico, and the International Chemical Engineering and Mining Union Federation (ICEM) to improve the ore-blending capabilityrelationship with the workforce at Geita. The parties concluded there was a need to renegotiate the existing recognition agreement to improve union access to the mine. The access agreement negotiations with Tamico commenced in 2012.
Over the past two years detailed geological work has been undertaken in Nyankanga, Geita Hill and Star & Comet pits in order to better understand controls of mineralization in each pit. In Nyankanga, mineralization is associated with the Nyankanga main fault zone while at Geita Hill pit, mineralization is associated with the axial planar cleavage of a large synformantiform fold pair. In the Star and Comet pit, mineralization is controlled by the contact between quartz feldspar porphyry and banded iron formation and a major shear zone cross cutting the middle of the plant. All planned performance parameters were achieved.
The fleet rationalization strategy also sawGeita town water project will begin once environmental approval has been granted in 2012. Completion of the numberfront end of trucksthe project, from the treatment plant and pumping station to the water reservoir, is expected in July 2012.
A budget of $2.6 million for cyanide destruction infrastructure has been approved for 2012. In the meantime, a tailings dilution system is being used duringto reduce the year reduce from 48 to 34. This,levels of cyanide at discharge points. Weak acid dissociable (WAD) cyanide at the pool has remained as low as 0.01ppm. Geita’s Cyanide Code compliance audit was held in conjunctionDecember, with improved operating practices, resultedcompliance targeted by the end of 2012. The approval and procurement of a new incinerator for the disposal of hazardous material took place in significant productivity gains as2011 and the same volume of material was moved with fewer haul trucks. Fleet rationalization will continue through 2011 as truck productivityfacility is expected to improve bybe commissioned in 2012.
Safety
Geita recorded an additional 10 percent to 20 percent, as a resultAIFR of the new larger, lightweight trays.
Emergency response and reporting course, plan task observation training to all frontline managers and rescue team refresher courses.
Fatigue has been identified as a critical safety area to be proactively managed. The fatigue program started in 2009 was upgraded in 2010, and construction of the school will be completed intraining on fatigue management continued throughout 2011.
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AUSTRALASIA
AngloGold Ashanti’s sole operating mine in Australasia is Sunrise Dam.
Performance
Production from Australasia declined by 138 percent to 396,000246,000 ounces in 2010,2011. This was equivalent to 96 percent of group production. This decline in production was due to the flood related work stoppage with the excessive rainfall resulting in operations both underground and at the open pit being adversely affected for approximately six months.
Total cash costs increased by 1097 percent to $692$1,362 per ounce. ounce due primarily to lower production and the cost of remedial work.
In all, 494an average of 509 people, including contractors were employed 39at the Sunrise Dam operation, 3 percent more than in 2009. 2010.
Total attributable capital expenditure for the region including Tropicana,more than doubled to $102 million, the bulk of which ($73 million) was $40 million, a decrease of 77 percentspent on the $177 millionTropicana project, which is scheduled to begin production in 2013. The bulk of this was spent in 2009, which includedon the Boddington project that was sold.
The group is also developing the new Tropicana gold mine in Western Australia, along withis being developed by AngloGold Ashanti (70 percent) and joint venture partner, Independence Group Ltd. (30 percent). Tropicana, a greenfield discovery made by AngloGold Ashanti, is expected to deliver its first production in 2013. AngloGold Ashanti is managing the Tropicana project along with a vastand has also undertaken an extensive exploration program in the area that covers some 13,500km2 of tenements along a 600 kilometerkilometers strike length,length. This area in Western Australia is considered one of the most prospective regions for new gold discoveries in Australia.
At year-end, the attributable Ore Reserve for Australasia, attributable to AngloGold Ashanti, totaled 3.744.26 million ounces at year-end.
AUSTRALIA
Australia and in the Solomon Islands. For further information on the group’s exploration program in Australasia, see the Global exploration section of this report.
Description
The Sunrise Dam gold mine is located in the northern goldfields of Western Australia, 220 kilometers northeast of Kalgoorlie and 55 kilometers south of Laverton.
The mine consists of a large open pit which is now in its fourteenthfifteenth year of operation, and an underground mine which began in 2004. Mining is conducted by contractors and the ore is treated in a conventional gravity and CILcarbon-in-leach (CIL) processing plant, which is owner-managed.
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Geology
Operating and production data for Sunrise Dam
| 2010 | 2009 | 2008 | ||||||||||
| Pay limit (oz/t) | 0.14 | 0.08 | 0.09 | |||||||||
| Pay limit (g/t) | 4.32 | 2.45 | 2.79 | |||||||||
Recovered grade (oz/t)(2) | 0.094 | 0.084 | 0.101 | |||||||||
Recovered grade (g/t)(2) | 3.22 | 2.87 | 3.46 | |||||||||
| Gold production (000 oz) | 396 | 401 | 433 | |||||||||
Total cash costs ($/oz)(1) | 692 | 631 | 559 | |||||||||
Total production costs ($/oz)(1) | 773 | 738 | 665 | |||||||||
| Capital expenditure ($ million) | 29 | 31 | 19 | |||||||||
Employees(3) | 93 | 99 | 77 | |||||||||
Outside contractors(3) | 401 | 356 | 333 | |||||||||
| All injury frequency rate | 13.65 | 8.94 | 15.85 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
Pay limit (oz/t) | 0.10 | 0.14 | 0.08 | |||||||||||||
Pay limit (g/t) | 3.00 | 4.32 | 2.45 | |||||||||||||
Recovered grade (oz/t)(2) | 0.063 | 0.094 | 0.084 | |||||||||||||
Recovered grade (g/t)(2) | 2.16 | 3.22 | 2.87 | |||||||||||||
Gold production (000 oz) | 246 | 396 | 401 | |||||||||||||
Total cash costs ($/oz)(1) | 1,362 | 692 | 631 | |||||||||||||
Total production costs ($/oz)(1) | 1,528 | 773 | 738 | |||||||||||||
Capital expenditure ($ million) | 27 | 29 | 31 | |||||||||||||
Employees(3) | 101 | 93 | 99 | |||||||||||||
Outside contractors(3) | 408 | 401 | 356 | |||||||||||||
All injury frequency rate | 19.40 | 13.65 | 8.94 | |||||||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Open-pit operations. |
| (3) | Average for the year. |
Performance
Sunrise Dam produced 246,000 ounces at a total cash cost of $1,362 per ounce in 2010 decreased by 1 percent to2011, compared with 396,000 ounces from 401,000 ouncesat a total cash cost of $692 per ounce the previous year. There were two significant events during 2011 that negatively impacted production. A major flood occurred in February, when 220 millimeters of rain fell in two storms, less than five days apart. This was equivalentthe highest rainfall recorded in the 129 years of records for the Laverton district. In April, a wall failed in the southeastern portion of the open pit, which prevented access to 9 percent of group goldthe open pit working areas. A new access ramp was constructed, which took approximately six months. No injuries were sustained in either event, or in the work required to re-establish production. The decline reflects the marginally lower average grade of ore processed as anticipated intwo events described above necessitated a substantial change to the mine plan. Open-pitplan and production schedule for 2011, with a consequential change to the annual gold output.
The flood event impacted underground production for approximately four months. During this period the mining continued incontractor worked on remedial activities to repair damage and rehabilitate flooded areas, thus full costs were incurred. Production from the North Wall Cutback providing over 80 percent of production. Ore continued to be sourced from a combination of underground and open pit operations withwas interrupted for approximately six months while the usenew access ramp was constructed. Again the open pit mining contractor was fully occupied for most of lower-grade stockpiles to supplement the ore feed toperiod, undertaking stockpile relocation, construction of the plant.
The underground operation returned to $692 per ounce, from $631 per ounce in 2009.
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Growth and improvement
An extensive mineralized system below the currently mined Cosmo and adjacent Dolly underground domains was discovered in 2011. Initial drill testing of these targets highlighted significant opportunity for a new mineralized domain, named Vogue. The mineralization is an extension of the Cosmo and Dolly gold system that extends beyond the existing mine infrastructure by up to 400 meters and to depths of at least 800 meters below surface. It is hosted within volcanic rocks and structures equivalent to those that host the Cosmo, Western Shear and GQ mineralization.
Dimensions of the Vogue mineralization are significantly larger than Cosmo and Dolly, with an opportunity for either extensive bulk or selective mining zones, close to existing underground mine infrastructure. A conceptual study was completed at the end of 2010.2011 and a prefeasibility study into the expansion of the Sunrise Dam underground mine has commenced, with a substantial exploration commitment that is expected to span two to three years.
Production at Sunrise Dam has been steadily declining from a peak in 2007 when the main high-grade ore zone was mined in the base of the open pit. Since then, open pit production has been declining and underground production steadily increasing. Production from underground will not reach the previous highs of the open pit as volumes of high-grade ore do not reach the same concentration as previously encountered in the base of the open pit. A plan was implemented in 2011 to increase production in the period 2012 – 2014.
There are four main areas of focus for this plan:
The Crown Pillar between the base of the pit and the underground mine contains high-grade ore. The pillar itself contains many pathways for water so by mining and replacing it, an engineered cemented backfill will improve water management in the event of flooding and high grade, low-cost gold production will be brought;
A study was undertaken during 2011 on the most suitable mining method for the GQ orebody. A substantial tonnage will now be mined via more productive and cost effective long hole open stoping methods and alternative mine design options are currently being assessed to optimize the extraction of areas of narrow, high grade mineralization that extend beyond bulk mining zones within GQ;
The underground production improvement project will focus on underground stope production, trucking, bogging, maintenance and retention of skilled people, using the “analyze and improve” processes of Project ONE. The objective is to lift ore production with minimal additional people and equipment. Management expects that this will improve mining costs and have the added benefit of lowering the cut-off grade and bringing more material into reserve; and
The Vogue discovery is an extremely broad domain of high- and low-grade gold mineralization. There are some well drilled areas at the top of the Vogue deposit where the potential exists for higher-grade coherent zones similar in scale to Cosmo.
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Safety
Sunrise Dam continues to maintain a lost-time injury frequency rate (LTIFR) below the Australian industry average. At the end of 2011, Sunrise Dam recorded an AIFR of 19.40 per million hours worked.
THE AMERICAS
AngloGold Ashanti owns the Cripple Creek & Victor mine in the United States, the Cerro Vanguardia mine in Argentina, the AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração) and Serra Grande operations, both in Brazil. The Americas represents an important growth region for AngloGold Ashanti.
Performance
Combined production from these operations increased by 36 percent to 842,000891,000 ounces of gold in 2010. This was equivalent2011, increasing its contribution to group production to 21 percent (2010: 19 percent of group production.percent). In all, 6,5827,389 people, including contractors, were employed, 698807 more than in 2009. 2010.
Total capital expenditure for the region was $309$452 million, an increase of 2046 percent on the $257$309 million spent in 2009.
The stronger real and scarce mining skills along with accelerating inflation across the South American jurisdictions presented significant cost pressures during the year.
The total attributable Ore Reserve for the Americas region was 11 million ounces.
Safety
Regrettably, two contractor employees lost their lives in occupational accidents during 2011. The first was in Brazil where a worker was run over by a tractor on a construction site, and the second was in Colombia where a worker was inundated by a naturally occurring landslide after unusually heavy rainfall. An all injury frequency rate of 6.33 per million hours worked (2010: 5.66) was achieved in 2011.
Growth and improvement
A far-reaching greenfield exploration program is underway in the Americas region, most notably in Colombia, South America, where it holds a significantAngloGold Ashanti has extensive land position and has made two greenfield discoveries — Gramalote and La Colosa. The companyholdings.
Exploration activities are also has exploration activities, either conducted by its owneither AngloGold Ashanti teams or together with joint venture partners, in Canada, Brazil and Argentina, among others.
UNITED STATES OF AMERICA
United States of America – Cripple Creek & Victor
Description
AngloGold Ashanti holds a 100 percent interest in Cripple Creek & Victor (CC&V) Gold Mining Company (CC&V) is AngloGold Ashanti’s sole active operation in the United States.
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Geology:
The district of Cripple Creek is centered on an intensely altered alkaline, Tertiary-aged, diatreme-volcanic, intrusive complex, approximately circular in shape covering 18.4 square kilometers and surrounded by Precambrian rocks. The Precambrian rocks consist of biotite gneiss, granodiorite and quartz monzonite and granite.
The intersection of these four units and regional tectonic events formed an area of regional dilation which subsequently facilitated the formation of the volcanic complex. The majority of the complex then in-filled with the eruptive phase Cripple Creek Breccia host rock. This complex was subsequently intruded by a series of intrusive dykes and sills that include syenites, phonolites, phonotephrites and lamprophyres. These intrusives occupy all of the dominant district structural orientations. District structures are generally near vertical and strike north-north-west to north-east. These structures acted as primary conduits for the late-stage gold mineralizing solutions. Higher grade pods of mineralization occur at structural intersections and/or as sheeted veins along zones of strike deflection. High-grade gold mineralization is associated with K-feldspar + pyrite +/- carbonate alteration and occurs adjacent to the major structural and intrusive dyke zones. The broader zones of disseminated mineralization occur primarily as micro-fracture halos around the stronger alteration zones in the more permeable Cripple Creek Breccia wall rocks.
The average depth of oxidation is 120 meters and is also developed along major structural zones to even greater depths. Individual orebodies can be tabular, pipe-like, irregular or massive. Individual gold particles are generally less than 20 microns in size and occur as native gold with pyrite or native gold after gold-silver tellurides. Gold occurs within hydrous iron and manganese oxides and as gold-silver tellurides. Silver is present but is economically unimportant. Gold mineralization can be encapsulated by iron and manganese oxides, pyrite, K-feldspar alteration and quartz.
Cripple Creek & Victor —– Summary of metallurgical operations
Gold plants | ||||
Capacity (000 tonnes/month) | ||||
- crushed ore production | 1,739 | |||
- total ore production | 1,796 | |||
- solution processed | 2,371 | |||
Operating and production data for Cripple Creek & Victor operations
| 2010 | 2009 | 2008(3) | ||||||||||
| Pay limit (oz/t) | 0.007 | 0.005 | 0.01 | |||||||||
| Pay limit (g/t) | 0.23 | 0.17 | 0.34 | |||||||||
| Recovered grade (oz/t) | 0.013 | 0.013 | 0.014 | |||||||||
| Recovered grade (g/t) | 0.43 | 0.46 | 0.49 | |||||||||
| Gold production (000 oz) | 233 | 218 | 258 | |||||||||
Total cash costs ($/oz)(1) | 500 | 371 | 310 | |||||||||
Total production costs ($/oz)(1) | 901 | 743 | 643 | |||||||||
| Capital expenditure ($ million) | 73 | 87 | 27 | |||||||||
Employees(2) | 403 | 367 | 350 | |||||||||
| Outside contractors | 243 | 195 | 71 | |||||||||
| All injury frequency rate | 12.26 | 15.80 | 30.19 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||||||
Pay limit (oz/t) | 0.007 | 0.007 | 0.005 | |||||||||||||
Pay limit (g/t) | 0.24 | 0.23 | 0.17 | |||||||||||||
Recovered grade (oz/t) | 0.011 | 0.013 | 0.013 | |||||||||||||
Recovered grade (g/t) | 0.39 | 0.43 | 0.46 | |||||||||||||
Gold production (000 oz) | 267 | 233 | 218 | |||||||||||||
Total cash costs ($/oz)(1) | 569 | 500 | 371 | |||||||||||||
Total production costs ($/oz)(1) | 929 | 901 | 743 | |||||||||||||
Capital expenditure ($ million) | 67 | 73 | 87 | |||||||||||||
Employees(2) | 454 | 403 | 367 | |||||||||||||
Outside contractors | 127 | 243 | 195 | |||||||||||||
All injury frequency rate | 19.80 | 12.26 | 15.80 | |||||||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. | |
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Performance
Major construction of the MLE1 project was completed during the year and this contributed to production as ore was placed closer to the liner on the heap-leachnew section of the pad. An all phase 5 pad compared with 18.7 millionliner was placed in 2011, a county road was relocated and additional adjacent land was purchased in support of the project.
Operations continued to be affected by a severe drought in the Colorado River Basin. The lack of water reduced percolation through the pad, curtailing production and productivity. Total tonnage mined was increased from 180,000 tonnes in 2009.
Commodity inflation was the primary driver of the year-on-year increase in production resulted fromcash costs along with higher diesel consumption as mining occurred deeper in the greater availabilityCresson pit and waste hauls were longer. Development and mining progressed on the Wild Horse Extension of the pad area near the liner following the removal of a truck load-out bin to another location. This change shortened the percolation time of the gold-bearing solution from the ore placed in this small, newly-lined area. In addition, successful test programs were undertaken to improve leach conditions at depth via deep injection into the pad to remediate an issue identified during the 2008 pad drilling program. The injected solution improves alkalinity and cyanide availability at depth to allow favorable conditions for leaching residual gold into solution. The injection programs are to be expanded, given their early success. Given the size of the pad, recovery of residual goldorebody which is expected to continue for several years.
Growth and improvement
CC&V’s Ore Reserve increased 35 percent to $500 per ounce, due primarily toby 1 million ounces in 2011. Exploration in the higher unit cost for the new ounces placed, rising commodity prices (diesel fuel in particular), and increased royalty costs, driven by higher gold prices.
Safety:
CC&V continued to reporthas a strong safety performance.record with no fatalities in 2011, maintaining its long-term fatality-free record. The all injury frequency rate for 2010 improveddeteriorated to 19.80 from 12.26 per million hours worked (2009: 15.80). There were no fatalities during the year.
The Project ONE and Safety Transformation initiatives were rolled out with standards being implemented as they are finalized. As part of the improvement initiatives, management is engaging all employees in soliciting, developing and implementing improvement ideas related to safety and production. This effort includes regular, scheduled meetings with top management and the hourly paid workforce.
In October, CC&V received recognition of continued certification at weekly meetings. The programs have been implemented to ensure continued improvementthe “Gold” level in the safety performance at CC&V. Project ONE was rolled out in 2009 and further positive results are expected over the two-year implementation process.
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AngloGold Ashanti has three operations in South America —- Cerro Vanguardia in Argentina and AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração) and Serra Grande in Brazil.
AngloGold Ashanti has had an active exploration program in Colombia for some years, with the most favorable of the prospects being in the La Colosa district. The exploration programs in
ARGENTINA
Argentina and Brazil were recently expanded.
Description
AngloGold Ashanti has a 92.5 percent interest in Cerro Vanguardia with Fomicruz (the province of Santa Cruz) owning the remaining 7.5 percent. Located to the northwest of Puerto San Julian in the province of Santa Cruz, Cerro Vanguardia consists of multiple small open pits with high stripping ratios.pits. Shallow underground mining began in 2010 to access high-grade material and in 2011 accounted for about 19 percent of the mine’s production. The orebodies comprise a series of hydrothermal vein deposits containing gold and large quantities of silver, which is mined as a by-product.
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Geology
Gold and silver mineralization at Cerro Vanguardia occurs within a vertical range of about 150 meters to 200 meters in a series of narrow, banded quartz veins that occupy structures within the Chon Aike ignimbrites. These veins form a typical structural pattern related to major north-south (Concepcion) and east-west (Vanguardia) shears. Two sets of veins have formed in response to this shearing —- one set strikes about N40W and generally dips 65 to 90 degrees to the east; while the other set strikes about N75W and the veins dip 60 degrees to 80 degrees to the south.
The veins are typical of epithermal, low-temperature, adularia-sericite character and consist primarily of quartz in several forms: as massive quartz, banded chalcedonic quartz, and quartz-cemented breccias. Dark bands in the quartz are due to finely disseminated pyrite, now oxidized to limonite. The veins show sharp contacts with the surrounding ignimbrite which hosts narrow stockwork zones that are weakly mineralized and appear to have been cut by a sequence of north-east-trending faults that have southerly movement with no appreciable lateral displacement.
Operating and production data for Cerro Vanguardia
| 2010 | 2009 | 2008 | ||||||||||
| Pay limit (oz/t) | 0.13 | 0.12 | 0.19 | |||||||||
| Pay limit (g/t) | 4.36 | 4.17 | 6.39 | |||||||||
| Recovered grade (oz/t) | 0.178 | 0.190 | 0.159 | |||||||||
| Recovered grade (g/t) | 6.11 | 6.51 | 5.44 | |||||||||
| Gold production (000 oz) 100 percent | 209 | 208 | 166 | |||||||||
| Gold production (000 oz) 92.50 percent | 194 | 192 | 154 | |||||||||
| Silver production (000 oz) 100 percent | 2.8 | 2.2 | 1.7 | |||||||||
| Silver production (000 oz) 92.50 percent | 2.6 | 2.0 | 1.6 | |||||||||
Total cash costs ($/oz)(1) | 366 | 359 | 617 | |||||||||
Total production costs ($/oz)(1) | 521 | 495 | 747 | |||||||||
| Capital expenditure ($ million) 100 percent | 41 | 18 | 16 | |||||||||
| Capital expenditure ($ million) 92.50 percent | 38 | 17 | 15 | |||||||||
Employees(2) | 883 | 753 | 756 | |||||||||
Outside contractors(2) | 359 | 316 | 316 | |||||||||
| All injury frequency rate | 8.08 | 9.34 | 9.72 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.11 | 0.13 | 0.12 | |||||||||
Pay limit (g/t) | 3.86 | 4.36 | 4.17 | |||||||||
Recovered grade (oz/t) | 0.182 | 0.178 | 0.190 | |||||||||
Recovered grade (g/t) | 6.23 | 6.11 | 6.51 | |||||||||
Gold production (000 oz) 100 percent | 212 | 209 | 208 | |||||||||
Gold production (000 oz) 92.50 percent | 196 | 194 | 192 | |||||||||
Silver production (000 oz) 100 percent | 2.9 | 2.8 | 2.2 | |||||||||
Silver production (000 oz) 92.50 percent | 2.7 | 2.6 | 2.0 | |||||||||
Total cash costs ($/oz)(1) | 403 | 366 | 359 | |||||||||
Total production costs ($/oz)(1) | 566 | 521 | 495 | |||||||||
Capital expenditure ($ million) 100 percent | 79 | 41 | 18 | |||||||||
Employees(2) | 1,065 | 883 | 753 | |||||||||
Outside contractors(2) | 579 | 359 | 316 | |||||||||
All injury frequency rate | 1.59 | 8.08 | 9.34 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
Performance
Cerro Vanguardia was the group’s lowest cost producer in 2010. Cash2011. Attributable gold production of 196,000 ounces was marginally higher than the previous year total of 194,000 ounces and met operating targets. Total cash costs of $366$403 per ounce were 2 percent higherlower than projected at the $359 per ounce in 2009, chiefly reflecting increased labor costsbeginning of the year due to improved efficiencies at the mine and also the positive impact of local inflationary pressures. Higher spot priceshigher-than-forecast silver production and increased royalties also contributedprices. Ensuring a consistent supply of feed to keep the higher costs but were partially offset by higher silver credits. The stockpile movementplant running at capacity was favorablea principal focus during the year, as a consequencewas the consolidation of higher ore tonnes mined compared with last year.
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Meeting production goals was complicated somewhat by the introduction of import restrictions by the federal government which delayed the delivery of some spare parts and capital equipment. In addition, accelerating inflation in Argentina pushed costs higher for both consumables and the payroll. These factors continue to pose a significant challenge in Argentina and may present additional hurdles to imports, in recruitment and labor relations in the year ahead.
Construction of the new heap leach was delayed from the third quarter of 2011 to the first quarter of 2012, principally owing to construction delays caused by unseasonably inclement weather. The delay curtailed production but was mitigated by additional output achieved by rescheduling some open pit operations as well as optimizing capacity of the underground operation. The heap leach project will enableallow Cerro Vanguardia’s annual gold productionVanguardia to increase by 20,000 ounces, maintaining total production at around 200,000 ounces by enabling the processingexploit additional sources of low-grade material. Cerro Vanguardia’s marginal-grade ores, belowore previously excluded from the cut-off grade of the current plant process, range from 0.35g/t to 1.5g/t. Project implementation will start in mid 2011.
Growth and improvement
About 34,000 meters of diamond drillholesdrilling and 17,00019,000 meters of reverse circulation holes. The program aims to expandholes were done during the mine’s Mineral Resourceyear with the aim of expanding the resource at depth and to the north and west of the concession.
Given the continued inflationary challenges facing companies in Argentina, the potential reduction in unit costs that will accompany additional production, makes further expansion of the operation an attractive option. The mine continued work on the underground and heap leach projects which are expected to add incremental production in coming years. Given the continued success of the brownfield exploration team in identifying new, high-grade sources of ore in the vein structures at the mine, the Americas team is investigating further expansion possibilities. These include increasing the size of the plant and further expanding the scale of the heap leach footprint.
To improve the knowledge of the orebody and to provide more certainty of both grade and tonnage, the Gabriela, Lucy, Cuncuna, Rocio, El Lazo, Loma del Muerto, Osvaldo 4 and Liliana veins were drilled.
Focus will remain on the recruitment of skilled workers in an increasingly competitive environment for human resources as more mining development occurs nationally and regionally. Maintenance and planning strategies will also be adapted to cope with the more complex set of import restrictions.
Seminars, workshops and ongoing training of employees at all levels are aimed at ensuring a reduction in reportable environmental and safety incidents. At Cerro Vanguardia, close attention will be paid to the management of underground water in order to prevent pollution as this portion of the mine’s development increases.
Safety
Cerro Vanguardia’s safety performance improved further during 2011, and the mine recorded its ninth straight year under review. For the eighth consecutive yearwith no fatalities were recorded, while the all injury frequency ratefatality. The AIFR improved markedly from 8.08 to 8.081.59 per million hours worked, (2009: 9.34), the best performance evera new record for the mine.
BRAZIL
Brazil are– AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração) and Serra Grande.
Description
AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração)
The Córrego do Sítio Mineração (AGA Mineração).
Geology:
The area in which Brasil Mineração is located is known as the Iron Quadrangle and is host to historic and current gold mining operations, as well as a number of open-pit limestone and iron ore operations. The geology of the Iron Quadrangle is composed of Proterozoic and Archaean volcano-sedimentary sequences and Pre-Cambrian granitic complexes. The host to the gold mineralization is the volcano-sedimentary Nova Lima Group (NLG) that occurs at the base of the Rio das Velhas SuperGroup (RDVS). The upper sequence of the RDVS is the meta-sedimentary Maquiné Group. Cuiabá mine, located at Sabara Municipality, has gold mineralization associated with sulfides and quartz veins in Banded Ironstone Formation (BIF) and volcanic sequences. At this mine, structural control and fluids flow ascension are
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The controlling mineralization structures are the apparent intersection of thrust faults with tight isoclinal folds in a ductile environment. The host rocks at Brasil Mineração are BIF, Lapa Seca and mafic volcanics (principally basaltic). Mineralization is due to the interaction of low salinity carbon dioxide rich fluids with the high-iron BIF, basalts and carbonaceous graphitic schists. Sulfide mineralization consists of pyrrhotite and pyrite with subordinate pyrite and chalcopyrite; the latter tends to occur as a late-stage fracture fill and is not associated with gold mineralization. Wallrock alteration is typically carbonate, potassic and silicic.
Brazil —– Summary of metallurgical operations
| AngloGold Ashanti Mineração | ||||||||||||
| Cuiabá | Raposos | Serra Grande | ||||||||||
Gold plants Capacity (000 tonnes/month) | 135 | 26 | 66 | |||||||||
| AngloGold Ashanti Mineração | Serra Grande | |||||||||||
| Cuiabá | Raposos | |||||||||||
Gold plants | ||||||||||||
Capacity (000 tonnes/month) | 135 | 26 | 66 | |||||||||
Operating and production data for AGA Mineração
| 2010 | 2009 | 2008 | ||||||||||
| Pay limit (oz/t) | 0.13 | 0.08 | 0.15 | |||||||||
| Pay limit (g/t) | 4.40 | 2.69 | 5.16 | |||||||||
Recovered grade (oz/t)(1) | 0.210 | 0.205 | 0.222 | |||||||||
Recovered grade (g/t)(1) | 7.21 | 7.02 | 7.62 | |||||||||
| Gold production (000 oz) | 338 | 329 | 320 | |||||||||
Total cash costs ($/oz)(2) | 444 | 347 | 322 | |||||||||
Total production costs ($/oz)(2) | 683 | 492 | 450 | |||||||||
| Capital expenditure ($ million) | 142 | 84 | 69 | |||||||||
Employees(3) | 2,486 | 2,249 | 1,954 | |||||||||
Outside contractors(3) | 940 | 715 | 1,033 | |||||||||
| All injury frequency rate | 2.62 | 4.19 | 5.79 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.13 | 0.13 | 0.08 | |||||||||
Pay limit (g/t) | 4.41 | 4.40 | 2.69 | |||||||||
Recovered grade (oz/t)(1) | 0.217 | 0.210 | 0.205 | |||||||||
Recovered grade (g/t)(1) | 7.43 | 7.21 | 7.02 | |||||||||
Gold production (000 oz) | 361 | 338 | 329 | |||||||||
Total cash costs ($/oz)(2) | 571 | 444 | 347 | |||||||||
Total production costs ($/oz)(2) | 855 | 683 | 492 | |||||||||
Capital expenditure ($ million) | 259 | 142 | 84 | |||||||||
Employees(3) | 2,715 | 2,486 | 2,249 | |||||||||
Outside contractors(3) | 1,110 | 940 | 715 | |||||||||
All injury frequency rate | 4.05 | 2.62 | 4.19 | |||||||||
| (1) | Recovered grade represents underground operations. |
| (2) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A. Operating results |
| (3) | Average for the year. |
Performance
At AGA Mineração, production increasedin 2011 was 361,000 ounces, 7 percent higher than the prior year. The higher output followed the ramp-up at Lamego and the start of production from Córrego do Sítio. Production was, however, negatively impacted by 3 percent to 338,000 ounces from 329,000 ounces in 2009,lower tonnage at Cuiabá, due mainly to geotechnical and fleet availability issues.
Cash costs of $571 per ounce were 29 percent up on the implementationprevious year, mainly due to labor cost inflation and higher energy consumption following the commissioning of the Lamego project. Total cashrefrigeration plant in Cuiabá. Other factors were the stronger Brazilian real, which appreciated by 5 percent against the dollar in 2011, lower volumes and higher unit costs increased by 28 percent to $444 per ounce, driven largely by higher maintenance costs. These effects were partially offset, however, by higher revenue from the sale ofnew Córrego do Sítio sulfide production. An improved price received for sulfuric acid, a by-product ofat the Cuiabá complex, had a positive impact on costs during the year.
The cost and availability of specialized mining operation.
Project ONE an integrated maintenance management systemimplementation is ongoing and all effortsthe BPF stabilization phase was completed at Cuiabá, with benefits achieved in maintenance and production to counter the low availability of the fleet of heavy mechanized equipment. Renewed focus was placed on training to improve safety and productivity in high-dip areas, while trial mining using the sub-level bench method was successfully piloted and will now be extended to other areas of the mine. This change also mitigated geomechanical instability and is expected to result in improved productivity in 2012 and 2013.
Given the increased mining depth to more than 1,100 meters at Cuiabá by the end of 2011 and the resultant rise in working temperatures, a refrigeration plant was commissioned to service the deeper areas of the mine.
At Lamego, where tonnages improved by 15 percent, the drill method was changed to cross-cut instead of driving the ramp down to the mine’s deepest levels so as to improve knowledge of the orebody at depth. Now, more than 2.5 years of reserves are organized into two strategies: short-term results focused on costs and equipment availability and medium-estimated to long-term results focused on SIGM Pyramid (maintenance management process). These initiatives resulted inbe available at current production rates, following development of ore drives from level 3.1 to level 4 at the Carruagem orebody. This enables a 7 percent improvement inhigh level of mining flexibility.
While the performance of sponsored heavy mobile equipmentscheduled maintenance shutdown at the pyrometallurgy plant at Queiroz was undertaken during the year.
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At Córrego do Sítio, the underground sulfide mine which, togetherwas developed and the orebodies prepared for the start of production during 2011. This mine had reached production capacity of 40 percent by year-end. The underground mine produced 171,000 tonnes in 2011. The metallurgical plant was commissioned in January 2012. The oxide heap leach plant improved its productivity 18 percent by increasing bench heights on the heap leach by 1 meter to 7 meters.
Growth and improvement
Both greenfield and brownfield exploration drilling campaigns continued, with São Bento, has been renamed Córrego do Sítio Mineração. Phase 1the focus on increasing the gold resource base.
Commissioning and mine ramp-up of the Córrego do Sítio project approvedproceeded during the year and full production at Lamego mine was achieved in 2011. Scoping studies are in progress for both mines to determine further expansion opportunities. At Córrego do Sítio, additional sources of oxide and sulfide ores will enable an expansion.
The underground sulfide operation is ramping up and is expected to reach full production by the board in May 2010end of 2012. One of the principal operating challenges is to control dilution from the sub-level stoping by a greater focus on grade control, while keeping the ramp-up on track with estimated capital expenditurethe development of $195 million, covers the Laranjeiras, Carvoaria Velharamps and Cachorro Bravo orebodies with trial miningore drives to ensure appropriate flexibility.
The Lamego project was completed at the latter already completed. The capital project is proceeding accordingend of 2011, with only minor changes to schedule. The initial focuscivil infrastructure required at a cost of the project team is on the refurbishment of the São Bento plant, the ramp-up in mine production and construction of infrastructure, including the new road to transport ore and waste. Annual production from Phase 1some $2 million. Meanwhile, further work is planned to startimprove knowledge of the upside in 2011, followingthe oxide and sulfide endowment.
At Lamego, management focused on improvements to equipment reliability as well as better planning and scheduling. The success of crews in using the business improvement framework to realize significant improvements in productivity without increased capital expenditure, have demonstrated the possibility of increased throughput. The establishment of an operational control centre at the mine has further helped streamline operations.
At Cuiabá, work is underway to stabilize production in narrow veins and to investigate use of satellite orebodies to further boost production. Management also began investigating mining at depths greater than those envisaged in the current mine plan, beginning with a mine and plant ramp up and will continue at an average of 140,000 ounces a year fordrilling campaign below the initial 11-year life of mine. The second phase of this project has the potential to increase production through the addition of Mineral Resources24 level and the expansionformation of a team to conduct improved geological mapping of the plant. The scope and sizemine. Increased infill drilling will also be undertaken to facilitate the change of the expansion will depend on the results ofmining method, while brownfield exploration drilling currently under way.
Safety:A vastly improved
The safety performance duringat AGA Mineração deteriorated when compared to 2010, resulted inrecording an all injury frequency rate of 2.624.05 per million hours worked forworked. Regrettably, a contractor died when he was run over by a tractor at the tailings facility construction site.
Following a culture survey undertaken during the year, (2009: 4.19). There were no fatalities.
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The company also holds the authoritiesfollowing certifications:
ISO 14001 – Environment;
OHSAS 18001 – Occupational Health and Safety;
ISO 17025 – Laboratory analysis;
NBR 16001 – Social responsibility – 1st Brazilian mine company;
International Cyanide Management Code; and
ISO 9001 – Quality (Laboratory and smelter house).
Brazil – Serra Grande (attributable 50 percent)
Description
Serra Grande is under review.
Geology:
The deposits occurare in the Rio Vermelho and Ribeirão das Antes Formations of the Archaean Pilar de Goia’s Group which together account for a large proportion of the Crixás Greenstone Belt in central Brazil.
The stratigraphy of the belt is dominated by basics and ultrabasics in the lower sequences with volcano sedimentary units forming the upper successions.
The gold deposits are hosted in a sequence of schists, volcanics and carbonates occurring in a typical greenstone belt structural setting. The host rocks are of the Pilar de Goiás Group of the Upper Archaean. Gold mineralization is associated with massive sulfides and vein quartz material associated with graphitic and sericitic schists and dolomites. The oreshoots plunge to the north-west with dips of between 6 and 35 degrees. The stratigraphy is overturned and thrusts towards the east.
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The Crixás greenstone belt comprises a series of Archaean to Palaeoproterozoic metavulcanics, metasediments and basement granitoids stacked within a series of north to north-east transported thrust sheet. Thrusting (D1) was accompanied by significant F1 folding/foliation development and progressive alteration in a brittle-ductile regime. D1 thrusting developed with irregular thrust ramp geometry, in part controlled by concealed early basin faults. The main Crixás orebodies are adjacent to a major north-north-west structural corridor, and up the main fault ramp/corner, to become dispersed to the east and north in zones of foreland thrust flats. Fluid alteration also diminished to the west away from the main fault corner. A series of concealed east-west to north-west-south-east basement block faults may have provided secondary fluid migration, and development of early anti-formal warps in the thrust sheets; these structures probably define the quasi-regular spacing of significant mineralization within the belt. The D1 thrust stack was gently folded by non-cylindrical folds. Gold mineralizing fluids probably migrated during this event, with similar south-south-west to north-north-east migration, and focusing on bedding slip during folding. Gold mineralization became minor and dispersed to the north and east along the formal thrust flat zone. Concentrations of gold along the case of quartz vein may be due to the damming of fluids migrating upward along layering.
Operating and production data for Serra Grande
| 2010 | 2009 | 2008 | ||||||||||
| Pay limit (oz/t) | 0.09 | 0.11 | 0.11 | |||||||||
| Pay limit (g/t) | 3.20 | 3.92 | 3.91 | |||||||||
| Recovered grade (oz/t) | 0.118 | 0.132 | 0.200 | |||||||||
| Recovered grade (g/t) | 4.05 | 4.52 | 6.85 | |||||||||
| Gold production (000 oz) 100 percent | 155 | 154 | 174 | |||||||||
| Gold production (000 oz) 50 percent | 77 | 77 | 87 | |||||||||
Total cash costs ($/oz)(1) | 481 | 429 | 299 | |||||||||
Total production costs ($/oz)(1) | 688 | 571 | 402 | |||||||||
| Capital expenditure ($ million) 100 percent | 52 | 67 | 41 | |||||||||
| Capital expenditure ($ million) 50 percent | 26 | 33 | 20 | |||||||||
Employees(2) | 965 | 864 | 725 | |||||||||
Outside contractors(2) | 303 | 425 | 383 | |||||||||
| All injury frequency rate (per million hours worked) | 7.22 | 8.99 | 13.34 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||
Pay limit (oz/t) | 0.11 | 0.09 | 0.11 | |||||||||
Pay limit (g/t) | 3.89 | 3.20 | 3.92 | |||||||||
Recovered grade (oz/t) | 0.105 | 0.118 | 0.132 | |||||||||
Recovered grade (g/t) | 3.59 | 4.05 | 4.52 | |||||||||
Gold production (000 oz) 100 percent | 134 | 155 | 154 | |||||||||
Gold production (000 oz) 50 percent | 67 | 77 | 77 | |||||||||
Total cash costs ($/oz)(1) | 851 | 481 | 429 | |||||||||
Total production costs ($/oz)(1) | 1,224 | 688 | 571 | |||||||||
Capital expenditure ($ million) 100 percent | 45 | 52 | 67 | |||||||||
Employees(2) | 1,039 | 965 | 864 | |||||||||
Outside contractors(2) | 300 | 303 | 425 | |||||||||
All injury frequency rate (per million hours worked) | 3.48 | 7.22 | 8.99 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results |
| (2) | Average for the year. |
Performance
Attributable production ofin 2011 was 67,000 ounces, compared with 77,000 ounces in 2010. The reduction was unchangeddue primarily to higher-than-expected dilution and the resultant impact on mined grades. This was partly offset by a 5 percent increase in the total ore mined at the operation to 1.33 million tonnes, with strong performance from the previous year.
To improve the grade mined at Serra Grande, an action plan was compiled and new operational control measures for dilution and close monitoring of the drilling and blasting processes were implemented. Total dilution for all Serra Grande’s mining operations started in 2011 at more than 30 percent and closed the year with significant reduction to 18 percent. Other factors which contributed to the decline in production included delays in development which in turn slowed the preparation of production stopes. Poor availability of drill rigs, as well as heavy machinery and the equipment fleet, hampered underground drilling and overall operational performance.
In the plant, recoveries were curtailed by problems encountered in the grinding and filtering circuits. Each of these issues has been addressed and Project ONE implementation is on track to support the operations.
Total cash costs increased 12by 77 percent to $481$851 per ounce due mainly to local currency appreciation andas a result of reduced production as well as continued inflationary pressure.
Growth and improvement
A priority for Serra Grande’s management is to facilitate closer co-operation between the geology, mine, plant and maintenance teams so as to reduce variability and increase both underground mine output and plant throughput. This is a key benefit that will follow Project ONE’s BPF stabilization on site and will assist in maintaining the required feed to the mill while also rebuilding the strategic stockpile which was revised. The tonnages mined remained unchanged, while plant throughput exceededdepleted in 2010. Optimization of the 30,000 tonnes initially planned. The feed grade was 13 percent lower thangravity circuit is planned to be completed in mid-2012, with expected forfurther improvements in recoveries.
An operational control center has been established on site to improve maintenance and enhance the year. Despite these challenges, the total cash cost for the year was only 2 percent higher than forecast.
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In the longer term, beyond 2013, the focus of the exploration effort will shift to increasing the operation’s mineral endowment to increase mine life.
A new program will also evaluate technical alternatives in mine design, sequencing and metallurgical processes to seek improvements in production and returns on invested capital.
Safety
The preliminary results are being evaluated by specialists.
Following a culture survey undertaken during the year, in the development of a safety culture across the workforce. All leadershipbehavior plan was launched at site underwent seven modulesall Brazilian operations. Initiatives include improvements to new employee induction, a review of on-the-job training with specialist consultants about the natureprocesses, and standardization of human behavior, how to enhance safety awareness in the workplace and a one-on-one safetyprocesses. A new approach to workincident investigation and analysis was established in 2011. A proactive safety indicator to evaluate the quality of processes has been developed.
The company also holds the following certifications:
ISO 14001 – Environment;
OHSAS 18001 – Occupational health and safety;
International Cyanide Management Code; and
ISO 9001 – Quality (Laboratory and smelter house).
GLOBAL EXPLORATION
Total expensed exploration including joint ventures for 2011 amounted to $313 million, of which $98 million was spent on a daily basis.
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Greenfield activities were undertaken through joint ventures, strategic alliances and on wholly owned ground holdings. The principal objective of the greenfield exploration team is value creation through the discovery of new long-life, low-cost mines that maximize shareholder value. Discoveries and ground positions that do not meet certain investment criteria are joint-ventured or divested to maximize AngloGold Ashanti’s return on its exploration investment.
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They are:
In Colombia, in the Americas region:
Gramalote; and
La Colosa.
In the DRC, in the Continental Africa region:
Kibali; and
Mongbwalu.
In Australia, in the Australasia region:
Tropicana.
Of these, Tropicana is the most advanced.
Americas – Colombia
Gramalote
Description
The Gramalote project, a balanced portfoliojoint venture between AngloGold Ashanti Limited (51 percent) and a pipelineVancouver-based B2Gold, is located 110 kilometers northeast of projects at various stagesMedellin in the municipality of exploration. Importantly, this requires diversification across new frontiers, emerging regions and known terranes.San Roque, which is in the department of Antioquia, Colombia. The range of ownership and partnership structures employedproject, managed by AngloGold Ashanti, helpsis expected to achievebe the desired variety of targets envisaged in this strategy. Important components for new discoveries and effective resource targeting include securing new search spaces and strategic land holdings while maintaining a balanced portfolio.
Progress
During 2010, AngloGold Ashanti resumed its role as operator and Australia, whereproject manager of Gramalote after it acquired part of B2Gold’s interest and undertook the companyprefeasibility and feasibility analyses. AngloGold Ashanti immediately accelerated the drilling program to improve knowledge of the orebody and increased the project’s resource.
During 2011, a total of 30,683 meters of drilling was undertaken. Drilling was undertaken on satellite areas adjacent to the main Cerro Gramalote orebody. This work built on the foundation created by B2Gold, which had completed an earlier scoping study on the project.
Since September 2010, when AngloGold Ashanti assumed control of the project, 33 kilometers of drilling has progressed frontierbeen completed.
Continued exploration from broad geological conceptssuccess and favourable metallurgical testwork suggest the potential to major discoveriesincrease the scale of the project.
The successful development of Gramalote also offers an ideal opportunity for AngloGold Ashanti to establish its project development credentials to the host community and to the broader Colombian population.
Almost $30 million was spent on the prefeasibility study in 2011, which included exploration on only about 10 percent of the 30,000 hectare concession area. This study is expected to be completed during 2012 and will be followed immediately by the full feasibility study which is expected to be completed in 2013.
La Colosa
Description
The exploration rights at the La Colosa project are wholly held by AngloGold Ashanti. This gold project is located 14 kilometers from the town of Cajamarca, in the department of Tolima, in Colombia. La Colosa, which lies in steep terrain in Colombia’s central Cordillera province, is the largest greenfields discovery made by AngloGold Ashanti to date. Exploration drilling at site resumed toward the middle of 2010 after a two-year suspension to receive or renew permits necessary to continue work on this gold porphyry deposit.
Progress
The prefeasibility study currently underway is scheduled for completion in 2014. It is expected to define the extent and Tropicana-Havana deposits, twosize of the worlds’ largest virgin gold findsresource, conduct metallurgical testwork, weigh the alternatives for mining and processing infrastructure, purchase land necessary for access and infrastructure development and conduct the necessary social and environmental impact baseline studies.
About 47,619 meters of recent times. In addition,drilling was completed during 2011. Almost $64 million was spent on the dominant strategic land holdings of some 44,838km2 in Australia and 15,815km2 in Colombia haveprefeasibility study during the potential to yield further significant new discoveries.
Exploratory activities were restricted to three countries as a result of changes in legislation and evolving risk profiles in the remaining countries. In 2010, however, a total of 276,346 meters was drilled in nine countries, including, Argentina, Colombia, Canada, DRC, Guinea, Gabon, Australia, Solomon Islands and Egypt, as the company began to leverage its exploration land holdings to greater effect.
Continental Africa – DRC
Kibali
Description
The Kibali gold project is a joint venture between AngloGold Ashanti and Randgold Resources, with each owning a 45 percent stake and Société des Mines d’Or de Kilo-Moto (SOKIMO), a state-owned gold company, which owns the balance.
Kibali, which the company acquired as a result of the acquisition of Moto Goldmines in 2009, lies in the north-eastern DRC, adjacent to the town of Doko, a staging point for the project and 180 kilometers by road from Arua, on the Ugandan border. Jersey-based Randgold, which is also AngloGold Ashanti’s partner at the Morila gold mine in Mali, is the operator and project manager at Kibali. The project does not currently produce any gold. Furthermore the company does not purchase gold or other conflict minerals from any local mining companies and/or artisanal miners.
Key statistics – Kibali
| 2011 | ||||||
Ore Reserve | Moz | 4.52 | ||||
Capital expenditure | $m | 73 |
Progress
By the end of 2011, the construction crew had started mobilizing on site, a process that was substantially completed by the end of the first quarter of 2012. Long-lead plant and equipment items were secured, key contractors selected and a development management team assembled.
The Kibali mine is expected to comprise an integrated open pit and underground mining operation, feeding a larger 6 million tonnes a year processing plant which is expected to include a full flotation section for treating sulfide ore. The complex is ultimately expected to be supplied by four hydropower stations supported by a thermal power station for low rainfall periods and back-up. The core capital program is scheduled to run over the next four years.
Phase 1 of the project, which is expected to end with the delivery of the mine’s first gold production, is expected to consist of the construction of the metallurgical facility, one hydropower station and back-up thermal power facility, a tailings storage facility, and all shared infrastructure as well as relocation of villages and open-pit mining. This phase is expected to run over a two-year period.
Phase 2, which is expected to run concurrently with Phase 1 but extend over four years, is expected to focus primarily on development of the underground mine and include a twin-decline and vertical shaft system, along with three hydropower stations.
Mongbwalu
Description
The Mongbwalu gold project in the northeastern DRC is a venture between AngloGold Ashanti, which owns an 86.22 percent interest and Société des Mines d’Or de Kilo-Moto (SOKIMO), the DRC’s state-owned gold company, which owns the balance. The deposit lies about 48 kilometers northwest of the town of Bunia, a staging point for the project. Preparatory work at the project has been completed.
The venture holds 18 tenements which, at the end of the year, covered an extensive area of 5,487m2. About 600 people are currently employed on site.
Progress
The preliminary scoping work envisaged an initial underground mine in the Adidi area of the resource, with the necessary infrastructure designed to generate cash flow to fund further exploration and expansion activities within the demarcated area belonging to the venture.
The feasibility study for the project was completed in March 2011, after which the business and technical development teams conducted the normal optimization process through the balance of the year. The final feasibility study and integrated execution schedule was submitted to the Board of the venture company in March and approved by the Board as submitted.
Regional exploration continued on the 5,487km2 Kilo concession. The brownfield exploration team continued drilling in support of the project on the Adidi and Kanga Mineral Resource. Greenfield exploration activities continued on five targets, namely Lodjo, Issuru, Dala, Alosi Camp 3 and Petsi. An IP survey was completed for Camp 3 (Kilo Central) while diamond drilling continued at Pili Pili (Pluto North-Issuru). Trenching and soil sampling continued in Kilo Central and Kilo North.
Australasia – Australia
Tropicana
Description
The Tropicana project, an unincorporated joint venture between AngloGold Ashanti Australia Ltd (70 percent) and Independence Group NL (30 percent), is located 330 kilometers eastnortheast of Kalgoorlie in Western Australia. The project is managed by AngloGold Ashanti on behalf of the joint venture partners.
Key statistics – Tropicana
| 2011 | ||||||
Ore Reserve | Moz | 2.74 | ||||
Capital expenditure | $m | 73 |
Progress
The project development approval was obtained in November 2010 at a total attributable capitalized development cost of A$530 million.
Lycopodium Minerals was engaged in early 2011 to provide engineering, procurement and construction management services to develop the infrastructure and processing plant. Macmahon was awarded the mining contract and is responsible for the design and establishment of the infrastructure required to support mining operations.
By December 31, 2011, the project had progressed to schedule and within the approved budget. All regulatory approvals were obtained. The necessary infrastructure, including access road, airstrip, accommodation village and telecommunications services were at advanced stages of development. Full transportation access to the site was achieved.
As at December 31, 2011, engineering and design for processing plant and infrastructure was approximately 75 percent complete, procurement of all equipment was 90 percent complete and the delivery of the equipment was in line with the project schedule.
Construction of the processing plant began in late 2011. Bulk earthworks for the plant site and internal access roads and concrete works commenced in early 2012.
Achievements
Significant achievements for 2011 included the delineation of additional pre-inferred gold ounces.
Considerable progress was also made in advancing AngloGold Ashanti’s greenfield exploration portfolio elsewhere in 2010.2011. Following the company’s entry into four new regions in 2009, 20102011 saw rapid progress in the delineation of exploration targets, license applications and associated approvals and exploration activities, including drilling, airborne and ground geophysics and diamond drilling.
Encouraging drilling and trench results have been received from Gabon, Canada, Egypt, Guinea, the DRC and the Solomon Islands.
Following the La Colosa, Gramalote, Tropicana-Havana and Mongbwalu discoveries, greenfield exploration teams are targeting new discoveries in Colombia, Australia and the DRC. At the same time, prospects in Guinea and Egypt have advanced from early stage to tangible projects, where multiple intersections of potentially economic gold mineralization have been intersected.
Expansion
During the course of 2010,2011, AngloGold Ashanti entered into a number of new joint ventures and strategic alliances in Brazil, Australia and the Middle East and North Africa, while downsizing in China and exiting Russia altogether.alliances. These new ventures include the FalcãoNome joint venture in Brazil with Horizonte Minerals;Alaska, the StratexGordon joint venture in Ethiopia/Djibouti with Stratex International; the Lusahunga joint venture in Tanzania with Oryx Mining; the Gawler joint venture in Australia with Stellar Resources; and the New Georgia and VangunuEthiopia as well as joint ventures with XDM Resources in the Solomon Islands. AngloGold Ashanti has also applied for wholly-owned tenure in Canada known as the Melville Project and in Australia at the Cornelia Range Project. In Eritrea, two tenements known as Kerkasha and Akordat North were granted and are included in the Thani Ashanti Alliance.
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To further improve decision-making processes in project and portfolio management, a global portfolio management process is being implemented to encompass both technical and commercial gating elements.
COLOMBIA
The synthesis of proprietary airborne and ground geophysical and geochemical data sets built up over the last decade of AngloGold Ashanti’s involvement in Colombia has facilitated consolidation of a world-class tenement portfolio with a robust project pipeline.
The principal area of focus has been to advance exploration was undertaken by AngloGold Ashanti and its joint venture partners B2Gold, Glencore International and Mineros S.A. in Colombia. AngloGold Ashanti has consolidated the tenement position from roughly 100,000km2 in 2009, to 15,815km2 at the end of 2010 through a variety of structures including joint ventures and the relinquishment of non-prospective areas.
Elsewhere in Colombia, exploration among others was undertaken on the Rio Dulce and La Llanada tenement contracts and applications in 2010. Two targets were drilled and four remain to be drill tested in Colombia. AngloGold Ashanti will continue to push its first-mover advantage and dominant land position, particularly as major competitors realizegroups.
CANADA
In Canada, exploration continued on properties forming part of the potential of Colombia, which has not seen a major gold mine development for decades.
BRAZIL
In Brazil, early stage exploration comprised of diamond drilling atmapping and regional geochemical programs was undertaken on the Kanosak and Malrok prospects.wholly owned Jurena Belt tenements. The gold occurrences on Baffin Island are hosted by a package of gently dipping rocks in a fold and thrust belt.
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DEMOCRATIC REPUBLIC OF THE CONGO
In the DRC, AngloGold Ashanti ownsholds an 86.22 percent stakeinterest in Ashanti Goldfields Kilo (AGK), the joint venture company, while the remaining 13.78 percent is held by SOKIMO, the country’s state- ownedstate-owned gold company.company SOKIMO. Of the 7,443km2 previously held under exploitation licenses by SOKIMO, 5,447km2 has have been transferred to AGK under the terms of thean agreement with the government, with 399km2 pending transfer. A feasibility study ontransfer at the 1.90 million ounces Central Mongbwalu project is scheduled for completion inend of the first halfyear. Significant progress was made with regional soil geochemistry programs that are expected to provide significant coverage over much of 2011.
GABON
In Gabon, AngloGold Ashanti is conducting exploration on an exclusive basis on the Ndjole and its joint venture partners advanced exploration over 16,248km2Mevang properties in partnership with Silver Bull Resources (formally Dome Ventures). The work has comprised regional geochemical sampling programs and completion of tenements, using geological mapping, soil sampling, channel sampling and drilling. Some 1,223 meters ofa diamond drilling were completed atprogram on the LaMboumi prospect, with a best result returned of 3 meters @ 0.72g/t Au. Further work will be undertaken in 2011 to test a number of well defined gold in soil anomalies.
MIDDLE EAST AND NORTH AFRICA (MENA)
In the Middle East and North Africa, during 2010.
In Eritrea, AngloGold Ashanti is currently reviewing its investment. Exploration in late 2010. Two licenses, were applied for and granted to the Thani Ashanti joint venture in Eritrea during 2010 and a further two applications were made late in the year. A new joint venture was formed in Ethiopia/Djiboutipartnership with Stratex International to explorewas conducted for epithermal gold mineralization in the Afar Depression. Extensivedepression of Ethiopia where the first-phase drill program intersected encouraging low- to moderate-tenor gold mineralization.
The alliance has continued with project generation activities were also conducted in Saudi Arabia.
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CHINA
AUSTRALIA
The Tropicana joint venture (AngloGold Ashanti 70 percent, Independence Group NL 30 percent) is systematically targeting a belt of tectonically reworked Archaean (c. 2640 Ma)and Proterozoic rocks that formon the eastern margin of the Yilgarn Craton, Western Australia. Some 3.7 million ounces (attributable) Tropicana gold discovery is a new mineral deposit style in this previously unrecognized and unexplored gold province. ExplorationGreenfields exploration in the “Tropicana Belt” has primarilyTropicana joint venture during 2011 focused on regional aircore drilling and reverse circulation (RC) andcirculation/ diamond drill testingdrilling of targets in supportseven priority targets. A number of prospects have been identified for further work including the Iceberg prospect, located 35 kilometers south of the Tropicana Gold Project resource development, with regional exploration predominantly in early stages of work to advance about 50 key prospects to drill testing stages.
The wholly owned Viking project covers the region’s exploration potential was further realized with the discovery of the Boston Shaker deposit, about 360 meters northinterpreted southeast extensions of the Tropicana open pit,belt. Exploration during 2011 included airborne magnetics/radiometrics, regional auger sampling and underground resource extensions down plungeaircore drilling of the Havana deposit (Havana Deeps). Scoping level studiesselected targets. Several auger anomalies have been identified for Boston Shaker and Havana Deeps were completed in December 2010. The potential for further Mineral Resource growth is highlighted by a recent step-out exploration drill hole which intercepted mineralization 1.2 kilometers down plunge of the Havana open pit design at vertical depth of 1 kilometer.
In Australia, a total of 2,889 aircore2,231 Aircore/RAB holes were drilled for 123,973102,278 meters, 552109 reverse circulation holes for 76,802.315,945 meters and 137six diamond holes for 41,0941,032 meters. In addition, 3,19418,417 surface auger samples were collected, 32,962 line30,861-line kilometers of aeromagnetic and radiometric surveys were flown and 2001,223 line kilometers of EMground gravity data were acquired.
SOLOMON ISLANDS
In the year came from diamond drilling intercepts at Boston Shaker, including 32 meters @ 3.7g/t Au from 181 meters and 18 meters @ 4.3g/t Au from 34 meters. The best results from Havana Deeps include 35 meters @ 5.0g/t Au from 514 meters and 16 meters @ 9.7g/t Au from 369 meters.
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ANGLOGOLD ASHANTI / DE BEERS JOINT VENTURE
Results from the seafield sampling campaign in New Zealand were analyzed and although offshore gold was detected, the grades did not warrant any further follow up work. Subsequently, a decision was made to relinquish the offshore prospecting licenses.
Exploration activities in the South African sea areas (SASA) offshore concessions of ~28,000km2 entailed the following:
Logging, sampling and the assay of a large number of historical vibro cores and samples;
A geophysical survey campaign of ~3,300 kilometres of seismic data;
An 11-day vibrocoring campaign during which 38 cores were collected; and
A reconnaissance field trip to the west coast of South Africa.
All of the above was used to complete a geological and mineralization model which was used to derive exploration targets for the coring campaign that began during December 2011 and was completed during February 2012.
| 4C. | ORGANIZATIONAL STRUCTURE |
GROUP STRUCTURE
AngloGold Ashanti’s operations are divided into the following regions:
South Africa – operations in Vaal River and West Wits;
Continental Africa – operations in Ghana, Guinea, Mali, Namibia and Tanzania;
Australasia – operation in Australia; and
Americas – operations in Argentina, Brazil and the United States.
The above four regions also correspond to AngloGold Ashanti’s four business segments.
Management of the group is entrusted to AngloGold Ashanti’s executive committee which is chaired by the Chief Executive Officer, comprising the two executive directors, nine executive vice presidents and one senior vice president. See “Item 6.: Directors, executive management and employees”.
Support is provided to the executive committee in managing AngloGold Ashanti’s corporate activities at both the central and local levels. Activities managed centrally include 15 meters @ 9.09g/t Austrategic and business planning, marketing, corporate finance, treasury, exploration, technology and innovation, corporate secretarial and corporate affairs. Specialized services directed from 701 meters. Further work is required to understand the significancecenter but managed by local operations include mining, engineering, metallurgy, mineral resource management, safety and accesshealth, the full potential of this system. Subsequent to year-end, environment and human resources.
SUBSIDIARIES
AngloGold Ashanti withdrew from exploringhas investments in Saxby.
| 4D. | PROPERTY, PLANTS AND EQUIPMENT |
For a discussion of AngloGold Ashanti’s mining properties, plant and equipment, see “Item 4B.: Business Overview – Operating performance”.
ORE RESERVES
The first of these is the wholly-owned Cornelia Range project covering 13,780km2 of exploration license applications made over the eastern Capricorn Orogencombined Proven and adjacent Paterson Orogen in central Western Australia. The project is 500 kilometers north of Sunrise Dam and 300 kilometers from eachProbable Ore Reserve of the major gold mining centers of Telfer (Paterson Orogen), Jundee and Plutonic (Yilgarn Craton). The second project is the Gawler joint venture with Stellar Resources Limited (1,190km2)group amounted to explore for iron oxide-copper-gold (IOCG) deposits in the Gawler Craton of South Australia.
Ore Reserve estimates are reported in accordance with the requirements of the SEC’s Industry Guide 7. Accordingly, as of the date of reporting, all Ore Reserves are planned to be mined out under the life-of-mine plans within the period of AngloGold Ashanti’s existing rights to mine, or within the renewal periods of AngloGold Ashanti’s rights to mine. In addition, as of the date of reporting, all Ore Reserves are covered by required permits and governmental approvals. See “Item 4B.:4B: Business overview”overview – The regulatory environment enabling AngloGold Ashanti to mine”.
AngloGold Ashanti has standard procedures for the estimation of Ore Reserves. These standard procedures are performed by technical personnel at the mining operations and reviewed by regional and corporate competent persons.
In the case of its underground mines, the procedure is as follows: Firstly, gold content and tonnage are estimated for in-situ mineralized material at a mining operation. This mineralized material is not necessarily economically viable. Exclusions on the grounds of safety (for example, stability pillars and shaft pillars) are then defined. Grade and tonnage curves specific for each of the deposits, in conjunction with parameters such as the cost structure; yield; mine call factor and gold price estimates are used to determine an optimal mining mix. This process facilitates the determination of the average grade to be mined by each operation. This grade is then applied to the grade-tonnage curves, which in turn facilitates the determination of the cut-off grade and Ore Reserve tonnage for the operation. A full mine design is carried out on the blocks of mineralized material, excluding large mining areas that do not meet the cut-off grade criterion. This mining plan is reviewed to ensure that it satisfies the economic criterion and practical limitations of access and timing. If the review process is positive then the mineralized material (with dilution) included in the mining plan is declared and published as the Ore Reserve for that operation. In the case of open-pit mines the procedure is as follows: revenue and costs are calculated for each mining block within a three-dimensional model of the orebody using assumed values for gold price, operating costs and metallurgical recoveries. An optimization process is then applied to determine the combination of blocks within the model that make a positive contribution under these assumptions. Block selection is within a shell whose limits are defined by the planned slope angles of the pit. Within this process, a cut-off grade is applied which determines the ore blocks to be treated and included in the Ore Reserves. These blocks are scheduled with consideration being given to practical mining considerations and limitations. Scheduled ore blocks that are classified as Proven or Probable constitute the Ore Reserve.
The gold price and exchange rate used for 20102011 and 20092010 Reserves are outlined in the following table.
| 2010 | 2010 | 2009 | ||||||||||||||
| (3 year | (Business | (3 year | ||||||||||||||
| average) | Plan) | average) | Units | |||||||||||||
| Reserve Gold Price | 1,015 | 850 | 840 | US$/oz | ||||||||||||
| Exchange Rate — South Africa | 8.00 | 8.71 | 7.90 | ZAR/US$ | ||||||||||||
| Reserve Gold Price (South African rand per ounce) | 8,120 | 7,404 | 6,636 | ZAR/oz | ||||||||||||
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| 2011 (3 year average) | 2011 (Business Plan) | 2010 (3 year average) |
Units | |||||||||||||
Reserve Gold Price | 1,256 | 1,100 | 1,015 | US$/oz | ||||||||||||
Exchange Rate – South Africa | 7.64 | 7.63 | 8.00 | ZAR/US$ | ||||||||||||
Reserve Gold Price (South African rand per ounce) | 9,479 | 8,393 | 8,120 | ZAR/oz | ||||||||||||
As in prior years, the Ore Reserves determined from the planning process were then tested for economic viability at the three-year historical average gold price and currency exchange rates shown in the above table for determining SEC compliant Ore Reserves. This did not result in any changes. The resultant SEC compliant Proven and Probable Ore Reserves are shown in the following pages.
In Australia and South Africa, AngloGold Ashanti is legally required to publicly report Ore Reserves and Mineral Resources according to the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC 2004)(The JORC Code, 2004 Edition) and the South African Code for Reporting of Mineral Resources and Ore Reserves (SAMREC 2007)(The SAMREC Code, 2007 Edition). The SEC’s Industry Guide 7 does not recognize Mineral Resources. Accordingly, AngloGold Ashanti does not report estimates of Mineral Resources in this annual report on Form 20-F.
The AngloGold Ashanti Ore Reserve increased from 68.1 million ounces in 2009 to 71.2 million ounces in 2010 to 75.6 million ounces in December 2010.2011. A year-on-year increase of 8.79.6 million ounces occurred before the subtraction of 5.65.2 million ounces for depletion, resulting in an increase of 3.14.4 million ounces after the subtraction of depletion. A gold price of $850$1,100 per ounce (ZAR7,404(ZAR8,393 per ounce) was used for Ore Reserve estimates (2009: $840(2010: $850 per ounce, ZAR6,636ZAR7,404 per ounce).
The principal changes in AngloGold Ashanti’s Ore Reserves as at December 31, 20102011 compared with those published as at December 31, 20092010 are as follows:
| Ore Reserve | Million oz | |||||||
Ore Reserves as at December 31, | 71.2 | |||||||
Reductions | ||||||||
Moab Khotsong | Depletion and minor model | |||||||
Other | Total of non-significant changes | |||||||
Additions | ||||||||
Geita | Improved Ore Reserve price | 0.5 | ||||||
Cripple Creek & Victor | 0.5 | |||||||
Vaal River Surface | 3.2 | |||||||
Other | Total of non-significant changes | 1.7 | ||||||
Ore Reserves as at December 31, | ||||||||
| 75.6 | ||||||||
Rounding may result in computational differences.
AngloGold Ashanti will continue to pursue a strategy of increasing value-adding Ore Reserves through expansion projects, brownfields and greenfields exploration and acquisition of new assets.
The Ore Reserve estimates in this document include Ore Reserves below current infrastructure in the case of certain South African, Brazilian and Ghanaian underground mines which are in production. These Ore Reserves have been determined based upon completed economic studies.
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By-products
External Audit of Mineral Resource and Ore Reserve Statement
During the course of the year and as part of the rolling audit program, AngloGold Ashanti’s 2010 grade models at the following AngloGold Ashanti operations were submitted forsubjected to external auditaudits by a number of international consulting companies:
AGA Mineração
Cripple Creek & Victor
Geita
Moab Khotsong
Mponeng
Obuasi
Siguiri
Tropicana
The company has been informed that the auditaudits identified no material shortcomings in the process by which AngloGold Ashanti’s grade models were evaluated. It is the company’s intention to continue thisa process so thatwhereby each of its operations will be audited, on average, every three years.
Competent Persons
The information in this report that relates to Ore Reserves is based on information compiled by the Competent Persons. The Competent Persons consent to the inclusion of Exploration Results and Ore Reserves information in this report, in the form and context in which it appears.
During the past decade, the company has developed and implemented a rigorous system of internal and external reviews of Exploration Results, Mineral Resources and Ore Reserves. A chain of responsibility exists from the Competent Persons at the operations to the company’s Mineral Resource and Ore Reserve Steering Committee. Accordingly, the Chairman of the Mineral Resource and Ore Reserve Steering Committee, VA Chamberlain, MSc (Mining Engineering), BSc Hons (Geology), MGSSA, FAusIMM, assumes responsibility for the Mineral Resource and Ore Reserve processes for AngloGold Ashanti and is satisfied that the Competent Persons have fulfilled their responsibilities.
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| Ore Reserves: Imperial | At December 31, 2010 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | |||||||||||||||||||||||||||
| Gold | Gold | Metallurgical | ||||||||||||||||||||||||||
| Tons(5) | Grade Content(1) | Tons(5) | Grade Content(1) | Recovery Factor | ||||||||||||||||||||||||
| (mill) | (oz/ton) | (mill oz) | (mill) | (oz/ton) | (mill oz) | percent | ||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(6) | ||||||||||||||||||||||||||||
| Great Noligwa | 4.44 | 0.225 | 1.00 | 1.98 | 0.210 | 0.42 | 96.0 | |||||||||||||||||||||
| Kopanang | 1.37 | 0.230 | 0.31 | 14.71 | 0.190 | 2.79 | 95.6 | |||||||||||||||||||||
Moab Khotsong(2) | 2.03 | 0.305 | 0.62 | 18.57 | 0.370 | 6.87 | 95.4-95.6 | (4) | ||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 4.58 | 0.234 | 1.07 | 43.96 | 0.292 | 12.83 | 97.4-98.2 | (4) | ||||||||||||||||||||
| Savuka | 0.09 | 0.147 | 0.01 | 3.60 | 0.181 | 0.65 | 97.0 | |||||||||||||||||||||
TauTona(2) | 0.75 | 0.226 | 0.17 | 7.01 | 0.269 | 1.89 | 97.2 | |||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
| Surface sources | — | — | — | 121.79 | 0.014 | 1.74 | 40-88 | (4) | ||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | — | — | — | 36.86 | 0.123 | 4.52 | 84.5; 91.3 | (10) | ||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
| Iduapriem | 32.21 | 0.039 | 1.26 | 27.23 | 0.045 | 1.24 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 16.30 | 0.195 | 3.18 | 27.12 | 0.212 | 5.75 | 85.0 | |||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 43.05 | 0.018 | 0.78 | 74.34 | 0.021 | 1.60 | 90-95 | (4) | ||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 2.59 | 0.049 | 0.13 | 2.95 | 0.033 | 0.10 | 89.0 | |||||||||||||||||||||
Sadiola (41 percent)(3) | 2.57 | 0.086 | 0.22 | 38.88 | 0.053 | 2.08 | 76-96 | (4) | ||||||||||||||||||||
Yatela (40 percent)(3) | 0.31 | 0.023 | 0.01 | 1.36 | 0.052 | 0.07 | 75-85 | (4) | ||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
| Navachab | 15.73 | 0.030 | 0.47 | 32.78 | 0.042 | 1.38 | 69.5 : 86.5 | (9) | ||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
| Geita | — | — | — | 45.10 | 0.093 | 4.21 | 46-89 | (4) | ||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
Sunrise Dam(3) | 7.93 | 0.050 | 0.40 | 7.38 | 0.133 | 0.98 | 85.5-86 | (4) | ||||||||||||||||||||
Tropicana (70 percent)(3) | 18.57 | 0.066 | 1.23 | 18.41 | 0.062 | 1.13 | 90.3 | |||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 10.51 | 0.036 | 0.37 | 9.45 | 0.155 | 1.47 | 95.0 | |||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(2)(8) | 5.45 | 0.197 | 1.07 | 6.70 | 0.160 | 1.07 | 93.0 | |||||||||||||||||||||
Serra Grande (50 percent)(3) | 2.17 | 0.100 | 0.22 | 1.45 | 0.121 | 0.18 | 90.9-94.9 | (4) | ||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
| Cripple Creek & Victor | 162.25 | 0.024 | 3.84 | 86.81 | 0.022 | 1.89 | 43-95 | (4) | ||||||||||||||||||||
Total | 332.90 | 0.049 | 16.34 | 628.45 | 0.087 | 54.86 | ||||||||||||||||||||||
| Ore Reserves: Imperial | At December 31, 2011 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | Metallurgical | ||||||||||||||||||||||||||
| Gold | Gold | Recovery | ||||||||||||||||||||||||||
| Tons(5) | Grade Content (1) | Tons(5) | Grade Content (1) | Factor | ||||||||||||||||||||||||
| (mill) | (oz/ton) | (mill oz) | (mill) | (oz/ton) | (mill oz) | percent | ||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(6) | ||||||||||||||||||||||||||||
Great Noligwa | 3.66 | 0.229 | 0.84 | 1.57 | 0.183 | 0.29 | 95.8 | |||||||||||||||||||||
Kopanang | 2.05 | 0.197 | 0.40 | 12.78 | 0.187 | 2.39 | 96.5 | |||||||||||||||||||||
Moab Khotsong(2) | 1.50 | 0.303 | 0.46 | 21.10 | 0.310 | 6.54 | 96.5 | |||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 5.09 | 0.276 | 1.41 | 41.99 | 0.300 | 12.62 | 98.2 (4) | |||||||||||||||||||||
Savuka | - | - | - | 2.60 | 0.231 | 0.60 | 97.4 | |||||||||||||||||||||
TauTona | 0.81 | 0.346 | 0.28 | 6.19 | 0.265 | 1.64 | 97.4 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
Surface sources | - | - | - | 546.11 | 0.009 | 4.96 | 76-88 (4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | - | - | - | 36.86 | 0.123 | 4.52 | 84.5; 91.3 (10) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
Iduapriem | 31.52 | 0.038 | 1.21 | 29.59 | 0.045 | 1.34 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 15.58 | 0.194 | 3.02 | 29.87 | 0.212 | 6.34 | 85.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 39.38 | 0.018 | 0.70 | 79.56 | 0.020 | 1.61 | 92 (4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 0.63 | 0.050 | 0.03 | 2.95 | 0.033 | 0.10 | 88.8-89.0 (4) | |||||||||||||||||||||
Sadiola (41 percent)(3) | 4.69 | 0.060 | 0.28 | 43.72 | 0.046 | 2.02 | 78-97.0 | |||||||||||||||||||||
Yatela (40 percent)(3) | 0.41 | 0.019 | 0.01 | 0.88 | 0.051 | 0.05 | 84.8 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
Navachab | 6.96 | 0.032 | 0.22 | 48.70 | 0.038 | 1.83 | 69.5 ; 86.7 (9) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
Geita | - | - | - | 62.10 | 0.076 | 4.74 | 46-91 (4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
Sunrise Dam(3) | 16.35 | 0.034 | 0.55 | 8.33 | 0.117 | 0.97 | 84.8-86 (4) | |||||||||||||||||||||
Tropicana (70 percent)(3) | 19.87 | 0.067 | 1.33 | 23.61 | 0.060 | 1.41 | 90.3 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 11.64 | 0.040 | 0.46 | 14.16 | 0.124 | 1.76 | 95.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(2)(8) | 5.78 | 0.182 | 1.05 | 7.51 | 0.140 | 1.05 | 88-93 (4) | |||||||||||||||||||||
Serra Grande (50 percent)(3) | 2.05 | 0.098 | 0.20 | 1.61 | 0.109 | 0.17 | 93.9 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
Cripple Creek & Victor | 177.23 | 0.024 | 4.26 | 95.46 | 0.021 | 2.00 | 43-95 (4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | 345.20 | 0.048 | 16.72 | 1117.25 | 0.053 | 58.95 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| (1) | Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining. |
| (2) | Probable Ore Reserves include Ore Reserves below infrastructure. See table below. |
| (3) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (4) | Recovery factor varies according to ore type. |
| (5) | Tons refers to a short ton, which is equivalent to 2000lbs avoirdupois. |
| (6) | The Vaal Reef Ore Reserves include 126.32 million pounds of Uranium oxide by-products; this cannot be accounted for by individual mine as Great Noligwa, Kopanang and Moab Khotsong feed to a combination of plants. |
| (7) | The Ore Reserve contains 46.93 million ounces of silver to be recovered as a by-product. |
| (8) | The Ore Reserve contains 0.45 million tons of sulfur to be recovered as a by-product. |
| (9) | DMS plant and CIP plant, respectively. |
| (10) | Open pit and underground mining, respectively. |
Rounding may result in computational differences.
The 2011 Probable Ore Reserves include Ore Reserves below infrastructure in the case of the following underground mines currently in production:
| Mine | Tons (millions) | Grade (ounces/ton) | Gold Content | |||||||
| (million ounces) | ||||||||||
Moab Khotsong | 13.91 | 0.312 | 4.34 | |||||||
Mponeng | 35.20 | 0.325 | 11.46 | |||||||
Obuasi | 2.99 | 0.381 | 1.14 | |||||||
AGA Mineração | 2.96 | 0.158 | 0.47 | |||||||
Total | 55.06 | 0.316 | 17.40 | |||||||
Rounding may result in computational differences.
South Africa Vaal River(6) Great Noligwa Kopanang Moab Khotsong(2) West Wits Mponeng(2) Savuka TauTona Surface Surface sources Continental Africa Democratic Republic of the Congo Kibali (45 percent)(3) Ghana Iduapriem Obuasi(2) Guinea Siguiri (85 percent)(3) Mali Morila (40 percent)(3) Sadiola (41 percent)(3) Yatela (40 percent)(3) Namibia Navachab Tanzania Geita Australasia Australia Sunrise Dam(3) Tropicana (70 percent)(3) Americas Argentina Cerro Vanguardia (92.5 percent)(3)(7) Brazil AGA Mineraçáo(2)(8) Serra Grande (50 percent)(3) United States of America Cripple Creek & Victor Total Ore Reserves: Imperial At December 31, 2010 Proven Ore Reserves(1) Probable Ore Reserves(1)(2) Metallurgical Gold Gold Recovery Tons(5) Grade Content (1) Tons(5) Grade Content (1) Factor (mill) (oz/ton) (mill oz) (mill) (oz/ton) (mill oz) percent 4.44 0.225 1.00 1.98 0.210 0.42 96.0 1.37 0.230 0.31 14.71 0.190 2.79 95.6 2.03 0.305 0.62 18.57 0.370 6.87 95.4-95.6 (4) 4.58 0.234 1.07 43.96 0.292 12.83 97.4-98.2 (4) 0.09 0.147 0.01 3.60 0.181 0.65 97.0 0.75 0.226 0.17 7.01 0.269 1.89 97.2 - - - 121.79 0.014 1.74 40-88 (4) - - - 36.86 0.123 4.52 84.5; 91.3 (10) 32.21 0.039 1.26 27.23 0.045 1.24 95.0 16.30 0.195 3.18 27.12 0.212 5.75 85.0 43.05 0.018 0.78 74.34 0.021 1.60 90-95 (4) 2.59 0.049 0.13 2.95 0.033 0.10 89.0 2.57 0.086 0.22 38.88 0.053 2.08 76-96 (4) 0.31 0.023 0.01 1.36 0.052 0.07 75-85 (4) 15.73 0.030 0.47 32.78 0.042 1.38 69.5 ;86.5 (9) - - - 45.10 0.093 4.21 46-89 (4) 7.93 0.050 0.40 7.38 0.133 0.98 85.5-86 (4) 18.57 0.066 1.23 18.41 0.062 1.13 90.3 10.51 0.036 0.37 9.45 0.155 1.47 95.0 5.45 0.197 1.07 6.70 0.160 1.07 93.0 2.17 0.100 0.22 1.45 0.121 0.18 90.9-94.9 (4) 162.25 0.024 3.84 86.81 0.022 1.89 43-95 (4) 332.90 0.049 16.34 628.45 0.087 54.86
| (1) | Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining. |
| (2) | Probable Ore Reserves include Ore Reserves below infrastructure. See table below. |
| (3) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (4) | Recovery factor varies according to ore type. |
| (5) | Tons refers to a short ton, which is equivalent to 2000lbs avoirdupois. |
| (6) | The Vaal Reef Ore Reserves include 47.6 million pounds of Uranium oxide by-products; this cannot be accounted for by individual mine as Great Noligwa, Kopanang and Moab Khotsong feed to a combination of plants. |
| (7) | The Ore Reserve contains 34.6 million ounces of silver to be recovered as a by-product. |
| (8) | The Ore Reserve contains 0.49 million tons of sulfur to be recovered as a by-product. |
| (9) | DMS plant and CIP plant, respectively. |
| (10) | Open pit and underground mining, respectively. | |
113Rounding may result in computational differences.
| Gold Content | ||||||||||||
| Mine | Tons (millions) | Grade (ounces/ton) | (million ounces) | |||||||||
| Mponeng | 34.06 | 0.311 | 10.58 | |||||||||
| Moab Khotsong | 11.47 | 0.366 | 4.19 | |||||||||
| Obuasi | 2.99 | 0.381 | 1.14 | |||||||||
| AGA Mineração | 3.54 | 0.172 | 0.61 | |||||||||
| Total | 52.06 | 0.317 | 16.53 | |||||||||
| Mine | Tons (millions) | Grade (ounces/ton) | Gold Content (million ounces) | |||
Moab Khotsong | 11.47 | 0.366 | 4.19 | |||
Mponeng | 34.06 | 0.311 | 10.58 | |||
Obuasi | 2.99 | 0.381 | 1.14 | |||
AGA Mineração | 3.54 | 0.172 | 0.61 | |||
Total | 52.06 | 0.317 | 16.53 |
Rounding may result in computational differences.
114
| ||||||||||||||||||||||||||||
| Ore Reserves: Metric | At December 31, 2011 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | Metallurgical | ||||||||||||||||||||||||||
| Tonnes(6) | Grade | Gold | Tonnes | Grade | Gold | Recovery factor | ||||||||||||||||||||||
| (mill) | (g/t) | Content (tonnes) | (mill) | (g/t) | Content (tonnes) | percent | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(5) | ||||||||||||||||||||||||||||
Great Noligwa | 3.32 | 7.845 | 26.06 | 1.42 | 6.266 | 8.90 | 95.8 | |||||||||||||||||||||
Kopanang | 1.86 | 6.752 | 12.54 | 11.59 | 6.421 | 74.43 | 96.5 | |||||||||||||||||||||
Moab Khotsong(2) | 1.36 | 10.402 | 14.16 | 19.14 | 10.632 | 203.52 | 96.5 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 4.62 | 9.471 | 43.73 | 38.09 | 10.302 | 392.47 | 98.2(4) | |||||||||||||||||||||
Savuka | - | - | - | 2.36 | 7.903 | 18.67 | 97.4 | |||||||||||||||||||||
TauTona | 0.73 | 11.854 | 8.68 | 5.61 | 9.084 | 50.99 | 97.4 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
Surface sources | - | - | - | 495.42 | 0.312 | 154.43 | 76-88(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of the Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | - | - | - | 33.44 | 4.207 | 140.69 | 84.5; 91.3 (10) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
Iduapriem | 28.59 | 1.318 | 37.70 | 26.85 | 1.555 | 41.74 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 14.13 | 6.656 | 94.07 | 27.10 | 7.281 | 197.31 | 85.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 35.72 | 0.613 | 21.90 | 72.18 | 0.692 | 49.97 | 92(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 0.57 | 1.709 | 0.98 | 2.67 | 1.136 | 3.04 | 88.8-89.0(4) | |||||||||||||||||||||
Sadiola (41 percent)(3) | 4.26 | 2.047 | 8.71 | 39.66 | 1.583 | 62.76 | 78-97.0 | |||||||||||||||||||||
Yatela (40 percent)(3) | 0.37 | 0.635 | 0.24 | 0.80 | 1.752 | 1.40 | 84.8 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
Navachab | 6.31 | 1.091 | 6.88 | 44.18 | 1.287 | 56.88 | 69.5 ; 86.7(9) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
Geita | - | - | - | 56.34 | 2.618 | 147.47 | 46-91(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
Sunrise Dam | 14.84 | 1.162 | 17.24 | 7.56 | 3.996 | 30.20 | 84.8-86(4) | |||||||||||||||||||||
Tropicana (70 percent)(3) | 18.03 | 2.299 | 41.45 | 21.42 | 2.043 | 43.75 | 90.3 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 10.56 | 1.354 | 14.30 | 12.85 | 4.252 | 54.64 | 95.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(8) | 5.25 | 6.228 | 32.68 | 6.81 | 4.808 | 32.74 | 88-93(4) | |||||||||||||||||||||
Serra Grande (50 percent)(3) | 1.86 | 3.355 | 6.24 | 1.46 | 3.724 | 5.43 | 93.9 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
Cripple Creek & Victor | 160.78 | 0.824 | 132.48 | 86.60 | 0.717 | 62.06 | 43-95(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | 313.16 | 1.661 | 520.04 | 1013.56 | 1.809 | 1833.51 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Ore Reserves: Imperial | At December 31, 2009 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | Metallurgical | ||||||||||||||||||||||||||
| Gold | Gold | |||||||||||||||||||||||||||
| Tons(5) | Grade Content(1) | Tons(5) | Grade Content(1) | Recovery Factor | ||||||||||||||||||||||||
| (mill) | (oz/ton) | (mill oz) | (mill) | (oz/ton) | (mill oz) | percent | ||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(6) | ||||||||||||||||||||||||||||
| Great Noligwa | 4.03 | 0.226 | 0.91 | 3.35 | 0.206 | 0.69 | 96.3 | |||||||||||||||||||||
| Kopanang | 1.08 | 0.202 | 0.22 | 18.64 | 0.166 | 3.10 | 97.5 | |||||||||||||||||||||
Moab Khotsong(2) | 1.29 | 0.305 | 0.39 | 20.51 | 0.328 | 6.74 | 94.6-97.1 | (4) | ||||||||||||||||||||
| Tau Lekoa | 0.66 | 0.116 | 0.08 | 0.76 | 0.116 | 0.09 | 97.4 | |||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 2.45 | 0.241 | 0.59 | 39.46 | 0.307 | 12.12 | 98.0-98.5 | (4) | ||||||||||||||||||||
| Savuka | 0.13 | 0.156 | 0.02 | 3.26 | 0.182 | 0.59 | 97.3 | |||||||||||||||||||||
TauTona(2) | 0.37 | 0.345 | 0.13 | 9.58 | 0.272 | 2.60 | 97.8 | |||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
| Surface sources | — | — | — | 128.22 | 0.015 | 1.88 | 48 — 91 | (4) | ||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | — | — | — | 31.65 | 0.131 | 4.14 | 84.5: 91.3 | (9) | ||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
| Iduapriem | 29.06 | 0.040 | 1.16 | 25.59 | 0.048 | 1.24 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 15.35 | 0.208 | 3.19 | 30.97 | 0.208 | 6.46 | 35-83 | (4) | ||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 33.98 | 0.019 | 0.63 | 96.84 | 0.025 | 2.44 | 88-93.5 | (4) | ||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 4.34 | 0.051 | 0.22 | 3.05 | 0.033 | 0.10 | 88.9-89 | (4) | ||||||||||||||||||||
Sadiola (41 percent)(3) | 4.52 | 0.072 | 0.33 | 17.86 | 0.063 | 1.13 | 80-100 | (4) | ||||||||||||||||||||
Yatela (40 percent)(3) | 1.33 | 0.033 | 0.04 | — | — | — | 84.8 | |||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
| Navachab | 10.86 | 0.027 | 0.29 | 35.72 | 0.037 | 1.33 | 88.0 | |||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
| Geita | — | — | — | 52.21 | 0.097 | 5.07 | 46.2-89.3 | (4) | ||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
| Sunrise Dam | 9.16 | 0.057 | 0.52 | 10.24 | 0.118 | 1.21 | 85-85.5 | (4) | ||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 11.86 | 0.040 | 0.48 | 10.63 | 0.132 | 1.40 | 95.0 | |||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(8) | 5.08 | 0.202 | 1.03 | 7.12 | 0.162 | 1.15 | 88 — 93 | (4) | ||||||||||||||||||||
Serra Grande (50 percent)(3) | 2.27 | 0.104 | 0.24 | 0.95 | 0.116 | 0.11 | 90.9-95.9 | (4 | ||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
| Cripple Creek & Victor | 110.03 | 0.027 | 2.97 | 51.14 | 0.026 | 1.32 | 50 — 77 | (4) | ||||||||||||||||||||
Total | 247.87 | 0.054 | 13.44 | 597.73 | 0.092 | 54.92 | ||||||||||||||||||||||
| (1) | Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining. |
| (2) | Probable Ore Reserves include Ore Reserves below infrastructure. See table below. |
| (3) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (4) | Recovery factor varies according to ore type. |
| (5) | ||
The Vaal Reef Ore Reserves include |
| (6) | Tonnes refers to a metric tonne which is equivalent to 1000 kilograms. |
| (7) | The Ore Reserve contains |
| (8) |
|
| (9) | DMS plant and CIP plant, respectively. |
| (10) | Open pit and underground mining, respectively. | |
115Rounding may result in computational differences.
| Gold Content | ||||||||||||
| Mine | Tons (millions) | Grade (ounces/ton) | (million ounces) | |||||||||
| TauTona | 0.53 | 0.406 | 0.22 | |||||||||
| Mponeng | 27.58 | 0.345 | 9.53 | |||||||||
| Moab Khotsong | 13.05 | 0.302 | 3.94 | |||||||||
| Obuasi | 3.64 | 0.383 | 1.40 | |||||||||
| AGA Mineração | 4.62 | 0.163 | 0.76 | |||||||||
| Total | 49.42 | 0.32 | 15.85 | |||||||||
| Mine | Tonnes (millions) | Grade (grams/tonne) | Gold Content (tonnes) | |||
Moab Khotsong | 12.62 | 10.70 | 134.95 | |||
Mponeng | 31.93 | 11.16 | 356.30 | |||
Obuasi | 2.71 | 13.08 | 35.49 | |||
AGA Mineração | 2.68 | 5.43 | 14.57 | |||
Total | 49.95 | 10.84 | 541.31 |
Rounding may result in computational differences.
116
| ||||||||||||||||||||||||||||
| Ore Reserves: Metric | At December 31, 2010 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | Metallurgical | ||||||||||||||||||||||||||
| Tonnes(6) | Grade | Gold | Tonnes | Grade | Gold | Recovery factor | ||||||||||||||||||||||
| (mill) | (g/t) | Content (tonnes) | (mill) | (g/t) | Content (tonnes) | percent | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(5) | ||||||||||||||||||||||||||||
Great Noligwa | 4.03 | 7.71 | 31.06 | 1.80 | 7.20 | 12.95 | 96.0 | |||||||||||||||||||||
Kopanang | 1.24 | 7.87 | 9.76 | 13.35 | 6.51 | 86.84 | 95.6 | |||||||||||||||||||||
Moab Khotsong(2) | 1.84 | 10.46 | 19.26 | 16.84 | 12.69 | 213.71 | 95.4-95.6(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 4.15 | 8.01 | 33.27 | 39.88 | 10.01 | 399.19 | 97.4-98.2(4) | |||||||||||||||||||||
Savuka | 0.08 | 5.05 | 0.42 | 3.27 | 6.20 | 20.29 | 97.0 | |||||||||||||||||||||
TauTona | 0.68 | 7.73 | 5.29 | 6.36 | 9.23 | 58.66 | 97.2 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
Surface sources | - | - | - | 110.49 | 0.49 | 54.10 | 40-88(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of the Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | - | - | - | 33.44 | 4.21 | 4.52 | 84.5; 91.3 (10) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
Iduapriem | 29.22 | 1.34 | 39.09 | 24.70 | 1.56 | 38.49 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 14.79 | 6.68 | 98.76 | 24.60 | 7.27 | 178.79 | 85.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 39.05 | 0.62 | 24.38 | 67.44 | 0.74 | 49.71 | 90-95(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 2.35 | 1.68 | 3.93 | 2.68 | 1.14 | 3.04 | 89.0 | |||||||||||||||||||||
Sadiola (41 percent)(3) | 2.33 | 2.95 | 6.88 | 35.27 | 1.83 | 64.59 | 76-96(4) | |||||||||||||||||||||
Yatela (40 percent)(3) | 0.28 | 0.79 | 0.22 | 1.24 | 1.78 | 2.20 | 75-85(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
Navachab | 14.27 | 1.02 | 14.49 | 29.74 | 1.45 | 42.99 | 69.5 ; 86.5(9) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
Geita | - | - | - | 40.92 | 3.20 | 131.06 | 46-89(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
Sunrise Dam | 7.20 | 1.71 | 12.30 | 6.69 | 4.56 | 30.53 | 85.5-86(4) | |||||||||||||||||||||
Tropicana (70 percent)(3) | 16.85 | 2.26 | 38.16 | 16.70 | 2.11 | 35.29 | 90.3 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 9.54 | 1.22 | 11.63 | 8.57 | 5.32 | 45.62 | 95.0 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(8) | 4.94 | 6.74 | 33.34 | 6.08 | 5.50 | 33.41 | 93.0 | |||||||||||||||||||||
Serra Grande (50 percent)(3) | 1.96 | 3.42 | 6.72 | 1.32 | 4.15 | 5.47 | 92.9-94.9(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
Cripple Creek & Victor | 147.19 | 0.81 | 119.37 | 78.76 | 0.75 | 58.76 | 43-95(4) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | 302.00 | 1.68 | 508.32 | 570.12 | 2.99 | 1,706.39 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Ore Reserves: Metric | At December 31, 2010 | |||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | |||||||||||||||||||||||||||
| Tonnes(6) | Grade | Gold | Tonnes | Grade | Gold | Metallurgical | ||||||||||||||||||||||
| Content | Content | Recovery factor | ||||||||||||||||||||||||||
| (mill) | (g/t) | (tonnes) | (mill) | (g/t) | (tonnes) | percent | ||||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(5) | ||||||||||||||||||||||||||||
| Great Noligwa | 4.03 | 7.71 | 31.06 | 1.80 | 7.20 | 12.95 | 96.0 | |||||||||||||||||||||
| Kopanang | 1.24 | 7.87 | 9.76 | 13.35 | 6.51 | 86.84 | 95.6 | |||||||||||||||||||||
Moab Khotsong(2) | 1.84 | 10.46 | 19.26 | 16.84 | 12.69 | 213.71 | 95.4-95.6 | (4) | ||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 4.15 | 8.01 | 33.27 | 39.88 | 10.01 | 399.19 | 97.4-98.2 | (4) | ||||||||||||||||||||
| Savuka | 0.08 | 5.05 | 0.42 | 3.27 | 6.20 | 20.29 | 97.0 | |||||||||||||||||||||
TauTona(2) | 0.68 | 7.73 | 5.29 | 6.36 | 9.23 | 58.66 | 97.2 | |||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
| Surface sources | — | — | — | 110.49 | 0.49 | 54.10 | 40-88 | (4) | ||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | — | — | — | 33.44 | 4.21 | 4.52 | 84.5: 91.3 | (10) | ||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
| Iduapriem | 29.22 | 1.34 | 39.09 | 24.70 | 1.56 | 38.49 | 95.0 | |||||||||||||||||||||
Obuasi(2) | 14.79 | 6.68 | 98.76 | 24.60 | 7.27 | 178.79 | 85.0 | |||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 39.05 | 0.62 | 24.38 | 67.44 | 0.74 | 49.71 | 90-95 | (4) | ||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 2.35 | 1.68 | 3.93 | 2.68 | 1.14 | 3.04 | 89.0 | |||||||||||||||||||||
Sadiola (41 percent)(3) | 2.33 | 2.95 | 6.88 | 35.27 | 1.83 | 64.59 | 76-96 | (4) | ||||||||||||||||||||
Yatela (40 percent)(3) | 0.28 | 0.79 | 0.22 | 1.24 | 1.78 | 2.20 | 75-85 | (4) | ||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
| Navachab | 14.27 | 1.02 | 14.49 | 29.74 | 1.45 | 42.99 | 69.5 : 86.5 | (9) | ||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
| Geita | — | — | — | 40.92 | 3.20 | 131.06 | 46-89 | (4) | ||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
| Sunrise Dam | 7.20 | 1.71 | 12.30 | 6.69 | 4.56 | 30.53 | 85.5-86 | (4) | ||||||||||||||||||||
Tropicana (70 percent)(3) | 16.85 | 2.26 | 38.16 | 16.70 | 2.11 | 35.29 | 90.3 | |||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 9.54 | 1.22 | 11.63 | 8.57 | 5.32 | 45.62 | 95.0 | |||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(8) | 4.94 | 6.74 | 33.34 | 6.08 | 5.50 | 33.41 | 93.0 | |||||||||||||||||||||
Serra Grande (50 percent)(3) | 1.96 | 3.42 | 6.72 | 1.32 | 4.15 | 5.47 | 92.9-94.9 | (4) | ||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
| Cripple Creek & Victor | 147.19 | 0.81 | 119.37 | 78.76 | 0.75 | 58.76 | 43-95 | (4) | ||||||||||||||||||||
Total | 302.00 | 1.68 | 508.32 | 570.12 | 2.99 | 1,706.39 | ||||||||||||||||||||||
| (1) | Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining. |
| (2) | Probable Ore Reserves include Ore Reserves below infrastructure. See table below. |
| (3) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (4) | Recovery factor varies according to ore type. |
| (5) | The Vaal Reef Ore Reserves include 21.6 thousand tonnes of Uranium oxide by-products; this cannot be accounted for by individual mine as Great Noligwa, Kopanang and |
| (6) | Tonnes refers to a metric tonne which is equivalent to 1000 kilograms. |
| (7) | The Ore Reserve contains 1 078 tonnes of silver to be recovered as a by-product. |
| (8) | The Ore Reserve contains 0.44 million tonnes of sulfur to be recovered as a by-product. |
| (9) | DMS plant and CIP plant, respectively. |
| (10) | Open pit and underground mining, respectively. | |
117Rounding may result in computational differences.
| Mine | Tonnes (millions) | Grade (grams/tonne) | Gold Content (tonnes) | |||||||||
| Mponeng | 30.90 | 10.65 | 329.13 | |||||||||
| Moab Khotsong | 10.40 | 12.54 | 130.46 | |||||||||
| Obuasi | 2.71 | 13.08 | 35.49 | |||||||||
| AGA Mineração | 3.21 | 5.91 | 19.01 | |||||||||
| Total | 47.22 | 10.89 | 514.09 | |||||||||
| Mine | Tonnes (millions) | Grade (grams/tonne) | Gold Content (tonnes) | |||
Moab Khotsong | 10.40 | 12.54 | 130.46 | |||
Mponeng | 30.90 | 10.65 | 329.13 | |||
Obuasi | 2.71 | 13.08 | 35.49 | |||
AGA Mineração | 3.21 | 5.91 | 19.01 | |||
Total | 47.22 | 10.89 | 514.09 |
Rounding may result in computational differences.
118
| At December 31, 2009 | ||||||||||||||||||||||||||||
| Proven Ore Reserves(1) | Probable Ore Reserves(1)(2) | |||||||||||||||||||||||||||
| Gold | Gold | Metallurgical | ||||||||||||||||||||||||||
| Tonnes(6) | Grade | Content | Tonnes | Grade | Content | Recovery factor | ||||||||||||||||||||||
| Ore Reserves: Metric | (mill) | (g/t) | (tonnes) | (mill) | (g/t) | (tonnes) | percent | |||||||||||||||||||||
South Africa | ||||||||||||||||||||||||||||
Vaal River(5) | ||||||||||||||||||||||||||||
| Great Noligwa | 3.66 | 7.75 | 28.33 | 3.04 | 7.07 | 21.46 | 96.3 | |||||||||||||||||||||
| Kopanang | 0.98 | 6.94 | 6.80 | 16.91 | 5.71 | 96.50 | 97.5 | |||||||||||||||||||||
Moab Khotsong(2) | 1.17 | 10.44 | 12.20 | 18.61 | 11.26 | 209.56 | 94.6-97.1 | (4) | ||||||||||||||||||||
| Tau Lekoa | 0.60 | 3.98 | 2.37 | 0.69 | 3.98 | 2.75 | 97.4 | |||||||||||||||||||||
West Wits | ||||||||||||||||||||||||||||
Mponeng(2) | 2.22 | 8.27 | 18.39 | 35.79 | 10.54 | 377.12 | 98.0-98.5 | (4) | ||||||||||||||||||||
| Savuka | 0.12 | 5.36 | 0.65 | 2.95 | 6.24 | 18.42 | 97.3 | |||||||||||||||||||||
TauTona(2) | 0.34 | 11.83 | 4.00 | 8.69 | 9.32 | 80.98 | 97.8 | |||||||||||||||||||||
Surface | ||||||||||||||||||||||||||||
| Surface sources | — | — | — | 116.31 | 0.50 | 58.59 | 48-91 | (4) | ||||||||||||||||||||
Continental Africa | ||||||||||||||||||||||||||||
Democratic Republic of Congo | ||||||||||||||||||||||||||||
Kibali (45 percent)(3) | — | — | — | 28.71 | 4.48 | 128.65 | 84.5: 91.3 | (9) | ||||||||||||||||||||
Ghana | ||||||||||||||||||||||||||||
| Iduapriem | 26.36 | 1.37 | 36.04 | 23.22 | 1.66 | 38.52 | 95.0 | ) | ||||||||||||||||||||
Obuasi(2) | 13.93 | 7.13 | 99.30 | 28.10 | 7.15 | 200.79 | 35.0-83.0 | (4) | ||||||||||||||||||||
Guinea | ||||||||||||||||||||||||||||
Siguiri (85 percent)(3) | 30.83 | 0.64 | 19.59 | 87.85 | 0.86 | 75.99 | 88-93.5 | (4) | ||||||||||||||||||||
Mali | ||||||||||||||||||||||||||||
Morila (40 percent)(3) | 3.94 | 1.74 | 6.85 | 2.76 | 1.14 | 3.14 | 88.9-89 | (4) | ||||||||||||||||||||
Sadiola (41 percent)(3) | 4.10 | 2.47 | 10.14 | 16.20 | 2.17 | 35.18 | 80-100 | (4) | ||||||||||||||||||||
Yatela (40 percent)(3) | 1.20 | 1.14 | 1.37 | — | — | — | 84.0 | |||||||||||||||||||||
Namibia | ||||||||||||||||||||||||||||
| Navachab | 9.85 | 0.93 | 9.12 | 32.40 | 1.28 | 41.42 | 88.0 | |||||||||||||||||||||
Tanzania | ||||||||||||||||||||||||||||
| Geita | — | — | — | 47.36 | 3.33 | 157.57 | 46.2-89.3 | (4) | ||||||||||||||||||||
Australasia | ||||||||||||||||||||||||||||
Australia | ||||||||||||||||||||||||||||
| Sunrise Dam | 8.31 | 1.94 | 16.16 | 9.29 | 4.05 | 37.59 | 85.0-85.5 | (4) | ||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||
Argentina | ||||||||||||||||||||||||||||
Cerro Vanguardia (92.5 percent)(3)(7) | 10.76 | 1.37 | 14.78 | 9.64 | 4.53 | 43.66 | 95.0 | |||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||||
AGA Mineraçáo(8) | 4.61 | 6.94 | 32.00 | 6.46 | 5.55 | 35.85 | 88-93 | (4) | ||||||||||||||||||||
Serra Grande (50 percent)(3) | 2.06 | 3.58 | 7.38 | 0.86 | 3.99 | 3.43 | 90.9-95.9 | (4) | ||||||||||||||||||||
United States of America | ||||||||||||||||||||||||||||
| Cripple Creek & Victor | 99.82 | 0.93 | 92.29 | 46.40 | 0.89 | 41.17 | 50-77 | (4) | ||||||||||||||||||||
Total | 224.87 | 1.86 | 417.77 | 542.25 | 3.15 | 1,708.35 | ||||||||||||||||||||||
119
| Mine | Tonnes (millions) | Grade (grams/tonne) | Gold Content (tonnes) | |||||||||
| TauTona | 0.48 | 13.93 | 6.70 | |||||||||
| Mponeng | 25.02 | 11.84 | 296.30 | |||||||||
| Moab Khotsong | 11.84 | 10.35 | 122.56 | |||||||||
| Obuasi | 3.3 | 13.14 | 43.41 | |||||||||
| AGA Mineração | 4.19 | 5.6 | 23.49 | |||||||||
| Total | 44.83 | 10.99 | 492.46 | |||||||||
120
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include the following stockpile material:
| At December 31, 2010 | ||||||||||||
| Gold content | ||||||||||||
| Stockpiles | Tons (million) | Grade (ounces/ton) | (million ounces) | |||||||||
South Africa | ||||||||||||
Surface sources(2) | 121.79 | 0.014 | 1.74 | |||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
| Iduapriem | 4.29 | 0.030 | 0.13 | |||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 67.22 | 0.016 | 1.08 | |||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 5.53 | 0.040 | 0.22 | |||||||||
Sadiola (41 percent)(1) | 2.57 | 0.086 | 0.22 | |||||||||
Yatela (40 percent)(1) | 0.26 | 0.019 | — | |||||||||
Namibia | ||||||||||||
| Navachab | 9.05 | 0.022 | 0.20 | |||||||||
Tanzania | ||||||||||||
| Geita | 7.57 | 0.032 | 0.24 | |||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
| Sunrise Dam | 7.26 | 0.049 | 0.35 | |||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 12.35 | 0.020 | 0.25 | |||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 0.083 | — | |||||||||
| ||||||||||||
| Stockpiles | At December 31, 2011 | |||||||||||
| ||||||||||||
| Tons (million) | Grade (ounces/ton) | Gold content | ||||||||||
| (million ounces) | ||||||||||||
| ||||||||||||
South Africa | ||||||||||||
Surface sources(2) | 546.11 | 0.009 | 4.96 | |||||||||
| ||||||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
Iduapriem | 6.28 | 0.027 | 0.17 | |||||||||
| ||||||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 66.59 | 0.016 | 1.09 | |||||||||
| ||||||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 3.58 | 0.036 | 0.13 | |||||||||
Sadiola (41 percent)(1) | 4.69 | 0.060 | 0.28 | |||||||||
Yatela (40 percent)(1) | 0.41 | 0.019 | 0.01 | |||||||||
| ||||||||||||
Namibia | ||||||||||||
Navachab | 4.47 | 0.031 | 0.14 | |||||||||
| ||||||||||||
Tanzania | ||||||||||||
Geita | 12.16 | 0.036 | 0.43 | |||||||||
| ||||||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
Sunrise Dam | 15.92 | 0.033 | 0.53 | |||||||||
| ||||||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 14.23 | 0.019 | 0.27 | |||||||||
| ||||||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 0.055 | 0.00 | |||||||||
| ||||||||||||
| (1) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (2) | Centralized operations treating material on surface that was previously generated by several underground operations. |
| (3) | Spent heap included in Ore Reserve. | |
121The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include the following stockpile material:
| At December 31, 2009 | ||||||||||||
| Gold content | ||||||||||||
| Stockpiles | Tons (million) | Grade (ounces/ton) | (million ounces) | |||||||||
South Africa | ||||||||||||
Surface | ||||||||||||
Vaal River Surface — SA MET(2) | 119.33 | 0.015 | 1.74 | |||||||||
West Wits Surface — SA MET(2) | 8.88 | 0.017 | 0.15 | |||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
| Iduapriem | 3.05 | 0.032 | 0.10 | |||||||||
| Obuasi | 5.62 | 0.058 | 0.33 | |||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 64.86 | 0.016 | 1.06 | |||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 7.40 | 0.043 | 0.32 | |||||||||
Sadiola (41 percent)(1) | 4.52 | 0.072 | 0.33 | |||||||||
Yatela (40 percent)(1) | 1.33 | 0.033 | 0.04 | |||||||||
Namibia | ||||||||||||
| Navachab | 7.58 | 0.022 | 0.17 | |||||||||
Tanzania | ||||||||||||
| Geita | 2.95 | 0.047 | 0.14 | |||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
| Sunrise Dam | 7.43 | 0.045 | 0.34 | |||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 14.45 | 0.018 | 0.26 | |||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.05 | 0.093 | 0.01 | |||||||||
| ||||||||||||
| Stockpiles | At December 31, 2010 | |||||||||||
| ||||||||||||
| Tons (million) | Grade (ounces/ton) | Gold content (million ounces) | ||||||||||
| ||||||||||||
South Africa | ||||||||||||
Surface sources(2) | 121.79 | 0.014 | 1.74 | |||||||||
| ||||||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
Iduapriem | 4.29 | 0.030 | 0.13 | |||||||||
| ||||||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 67.22 | 0.016 | 1.08 | |||||||||
| ||||||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 5.53 | 0.040 | 0.22 | |||||||||
Sadiola (41 percent)(1) | 2.57 | 0.086 | 0.22 | |||||||||
Yatela (40 percent)(1) | 0.26 | 0.019 | 0.00 | |||||||||
| ||||||||||||
Namibia | ||||||||||||
Navachab | 9.05 | 0.022 | 0.20 | |||||||||
| ||||||||||||
Tanzania | ||||||||||||
Geita | 7.57 | 0.032 | 0.24 | |||||||||
| ||||||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
Sunrise Dam | 7.26 | 0.049 | 0.35 | |||||||||
| ||||||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 12.35 | 0.020 | 0.25 | |||||||||
| ||||||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 0.083 | 0.00 | |||||||||
| ||||||||||||
| (1) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (2) | Centralized operations treating material on surface that was previously generated by several underground operations. |
| (3) | Spent heap included in Ore Reserve. | |
122The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include the following stockpile material:
| At December 31, 2010 | ||||||||||||
| Gold content | ||||||||||||
| Stockpiles | Tonnes (million) | Grade (grams/tonne) | (tonnes) | |||||||||
South Africa | ||||||||||||
Surface sources(2) | 110.49 | 0.49 | 54.10 | |||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
| Iduapriem | 3.89 | 1.05 | 4.06 | |||||||||
Guinea | ||||||||||||
Siguiri (85 percent) (1)(3) | 60.98 | 0.55 | 33.62 | |||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 5.02 | 1.39 | 6.97 | |||||||||
Sadiola (41 percent)(1) | 2.33 | 2.95 | 6.88 | |||||||||
Yatela (40 percent)(1) | 0.23 | 0.66 | 0.15 | |||||||||
Namibia | ||||||||||||
| Navachab | 8.21 | 0.77 | 6.31 | |||||||||
Tanzania | ||||||||||||
| Geita | 6.87 | 1.09 | 7.51 | |||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
| Sunrise Dam | 6.58 | 1.67 | 11.02 | |||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 11.20 | 0.70 | 7.83 | |||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 2.83 | 0.08 | |||||||||
| ||||||||||||
| Stockpiles | At December 31, 2011 | |||||||||||
| ||||||||||||
| Tonnes (million) | Grade (grams/tonne) | Gold content (tonnes) | ||||||||||
| ||||||||||||
South Africa | ||||||||||||
Surface sources(2) | 495.42 | 0.312 | 154.43 | |||||||||
| ||||||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
Iduapriem | 5.70 | 0.935 | 5.32 | |||||||||
| ||||||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 60.41 | 0.562 | 33.94 | |||||||||
| ||||||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 3.25 | 1.237 | 4.02 | |||||||||
Sadiola (41 percent)(1) | 4.26 | 2.047 | 8.71 | |||||||||
Yatela (40 percent)(1) | 0.37 | 0.635 | 0.24 | |||||||||
| ||||||||||||
Namibia | ||||||||||||
Navachab | 4.06 | 1.063 | 4.31 | |||||||||
| ||||||||||||
Tanzania | ||||||||||||
Geita | 10.50 | 1.248 | 13.10 | |||||||||
| ||||||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
Sunrise Dam | 14.44 | 1.137 | 16.43 | |||||||||
| ||||||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 12.91 | 0.642 | 8.28 | |||||||||
| ||||||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 1.890 | 0.05 | |||||||||
| ||||||||||||
| (1) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (2) | Centralized operations treating material on surface that was previously generated by several underground operations. |
| (3) | Spent heap included in Ore Reserve. | |
123The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include the following stockpile material:
| At December 31, 2009 | ||||||||||||
| Gold content | ||||||||||||
| Stockpiles | Tonnes (million) | Grade (grams/tonne) | (tonnes) | |||||||||
South Africa | ||||||||||||
Vaal River Surface — SA MET(2) | 108.26 | 0.50 | 54.02 | |||||||||
West Wits Surface — SA MET(2) | 8.06 | 0.57 | 4.57 | |||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
| Iduapriem | 2.77 | 1.08 | 2.99 | |||||||||
| Obuasi | 5.10 | 2.01 | 10.23 | |||||||||
Guinea | ||||||||||||
Siguiri (85 percent) (1)(3) | 58.84 | 0.56 | 32.83 | |||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 6.71 | 1.49 | 9.99 | |||||||||
Sadiola (41 percent)(1) | 4.10 | 2.47 | 10.14 | |||||||||
Yatela (40 percent)(1) | 1.20 | 1.14 | 1.37 | |||||||||
Namibia | ||||||||||||
| Navachab | 6.87 | 0.77 | 5.28 | |||||||||
Tanzania | ||||||||||||
| Geita | 2.67 | 1.63 | 4.35 | |||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
| Sunrise Dam | 6.74 | 1.55 | 10.47 | |||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 13.11 | 0.62 | 8.14 | |||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.04 | 3.2 | 0.14 | |||||||||
| ||||||||||||
| Stockpiles | At December 31, 2010 | |||||||||||
| ||||||||||||
| Tonnes (million) | Grade (grams/tonne) | Gold content (tonnes) | ||||||||||
| ||||||||||||
South Africa | ||||||||||||
Surface sources(2) | 110.49 | 0.49 | 54.10 | |||||||||
| ||||||||||||
Continental Africa | ||||||||||||
Ghana | ||||||||||||
Iduapriem | 3.89 | 1.05 | 4.06 | |||||||||
| ||||||||||||
Guinea | ||||||||||||
Siguiri (85 percent)(1)(3) | 60.98 | 0.55 | 33.62 | |||||||||
| ||||||||||||
Mali | ||||||||||||
Morila (40 percent)(1) | 5.02 | 1.39 | 6.97 | |||||||||
Sadiola (41 percent)(1) | 2.33 | 2.95 | 6.88 | |||||||||
Yatela (40 percent)(1) | 0.23 | 0.66 | 0.15 | |||||||||
| ||||||||||||
Namibia | ||||||||||||
Navachab | 8.21 | 0.77 | 6.31 | |||||||||
| ||||||||||||
Tanzania | ||||||||||||
Geita | 6.87 | 1.09 | 7.51 | |||||||||
| ||||||||||||
Australasia | ||||||||||||
Australia | ||||||||||||
Sunrise Dam | 6.58 | 1.67 | 11.02 | |||||||||
| ||||||||||||
Americas | ||||||||||||
Argentina | ||||||||||||
Cerro Vanguardia (92.5 percent)(1) | 11.20 | 0.70 | 7.83 | |||||||||
| ||||||||||||
Brazil | ||||||||||||
Serra Grande (50 percent)(1) | 0.03 | 2.83 | 0.08 | |||||||||
| ||||||||||||
| (1) | Ore Reserves attributable to AngloGold Ashanti’s percentage interest shown. |
| (2) | Centralized operations treating material on surface that was previously generated by several underground operations. |
| (3) | Spent heap included in Ore Reserve. | |
124The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
In determining the Proven and Probable Ore Reserves, AngloGold Ashanti applied the following drill hole spacings:
| Drill Hole Spacings | ||||
| Proven Ore Reserves | Probable Ore Reserves | |||
South Africa | ||||
Underground sources | ||||
Ore body opened up, developed and sampled on a 7 to 10 foot spacing on raise lines and on a 16 x 16 grid thereafter | From a 131 x 131 foot spacing up to 3281 x 3281 foot spacing | |||
Surface sources | ||||
Variable sampling strategies: Belt samplers, cross stream residue samplers and bulk sampling campaigns | Variable sampling strategies: Belt samplers, cross stream residue samplers | |||
Continental Africa | ||||
Ghana | ||||
Iduapriem | 164 x 164 feet, 164 x 328 feet | 164 x 246 feet, 246 x 328 feet | ||
Obuasi - Surface | 66 x 66 feet | 98 x 98 feet | ||
Obuasi - Underground | 66 x 66 feet | 197 x 197 feet | ||
Guinea | ||||
Siguiri | ||||
16 x 33 feet | 66 x 131 feet, 82 x 82 feet | |||
Mali | ||||
Morila | ||||
33 x 33 feet | 98 x 98 feet | |||
Sadiola | 66 x 66 feet, 82 x 82 feet | 82 x 164 feet | ||
Yatela | 33 x 33 feet, 82 x 82 feet | 115 x 148 feet | ||
Namibia | ||||
Navachab | 33 x 33 feet | 82 x 164 feet | ||
Tanzania | ||||
Geita | ||||
16 x 33 feet, 33 x 33 feet | 131 x 131 feet | |||
Australasia | ||||
Australia | ||||
Sunrise Dam | ||||
33 x 33 feet, 82 x 82 feet | 66 x 66 feet, 131 x 131 feet, 164 x 164 feet | |||
Americas | ||||
Argentina | ||||
Cerro Vanguardia | 41 x 41 feet | 131 x 131 feet | ||
Brazil | ||||
AGA Mineraçáo | ||||
66 x 66 feet, 82 x 82 feet. Drilling pattern of | 66 x 66 feet, 164 x 164 feet. | |||
Serra Grande | ||||
33 x 33 feet, 33 x 66 | 33 x 66 feet, 66 x 164 feet | |||
United States of America | ||||
Cripple Creek & Victor | <98 x 98 feet | >98 x 98 feet | ||
125
In determining the Proven and Probable Ore Reserves, AngloGold Ashanti applied the following drill hole spacings:
| Drill Hole Spacings | ||||
| Proven Ore Reserves | Probable Ore Reserves | |||
South Africa | ||||
Underground sources | ||||
Ore body opened up, developed and sampled on a 2 to 3 meter spacing on raise lines and on a 5 x 5 grid thereafter | From a 40 x 40 meter spacing up to 1000 x 1000 meter spacing | |||
Surface sources | ||||
Variable sampling strategies: Belt samplers, cross stream residue samplers and bulk sampling campaigns | Variable sampling strategies: Belt samplers, cross stream residue samplers | |||
Continental Africa | ||||
Ghana | ||||
Iduapriem | 50 x 50 meter, 50 x 100 meter | 50 x 75 meter, 75 x 100 meter | ||
Obuasi – Surface | 20 x 20 meter | 30 x 30 meter | ||
Obuasi - Underground | 20 x 20 meter | 60 x 60 meter | ||
Guinea | ||||
Siguiri | ||||
5 x 10 meter | 20 x 40 meter, 25 x 25 meter | |||
Mali | ||||
Morila | ||||
10 x 10 meter | 30 x 30 meter | |||
Sadiola | 20 x 20 meter, 25 x 25 meter | 25 x 50 meter | ||
Yatela | 10 x 10 meter, 25 x 25 meter | 35 x 45 meter | ||
Namibia | ||||
Navachab | 10 x 10 meter | 25 x 25 meter | ||
Tanzania | ||||
Geita | ||||
5 x 10 meter, 10 x 10 meter | 40 x 40 meter | |||
Australasia | ||||
Australia | ||||
Sunrise Dam | ||||
10 x 10 meter, 25 x 25 meter | 20 x 20 meter, 40 x 40 meter, 50 x 50 meter | |||
Americas | ||||
Argentina | ||||
Cerro Vanguardia | 12.5 x 12.5 meter | 40 x 40 meter | ||
Brazil | ||||
AGA Mineraçáo | ||||
20 x 20 meter, 25 x 25 meter. Drilling pattern of 20 x 60 | 20 x 20 meter, 50 x 50 meter. | |||
Serra Grande | ||||
10 x 10 meter, 10 x 20 | 10 x 20 meter, 20 x 50 meter | |||
United States of America | ||||
Cripple Creek & Victor | <30 x 30 meter | >30 x 30 meter | ||
126
127
128
129
130
131
132
133
Not applicable.
134
The following discussion provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of AngloGold Ashanti Limited under US GAAP for the three years ended and as at December 31, 2011, 2010 2009 and 2008.
This item should be read in conjunction with the Company’s consolidated financial statements and the notes thereto which are included under Item 18 of this annual report.
The principal accountant of AngloGold Ashanti has made reference to the work of other auditors in theirits report on the consolidated financial statements of AngloGold Ashanti Limited for the year ended December 31, 2010 and therefore in compliance with Regulation S-X Rule 2-05 the separate reportsreport of the other auditors areauditor is included in Item 18.
Overview
AngloGold Ashanti is a global gold mining company headquartered in Johannesburg, South Africa,Africa. AngloGold Ashanti’s main product is gold. As part of extracting gold the Company also produces silver, uranium oxide and sulfuric acid as by-products. The Company sells its products on world markets.
AngloGold Ashanti conducts gold-mining operations in the following regions, which represent its business segments:
South Africa (comprising the Vaal River and West Wits operations)
Continental Africa (comprising Ghana, Guinea, Mali, Namibia and Tanzania operations)
Australasia (comprising Australia)
Americas (comprising Argentina, Brazil and United States of America)
In particular, AngloGold Ashanti has a global presence with 20 operations in the four regions comprising open-pit and underground mines and surface metallurgical plants, in ten countries on four continents, which are supported by extensive, yet focused, exploration activities. For more information on the Company’s business and operations, see “Item 4B.: Business Overview – Products, operations and geographical locations”.
As at December 31, 20102011 the Company had on an attributable basis, Proven and Probable Ore Reserves of approximately 71.275.6 million ounces (including joint ventures). For the year ended December 31, 2010,2011, AngloGold Ashanti had an attributable gold production of approximately 4.524.3 million ounces (including joint ventures).
AngloGold Ashanti’s costs and expenses consist primarily of production costs, royalties, exploration, general and administration costs and depreciation, depletion and amortization and exploration.amortization. Production costs include labor, mining contracts, fuel, lubricants, power, consumable stores which(which include explosives, timber, other consumablesconsumables), utilities and utilities.costs of environmental rehabilitation. The Company’s mining operations consist of deep-level underground mining methods as well as open-pit operations, both of which are labor intensive, therefore labor is a significant component of production costs.
Outlook
Gold production for 2012 is forecast to be between 4.3 million and 4.4 million ounces. Capital expenditure is expected to be approximately $2.2 billion to $2.3 billion in 2012 (2011: $1,527 million), of which 27 percent relates to South Africa, 40 percent to Continental Africa, 16 percent to the Americas, 14 percent to Australasia and 3 percent to other.
AngloGold Ashanti’s results of operations, in ten countries on four continents, AngloGold Ashanti is exposedfinancial condition and prospects, as well as the company's ability to meet its targets, may be adversely affected by a number of factors, relating to these specific countries that could affect its profitability,risks and uncertainties, some of which are beyond the company's control, including gold prices, exchange rate fluctuations, inflation, as well as political, mining and other risks. TheseIn particular production outlook is subject to, among other things, unplanned stoppages and safety related interventions, the stability and availability of power as well as other operational risks generally. Certain of these risks, uncertainties and other factors are inherentdescribed in conducting mining operations on a global basis,“Item 3D.: Risk factors”. See also “Note regarding forward-looking statements”.
| 5A. | OPERATING RESULTS |
INTRODUCTION
In 2011, the gold market continued to be profoundly influenced by ongoing economic turmoil, particularly in the United States of America in the first half of the year and latterly by the Eurozone crisis triggered by the deterioration of the sovereign debt markets. This trend persisted until the fourth quarter, during which the situation in Europe deteriorated, the euro started slipping against the US Dollar in the face of the inability of the European countries to resolve the funding crisis and the Company applies measures wherever appropriate and feasible,gold price failed to reduce its exposurereact favorably to these factors.
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Key factors affecting results
Gold prices
AngloGold Ashanti’s operating results are directly related to the price of gold, which can fluctuate widely and is affected by numerous factors beyond its control, including industrialinvestment, jewellery and jewelleryindustrial demand, expectations with respect to the rate of inflation, the strength of the US dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales and purchases by central banks and the International Monetary Fund (IMF), global or regional political or economic events, and production and cost levels in major gold-producing regions. In addition, the price of gold is often subject to sharp, short-term changes because of speculative activities. The shift in gold demand from physical demand to investment and speculative demand may exacerbate the volatility of gold prices.
The current demand for and supply of gold may affect gold prices, but not necessarily in the same manner as current supply and demand affects the prices of other commodities. The supply of gold consists of a combination of new production and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals.
Yearly average spot gold prices have increased during the three years under review as follows:
2009 - $974 per ounce
2010 - $1,227 per ounce
2011 - $1,572 per ounce
AngloGold Ashanti’s net income for 2009 and 2010 was adversely impacted by its hedge book, which was eliminated in 2010. The Company had no hedge contracts in 2011 and was therefore fully exposed to spot gold prices, which resulted in higher net income for 2011. If revenue from gold sales falls for a substantial period below the Company’s cost of production at its operations, AngloGold Ashanti could determine that it is not economically feasible to continue commercial production at any or all of its operations or to continue the development of some or all of its projects.
In the first quarter of 2012, the gold price came under some pressure and it reached lows of $1,562 per ounce on January 3, 2012 due to muted jewellery demand from India and lower than anticipated investment demand. On May 24, 2011,April 16, 2012, the afternoon fixing price for gold on the London Bullion Market was $1,527$1,653 per ounce.
Production costslevels
In addition to gold prices, AngloGold Ashanti’s revenue in the production of gold. AngloGold Ashanti has no influence over the cost of most consumables, many of which are linked to some degree to the price of oil and steel. AngloGold Ashanti estimates that for each $1 per barrel rise in the oil price, other factors remaining equal, the average cash costs under IFRS of all its operations increases by about $0.50 per ounce with the cash costs of certain of the company’s mines, particularly Geita, Cripple Creek & Victor, Siguiri and Sadiola, which, being more dependent on fuel, are more sensitive to changes in the price of oil. Furthermore, there has also been volatility recently in the price of steel, used in the manufacture of most forms of fixed and mobile mining equipment, which is a relatively large contributor to the operating costs and capital expenditure of a mine. For example, the price of flat Hot Rolled Coil (North American Domestic FOB) steel traded between $557 per ton and $698 per ton in 2010. Laborany year is also influenced by its level of gold production. Production levels are in turn influenced by grades, tonnages mined and processed through the plant, and metallurgical recoveries. Attributable gold production (including joint ventures) declined from 4.6 million ounces in 2009 to 4.3 million ounces in 2011. The decline in production levels is due to a significant componentvariety of factors, as follows:
South Africa: Sale of Tau Lekoa mine in 2010 and increased levels of safety related stoppages at the mines resulting in lower tonnages being mined and processed.
Continental Africa: Production levels have remained relatively flat over this period with declines in Ghana, Guinea and Mali, compensated by higher production costsfrom Tanzania on the back of improved grades and productivity improvements.
Australasia: 38 percent decline in production due to unprecedented rainfalls, pitwall and access ramp failure at Sunrise Dam, together with forecast decline in grades at the mine.
Americas: 6 percent increase in production from Americas came from Brazil on the back of grade and productivity improvements. This increase partially offset the decline from the other regions.
Grades from gold ore bodies tend to decline as AngloGold Ashanti’s mining operations consistthey mature over time. With a view to reversing the grade decline, the Company embarked on the following initiatives:
Short-term: Continued implementation of deep-level underground mining methods as well as open-pit operations, both of which are labor intensive.
136
Medium-term: Active exploration programmes to replenish depletion in subsequent increases in the market price of gold with respect to covered production. In order to provide full exposure to the rising spot price of gold, the Company completed its final tranche of the hedge buy-back programexisting ore bodies by mine life extensions and settled all derivative gold contracts that had been used by the Company. As a result, the Company has eliminated its outstanding hedge commitments of 3.90 million ounces (or 100 percent) and had no outstanding hedge commitments as at December 31, 2010. Buy-back transactions resulted in cash outflows during the current year of $2,611 million. For a discussion of the Company’s commodity instruments see “Item 11.: Quantitivate and qualitative disclosures about market risk”.new mines.
Long-term: Technology project in South Africa with a view to accessing the ore body at greater depth and further distance from existing infrastructure.
Concurrently, AngloGold Ashanti also embarked on ways of increasing the tonnage mined and processed, and processing improvements to enhance metallurgical recoveries.
Foreign exchange fluctuations
Production costs in all business segments are largely incurred in local currency where the relevant operation is located. US dollar denominated production costs and net income tend to be adversely impacted by local currency strength and favorably impacted by local currency weakness, assuming there are no other offsetting factors. AngloGold Ashanti’s financial results can be influenced significantly by the fluctuations in the South African Rand, Brazilian Real, Australian Dollar and, to a lesser extent, in Brazil, Argentinathe Argentinean Peso, Ghanaian Cedi and Australia. Most of its production costs, therefore, are denominated inother local currencies, such ascurrencies. As set out below, during the years ended December 31, 2011, 2010 and 2009, the US Dollar weakened and the South African rand, theRand, Brazilian real, the Argentinean pesoReal and the Australian dollar. Dollar strengthened, which had an unfavorable impact on AngloGold Ashanti’s US Dollar denominated production costs.
Average annual exchange rates to the US dollar
| 2011
| 2010
| 2009
| |||||||||
South African Rand | 7.26 | 7.30 | 8.39 | |||||||||
Brazilian Real | 1.68 | 1.76 | 2.00 | |||||||||
Australian Dollar | 0.97 | 1.09 | 1.26 | |||||||||
In 2010,2011, the Company derived 6661 percent (62(58 percent including joint ventures) of its revenues from these countriesSouth Africa, Brazil, Australia and Argentina, and incurred 6261 percent (58(57 percent including joint ventures) of its production costs in these local currencies. A one percent strengthening of these local currencies against the US dollar will result in an increase of total cash costs incurred of nearly $5 per ounce. As the price of gold is denominated in US dollars and the Company realizes the majority of its revenues in US dollars, devaluation of these local currencies against the US dollar improves the Company’s production costs in the short-term. Conversely strengthening of these local currencies against the US dollar adversely impacts the Company’s production costs in the short-term. Most local currencies were stronger against the US dollar during 2010 compared to 2009. Consequently, total cash costs in US dollar terms were negatively impacted during the 2010 year, thereby eroding the benefits of the higher US dollar gold price.
Certain exchange controls are currently in force in most emerging markets in which the Company operates, including for example South Africa. AlthoughAfrica and Argentina. In the case of South Africa, though the exchange rate of the rand is primarily market determined, its value at any time may not be considered a true reflection of the underlying value while exchange controls exist. The government has indicated its intention to relax exchange controls over time. As exchange controls are relaxed, rand exchange rates will be more closely tied to market forces. It is not possible to predict whether or when this will occur or the future value of the rand. For a detailed discussion of these exchange controls, see “Item 10D.: Exchange controls”.
137
Production costs include the cost of labor, mining contracts, fuel, lubricants, power, consumable stores (which include explosives, timber and other consumables), utilities and environmental rehabilitation costs. The mining industry continues to experience price inflation for many commodities and consumablescosts of inputs used in the production of gold, which leads to higher production costs reported by many gold producers.
AngloGold Ashanti’s operations have not been materially adversely affected by inflation in recent years, given that it has benefited from sustained periods of rising gold prices. However, the Company is unable to control the prices at which it sells its gold and it is possible, therefore, that if there is to begold. Accordingly, in the event of significant inflation in South Africa andor, to a lesser extent, in Brazil, Argentina andor Australia, without a concurrent devaluation of the local currency or an increase in the price of gold, there could be a material adverse effect upon the Company’s results and financial condition.
AngloGold Ashanti employs over 60,000 people globally, most of whom are members of trade unions, particularly in South Africa, Continental Africa and the Americas. Labor and mining contracts account for a significant component of production costs and are impacted by annual wage increases. During the period under review, given the rally in the gold price, trade unions have been successful in negotiating and securing higher than inflationary wage increases. During the years ended December 31, 2009, 2010 and 2011, management used Project ONE to claw back some of the increases through productivity improvements.
Energy costs, comprising power, fuel and lubricants, are another material component of production costs. Due to the remote location of some of its mines in Continental Africa, AngloGold Ashanti uses fuel to generate power and uses fuel and lubricants at its mines to run its fleet and processing plants. The percentageprice of oil has recently been volatile, fluctuating between $94.20 and $122.60 per barrel of Brent crude in 2011. AngloGold Ashanti estimates that for each $1 per barrel rise in the oil price, other factors remaining equal, the average cash costs under IFRS of all its operations increases by about $0.70 per ounce with the cash costs of certain of the company’s mines, particularly Geita, Cripple Creek & Victor, Siguiri and Sadiola, which are more dependent on fuel, being more sensitive to changes in the price of oil. Energy costs, even in business segments which are supported by grid power, like South Africa, have increased considerably over the three year period with price increases from Eskom (South Africa’s power utility) of approximately 26 percent per annum, far higher than average inflation. These increases have adversely impacted production costs.
AngloGold Ashanti has no influence over the cost of most consumables, many of which are linked to some degree to the price of oil and steel and in a number of cases have exceeded inflation. Furthermore, there has also been volatility recently in the price of steel, used in the manufacture of most forms of fixed and mobile mining equipment, which is a relatively large contributor to the operating costs and capital expenditure of a mine. All of these cost pressures have adversely impacted net income during the period.
Discounted closure liabilities (excluding joint ventures) increased from $530 million in 2010 to $653 million in 2011. This change is largely attributable to a change in mine plans resulting in accelerated cash flows, change in economic assumptions and discount rates, change in design of tailings storage facilities and change in methodology following requests from the rand/US dollar exchange rate, based upon average ratesGhana Environmental Protection Agency.
Exploration costs
Growing the business is one of AngloGold Ashanti’s key strategies. Accordingly, the Company has incurred increasing amounts of exploration expenditure during the respective years ended December 31, 2009, 2010 and 2011 in order to replenish depleting gold reserves and bring new ore bodies into pre-feasibility or feasibility. The exploration costs incurred over the local annual inflation rate,last three fiscal years amounted to $150 million in 2009, $206 million in 2010 and $279 million in 2011 and have adversely impacted net income.
General and administrative costs
In order to meet AngloGold Ashanti’s strategic objectives, management has incurred increasing levels of costs to build talent, capacity and expertise globally and in particular to support its Project ONE initiatives. The increase in costs over the 2009 - 2011 period had an adverse impact on net income. The costs incurred over such period amounted to $158 million in 2009, $228 million in 2010 and $287 million in 2011.
Royalties
Royalties, which are generally calculated as measured bya percentage of revenue, more than doubled from the $84 million incurred in 2009 to $193 million incurred in 2011, due to:
the introduction of royalties in South African Producer Price Index (PPI),Africa effective March 1, 2010; and
the higher spot gold prices resulting in increased royalties.
Royalties are set outlikely to continue to increase in the table below:
| 2010 | 2009 | 2008 | ||||||||||
| Year ended December 31 | percent | percent | percent | |||||||||
| The average South African rand/US$ exchange rate (strengthened)/weakened by: | (12.9 | ) | 1.7 | 17.4 | ||||||||
| PPI (inflation rate) increase/(decrease): | 5.8 | (0.1 | ) | 14.2 | ||||||||
| Net effect | 18.7 | (1.8 | ) | (3.2 | ) | |||||||
Depreciation, depletion and amortization
Depreciation, depletion and amortization increased during the 2009—2011 period largely due to higher capital expenditure, reassessment of useful lives of assets and revisions in life of mine plans. Due to the higher capital investment expenditure required to complete new projects, depreciation, depletion and amortization is likely to continue to increase in the coming years.
Impairments
AngloGold Ashanti reviews and tests the carrying value of its assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. AngloGold Ashanti values individual mining assets at the lowest level for which cash flows are identifiable as independent of cash flows of other mining assets and liabilities.
If there are indications that impairment may have occurred, AngloGold Ashanti prepares estimates of expected future cash flows for each group of assets. Expected future cash flows are inherently uncertain, and could materially change over time. They are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures.
If any of these uncertainties occur either alone or in combination, it could require management to recognize impairments. In 2011, AngloGold Ashanti incurred an impairment charge of $17 million on long-lived assets. In 2010, AngloGold Ashanti incurred an impairment charge of $91 million on long-lived assets. See “Note 5 – Costs and Expenses” to the consolidated financial statements for a detailed description of impairments.
Taxation
Taxation expense increased significantly over the period from a benefit of $33 million in 2009 to an expense of $705 million in 2011. The sharp increase in the tax charge is as a result of utilization of tax losses and higher spot prices resulting in higher pre-tax net income.
Similar to royalties, taxation expense is likely to continue to increase in the coming years as in a number of jurisdictions host governments increasingly seek to obtain a higher share of revenue by increasing rates for existing taxes and introducing new taxes on gold mines.
Acquisitions and dispositions
The global gold mining industry has experienced active consolidation and rationalization activities in recent years. Accordingly, AngloGold Ashanti has been, and expects to continue to be, involved in assessing a number of acquisitions and dispositions as part of this global trend and to identify value-adding business combination and acquisition opportunities.
Acquisitions and dispositions are described in note 3 to the consolidated financial statements “Acquisitions and disposals of businesses and assets”. See also note 29 to the consolidated financial statements “Subsequent events”. The consolidated financial statements reflect the operations and financial condition of AngloGold Ashanti, assuming that acquisitions and disposals took place on the effective date of these transactions.
South African economic and other factors
AngloGold Ashanti is a company domiciled in South Africa with a number ofsignificant operations in South Africa. As a result, the Company is subject to various economic, fiscal and monetary factors that affect South African companies generally.
Comparison of operating performance in 2011, 2010 2009 and 2008
The following table presents operating data for the AngloGold Ashanti group for the three year period ended December 31, 2010:
| Operating data for AngloGold Ashanti | Year ended December 31 | |||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| Total attributable gold production (thousand ounces) | 4,515 | 4,599 | 4,982 | |||||||||
| Total cash costs ($/oz) | 627 | 534 | 465 | |||||||||
| Total production costs ($/oz) | 812 | 683 | 592 | |||||||||
| Production costs (million US dollars) | 2,656 | 2,229 | 2,159 | |||||||||
Capital expenditure (million US dollars)(1) | 1,015 | 1,027 | 1,239 | |||||||||
| — Consolidated entities | 973 | 1,019 | 1,232 | |||||||||
| — Equity accounted joint ventures | 42 | 8 | 7 | |||||||||
| Operating data for AngloGold Ashanti | Year ended December 31 | |||||||||||
| 2011 | 2010 | 2009 | ||||||||||
Total attributable gold production (thousand ounces) | 4,331 | 4,515 | 4,599 | |||||||||
Total cash costs ($/oz)(1) | 733 | 627 | 534 | |||||||||
Total production costs ($/oz)(1) | 948 | 812 | 683 | |||||||||
Production costs (million US dollars) - per financial statements | 2,977 | 2,656 | 2,229 | |||||||||
Capital expenditure (million US dollars)(2) | 1,527 | 1,015 | 1,027 | |||||||||
- Consolidated entities | 1,439 | 973 | 1,019 | |||||||||
- Equity accounted joint ventures | 88 | 42 | 8 | |||||||||
| (1) | Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see “Item 5A.: Operating results – Total cash costs and total production costs”. |
| (2) | Including capital expenditure of Boddington in |
138
Production in 2011
For the year ended December 31, 2011, AngloGold Ashanti’s total attributable gold production from continuing operations at 4.33 million ounces was 184,000 ounces, or 4 percent, lower when compared to 2010 production of 4.52 million ounces.
InSouth Africa, gold production decreased by 9 percent or 161,000 ounces in 2011 of which 63,000 ounces relate to the sale of Tau Lekoa effective August 1, 2010. The balance of the production decrease occurred across most of the South African mines. The lower output was mainly due to industrial strike actions and an increased number of government imposed safety related stoppages. At TauTona, a decision was taken early in 2011, following a significant seismic event, to cease mining of the Ventersdorp Contact Reef (VCR) shaft pillar and remove it from the immediate mine plan in the interests of safety. This decision contributed to the decline in output. Great Noligwa experienced lower production due to a combination of ore pass blockages and the closure of two haulages.
Production increased by 5 percent or 78,000 ounces in 2011 inContinental Africa mainly due to a significant increase in production at Geita in Tanzania, where gold produced increased from 357,000 ounces in the year ended December 31, 2010 to 494,000 ounces in 2011. The increase in production was due to the mining of higher grade material in 2011. This increase was partially offset by lower production at Yatela, Siguiri and Navachab due to lower recovered grades.
Production decreased by 38 percent or 150,000 ounces in 2011 inAustralia mainly due to the impact of unprecedented heavy rainfall and the ramp failure in the first quarter of 2011 at Sunrise Dam in Australia, which severely affected all aspects of the operation during the rest of the year.
In theAmericas region, production increased by 6 percent or 49,000 ounces to 891,000 ounces. The increase was mainly due to better ounce recovery from the heap leach pad at Cripple Creek & Victor in North America, which benefited from better pad pH chemistry and the strategy of stacking higher grade ore closer to the pad liner. In Brazil at AngloGold Ashanti Córrego do Sítio Mineração higher tonnage and grades contributed to increased production. These increases were partially offset by lower production at Serra Grande in Brazil due to lower recovered grades.
Production in 2010
For the year ended December 31, 2010, AngloGold Ashanti’s total attributable gold production from continuing operations at 4.52 million ounces was 84,000 ounces, or 2 percent, lower when compared to 2009 production of 4.6 million ounces.
InSouth Africa, gold production decreased by 1 percent or 12,000 ounces in 2010 mainly due to a 13 percent decline in volumes mined and a 9 percent decline in recovered grade at Kopanang and the sale of Tau Lekoa effective August 1, 2010.
Production decreased by 6 percent or 93,000 ounces in 2010 inContinental Africa mainly due to lower grades mined and processed at Siguiri, Morila, Yatela and Sadiola. Lower production at Obuasi was mainly attributable to underground tonnages declining by 8 percent as a result of reduced flexibility in developed ore reserves, in addition to stoppages to address environmental issues at the Tailings Storage Facility and elution problems at the Tailings Treatment Plant.
Total cash costs and total production costs
Comparison of total cash costs and total production costs in 2011 with 2010
Most local currencies (South Africa, Australia and Brazil) were on average stronger against the US dollar during 2011 compared to 2010. Consequently, total cash costs in US dollar terms were negatively impacted for 2011.
Cash costs per ounce at most of the operations situated in South Africa increased in 2011 when compared to 2010. This was largely a result of increases in the cost of labor, power and stores and royalty payments which came into effect on March 1, 2010, as well as the strengthening of the rand. The lower production in 2011 also negatively impacted the cash costs per ounce.
Geita, in Tanzania, reported a 30 percent decrease in cash costs from $697 per ounce in 2010 to $488 per ounce in 2011. This was mainly as a result of higher production and inventory adjustments.
In Mali, at Morila, cash costs increased in 2011 to $818 per ounce compared to $716 per ounce in 2010 mainly due to higher reagent costs and fuel used in power generation. At Sadiola cash costs increased from $686 per ounce in 2010 to $835 per ounce in 2011. These were driven by increases in fuel prices, mining contractor costs were higher as a result of the longer haulage distance and higher maintenance costs. The cash costs at Yatela increased from $817 per ounce in 2010 to $1,483 per ounce in 2011 mainly due to the significant decrease in production of 31,000 ounces (52 percent).
In Ghana, at Obuasi, cash costs increased in 2011 to $859 per ounce compared to $760 per ounce in 2010 mainly due to the decline in production and an increase in the power tariff and inventory adjustments. At Siguiri, in Guinea, cash costs increased to $871 per ounce in 2011 from $656 per ounce in 2010 mainly due to the decline in production, higher fuel prices, an increase in inventory adjustments and increased costs related to labor and mining contractors.
In the United States, Cripple Creek reported a $69 per ounce increase in cash costs to $569 per ounce in 2011 due primarily to rising commodity prices (diesel fuel in particular) and increased labor costs. In Brazil at AngloGold Ashanti Córrego do Sítio Mineração cash costs increased to $571 per ounce in 2011 from $444 per ounce in 2010 driven largely by labor cost increases and higher energy consumption following the commissioning of the refrigeration plant in Cuiabá. Other factors were the stronger Brazilian real, lower volumes and higher unit costs from new Córrego do Sítio sulfide production. These effects were partially offset, however, by higher revenue from the sale of sulfuric acid, a by-product of the Cuiabá mining operation. At Serra Grande cash costs increased by $370 per ounce to $851 per ounce in 2011 due to reduced production as well as continued inflationary pressure on all mining-related inputs, such as power, consumables and labor in Brazil and the impact of the stronger Brazilian real.
In Australia, at Sunrise Dam, cash costs increased in 2011 to $1,362 per ounce compared to $692 per ounce in 2010 mainly due to the significant decrease in production of 150,000 ounces (38 percent). The decrease in production was due to the impact of unprecedented heavy rainfall and the ramp failure in the first quarter of 2011. The considerable remedial work and the stronger Australian Dollar negatively impacted cash costs per ounce.
Overall the Company’s total cash costs increased by $106 per ounce, or 17 percent when compared to the previous year. Of this increase, inflation accounted for $47 per ounce, lower production accounted for $20 per ounce, royalties accounted for $12 per ounce and local currency strength accounted for $9 per ounce.
Comparison of total cash costs and total production costs in 2010 with 2009
Most local currencies (South Africa, Australia and Brazil) were on average stronger against the US dollar during 2010 compared to 2009. Consequently, total cash costs in US dollar terms were negatively impacted for 2010.
139
Geita, in Tanzania, reported a 29 percent decrease in cash costs from $985 per ounce in 2009 to $697 per ounce in 2010. This was mainly as a result of higher production, lower reagent costs and a reduction in general and engineering stores.
In Mali, at Morila, cash costs increased in 2010 to $716 per ounce compared to $526 per ounce in 2009 mainly due to the lower production and higher reagent costs and fuel used in power generation. At Sadiola cash costs increased from $489 per ounce in 2009 to $686 per ounce in 2010. The increase in cash costs was mainly due to the lower-grade feed supplied to the priority plant. In addition, mining contractor costs were higher as a result of the longer haulage distance, higher maintenance costs and increases in the fuel price. The cash costs at Yatela increased from $326 per ounce in 2009 to $817 per ounce in 2010 mainly due to the significant decrease in production of 29,000 ounces (33 percent) and an increase in contract mining costs.
In Ghana, at Obuasi, cash costs increased in 2010 to $760 per ounce compared to $630 per ounce in 2009 mainly due to the decline in production, an increase in the power tariff and the once-off settlement of historical wage claims. These negative factors were partially offset by a reduction in the cost of consumables, which were sourced via a focused procurement strategy. At Siguiri, in Guinea, cash costs increased to $656 per ounce in 2010 from $513 per ounce in 2009 mainly due to higher fuel prices and costs related to labor and mining contractors.
In North America, Cripple Creek reported a $129 per ounce increase in cash costs to $500 per ounce in 2010 due primarily to the higher unit cost for the new ounces placed, rising commodity prices (diesel fuel in particular), and increased royalty costs, driven by higher gold prices. In Brazil at AngloGold Ashanti Córrego do Sítio Mineração cash costs increased to $444 per ounce in 2010 from $347 per ounce in 2009 driven largely by higher maintenance costs and stronger local currencies. These effects were partially offset, however, by higher revenue from the sale of sulfuric acid, a by-product of the Cuiabá mining operation.
Overall the Company’s total cash costs increased by $93 per ounce, or 17 percent when compared to the previous year. Of this increase, inflation accounted for $46 per ounce and local currency strength accounted for $45 per ounce.
140
Total cash costs and total production costs are calculated in accordance with the guidelines of the Gold Institute industry standard and industry practice and are not US GAAP measures. The Gold Institute, which has been incorporated into the National Mining Association, wasis a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products, which developed a uniform format for reporting total production costs on a per ounce basis. The guidance was first adopted in 1996 and revised in November 1999.
Total cash costs, as defined in the Gold Institute industry guidelines, are production costs as recorded in the statement of operations, less offsite (i.e. central), general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees, refinery charges and social development costs) and rehabilitation costs, plus royalties and employee termination costs.
Total cash costs as calculated and reported by AngloGold Ashanti include costs for all mining, processing, onsite administration costs, royalties and production taxes, as well as contributions from by-products, but exclusive of depreciation, depletion and amortization, rehabilitation costs, employment severance costs, corporate administration costs, capital costs and exploration costs. Total cash costs per ounce are calculated by dividing attributable total cash costs by attributable ounces of gold produced.
Total production costs, as defined in the Gold Institute industry guidelines, are total cash costs, as calculated using the Gold Institute industry guidelines, plus amortization, depreciation and rehabilitation costs.
141
Total cash costs and total production costs should not be considered by investors in isolation or as alternatives to production costs, net income/(loss) applicable to common stockholders, income/(loss) before income tax provision, net cash provided by operating activities or any other measure of financial performance presented in accordance with US GAAP or as an indicator of the company’s performance. While the Gold Institute has provided definitions for the calculation of total cash costs and total production costs, the calculation of total cash costs, total cash costs per ounce, total production costs and total production costs per ounce may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies.
However, AngloGold Ashanti believes that total cash costs and total production costs in total by mine and per ounce by mine are useful indicators to investors and management as they provide:
an indication of profitability, efficiency and cash flows;
the change in costs as the mining operations mature over time on a consistent basis; and
an internal benchmark of performance to allow for comparison against other mines, both within the AngloGold Ashanti group and of other gold mining companies.
A reconciliation of production costs as included in the company’s audited financial statements to total cash costs and to total production costs for each of the three years in the period ended December 31, 20102011 is presented below. In addition the Company has also provided below detail of the attributable ounces of gold produced by mine for each of those periods.
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Operations in South Africa
(in $ millions, except as otherwise noted)
| Great Noligwa | Kopanang | Moab Khotsong | Tau Lekoa | Mponeng | Savuka | TauTona | Surface operations | Corporate(6) | ||||||||||||||||||||||||||||
Production costs | 120 | 192 | 181 | 59 | 233 | 24 | 177 | 89 | 12 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | (2 | ) | (5 | ) | (10 | ) | — | (5 | ) | — | (3 | ) | — | (8 | ) | |||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Inventory movement | (1 | ) | (1 | ) | (1 | ) | (1 | ) | — | — | — | — | — | |||||||||||||||||||||||
| Royalties | 2 | 4 | 4 | — | 18 | 1 | 9 | — | — | |||||||||||||||||||||||||||
Related party transactions(2) | (1 | ) | (3 | ) | (3 | ) | (1 | ) | (5 | ) | — | (2 | ) | (2 | ) | — | ||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | (9 | ) | ||||||||||||||||||||||||||
Total cash costs | 118 | 187 | 171 | 57 | 241 | 25 | 181 | 87 | (5 | ) | ||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 27 | 73 | 108 | 1 | 58 | 5 | 71 | 6 | 15 | |||||||||||||||||||||||||||
| Employee severance costs | 5 | 3 | 2 | 1 | 5 | 1 | 3 | — | — | |||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | 2 | 5 | 10 | — | 5 | — | 3 | — | 8 | |||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | (11 | ) | ||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | (5 | ) | ||||||||||||||||||||||||||
Total production costs | 152 | 268 | 291 | 59 | 309 | 31 | 258 | 93 | 2 | |||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 132 | 305 | 292 | 63 | 532 | 22 | 259 | 179 | — | |||||||||||||||||||||||||||
Total cash costs per ounce(5) | 894 | 613 | 586 | 905 | 452 | 1,136 | 699 | 486 | — | |||||||||||||||||||||||||||
Total production costs per ounce(5) | 1,152 | 879 | 997 | 937 | 580 | 1,409 | 996 | 520 | — | |||||||||||||||||||||||||||
143
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Production costs | 109 | 201 | 174 | - | 248 | 40 | 188 | 110 | 24 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | - | (2 | ) | - | - | - | (1 | ) | (1 | ) | - | 1 | ||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Inventory movement | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Royalties | 4 | 13 | 11 | - | 29 | 3 | 14 | - | - | |||||||||||||||||||||||||||
Related party transactions(2) | (1 | ) | (2 | ) | (2 | ) | - | (3 | ) | - | (2 | ) | (1 | ) | - | |||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | (29 | ) | ||||||||||||||||||||||||||
Total cash costs | 112 | 210 | 183 | - | 274 | 42 | 199 | 109 | (4 | ) | ||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 23 | 78 | 101 | - | 70 | 1 | 75 | 4 | 16 | |||||||||||||||||||||||||||
Employee severance costs | 1 | 2 | 1 | - | 2 | 1 | 2 | - | 1 | |||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | - | 2 | - | - | - | 1 | 1 | - | (1 | ) | ||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | - | - | - | - | - | - | (24 | ) | ||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | (7 | ) | ||||||||||||||||||||||||||
Total production costs | 136 | 292 | 285 | - | 346 | 45 | 277 | 113 | (19 | ) | ||||||||||||||||||||||||||
Gold produced (000’ ounces) (4) | 94 | 307 | 266 | - | 500 | 49 | 244 | 164 | - | |||||||||||||||||||||||||||
Total cash costs per ounce (5) | 1,191 | 684 | 688 | - | 547 | 857 | 816 | 665 | - | |||||||||||||||||||||||||||
| Total production costs per ounce (5) | 1,447 | 951 | 1,071 | - | 691 | 918 | 1,135 | 689 | - | |||||||||||||||||||||||||||
Operations in Ghana, Guinea, Mali, Namibia, Tanzania, Australia, United States of America, Argentina and Brazil
(in $ millions, except as otherwise noted)
| UNITED | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| GHANA | GUINEA | MALI | NAMIBIA | TANZANIA | AUSTRALIA | STATES OF AMERICA | ARGENTINA | BRAZIL | ||||||||||||||||||||||||||||||||||||||||||||
| Cripple | AngloGold Ashanti | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Iduapriem | Obuasi | Siguiri | Morila | Sadiola | Yatela | Navachab | Geita | Sunrise Dam | Creek & Victor | Cerro Vanguardia | Mineracao | Serra Grande | ||||||||||||||||||||||||||||||||||||||||
Production costs | 151 | 238 | 184 | — | — | — | 57 | 256 | 261 | 114 | 63 | 169 | 76 | |||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | 61 | 5 | 43 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | (20 | ) | (16 | ) | (1 | ) | — | (3 | ) | (2 | ) | 3 | (8 | ) | 1 | (13 | ) | (7 | ) | (18 | ) | — | ||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory movement | 6 | 7 | (1 | ) | — | 1 | 1 | (1 | ) | (12 | ) | — | 58 | — | (1 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||
| Royalties | 7 | 12 | 29 | 7 | 9 | 4 | 3 | 13 | 12 | 5 | 21 | — | 1 | |||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | — | — | — | — | (1 | ) | 3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (32 | ) | — | — | — | — | — | — | — | (6 | ) | — | (38 | ) | ||||||||||||||||||||||||||||||||||||
Total cash costs | 144 | 241 | 179 | 68 | 81 | 49 | 62 | 249 | 274 | 164 | 71 | 150 | 37 | |||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 25 | 61 | 23 | 4 | 3 | 2 | 8 | 55 | 33 | 33 | 24 | 61 | 32 | |||||||||||||||||||||||||||||||||||||||
Employee severance costs | 1 | — | — | 1 | — | — | — | — | — | — | 1 | 2 | — | |||||||||||||||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | 20 | 16 | 1 | — | 3 | 2 | (3 | ) | 8 | (1 | ) | 13 | 7 | 18 | — | |||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (3 | ) | — | — | — | — | — | — | — | (2 | ) | — | (16 | ) | ||||||||||||||||||||||||||||||||||||
Total production costs | 190 | 318 | 200 | 73 | 87 | 53 | 67 | 312 | 306 | 210 | 101 | 231 | 53 | |||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 185 | 317 | 273 | 95 | 118 | 60 | 86 | 357 | 396 | 233 | 194 | 338 | 77 | |||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 778 | 760 | 656 | 716 | 686 | 817 | 721 | 697 | 692 | (7) 500 | 366 | 444 | 481 | |||||||||||||||||||||||||||||||||||||||
Total production costs per ounce(5) | 1,027 | 1,003 | 733 | 768 | 737 | 883 | 779 | 874 | 773 | 901 | 521 | 683 | 688 | |||||||||||||||||||||||||||||||||||||||
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| Production costs | 176 | 324 | 252 | - | - | - | 59 | 220 | 325 | 135 | 53 | 220 | 119 | |||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures (1) | - | - | - | 72 | 92 | 41 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | (18 | ) | (69 | ) | (11 | ) | - | (2 | ) | (1 | ) | (1 | ) | (10 | ) | - | (17 | ) | (8 | ) | (24 | ) | (18 | ) | ||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory movement | - | (1 | ) | (8 | ) | - | - | (1 | ) | 1 | 8 | 1 | 67 | 13 | 9 | 6 | ||||||||||||||||||||||||||||||||||||
Royalties | 9 | 15 | 23 | 9 | 11 | 3 | 3 | 23 | 9 | 8 | 27 | - | 2 | |||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | - | - | - | - | - | 1 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | (39 | ) | - | - | - | - | - | - | - | (6 | ) | - | (52 | ) | ||||||||||||||||||||||||||||||||||||
Total cash costs | 167 | 269 | 217 | 81 | 101 | 43 | 62 | 241 | 335 | 193 | 79 | 205 | 57 | |||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 29 | 65 | 24 | 4 | 2 | 1 | 10 | 82 | 41 | 38 | 26 | 76 | 32 | |||||||||||||||||||||||||||||||||||||||
Employee severance costs | 1 | - | - | - | - | - | 1 | - | - | - | 1 | 2 | - | |||||||||||||||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | 18 | 69 | 11 | - | 2 | 1 | 1 | 10 | - | 17 | 8 | 24 | 18 | |||||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | - | - | (5 | ) | - | - | - | - | - | - | - | (3 | ) | - | (25 | ) | ||||||||||||||||||||||||||||||||||||
| Total production costs | 215 | 403 | 247 | 85 | 105 | 45 | 74 | 333 | 376 | 248 | 111 | 307 | 82 | |||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 199 | 313 | 249 | 99 | 121 | 29 | 66 | 494 | 246 | 267 | 196 | 359 | 67 | |||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 839 | 859 | 871 | 818 | 835 | 1,483 | 939 | 488 | 1,362 | (7) 569 | 403 | 571 | 851 | |||||||||||||||||||||||||||||||||||||||
Total production costs per ounce(5) | 1,080 | 1,288 | 992 | 859 | 868 | 1,552 | 1,121 | 674 | 1,528 | 929 | 566 | 855 | 1,224 | |||||||||||||||||||||||||||||||||||||||
AngloGold Ashanti operations —- Total
(in $ millions, except as otherwise noted)
| Total | ||||
Production costs per financial statements | ||||
Plus: | ||||
Production costs of equity accounted joint ventures(1) | ||||
Less: | ||||
Rehabilitation costs & other non-cash costs | ( | ) | ||
Plus/(less): | ||||
Inventory movement | 95 | |||
Royalties | ||||
Related party transactions(2) | ( | ) | ||
Adjusted for: | ||||
Noncontrolling interests(3) | ( | ) | ||
Non-gold producing companies and adjustments | ( | ) | ||
Total cash costs | ||||
Plus: | ||||
Depreciation, depletion and amortization | 798 | |||
Employee severance costs | ||||
Rehabilitation and other non-cash costs | ||||
Adjusted for: | ||||
Noncontrolling interests(3) | ( | ) | ||
Non-gold producing companies and adjustments | ( | ) | ||
Total production costs | ||||
Gold produced (000’ ounces)(4) | ||||
Total cash costs per ounce(5) | ||||
Total production costs per ounce(5) | ||||
| (1) | Attributable production costs and related expenses of equity accounted joint ventures are included in the calculation of total cash costs per ounce and total production costs per ounce. |
| (2) | Relates solely to production costs as included in the Company’s consolidated financial statements and has, accordingly, been included in total production costs and total cash costs. |
| (3) | Adjusting for noncontrolling interest of items included in calculation, to disclose the attributable portions only. |
| (4) | Attributable production only. |
| (5) | In addition to the operational performances of the mines, total cash costs per ounce and total production costs per ounce are affected by fluctuations in the currency exchange rate. AngloGold Ashanti reports total cash costs per ounce and total production costs per ounce calculated to the nearest US dollar amount and gold produced in ounces. |
| (6) | Corporate includes non-gold producing subsidiaries. |
| (7) | Total cash costs per ounce calculation includes heap-leach inventory change. |
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| (8) | There was no production attributable to AngloGold Ashanti in 2011. AngloGold Ashanti sold Tau Lekoa to Simmer & Jack Mines Limited (“Simmers”) in 2010. |
OerationsOperations in South Africa
(in $ millions, except as otherwise noted)
| Great Noligwa | Kopanang | Moab Khotsong | Tau Lekoa | Mponeng | Savuka | TauTona | Surface operations | Corporate(6) | ||||||||||||||||||||||||||||
Production costs | 127 | 141 | 107 | 88 | 178 | 34 | 119 | 64 | (26 | ) | ||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | — | (1 | ) | — | 2 | — | — | — | — | (15 | ) | |||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Inventory movement | — | — | — | — | (1 | ) | — | (1 | ) | — | — | |||||||||||||||||||||||||
| Royalties | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Related party transactions(2) | (2 | ) | (3 | ) | (3 | ) | (1 | ) | (5 | ) | — | (2 | ) | (2 | ) | — | ||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | 41 | |||||||||||||||||||||||||||
Total cash costs | 125 | 137 | 104 | 89 | 172 | 34 | 116 | 62 | — | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 29 | 61 | 80 | 7 | 37 | 8 | 49 | 2 | 13 | |||||||||||||||||||||||||||
| Employee severance costs | 3 | 2 | 1 | 1 | 1 | — | 2 | — | — | |||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | — | 1 | — | (2 | ) | — | — | — | — | 15 | ||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | 8 | |||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | (3 | ) | ||||||||||||||||||||||||||
Total production costs | 157 | 201 | 185 | 95 | 210 | 42 | 167 | 64 | 33 | |||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 158 | 336 | 247 | 124 | 520 | 30 | 218 | 164 | — | |||||||||||||||||||||||||||
Total cash costs per ounce(5) | 791 | 408 | 421 | 718 | 331 | 1,133 | 532 | 378 | — | |||||||||||||||||||||||||||
Total production costs per ounce(5) | 994 | 598 | 749 | 766 | 404 | 1,400 | 766 | 390 | — | |||||||||||||||||||||||||||
146
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Production costs | 120 | 192 | 181 | 59 | 233 | 24 | 177 | 89 | 12 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | (2 | ) | (5 | ) | (10 | ) | - | (5 | ) | - | (3 | ) | - | (8 | ) | |||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Inventory movement | (1 | ) | (1 | ) | (1 | ) | (1 | ) | - | - | - | - | - | |||||||||||||||||||||||
Royalties | 2 | 4 | 4 | - | 18 | 1 | 9 | - | - | |||||||||||||||||||||||||||
Related party transactions(2) | (1 | ) | (3 | ) | (3 | ) | (1 | ) | (5 | ) | - | (2 | ) | (2 | ) | - | ||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | (9 | ) | ||||||||||||||||||||||||||
Total cash costs | 118 | 187 | 171 | 57 | 241 | 25 | 181 | 87 | (5 | ) | ||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 27 | 73 | 108 | 1 | 58 | 5 | 71 | 6 | 15 | |||||||||||||||||||||||||||
Employee severance costs | 5 | 3 | 2 | 1 | 5 | 1 | 3 | - | - | |||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | 2 | 5 | 10 | - | 5 | - | 3 | - | 8 | |||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | - | - | - | - | - | - | (11 | ) | ||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | (5 | ) | ||||||||||||||||||||||||||
| Total production costs | 152 | 268 | 291 | 59 | 309 | 31 | 258 | 93 | 2 | |||||||||||||||||||||||||||
Gold produced (000’ ounces) (4) | 132 | 305 | 292 | 63 | 532 | 22 | 259 | 179 | - | |||||||||||||||||||||||||||
Total cash costs per ounce (5) | 894 | 613 | 586 | 905 | 452 | 1,136 | 699 | 486 | - | |||||||||||||||||||||||||||
| Total production costs per ounce (5) | 1,152 | 879 | 997 | 937 | 580 | 1,409 | 996 | 520 | - | |||||||||||||||||||||||||||
Operations in Ghana, Guinea, Mali, Namibia,Tanzania, Australia, United States of America, Argentina and Brazil
(in $ millions, except as otherwise noted)
| UNITED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GHANA | GUINEA | MALI | NAMIBIA | TANZANIA | AUSTRALIA | STATES OF AMERICA | ARGENTINA | BRAZIL | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cripple | AngloGold Ashanti | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Iduapriem | Obuasi | Siguiri | Morila | Sadiola | Yatela | Navachab | Geita | Boddington(8) | Sunrise Dam | Creek & Victor | Cerro Vanguardia | Brasil Mineracao | Serra Grande | |||||||||||||||||||||||||||||||||||||||||||
Production costs | 122 | 240 | 160 | — | — | — | 42 | 261 | — | 250 | 83 | 62 | 112 | 65 | ||||||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | 67 | 61 | 26 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | (2 | ) | (5 | ) | (7 | ) | (2 | ) | (1 | ) | (3 | ) | (1 | ) | (3 | ) | — | (6 | ) | 5 | (2 | ) | (4 | ) | (1 | ) | ||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory movement | — | (6 | ) | 7 | (1 | ) | (2 | ) | (1 | ) | 1 | 2 | — | (1 | ) | 54 | (1 | ) | 6 | — | ||||||||||||||||||||||||||||||||||||
| Royalties | 5 | 11 | 30 | 8 | 8 | 5 | 2 | 8 | — | 10 | 2 | 16 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | — | — | — | — | — | 2 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (28 | ) | — | — | — | — | — | — | — | — | (6 | ) | — | (31 | ) | |||||||||||||||||||||||||||||||||||||||
Total cash costs | 125 | 240 | 162 | 72 | 66 | 29 | 44 | 268 | — | 253 | 144 | 69 | 114 | 33 | ||||||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 24 | 76 | 26 | 5 | 12 | 5 | 2 | 53 | — | 37 | 23 | 24 | 44 | 20 | ||||||||||||||||||||||||||||||||||||||||||
| Employee severance costs | — | 2 | — | — | — | — | — | — | — | — | — | 2 | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | 2 | 5 | 7 | 2 | 1 | 3 | 1 | 3 | — | 6 | (5 | ) | 2 | 4 | 1 | |||||||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (5 | ) | — | — | — | — | — | — | — | — | (2 | ) | — | (10 | ) | |||||||||||||||||||||||||||||||||||||||
Total production costs | 151 | 323 | 190 | 79 | 79 | 37 | 47 | 324 | — | 296 | 162 | 95 | 162 | 44 | ||||||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 190 | 381 | 316 | 137 | 135 | 89 | 65 | 272 | — | 401 | 218 | 192 | 329 | 77 | ||||||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 658 | 630 | 513 | 526 | 489 | 326 | 677 | 985 | — | 631 | (7) 371 | 359 | 347 | 429 | ||||||||||||||||||||||||||||||||||||||||||
Total production costs per ounce(5) | 795 | 848 | 601 | 577 | 585 | 416 | 723 | 1,191 | — | 738 | 743 | 495 | 492 | 571 | ||||||||||||||||||||||||||||||||||||||||||
147
 |  |  |  |  |  |
|  |  | ||||||||||||||||||||||||||||||||||||||||||||
 |  |  |  |  |  |  |  |  |  |  |
|  | ||||||||||||||||||||||||||||||||||||||||
Production costs | 151 | 238 | 184 | - | - | - | 57 | 256 | 261 | 114 | 63 | 169 | 76 | |||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures (1) | - | - | - | 61 | 75 | 43 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | (20 | ) | (16 | ) | (1 | ) | - | (3 | ) | (2 | ) | 3 | (8 | ) | 1 | (13 | ) | (7 | ) | (18 | ) | - | ||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory movement | 6 | 7 | (1 | ) | - | 1 | 1 | (1 | ) | (12 | ) | - | 58 | - | (1 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||
Royalties | 7 | 12 | 29 | 7 | 9 | 4 | 3 | 13 | 12 | 5 | 21 | - | 1 | |||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | - | - | - | - | (1 | ) | 3 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | - | - | (32 | ) | - | - | - | - | - | - | - | (6 | ) | - | (38 | ) | ||||||||||||||||||||||||||||||||||||
Total cash costs | 144 | 241 | 179 | 68 | 81 | 49 | 62 | 249 | 274 | 164 | 71 | 150 | 37 | |||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 25 | 61 | 23 | 4 | 3 | 2 | 8 | 55 | 33 | 33 | 24 | 61 | 32 | |||||||||||||||||||||||||||||||||||||||
Employee severance costs | 1 | - | - | 1 | - | - | - | - | - | - | 1 | 2 | - | |||||||||||||||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | 20 | 16 | 1 | - | 3 | 2 | (3 | ) | 8 | (1 | ) | 13 | 7 | 18 | - | |||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | - | - | (3 | ) | - | - | - | - | - | - | - | (2 | ) | - | (16 | ) | ||||||||||||||||||||||||||||||||||||
| Total production costs | 190 | 318 | 200 | 73 | 87 | 53 | 67 | 312 | 306 | 210 | 101 | 231 | 53 | |||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 185 | 317 | 273 | 95 | 118 | 60 | 86 | 357 | 396 | 233 | 194 | 338 | 77 | |||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 778 | 760 | 656 | 716 | 686 | 817 | 721 | 697 | 692 | (7) 500 | 366 | 444 | 481 | |||||||||||||||||||||||||||||||||||||||
| Total production costs per ounce(5) | 1,027 | 1,003 | 733 | 768 | 737 | 883 | 779 | 874 | 773 | 901 | 521 | 683 | 688 | |||||||||||||||||||||||||||||||||||||||
AngloGold Ashanti operations —- Total
(in $ millions, except as otherwise noted)
| Total | ||||
Production costs per financial statements | ||||
Plus: | ||||
Production costs of equity accounted joint ventures(1) | ||||
Plus: | ||||
Rehabilitation costs & other non-cash costs | ( | ) | ||
(Less)/plus: | ||||
Inventory movement | 52 | |||
Royalties | ||||
Related party transactions(2) | ( | ) | ||
Adjusted for: | ||||
Noncontrolling interests(3) | ( | ) | ||
Non-gold producing companies and adjustments | ||||
| (9 | ) | |||
Total cash costs | 2,831 | |||
Plus/(less): | ||||
Depreciation, depletion and amortization | 728 | |||
Employee severance costs | 25 | |||
Rehabilitation and other non-cash costs | 117 | |||
Adjusted for: | ||||
Noncontrolling interests(3) | (32 | ) | ||
Non-gold producing companies and adjustments | ( | ) | ||
Total production costs | ||||
Gold produced (000’ ounces)(4) | ||||
Total cash costs per ounce(5) | ||||
Total production costs per ounce(5) | ||||
| (1) | Attributable production costs and related expenses of equity accounted joint ventures are included in the calculation of total cash costs per ounce and total production costs per ounce. |
| (2) | Relates solely to production costs as included in the Company’s consolidated financial statements and has, accordingly, been included in total production costs and total cash costs. |
| (3) | Adjusting for noncontrolling interest of items included in calculation, to disclose the attributable portions only. |
| (4) | Attributable production only. |
| (5) | In addition to the operational performances of the mines, total cash costs per ounce and total production costs per ounce are affected by fluctuations in the currency exchange rate. AngloGold Ashanti reports total cash costs per ounce and total production costs per ounce calculated to the nearest US dollar amount and gold produced in ounces. |
| (6) | Corporate includes non-gold producing subsidiaries. |
| (7) | Total cash costs per ounce calculation includes heap-leach inventory change. | |
148
Operations in South Africa
(in $ millions, except as otherwise noted)
| Great Noligwa | Kopanang | Moab Khotsong | Tau Lekoa | Mponeng | Savuka | TauTona | Surface operations | Corporate(6) | ||||||||||||||||||||||||||||
Production costs | 152 | 128 | 74 | 78 | 155 | 29 | 125 | 41 | 13 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | — | — | — | — | — | 9 | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | — | — | (1 | ) | (2 | ) | (2 | ) | (1 | ) | (7 | ) | — | 26 | ||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Inventory movement | — | — | — | — | (1 | ) | — | — | — | — | ||||||||||||||||||||||||||
| Royalties | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Related party transactions(2) | (1 | ) | (2 | ) | (1 | ) | (1 | ) | (3 | ) | — | (1 | ) | — | — | |||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | (32 | ) | ||||||||||||||||||||||||||
Total cash costs | 151 | 126 | 72 | 75 | 149 | 28 | 117 | 41 | 16 | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 32 | 53 | 50 | 25 | 44 | 5 | 37 | 3 | 12 | |||||||||||||||||||||||||||
| Employee severance costs | 3 | 2 | — | 1 | 1 | — | 2 | — | — | |||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | — | — | 1 | 2 | 2 | 1 | 7 | — | (26 | ) | ||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | — | — | — | — | — | — | (8 | ) | ||||||||||||||||||||||||||
| Non-gold producing companies and adjustments | — | — | — | — | — | — | — | — | (3 | ) | ||||||||||||||||||||||||||
Total production costs | 186 | 181 | 123 | 103 | 196 | 34 | 163 | 44 | (9 | ) | ||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 330 | 362 | 192 | 143 | 600 | 66 | 314 | 92 | — | |||||||||||||||||||||||||||
Total cash costs per ounce(5) | 458 | 348 | 375 | 524 | 248 | 424 | 373 | 446 | — | |||||||||||||||||||||||||||
Total production costs per ounce(5) | 564 | 500 | 641 | 720 | 327 | 515 | 519 | 478 | — | |||||||||||||||||||||||||||
149
 |  |  |  |  |  |  |
|  | ||||||||||||||||||||||||||||
Production costs | 127 | 141 | 107 | 88 | 178 | 34 | 119 | 64 | (26 | ) | ||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures (1) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | - | (1 | ) | - | 2 | - | - | - | - | (15 | ) | |||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Inventory movement | - | - | - | - | (1 | ) | - | (1 | ) | - | - | |||||||||||||||||||||||||
Royalties | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Related party transactions (2) | (2 | ) | (3 | ) | (3 | ) | (1 | ) | (5 | ) | - | (2 | ) | (2 | ) | - | ||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | 41 | |||||||||||||||||||||||||||
Total cash costs | 125 | 137 | 104 | 89 | 172 | 34 | 116 | 62 | - | |||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 29 | 61 | 80 | 7 | 37 | 8 | 49 | 2 | 13 | |||||||||||||||||||||||||||
Employee severance costs | 3 | 2 | 1 | 1 | 1 | - | 2 | - | - | |||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | - | 1 | - | (2 | ) | - | - | - | - | 15 | ||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | - | - | - | - | - | - | 8 | |||||||||||||||||||||||||||
Non-gold producing companies and adjustments | - | - | - | - | - | - | - | - | (3 | ) | ||||||||||||||||||||||||||
| Total production costs | 157 | 201 | 185 | 95 | 210 | 42 | 167 | 64 | 33 | |||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 158 | 336 | 247 | 124 | 520 | 30 | 218 | 164 | - | |||||||||||||||||||||||||||
Total cash costs per ounce (5) | 791 | 408 | 421 | 718 | 331 | 1,133 | 532 | 378 | - | |||||||||||||||||||||||||||
| Total production costs per ounce (5) | 994 | 598 | 749 | 766 | 404 | 1,400 | 766 | 390 | - | |||||||||||||||||||||||||||
Operations in Ghana, Guinea, Mali, Namibia, Tanzania, Australia, United States of America, Argentina and Brazil
(in $ millions, except as otherwise noted)
| UNITED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GHANA | GUINEA | MALI | NAMIBIA | TANZANIA | AUSTRALIA | STATES OF AMERICA | ARGENTINA | BRAZIL | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cripple | AngloGold Ashanti | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Iduapriem | Obuasi | Siguiri | Morila | Sadiola | Yatela | Navachab | Geita | Boddington(8) | Sunrise Dam | Creek & Victor | Cerro Vanguardia | Brasil Mineracao | Serra Grande | |||||||||||||||||||||||||||||||||||||||||||
Production costs | 118 | 227 | 157 | — | — | — | 37 | 268 | (1 | ) | 231 | 70 | 99 | 106 | 52 | |||||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures(1) | — | — | — | 65 | 60 | 34 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rehabilitation costs & other non-cash costs | 1 | — | (1 | ) | — | — | 1 | (1 | ) | 5 | 1 | — | (3 | ) | (5 | ) | 1 | — | ||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory movement | 1 | (9 | ) | (3 | ) | (2 | ) | — | 1 | — | (65 | ) | — | 1 | 63 | (4 | ) | (4 | ) | — | ||||||||||||||||||||||||||||||||||||
| Royalties | 5 | 9 | 31 | 9 | 9 | 3 | 2 | 7 | — | 10 | 2 | 12 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | — | — | — | — | — | 2 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (28 | ) | — | — | — | — | — | — | — | — | (7 | ) | — | (26 | ) | |||||||||||||||||||||||||||||||||||||||
Total cash costs | 125 | 227 | 156 | 72 | 69 | 41 | 38 | 215 | — | 242 | 132 | 95 | 103 | 26 | ||||||||||||||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 24 | 81 | 36 | 13 | 32 | 2 | 4 | 55 | — | 46 | 31 | 17 | 42 | 17 | ||||||||||||||||||||||||||||||||||||||||||
| Employee severance costs | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Rehabilitation and other non-cash costs | (1 | ) | — | 1 | — | — | (1 | ) | 1 | (5 | ) | (1 | ) | — | 3 | 5 | (1 | ) | — | |||||||||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests(3) | — | — | (5 | ) | — | — | — | — | — | — | — | — | (2 | ) | — | (8 | ) | |||||||||||||||||||||||||||||||||||||||
Total production costs | 148 | 308 | 188 | 85 | 101 | 42 | 43 | 265 | (1 | ) | 288 | 166 | 115 | 144 | 35 | |||||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 200 | 357 | 333 | 170 | 172 | 66 | 68 | 264 | — | 433 | 258 | 154 | 320 | 87 | ||||||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 625 | 636 | 468 | 424 | 401 | 621 | 559 | 814 | — | 559 | (7) 310 | 617 | 322 | 299 | ||||||||||||||||||||||||||||||||||||||||||
Total production costs per ounce(5) | 740 | 863 | 565 | 500 | 587 | 636 | 632 | 1,004 | — | 665 | 643 | 747 | 450 | 402 | ||||||||||||||||||||||||||||||||||||||||||
150
| | | | | |
| | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | |  | | | |
| | |||||||||||||||||||||||||||||||||||||||||||
Production costs | 122 | 240 | 160 | - | - | - | 42 | 261 | - | 250 | 83 | 62 | 112 | 65 | ||||||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Production costs of equity accounted joint ventures (1) | - | - | - | 67 | 61 | 26 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rehabilitation costs & other non-cash costs | (2 | ) | (5 | ) | (7 | ) | (2 | ) | (1 | ) | (3 | ) | (1 | ) | (3 | ) | - | (6 | ) | 5 | (2 | ) | (4 | ) | (1 | ) | ||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory movement | - | (6 | ) | 7 | (1 | ) | (2 | ) | (1 | ) | 1 | 2 | - | (1 | ) | 54 | (1 | ) | 6 | - | ||||||||||||||||||||||||||||||||||||
Royalties | 5 | 11 | 30 | 8 | 8 | 5 | 2 | 8 | - | 10 | 2 | 16 | - | - | ||||||||||||||||||||||||||||||||||||||||||
Related party transactions(2) | - | - | - | - | - | 2 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | (28 | ) | - | - | - | - | - | - | - | - | (6 | ) | - | (31 | ) | |||||||||||||||||||||||||||||||||||||||
Total cash costs | 125 | 240 | 162 | 72 | 66 | 29 | 44 | 268 | - | 253 | 144 | 69 | 114 | 33 | ||||||||||||||||||||||||||||||||||||||||||
Plus: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 24 | 76 | 26 | 5 | 12 | 5 | 2 | 53 | - | 37 | 23 | 24 | 44 | 20 | ||||||||||||||||||||||||||||||||||||||||||
Employee severance costs | - | 2 | - | - | - | - | - | - | - | - | - | 2 | - | - | ||||||||||||||||||||||||||||||||||||||||||
Rehabilitation and other non-cash costs | 2 | 5 | 7 | 2 | 1 | 3 | 1 | 3 | - | 6 | (5 | ) | 2 | 4 | 1 | |||||||||||||||||||||||||||||||||||||||||
Adjusted for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests (3) | - | - | (5 | ) | - | - | - | - | - | - | - | - | (2 | ) | - | (10 | ) | |||||||||||||||||||||||||||||||||||||||
| Total production costs | 151 | 323 | 190 | 79 | 79 | 37 | 47 | 324 | | - | | 296 | 162 | 95 | 162 | 44 | ||||||||||||||||||||||||||||||||||||||||
Gold produced (000’ ounces)(4) | 190 | 381 | 316 | 137 | 135 | 89 | 65 | 272 | - | 401 | 218 | 192 | 329 | 77 | ||||||||||||||||||||||||||||||||||||||||||
Total cash costs per ounce(5) | 658 | 630 | 513 | 526 | 489 | 326 | 677 | 985 | - | 631 | (7) 371 | 359 | 347 | 429 | ||||||||||||||||||||||||||||||||||||||||||
| Total production costs per ounce (5) | 795 | 848 | 601 | 577 | 585 | 416 | 723 | 1,191 | - | 738 | 743 | 495 | 492 | 571 | ||||||||||||||||||||||||||||||||||||||||||
AngloGold Ashanti operations —- Total
(in $ millions, except as otherwise noted)
| Total | ||||
Production costs per financial statements | ||||
Plus: | ||||
Production costs of equity accounted joint ventures(1) | ||||
Less: | ||||
Rehabilitation costs & other non-cash costs | ||||
| ( | ) | |||
Plus/(less): | ||||
Inventory movement | ||||
Royalties | 105 | |||
Related party transactions(2) | ( | ) | ||
Adjusted for: | ||||
Noncontrolling interests(3) | ( | ) | ||
Non-gold producing companies and adjustments | 41 | |||
Total cash costs | 2,458 | |||
Plus: | ||||
Depreciation, depletion and amortization | 637 | |||
Employee severance costs | 14 | |||
Rehabilitation and other non-cash costs | 46 | |||
Adjusted for: | ||||
Noncontrolling interests(3) | ( | ) | ||
Non-gold producing companies and adjustments | (3 | ) | ||
Total production costs | ||||
Gold produced (000’ ounces)(4) | ||||
Total cash costs per ounce(5) | ||||
Total production costs per ounce(5) | ||||
| (1) | Attributable production costs and related expenses of equity accounted joint ventures are included in the calculation of total cash costs per ounce and total production costs per ounce. |
| (2) | Relates solely to production costs as included in the Company’s consolidated financial statements and has, accordingly, been included in total production costs and total cash costs. |
| (3) | Adjusting for noncontrolling interest of items included in calculation, to disclose the attributable portions only. |
| (4) | Attributable production only. |
| (5) | In addition to the operational performances of the mines, total cash costs per ounce and total production costs per ounce are affected by fluctuations in the currency exchange rate. AngloGold Ashanti reports total cash costs per ounce and total production costs per ounce calculated to the nearest US dollar amount and gold produced in ounces. |
| (6) | Corporate includes non-gold producing subsidiaries. |
| (7) | Total cash costs per ounce calculation includes heap-leach inventory change. |
| (8) | There was no production attributable to AngloGold Ashanti in | |
151
Total capital expenditure of $1,527 million was recorded in the year ended December 31, 2011 compared to $1,015 million in the same period in 2010. This represents a $512 million, or 50 percent increase from 2010. The increased capital expenditure during 2011 relates to increased spending to sustain existing operations of $265 million and growth related projects of $247 million. Capital expenditure increased at AngloGold Ashanti Córrego do Sítio Mineração by $117 million, Tropicana by $63 million, Iduapriem by $56 million, Mponeng by $50 million, Kibali joint venture by $43 million, Cerro Vanguardia by $35 million, Navachab by $34 million, Kopanang by $31 million, Moab Khotsong by $27 million, Obuasi by $23 million and Geita by $20 million.
Total capital expenditure of $1,015 million was recorded in the year ended December 31, 2010 compared to $1,027 million in the same period in 2009. This represents a $12 million, or 1 percent, decrease from 2009. In Australia, total capital expenditure decreased from $177 million in 2009 to $40 million in 2010 as a result of the sale of Boddington during 2009. Capital expenditure increased at Obuasi by $27$15 million, AngloGold Ashanti Córrego do Sítio Mineração by $24$58 million, Geita by $22$19 million, Mponeng by $17$13 million, Moab Khotsong by $13$16 million and Cerro Vanguardia by $7$21 million.
Comparison of financial performance on a segment basis for 2011, 2010 2009 and 2008
The Company produces gold as its primary product and does not have distinct divisional segments in terms of principal business activity, but manages its business on the basis of different geographic segments. Therefore, information regarding separate geographic segments is provided. Revenues presented below exclude allocated realized gains/losses on non-hedge derivatives to individual geographic areas.
Revenues
| (in millions) | Year ended December 31 | |||||||||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||||||
| $ | percent | $ | percent | $ | percent | |||||||||||||||||||
Category of activity | ||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||
Product sales | 6,570 | 5,334 | 3,784 | |||||||||||||||||||||
Interest, dividends and other | 72 | 68 | 170 | |||||||||||||||||||||
Total revenues | 6,642 | 5,402 | 3,954 | |||||||||||||||||||||
Geographical area data | ||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||
South Africa | 2,596 | 39 | 2,276 | 42 | 1,687 | 43 | ||||||||||||||||||
Continental Africa | 2,529 | 38 | 1,871 | 34 | 1,451 | 36 | ||||||||||||||||||
Australasia | 389 | 6 | 468 | 9 | 239 | 6 | ||||||||||||||||||
Americas | 1,499 | 23 | 1,125 | 21 | 804 | 20 | ||||||||||||||||||
Other, including Corporate and Non-gold producing subsidiaries | 17 | - | (6 | ) | - | 129 | 3 | |||||||||||||||||
| 7,030 | 5,734 | 4,310 | ||||||||||||||||||||||
Less : Equity method investments included above | (388 | ) | (6 | ) | (332 | ) | (6 | ) | (355 | ) | (8 | ) | ||||||||||||
Total revenues | 6,642 | 100 | 5,402 | 100 | 3,955 | 100 | ||||||||||||||||||
RevenuesAssets
| Year ended December 31 | ||||||||||||||||||||||||
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| (in millions) | $ | percent | $ | percent | $ | percent | ||||||||||||||||||
| Category of activity | ||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||
| Product sales | 5,334 | 3,784 | 3,655 | |||||||||||||||||||||
| Interest, dividends and other | 68 | 170 | 75 | |||||||||||||||||||||
| Total revenues | 5,402 | 3,954 | 3,730 | |||||||||||||||||||||
| Geographical area data | ||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||
| South Africa | 2,276 | 42 | 1,687 | 43 | 1,521 | 41 | ||||||||||||||||||
| Continental Africa | 1,871 | 34 | 1,451 | 36 | 1,406 | 37 | ||||||||||||||||||
| Australasia | 468 | 9 | 239 | 6 | 282 | 8 | ||||||||||||||||||
| Americas | 1,125 | 21 | 804 | 20 | 702 | 19 | ||||||||||||||||||
| Other, including Corporate and Non-gold producing subsidiaries | (6 | ) | — | 129 | 3 | — | — | |||||||||||||||||
| 5,734 | 4,310 | 3,911 | ||||||||||||||||||||||
| Less : Equity method investments included above | (332 | ) | (6 | ) | (355 | ) | (8 | ) | (181 | ) | (5 | ) | ||||||||||||
| Total revenues | 5,402 | 100 | 3,955 | 100 | 3,730 | 100 | ||||||||||||||||||
| As at December 31 | ||||||||||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||||||
| $ | percent | $ | percent | $ | percent | |||||||||||||||||||
Geographical area data | ||||||||||||||||||||||||
Total segment assets | ||||||||||||||||||||||||
South Africa | 2,974 | 27 | 3,370 | 32 | 3,354 | 31 | ||||||||||||||||||
Continental Africa | 4,365 | 39 | 4,093 | 39 | 4,055 | 38 | ||||||||||||||||||
Australasia | 714 | 6 | 534 | 5 | 496 | 5 | ||||||||||||||||||
Americas | 2,527 | 23 | 2,170 | 21 | 2,012 | 19 | ||||||||||||||||||
Other, including Corporate, Assets held for sale and Non-gold producing subsidiaries | 605 | 5 | 221 | 2 | 745 | 7 | ||||||||||||||||||
Total segment assets | 11,185 | 100 | 10,388 | 100 | 10,662 | 100 | ||||||||||||||||||
At December 31, 2011, 27 percent of AngloGold Ashanti’s total consolidated revenuesassets were derived from its operationslocated in South Africa compared with 32 percent at the end of 2010, mainly due to 43 percent in 2009. South Africa produced 40 percentthe weakening of the global production in 2010.
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| As at December 31 | ||||||||||||||||||||||||
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| $ | percent | $ | percent | $ | percent | |||||||||||||||||||
| Geographical area data | ||||||||||||||||||||||||
| Total segment assets | ||||||||||||||||||||||||
| South Africa | 3,370 | 32 | 3,354 | 31 | 2,497 | 26 | ||||||||||||||||||
| Continental Africa | 4,093 | 39 | 4,055 | 38 | 3,582 | 38 | ||||||||||||||||||
| Australasia | 534 | 5 | 496 | 5 | 1,279 | 14 | ||||||||||||||||||
| Americas | 2,170 | 21 | 2,012 | 19 | 1,717 | 18 | ||||||||||||||||||
| Other, including Corporate, Assets held for sale and Non-gold producing subsidiaries | 221 | 2 | 745 | 7 | 376 | 4 | ||||||||||||||||||
Total segment assets | 10,388 | 100 | 10,662 | 100 | 9,451 | 100 | ||||||||||||||||||
Comparison of financial performance in 2011, 2010 and 2009
| Financial performance of AngloGold Ashanti | Year ended December 31 | |||||||||||
| (in millions) | 2011 | 2010 | 2009 | |||||||||
Revenue | 6,642 | 5,402 | 3,954 | |||||||||
Cost and expenses | (4,521) | (5,021) | (4,852) | |||||||||
Taxation (expense)/benefit | (705) | (255) | 33 | |||||||||
Equity income/(loss) in associates | 59 | 40 | 88 | |||||||||
Net income attributable to noncontrolling interests | (50) | (54) | (48) | |||||||||
Net income/(loss) | 1,425 | 112 | (825) | |||||||||
Comparison of financial performance in 2011 with 2010
Revenues
Revenues from product sales and other income increased by $1,240 million from $5,402 million in 2010 to $6,642 million in 2011, representing a 23 percent increase over the period. This increase was mainly due to the increase in the average spot price of gold. The average spot price of gold was $1,572 per ounce during 2011, $345 per ounce, or 28 percent, higher than $1,227 per ounce in 2010. The year on year increase in revenue was partially offset by reduced gold production of 184,000 ounces in 2011 when compared to 2010. The majority of product sales consisted of US dollar-denominated gold sales.
Total revenues from the South African operations increased by $320 million to $2,596 million from $2,276 million in 2010, mainly as a result of the increase in the average spot price of gold. This increase was offset by the reduced gold production at the South African operations (1,624,000 ounces in 2011 compared to 1,785,000 ounces in 2010).
Total revenues from the Continental Africa operations increased by $658 million to $2,529 million from $1,871 million in 2010, mainly as a result of the increase in the average spot price of gold and the treatment of higher tonnes and higher grade material at Geita.
Total revenue from the Australian operation at Sunrise Dam decreased from $468 million in 2010 to $389 million in 2011. The decrease in revenue was mainly due to the decrease in production of 150,000 ounces in 2011.
Total revenues from the Americas operations increased from $1,125 million in 2010 to $1,499 million in 2011 mainly as a result of the increase in the average spot price of gold and an increase in gold produced from 842,000 attributable ounces in 2010 to 891,000 ounces in 2011.
Production costs
Production costs increased from $2,656 million in 2010 to $2,977 million in 2011, which represents a $321 million, or 12 percent increase. The production costs of most of the operations increased in 2011. The increase was mainly as a result of an increase in rehabilitation and operational costs including labor, consumables and power. Operational cost increases were mainly due to annual labor cost increases and increased contractor costs at Sunrise Dam, power tariff increases mainly in South Africa and at AngloGold Ashanti Córrego do Sítio Mineração in Brazil and higher rehabilitation costs that were recorded at Obuasi in Ghana and Serra Grande in Brazil.
Exploration costs
Exploration costs increased from $206 million in 2010 to $279 million in 2011 mainly due to higher prefeasibility expenditure at La Colosa in Colombia, additional exploration at Tropicana in Australia and Mongbwalu in the Democratic Republic of the Congo, as well as increased exploration activities in Guinea, the Solomon Islands and marine exploration areas. For a discussion of AngloGold Ashanti’s exploration activities in 2011, see “Item 4B.: Business overview – Global exploration”.
Royalties
Royalties paid by AngloGold Ashanti increased from $142 million in 2010 to $193 million in 2011, mainly due to payments of royalties under the South African Mineral and Petroleum Resources Act and the higher average spot price of gold. Royalties recorded by the South African mines increased from $38 million in 2010 to $73 million in 2011. Royalties in Argentina increased from $21 million in 2010 to $27 million in 2011 as a result of higher average spot prices of gold. In Argentina, royalties are payable to Fomicruz, a State owned company in the Santa Cruz Province, being the minority shareholder of the Cerro Vanguardia operation and are calculated as a percentage of revenues. Royalties paid in Tanzania amounted to $23 million in 2011 compared to $13 million in 2010. Royalties in Tanzania increased due to the higher production and the higher gold price.
Depreciation, depletion and amortization
Depreciation, depletion and amortization expense increased by $69 million or 10 percent, to $789 million in 2011 when compared to $720 million recorded in 2010. This increase was mainly due to increases in depreciation, depletion and amortization expense in Tanzania (Continental Africa) and the Americas from $55 million and $152 million, respectively, incurred in the year ended December 31, 2010 to $82 million and $173 million, respectively, for the same period of 2011 mainly as a result of higher production and changes in estimated useful life of assets which are used in the calculation of depreciation, depletion and amortization.
Impairment of assets
In 2011, AngloGold Ashanti recorded impairments amounting to $17 million compared to $91 million in 2010. This was mainly due to the impairment of Savuka, waste wash plant at Kopanang and abandoned shaft pillar development at Tau Tona in South Africa during 2011 and the write-off of assets at Obuasi in Continental Africa. Tau Tona and Savuka were impaired due to changes in the mine plan resulting in areas being abandoned and safety related concerns. See “Note 5 Costs and expenses: Impairment of assets” to the consolidated financial statements for additional information.
Interest expense
Interest expense increased by $27 million to $178 million in 2011, compared to $151 million recorded in 2010. The increase is mainly due to interest charges for the full year on the rated bonds and mandatory convertible bonds which were issued in April 2010 and September 2010, respectively, partially offset by lower interest paid due to the repayment of the 2009 Term Facility during 2010. Interest expense recorded in the year ended December 31, 2010 includes $8 million related to accelerated amortization of fees on debt facilities cancelled.
Accretion expense
Accretion expense of $28 million was recorded in 2011 compared with $22 million in 2010. Accretion relates to the unwinding of discounted future rehabilitation obligations to present values and 2008
| Financial performance of AngloGold Ashanti | Year ended December 31 | |||||||||||
| (in millions) | 2010 | 2009 | 2008 | |||||||||
| Revenue | 5,402 | 3,954 | 3,730 | |||||||||
| Cost and expenses | (5,021 | ) | (4,852 | ) | (4,103 | ) | ||||||
| Taxation (expense)/benefit | (255 | ) | 33 | (22 | ) | |||||||
| Equity income/(loss) in associates | 40 | 88 | (149 | ) | ||||||||
| Discontinued operations | — | — | 23 | |||||||||
| Net income attributable to noncontrolling interests | (54 | ) | (48 | ) | (42 | ) | ||||||
| Net income/(loss) | 112 | (825 | ) | (563 | ) | |||||||
153
Employment severance cost
Employment severance costs decreased to $15 million in 2011 from $23 million in 2010. Employment severance costs recorded for the year ended December 31, 2011 relates to retrenchments in the South Africa region at Great Noligwa, Kopanang, TauTona and Mponeng and in Continental Africa reflecting rationalization of operations.
In 2011, the Company recorded a profit of $43 million compared to a profit of $3 million recorded in 2010. The profit in 2011 mainly related to royalties received from Newmont Mining Corporation (2009 Boddington Gold mine sale) and Franco Nevada Corporation (2011 sale of royalty stream in Ayanfuri mine). These profits were partially offset by the impairment of investments, the loss on disposal of land, equipment and assets, mineral rights and exploration properties, reassessment of indirect taxes payable and Black economic empowerment transaction restructuring costs.
The profit in 2010 mainly related to profit on sale of investments held in B2Gold Corporation and Red 5 Limited, an insurance claim recovery at Savuka mine and royalties received. These profits was partially offset by the mandatory convertible bond underwriting and professional fees, the loss on disposal of land, equipment and assets, mineral rights and exploration properties and reassessment of indirect taxes payable in Tanzania, Brazil, Guinea and South Africa.
Non-hedge derivative (gain)/loss and movement on bonds
Non-hedge derivative (gain)/loss
A gain on non-hedge derivatives of $83 million was recorded in 2011 compared to a loss of $703 million in 2010 (which included normal purchase and sale exempted (“NPSE”) contracts re-designated to non-hedging instruments in previous years) relating to the use of non-hedging instruments. These represent derivatives not designated in formal hedge accounting relationships. The change in fair value of these derivatives are recorded each period in the income statement.
The net gain recorded for the year ended December 31, 2011 relates to the fair value movements of the conversion features of convertible bonds amounting to $84 million and the revaluation of non-hedge derivatives resulting from changes in the prevailing forward gold price, exchange rates, interest rates and volatilities during the year amounting to a loss of $1 million.
During 2010, the Company eliminated its gold hedge book. The loss on scheduled hedge book maturities during 2010 was $277 million. Loss on non-hedge derivatives included a realized loss of $2,698 million related to the final tranche of the accelerated hedge buy-back, that commenced in September 2010 and was concluded on October 7, 2010. The final phase of hedge restructuring was funded with proceeds from the equity offering and the mandatory convertible bonds in September 2010, as well as cash from internal sources and debt facilities.
The loss on non-hedge derivatives recorded for the year ended December 31, 2010 relates to the accelerated hedge book settlement, normal realized losses on non-hedge derivatives, the fair value movement of the conversion features of convertible bonds and the revaluation of non-hedge derivative that resulted from changes in the prevailing spot gold price, exchange rates, interest rates, volatilities and non-performance risk during 2010.
The hedge buy-back and re-designation of contracts (effected in 2009) resulted in an increase in current non-hedge derivative liabilities and a consequential loss recorded in (gain)/loss on non-hedge derivatives. During 2010, the opening balance of the derivative liability of $556 million further declined by $131 million in fair value, before all these contracts were settled for $687 million.
Non-hedge derivatives recorded for the years ended December 31, 2011 and 2010 included:
| Year ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| (in US Dollars, million) | ||||||||
Loss on realized non-hedge derivatives | - | 2,975 | ||||||
Loss/(gain) on unrealized non-hedge derivatives | 1 | (2,273) | ||||||
Fair value (gain)/loss on option component of convertible bonds | (84) | 1 | ||||||
|
| |||||||
Net (gain)/loss | (83) | 703 | ||||||
|
| |||||||
| Movement on bonds | ||||||||
| Year ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| (in US Dollars, million) | ||||||||
Fair value (gain)/loss on mandatory convertible bonds | (113) | 83 | ||||||
Fair value movements on the mandatory convertible bonds were based on to the ex interest NYSE closing price of these bonds. | ||||||||
Equity income in associates
Equity income in equity method investments increased from $40 million in 2010 to $59 million in 2011, mainly as a result of the increase in revenue from gold sales at Sadiola and Morila mines in Mali from $143 million and $117 million, respectively, in 2010 to $189 million and $157 million, respectively, in 2011. The increase was mainly due to the increase in the average spot price of gold for 2011.
Taxation expense/benefit
A net taxation expense of $705 million was recorded in 2011 compared to $255 million in 2010. Charges for current tax in 2011 amounted to $406 million compared to $117 million in 2010. The increase in the tax charge in 2011 is mainly due to higher income as a result of the higher gold price and losses having been fully utilized during the current year in South Africa and Tanzania. Charges for deferred tax in 2011 amounted to a net tax expense of $299 million compared to $138 million in 2010. The increase in the deferred tax charge in 2011 is mainly due to the reversal of deferred tax credits on losses utilized in South Africa, Geita and the Americas. Refer to “Note 7 – Taxation” of the consolidated financial statements.
Comparison of financial performance in 2010 with 2009
Revenues
Revenues from product sales and other income increased by $1,447 million from $3,955 million in 2009 to $5,402 million in 2010, representing a 37 percent increase over the period. This increase was mainly due to the increase in the average spot price of gold. The average spot price of gold was $1,227 per ounce during 2010, $253 per ounce, or 26 percent, higher than $974 per ounce in 2009. In addition, included in the 2009 gold income, were normal purchase and sale exempted (NPSE) contract losses which from July 2009 onwards were redesignated at fair value on the balance sheet and reported under the loss from non-hedge derivatives. The year on year increase in revenue was partially offset by reduced gold production of 84,000 ounces in 2010 when compared to 2009. The majority of product sales consisted of US dollar-denominated gold sales.
Total revenues from the South African operations increased by $589 million to $2,276 million from $1,687 million in 2009, mainly as a result of the increase in the average spot price of gold. This increase was offset by the reduced gold production at the South African operations (1,785,000 ounces in 2010 compared to 1,797,000 ounces in 2009).
Total revenues from the Americas operations increased from $804 million in 2009 to $1,125 million in 2010 mainly as a result of the increase in the average spot price of gold and an increase in gold produced from 816,000 attributable ounces in 2009 to 842,000 ounces in 2010.
Total revenues from the Continental Africa operations increased by $420 million to $1,871 million from $1,451 million in 2009, mainly as a result of the increase in the average spot price of gold and the treatment of higher tonnes and higher grade material at Geita.
Total revenue from the Australian operation at Sunrise Dam increased from $239 million in 2009 to $468 million in 2010 mainly due to the increase in the average spot price of gold. Average recovered grade increased from 2.87 grams per tonne in 2009 to 3.22 grams per tonne in 2010.
Production costs
Production costs increased from $2,229 million in 2009 to $2,656 million in 2010, which represents a $427 million, or 19 percent increase. The production costs of most of the operations increased in 2010. The increase was mainly as a result of an increase in operational costs including labor, consumables and power and the increase in the rehabilitation provision. The increase in production costs was partially offset by the effects of cost saving initiatives.
South Africa continued to grapple with steeply rising (31 percent) electricity tariffs, effective from July 2009. On February 24, 2010 Eskom Holdings Limited, the state-owned utility, was also granted permission by the National Energy Regulator to raise prices annually by a further average 25 percent for each of the next three years to fund the construction of new power generation capacity. This will significantly increase the cost structure of AngloGold Ashanti’s South African operations which currently account for approximately 40 percent of annual production. In 2010 power costs increased by $71 million of which $51 million was in South Africa.
Production costs in Tanzania (Continental Africa) marginally decreased from $261 million in 2009 to $256 million in 2010. This was due to a decrease in consumables used and the effects of cost saving initiatives.
Exploration costs
Exploration costs increased from $150 million in 2009 to $206 million in 2010 mainly due to higher prefeasibility expenditure at La Colosa in Colombia, Tropicana in Australia and Mongbwalu in the Democratic Republic of the Congo. For a discussion of AngloGold Ashanti’s exploration activities in 2010, see “Item 4B.: Business overview —– Global exploration”.
General and administrative
General and administrative expenses increased from $158 million in 2009 to $228 million in 2010, mainly due to higher labor costs, the roll out of Project ONE business improvement initiatives, the implementation of a global security framework, corporate office costs, consultancy fees and the strengthening of the rand relative to the US dollar.
154
Royalties paid by AngloGold Ashanti increased from $84 million in 2009 to $142 million paid in 2010 mainly due to the introduction of the South African Mineral and Petroleum Resources Act of royalties payable in South Africa from March 1, 2010 as well as the high spot price of gold. Royalties recorded by the South African mines were $38 million in 2010. Royalties in Argentina increased from $16 million in 2009 to $21 million in 2010 as a result of higher spot prices of gold. In Argentina, royalties are payable to Fomicruz, a State owned company in the Santa Cruz Province, being the minority shareholder of the Cerro Vanguardia operation and are calculated as a percentage of revenues. Royalties paid in Ghana and Guinea amounted to $48 million in 2010 compared to $46 million in 2009. In Ghana, royalties are payable to the government at a fixed rate of 3 percent per annum based on revenue, as agreed to under the Stability Agreement entered into with AngloGold as part of the AngloGold Ashanti business combination. In Guinea, royalties are paid to the government, Union Miniere and the International Finance Corporation and are calculated as a percentage of revenues.
Depreciation, depletion and amortization
Depreciation, depletion and amortization expense increased by $105 million or 17 percent, to $720 million in 2010 when compared to $615 million recorded in 2009. This increase was mainly due to increases in depreciation, depletion and amortization expense in South Africa, Tanzania (Continental Africa) and the Americas from $281 million, $53 million and $111 million, respectively, incurred in the year ended December 31, 2009 to $357 million, $55 million and $152 million, respectively, for the same period of 2010 mainly as a result of changes in estimated lives of assets, as well as stronger local currencies. This was partially offset by a decrease in depreciation, depletion and amortization expense in Ghana (Continental Africa) which decreased from $101 million incurred in the year ended December 31, 2009 to $87 million in the same period in 2010 as a result of a decrease in gold production.
Impairment of assets
In 2010, AngloGold Ashanti recorded impairments amounting to $91 million compared to $8 million in 2009. The increase was mainly due to the impairment of Tau Lekoa (held for sale), Tau Tona and Savuka in South Africa during 2010, the write-off of assets at Iduapriem, Geita and Serra Grande in Brazil. Tau Tona and Savuka were impaired due to changes in the mine plan resulting in areas being abandoned and safety related concerns. Total impairment recognized for Tau Tona and Savuka during 2010 was $63 million. Following the classification of Tau Lekoa as held for sale, impairment testing was performed on the held for sale asset and since the estimated fair value did not support the carrying value, an impairment of $8 million was recorded. See “Note 5 Costs and expenses: Impairment of assets” to the consolidated financial statements for additional information.
Interest expense
Interest expense increased by $28 million to $151 million in 2010, compared to $123 million recorded in 2009. The increase is mainly due to interest on the rated bonds and mandatory convertible bonds, which was partially offset by lower interest paid due to the repayment of the 2009 Term Facility and $1.5 billion Revolving Credit Facility during 2010. Interest expense recorded in the year ended December 31, 2010 includes $8 million related to accelerated amortization of fees on debt facilities cancelled.
Accretion expense
Accretion expense of $22 million was recorded in 2010 compared with $17 million in 2009. Accretion relates to the unwinding of discounted future reclamation obligations to present values and increases in the reclamation obligations to its future estimated payout.
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Employment severance costs increased to $23 million in 2010 from $14 million in 2009. Employment severance costs recorded for the year ended December 31, 2010 relates to retrenchments in the South Africa region reflecting rationalization of operations at Great Noligwa, Kopanang, Tau TonaTauTona and Mponeng.
Profit/loss on sale of assets, realization of loans, indirect taxes and other
In 2010, the Company recorded a profit of $3 million compared to a loss of $10 million recorded in 2009. The profit in 2010 mainly related to profit on sale of investments held in B2Gold Corporation and Red 5 Limited, an insurance claim recovery at Savuka mine and royalties received. These profits waswere partially offset by the mandatory convertible bond underwriting and professional fees, the loss on disposal of land, equipment and assets, mineral rights and exploration properties and reassessment of indirect taxes payable in Tanzania, Brazil, Guinea and South Africa.
The loss in 2009 mainly related to the impairment of Pamodzi Gold debtor in South Africa whose operations were liquidated during October 2009, a loss on consignment stock and reassessment of indirect taxes payable in Tanzania, Brazil and Guinea being offset by the profit on disposal of the indirect 33.33 percent joint venture interest in Boddington Gold mine in Australia to Newmont Mining Corporation.
Non-hedge derivative loss
A loss on non-hedge derivatives of $703 million was recorded in 2010 compared to a loss of $1,452 million in 2009 (which included normal purchase and sale exempted (“NPSE”) contracts re-designated to non-hedging instruments during the period) relating to the use of non-hedging instruments. These represent derivatives not designated in formal hedge accounting relationships. The change in fair value of such derivatives is recorded each period in the income statement.
During 2010, the Company eliminated its gold hedge book. The loss on scheduled hedge book maturities during 2010 was $277 million. Loss on non-hedge derivatives includes a realized loss of $2,698 million relating to the final tranche of the accelerated hedge buy-back, that commenced in September 2010 and was concluded on October 7, 2010. The final phase of hedge restructuring was funded with proceeds from the equity offering and the mandatory convertible bonds in September 2010, as well as cash from internal sources and debt facilities.
Therefore, the loss on non-hedge derivatives recorded for the year ended December 31, 2010 relates to the accelerated hedge book settlement, normal realized losses on non-hedge derivatives, the fair value movement of the conversion features of convertible bonds aggregating to $1.1 million and the revaluation of non-hedge derivatives resulting from changes in the prevailing spot gold price, exchange rates, interest rates, volatilities and non-performance risk during 2010.
During 2009, the Company embarked on a hedge buy-back that resulted in the accelerated settlement of both non-hedge and forward gold contracts qualifying for the normal purchases and sales exemption (which permits the Company to not record such amounts in its financial statements until the maturity date of the contract) under which the Company had committed to deliver a specified quantity of gold at a future date in exchange for an agreed price. Of the total hedge buy-back cost of $797 million, the majority, being $580 million, related to contracts previously designated as NPSE, which allowed them to be accounted for off-balance sheet in prior periods. A further $217 million was also incurred in accelerating the cash settlement of existing non-hedge derivative contracts that were not previously designated as NPSE contracts. However, as a result of the accelerated cash settlement of the NPSE contracts during July 2009, the FASB ASC guidance on derivatives and hedging necessitated a review of the continuing designation of, and accounting treatment for, the remaining NPSE contracts that were not part of the accelerated settlement. As the Company continued to consider alternatives to reduce its outstanding gold derivatives position in future periods including, where appropriate, the accelerated settlement of contracts previously qualifying for the NPSE designation, management concluded, in accordance with the provisions of the FASB ASC guidance, to re-designate all remaining NPSE contracts as non-hedge derivatives and to account for such contracts at fair value on the balance sheet with changes in fair value accounted for in the income statement.
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Non-hedge derivatives recorded for the years ended December 31, 2010 and 2009 included:
| Year ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| (in US Dollars, million) | ||||||||
| Loss on realized non-hedge derivatives | 2,975 | 543 | ||||||
| (Gain)/loss on unrealized non-hedge derivatives | (2,273 | ) | 876 | |||||
| Fair value loss on option component of convertible bonds | 1 | 33 | ||||||
| Net loss | 703 | 1,452 | ||||||
| Year ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| (in US Dollars, million) | ||||||||
| Fair value loss on mandatory convertible bonds | 83 | — | ||||||
| Fair value movements on the mandatory convertible bonds relate to the ex interest NYSE closing price of these bonds. | ||||||||
| Year ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| (in US Dollars, million) | ||||||||
Loss on realized non-hedge derivatives | 2,975 | 543 | ||||||
Loss/(gain) on unrealized non-hedge derivatives | (2,273 | ) | 876 | |||||
Fair value loss on option component of convertible bonds | 1 | 33 | ||||||
|
| |||||||
Net loss | 703 | 1,452 | ||||||
|
| |||||||
Movement on bonds
| ||||||||
| Year ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| (in US Dollars, million) | ||||||||
Fair value loss on mandatory convertible bonds | 83 | - | ||||||
Fair value movements on the mandatory convertible bonds relate to the ex interest NYSE closing price of these bonds. | ||||||||
Equity income in associates
Equity income in equity method investments decreased from $88 million in 2009 to $40 million in 2010, mainly as a result of a decrease in revenue from gold sales at Yatela and Morila mines in Mali from $89 million and $135 million, respectively, in 2009 to $71 million and $117 million, respectively, in 2010. The decrease was mainly due to a decrease in production in 2010 compared to 2009. The decrease in production was partially offset by the increase in the average spot price of gold for 2010.
Taxation expense/benefit
A net taxation expense of $255 million was recorded in 2010 compared to a net tax benefit of $33 million recorded in 2009. Charges for current tax in 2010 amounted to $117 million compared to $166 million in 2009. The decrease in the current tax charge in 2010 mainly related to tax benefits on losses relating to the early hedge settlement and tax benefits relating to prior year in South Africa. This decrease was partly offset by an increase in the tax charge due to higher income as a result of the higher gold price. Charges for deferred tax in 2010 amounted to a net tax expense of $138 million compared to a net tax benefit of $199 million in 2009. The increase in the deferred tax charge in 2010 is mainly related to the reversal of deferred tax on unrealized non-hedge derivative losses. Refer to “Note 7 —– Taxation” of the consolidated financial statements for deductible temporary differences expected to reverse.
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| 5B. | LIQUIDITY AND CAPITAL RESOURCES |
In the board’s opinion, AngloGold Ashanti’s working capital is sufficient to meet the Company’s present requirements.
Operating activities
Net cash provided by $224 million from $3,730operating activities was $2,550 million in 2008 to $3,954 million in 2009, representing a 6 percent increase over2011, higher than the period. This increase was mainly due to the2010 amount of $1,038 million. The increase in the average spot price of gold. The average spot price of gold was $974 per ounce during 2009, $102 per ounce, or 12 percent, higher than $872 per ounce, the average spot price of gold in 2008. This increase was partially offsetnet cash provided by reduced gold production (4.6 million ounces in 2009 compared to 5 million ounces in 2008). The majority of product sales consisted of US dollar-denominated gold sales.
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| Year ended December 31, | ||||||||
| 2009 | 2008 | |||||||
| (in US Dollars, million) | ||||||||
| Loss on realized non-hedge derivatives | 543 | 1,243 | ||||||
| Loss/(gain) on unrealized non-hedge derivatives | 876 | (985 | ) | |||||
| Fair value loss on option component of convertible bonds | 33 | — | ||||||
| Net loss | 1,452 | 258 | ||||||
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Net cash outflow from Yatela.
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2010
Net cash outflow from operating working capital items amounted to $314 million in 2010, compared with an outflow of $21 million in 2009.
2009Investing activities
2011
Investing activities was $443 million in 2009, significantly higher than the 2008 amount of $64 million. The increase2011 resulted in a net cash provided by operations was mainly asoutflow of $1,603 million, which is a resultdecrease of lower payments to suppliers, higher received gold price and lower cash utilized in hedge buy-backs in 2009.
2010
Investing activities in 2010 resulted in a net cash outflow of $1,887 million, which is an increase of $1,619 million from an outflow of $268 million in 2009. Investing activities for non-hedge derivatives maturing resulted in an outflow of $984 million in the year ended December 31, 2010 compared to an outflow of $18 million for the same period in 2009. Proceeds received from the sale of assets decreased from $1,142 million in 2009 to $69 million in 2010 due to the inclusion of the sale of Boddington 2009.
2009Financing activities
2011
Net cash generated by financing activities in 2009 resulted in a net cashthe year ended December 31, 2011 amounted to an outflow of $268$319 million, which is a decrease of $1,325$549 million from an outflowinflow of $1,593$230 million in 2008 mainly duethe year ended December 31, 2010. Cash inflows from proceeds from loans in 2011 amounted to $109 million and included gross proceeds of $100 million raised from the $990$1 billion Syndicated loan facility.
Cash outflows from repayment of debt of $268 million during the year ended December 31, 2011 included the capital repayment of $99 million towards the FirstRand Bank Limited loan facility, $150 million towards the $1.0 billion syndicated loan facility and normal scheduled loan repayments of $19 million.
Dividends paid increased from $117 million in proceeds received from the sale of the 33.33 percent stake2010 to $169 million in Boddington which was offset in part2011. Dividends are proposed and approved by the $344 million acquisitionboard of an effective indirect 45 percent interest indirectors of AngloGold Ashanti, based on the Kibali gold project.
2010
During the second and third quarter of 2010, AngloGold Ashanti completed the following key financing transactions, namely:
The issue of two rated US dollar bonds maturing in 10 and 30 years aggregating $1.0 billion. The net proceeds of $983 million were applied to repay and cancel amounts drawn under the $1.15 billion syndicated loan facility and the 2009 Term Facility;
The entering of a four year unsecured Syndicated loan facility with a group of banks for $1.0 billion of which $950 million remained undrawn as at December 31, 2010; The entering of a ZAR1.5 billion ($222 million) short-term loan from FirstRand Bank Limited, of which $107 million was drawn as at December 31, 2010, to fund, in part, the closing of the hedge book; and The raising of aggregate net proceeds of $1,562 billion in equal parts of a dual tranche capital raising |
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Net cash generated by financing activities in the year ended December 31, 2010 amounted to an inflow of $230 million, which is a decrease of $73 million from an inflow of $303 million in the year ended December 31, 2009. Cash inflows from proceeds from loans in 2010 amounted to $2,316 million and included gross proceeds of $994 million raised from the rated bonds issued during April 2010, $789 million raised from mandatory convertible bonds during September 2010, $326 million raised from the Firstrand Bank Limited loan facility raised and $170 million raised from the $1 billion Syndicated loan facility. Financing activities for non-hedge derivatives maturing resulted in an outflow of $1,065 million in the year ended December 31, 2010 compared to an inflow of $35 million for the same period in 2009. Debt issuance costs paid during the year ended December 31, 2010 included $26 million on the mandatory convertible bonds and $13 million on the rated bonds.
Cash outflows from repayment of debt of $1,642 million during the year ended December 31, 2010 included the capital repayment of $1,060 million towards the $1.15 billion syndicated loan facility during June 2010, $250 million towards the 2009 Term Facility, $200 million towards the FirstRand Bank Limited loan facility, $120 million towards the $1.0 billion syndicated loan facility and normal scheduled loan repayments of $12 million.
Dividends paid increased from $56 million in 2009 to $117 million in 2010. AngloGold Ashanti declares interim dividends at the time of announcing its interim results and declares and pays final dividends in the following year based on the previous year’s results.
Liquidity
AngloGold Ashanti’s revenues are derived primarily from the sale of gold produced at its mines. Cash generated by operating activities is therefore the function of gold produced sold at a specific price. The market price of gold can fluctuate widely which impacts the profitability of the Company’s operations and the cash flows generated by these operations. Earnings of joint ventures and subsidiaries in Mali and Argentina which are not permanently re-invested may be received as dividends.
AngloGold Ashanti’s cash and cash equivalents decreasedincreased to $1,112 million at December 31, 2011 compared with $586 million at December 31, 2010 (which includes $11 million for held for sale assets) at December 31, 2010 compared with $1,100 million at December 31, 2009.. In accordance with South African Reserve Bank regulations, cash generated by South African operations is held in rands and is therefore subject to exchange controls. At December 31, 2010,2011, approximately 3650 percent of the Company’s cash and cash equivalents were held in US dollars, 3136 percent were held in South African rands and 3314 percent were held in other currencies.
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On April 22, 2010, the Company announced the pricing of an offering of a $700 million 10-year note and a $300 million 30-year note. The offering closed on April 28, 2010. The notes were issued by AngloGold Ashanti Holdings plc, a wholly owned subsidiary of AngloGold Ashanti Limited, and are fully and unconditionally guaranteed by AngloGold Ashanti Limited. The notes are unsecured and interest is payable semi-annually at a rate of 5.375 percent on the $700 million bond and 6.50 percent on the $300 million bond. The bonds are payable in April 2020 and April 2040, respectively.
In September 2010, the Company issued mandatory convertible bonds at a coupon rate of 6 percent due in September 2013. The conversion of the mandatory convertible bonds into ADSs was subject to shareholder approval, which was granted in October 2010. These bonds are convertible into a variable number of shares ranging from 18,140,000 at a share price equal to or lesser than $43.50, to 14,511,937 at a share price equal to or greater than $54.375, each as calculated in accordance with the formula set forth in the indenture and subject to adjustment. Concurrent with the mandatory convertible bonds offering was an equity offering which resulted in the issue of 18,140,000 shares at an issue price of R308.37 per share. Total gross proceeds of $789 million were received from each of these offerings.
On December 22, 2011, AngloGold Ashanti Australia Limited entered into a four year revolving credit facility of A$600 million with a syndication of banks. Interest is charged at BBSY plus 2 percent per annum. AngloGold Ashanti Limited together with AngloGold Ashanti Holdings plc has each guaranteed all payments and other obligations of AngloGold Ashanti Australia Limited under the facility. Amounts may be repaid and reborrowed under the facility during its four year term. No draw down was made during 2011 under the facility. A committment fee of 50 percent of the applicable margin is payable quarterly in arrears on the undrawn portion of the facility. This facility will be used to fund working capital and development costs associated with mining operations in Australia.
During 2011,2012, approximately $135$32 million of AngloGold Ashanti’s debt is scheduled to mature, consisting mainly of $107 millioninterest payable under the FirstRand Bank Limited loan facility due in May 2011.
AngloGold Ashanti intends to finance its capital expenditure and debt repayment requirements in 20112012 from cash on hand, cash flow from operations, existing credit facilities and, potentially if deemed appropriate long-term debt financing, the issuance of equity and equity linked instruments.
Short-term debt
AngloGold Ashanti’s short-term debt decreased to $32 million at December 31, 2011 from $135 million at December 31, 2010 from $1,292 million at December 31, 2009.2010. Included in the short-term debt at December 31, 2010,2011, were:
$8 million in interest payable under the $700 million 10-year bond (interest charged at 5.375 percent per annum; the bonds are repayable in April 2020 and are US dollar-based);
$4 million in interest payable under the $300 million 30-year bond (interest charged at 6.50 percent per annum; the bonds are repayable in April 2040 and are US dollar-based); and
$8 million payable under the Navachab Lewcor Mining contract loan (interest charged at 8.40 percent per annum; the loan is repayable by April 2015 and is Namibian dollar-based).
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AngloGold Ashanti’s long-term debt increaseddecreased to $2,473 million at December 31, 2011 compared with $2,602 million at December 31, 2010 compared with $667 million at December 31, 2009.2010. As at December 31, 2010,2011, the Company’s long-term borrowings included:
Unsecured loans:
$994 million outstanding under the $700 million 10 year and $300 million 30 year rated bonds issued April 2010 (interest charged at 5.375 percent and 6.50 percent, respectively, per annum; the bonds are repayable in April 2020 and April 2040, respectively, and are US dollar-based).
The fair value of $758 million outstanding under the Mandatory Convertible Bonds issued September 2010 (quarterly coupons are paid at 6 percent per annum; the bonds are convertible into ADS until their maturity in September 2013 and are US dollar-based). The principal of this bond will be settled by the issue of shares as mentioned earlier and only the interest payments will be settled in cash.
$659 million outstanding under the convertible bonds issued on May 22, 2009 (interest charged at 3.50 percent per annum; the bonds are convertible, at holders’ option, into ADS up to May 2014 and are US dollar-based).
Secured capital leases:
$29 million is repayable to Navachab Lewcor Mining Contract for equipment financed (interest charged at a rate of 8.4 percent per annum. Loans are repayable in April 2015 and are Namibian dollar-based. The equipment financed is used as security for these loans).
$33 million is repayable to Turbine Square Two (Proprietary) Limited for buildings financed (interest charged at an implied rate of 9.8 percent per annum, lease payments are payable in monthly installments terminating in March 2022, are rand-based and the buildings financed are used as security for these loans). $10 million is repayable to Caterpillar Financial Services Corporation (Interest charged at an average rate of 5.46 percent per annum. Loans are repayable in monthly installments terminating in January 2015 and are US dollar-based. The equipment financed is used as security for these loans.) |
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| $ (million) | ||||
Unsecured loans | ||||
Secured capital leases | ||||
Total | ||||
Less: Short-term maturities | ||||
Long-term debt | ||||
Debt maturities are scheduled as follows:
| $ (million) | ||||
| 2011 | 135 | |||
| 2012 | 8 | |||
| 2013 | 877 | |||
| 2014 | 685 | |||
| 2015 | 2 | |||
| Thereafter | 1,030 | |||
Total | 2,737 | |||
| $ (million) | ||||
2012 | 32 | |||
2013 | 773 | |||
2014 | 673 | |||
2015 | 4 | |||
2016 | 2 | |||
Thereafter | 1,021 | |||
Total | 2,505 | |||
At December 31, 20102011 the currencies in which the borrowings were denominated were as follows:
| $ (million) | ||||
United States dollars | ||||
South African rands | ||||
Brazilian real | 6 | |||
Namibian dollars | ||||
Total | 2,505 | |||
Repayments of short-term and long-term borrowings amounted to $1,522$118 million and $120$150 million, respectively, in 2010.
At December 31, 2010,2011, AngloGold Ashanti had the following undrawn amounts available under its borrowing facilities:
| $ (million) | ||||
Syndicated Loan Facility ($1,0 billion) | ||||
Syndicated Loan Facility (A$600 million) – Australian dollar | 617 | |||
FirstRand Bank Limited | 50 | |||
Absa Bank Limited | 42 | |||
Nedbank Limited | ||||
FirstRand Bank Limited – rands | 14 | |||
Standard Bank of South Africa Limited | ||||
Nedbank Limited | ||||
Absa Bank Limited | ||||
Total undrawn | ||||
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As of December 31, 2010,2011, the Company was in compliance with all debt covenants and provisions related to potential defaults.
AngloGold Ashanti, through its executive committee, reviews its short, medium and long-term funding, treasury and liquidity requirements and positions monthly. The board of directorsAudit Committee also reviews these on a quarterly basis at its meetings.
Commitments and contingencies
For a detailed discussion of commitments and contingencies, see note 2120 to the consolidated financial statements “Commitments and contingencies”.
As at December 31, 2010,2011, capital commitments(1) and contingencies can be summarized over the periods shown below as follows:
| Expiration per Period | ||||||||||||||||||||
| Total | Less than 1 | 1 - 3 | 4 - 5 | Over 5 | ||||||||||||||||
| Commitment | amount | year | years | years | years | |||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
Capital expenditure (contracted and not yet contracted)(1) | 1,164 | 837 | 327 | — | — | |||||||||||||||
| Guarantees | 2,864 | 15 | 791 | 786 | 1,272 | |||||||||||||||
Other commercial commitments(2) | 538 | 398 | 81 | 41 | 18 | |||||||||||||||
Total | 4,566 | 1,250 | 1,199 | 827 | 1,290 | |||||||||||||||
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| Expiration per period | ||||||||||||||||||||
Commitment
(in millions) | Total amount $ | Less than 1 year $ | 1 – 3 years $ | 4 – 5 years $ | Over 5 years $ | |||||||||||||||
Capital expenditure | 1,330 | 1,253 | 77 | - | - | |||||||||||||||
(contracted and not yet contracted)(1) | ||||||||||||||||||||
Guarantees | 2,848 | 12 | 1,527 | - | 1,309 | |||||||||||||||
Other commercial commitments(2) | 463 | 334 | 68 | 42 | 19 | |||||||||||||||
Total | 4,641 | 1,599 | 1,672 | 42 | 1,328 | |||||||||||||||
(1)Including commitments through contractual arrangements with equity accounted joint ventures of $14 million (2010: $12 million).
(2)Excludes commitments through contractual arrangements with equity accounted joint ventures.
Derivatives accounted for at fair value
In the normal course of its operations, the Company is exposed to gold and other commodity price, currency, interest rate, liquidity and non-performance risk, which includes credit risk. The Company is also exposed to certain by-product commodity price risk. In order to manage these risks, the Company may enter into transactions which make use of derivatives. The Company has developed a risk management process to facilitate, control and monitor these risks. The board approves and monitors this risk management process, inclusive of documented treasury policies, counterpart limits, controlling and reporting structures. The Company does not acquire, hold or issue derivatives for trading purposes. During the year,Until 2010 the Company had utilized a number of derivatives including forward purchase and sale contracts and call and put options, to manage commodity price and foreign exchangeas part of its hedging of these risks. In order to provide financial exposure to the rising spot price of gold and the potential for enhanced cash flowcash-flow generation the Company completed its final tranche of the hedge buy-back program during 2010 and settled all the hedge bookforward gold and foreign exchange contracts that had been used by the Company in the past to manage those risks.
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. The following table represents the change in fair value of all derivative financial instruments:
| $ (million) | ||||
Fair value of derivatives at January 1, | ||||
Option component of convertible bonds | ||||
Embedded derivatives | ||||
Warrants on shares | ||||
Fair value of derivatives at December 31, | ||||
The fair value of the on-balance sheet derivatives at December 31, 20102011 included:
| $ (million) | ||||
Derivatives | ||||
Derivatives | ||||
The maturity of the fair value of derivatives as at December 31, 20102011 was as follows:
| Fair value of derivatives at December 31 | ||||||||||||||||||||
| Maturity | Maturity | Maturity | Maturity | |||||||||||||||||
| less than | 1 - 3 | 4 - 5 | excess of | Total Fair | ||||||||||||||||
| Source of fair value | 1 year | years | years | 5 years | value | |||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
| Prices actively quoted | — | — | — | — | — | |||||||||||||||
| Prices provided by other external sources | — | — | �� | — | — | — | ||||||||||||||
Prices based on models and other valuation methods(1) | 1 | — | (176 | ) | — | (175 | ) | |||||||||||||
| Fair value of derivatives at December 31 | ||||||||||||||||||||
| Source of fair value | Maturity | Maturity | Maturity | Maturity | Total | |||||||||||||||
| (in millions) | less than 1 year $ | 1 - 3 years $ | 4 - 5 years $ | excess of 5 years $ | Fair value $ | |||||||||||||||
Prices actively quoted | - | - | - | - | - | |||||||||||||||
Prices provided by other external sources | - | - | - | - | - | |||||||||||||||
Prices based on models and other valuation methods(1) | - | (92) | - | (1) | (93) | |||||||||||||||
(1)Fair value of volatility-based instruments (i.e. options) are calculated based on market prices, volatilities, credit risk and interest rates.
Recent developments
For a detailed discussion of recent developments, see note 3029 to the consolidated financial statements “Subsequent events”.
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For a detailed discussion of related party transactions, see “Item 7B.: Related party transactions”.
Recently adopted accounting policies and pending adoption of new accounting standards
AngloGold Ashanti’s accounting policies are described in note 4 to the consolidated financial statements “Significant accounting policies”. Recently adopted accounting policies are described in note 2 to the consolidated financial statements “Accounting changes”. Recent pronouncements are described in note 4.27 to the consolidated financial statements “Recent pronouncements”.
Critical accounting policies
AngloGold Ashanti’s accounting policies are described in note 4 to the consolidated financial statements “Significant accounting policies”. The preparation of the Company’s financial statements in conformity with US GAAP requirerequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The following are considered to be the accounting policies that are most critical to the Company’s results of operations, financial condition and cash flows.
UsingUse of estimates and making of assumptions
The most critical accounting estimates upon which AngloGold Ashanti’s financial reporting depends are those requiring estimates of Proven and Probable Reserves, recoverable ounces there from, and/or assumptions of future gold prices. Such estimates and assumptions affect the value of inventories (which are stated at the lower of average cost or net realizable value) and the potential impairment of long-lived assets and intangibles as detailed below. These estimates and assumptions also affect the rate at which depreciation and amortization are charged to earnings. On an ongoing basis, management evaluates its estimates and assumptions; however, actual amounts could differ significantly due to the ultimate conclusion of uncertainties.
Ore reserves and life-of-mines
AngloGold Ashanti estimates on an annual basis its Ore Reserves at its mining operations. There are a number of uncertainties inherent in estimating quantities of reserves, including many factors beyond the Company’s control. Estimates of Ore Reserves are based upon engineering evaluations of assay values derived from samplings of drill holes and other openings. Additionally, declines in the market price of gold may render certain reserves containing relatively lower grades of mineralization uneconomic to mine. Further, availability of permits, changes in operating and capital costs, and other factors could materially and adversely affect Ore Reserves. The Company uses its estimates of Ore Reserves to determine the unit basis for mine depreciation and closure rates, and to evaluate mine asset impairments. Changes in estimates of Ore Reserves could significantly affect these items. At least annually, the Company reviews mining schedules, production levels and asset lives in the Company’s life-of-mine planning for all of the Company’s operating and development properties. Significant changes in the life-of-mine plans may occur as a result of mining experience, new ore discoveries, changes in mining methods and rates, process changes, investment in new equipment and technology and gold prices. Based on the life-of-mine analysis the Company reviews its accounting estimates and adjusts depreciation, amortization, reclamation costs and evaluation of each mine for impairment where necessary. Accordingly, this analysis and the estimates made therein have a significant impact on the Company’s results of financial condition.
Drilling and related costs
Drilling and related costs incurred on sites without an existing mine and on areas outside the boundary of a known mineral deposit that contain proven and probable reserves are recorded as exploration expenditures and are expensed as incurred.
Drilling and related costs incurred to define and delineate a residual mineral deposit that has not been classified as proven and probable reserves at a development stage or production stage mine are capitalized when management determines that there is sufficient evidence that the expenditure will result in a future economic benefit to the Company in the accounting period when the expenditure is made. Management evaluates whether or not there is sufficient geologic and economic certainty of being able to convert a residual mineral deposit into a proven and probable reserve at a development stage or production stage mine, based on the known geologic and metallurgy, existing mining and processing facilities, operating permits and environmental programs. Therefore prior to
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There is a probable future benefit;
AngloGold Ashanti can obtain the benefit and control access to it; and
The transaction or event giving rise to it has already occurred.
The Company understands that there is diversity in practice within the mining industry, in that some companies expense the drilling and related costs incurred to define and delineate residual mineral deposits that have not been classified as proven and probable reserves at a development stage or production stage mine. Had AngloGold Ashanti expensed such costs as incurred, net income, earnings per share and retained earnings would have been lower by approximately the following amounts:
| 2010 | 2009 | 2008 | ||||||||||
| Net income ($ millions) | 27 | 16 | 10 | |||||||||
Earnings per share (cents)(1) | 7 | 4 | 3 | |||||||||
| Retained income — January 1 ($ millions) | 86 | 70 | 60 | |||||||||
| Retained income — December 31 ($ millions) | 113 | 86 | 70 | |||||||||
(1) | Impact per basic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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AngloGold Ashanti accounts for contingencies in accordance with the FASB ASC guidance for contingencies. It requires the recording of an estimated loss for a loss contingency when information available indicates that it is probable that an asset has been impaired or a liability has been incurred, and the amount of the loss can be reasonably estimated. Accounting for contingencies such as legal and income tax matters requires the use of judgments to determine the amount to be recorded in the financial statements. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur and typically, those events will occur a number of years into the future. The Company assesses such contingent liabilities, which inherently involves the exercise of significant management judgment and estimates of the outcome of future events. Also, see “Taxation” discussed below.
Impairment of long-lived assets
AngloGold Ashanti’s long-lived assets include property, plant and equipment, acquired properties, goodwill and other tangible assets. In assessing the potential impairment of its long-lived assets held for use, the Company must make assumptions regarding estimated future cash flows and other factors relating to the respective assets. To the extent that the carrying value of the long-lived asset as recorded in the consolidated financial statements exceeds the undiscounted cash flows associated with these assets, an impairment charge is recognized in the consolidated financial statements based on the fair value of the asset. The Company performs impairment tests for goodwill at least annually during the fourth quarter and whenever certain indicators of impairment exist. Impairment calculation assumptions are included in notes to the consolidated financial statements —– Note 5 “Costs and expenses”.
Taxation
AngloGold Ashanti follows the liability method of accounting for deferred taxation whereby the Company recognizes the tax consequences of temporary differences by applying current statutory tax rates applicable to future years to differences between financial statement amounts and the tax bases of certain assets and liabilities. Changes in deferred tax assets and liabilities include the impact of any tax rate changes enacted during the year. Deferred tax is estimated at the future average anticipated taxation rates at which temporary differences are expected to reverse. Future average anticipated taxation rates are determined from revenue and expenditure outlined in life-of-mine business plans that are revised annually. When a deferred tax asset arises the Company reviews the asset for recoverability and establishes a valuation allowance where the Company determines it is more likely than not that such an asset will not be realized. These determinations are based on the projected realization of tax allowances and tax losses. If these tax assets are not to be realized, an adjustment to the valuation allowance would be required, which would be charged to income in the period that the determination was made.
If the Company determines that it would be able to realize tax assets in the future in excess of the recorded amount thereof, an adjustment to reduce the valuation allowance would be recorded as a credit to income in the period that the determination is made. Management classifies taxes payable based on the likelihood of the amount required to be settled within twelve months, which are then reported within current liabilities. All other taxes payable are recorded within non-current liabilities.
Provision for environmental rehabilitation
AngloGold Ashanti’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Company recognizes management’s best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Changes in Mineral Reserves could similarly affect the useful lives of assets depreciated on a straight-line-basis, where those lives are limited to the life of mine.
171
Discounted closure liabilities (excluding joint ventures) increased from $530 million in 2010 to $653 million in 2011. This change is largely attributable to a change in mine plans resulting in accelerated cash flows, change in economic assumptions and discount rates, change in design of tailings storage facilities and change in methodology following requests from the Ghana Environmental Protection Agency.
172
The recovery of gold from certain oxide ores is achieved through the heap-leaching process. Under this method, ore is placed on leach pads where it is permeated with a chemical solution, which dissolves the gold contained in the ore. The resulting “pregnant” solution is further processed in a process plant where the gold is recovered. For accounting purposes, costs are added to leach pads based on current mining costs, including applicable depreciation, depletion and amortization relating to mining operations. Costs are removed from the leach pad as ounces are recovered in circuit at the leach plant based on the average cost per recoverable ounce of gold on the leach pad.
The engineering estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on metallurgical testing and ore type). Leach pad production cycles vary from several months to multiple years dependant on the height of the heap leach pad. The increased height of the pad and the resultant associated lengthy transport time of the solution to the internal collection ponds from which the pregnant solution is pumped significantly increase the time from placement of ore to the ultimate gold recovery.
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical balancing process is constantly monitored and the engineering estimates are refined based on actual results over time. Historically, AngloGold Ashanti’s operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads. For operations with long-term leach production cycles, variations in recovery estimates from new metallurgical data or production variances would be accounted for as an adjustment to the recoverable ounces and the average cost per recoverable ounce of gold on the leach pad. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from a pad will not be known until the leaching process has been concluded.
The costs of materials currently contained on the leach pad are reported as a separate line item. As at December 31, 2011 and 2010, and 2009, $91$98 million and $40$91 million, respectively, was classified as short-term as the Company expects the related gold to be recovered within twelve months. The short-term portion of materials on the leach pad is determined by multiplying the average cost per ounce in inventory by the expected production ounces for the next twelve months. Heap-leach pad inventory occurs in two forms: (1) gold recoverable but yet to be dissolved (i.e. gold still in the ore), and (2) gold recoverable from gold dissolved in solution within the leach pad (i.e. pore water). This estimate calculation was used in determining the short-term portion of materials on the leach pad as at December 31, 2010.2011. As at December 31, 2010, $3312011, $393 million was classified as long-term compared with $324$331 million as at December 31, 2009.
1732010.
Research and development expenditure included in the income statement amounted to $1 million, $4 million and $3 million during 2011, 2010 and $1 million during 2010, 2009 and 2008 respectively.
For a discussion of trends affecting AngloGold Ashanti’s business and operations, see “Item 5A.: Gold production for 2011 is forecast to be between 4.55 million and 4.75 million ounces. Our production outlook is subject to, among other things, unplanned stoppages and safety-related interventions and the stability and availability of power in South Africa and other operational risks generally, which may affect production. See “Certain Forward-Looking Statements” which are included in this annual report.
AngloGold Ashanti does not engage in off-balance sheet financing activities, and does not have any off-balance sheet debt obligations, special purpose entities or unconsolidated associates. The most significant off-balance sheet item is the unaccrued future rehabilitation obligations, of which is discussed below. Normal purchase and normal sale exempt contracts which classified as an off-balance sheet item were redesignated as non-hedge derivatives during 2009.
See note 2019 to the consolidated financial statements “Provision for environmental rehabilitation”.
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As at December 31, 20102011 AngloGold Ashanti had the following known contractual obligations:
| Less than | 1-3 | 3-5 | More than | |||||||||||||||||
| Contractual Obligations | Total | 1 year | years | years | 5 years | |||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
Long-term debt obligations including interest(1) | 3,935 | 252 | 1,146 | 829 | 1,708 | |||||||||||||||
| Capital lease obligations | 92 | 10 | 19 | 15 | 48 | |||||||||||||||
| Operating lease obligations | 27 | 18 | 8 | 1 | — | |||||||||||||||
| Purchase obligations | ||||||||||||||||||||
- Contracted capital expenditure(2) | 176 | 176 | — | — | — | |||||||||||||||
- Other purchase obligations(3) | 538 | 398 | 81 | 41 | 18 | |||||||||||||||
Environmental rehabilitation costs(4) | 2,512 | 84 | 48 | 67 | 2,313 | |||||||||||||||
Derivatives(5) | 176 | — | — | 176 | — | |||||||||||||||
Pensions and other post retirement medical obligations(6) | 194 | 16 | 35 | 35 | 108 | |||||||||||||||
Uncertain taxes(7) | 52 | — | 46 | — | 6 | |||||||||||||||
Total | 7,702 | 954 | 1,383 | 1,164 | 4,201 | |||||||||||||||
| Contractual obligations | ||||||||||||||||||||
| Less than | More than | |||||||||||||||||||
| Total | 1 year | 1-3 | 3-5 | 5 years | ||||||||||||||||
| years | years | |||||||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
Long-term debt obligations including interest(1) | 3,631 | 152 | 1,721 | 126 | 1,632 | |||||||||||||||
Capital lease obligations | 105 | 20 | 38 | 12 | 35 | |||||||||||||||
Operating lease obligations | 25 | 23 | 2 | - | - | |||||||||||||||
Purchase obligations | ||||||||||||||||||||
- Contracted capital expenditure(2) | 202 | 202 | - | - | - | |||||||||||||||
- Other purchase obligations(3) | 463 | 334 | 68 | 42 | 19 | |||||||||||||||
Environmental rehabilitation costs(4) | 2,542 | 57 | 113 | 72 | 2,300 | |||||||||||||||
Derivatives(5) | (93 | ) | - | (92 | ) | - | (1 | ) | ||||||||||||
Pensions and other post retirement medical obligations(6) | 178 | 14 | 31 | 32 | 101 | |||||||||||||||
Uncertain taxes(7) | 78 | - | 40 | - | 38 | |||||||||||||||
Total | 7,131 | 802 | 1,921 | 284 | 4,124 | |||||||||||||||
| (1) | Interest calculations are at the rate existing at the year end. Actual rates are set at floating rates for some of the debt (Refer Note |
| (2) | Represents contracted capital expenditure for which contractual obligations exist. Amounts stated include commitments of equity accounted joint ventures. |
| (3) | Other purchase obligations represent contractual obligations for mining contract services, purchase of power, supplies, consumables, inventories, explosives and activated carbon. Amounts stated exclude purchase obligations of equity accounted joint ventures. |
| (4) | Operations of gold mining companies are subject to extensive environmental regulations in the various jurisdictions in which they operate. These regulations establish certain conditions on the conduct of operations by AngloGold Ashanti. Pursuant to environmental regulations, AngloGold Ashanti is also obligated to close their operations and reclaim and rehabilitate the lands upon which it conducted its mining and gold recovery operations. The present estimated closure costs at existing operating mines and mines in various stages of closure are reflected in this table. For more information of environmental rehabilitation obligations, see |
| (5) | Estimated fair value of all derivatives. Also see “Item 5B.: Liquidity and capital resources |
| (6) | Represents payments for unfunded plans or plans with insufficient funding. |
| (7) | Certain of the uncertain tax positions will prescribe in 2013 and 2014. |
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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors
AngloGold Ashanti has a unitary board structure which comprises two executive directors and eight non-executive directors. Certain information with respect to AngloGold Ashanti’s directors as at December 31, 20102011 is set forth below:
| Year first | ||||||||||
| Name | Age | Position | appointed(1) | |||||||
| Mark Cutifani | 52 | Executive director and chief executive officer | 2007 | |||||||
| Srinivasan Venkatakrishnan | 45 | Executive director, and chief financial officer | 2005 | |||||||
Tito T Mboweni(3) | 51 | Independent non-executive director and chairman | 2010 | |||||||
Thokoana J. (James) Motlatsi(4)(5) | 59 | Independent non-executive director and deputy chairman | 1998 | |||||||
Frank B. Arisman(2) | 66 | Independent non-executive director | 1998 | |||||||
Rhidwaan Gasant(2) | 51 | Independent non-executive director | 2010 | |||||||
| William (Bill) A Nairn | 66 | Independent non-executive director | 2001 | |||||||
Lumkile W (Wiseman) Nkuhlu(2) | 66 | Independent non-executive director | 2006/2009 | |||||||
| Ferdinand Ohene-Kena | 74 | Independent non-executive director | 2010 | |||||||
| Sipho M Pityana | 51 | Independent non-executive director | 2007 | |||||||
| Name | Age | Position | Year first appointed (1) | |||
Mark Cutifani | 53 | Executive director and chief executive officer | 2007 | |||
SrinivasanVenkatakrishnan | 46 | Executive director, and chief financial officer | 2005 | |||
Tito T Mboweni(3) | 52 | Independent non-executive director and chairman | 2010 | |||
Frank B. Arisman(2) | 67 | Independent non-executive director | 1998 | |||
Rhidwaan Gasant(2) | 52 | Independent non-executive director | 2010 | |||
Nozipho January-Bardill (2) | 61 | Independent non-executive director | 2011 | |||
William (Bill) A Nairn | 67 | Independent non-executive director | 2001 | |||
Lumkile W (Wiseman) Nkuhlu(2) | 67 | Independent non-executive director | 2006/2009 | |||
Ferdinand Ohene-Kena | 75 | Independent non-executive director | 2010 | |||
Sipho M Pityana | 52 | Independent non-executive director | 2007 |
| (1) | Directors who do not have a contract of employment with the company (non-executive directors) serve for a period of three years unless re-elected. At each annual general meeting, directors appointed since the previous annual general meeting are required to retire, but are eligible for re-election. In addition, one-third of the non-executive directors (rounded down to the next whole number), must retire according to seniority or by lot but may be re-elected. |
| (2) | Member of the |
| (3) | Appointed as chairman with effect from June 1, 2010. | |
176
(52)
BA, MA (Development Economics)
Chairman and independent non-executive director
Tito Mboweni was appointed to the board and as chairmanChairman of AngloGold Ashanti on June 1, 2010. Mr MboweniHe has a long and outstanding record of public service. As Labor Minister from 1994 to 1998, heMr Mboweni was the architect of South Africa’s post-apartheid labor legislation which today continues to provide the basis for the mutually respectful labor relationships central to AngloGold Ashanti’s operational approach in South Africa. The past ten years have cemented his reputation as oneHe was the eighth Governor of the world’s foremostSouth African Reserve Bank from 1999 to 2009, and highly respected Central Bank governors.Chancellor of the University of the North from 2002 to 2005. He is also non-executive chairman of Nampak Limited and an international adviser to Goldman Sachs. Mr Mboweni is a founder member of Mboweni Brothers Investment Holdings. He is also chairman of the fund raising committee of the Nelson Mandela Children’s Hospital and a trustee and chairman of the finance committee of the Thabo Mbeki Foundation. He is chairman of theAngloGold Ashanti’s Nominations Committee and is a member of the Investment, Financial Analysis and Party Political Donations committees.
EXECUTIVE DIRECTORS:
Mr M Cutifani (53)
BE (Mining Engineering)
Deputy chairman and independent non-executiveChief Executive Officer
Mark Cutifani was appointed to the board of AngloGold Ashanti on AprilSeptember 17, 2007 and as Chief Executive Officer on October 1, 1998 and deputy chairman on May 1, 2002.
Mr S Venkatakrishnan (Venkat) (46)
BCom, ACA (ICAI)
Chief Financial Officer
Venkat joined AngloGold Ashanti on July 1, 2004, having been Chief Financial Officer at Ashanti Goldfields Company Limited (Ashanti) until that company’s merger with AngloGold Limited in May 2004. He was appointed to the board on August 1, 2005, is a member of the Safety, HealthExecutive, Risk and Sustainable Development, NominationsInformation Integrity and Remuneration committees.
NON-EXECUTIVE DIRECTORS:
Mr FB Arisman (66) (American)(67)
BA (Finance),
MSc (Finance)
Independent non-executive director
Frank Arisman joined the board of AngloGold Ashanti on April 1, 1998. He serves on six board committees: Auditis chairman of the Financial Analysis and Corporate Governance,Investment Committees, and a member of the Safety, Health and Sustainable Development, Nominations, Remuneration,Development; Audit and Corporate Governance; Nominations; Risk and Information Integrity committeesIntegrity; and chairs the Investment and the Financial Analysis committees.
Mr R Gasant (51) (South African),
(52)
CA (SA), ACIMA
Independent non-executive director
Rhidwaan Gasant was appointed to the board of AngloGold Ashanti on August 12, 2010 and2010. He is chairman of the Risk and Information Integrity Committee as well asand a member of the Audit and Corporate Governance, Nominations and Financial Analysis Committees. He is the former Chief Executive Officer of Energy Africa Limited and a former finance director of Engen Ltd and sits on the board of South African and international non-public companies in the MTN Group.
177
Mrs NP January-Bardill (61)
BA (Education), MA (Applied Linguistics)
Independent non-executive director
Nozipho January-Bardill was appointed to the board of AngloGold Ashanti on JuneOctober 1, 2010. He is the former Ghanaian Minister of Mines and Energy and is currently a member of the Ghana Judicial Council. He is the Chairman of the Ghana Minerals Commission2011 and is a member of the President’s Economic Advisory Council. Mr Ohene-KenaAudit and Corporate Governance and Nominations Committees. She recently retired from the MTN Group where she served as an Executive Director and spokesperson and on the boards of a number of operations in the MTN footprint. She is aformer South African Ambassador to Switzerland, and former Deputy Director General, Human Capital Management and Head of the Foreign Service Institute in the then Department of Foreign Affairs (now DIRCO). She was reappointed as member of the Safety, HealthUN Expert Committee on the Elimination of Racism, Racial Discrimination, Xenophobia and Sustainable Development, TransformationRelated Intolerances for a four-year period from 2012-2015 (previously from 2000-2008). She is currently the founder and Human Resources Developmentexecutive director of Bardill & Associates, a consulting company focusing on strategic communications, high-level government relations and Nominations Committees.
Mr WA Nairn (66) (South African),
(67)
BSc (Mining Engineering)
Independent non-executive director
Bill Nairn has been a member of the board of AngloGold Ashanti since January 1, 2000 and chairs the Remuneration Committee and is a member of the Safety, Health and Sustainable Development Committee. He is a member of five other committees:Development; Transformation and Human Resources Development, Investment,Development; Investment; Party Political Donations, Nominations andDonations; Risk and Information Integrity committees.Integrity; and Nominations Committees. Bill, a mining engineer, has considerable technical experience, having been the group technical directorGroup Technical Director of Anglo American plc until 2004 when he retired from the company.
Prof LW Nkuhlu (66) (South African),
(67)
BCom, CA (SA), MBA (New York University)
Independent non-executive director
Wiseman Nkuhlu was appointed to the board on August 4, 2006. He has been the chairman of the Audit and Corporate Governance Committee since May 5, 2007, having served as deputy chairman of the committee from August 4, 2006. He also serves as a member of the Nominations, Party Political Donations, Remuneration,Financial Analysis; Risk and Information Integrity; Safety, Health and Sustainable DevelopmentDevelopment; Nominations, Party Political Donations; and Risk and Information Integrity, and the Financial Analysis committees.
Mr F Ohene-Kena (75)
MSc (Engineering), DIC and ACSM
Independent non-executive director
Ferdinand (Fred) Ohene-Kena was appointed to the board of AngloGold Ashanti on June 1, 2010. He is the former Ghanaian Minister of Mines and Energy and is currently a member of the Ghana Judicial Council. He is the chairman of the Ghana Minerals Commission and a member of the President’s Economic Advisory Council. Mr Ohene-Kena is a member of the Safety, Health and Sustainable Development; Transformation and Human Resources Development; and Nominations Committees.
Mr SM Pityana (51) (South African),
(52)
BA (Hons) (Essex), MSc (London), Dtech (Honoris) (Vaal University of Technology)Technology
)
Independent non-executive director
Sipho Pityana joined the board of AngloGold Ashanti on February 13, 2007 and assumed the chairmanship of the Remuneration Committee on August 1, 2008.2007. He is a memberthe chairman of the Safety, Health and Sustainable Development Committee and is a member of the Remuneration, Party Political Donations, Investment, Nominations, Transformation and Human Resources Development,Financial Analysis, Risk and Information Integrity and the Financial Analysis committees.Transformation and Human Resources Development Committees. Sipho has extensive experience in management and finance, and has occupied strategic roles in both the public and private sectors, including that of Director General of the national departments of both labor and foreign affairs. He was formerly a senior executive of Nedbank Limited and is currently the executive chairmanExecutive Chairman of Izingwe Holdings (Proprietary) Limited, a local empowerment group and a significant investor in mining, engineering, infrastructure and logistics, and AngloGold Ashanti’s BEE partner. He serves as a non-executive directorNon-executive Director on the boards of several other South African companies.
178
Mr RJ Ruston (61)
MBA, Business, BE (Mining)
Rodney Ruston was appointed to the board of AngloGold Ashanti on January 1, 2012. Rodney, a mining engineer, has over 35 years of experience in the resources industry. He is currently the President and CEO of North American Energy Partners, a large Canadian mining and construction contracting company listed on the NYSE and the TSX.
Board movements during 2010
Mrs N P Edey retired as chairman and member of the board at the conclusion of the annual general meeting held on May 7, 2010.
In terms of the company’s memorandum and articles of association, there is no mandatory retirement age for non-executive directors. Non-executive directors do not hold service contracts with the company.
In accordance with the articles of association of AngloGold Ashanti, all non-executive directors must retire at least once every three years by rotation and may be re-elected by shareholders. At the annual general meeting held on May 7, 2010,11, 2011, Mr F B ArismanW A Nairm and Mr S M Pityana who retired by rotation and Prof L W Nkuhlu who retired in terms of the company’s articles of association at the annual general meeting made themselves available for re-election and election respectively and were appointed by shareholders at the annual general meeting.
At the annual general meeting held on May 11, 2011, Mr T T Mboweni, Mr F Ohene-Kena and Mr R Gasant who were all appointed to the board since the last annual general meeting, retired from the board in terms of the company’s articles of association, and having made themselves available for election to the board, were appointed by the shareholders. Mr W A Nairn and Mr S M Pityana who retired by rotation at the annual general meeting held on May 11, 2011 and having made themselves available for re-election, were re-elected by shareholders.
Board movements subsequent to year-end
On February 17, 2011, Dr TJanuary 1, 2012, Mr R J Motlatsi retired fromRuston joined the board.
EXECUTIVE COMMITTEE
Day-to-day management of the company’sgroup’s affairs is vested in the Executive Committee, which is chaired by the Chief Executive Officer and for executingcomprises 12 members, four of whom head the decisionsregional operations. The committee’s work is supported by country and regional management teams. During the year under review, three new members, Mike O’Hare, Ria Sanz and Italia Boninelli, were appointed to the committee.
The committee met monthly to discuss operational matters and review the programs and activities being implemented to advance the achievement of the board. The committee meets at least monthlyset of strategic goals on safety, asset portfolio-, financial-, people- and is actively involved in the strategic review of the company’s values, safety performance, operation and exploration profiles and financial status.
In addition to Mr M Cutifani and Mr S Venkatakrishnan, the two executive directors, the following make up the Executive Committee. The business experience and functions of the executive committee members of AngloGold Ashanti, as at December 31, 20102011 are as follows.
AngloGold Ashanti has determined that all members of the Executive Committee are “prescribed officers” within the meaning of section 66(10) and regulation 38 of the Companies Act of 2008.
Ms I Boninelli (55)
M (Psychology), post-graduate diploma in Labor Relations
Executive Vice President – People and Organizational Development
Italia Boninelli joined AngloGold Ashanti on October 15, 2010 as Senior Vice President: Human Resources, Strategy and Change Management and was appointed to the Executive Committee on December 1, 2011 where she is responsible for the company’s people strategy, transformation and change management initiatives. Italia has more than 25 years’ experience in human resources, marketing communications, customer relationship management and business transformation, in a variety of industries including mining, manufacturing, healthcare and banking. She is a registered industrial psychologist with the Health Professions Council of South Africa, holds a masters degree in psychology and a post-graduate diploma in labor relations.
Dr CE Carter (48),
(49)
BA (Hons), DPhil, EDP
Executive Vice President —– Business Strategy andOrganizational Effectiveness
Charles Carter has worked in the mining industry in South Africa and the USUnited States since 1991, in a range of corporate roles with Anglo American Corporation, RFC Corporate Finance and AngloGold Ashanti. He was appointed Executive Vice President —– Business Strategy in December 2007 and is currently responsible for corporate strategy and business planning, risk management, investor relations and investor relations. In late 2009, he assumed additional responsibility for the group’s Human Resources function, and now also has oversight of Project ONE’s ongoing implementation and integration into the business.
179
(48)
BCom, MBA
Executive Vice President —– Continental Africa
Richard Duffy joined Anglo American in 1987 and in 1998 was appointed executive officerExecutive Officer and managing secretaryManaging Secretary of AngloGold. In November 2000, he was appointed headHead of business planningBusiness Planning and in 2004 assumed responsibility for all new business opportunities globally. In April 2005, this role was expanded to include Greenfieldgreenfields exploration. He was appointed to the Executive Committee in August 2005. Richard was appointed as Executive Vice President —– Continental Africa in July 2008.
Mr GJ Ehm (54),
(55)
BSc Hons, MAusIMM, MAICD
Executive Vice President —– Australasia
Graham Ehm has, since 1979, gained diverse experience in mine operations and project management, covering the nickel, phosphate, copper, uranium and gold sectors. He was appointed General Manager of Sunrise Dam Gold Minegold mine in 2000, Regional Head —– Australia in 2006 and Executive Vice President —– Australasia in December 2007. He assumed the role of Executive Vice President —– Tanzania on June 1, 2009 where he led a successful implementation of a turnaround strategy for the Geita mine. Inand during August 2010, he resumed the position of Executive Vice President —– Australasia.
Mr RW Largent (50),
(51)
BSc (Min. Eng)(Mining Engineering), MBA
Executive Vice President —– Americas
Ron Largent has been with AngloGold Ashanti since 1994. He has served on the board of directors for the Colorado Mining Association, California Mining Association and Nevada Mining Association. In 2001, he was appointed general managerGeneral Manager of the Cripple Creek & Victor Gold Minegold mine and took up his current role as Executive Vice President —– Americas in December 2007.
Mr RL Lazare (54),
(55)
BA, HED, DPLR, SMP
Executive Vice President — South Africa
Robbie Lazare joined Anglo American Gold and Uranium Division in 1982, working in a variety of management posts until 1999 when he was appointed general managerGeneral Manager of TauTona. In December 2004, he was appointed an executive officerExecutive Officer with responsibility for South African operations and in July 2008, Executive Vice President —– Human Resources. From November 17, 2009, Robbie was assigned to lead a strategy review of the South African operations and is now responsible for the South Africa region as Executive Vice President — South Africa Region.
Mr AM O’Neill (53),
MP O’Hare (52)
BSc (Mining Engineering), MBA
Engineering (Mining)
Executive Vice President —– South Africa
Mike O’Hare joined Anglo American in 1977, and has held a number of positions at various gold mining operations within the group. His roles have included General Manager of Kopanang (1993), Great Noligwa (2003), Head of Mining and Mineral Resource Management Underground (2006), Vice President: Technical Support (2008), Senior Vice President: Operations and Business Planning for South Africa (2010), and in 2011, he was appointed Executive Vice President – South Africa.
Mr AM O’Neill (54)
BSc Engineering (Mining), MBA
Executive Vice President – Business and Technical Development
Tony O’Neill joined AngloGold Ashanti in July 2008 as Executive Vice President —– Business and Technical Development, having consulted to the company prior to this on its asset portfolio strategy. His extensive career in mining since 1978 included the roles of executive — operationsExecutive – Operations at Newcrest Mining Limited and executive general managerExecutive General Manager for gold at Western Mining Corporation.
Ms ME Sanz (46)
BCom LLB, H Dip Tax, Admitted Attorney
Executive Vice President — BusinessGroup General Counsel
Maria (Ria) Sanz joined AGA in June 2011 having worked in a number of industries and major corporate organizations. She has held legal roles at Investec Bank, Basil Read, Afrox and Sappi. She was also Group Head of Sustainability
180
Ms Y Simelane (46)
BA LLB, MAP,
EMPM
Senior Vice President —– Corporate Affairs
Yedwa Simelane joined AngloGold in November 2000 from the Mineworkers’ Provident Fund where she was the senior managerSenior Manager of the Fund.fund. She was appointed an executive officerExecutive Officer in May 2004 and Vice President —– Government Relations in July 2008. In November 2009, she was appointed Senior Vice President —– Corporate Affairs.
OFFICE OF THE COMPANY SECRETARY
Ms L Eatwell (56),
(57)
FCIS, FCIBM
Lynda Eatwell joined AngloGold Ashanti in 2000 as assistant company secretaryAssistant Company Secretary and was appointed company secretaryCompany Secretary in December 2006. She is responsible for ensuring statutory compliance with statutory and corporate governance requirements and the regulations of the stock exchanges on whichby AngloGold Ashanti is listed.and its subsidiaries. She also advises members of the board on their duties and responsibilities as directors.
COMPETENT PERSONS
As part of it suite of annual reports, AngloGold Ashanti produces a Mineral Resource and Ore ReservesReserve statement and all the information in this report that relates to Exploration Results, Mineral Resources and Ore ReservesReserve is based on information compiled by the Competent Persons.
During the past decade, the company has developed and implemented a rigorous system of internal and external reviews of Exploration Results, Mineral Resources and Ore Reserves. A documented chain of responsibility exists from the Competent Persons at the operations to the Company’s Mineral Resource and Ore ReservesReserve Steering Committee. Accordingly, the Chairman of the Mineral Resources and Ore ReservesReserve Steering Committee, Mr V A Chamberlain, assumes responsibility for the Mineral Resource and Ore Reserve processes for AngloGold Ashanti and is satisfied that the Competent Persons have fulfilled their responsibility.
VA Chamberlain (48)
(49)
MSc (Mining Engineering), BSc (Hons) (Geology), MAusIMM
Vaughan has 2526 years experience and holds a Bachelor of Science (Honors) degree in Geology from the University of Natal and a Masters degree in Mining Engineering from the University of the Witwatersrand. He started his career with Anglo American Corporation in 1987 as a geologist at Western Deep Levels East Mine (now TauTona mine). He joined AngloGold in 1998 and currently holds the position of Senior Vice President — GeosciencesPresident: Geology and Metallurgy and is chairman of the Mineral Resources and Ore Reserves Steering Committee.
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| 6B. | COMPENSATION |
Remuneration Committee
The Remuneration Committee comprises only independent non-executive directors and is responsible for evaluating the performance of executive directors and executive management, and for setting appropriate remuneration for such officers of the company.
The performance of each executive director is assessed relative to the prevailing business climate and market conditions, as well as to annual evaluations of the achievement of key predetermined targets. Bonuses paid to executive directors are a reflection of the performance of each of the directors and the company as a whole.
The members and attendance atof the remuneration committee meetings during 2010 is2011 are reflected below:
Members
WA Nairn (Chairman)
FB Arisman
TT Mboweni
Prof LW Nkuhlu
SM Pityana
All meetings of the committee are attended by the chief executive officer and executive vice president —– human resources, except when their own remuneration or benefits are being discussed. The services of PWC (formerly PricewaterhouseCoopers)PricewaterhouseCoopers were retained to act as independent, expert advisers on executive remuneration.
Remuneration policy
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Aligning executive and management remuneration with the company’s performance and shareholder interest;
Setting remuneration standards which attract, retain and motivate a competent executive and management team;
Linking individual pay with operational and the company’s performance in relation to strategic objectives; and
Evaluating compensation of executives including approval of salary, equity and incentive based awards.
To support them in the delivery of these objectives the remuneration policy. This policy has as its objectives to:
To align the behaviour and performance of the executives with the strategic goals, all incentive plans have performance criteria in place that align targets to shareholder interest;
To attract, retain and motivate executives of the requisite caliber, executive remuneration is benchmarked against a comparator group of global and South African mining and multinational companies;
A large portion of the executives’ pay is linked to the remuneration policy and in determining executive remuneration:
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| On target | ||||||||||||||||
| BSP award | ||||||||||||||||
| (face value | ||||||||||||||||
| Maximum | On target | On target | at date of | |||||||||||||
| Position | bonus | bonus | cash bonus | grant) | ||||||||||||
| Chief executive officer | 160 | % | 80 | % | 40 | % | 40 | % | ||||||||
| Executive directors | 140 | % | 70 | % | 35 | % | 35 | % | ||||||||
| Executive management | 120 | % | 60 | % | 30 | % | 30 | % | ||||||||
| Other management | 100 | % | 50 | % | 25 | % | 25 | % | ||||||||
On-going evaluation of the medium-executive pay elements led to long-term.
Through 2011 the following changes occurred to continue with the delivery of these principles:
Executive LTIP allocations were increased following the benchmarking review as follows:
| Previous maximum | Increased maximum | |||
| Designation | grant of basic salary | grant of basic salary | ||
Chief executive officer | 120% | 160% | ||
Executive directors | 100% | 140% | ||
Executive management | 80% | 100% |
The Remuneration Committee approved a rightrevised Remuneration Policy that was communicated and ratified at the May 2011 annual general meeting; and
A review was done on the existing change of control conditions and although the decision has been made to receive sharesleave them in place due to the current economic environment and on-going change in the company, subject firstly to performance conditions being achieved over the specified performance period and secondly to continued employment with the group.
The Remuneration Committee is comfortable that these principles continue to support the company’s strategy.delivery of its objectives.
Remuneration process
How we determine remuneration
Executive remuneration is structured to be competitive in a global market where growth and a scarcity in key talent and skills are an on-going dilemma, whilst still recognizing cost and shareholder value as key drivers in policy delivery. AngloGold Ashanti executives are benchmarked against an identified global group of competitors. AngloGold Ashanti’s size and complexity as well as each executive individual role and personal performance are reviewed annually against the benchmark group from a base pay, guaranteed pay and variable pay perspective. The LTIP awards are granted with a three-year vesting period. For awards grantedbenchmark survey for 2011 was completed by PricewaterhouseCoopers, using both benchmark data as well as data provided in 2009,remuneration reports of the company targets were based on measures including:
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Our salary benchmarks are targeted at the market median, however, where there is nine months. Executive vice presidents have a six-month notice period, while senior vice presidentsshortage of specialist and/or key technical skills, higher than the benchmark median is paid, targeting the 75th percentile.
Annual increases for executives are effective on January 1, of each year.
Executives are remunerated on a principle of base pay plus benefits; medical coverage, retirement/pension and vice presidents have three-month notice periods. The contracts also provide for a payment of twenty-four months’ salary in the case of the chief executive officer; eighteen months in the case of the chief financial officerrisk cover do however differ based on nationality, country legislation and twelve months in the case of other executive management, in the eventhistoric offerings. All executives are members of a material change in role, responsibilities or remuneration, including loss of employment, following a new shareholder assuming control of the company.
Executive directors do not receive payment of directors’directors fees or committee feesfees.
Retirement benefits/pension
Retirement benefits are granted to all executives. All new executives and travel allowances.
186employees receive retirement benefits under defined contribution plans. Legacy defined benefit plans remain in place for some executives. Contributions vary from those prescribed by the USA 401(k) defined contribution fund, to the legacy defined benefit plan.
| Pre-tax gain on share | ||||||||||||||||||||||||||||||||
| Appointment(2) | Performance related | Pension scheme | Other | Encashed | options | |||||||||||||||||||||||||||
| All figures in $000(1) | From/To | Salary | payments(3) | contributions(4) | Benefits(4) | leave(5) | exercised(6) | Total | ||||||||||||||||||||||||
Executive directors’ remuneration 2010 | ||||||||||||||||||||||||||||||||
| M Cutifani | Full year | 1,567 | 1,170 | 286 | 47 | — | — | 3,070 | ||||||||||||||||||||||||
| S Venkatakrishnan | Full year | 961 | 681 | 179 | 303 | — | — | 2,124 | ||||||||||||||||||||||||
| 2,528 | 1,851 | 465 | 350 | — | — | 5,194 | ||||||||||||||||||||||||||
Executive management (non-directors) — top three earners remuneration 2010 | ||||||||||||||||||||||||||||||||
| Top earner 1 | Full year | 1,209 | 545 | 269 | 117 | — | — | 2,140 | ||||||||||||||||||||||||
| Top earner 2 | Full year | 626 | 339 | 109 | 254 | — | 409 | 1,737 | ||||||||||||||||||||||||
| Top earner 3 | Full year | 547 | 233 | 57 | 162 | — | 456 | 1,455 | ||||||||||||||||||||||||
| 2,382 | 1,117 | 435 | 533 | — | 865 | 5,332 | ||||||||||||||||||||||||||
Remainder of Executive management’s remuneration 2010 representing 5 executive managers | Full year | 2,627 | 1,501 | 360 | 720 | 19 | 389 | 5,616 | ||||||||||||||||||||||||
Total Remuneration 2010, comprising: | ||||||||||||||||||||||||||||||||
Executive directors and Executive management (incorporating Top-three earners and remaining executive management) | 7,537 | 4,469 | 1,260 | 1,603 | 19 | 1,254 | 16,142 | |||||||||||||||||||||||||
Executive directors’ remuneration 2009 | ||||||||||||||||||||||||||||||||
| M Cutifani | Full year | 1,294 | 910 | 228 | 76 | — | — | 2,508 | ||||||||||||||||||||||||
| S Venkatakrishnan | Full year | 785 | 512 | 143 | 232 | — | 313 | 1,985 | ||||||||||||||||||||||||
| 2,079 | 1,422 | 371 | 308 | — | 313 | 4,493 | ||||||||||||||||||||||||||
Executive management’s remuneration 2009 representing 10 executive management | Full year | 4,488 | 2,029 | 537 | 1,208 | 47 | 2,430 | 10,739 | ||||||||||||||||||||||||
Total executive directors, and executive management remuneration 2009 | 6,567 | 3,451 | 908 | 1,516 | 47 | 2,743 | 10,143 | |||||||||||||||||||||||||
2011
All figures in $000(1)
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M Cutifani | Full year | 1 735 | 1 150 | 317 | 634 | 3 836 | - | 3 836 | ||||||||||||||||||||||||||
S Venkatakrishnan | Full year | 1 074 | 609 | 163 | 411 | 2 257 | - | 2 257 | ||||||||||||||||||||||||||
Total executive directors(6) | 2 809 | 1 759 | 480 | 1 045 | 6 093 | - | 6 093 | |||||||||||||||||||||||||||
Prescribed officers | ||||||||||||||||||||||||||||||||||
I Boninelli | From November 1, 2011 | 103 | 323 | 11 | 1 | 438 | - | 438 | ||||||||||||||||||||||||||
CE Carter | Full year | 704 | 332 | 75 | 201 | 1 312 | 353 | 1 665 | ||||||||||||||||||||||||||
RN Duffy | Full year | 712 | 335 | 147 | 222 | 1 416 | 172 | 1 588 | ||||||||||||||||||||||||||
GJ Ehm(7)(9) | Full year | 586 | 279 | 83 | 326 | 1 274 | 833 | 2 107 | ||||||||||||||||||||||||||
RW Largent | Full year | 671 | 313 | 42 | 259 | 1 285 | - | 1 285 | ||||||||||||||||||||||||||
RL Lazare(7)(8)(9) | Full year | 707 | 634 | 138 | 567 | 2 046 | 1 001 | 3 047 | ||||||||||||||||||||||||||
MP O’Hare | From June 1, 2011 | 357 | 287 | 71 | 534 | 1 249 | 284 | 1 533 | ||||||||||||||||||||||||||
AM O’Neill(7) | Full year | 1 608 | 624 | 132 | 151 | 2 515 | - | 2 515 | ||||||||||||||||||||||||||
ME Sanz | From June 13, 2011 | 232 | 197 | 24 | 106 | 559 | - | 559 | ||||||||||||||||||||||||||
TML Setiloane | To August 31, 2011 | 388 | 161 | 42 | 197 | 788 | - | 788 | ||||||||||||||||||||||||||
YZ Simelane | Full year | 440 | 194 | 83 | 23 | 740 | 720 | 1 460 | ||||||||||||||||||||||||||
Total Prescribed Officers | 6 508 | 3 679 | 848 | 2 587 | 13 622 | 3 363 | 16 985 | |||||||||||||||||||||||||||
Total top executive management remuneration 2011 | 9 317 | 5 438 | 1 328 | 3 632 | 19 715 | 3 363 | 23 078 | |||||||||||||||||||||||||||
2010
($000)
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M Cutifani | Full year | 1,567 | 1,170 | 286 | 47 | 3,070 | - | 3,070 | ||||||||||||||||||||||||||
S Venkatakrishnan | Full year | 961 | 681 | 179 | 303 | 2,124 | - | 2,124 | ||||||||||||||||||||||||||
Total executive directors(6) | 2,528 | 1,851 | 465 | 350 | 5,194 | - | 5,194 | |||||||||||||||||||||||||||
Prescribed officers | ||||||||||||||||||||||||||||||||||
I Boninelli | Appointed during 2011 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
CE Carter | Full year | 633 | 351 | 59 | 182 | 1,225 | - | 1,225 | ||||||||||||||||||||||||||
RN Duffy | Full year | 665 | 283 | 130 | 204 | 1,282 | - | 1,282 | ||||||||||||||||||||||||||
GJ Ehm(7) | Full year | 391 | 315 | 65 | 133 | 904 | - | 904 | ||||||||||||||||||||||||||
RW Largent | Full year | 529 | 353 | 40 | 217 | 1,139 | - | 1,139 | ||||||||||||||||||||||||||
RL Lazare(7) | Full year | 626 | 338 | 109 | 254 | 1,327 | 409 | 1,736 | ||||||||||||||||||||||||||
MP O’Hare | Appointed during 2011 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
AM O’Neill(7) | Full year | 1,209 | 545 | 269 | 117 | 2,140 | - | 2,140 | ||||||||||||||||||||||||||
ME Sanz | Appointed during 2011 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
TML Setiloane | Full year | 548 | 233 | 58 | 162 | 1,001 | 456 | 1,457 | ||||||||||||||||||||||||||
YZ Simelane | Full year | 409 | 199 | 66 | 4 | 678 | 389 | 1,067 | ||||||||||||||||||||||||||
Total Prescribed Officers | 5,010 | 2,617 | 796 | 1,273 | 9,696 | 1,254 | 10,950 | |||||||||||||||||||||||||||
Total executive director and executive management remuneration 2010 | 7,538 | 4,468 | 1,261 | 1,623 | 14,890 | 1,254 | 16,144 | |||||||||||||||||||||||||||
| (1) | Where directors’ compensation is paid in South African rands, for the purposes of this annual report on Form 20-F, the rand values have been converted to US dollar using the following year-to-date average rate of exchange |
| (2) | Salaries are disclosed only for the period from or to which office was held. |
| (3) | In order to more accurately disclose remuneration received/receivable by executive directors and executive management, the tables above include the performance related payments calculated on the year’s financial results. |
| (4) | Includes health care, personal travel and retention payments. |
| (5) | Pursuant to AngloGold Ashanti’s policy regarding the number of leave days that may be accrued, all surplus leave days accrued are compulsorily encashed. |
| (6) |
|
| (7) | Pursuant to King III, companies are required to disclose the |
| (8) | Performance-related payments include cash payments in lieu of |
| (9) | Other benefits and encashed leave includes an adjustment to |
Rounding of figures may result in computational discrepancies.
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The fees of non-executive directors are fixed by shareholders at the annual general meeting and, other than the fees they receive for their participation on board committees and allowance for travelling internationally to attend board meetings, non-executive directors receive no further payments from the company and are precluded from participation in the company’s share incentive scheme.
At the annual general meeting of shareholders held on May 11, 2011, shareholders approved an increase to the fees payable to non-executive directors.
The increases as approved by shareholders are shown below:
| 1.1 | Non-Executive Directors’ fees for six board meetings per annum |
1.1 | Board Meetings | Fees to May 31, 2011 per annum | Fees from June 1, 2011 per annum | ||||||||
1.1.1 | South African resident Chairman | R1,520,300 | R1,672,330 | ||||||||
1.1.2 | South African resident Deputy Chairman | R650,000 | R747,500 | ||||||||
1.1.3 | South African resident directors | R270,000 | R310,500 | ||||||||
1.1.4 | Non-South African resident directors who are resident in Africa | US$33,750 | US$42,188 | ||||||||
1.1.5 | Non-South African resident directors who are resident in jurisdictions other than Africa | US$60,000 | US$66,000 | ||||||||
| 1.2 | Allowance for attendance by non-executive directors at additional board meetings |
Each non-executive director will be entitled to an allowance for each board meeting attended by such director, in addition to the six scheduled board meetings per annum, as follows:
1.2 | Additional Board Meetings | Fees to May 31, 2011 per meeting | ||||||
| Fees from June 1, 2011 per meeting | ||||||||
1.2.1 | South African resident Chairman | R78,000 | R85,800 | |||||
1.2.2 | South African resident Deputy Chairman | R32,400 | R37,260 | |||||
1.2.3 | South African resident directors | R16,000 | R18,400 | |||||
1.2.4 | Non-South African resident directors who are resident in Africa | US$2,000 | US$2,500 | |||||
1.2.5 | Non-South African resident directors who are resident in jurisdictions other than Africa | US$3,000 | US$3,300 |
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| 1.3 | Travel allowance to be paid to non-executive directors who travel from outside South Africa to attend board meetings |
Each non-executive director who is not in South Africa and who travels to attend board meetings will be entitled to receive a travel allowance on the basis set out below. In addition to the travel allowance payable, the company will cover all accommodation and sundry costs. The travel allowance for directors outside South Africa who attend board meetings is as follows:
1.3 | Additional Board Meetings | Fees to | ||||||
May 31, 2011 per meeting | Fees from June 1, 2011 per meeting | |||||||
1.3.1 | South African resident directors | Rnil | Rnil | |||||
1.3.2 | Non-South African resident who are resident in Africa | US$6,000 | US$7,500 | |||||
1.3.3 | Non-South African resident directors who are resident in jurisdictions other than Africa | US$8,000 | US$8,800 |
| 2.1 | Board committee fees payable to non-executive directors |
The fee paid to each non-executive director in respect of such director’s membership of a committee of the board is as follows:
2.1 | Board Committee Meetings | Fees to May 31, 2011 per annum | Fees from June 1, 2011 per annum | |||||
Audit and Corporate Governance Committee | ||||||||
2.1.1 | Chairman | R160,000 | R184,000 | |||||
2.1.2 | Member | R135,000 | R155,250 | |||||
2.1.3 | Member | US$16,875 | US$21,094 | |||||
2.1.4 | Member | US$25,315 | US$27,847 | |||||
Other Committees (being Investment, Remuneration, Safety, Health and Sustainable Development, Transformation and Human Resource Development, Risk and Information Integrity and such other committees of the board as may be established from time to time) | ||||||||
2.1.5 | Chairman | R130,000 | R149,500 | |||||
2.1.6 | Chairman | US$16,250 | US$20,313 | |||||
2.1.7 | Chairman | US$25,000 | US$27,500 | |||||
2.1.8 | Member | R110,000 | R126,500 | |||||
2.1.9 | Member | US$13,750 | US$17,188 | |||||
2.1.10 | Member | US$20,000 | US$22,000 |
| 2.2 | Fees payable to non-executive directors in respect of their attendance at meetings of committees of the board which meet on an ad hoc basis |
Each non-executive director will be entitled to an allowance for each board committee meeting attended by such director in respect of those committees which meet on an ad hoc basis, including, the Financial Analysis committee, the Party Political Donations committee, the Nominations committee and any special purpose committee established by the board as follows:
2.2 |
Board Committee and Special Purpose Committee | Fees to May 31, 2011 per meeting | Fees from June 1, 2011 per meeting | ||||||
2.2.1 | South African resident directors | R16,200 | R18,630 | |||||
2.2.2 | Non-South African resident who are resident in Africa | US$2,025 | US$2,531 | |||||
2.2.3 | Non-South African resident directors who are resident in jurisdictions other than Africa | US$3,000 | US$3,300 | |||||
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| Com- | Com- | |||||||||||||||||||||||||||||||||||||||
| Directors’ | mittee | Directors’ | mittee | |||||||||||||||||||||||||||||||||||||
| All figures stated to the | Appointment | fees(3) | fees | Travel(4) | Total | fees(3) | fees | Travel(4) | Total | |||||||||||||||||||||||||||||||
| nearest $000(1) | From(2) | To(2) | 2010 | 2009 | ||||||||||||||||||||||||||||||||||||
| RP Edey (outgoing Chairman) | May 7, 10 | 114 | 30 | 20 | 164 | 204 | 38 | 40 | 282 | |||||||||||||||||||||||||||||||
| T T Mboweni (Chairman) | June 1, 10 | 121 | 14 | — | 136 | — | — | — | — | |||||||||||||||||||||||||||||||
| Dr TJ Motlatsi (Deputy chairman) | 86 | 51 | — | 137 | 67 | 33 | — | 100 | ||||||||||||||||||||||||||||||||
| FB Arisman | 51 | 86 | 32 | 169 | 40 | 36 | 26 | 102 | ||||||||||||||||||||||||||||||||
| RE Bannerman | May 15, 09 | — | — | — | — | 14 | 8 | 10 | 32 | |||||||||||||||||||||||||||||||
| R Gasant | Aug 12, 10 | 15 | 16 | — | 31 | — | — | — | — | |||||||||||||||||||||||||||||||
| JH Mensah | May 15, 09 | — | — | — | — | 14 | 12 | 5 | 31 | |||||||||||||||||||||||||||||||
| WA Nairn | 36 | 58 | — | 94 | 27 | 34 | — | 61 | ||||||||||||||||||||||||||||||||
Prof LW Nkuhlu(5) | 36 | 67 | — | 103 | 29 | 31 | — | 60 | ||||||||||||||||||||||||||||||||
| F Ohene-Kena | June 1, 10 | 19 | 15 | 11 | 45 | — | — | — | — | |||||||||||||||||||||||||||||||
| SM Pityana | 36 | 73 | — | 109 | 27 | 47 | — | 74 | ||||||||||||||||||||||||||||||||
Total — non-executive directors | 514 | 410 | 63 | 987 | 422 | 239 | 81 | 742 | ||||||||||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||||||||||||
| All figures stated to the nearest $000(1) | Appointment | Directors’ fees(3) | Com- mittee fees | Travel | Total | Directors’ fees(3) | Com- mittee fees | Travel | Total | |||||||||||||||||||||||||
| From(2) | To(2) | |||||||||||||||||||||||||||||||||
T TMboweni (Chairman) | June 1, 10 | 245 | 57 | – | 302 | 121 | 14 | – | 136 | |||||||||||||||||||||||||
RP Edey | May 7, 10 | – | – | – | – | 114 | 30 | 20 | 164 | |||||||||||||||||||||||||
Dr TJ Motlatsi | Feb 17, 11 | 22 | 14 | – | 36 | 86 | 51 | – | 137 | |||||||||||||||||||||||||
FB Arisman | 76 | 132 | 50 | 258 | 51 | 86 | 32 | 169 | ||||||||||||||||||||||||||
R Gasant | Aug 12, 10 | 50 | 52 | – | 102 | 15 | 16 | – | 31 | |||||||||||||||||||||||||
NP January-Bardill | Oct 1, 11 | 11 | 6 | – | 17 | – | – | – | – | |||||||||||||||||||||||||
WA Nairn | 45 | 101 | – | 146 | 36 | 58 | – | 94 | ||||||||||||||||||||||||||
Prof LW Nkuhlu | 50 | 85 | – | 135 | 36 | 67 | – | 103 | ||||||||||||||||||||||||||
F Ohene-Kena | June 1, 10 | 41 | 43 | 27 | 111 | 19 | 15 | 11 | 45 | |||||||||||||||||||||||||
SM Pityana | 43 | 95 | – | 138 | 36 | 73 | – | 109 | ||||||||||||||||||||||||||
Total – non-executive directors | 583 | 585 | 77 | 1,245 | 514 | 410 | 63 | 987 | ||||||||||||||||||||||||||
| (1) | Where non-executive directors’ compensation is paid in South African rands, for the purposes of this annual report on Form 20-F, the rand values have been converted to US dollars using the following yearly average rate of exchange: |
| (2) | Fees are disclosed only for the period from or to which, office is held. |
| (3) | At the annual general meeting of shareholders held on May |
| For six | Additional | |||||||||||
| meetings | per meeting | Travel(4) | ||||||||||
— Chairman | R1,520,300 | R78,000 | $ | 10,000 | ||||||||
— Deputy chairman | R650,000 | R32,400 | — | |||||||||
— South African resident directors | R270,000 | R16,000 | — | |||||||||
— Non-South African directors | ||||||||||||
— Living in Africa | $ | 33,750 | $ | 2,000 | $ | 6,000 | ||||||
— Living other than Africa | $ | 60,000 | $ | 3,000 | $ | 8,000 | ||||||
| Audit | ||||||||||||
| and Corporate | ||||||||||||
| Governance | Other | Ad hoc | ||||||||||
| committee | committees | committees | ||||||||||
| (per annum) | (per annum) | (per meeting) | ||||||||||
— Chairman — South African resident | R160,000 | R130,000 | — | |||||||||
— Chairman — Living in Africa | — | $ | 16,250 | — | ||||||||
— Chairman — Living other than Africa | — | $ | 25,000 | — | ||||||||
— South African resident members | R135,000 | R110,000 | R16,200 | |||||||||
— Non-South African members | ||||||||||||
— Living in Africa | $ | 16,875 | $ | 13,750 | $ | 2,025 | ||||||
— Living other than Africa | $ | 25,315 | $ | 20,000 | $ | 3,000 | ||||||
Rounding may result in computational differences.
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| 6C. | BOARD PRACTICES |
The Board of Directors
The following movements to the board’s independence criteria.
Executive directors
There iswere no mandatory retirement age for non-executive directors; however, in line with best practice in corporate governance and in accordance withchanges to the Sarbanes-Oxley Act,executive directorate during the year under review.
Non-executive directors are required to step down
Dr TJ Motlatsi retired from the board after nine consecutive years of service. The nine-year tenure could be extended at the board’s discretion and with the individual director’s consent. Mr RP Edey, the former chairmanon February 17, 2011.
Ms NP January-Bardill was appointed as a member of the board retired at the annual general meeting held on May 7, 2010 after serving the board for twelve years, eight of which were as board chairman. The independence of Mr FB Arisman, who joined the board in 1998 was evaluated by the board in February 2010. The board concluded that, his performance, skills and knowledge and his contribution to the board’s performance are of a high standard and that his independence of character and judgment are not in any way affected or impaired by the length of his service as a director. This decision was ratified at the annual general meeting held on May 7, 2010, when an extension of tenure for a further three years was approved by shareholders.
Mr RJ Ruston was appointed as a member of the board with effect from January 1, 2012.
The board’s charter sets outdirectors retiring by rotation at the powers, responsibilities, functionsforthcoming annual general meeting in terms of the articles of association are, Prof LW Nkuhlu and delegationMr WA Nairn. Both Prof Nkuhlu and Mr Nairn have made themselves available for re-election at the annual general meeting to be held on May 10, 2012.
Ms NP January-Bardill and Mr RJ Ruston, who were appointed as directors on October 1, 2011 and January 1, 2012 respectively, will retire at the annual general meeting but offer themselves for election.
In terms of authority, and the areascompany’s memorandum of responsibility expressly reservedincorporation, there is no mandatory retirement age for non-executive directors. Non-executive directors do not hold service contracts with the board. The charter covers, among others, the following key areas:
Appointment of directors
The board is authorizedauthorised by the company’s ArticlesMemorandum of AssociationIncorporation to appoint new directors based on recommendations by the Nominations Committee, provided such appointeesCommittee. Newly appointed directors are required to retire at the next annual general meeting following their appointment and stand for election by shareholders. RetirementEligibility for appointment as a director is guided by the Director’s Fit and Proper Standards Policy, requirements of non-executivethe Companies Act of 2008, King III and best practice.
Non-executive directors receive fees for their services as directors which are approved by rotation follows a staggered process with one-third of non-executive directors retiringshareholders at least every three years at the annual general meeting. The curriculum vitae of each director standing for election or re-election is made available to shareholdersmeetings. Non-executive directors do not participate in the notice of meeting circulated to shareholders prior to the annual general meeting to assist in their decision-making.
Executive directors have contracts of employment with the company. Details on the remuneration of executive and non- executive directors are presented in “Item 6.B.: Compensation.”
191
Executive Committee
The committee met monthly to discuss operational matters and review the recordsprograms and activities being implemented to advance the achievement of the company,set of strategic goals on safety, asset portfolio-, financial-, people- and environmental management as well as to external professional advisers should the need arise.
Prescribed officers
In terms of non-executive directors, including the fees received for membershipSection 66(10) together with regulation 38 of committees, are fixed by shareholders at the annual general meeting. Other than these fees and an allowance for travelling internationally to attend board meetings, non-executive directors receive no further payments from the company.
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193
Service contracts
An annual review is done of executive director and reportexecutive management service contracts. The change of control payments and conditions are subject to the board on their respective operational areas.
If AngloGold Ashanti becomes a subsidiary of another company; or substantially all of the businesses, assets and undertakings of AngloGold Ashanti become owned by any person, firm or company; or a number of shareholders holding less than 35 percent of the company’s issued share capital act in concert to gain a majority of the board held its six scheduled meetings and three special meetings to considerforce changes in the appointmentmanagement of the company; and as a new board chairmanconsequence of this the Executive Committee member’s employment is terminated as a result of an involuntary termination or the committee member’s role is significantly diminished and to approve various financial transactions thatemployment conditions are reduced.
In 2011, the notice periods and change of control clauses were undertaken byaligned as per the company. In addition, two sub-committee meetings were held to approve various corporate reports including the 2009 annual financial statements and the annual report on Form 20-F (US GAAP Report for 2009).
Executive committee member |
| control | ||
Chief executive officer |
Chief financial officer | 9 months | 9 months | ||||||||||||||||
Executive Committee members | 6 months | |||||||||||||||||
194Non-executive directors do not hold service contracts with the company. Executive directors do not receive payment of directors’ fees or committee fees.
Board activities in 2011
Outside of meeting on a collective basis, individual board members, especially the chairman of the board, the chairman of the Audit and Corporate Governance Committee and the chairmen of the other board committees, actively and continuously engage with management and other stakeholders on important matters, thereby enabling the board to provide the required strategic leadership.
The following are some key actions and programs undertaken and implemented by the board in 2011 in fulfilling its functions and responsibilities regarding strategic oversight:
Discussed and approved management’s budget proposals for the 2012 financial year;
Evaluated and approved management’s five-year strategic proposals;
Examined ways of improving long-term value to shareholders;
Discussed and approved, capital expenditure proposals submitted by management on a quarterly basis;
Reviewed and approved an enterprise resource planning (ERP) project for the group;
Approved the Group Information Technology Strategic Plan;
Visited various mines and exploration sites to observe and acquire a better understanding of the operations;
Accessed the skills set of the board which resulted in the appointment of two new independent non-executive directors;
Reviewed composition of and restructured committees to enhance skills set and improve effectiveness of discussions;
Reviewed the independence of each non-executive director in accordance with policy and best practice guidelines;
Approved a formal role description for the chairman of the board;
Approved an Alternative Dispute Resolution Policy in accordance with recommendations of King III; and
Considered the necessary information to provide an assessment of internal controls.
Board committees
The board has established and delegated specific roles and responsibilities to nineten standing committees, and one management committee (theincluding the Executive Committee)Committee, to assist it in discharging its duties and responsibilities. The terms of reference of each committee are approved by the execution of its mandate. board and reviewed annually or as necessary.
All standing committees, except the Executive Committee, are chaired by independent non-executive directors and the following committees are composed of only independentcomprise non-executive directors —only – Audit and Corporate Governance, Remuneration, Nominations, Party Political DonationsRemuneration and Financial Analysis. The Executive Committee is chaired by the chief executive officer.
All committees meet quarterly in itsaccordance with their terms of reference, approved by the board and reviewed regularly to ensure that they remain in line with relevant regulations, the company’s needs and business climate and with best practice in corporate governance. During 2010, a new committee, Risk and Information Integrity Committee was established. The Treasury Committee, which was a sub-committee of the Audit and Corporate Governance Committee, was dissolved on November 9, 2010 following the elimination of the company’s hedge book, which substantially reduced the functions of that committee. Residual duties of the committee were transferred to the Audit and Corporate Governance Committee. As and when required, the board may establish ad hoc committees to address specific issues.
The Party Political Donations Committee did not meet during 2011.
Attendance at meetings by directors
| Director | Board | Audcom | Remcom | R&II | Nomcom | SHSD | THRC | INVCOM | FACOM | |||||||||||||||||||||||||||
TT Mboweni | 8/8 | – | 4/4 | – | 4/4 | – | 3/3 | 4/4 | 1/1 | |||||||||||||||||||||||||||
Dr TJ Motlatsi+ | 2/2 | – | 1/1 | – | 1/1 | 1/1 | 1/1 | – | – | |||||||||||||||||||||||||||
FB Arisman | §8/8 | 6/6 | 4/4 | 4/4 | 4/4 | 4/4 | – | 4/4 | 1/1 | |||||||||||||||||||||||||||
M Cutifani | §8/8 | – | – | 4/4 | – | 4/4 | 4/4 | 4/4 | – | |||||||||||||||||||||||||||
R Gasant | §8/8 | 6/6 | – | 4/4 | 4/4 | – | – | – | 1/1 | |||||||||||||||||||||||||||
NP January-Bardill* | 2/2 | 1/1 | – | – | 1/1 | – | – | – | – | |||||||||||||||||||||||||||
WA Nairn | §7/8 | – | 2/3 | 4/4 | 3/4 | 4/4 | 4/4 | 4/4 | – | |||||||||||||||||||||||||||
Prof LW Nkuhlu | §8/8 | 6/6 | 4/4 | 4/4 | 4/4 | 4/4 | – | – | 1/1 | |||||||||||||||||||||||||||
F Ohene-Kena | 6/8 | – | – | – | 4/4 | 4/4 | 4/4 | – | – | |||||||||||||||||||||||||||
SM Pityana | 7/8 | – | 4/4 | 4/4 | 4/4 | 4/4 | 4/4 | 4/4 | R | |||||||||||||||||||||||||||
S Venkatakrishnan | §8/8 | – | – | 4/4 | – | – | – | 4/4 | – | |||||||||||||||||||||||||||
+ Retired February 17, 2011 * Appointed on each board committee is provided below.
§ Attended two sub-committee meetings.
| Key | ||
Audcom: | Audit and Corporate Governance Committee | |
Remcom: | Remuneration Committee | |
R&II: | Risk and Information Integrity Committee | |
Nomcom: | Nominations Committee | |
SHSD: | Safety, Health and Sustainable Development Committee | |
THRC: | Transformation and Human Resources Development Committee | |
INVCOM: | Investment Committee | |
FACOM: | Financial Analysis Committee |
Audit and Corporate Governance Committee
In accordance with best practice recommendations of the AuditKing III and Corporate Governance Committee, including its chairman, comprises only independent non-executive directors, in compliance with the Sarbanes-Oxley Act of the United States, and the guidelinesmembership of King III. All threethis committee comprises four independent non-executive directors. Several members of the committee have considerable financial knowledgeexecutive team and experience to help oversee and guidemanagement, including the board andChief Executive Officer, the company in respectChief Financial Officer, the Chief Accounting Officer, the Group Internal Auditor, Financial Controllers at the regional operations as well as the external auditors attended the committee’s quarterly meetings. Members of the audit and corporate governance functions.
Pursuant to the Companies Act of 2008, King III and Corporate Governance Committee to serve as membersbest practice, the committee, amongst others:
Reviewed and approved the external auditors’ fees and the integrated audit plan for the 2011 financial year;
Reviewed the performance of the committeeexternal auditors and recommended their reappointment;
Considered, and pre-approved, on a quarterly basis, non-audit services provided by all external auditors to the group;
Reviewed the independence of the external audit team and audit partner and concluded that they were independent for the next2011 audit year;
Reviewed the 2010 annual reports and 2011 quarterly reports on behalf of the board.
Received and reviewed, on a quarterly basis, the use of the company’s whistle-blowing facility and advised on ways to enhance its use;
Reviewed, on a quarterly basis, submissions by management on the state of the group’s financial year. In lineaffairs, internal control environment and auditing and reporting thereof to the board;
Reviewed the expertise, resources and experience of the finance function and the Chief Financial Officer;
Monitored implementation of recommendations on audit findings;
Monitored the activities of the group’s internal audit function and also ensured that it was sufficiently resourced to discharge its duties;
Reviewed and approved a combined assurance framework and an integrated audit process;
Monitored, on behalf of the board, application of the principles of King III and compliance with the requirements of the Companies Act of 2008;
Received a briefing from a legal firm on the requirements of the Companies Act of 2008 so as to enable it to effectively advise on and monitor implementation of the Act by management;
Monitored developments in IFRS and US GAAP accounting standards through regular updates from management and a formal training session, with the main objective of ensuring that the company’s accounting practices complied with relevant standards;
Received quarterly briefings and updates on the roll-out of the Code of Business Principles and Ethics and matters relating to compliance;
Received and reviewed on a quarterly basis, reports on major litigations and disputed cases so as to assess their likely outcome and their potential financial and other impact on the group; and
Assisted and advised management to develop a legal and regulatory framework to monitor compliance with relevant laws and regulations.
Risk and Information Integrity Committee
This committee which was established in August 2010, held its first meeting in November 2010 and became fully operational during 2011. The committee was established to not only comply with the recommendations of King III their appointment was put before shareholders on May 7, 2010but also to improve the management of risk and information technology which are important tools for the first time andachievement of business objectives.
Below are the resolutions for each member was duly passedsalient matters deliberated on by about 98 percent of shareholders who participated in and voted at the annual general meeting. Their next re-appointments were considered and also voted on at the annual general meeting held on May 11, 2011.
Risk management:The board chairman, Mr RP Edey, resigned following his retirement fromhas ultimate responsibility for the board. Mr R Gasant was appointed as a member of the committee on August 12, 2010.
195
The committee guided management in the implementation of its 2011 risk management plan. At its meeting held in November 2011, achievements under the plan were assessed against set objectives and a significant improvement in risk management as noted; and
The Risk Management Plan for 2012, developed in line with the recommendations of King III on risk management and the terms of reference of the committee are also membersand which set out the activities of the Riskrisk management team for 2012, was reviewed and approved.
Information Integrity Committee.
A major development in Information Technology Management in 2011 was the approval of an enterprise resource planning project. The main objective of the project is to remove the unacceptable high level risk from obsolete information systems, improve the group’s decision-making capability through a financial nature, prioruniform information system throughout the organization and support ongoing organizational improvement initiatives. It will create a new information systems environment that is world class to approvalsupport the vision of AngloGold Ashanti to be the leading mining company. Other major information technology improvement activities that took place in 2011 included the following:
A Chief Information Officer was employed in August 2011 to strengthen information technology management;
An information technology plan for the AngloGold Ashanti group was considered by the board.committee and, based on its recommendations, was approved by the board on November 7, 2011. The plan will guide the implementation of information technology programs; and
An international best practice information technology governance framework and Corporate Governancethe control objectives for information technology (CoBIT), which contain a comprehensive set of IT processes and a measurement framework for measuring the maturity of those processes within a company, were adopted by the group.
Business insurance:Business insurance is a critical component of risk management in AngloGold Ashanti. The R&II committee assumed oversight responsibility for insurance matters during 2011. It reviewed the group’s insurance policies for 2011/2012 insurance year to ensure that adequate cover for the company’s assets and employees was in place.
In order to ensure that its insurance is effectively and efficiently managed, AngloGold Ashanti established AGRe Insurance Company Limited, an in-house South African registered captive insurance company in 2002, with a branch in Switzerland.
Safety, Health and Sustainable Development Committee meetings — 2010
196
Safety remains AngloGold Ashanti’s first value and continues to form a key component of management’s operational deliverables.
During 2011, the main focus of the committee’s deliberations was the implementation of safety targets under the safety improvement initiative and safety transformation. The committee ensures thatalso reviewed strategies to improve the company conducts itshealth and well-being of employees and their families especially in relation to HIV/AIDs and malaria. Illegal mining continued to raise concerns across the company’s operations, especially in an economically and socially responsible manner and in accordance with sustainable business practices and with due regard to the safety and health of its employees, communities and the protection of the natural environment.West Africa. The committee is also responsible for establishing targets in relationaddressing these concerns with a view to each of these areas. Safety, healthfinding alternative and environmental performance and relations with government, community members and other stakeholders, form an integral part of operational management.
197
The issues deliberated on at the committee’s mandate. During 2010, the committee deliberatedmeetings during 2011 are reported on the strategies and methodologies that will enhance the safety and securityin various sections of all company employees, and in particular deliberated on the safety concerns faced by the company’s South African mines.
198
199
AngloGold Ashanti subscribes to the company’s performance in respect of employment equity,South African government’s initiatives on social transformation and staff development by taking into account the legal requirementslabor localisation policies of applicable legislation and the monitoring of targets set by the company, including the monitoring of the Mining Charter in its entirety and all legislative requirements impacting on the company’s right to mine at all its operations. other operational jurisdictions.
The committee is also responsible for employee skills development in a manner that seeks to develop and retain talent, and to provide employees with the opportunity to enhance their skills and knowledge. Details of the company’s employment equity practices and performance during the year, as well as the challenges the company faces in this regard are provided in the Sustainability Review 2010 which is available on the company’s website. The committee held four scheduled quarterly meetings in 2010.
Remuneration Committee
In accordance with its mandate, the Remuneration Committee oversees matters relating to aspectsthe remuneration of the company’s financial management, including exchange and commodities markets, the hedge book management and its reduction strategies, operations cash flow requirements and asset sales.
200
Nominations Committee
During the deputy chairmanyear under review, the Nominations Committee assessed the skills mix of the board Dr TJ Motlatsi. No meeting was held in 2010. Mr TT Mboweni took overas well as the chairmanship of this committee in 2011 following Dr TJ Motlatsi’s retirement from the board.
Investment Committee
This committee deliberated on matters pertaining to the company’s share registrars on all issues affecting shareholders. The company secretarial function, in consultation with other departments, provides mandatory information required by various regulatory bodies and stock exchanges on which the company is listed. The company secretary ensures compliance with all the statutory requirements relating to the administration of the company’s share incentive scheme. She also ensures that minutes of meetings of shareholders, board and board committees are properly recorded in accordance with the South African Companies Act 61 of 1973, as amended. The company secretarial function coordinates the board’s annual evaluation process.
201
Financial Analysis Committee
In line with AngloGold Ashanti’s policy of maintaining healthy stakeholder relationships at all times, the company responded to a request by the Ethics Institute ofunions in South Africa to restructure the Black Economic Empowerment (BEE) transaction that was implemented in 2006 but which failed to deliver the expected value to employees. In April 2011, the Financial Analysis Committee examined the proposed restructured BEE transaction and, based on November 23, 2010its recommendations, the board approved the transaction which was presented to, and attendedapproved by the chairmanshareholders on May 11, 2011.
Organizational improvement projects
Embedding of the Auditmain organizational improvement initiative, Project ONE, which incorporates the Business Process Framework (BPF) and Corporate Governance Committee, who presented the key note address. The chief executive officerSystems for People (SP), continued throughout the organization. Tangible and other senior managers, as well corporate office employees participatedpositive results are being recorded in the workshop.
202group’s operations.
| 6D. | EMPLOYEES |
| 2010 | 2009 | 2008 | ||||||||||
| South Africa | 35,660 | 37,425 | 37,127 | |||||||||
| Continental Africa | 15,761 | 15,267 | 15,644 | |||||||||
| Australasia | 494 | 1,776 | 1,198 | |||||||||
| Americas | 6,582 | 5,884 | 5,588 | |||||||||
| Other, including corporate and non-gold producing subsidiaries | 3,549 | 3,012 | 3,338 | |||||||||
Total | 62,046 | 63,364 | 62,895 | |||||||||
| 2011 | 2010 | 2009 | ||||||||||
South Africa | 32,082 | 35,660 | 37,425 | |||||||||
Continental Africa | 16,539 | 15,761 | 15,267 | |||||||||
Australasia | 509 | 494 | 1,776 | |||||||||
Americas | 7,389 | 6,582 | 5,884 | |||||||||
Other, including corporate and non-gold producing subsidiaries | 4,723 | 3,549 | 3,012 | |||||||||
Total | 61,242 | 62,046 | 63,364 | |||||||||
Labor relations and collective bargaining
AngloGold Ashanti recognizes the fundamental right of freedom of association of all employees and contractors, and adheres to collective bargaining agreements with due regard to the relevant legislation in the countries in which it operates. Relations with organized labor are founded on mutual respect, and wage negotiations are conducted in line with the company’s values.
Approximately 8381 percent of AngloGold Ashanti’s full-time employees are either members of a union or are catered for through collective bargaining agreements. Exceptions are the United States and Australia, where employees are not members of unions, but where a high degree of employee participation in wage discussions is encouraged. Wage settlements are specific to each jurisdiction in which AngloGold Ashanti operates and the company’s approach is to ensure that agreements are fair but realistic, taking into account the local economic context and the impact of any settlement on the long-term viability of the business.
High levels of unionization occur at operations in South Africa, Brazil, Argentina and areas of West Africa. In 2009 wage settlements wereTanzania, although employees are free to join unions and management liaises regularly with unions represented, no single union has reached without disruptionthe minimum number of members required to labor. be officially recognized as representative for purposes of collective bargaining.
In South Africa, a two-year wage settlement was reached in August 2011 effective July 2009. 1, 2011.
In Ghana and Guinea, settlements were reached without the loss of production, however,production. However, the negotiation processes were protracted and several months were required to reach agreement.
In response to the industrial relations environment and the sometimes volatile economic and political context in which the company operates in West Africa, an integrated strategy for collective bargaining is being implemented, with the aim of creating a framework within which the company and organized labor can improve their relationship and, through collective bargaining, agree on conditions of employment in an efficient and mutually beneficial manner. The approach is a holistic one, where issues relating to the political, economic and social environment are considered in the development of this strategy.
A pro-active approach to labor relations, integrated with other management initiatives, has been adopted at AngloGold Ashanti’s operations in Argentina, where the uncertain political and economic climate has the potential to affect relations between the various labor groups and between management and employees. Frequent dialogue with union leaders at local, provincial and national level has taken place during the year. The climate among employees is also monitored, and management communicates proactively with employees to ensure that they are well informed about their conditions of employment.
The collective bargaining agreement that applies to the company’s employees at Cerro Vanguardia in Argentina is due to expire in May 2012. The trade unions have requested significant salary increases. The company and the unions have entered into a transitional agreement that provides for an average salary increase across all wage categories of approximately 17 percent and expect to negotiate a final salary increase in connection with the new collective bargaining agreement. The company may not be able to renegotiate this agreement on satisfactory terms when it expires. In particular, the new agreement may result in significantly higher labor costs for the company’s Argentine operations. The unions may also resort to industrial action in connection with the renegotiation of the agreement.
The group level,is committed to upholding the basic labor rights as expressed in an undertaking to promote internationally accepted labor relationsthe International Labour Organization (ILO) instruments and human resourceas implemented through specific practices atin the countries where AngloGold Ashanti’s operations aroundAshanti operates.
In support of these rights, AngloGold Ashanti concluded the world, a global agreement was signed between‘Agreement on the Promotion and Implementation of Good Human and Labour Relations in AngloGold Ashanti Operations Worldwide’ with the International Federation of Chemical, Energy, Mine and General Workers’ unionsWorker’s Unions (ICEM) and the company.in April 2009. The agreement sets outreflects all the commitment of both parties to respect and advance the principles and values of internationally-accepted labor relations and human resource practice, including the relevant ILO conventions and the principles of GRI and the UNGC. Its objective is to enhance principles or practices established by local regulation and collective bargaining processes at operations managed directly by AngloGold Ashanti. Provision is also made in the agreement for ongoing dialogue between the company and the ICEM at a corporate level.
203
| 6E. | SHARE OWNERSHIP |
DIRECTORS’ AND PRESCRIBED OFFICERS’ INTERESTS IN ORDINARY SHARES
The interests of the directors and prescribed officers in the ordinary shares of the company at December 31, 2010 are shown below. There have2011 which did not individually exceed 1 percent of the company’s issued ordinary share capital, were:
| ||||||||||||||||
| Beneficial | Beneficial | |||||||||||||||
| Direct | Indirect | Direct | Indirect | |||||||||||||
| ||||||||||||||||
| December 31, 2011 | December 31, 2010 | |||||||||||||||
| ||||||||||||||||
Non-executive directors | ||||||||||||||||
FB Arisman | - | 4,984 | - | 4,984 | ||||||||||||
LW Nkuhlu | - | 800 | - | 800 | ||||||||||||
| ||||||||||||||||
Total | - | 5,784 | - | 5,784 | ||||||||||||
| ||||||||||||||||
Executive directors | ||||||||||||||||
M Cutifani | 10,000 | - | 10,000 | - | ||||||||||||
S Venkatakrishnan | 10,351 | - | 10,351 | - | ||||||||||||
| ||||||||||||||||
Total | 20,351 | - | 20,351 | - | ||||||||||||
| ||||||||||||||||
Prescribed officers | ||||||||||||||||
AM O’Neill | - | 7,000 | - | 7,000 | ||||||||||||
CE Carter | 7,037 | - | 7,000 | - | ||||||||||||
| ||||||||||||||||
| 7,037 | 7,000 | 7,000 | 7,000 | |||||||||||||
| ||||||||||||||||
Grand total | 27,388 | 12,784 | 27,351 | 12,784 | ||||||||||||
| ||||||||||||||||
Other than CE Carter who sold 1,231 shares during December 2011, which settled in January 2012, there has been no changesfurther change in the above interests since December 31, 2010.
| Beneficial | ||||||||
| Direct | Indirect | |||||||
| December 31, 2010 | ||||||||
Executive directors | ||||||||
| M Cutifani | 10,000 | — | ||||||
| S Venkatakrishnan | 10,351 | — | ||||||
Total | 20,351 | — | ||||||
Non-executive directors | ||||||||
| FB Arisman | — | 4,984 | ||||||
| LW Nkuhlu | — | 800 | ||||||
Total | — | 5,784 | ||||||
Grand total | 20,351 | 5,784 | ||||||
SHARE OWNERSHIP OF EXECUTIVE OFFICERS/EXECUTIVE MANAGEMENT
Under the Listings Requirements of the JSE, AngloGold Ashanti is not required to disclose, and it does not otherwise disclose or ascertain, share ownership of individual executive officers/executive management in the share capital of AngloGold Ashanti. However, to the best of its knowledge, AngloGold Ashanti believes that AngloGold Ashanti ordinary shares held by executive officers, in aggregate;aggregate, do not exceed 1 percent of the company’s issued ordinary share capital.
DIRECTORS’ INTERESTS IN E ORDINARY SHARES
SM Pityana, an independent non-executive director of AngloGold Ashanti, has an indirect beneficial holding in the company given that he is a Trustee and beneficiary of a trust which holds a 44 percent interest in Izingwe Holdings, the company’s BEE partner. SM Pityana is the Executive Chairman of Izingwe Holdings. As at December 31, 2011, Izingwe Holdings held 1,050,000 E ordinary shares in the issued capital of the company (December 31, 2010: 1,120,000 E ordinary shares). This holding is unchanged at the date of this report.
SHARE OWNERSHIP OF EMPLOYEES
At a general meeting of shareholders held on December 11, 2006, members approved the creation of 4,280,000 E ordinary shares of 25 South African cents pursuant to an employee share ownership plan for the benefit of certain AngloGold Ashanti employees, of which the majority are historically disadvantaged South Africans as defined in the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry. For details on the E ordinary share capital, see “Item 7.:7: Shareholders and related party transactions —– E Ordinary shares”.
At a general meeting held on May 11, 2011, shareholders approved an amendment to the BEE transaction authorising an additional issue of 48,923 ordinary shares to be made to the ESOP and the reinstatement of lapsed E ordinary shares to be made. The amendment also revised changes to the vesting criteria and duration of the scheme.
On June 9, 2011, a total of 1,329,164 E ordinary shares were reinstated.
AngloGold Share Incentive Scheme
AngloGold Ashanti operates a share incentive scheme through which executive directors, executive vice presidents and management groups of the company and its subsidiaries are given the opportunity to acquire shares in the company. The objective is to incentivize such employees to identify themselves more closely with the fortunes of the group and its continued growth and to promote the retention of such employees.
Non-executive directors are not eligible for participation in the share incentive scheme.
At the annual general meeting held on May 7, 2010, shareholders authorized that 17,000,000 shares may be allocated for the purposes of the scheme. Prior to this authorization, the maximum number of shares attributable to the scheme was 2.75 percent of the total number of ordinary shares in issue from time to time. The maximum aggregate number of shares which may be acquired by any one participant in the scheme is 5 percent of the shares attributable to the scheme or 850,000 ordinary shares per employee could be issued in aggregate (2009: 498,080)(2010: 850,000).
Employees participate in the share incentive scheme to the extent that they are granted options or rights to acquire shares and accept them. All options or rights which have not been exercised within ten years from the date on which they were granted, automatically expire.
204
Although the Remuneration Committee has the discretion to incentivize employees through the issue of shares, only options or rights have so far been granted.
The type and vesting criteria of the options or rights granted are:
Time-related
The granting of time-related options was approved by shareholders at the general meeting held on June 4, 1998 and amended by shareholders at the annual general meeting held on April 30, 2002, when it was agreed that no further time-related options would be granted and allgranted. All time-related options granted hereunder will terminate on February 1, 2012, being the date on which the last options granted under this criteria may be exercised or they will expire.
Performance-related
The granting of performance-related options was approved by shareholders at the annual general meeting held on April 30, 2002 and amended at the annual general meeting held on April 29, 2005 when it was agreed that no further performance related options would be granted and all options granted hereunder will terminate on November 1, 2014, being the date on which the last options granted under this criteria may be exercised or they will expire.
Performance-related options granted vest in full, three years from the date of grant, provided that the conditions under which the options were granted are met. All options granted and outstanding vested in full on November 1, 2007.
Bonus Share Plan (BSP)
The granting of rightsawards in terms of the BSP was approved by shareholders at the annual general meeting held on April 29, 2005 and amended at the general meeting held on May 6, 2008 when shareholders approved an increase in the maximum level of the bonus payable to eligible participants, as well as shortening the vesting period. Executive directors, executive vice presidents and other management groups are eligible for participation. Each award made in respect of the BSP entitles the holder to acquire one ordinary share at “nil” cost. In respect of all awards granted to and including 2007, these awards vest in full, three years from the date of grant, provided that the participant is still in the employ of the company at the date of vesting unless an event, such as death, occurs which may result in an earlier vesting date. In respect of awards granted in 2008 and onwards, the vesting period has been shortened to 40 percent in year one and 60 percent in year two from the date of grant or, in the event that the exercising of awards only takes place in year three, then 120 percent of awards granted will be available for exercising.
Long-Term Incentive Plan (LTIP)
The granting of rightsawards in terms of the LTIP was approved by shareholders at the annual general meeting held on April 29, 2005. Executive directors, executive vice presidents and selected senior management are eligible for participation. Each award made in respect of the LTIP entitles the holder to acquire one ordinary share at “nil” cost. Awards granted vest three years from date of grant, to the extent that the stretched company performance targets, under which the rights were granted, are met and provided that the participant is still in the employ of the company, or unless an event, such as death, occurs which may result in an earlier vesting date.
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Details of the options and rights to subscribe for ordinary shares in the company granted to, and exercised by, executive directors, executive management and other managers on an aggregate basis during the year to December 31, 20102011 and subsequent to year-end are set out in the table below.
| Executive | Other | |||||||||||||||||||
| manage- | manage- | Total | ||||||||||||||||||
| M Cutifani | Venkat(1) | ment(2) | ment(2) | scheme(3) | ||||||||||||||||
Granted and outstanding at January 1, 2010 | ||||||||||||||||||||
| Number | 100,127 | 82,184 | 394,814 | 2,650,559 | 3,227,684 | |||||||||||||||
Granted during the year(4) | ||||||||||||||||||||
| Number | 77,694 | 40,617 | 142,873 | 1,181,596 | 1,442,780 | |||||||||||||||
Exercised during the year | ||||||||||||||||||||
| Number | — | — | (28,241 | ) | (795,170 | ) | (823,411 | ) | ||||||||||||
| Pre-tax gain at date of exercise (value) — R | — | — | 9,155,351 | 193,379,517 | 202,534,868 | |||||||||||||||
Lapsed during the year | ||||||||||||||||||||
| Number | — | (5,781 | ) | (17,535 | ) | (278,981 | ) | (302,297 | ) | |||||||||||
Held at December 31, 2010 | ||||||||||||||||||||
| Number | 177,821 | 117,020 | 491,911 | 2,758,004 | 3,544,756 | |||||||||||||||
Latest expiry date | Feb 23, 2020 | Feb 23, 2020 | Feb 23, 2020 | Feb 23, 2020 | Feb 23, 2020 | |||||||||||||||
Number of options and awards granted
| Balance at January 1, 2011 | Granted 2011 | Exercised 2011 | Pre-tax gains on share (R’000) | Lapsed 2011 | Balance as at | |||||||||||||||||||
Executive Directors | ||||||||||||||||||||||||
M Cutifani | 177,821 | 86,789 | - | - | 6,400 | 258,210 | ||||||||||||||||||
S Venkatakrishnan | 117,020 | 47,943 | - | - | 3,997 | 160,966 | ||||||||||||||||||
| 294,841 | 134,732 | - | - | 10,397 | 419,176 | |||||||||||||||||||
Prescribed officers(1) | ||||||||||||||||||||||||
I Boninelli | - | 8,568 | - | - | - | 8,568 | ||||||||||||||||||
CE Carter | 69,089 | 23,300 | 14,011 | 2,562 | 1,751 | 76,627 | ||||||||||||||||||
RN Duffy | 75,595 | 21,950 | 10,400 | 1,246 | 1,751 | 85,394 | ||||||||||||||||||
GJ Ehm | 53,616 | 18,702 | 21,989 | 6,042 | 1,484 | 48,845 | ||||||||||||||||||
RW Largent | 67,229 | 22,730 | - | - | 1,628 | 88,331 | ||||||||||||||||||
RL Lazare(2) | 72,894 | - | 29,279 | 7,261 | 2,042 | 41,573 | ||||||||||||||||||
MP O’Hare(4) | 58,268 | 12,852 | 15,617 | 2,060 | 1,222 | 54,281 | ||||||||||||||||||
AM O’Neill | 69,413 | 41,528 | - | - | 2,397 | 108,544 | ||||||||||||||||||
ME Sanz | - | 8,406 | - | - | - | 8,406 | ||||||||||||||||||
TML Setiloane(5) | 44,836 | 5,357 | - | - | 1,751 | 48,442 | ||||||||||||||||||
YZ Simelane | 39,239 | 12,085 | 17,856 | 5,227 | 1,460 | 32,008 | ||||||||||||||||||
| 550,179 | 175,478 | 109,152 | 24,398 | 15,486 | 601,019 | |||||||||||||||||||
Other management | 2,699,736 | 1,196,942 | 780,441 | 229,530 | 157,850 | 2,958,387 | ||||||||||||||||||
Total share incentive scheme | 3,544,756 | 1,507,152 | 889,593 | 253,928 | 183,733 | 3,978,582(6) | ||||||||||||||||||
| (1) | ||
Pursuant to | ||
| (2) | Cash in |
| (3) | The latest expiry date of all options/awards granted and outstanding at December 31, |
| (4) | Mike O’Hare was appointed to the Executive Committee with effect from June 1, 2011 and as a result of this change, 58,268 options/awards, which were previously reflected in the closing balance of “Other management”, are now reflected in the opening balance of “Prescribed officers”. |
| (5) | No longer a prescribed officer with effect from August 31, 2011. |
| (6) | Of the 3,978,582 options/awards granted and outstanding at December 31, 2011, 1,143,194 options/awards are fully vested. | |
Awards granted since 2005 have been granted at nil cost to participants.
No options/awards have been exercised by executive directors and prescribed officer subsequent to year-end.
Non-executive directors are not eligible to participate in the share incentive scheme.
Awards granted in 2011 to executive directors and executive management are as follows:
| BSP | LTIP(1) | |||||||
| M Cutifani | 25,086 | 60,940 | ||||||
| S Venkatakrishnan | 14,462 | 32,098 | ||||||
| Top 3 earners | 23,734 | 26,040 | ||||||
| Other executive management | 31,962 | 64,700 | ||||||
| Number of awards issued in | Total(1) 2012 | Total(1) 2011 | Total(1) 2010 | |||||||||
Executive Directors | ||||||||||||
M Cutifani | 112,183 | 86,789 | 77,694 | |||||||||
S Venkatakrishnan | 52,176 | 47,943 | 40,617 | |||||||||
Total executive directors | 164,359 | 134,732 | 118,311 | |||||||||
Prescribed officers | ||||||||||||
I Boninelli | 21,590 | 8,568 | - | |||||||||
CE Carter | 25,507 | 23,300 | 19,448 | |||||||||
RN Duffy | 27,790 | 21,950 | 20,298 | |||||||||
GJ Ehm | 22,286 | 18,702 | 16,307 | |||||||||
RW Largent | 26,083 | 22,730 | 21,685 | |||||||||
RL Lazare | 1,901 | - | 20,280 | |||||||||
MP O’Hare | 22,809 | 12,852 | - | |||||||||
AM O’Neill | 45,512 | 41,528 | 19,322 | |||||||||
ME Sanz | 13,387 | 8,406 | - | |||||||||
TML Setiloane | 1,263 | 5,357 | 16,786 | |||||||||
YZ Simelane | 13,350 | 12,085 | 8,747 | |||||||||
Total prescribed officers | 221,478 | 175,478 | 142,873 | |||||||||
Total awards to executive management | 385,837 | 310,210 | 261,184 | |||||||||
| (1) | ||
|
206
| Long- | Total | |||||||||||||||||||||||
| Perfor- | Bonus | Term | Share | Total | ||||||||||||||||||||
| Time- | mance | Share | Incentive | Incentive | shares | |||||||||||||||||||
| related | related | Plan(1) | Plan(1) | Scheme | issued | |||||||||||||||||||
| At January 1, 2010 | 28,252 | 639,975 | 1,295,708 | 1,263,749 | 3,227,684 | 6,100,420 | ||||||||||||||||||
| Movement during year | ||||||||||||||||||||||||
| — Granted | — | — | 811,638 | 632,142 | 1,442,780 | |||||||||||||||||||
| — Exercised | (27,611 | ) | (242,551 | ) | (468,327 | ) | (84,922 | ) | (823,411 | ) | 823,411 | |||||||||||||
| — Lapsed — terminations | — | (5,492 | ) | (86,526 | ) | (211,279 | ) | (302,297 | ) | |||||||||||||||
| At December 31, 2010 | 641 | 391,932 | 1,552,493 | 1,599,690 | 3,544,756 | 6,923,831 | ||||||||||||||||||
| Average exercise/issue price per share | R194.00 | R241.96 | R283.39 | R172.03 | R241.96 | |||||||||||||||||||
| Time- related | Perfor- mance related | Bonus Share Plan(1) | Long- Term Incentive Plan(1) | Total Share Incentive Scheme | Total shares issued | |||||||||||||||||||
At January 1, 2011 | 641 | 391,932 | 1,552,493 | 1,599,690 | 3,544,756 | 6,923,831 | ||||||||||||||||||
Movement during year | ||||||||||||||||||||||||
– Granted | - | - | 820,847 | 686,305 | 1,507,152 | |||||||||||||||||||
– Exercised | (641) | (220,788) | (466,849) | (201,315) | (889,593) | 889,593 | ||||||||||||||||||
– Lapsed – terminations | - | - | (81,113) | (102,620) | (183,733) | |||||||||||||||||||
At December 31, 2011 | - | 171,144 | 1,825,378 | 1,982,060 | 3,978,582 | 7,813,424 | ||||||||||||||||||
Average exercise/issue price per share outstanding | - | R231.98 | R306.43 | R302.69 | R301.36 | |||||||||||||||||||
Subsequent to year-end | ||||||||||||||||||||||||
– Granted | - | - | - | - | - | |||||||||||||||||||
– Exercised | - | (3,740) | (4,963) | (2,003) | (10,706) | 10,706 | ||||||||||||||||||
– Lapsed – terminations | - | - | - | - | - | |||||||||||||||||||
At January 31, 2012 | - | 167,404 | 1,820,415 | 1,980,057 | 3,967,876 | 7,824,130 | ||||||||||||||||||
| (1) | ||
BSP and LTIP awards granted at nil cost to participants. |
Effective October 15, 2008, the JSE amended Schedule 14 (Requirements for share incentive schemes) of the Listings Requirements. AngloGold Ashanti is required to amend the terms of its Share Incentive Scheme by obtaining shareholder approval to amend the total number of shares attributable to the share incentive scheme, from 2.75 percent of issued share capital from time to time, to a fixed number of shares that may be issued to the scheme. Although the amendment only had to be in place by January 1, 2011, AngloGold Ashanti sought and obtained shareholder approval at the annual general meeting held on May 7, 2010 authorizing the directors to issue up to 17,000,000 shares, which was management’s estimate of options/awards to be granted over a three-year period, including options/awards granted and outstanding as at December 31, 2010. The total number of options/awards that may be issued in aggregate to any one participant to the scheme will remain at 5 percent of the total number of shares attributable to the scheme.
Also effective October 15, 2008, the recycling of options/awards that have vested and which have been delivered and for which AngloGold Ashanti shares have been issued, is no longer allowed. The table below reflects the total number of options/awards that are unissued in terms of the share incentive scheme, as affected by this Listings Requirements rule change:
| Details | Options/Awards | ||||
Total number of | 17,000,000 | ||||
Less: | |||||
– Total number of options/awards granted and outstanding at December 31, | |||||
– Total number of options/awards exercised: | |||||
– During the period October 15, to December 31, 2008 | (101,013 | ) | |||
– During the period January 1 to December 31, 2009 | (1,131,916 | ) | |||
– During the period January 1 to December 31, 2010 | (823,411 | ) | |||
– During the period January 1 to December 31, 2011 | (889,593 | ) | |||
Total options/awards available but unissued at December 31, | |||||
207
OVERVIEW
DESCRIPTION OF ANGLOGOLD ASHANTI’S SHARE CAPITAL
AngloGold Ashanti’s share capital consists of four classes of stock:
Ordinary shares, par value 25 South African cents each (the “ordinary shares”);
E-Ordinary shares, par value 25 South African cents each (the “E-ordinary shares”);
A redeemable preference shares, par value 50 South African cents each (the “A preference shares”); and
B redeemable preference shares, par value 1 South African cent each (the “B preference shares”).
The authorized and issued share capital of AngloGold at December 31, 2010,2011, is set out below:
| Title of class | Authorized | Issued | ||||||
| Ordinary shares | 600,000,000 | 381,204,080 | ||||||
| E-Ordinary shares | 4,280,000 | 2,806,126 | ||||||
| A preference shares | 2,000,000 | 2,000,000 | ||||||
| B preference shares | 5,000,000 | 778,896 | ||||||
| ||||||||
| Title of class | Authorized | Issued | ||||||
| ||||||||
Ordinary shares | 600,000,000 | 382,242,343 | ||||||
E-Ordinary shares | 4,280,000 | 2,582,962 | ||||||
A preference shares | 2,000,000 | 2,000,000 | ||||||
B preference shares | 5,000,000 | 778,896 | ||||||
| ||||||||
All the issued ordinary shares, E ordinary shares, A redeemable preference shares and B redeemable preference shares are fully paid and are not subject to further calls or assessment by AngloGold Ashanti. For a discussion of rights attaching to the ordinary shares, E ordinary shares, the A redeemable preference shares and the B redeemable preference shares, see “Item 10B.: Memorandum and Articlesarticles of Association”association”.
The following are the movements in the ordinary issued share capital at December 31:
Ordinary shares
| Number of | Number of | Number of | ||||||||||||||||||||||
| Shares | Rand | Shares | Rand | Shares | Rand | |||||||||||||||||||
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| At January 1 | 362,240,669 | 90,560,167 | 353,483,410 | 88,370,853 | 277,457,471 | 69,364,368 | ||||||||||||||||||
| Issued during the year: | ||||||||||||||||||||||||
| - Rights offer | — | — | — | — | 69,470,442 | 17,367,611 | ||||||||||||||||||
| - Golden Cycle acquisition | — | — | — | — | 3,181,198 | 795,299 | ||||||||||||||||||
| - São Bento acquisition | — | — | — | — | 2,701,660 | 675,415 | ||||||||||||||||||
| - Equity offering to fund the initial 35 percent interest in the Kibali gold project | — | — | 7,624,162 | 1,906,041 | — | — | ||||||||||||||||||
| - Equity raising — proceeds used to part fund the hedge elimination | 18,140,000 | 4,535,000 | — | — | — | — | ||||||||||||||||||
| - Bokamoso ESOP on conversion of E ordinary shares | — | — | 1,181 | 295 | 94 | 24 | ||||||||||||||||||
| - Exercise of options by participants in the AngloGold share Incentive Scheme | 823,411 | 205,853 | 1,131,916 | 282,979 | 672,545 | 168,136 | ||||||||||||||||||
| 381,204,080 | 95,301,020 | 362,240,669 | 90,560,167 | 353,483,410 | 88,370,853 | |||||||||||||||||||
| Number of Shares | Rand | Number of Shares | Rand | Number of Shares | Rand | |||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||||
At January 1 | 381,204,080 | 95,301,020 | 362,240,669 | 90,560,167 | 353,483,410 | 88,370,853 | ||||||||||||||||
Issued during the year: | ||||||||||||||||||||||
- Equity offering to fund the initial 35 percent interest in the Kibali gold project | – | – | – | – | 7,624,162 | 1,906,041 | ||||||||||||||||
- Equity raising – proceeds used to part fund the hedge elimination | – | – | 18,140,000 | 4,535,000 | – | – | ||||||||||||||||
- Bokamoso ESOP on conversion of E ordinary shares | 60,695 | 15,174 | – | – | 1,181 | 295 | ||||||||||||||||
- Izingwe on conversion of E ordinary shares | 39,052 | 9,763 | – | – | – | – | ||||||||||||||||
- BEE transaction (as approved by shareholders on May 11, 2011) Bokamoso ESOP | 48,923 | 12,230 | – | – | – | – | ||||||||||||||||
- Exercise of options by participants in the AngloGold share Incentive Scheme | 889,593 | 222,398 | 823,411 | 205,853 | 1,131,916 | 282,979 | ||||||||||||||||
| 382,242,343 | 95,560,585 | 381,204,080 | 95,301,020 | 362,240,669 | 90,560,167 | |||||||||||||||||
During the period January 1, 20112012 to and including May 24, 2011, 269,742April 16, 2012, 168,621 ordinary shares were issued at an average issue price of R279.77R330.84 per share, resulting in 269,742382,410,964 ordinary shares being in issue at May 24, 2011.April 16, 2012. Of the 269,742168,621 ordinary shares issued during the period January 1, 20112012 to and including May 24, 2011, noApril 16, 2012, 2,269 ordinary shares were issued on conversion and cancellation of 685,87619,190 E ordinary shares in accordance with the applicable conversion formula.
208
The following are the movements in the E ordinary issued share capital at December 31:
| Number of Shares | Rand | Number of Shares | Rand | Number of Shares | Rand | |||||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||||||
At January 1 | 2,806,126 | 701,531 | 3,794,998 | 948,749 | 3,966,941 | 991,735 | ||||||||||||||||||
Reinstated | 1,329,164 | 332,291 | ||||||||||||||||||||||
Issued during the year: | ||||||||||||||||||||||||
- | Cancelled in exchange for ordinary shares in terms of the cancellation formula | (1,552,328 | ) | (388,082 | ) | (988,872 | ) | (247,218 | ) | (171,943 | ) | (42,986) | ||||||||||||
| 2,582,962 | 645,740 | 2,806,126 | 701,531 | 3,794,998 | 948,749 | |||||||||||||||||||
On December 11, 2006, shareholders in general meeting authorized the creation of a maximum of 4,280,000 E ordinary shares to be issued pursuant to an Employee Share Ownership Plan (ESOP) and a black economic empowermentBlack Economic Empowerment transaction (BEEwith Izingwe Holdings (Pty) Limited (Izingwe) – (collectively, the BEE transaction). All
At a general meeting held on May 11, 2011, shareholders approved an amendment to the BEE transaction authorizing an additional issue of 48,923 ordinary shares to be made to the ESOP and the reinstatement of lapsed E ordinary shares have been issued.
| Number of | Number of | Number of | ||||||||||||||||||||||
| Shares | Rand | Shares | Rand | Shares | Rand | |||||||||||||||||||
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| At January 1 | 3,794,998 | 948,749 | 3,966,941 | 991,735 | 4,140,230 | 1,035,057 | ||||||||||||||||||
| Issued during the year: | ||||||||||||||||||||||||
| - Cancelled in exchange for ordinary shares in terms of the cancellation formula | (988,872 | ) | (247,218 | ) | (171,943 | ) | (42,986 | ) | (173,289 | ) | (43,322 | ) | ||||||||||||
| 2,806,126 | 701,531 | 3,794,998 | 948,749 | 3,966,941 | 991,735 | |||||||||||||||||||
On June 9, 2011, a total of 1,329,164 E ordinary shares were reinstated, of which 769,164 E ordinary shares were reinstated in respect of the ESOP and 560,000 E ordinary shares were reinstated in respect of Izingwe.
In terms of the original authority granted by shareholders in 2006, on vesting, E ordinary shares arewere cancelled in exchange for ordinary shares in accordance with the cancellation formula. All E ordinary shares which are cancelled may not be re-issued and therefore, does not form part of the unissued share capital of the company.
E ordinary share capital amounting to R89,954,970R51,842,313 in respect of 988,872688,332 vested, unconverted and cancelled E ordinary shares, was transferred to ordinary share premium during 2010.2011. Prior to the amendment of the BEE transaction E ordinary shares dodid not convert to ordinary shares in the instance whenwhere the market price of an AngloGold Ashanti ordinary share iswas less than the valuestrike price of the E ordinary share as calculated in accordance with the cancellation formula.
In addition to the first tranchereinstatement of thecancelled E ordinary shares, issuedshareholders approved an amendment to the Bokamoso ESOP and to Izingwe Holdings (Pty) Limited (Izingwe) vested. In terms of the rules, if at the date of the vesting the cost price of the E Ordinary shares as calculated in accordance with the cancellation formula is greater thanthrough the market price onresetting of the last business day priorstrike price. Participants to the dateESOP and Izingwe are now guaranteed a minimum conversion price of vesting, thenR40 per E ordinary share with a maximum of R90 per E ordinary share for the conversionESOP and R70 per E ordinary share for Izingwe from a base price of theR320 and R330 per share, respectively.
E ordinary shareholders are entitled to vote at all ordinary shareholder meetings. However, they do not hold a veto right.
Dividends are payable on E ordinary shares, will be deferred. In respectin an amount equal to 50 percent of dividends payable to ordinary shareholders. The residual 50 percent of the Bokamoso ESOP and Izingwe, vesting was deferred to May 1, 2010 at which timedividend payable is taken into account in determining the cancellation formula.
E ordinary shares werewhich vest and are exchanged for ordinary shares are cancelled without benefit.
Redeemable preference shares
The A and B redeemable preference shares, all of which are held by wholly owned subsidiary, Eastvaal Gold Holdings Limited, may not be transferred and are redeemable from the realization of the assets relating to the Moab lease area after the cessation of mining operations in the area. The shares carry the right to receive dividends equivalent to the profits (net of royalty, ongoing capital expenditure and taxation) from operations in the area. No further A and B redeemable preference shares will be issued.
209
| 7A. | MAJOR SHAREHOLDERS |
| Ordinary shares held at | December 31, 2010 | December 31, 2009 | December 31, 2008 | |||||||||||||||||||||
| Number of | % Voting | Number of | % Voting | Number of | % Voting | |||||||||||||||||||
| Shareholder* | Shares | Rights | Shares | Rights | Shares | Rights | ||||||||||||||||||
| Paulson & Co., Inc | 41,000,000 | 10.76 | 42,849,864 | 11.83 | Not disclosed | |||||||||||||||||||
| Allan Gray Unit Trust Management Limited | 31,668,339 | 8.31 | 36,689,809 | 10.13 | 42,865,757 | 12.13 | ||||||||||||||||||
| Fidelity Management & Research | 28,383,749 | 7.45 | 12,862,911 | 3.55 | Not disclosed | |||||||||||||||||||
| Ordinary shares held at | December 31, 2011 | December 31, 2010 | December 31, 2009 | |||||||||||||||||||
| Shareholder* | Number of Shares | % Voting Rights | Number of Shares | % Voting Rights | Number of Shares | % Voting Rights | ||||||||||||||||
Paulson & Co., Inc | 32,570,668 | 8.52 | 41,000,000 | 10.76 | 42,849,864 | 11.83 | ||||||||||||||||
Allan Gray Unit Trust Management Limited | 24,710,806 | 6.46 | 31,668,339 | 8.31 | 36,689,809 | 10.13 | ||||||||||||||||
Fidelity Management & Research | 28,383,749 | 7.45 | ||||||||||||||||||||
*Shares may not necessarily reflect the beneficial shareholder
At December 31, 2010,2011, a total of 182,168,922164,886,294 shares (or 47.7943.14 percent of issued ordinary share capital) waswere held by The Bank of New York Mellon, as Depositary for the company’s American Depositary Receipt program. Each American Depositary Share (ADS) is equivalent to one ordinary share. At December 31, 2010,2011, the number of persons who were registered holders of ADSs was reported at 3,675.3,440. AngloGold Ashanti is aware that many ADSs are held of record by brokers and other nominees, and accordingly the above numbers are not necessarily representative of the actual number of persons who are beneficial holders of ADSs or the number of ADSs beneficially held by these persons.
All shareholders have the same voting rights.
As at December 31, 2010,2011, there were 9,0499,411 holders of record of AngloGold Ashanti ordinary shares. Of these holders 365357 had registered addresses in the United States and held a total of 69,99969,330 ordinary shares, approximately 0.01840.018 percent of the total outstanding ordinary shares. In addition, certain accounts of record with registered addresses outside the United States, including The Bank of New York Mellon, hold AngloGold Ashanti ordinary shares, in whole or in part, beneficially for United States persons.
At May 24, 2011,180,324,850April 16, 2012, 153,612,808 ADSs or approximately 47.2740.17 percent of the total issued ordinary share capital, were issued and outstanding and held of record by approximately 3,6043,350 registered holders .
Insofar as is known to AngloGold Ashanti, there was no person who, directly or indirectly, jointly or severally, exercised or could exercise control over AngloGold Ashanti, nor is AngloGold Ashanti aware of any arrangements which might result in a change in control of AngloGold Ashanti.
| 7B. | RELATED PARTY TRANSACTIONS |
Related party transactions are concluded on an arm’s length basis. The group had the following transactions with related parties during the years ended December 31, 2011, 2010 2009 and 2008:
| At December 31 | 2010 | 2009 | 2008 | |||||||||||||||||||||
| Purchases | Amounts | Purchases | Amounts | Purchases | ||||||||||||||||||||
| (by)/from | owed to/ (by) | (by)/from | owed to/ (by) | (by)/from | ||||||||||||||||||||
| related party | related party | related party | related party | related party | ||||||||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||||||
Purchases of goods and services (by)/from equity accounted joint ventures and associates | ||||||||||||||||||||||||
| Margaret Water Company | 3 | — | 1 | — | 1 | |||||||||||||||||||
| Société d’Exploitation des Mines d’Or de Sadiola S.A. | (8 | ) | (2 | ) | (10 | ) | (3 | ) | (5 | ) | ||||||||||||||
| Société d’Exploitation des Mines d’Or de Yatela S.A. | (3 | ) | — | (3 | ) | — | (1 | ) | ||||||||||||||||
| Société des Mines de Morila S.A. | (8 | ) | (1 | ) | (6 | ) | (1 | ) | (5 | ) | ||||||||||||||
| Trans-Siberian Gold plc | 1 | — | — | (1 | ) | — | ||||||||||||||||||
| (15 | ) | (3 | ) | (18 | ) | (5 | ) | (10 | ) | |||||||||||||||
210
| At December 31 | 2011 | 2010 | 2009 | |||||||||||||||||
(in millions) | Purchases (by)/from related party $ | Amounts owed to/(by) related party $ | Purchases (by)/from related party $ | Amounts owed to/ (by) related party $ | Purchases (by)/from related party $ | |||||||||||||||
| Purchases of goods and services (by)/from equity accounted joint ventures and associates | ||||||||||||||||||||
Margaret Water Company | 6 | - | 3 | - | 1 | |||||||||||||||
Société d’Exploitation des Mines d’Or de Sadiola S.A. | (12) | (2) | (8) | (2) | (10) | |||||||||||||||
Société d’Exploitation des Mines d’Or de Yatela S.A. | (2) | (1) | (3) | - | (3) | |||||||||||||||
Société des Mines de MorilaS.A. | (4) | - | (8) | (1) | (6) | |||||||||||||||
Trans-Siberian Gold plc | - | - | 1 | - | - | |||||||||||||||
| (12) | (3) | (15) | (3) | (18) | ||||||||||||||||
Loans due by equity accounted joint ventures and associates for the years ended December 31, 20102011 and 2009:
| 2010 | 2009 | |||||||
| $ | $ | |||||||
AGA-Polymetal Strategic Alliance (joint venture) (1) | — | 3 | ||||||
Oro Group (Proprietary) Limited(2) | 2 | 2 | ||||||
AuruMar (Proprietary) Limited (joint venture)(3) | 5 | 2 | ||||||
Orpheo (Proprietary) Limited(3) | 1 | 1 | ||||||
2011 $ | 2010 $ | |||
Oro Group (Proprietary) Limited(1) | 1 | 2 | ||
AuruMar (Proprietary) Limited (joint venture)(2) | 5 | 5 | ||
Orpheo (Proprietary) Limited(2) | - | 1 | ||
Trans-Siberian Gold plc(3) | 3 | - | ||
Thani-Ashanti Alliance Limited (joint venture) (4) | 20 | - |
| (1) | ||
The loan bears interest at a rate determined by the Oro Group (Proprietary) Limited’s board of directors and is repayable at their discretion. |
Loans are unsecured, interest free and there are no fixed terms of repayment. |
| (3) | The loan is unsecured and bears interest at 8 percent per annum and is repayable in April 2012. |
| (4) | The loan bears interest at a margin of 0.95 percent over the Johannesburg Interbank Agreed Rate (“JIBAR”) and is repayable in December 2012. |
As at December 31, 20102011 and 2009,2010, there are no outstanding balances arising from loans owed to related parties.
Restructuring of the E ordinary shares:
For a discussion of the restructuring of the E ordinary shares insofar as it relates to Izingwe Holdings, see “Overview Description of AngloGold Ashanti’s share capital – E ordinary shares”.
| 7C. | INTERESTS OF EXPERTS AND COUNSEL |
Not applicable.
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There is no material proceeding in which a director, officer or officeraffiliate of AngloGold Ashanti hasis either a directparty adverse or indirect positionhas a material interest adverse to the company.
In addition to the proceedings described below, the company becomes involved, from time to time, in various claims, legal proceedings and complaints incidental to the ordinary course of business.
TAX PROCEEDINGS
The State of Goiás v. Mineração Serra Grande S.A. (MSG): InBrazil, in 2006, MSG received two tax assessments from the State of Goiás related to payments of state sales taxes at the rate of 12 percent on gold deliveries for export from one Brazilian state to another during the period from February 2004 to the end of May 2006. AngloGold Ashanti.
Departamento Nacional de Produção Mineral (DNPM) v. AngloGold Ashanti Brazil Mineração (AABM): InBrazil, in November 2007, the following cases:
SOUTH AFRICA
Mankayi v. AngloGold Ashanti Limited (AGA):
Mr Mankayi passed away subsequent to the hearing in the Supreme Court of Appeal. In August 2010,Following the Constitutional Court of South Africa heardjudgment, Mr Mankayi’s application for leave to appeal to the Constitutional Court. On March 3, 2011 the Constitutional Court granted the leave to appeal and simultaneously granted the Appeal. The effect thereof is that the executor of Mr Mankayi’s estate may return toproceed with his case in the High Court to recover common law damages from AngloGold Ashanti andCourt. This will comprise, amongst others, providing evidence showing that they are not barred by legislation from doing so. AngloGold Ashanti has several defenses available to it, and it will continue to defend the action. AsMr Mankayi contracted silicosis as a result of negligent conduct on the Constitutional Court decision,part of AngloGold Ashanti could be subject to numerousLimited.
The company will defend the case and any subsequent claims on their merits. Should other individuals or groups lodge similar claims, including potentially by way of a class action or similar group claim. Thesethese too wouldwill be defended by the company and adjudicated by the by the Courts on their merits.
AngloGold Ashanti Limited (AGA) v. Pamodzi Gold (Orkney) (Pty) Limited(Pamodzi) (in Provisional Liquidation) purchased(Pamodzi): AGA is owed money for services rendered to Pamodzi. AGA sold Shafts 1 — 7 from Harmony Gold Mining Company. AngloGold Ashanti has provided various services1-7 to Shafts 1 — 7 since it soldanother mining company in 1998 but continued to service them pursuant to the terms of a service contract. When Pamodzi later purchased the Shafts, to ARM in 1998. Despite not having a written agreement with Pamodzi, AngloGold AshantiAGA provided services to Pamodzi on the same basis that it had provided services to ARM andthe previous owner, on the understanding that a new agreement would be entered into with Pamodzi once all of the commercial terms of such an agreement were finalized. On March 10, 2009, prior to AngloGold AshantiAGA and Pamodzi entering into a new services agreement, a creditor of Pamodzi applied to have Pamodzi placed under provisional liquidation. This application was granted by the North Gauteng High Court.
At the time of being placed in provisional liquidation Pamodzi owed AngloGold AshantiAGA approximately R59 million (approximately $6.5US$6.5 million) for services rendered by AngloGold Ashanti. The provisional liquidators ofAGA. Pamodzi have entered into a contract with Aurora Empowerment Services. Aurora has agreed to operate the mines pending final liquidation and Aurora possibly purchasing the company in provisional liquidation or the assets. Pamodzialso owes (in addition to the R59 million mentioned above)AGA approximately R54 million (approximately $5.9US$5.9 million) to AngloGold Ashanti for services rendered postsubsequent to the liquidation application being made. This R54 million is an administrative cost and will be a first charge against the estate.
On March 16, 2012, Pamodzi (in provisional liquidation) and four others issued summons against AGA in the North Gauteng High Court, Pretoria, demanding the return of about R89.5 million (approximately US$11.1 million) paid by Pamodzi to private arbitration which arbitration hearing is scheduledAGA less than six months prior to take placethe winding-up of Pamodzi. Plaintiffs further allege that AGA took possession of some 26.9 kilograms of gold owned by Pamodzi in September 2011.
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| • | ||
|
COLOMBIA
Penalty of the Ministry of Environment againstLa Colosa class action lawsuits: The following six class action lawsuits are currently pending before different Colombian state and federal courts in relation to AngloGold Ashanti Colombia S.A.: (AGAC)’s La Colosa project, which is currently in its pre-feasibility phase and consists of three core concession contracts:
Ivonne Prada v. Federal Department of the Environment, Housing and Territorial Development (October 2009);
Usocoello, Cortolima, Procuraduria Regional Tolima, Universidad de Ibagué, Estudiantes de la Universidad del Rosario, Federarroz v. AGAC, Federal Department of Mines, Federal Department of the Environment, Housing and Territorial Development and Ingeominas (September 2010);
Maria del Pilar Gonzalez v. Federal Department of Mines, Ingeominas and AGAC (May 2011);
Maria del Pilar Gonzalez v. Federal Department of Mines, Ingeominas and AGAC (July 2011);
Personero de Ibagué v. Federal Department of the Environment, Housing and Territorial Development, Ingeominas, AGAC, Continental Gold Ltda., Oro Barracuda Ltda., Fernando Montoya, Alberto Murillo and Eugenio Gomez (December 2011); and
Juan Ceballos v. Federal Department of the Environment, Housing and Territorial Development, Ingeominas, Cortolima and AGAC (February 2012).
All but one of these lawsuits name AGAC as a defendant. Each lawsuit aims to stop exploration and mining in certain restricted areas affected by the La Colosa project due to environmental concerns or alleged breaches of environmental laws. Under Colombian law, restricted areas are State-protected land on which economic activities are restricted. AGAC has opposed, and has sought the dismissal of most of, the class action lawsuits that have been filed against it.
The Ministryclass action lawsuit that has progressed the most was filed in the Third Administrative Court of the District of Ibagué on September 9, 2010. It named each of Ingeominas (the Colombian regulatory agency for mining activities), the Federal Department of the Environment, Housing and Territorial Development, as well as the Federal Department of Mines as defendants. AGAC was subsequently joined to the lawsuit as an additional defendant. The plaintiffs are the User Association of the Land Adequation District of Coello and Cucuana Rivers (Usocoello), which is a cooperative representing local farmers, the Autonomous Regional Corporation of Tolima (Cortolima), which is the government of the State of Tolima, the Office of the Attorney General of the State of Tolima (Procurador Judicial Ambiental y Agrario para el Tolima), the University of Ibagué, a student association of the University of El Rosario (Estudiantes de la Universidad del Rosario) and Fedearroz, which is the Colombian association of rice growers.
The plaintiffs have petitioned the court to order the defendant governmental entities not to declare the La Colosa mining project feasible on the grounds that the project threatens a healthy environment, public health and food safety for Usocoello members and local residents. Such order by the court would result in the revocation of AGAC’s permit to temporarily use for its exploration activities 515.75 hectares of forest reserve that are otherwise designated as restricted areas.
In addition, as each of AGAC’s three core mining concession contracts governing the La Colosa project provides that Ingeominas has the discretion to declare the underlying concession void if AGAC breaches applicable environmental laws or regulations, the plaintiffs have petitioned the court to direct Ingeominas to cancel such concession contracts on the ground that AGAC has violated the Code of Natural Resources. If plaintiffs prevail and Ingeominas is ordered to cancel AGAC’s three core concession contracts, the company would be required to abandon the La Colosa project and all of AGAC’s other existing mining concession contracts and pending proposals for new mining concession contracts would also be cancelled. In addition, AGAC would be banned from doing business with the Colombian government for a period of five years. As a result, AGAC would be unable to conduct any mining exploration or development activities during such period. However, this would not affect other AngloGold Ashanti subsidiaries operating in Colombia, which hold singularly or in concert with joint venture partners the majority of AngloGold Ashanti’s concession contracts in Colombia.
As no settlement was reached at a special conciliation hearing (Pacto de Cumplimiento) held on April 27, 2011, the trial has continued and the court is gathering evidence from the parties in preparation for its ruling.
In addition, in connection with the class action lawsuit filed by the Ombudsman of Ibagué (Personero de Ibagué) in September 2011, the Superior Court of the District of Ibagué granted the plaintiff a preliminary injunction that resulted in the suspension of AGAC’s mining concession contracts relating to certain greenfield exploration activities in the Toche Anaima Belt. These contracts do not include AGAC’s core concession contracts relating to the La Colosa project. AGAC has appealed against this preliminary injunction and its appeal is still pending.
Department of the Environment, Housing and Territorial Development (DoE) v. AGAC: In Resolution No. 785 of April 29, 2009, the DoE opened an investigation against the companyAGAC and brought a list of charges against the companyit for carrying out exploratory activities at the La Colosa project without having processedobtained the subtractionapplicable permit to partially or temporarily use the soil of a forest reserve that was designated as a restricted area. In particular, the DoE alleged that AGAC violated Article 210 of the area fromCode of Natural Resources (Code), which requires a company to obtain such a permit when it plans on carrying out an economic activity that will involve the forest reserve. Aftercutting down of trees. In 2010, while conducting its investigation the evidence period,DoE also proceeded to update the Environmental Ministryexisting mining terms of reference, which set forth the environmental studies and other environmental activities that each mining company is required to conduct in connection with the exploration phase of its respective mining project. As reflected in Article 34 of the Code, the new terms of reference specify that exploration may not be carried out in restricted areas without a permit sanctioning such exploration. The DoE then resolved that AGAC was in breach of the 2010 terms of reference and issued a fine against the company.
As the parties were unable to reach an agreement at a conciliation meeting held on May 30, 2011, on such same date AGAC filed an action against the DoE in the Administrative Superior Court of the Cundinamarca District to annul the penalties. Should the DoE’s fine ultimately be upheld by the courts, Ingeominas would then have the discretion to terminate AGAC’s three core mining concession contracts relating to the La Colosa project. In the event of such termination, the company would be required to abandon the La Colosa project and all of AGAC’s other existing mining concession contracts and pending proposals for new mining concession contracts would also be canceled. In addition, AGAC would be banned from doing business with the Colombian government for a period of five years. As a result, AGAC would be unable to conduct any mining exploration or development activities during such period. However, this would not affect other AngloGold Ashanti commenced prejudicial conciliation proceedings, againstsubsidiaries operating in Colombia, which hold singularly or in concert with joint venture partners the Environmental Ministry, as required.
GHANA
:
Trial began on February 13, 2009. The court decided in WAL’s favor on March 31, 2011 and awarded damages of US$17.4 million in general damages and GHS 30,000 (approximately $19,726) in costs. AGCL has appealed and has been granted a stay of execution pending appeal.
National Labour Commission & 273 Others:Others v. AngloGold Ashanti (Ghana) Limited (AAGL): In December 2006, Appiah Agyei Boateng and 272 others claiming to be the employees of AngloGold AshantiAAGL petitioned the National Labour Commission (NLC) for the payment ofto compel AAGL to pay their gratuities. The basis of theirPlaintiffs claim was that they were at all material times employees of AngloGold Ashanti (Ghana) Limited and that they have been transferred to Mining and Building Contractors Limited (MBC), an independent construction firm, without their consent and have consequentlyallege that, as a result of their transferral, they suffered a diminution in their terms and conditions of service. They werePlaintiffs therefore claimingseek redundancy payments from AngloGold Ashanti. AAGL.
On August 20, 2009, the NLC found in favor of the petitioners and ordered AngloGold AshantiAAGL to pay the Petitionersmake redundancy payments totalling $4.7US$4.7 million. AngloGold Ashanti then initiated proceedings inAAGL applied to the High Court seeking to have the NLCNLC’s decision set aside. The affected workers applied and secured an order from the court joining them to the suit. On April 7, 2011, the High Court gave judgment ruling in favorfound against AAGL. A stay of the plaintiffsexecution was granted on January 13, 2012, on condition that the National Labour Commission had the power to determine the matter. By this judgment, the Company is to pay the award as given by the Labour Commission. We are reviewing the possibility of applying for leave of the court to file an appeal be heard within three months. AAGL is working closely with the Registrar to have the records expedited and transmitted to the Labour Commission’s decision outCourt of time.
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On April 3, 2009, the National Labour Commission issued a decision on the matter. ItNLC ordered AngloGold Ashanti GhanaAAGL to calculatepay each petitioner the difference between the Redundancy Packageredundancy package and the Early Retirement benefit in the case of each petitioner and the difference paid to each petitioner. Then AngloGold Ashanti refused to comply with the orders of the Commission, the Commission instituted action at theearly retirement benefit. The High Court to enforce their orders. On February 11, 2011upheld the High Court dismissed our Application for Stay of Execution pending appeal and ordered further that we pay the amount ordered to be paid to the petitioners into court within 14 days. Thereafter each of the petitioners, who are not parties to the suit should apply to the court to take out his or her entitlement upon providing satisfactory security. AngloGold Ashanti repeated its Application for Stay of Execution at the Court of Appeal. On March 14, 2011order, but the Court of Appeal grantedreversed the Company’s Applicationorder on March 14, 2011 and allowed AAGL’s application for Staya stay of Execution and directed that it should ensure thatexecution pending appeal. A hearing date is expected to be fixed once the Appeal would be ready for hearing within three months. The Company has written to the Registrar to complete the record of proceedings for onward transmissionrecords have been transmitted to the Court of Appeal.
TANZANIA:
Jackson Manyelo & others vs. GGM Misc. CivilGeita Gold Mining Limited (GGM) (Civil case no. 27/2007): In January 2007, (land case):Thethe claimants allegefiled a suit against GGM in the Mwanza High Court alleging that they have beenwere affected by blasting activities in the Katoma blastingarea carried out by GGM and they havehad suffered damages in the amount of Tshs 9.6Tshs9.6 billion ($7,161,446)(approximately US$6 million). Pre trial conference has been rescheduled.The parties are waiting to receive notice of a mediation hearing from the Mwanza High Court.
GUINEA
Government of Guinea (National Claim Commission) v. Société AngloGold Ashanti Goldfields de Guinée SA (SAG):
Dividends are proposed and approved by the board of directors of AngloGold Ashanti, based on the interim and year endcompany’s financial performance. Dividends are recognized when declared by the board of directors of AngloGold Ashanti. During the third quarter of 2011, the Company changed its timing of dividend payments to quarterly, rather than half-yearly.
Dividends may be declared in any currency at the discretion of the AngloGold Ashanti board or AngloGold Ashanti shareholders at a general meeting. Currently, dividends are declared in South African rands and may be payablepaid in Australian dollars, South African rands, United KingdomBritish pounds orand Ghanaian cedis.
Dividends declared to foreign shareholders are not subject to the approval by the South African Reserve Bank (SARB) in terms of South African foreign exchange control regulations. Dividends are freely transferable to foreign shareholders from both trading and non-trading profits earned in South Africa by publicly listed companies.
AngloGold Ashanti expects to continue to pay dividends, although there can be no assurance that dividends will be paid in the future or as to the particular amounts that will be paid from year to year. The payment of future dividends will dependbe dependent upon the Board’sboard’s ongoing assessment of AngloGold Ashanti’s earnings, after providing for capital expenditurelong term growth, cash/debt resources, compliance with the solvency and long-term growth, cash and debt resources,liquidity requirements the Companies Act of 2008, the amount of reserves available for a dividend usingbased on the going concern assessment, and restrictions placed by the conditions of the convertible bond, other debt facilities, protection of the investment grade credit rating and other factors.
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Under South African law, the company may declare and pay dividends from any reserves included in total shareholder’s equity (including share capital and share premium) calculated in accordance with International Financial Reporting Standards (IFRS), subject to the solvency and liquidity test.
Withholding tax
In the budget speech on February 22, 2012, the South African Minister of Finance announced a proposal to replacethat the Secondary Tax on Companies with a 10 percent withholding tax on dividends and other distributions payable to shareholders. The date for the implementation of theshareholders is 15 percent on all dividends declared after April 1, 2012.
This withholding tax replaces the Secondary Tax on dividends has now been announced as April 1, 2012. AlthoughCompanies and although this may reduce the tax payable by theAngloGold Ashanti’s South African operations, of the group, thereby potentially increasing distributable earnings, the withholding tax on dividends and other distributions will generally reduce the amount of dividends or other distributions received by AngloGold Ashanti shareholders.
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| 9A. | OFFER AND LISTING DETAILS |
The following table sets out, for the periods indicated, the reported high and low market quotations for AngloGold Ashanti’s ordinary shares on the JSE and for its sponsored ADSs on the NYSE:
| JSE | NYSE(1) | |||||||||||||||
| High | Low | High | Low | |||||||||||||
| Year ended December 31 | (South African cents per ordinary share) | (US dollars per ADS) | ||||||||||||||
Annual information | ||||||||||||||||
| 2006 | 38,700 | 24,700 | 62.20 | 35.58 | ||||||||||||
| 2007 | 35,899 | 25,400 | 49.42 | 33.80 | ||||||||||||
| 2008 | 34,900 | 15,011 | 51.35 | 13.37 | ||||||||||||
| 2009 | 34,679 | 28,630 | 47.52 | 36.05 | ||||||||||||
| 2010 | 36,631 | 26,640 | 52.86 | 34.11 | ||||||||||||
2009 | ||||||||||||||||
| First quarter | 36,900 | 23,206 | 38.99 | 22.50 | ||||||||||||
| Second quarter | 35,789 | 25,950 | 43.16 | 29.36 | ||||||||||||
| Third quarter | 33,990 | 27,150 | 45.64 | 32.77 | ||||||||||||
| Fourth quarter | 34,679 | 28,630 | 47.52 | 36.05 | ||||||||||||
2010 | ||||||||||||||||
| First quarter | 33,000 | 26,640 | 44.68 | 34.11 | ||||||||||||
| Second quarter | 34,150 | 27,649 | 45.25 | 37,52 | ||||||||||||
| Third quarter | 33,946 | 28,650 | 47.75 | 38.55 | ||||||||||||
| Fourth quarter | 36,631 | 31,165 | 52.86 | 44.22 | ||||||||||||
2011 | ||||||||||||||||
| First quarter | 35,240 | 30,226 | 49.99 | 42.47 | ||||||||||||
| October 2010 | 32,950 | 31,165 | 48.16 | 44.22 | ||||||||||||
| November 2010 | 36,631 | 31,986 | 52.86 | 45.88 | ||||||||||||
| December 2010 | 34,786 | 32,230 | 50.76 | 46.57 | ||||||||||||
| January 2011 | 33,199 | 30,226 | 49.59 | 42.47 | ||||||||||||
| February 2011 | 35,240 | 30,810 | 49.31 | 43.21 | ||||||||||||
| March 2011 | 34,320 | 30,695 | 49.99 | 43.40 | ||||||||||||
| April 2011 | 34,096 | 32,344 | 51.28 | 47.67 | ||||||||||||
May 2011(2) | 33,491 | 30,247 | 51.69 | 43.29 | ||||||||||||
| JSE | NYSE(1) | |||||||
| Year ended December 31 | High | Low | High | Low | ||||
| (South African cents per ordinary share) | (US dollars per ADS) | |||||||
Annual information | ||||||||
2007 | 35,899 | 25,400 | 49.42 | 33.80 | ||||
2008 | 34,900 | 15,011 | 51.35 | 13.37 | ||||
2009 | 34,679 | 28,630 | 47.52 | 36.05 | ||||
2010 | 36,631 | 26,640 | 52.86 | 34.11 | ||||
2011 | 39,182 | 27,333 | 51.69 | 38.97 | ||||
2010 | ||||||||
First quarter | 33,000 | 26,640 | 44.68 | 34.11 | ||||
Second quarter | 34,150 | 27,649 | 45.25 | 37,52 | ||||
Third quarter | 33,946 | 28,650 | 47.75 | 38.55 | ||||
Fourth quarter | 36,631 | 31,165 | 52.86 | 44.22 | ||||
2011 | ||||||||
First quarter | 35,240 | 30,226 | 49.99 | 42.47 | ||||
Second quarter | 34,096 | 27,333 | 51.69 | 39.70 | ||||
Third quarter | 38,250 | 27,600 | 48.85 | 40.58 | ||||
Fourth quarter | 39,182 | 32,000 | 49.14 | 38.97 | ||||
2012 | ||||||||
First quarter | 36,500 | 28,001 | 47.17 | 36.06 | ||||
September 2011 | 38,250 | 31,300 | 48.85 | 40.63 | ||||
October 2011 | 36,710 | 32,000 | 47.55 | 38.97 | ||||
November 2011 | 38,795 | 35,600 | 49.14 | 42.93 | ||||
December 2011 | 39,182 | 33,567 | 48.88 | 40.59 | ||||
January 2012 | 36,382 | 34,016 | 46.66 | 42.02 | ||||
February 2012 | 36,500 | 32,348 | 47.17 | 41.41 | ||||
March 2012 | 31,995 | 28,001 | 42.96 | 36.06 | ||||
April 2012(2)
| 28,540 | 26,030 | 37.25 | 32.44 | ||||
| (1) | Each ADS represents one ordinary share. |
| (2) | Through |
See “Item 7A.: Major shareholders” for the number of ADSs outstanding at December 31, 2010.
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| 9C. | MARKETS |
The principal trading markets for AngloGold Ashanti’s ordinary shares are the New York Stock Exchange, in the form of ADSs, under the symbol “AU” and the JSE Limited, in the form of ordinary shares, under the symbol “ANG”.
AngloGold Ashanti’s ordinary shares are also listed on the London Stock Exchange under the symbol “AGD”, Euronext Paris under the symbol “VA”“AGD and the Ghana Stock Exchange under the symbol “AGA”. Its ordinary shares are also listed on the Australian Stock Exchange, in the form of Chess Depositary Interests (each representing one-fifth of an ordinary share) under the symbol “AGG”, and on the Ghana Stock Exchange, in the form of Ghanaian Depositary Shares or GhDSs (each representing one one-hundredth of an ordinary share) under the symbol “AADS”.
AngloGold Ashanti delisted from Euronext Paris on December 23, 2011 and quoted onfrom Euronext Brussels in the form of unsponsored international depositary receipts under the symbol “ANG”.
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At the annual general meeting of shareholders held on May 15, 2009, shareholders approved an increase in the company’s authorized ordinary share capital. AngloGold Ashanti’s authorized and issued share capital as of December 31, 20102011 and May, 24, 2011April 16, 2012 (being the latest practicable date prior to the publication of this document) is set out below:
| Issued | ||||||||||||
| Title of Class | Authorized | May 24, 2011(1) | December 31, 2010 | |||||||||
| Ordinary shares at par value of R0.25 each | 600,000,000 | 381,473,822 | 381,204,808 | |||||||||
| E ordinary shares at par value of R0.25 each | 4,280,000 | 2,120,250 | 2,806,126 | |||||||||
| A redeemable preference shares at par value of R0.50 each | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||
| B redeemable preference shares at par value of R0.01 each | 5,000,000 | 778,896 | 778,896 | |||||||||
| Title of Class | Authorized | Issued | ||||||||||
| April 16, 2012(1) | December 31, 2011 | |||||||||||
Ordinary shares at par value of R0.25 each | 600,000,000 | 382,410,964 | 382,242,343 | |||||||||
E ordinary shares at par value of R0.25 each | 4,280,000 | 2,563,772 | 2,582,962 | |||||||||
A redeemable preference shares at par value of R0.50 each | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||
B redeemable preference shares at par value of R0.01 each | 5,000,000 | 778,896 | 778,896 | |||||||||
| (1) | Does not include additional shares to be issued in respect of the BEE Transaction approved by shareholders on May 11, 2011 of 48,923 ordinary shares and 1,370,634 E ordinary shares. |
All of the issued ordinary shares, E ordinary shares, A redeemable preference shares and B redeemable preference shares are fully paid and are not subject to further calls or assessment by AngloGold Ashanti.
All of the A redeemable preference shares and B redeemable preference shares are held by Eastvaal Gold Holdings Limited, AngloGold Ashanti’s wholly-owned subsidiary. AngloGold Ashanti’s Articles of Association provide that the A redeemable preference shares and B redeemable preference shares are not transferable.
The table below details changes in the ordinary issued share capital of AngloGold since December 31, 20072008 through December 31, 2010.
| Period to | Description | Number of Shares | |||||||||
December 31, 2008 | |||||||||||
| 353,483,410 | |||||||||||
Ordinary shares issued during 2009 | �� | AngloGold Share Incentive Scheme | 1,131,916 | ||||||||
| Employee Share ownership program | |||||||||||
| conversion of E ordinary shares | 1,181 | ||||||||||
| Equity offering to fund the initial | |||||||||||
| effective 35 percent interest in the | |||||||||||
| Kibali gold project | 7,624,162 | ||||||||||
December 31, 2009 | 362,240,669 | ||||||||||
Ordinary shares issued during 2010 | AngloGold Share Incentive Scheme | 823,411 | |||||||||
| Employee Share ownership program | |||||||||||
| conversion of E ordinary shares | |||||||||||
| Equity raising | |||||||||||
| fund the hedge elimination | 18,140,000 | ||||||||||
December 31, 2010 | 381,204,080 | ||||||||||
Ordinary shares issued during 2011 | AngloGold Share Incentive Scheme | 889,593 | |||||||||
| Employee Share ownership program – on conversion of E ordinary shares | 99,747 | ||||||||||
| BEE transaction Bokamoso ESOP | 48,923 | ||||||||||
December 31, 2011 | 382,242,343 | ||||||||||
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| Period to | Description | Number of Shares | ||||||
December 31, 2008 | 3,966,941 | |||||||
2009 E-ordinary shares movement | Cancelled and exchanged for ordinary shares | |||||||
| in accordance with the cancellation formula | ||||||||
December 31, | ||||||||
2010 E-ordinary shares movement | Cancelled and exchanged for ordinary shares | |||||||
| in accordance with the cancellation formula | ||||||||
December 31, | ||||||||
2011 E-ordinary shares movement | Re-instated | 1,329,164 | ||||||
| Cancelled and exchanged for ordinary shares | ||||||||
| in accordance with the cancellation formula | ||||||||
December 31, | ||||||||
E ordinary shares are
On December 11, 2006, shareholders in general meeting authorised the creation of a maximum of 4,280,000 E ordinary shares to be issued pursuant to an Employee Share Ownership Plan (ESOP) and a black economic empowerment transaction with Izingwe Holdings (Pty) Limited (Izingwe) – (collectively, the BEE transaction).
At a general meeting held on May 11, 2011, shareholders approved an amendment to the BEE transaction authorizing an additional issue of 48,923 ordinary shares to be made to the ESOP and the reinstatement of lapsed E ordinary shares to be made to the ESOP (to a maximum of 810,634 E ordinary shares) and to Izingwe (560,000 E ordinary shares). The amendment also took cognizance of changes to the vesting criteria and duration of the scheme.
On June 9, 2011, a total of 1,329,164 E ordinary shares were reinstated, of which 769,164 E ordinary shares were reinstated in respect of the ESOP and 560,000 E ordinary shares were reinstated in respect of Izingwe.
In terms of the original authority granted by shareholders in 2006, on vesting, E ordinary shares were cancelled in exchange for ordinary shares in accordance with the cancellation formula. All E-ordinary
E ordinary share capital amounting to R51,842,313 in respect of 688,332 vested, unconverted and cancelled E ordinary shares, was transferred to ordinary share premium during 2011. Prior to the amendment of the BEE transaction, E ordinary shares did not convert into ordinary shares where the market price of an AngloGold Ashanti ordinary share was less than the strike price of the E ordinary share as calculated in accordance with the cancellation formula.
In addition to the reinstatement of cancelled E ordinary shares, shareholders approved an amendment to the cancellation formula through the resetting of the strike price. Participants to the ESOP and Izingwe are now guaranteed a minimum conversion price of R40 per E ordinary share with a maximum of R90 per E ordinary share for the ESOP and R70 per E ordinary share for Izingwe from a base price of R320 and R330 per share, respectively.
E ordinary shareholders are entitled to vote at all ordinary shareholder meetings. However, they do not hold a veto right.
Dividends are payable on E ordinary shares, in an amount equal to 50 percent of dividends payable to ordinary shareholders. The residual 50 percent of the dividend payable is taken into account in determining the cancellation formula.
E ordinary shares which vest and are exchanged for ordinary shares are cancelled and may not be re-issued and therefore, doesre-issued. Therefore, they do not form part of the unissued share capital of the company.
Unissued shares
The directors of the 171,943 E-ordinary shares which were cancelled during 2009, 138,059 E-ordinary shares were cancelled withoutCompany are authorized to allot and issue, for such purposes and on such terms as they may, in their discretion, determine, ordinary shares being issued. E-ordinary shares are not exchanged for ordinaryof 25 SA cents each (“shares”) in the authorized but unissued share capital of the Company up to a maximum of 5 percent of the number of shares in issue from time to time.
| Shares under the control of the directors – 5 percent of issued shares from time to time | 19,112,707 | |||
| Shares attributable to the share incentive scheme (17,000,000 of issued – issued less shares issued from 15 October 2008) | 14,054,067 | |||
| Shares under specific authority for the convertible bonds (approved at the general meeting 30 July 2009) | 15,384,615 | |||
| Shares under specific authority for the mandatory convertible bonds (approved at the general meeting 26 October 2010) | 18,140,000 | |||
| 10B. | MEMORANDUM AND ARTICLES OF ASSOCIATION |
With effect from May 1, 2011, the instance when the market priceSouth African Companies Act 71 of an AngloGold Ashanti ordinary share is less than the value of the E-ordinary share as calculated in accordance with the cancellation formula.
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REGISTRATION
AngloGold Ashanti is governed by its articles of associationMoI which document is available for inspection as set out in “Item 10H.: Documents on Display” and a summary of pertinent provisions, including rights of the holders of shares in AngloGold Ashanti, are set out below.
This summary does not contain all the information concerning the rights of holders of AngloGold Ashanti’s ordinary shares and is qualified in its entirety by reference to the law of South Africa and AngloGold Ashanti’s governing corporate documents. As well as being governed by the provisions of the articles of association,MoI, the rights of holders of AngloGold Ashanti’s ordinary shares are governed by the South African Companies Act 61 of 1973, as amended, which is referred to as, the Companies Regulations, 2011, promulgated under the Act (the Regulations), which include the South African Securities Regulation Code on Take-Overs and MergersTakeover Regulations, and the JSE ListingListings Requirements. In addition, the South African Companies Act 71 of 2008, which is referred to as the 2008 Companies Act, was signed by the President of the Republic of South Africa on April 9, 2008 and will replace the Companies Act upon its commencement, which is effective on May 1, 2011. Further, the rights of holders of AngloGold Ashanti ADSs are governed by the Deposit Agreement between AngloGold Ashanti and The Bank of New York Mellon. See “—“– Share Rights, Preferences and Restrictions —– The Deposit Agreement”.
The founding document of a company under the 2008 Companies Act will be the Memorandum of Incorporation, which will replace what is currently the memorandum and articles of association. The memorandum and articles of association of an existing company will continue to be effective for two years notwithstanding any conflicts between the memorandum and articles of association and the 2008 Companies Act and can continue to be effective beyond two years if there is no conflict between the memorandum and articles of association and the 2008 Companies Act.
DIRECTORS
The management and control of any business of AngloGold Ashanti is vested in the directors who, in addition to their powers under the articles of association, may exercise all powers and do all such acts and things as may be exercised or done by AngloGold Ashanti which are not expressly required to be exercised or done by AngloGold Ashanti’s shareholders in a general meeting.
Appointment, Retirement and Removal of Directors
The board of directors may appoint any person to be a director and any director so appointed will hold office only until the following annual general meeting and will then be eligible for re-election. The directors who retire at the annual general meeting in this manner will not be taken into account in determining the directors who are to retire by rotation at such meeting.
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A director will no longer act as a director of the company if he becomes insolvent or subject to insolvency procedures, is found to be of unsound mind, is requested to resign by at least three-quarters of the directors in writing, is removed by a board resolution of AngloGold Ashanti, is prohibited from acting as director by law or order of court, or is absent from board meetings without leave of the directors for six consecutive months. A director can resign with one month’s written notice unless he obtains the permission of the directors to shorten his notice period.
The articles of association containMoI contains no provision for directors to hold qualification shares, nor stipulate an age limit requirement for the retirement or non-retirement of directors.
Under the 2008 Companies Act, the Memorandum of IncorporationMoI of a profit company must provide the company’s shareholders the right to elect a minimum of 50 percent of the company’s directors. The remaining directors may be appointed in accordance with the Memorandum of IncorporationMoI of the company.company which may provide for a director to be electedex officio (as a consequence of that person holding some other office, title, designation or similar status), by a person specified in the MoI or as an alternate director. In addition, a director may be removed by an ordinary resolution at a shareholders’ meeting. The director concerned must be given notice of the meeting and be afforded a reasonable opportunity to make a presentation on the matter either personally or by representative before a vote is taken by the shareholders. If a company’s Memorandum of Incorporation so provides, a person may be appointed to be an ex officio director as a consequence of that person holding some other office, title, designation or similar status.
The 2008 Companies Act provides that the authority of the board and its actions are not limited, negated or invalidated if the number of directors of a company falls below the minimum required by the 2008 Companies Act or the Memorandum of IncorporationMoI of such company. Instead, the board is obliged, within 40 business days, to convene a shareholders’ meeting to elect additional directors to bring the number of directors into compliance with the 2008 Companies Act and the Memorandum of IncorporationMoI of such company.
Board Meetings
The directors may regulate board meetings and determine the quorum necessary for the transaction of business as they deem fit. Unless otherwise determined by the directors, two directors form a quorum. Issues arising at meetings are decided by majority vote with the chairman having a second or casting vote where there are more than two directors present at the meeting.
Under the 2008 Companies Act, to the extent that the Memorandum of IncorporationMoI does not provide otherwise, decisions can be adopted by the written consent of a majority of directors given in person or by electronic communication, provided that each director has received notice of the matter to be decided.
Borrowing Powers
AngloGold Ashanti may create and issue secured or unsecured debentures and the directors may borrow or secure the payment of such sums as they deem fit (but subject to any regulations made by shareholders in general meeting) and may secure the repayment of any indebtedness by bond, mortgage or charge provided that no special privileges as to allotment of shares, attending and voting at meetings, appointment of directors or otherwise will be given to the holders of AngloGold Ashanti’s debentures without the sanction of AngloGold Ashanti shareholders in a general meeting.
AngloGold Ashanti’s borrowing powers are unlimited. These borrowing powers may be varied by AngloGold Ashanti shareholders by way of a special resolution in a general meeting.
Remuneration
The directors are entitled to such remuneration as AngloGold Ashanti shareholders may approve by special resolution in a general meeting. If a director performs services that, in the opinion of the board of directors, are outside the scope of the ordinary duties of a director, he may be paid such extra remuneration as the directors determine.
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Interests of Directors and Restriction on Voting
A director who is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with AngloGold Ashanti or any of AngloGold Ashanti’s subsidiaries must declare the nature of his interest to AngloGold Ashanti in accordance with the Companies Act.
A director will not vote nor be counted in the quorum and if he will do so his vote will not be counted on any resolution for his own appointment to any other office or position under AngloGold Ashanti, or in respect of any contract or arrangement in which he is interested. This prohibition will not apply to:
| (i) | any arrangement for giving to any director any security or indemnity in respect of money lent by him to, or obligations undertaken by him for the benefit of, AngloGold Ashanti; |
| (ii) | any arrangement for the giving by AngloGold Ashanti of any security to a third party in respect of a debt or obligation of AngloGold Ashanti which the director has himself guaranteed or secured; |
| (iii) | any contract by a director to subscribe for or underwrite securities; or |
| (iv) | any contract or arrangement with a company in which he is interested by reason only of being a director, officer, creditor or member of such company (and note that these prohibitions may at any time be suspended or relaxed to any extent either generally, or in respect of any particular contract or arrangement, by AngloGold Ashanti in general meeting). |
Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more directors to offices or employments with AngloGold Ashanti or any company in which AngloGold Ashanti is interested, such proposals may be divided and considered in relation to each director separately and in such cases each of the directors concerned will be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment.
If any question arises at any meeting as to the entitlement of any directors to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question must be referred to the chairman of the meeting and his ruling in relation to any other director must be final and conclusive except in a case where the nature or extent of the interests of the director concerned have not been fairly disclosed.
The directors may exercise the voting powers conferred by the shares in any other company held or owned by AngloGold Ashanti in such manner and in all respects as they deem fit, including the exercise thereof in favor of any resolution appointing themselves or any of them to be directors or officers of such other company or voting or providing for the payment of remuneration to the directors or officers of such other company.
Under the 2008 Companies Act, the restrictions described above willprocedures to deal with the personal financial interests of directors also apply to a company’s directors, certain prescribed officers (the precise scope(persons who exercise general executive control over and management of which remainsthe whole, or a significant portion, of the business and activities of the company or regularly participate to be defined)a material degree in the exercise of general executive control over and management of the whole, or a significant portion, of the business and activities of the company, irrespective of the office held or function performed by such persons) and any person who is a member of a committee of the board of the company, or of the Audit Committee of the company, whether or not that person is also a member of the company’s board.
Share Rights, Preferences and Restrictions
Allotment and Issue of Ordinary Shares
Any unissued ordinary shares can be disposed of or dealt with in such manner as AngloGold Ashanti shareholders may direct in a general meeting. AngloGold Ashanti shareholders may resolve that all or any of such ordinary shares are at the disposal of the directors who may allot, grant options over or otherwise deal with or dispose of the ordinary shares to such persons at such times and on such terms and conditions and for such consideration as the directors may determine.
Any ordinary shares may be issued with such rights or restrictions as AngloGold Ashanti shareholders in a general meeting may from time to time determine.
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Under the 2008 Companies Act, although directors may generally issue shares without shareholder approval, shareholder approval by way of a special resolution will, subject to certain exceptions, be required for the issue of shares (including ordinary shares), convertible securities (including share optionsoptions) to directors, and otherprescribed officers or persons that are related or inter-related to the company or to any director)a director or prescribed officer, or if there is an issue of shares (including ordinary shares), or convertible securities, including share options, with voting power on an as-converted basis equal to or exceeding 30 percent of the voting power of all shares of that class held by shareholders immediately prior to the transaction or series of transactions.
Under the 2008 Companies Act, directors may only issue shares for adequate consideration as determined by the board. The term “adequate consideration” is not defined under the 2008 Companies Act. The board’s determination of adequate consideration may not be challenged unless the directors have breached their standards of conduct as specified in the 2008 Companies Act. In some cases, it may not be possible to indemnify the directors for their conduct and the company may have a claim against the directors for breach of their duties as set out in the 2008 Companies Act. When a company has received the consideration for the issuance of shares (including in AngloGold Ashanti’s case, its ordinary shares) as approved by the board, such shares will be fully paid and the company will be obliged to issue the shares and cause the name of the holder to be entered into the company’s securities registers.
The 2008 Companies Act also provides that shares can be issued for a consideration of future services, future benefits or future payment.
Dividends, Rights and Distributions
The ordinary shares participate fully in all dividends, other distributions and entitlements as and when declared by AngloGold Ashanti in respect of fully paid ordinary shares. Under South African law, AngloGold Ashanti may declare and pay dividends from any reserves included in total shareholders’ equity calculated in accordance with International Financial Reporting Standards, subject to its solvency and liquidity. No larger dividend will be declared by shareholders in general meeting than is recommended by the directors. Dividends are payable to shareholders registered at a record date that is after the date of declaration.
Dividends may be declared in any currency at the discretion of the board of directors.directors or AGA shareholders in general meeting. Currently, dividends are declared in South African rands and paid in Australian dollars, South African rands, Ghanaian cedis or United Kingdom pounds. Dividends paid to registered holders of AngloGold Ashanti ADSs are paid in US dollars converted from South African rands by The Bank of New York Mellon, as depositary, in accordance with the Deposit Agreement. See “—“– The Deposit Agreement”.
As approved by shareholders in general meeting on December 11, 2006, the company’s authorized share capital was increased through the creation of a maximum of 4,280,000 E ordinary shares, to be issued for cash, pursuant to an employee share ownership plan and black economic empowerment transaction. The E ordinary shares will not be listed. Holders of E ordinary shares are entitled to receive a dividend, equal to one-half of the dividend per ordinary share declared by AngloGold Ashanti from time to time. In addition 50 percent of the dividend declared by AngloGold Ashanti from time to time is offset against the loan value of the E ordinary shares.
The holder of B preference shares is entitled to an annual dividend amounting to the lesser of five percent of the issue price of the B preference shares, or an amount equivalent to the balance of the after-tax profits from income from mining the Moab Lease Area (which is part of the Vaal River operations in South Africa) as determined by the directors in each financial year. This annual dividend is a first charge on any profit available for distribution from the Moab Lease Area. The annual dividend is not payable from any of AngloGold Ashanti’s other profits.
The holder of A preference shares is entitled to an annual dividend equivalent to the balance of the after-tax profits from income from mining the Moab Lease Area as determined by AngloGold Ashanti’s directors in each financial year, only once the annual dividend on the B preference shares has been paid in full.
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All dividends remaining unclaimed for a period of not less than three years from the date on which they became payable, may be forfeited by resolution of the directors for the benefit of the company.
All of the issued ordinary shares, A redeemable preference shares and B redeemable preference shares are fully paid and are not subject to further calls or assessment by AngloGold Ashanti.
Under the 2008 Companies Act, any dividend distributions must be approved by the board and satisfy certain solvency and liquidity tests as provided by the 2008 Companies Act.
Voting Rights
Each ordinary share confers the right to vote at all general meetings. Each holder present in person or, in the case of a corporate entity, represented, has one vote on a show of hands. If a poll is held, holders present or any duly appointed proxy will have one vote for each ordinary share held. A holder of ordinary shares is entitled to appoint a proxy to attend, speak and vote at any meeting on his or her behalf and the proxy need not be a shareholder. Holders of ADSs are not entitled to vote in person at meetings, but may vote by way of proxy through The Bank of New York Mellon as the ADS issuer. Holders of CDIs are not entitled to vote in person at meetings, but may vote by way of proxy.
There are no limitations on the right of non-South African shareholders to hold or exercise voting rights attaching to any of the ordinary shares.
Holders of E ordinary shares have the right to vote at all general meetings and are entitled to appoint a proxy to attend, speak and vote at any meeting on his or her behalf and the proxy need not be a shareholder, to the extent that holders of E ordinary shares will not be entitled to veto any resolution that would otherwise have been capable of being passed, or not, by the required majority of votes of holders of ordinary shares and subject to the Listings Requirements of the JSE, holders of E ordinary shares will not be counted for categorization purposes in terms of section 9 of the Listings Requirements. These limitations on the E ordinary shares are a function of shareholder approval and the JSE ListingListings Requirements.
The A redeemable preference shares have voting rights that are similar to those of ordinary shares. The B redeemable preference shares have limited voting rights, except in the event that a dividend on this class of share has not been paid and remains unpaid for six months, or in connection with issues directly affecting these preference shares or AngloGold Ashanti as a whole, such as disposal of substantially all of the company’s assets, winding up AngloGold Ashanti or reducing the company’s share capital.
At any meeting of association do not provide for cumulative voting in respect of anyAngloGold Ashanti at which the holders of the classesordinary shares, A redeemable preference shares, and B redeemable preference shares are present and entitled to vote, on a poll, each holder of AngloGold Ashanti’s shares.
The articles of association specifyMoI specifies that if new classes of ordinary or preference shares are issued, the rights relating to any class of shares may be modified or abrogated either with the consent in writing of the holders of at least three-fourths of the issued shares of that class, or with the sanction of a resolution passed as if it were a special resolution of the company at a separate general meeting of the holders of the shares of that class.
Transfer of Ordinary Shares
Dematerialized shares which have been traded on the JSE are transferred on the STRATE (Share Transactions Totally Electronic) settlement system and delivered within five business days after each trade.
The dematerialization of shares is not mandatory and holders of ordinary shares in AngloGold Ashanti may elect to retain their certificated securities. Subject to any statutory restrictions on transfers, any shareholder may transfer all or part of his certificated securities, to the extent it is not prevented by section 91A of the Companies Act. Every transfer must be in writing in the usual common form or in such other form as the directors may approve and must be left at the transfer office where the register of transfers is kept or at such other place as the directors prescribe and must be accompanied by the share certificate and such other evidence as the directors or registrar may require to prove title and capacity of the intending transferor or transferee.
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Conversion of Ordinary Shares into Stock
In terms of the MoI AngloGold Ashanti may, by special resolution, convert any paid-up shares into stock and may reconvert any stock into paid-up shares of any denomination. The holders of stock may transfer their respective interests but the directors may fix the minimum amount of stock transferable. The holders of stock have the same rights, privileges and advantages as regards participation in profits and voting at general meetings of AngloGold Ashanti as if they held the shares from which the stock arose. All of the provisions of the ArticlesMoI apply equally to stock as to shares.
Increase and Reduction of Capital
In terms of the MoI AngloGold Ashanti shareholders may by way of special resolution in a general meeting and in accordance with the provisions of the Companies Act resolve to:
increase its capital by any sum divided into shares of any amount;
consolidate and divide all or any part of its share capital into shares of larger amounts or consolidate and reduce the number of any issued no par value shares;
increase the number of any issued no par value shares without increasing its stated capital;
cancel any shares which have not been subscribed for;
sub-divide its shares or any of them into shares of smaller amounts than fixed by the memorandum of association;
vary, modify or amend any rights attached to any shares whether issued or not, including the conversion of any shares into preference shares; and
convert any of its shares whether issued or not into shares of another class.
In addition, AngloGold Ashanti shareholders may by ordinary resolution in a general meeting and subject to the requirements of the Companies Act and the rules and requirements of the stock exchange on which the securities are listed, reduce, dispose of, distribute or otherwise deal with in any manner its share capital, share premium, stated capital, reserves and capital redemption reserve fund.
Under the 2008 Companies Act, the authorization and classification of shares, the numbers of authorized shares of each class, and the preference, rights, limitations and other terms associated with each class of shares, as set out in a company’s Memorandum of Incorporation,MoI, may be changed by amending the company’s Memorandum of IncorporationMoI by special resolution of shareholders or, unless the Memorandum of IncorporationMoI provides otherwise, the directors of the company may increase or decrease the number of authorized shares of any class of shares, reclassify any classified shares that have been authorized but not issued, classify any unclassified shares that have been authorized but not issued, or determine the preferences, rights, limitations or other terms of shares which are subject to the directors’ determination.
Share Premium Account and Capital Redemption Reserve Fund
AngloGold Ashanti shareholders may by ordinary resolution in a general meeting authorize the directors to distribute or deal with, in any way recommended by the directors, all or any part of the amount outstanding to the credit of any share premium account or capital redemption reserve fund of AngloGold Ashanti.
Rights Upon Liquidation
In the event of the winding up of AngloGold Ashanti:
the B redeemable preference shares confer the right, in priority to any payment in respect of the ordinary shares or the A preference shares in the capital of AngloGold Ashanti, to receive only so much of the net proceeds from the disposal of the assets relating to the Moab Lease Area as is available for distribution, but not exceeding a return for each B redeemable preference share of the capital paid up on that share and any share premium paid on the issue of the B redeemable preference shares outstanding at that time;
the A redeemable preference shares confer the right, in priority to any payment in respect of the ordinary shares but after any payment in respect of the B preference shares, to receive only so much of the net proceeds from the disposal of the assets relating to the Moab Lease Area as is then available for distribution. The A redeemable preference and
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the ordinary shares and E ordinary shares confer the equal rights to any surplus arising from the liquidation of all other assets of AngloGold Ashanti.
Redemption Provisions
The A redeemable preference shares may be redeemed for their nominal value, plus a premium per share of an amount equal to the net proceeds available from the disposal of the assets relating to the Moab Lease Area, after redemption in full of the B preference shares and payment of the nominal value of the A preference shares, divided by 2,000,000.
The B redeemable preference shares may be redeemed for their nominal value, plus a premium of up to R249.99 per share, but limited to an amount equal to the net proceeds available from the disposal of the assets relating to the Moab Lease Area after payment of the nominal value of the B preference shares.
The ordinary shares are not redeemable.
Description of AngloGold Ashanti ADSs
The Bank of New York Mellon issues AngloGold Ashanti’s American Depositary Shares, or ADSs. One ADS represents the ownership interest of one ordinary share of AngloGold Ashanti.
The Deposit Agreement
This section provides a summary description of AngloGold Ashanti’s ADSs.
AngloGold Ashanti has entered into an Amended and Restated Deposit Agreement dated as of June 3, 2008 with The Bank of New York Mellon as depositary and the owners and beneficial owners of American Depositary Receipts (the “Deposit Agreement”).
The following is a summary of the material provisions of the Deposit Agreement. For more complete information, read the entire Deposit Agreement and the form of American Depositary Receipt, which AngloGold Ashanti has filed with the SEC as an exhibit to AngloGold Ashanti’s registration statement on Form F-6/A (File No. 333-133049) on May 27, 2008. See “Item 10.H.: Documents On Display”. Copies of the Deposit Agreement are also available for inspection at the Corporate Trust Office of The Bank of New York Mellon currently located at 101 Barclay Street, New York, New York, 10286.
Description of the ADSs
The Bank of New York Mellon, as depositary, will register and deliver ADSs. Each ADS will represent one ordinary share (or a right to receive one share) deposited with The Standard Bank of South Africa Limited, Société Générale South Africa Limited, FirstRand Bank Limited, National Australia Bank Limited of Australia and New Zealand Banking Group Limited, each as a custodian for The Bank of New York Mellon, and all of which are referred to collectively as the custodian. Each ADS will also represent any other securities, cash or other property which may be held by The Bank of New York Mellon. The Bank of New York Mellon’s Corporate Trust Office at which the ADSs will be administered is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon’s principal executive office is located at One Wall Street, New York, New York 10286.
ADSs may be held either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in the holder’s name, or (ii) by having ADSs registered in a holder’s name in the Direct Registration System, or (B) indirectly by holding a security entitlement in ADSs through a broker or other financial institution. If ADSs are held directly, such holders are ADS holders. This description applies to ADS holders. If ADSs are held indirectly, such holders must rely on the procedures of their broker or other financial institution to assert the rights of ADS registered holders described in this section. Such holders should consult with their broker or financial institution to find out what those procedures are.
The Direct Registration System, or DRS, is a system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.
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Dividends and Other Distributions
The Bank of New York Mellon has agreed to pay to holders of ADSs the cash dividends or other distributions it or a custodian receives on AngloGold Ashanti ordinary shares or other deposited securities after deducting any fees and expenses and any applicable withholding taxes. Holders of ADSs will receive these distributions in proportion to the number of AngloGold Ashanti’s ordinary shares that their ADSs represent.
Cash
The Bank of New York Mellon will convert any cash dividend or other cash distribution AngloGold Ashanti pays on AngloGold Ashanti’s ordinary shares into US dollars (unless AngloGold Ashanti pays it in US dollars), if it can do so on a reasonable basis and can transfer the US dollars to the United States. Currently, AngloGold Ashanti pays dividends on ordinary shares in South African rand. AngloGold Ashanti may declare dividends and distributions on ordinary shares in any currency that the board of directors or shareholders at a general meeting approve.
The Bank of New York Mellon will convert the South African rand it receives from AngloGold Ashanti to US dollars and distribute dividends in US dollars to registered holders of ADSs. If that is no longer possible or if any approval from any government is needed and cannot be obtained, The Bank of New York Mellon may distribute non-US currency only to those ADS holders to whom it is possible to make this type of distribution.
The Bank of New York Mellon may hold the non-US currency it cannot convert for the account of holders of ADSs who have not been paid. It will not invest the non-US currency, and it will not be liable for the interest. Before making a distribution, any withholding taxes that must be paid will be deducted. See “Payment of Taxes” below. The Bank of New York Mellon will distribute only whole US dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when The Bank of New York Mellon cannot convert the non-US currency, holders of ADSs may lose some or all of the value of the distribution.
Ordinary Shares
The Bank of New York Mellon may distribute to holders of ADSs additional ADSs representing ordinary shares that AngloGold Ashanti distributes as a dividend or free distribution, if AngloGold Ashanti provides it promptly with satisfactory evidence that it is legal to do so. If The Bank of New York Mellon does not distribute additional ADSs, the outstanding ADSs will also represent the newly distributed AngloGold Ashanti ordinary shares. The Bank of New York Mellon will only distribute whole ADSs. It will sell AngloGold Ashanti ordinary shares that would require it to deliver a fraction of an ADS and distribute the net proceeds in the same way as it distributes cash. The Bank of New York Mellon may sell a portion of the distributed shares sufficient to pay its fees and expenses in connection with that distribution.
Rights to Subscribe for Additional Ordinary Shares
If AngloGold Ashanti offers holders of its ordinary shares any rights to subscribe for additional AngloGold Ashanti ordinary shares or any other rights, The Bank of New York Mellon, after consultation with AngloGold Ashanti, may make these rights available to holders of ADSs or sell the rights and distribute the proceeds in the same way as it distributes cash. If The Bank of New York Mellon cannot do either of these things for any reason, it may allow these rights to lapse. In that case, holders of ADSs will receive no value for them.
If The Bank of New York Mellon makes these types of subscription rights available to holders of ADSs, upon instruction from holders of ADSs, it will exercise the rights and purchase AngloGold Ashanti’s ordinary shares on their behalf. The Bank of New York Mellon will then deposit the AngloGold Ashanti ordinary shares and deliver ADSs to the holders of ADSs. It will only exercise these rights if holders of ADSs pay it the exercise price and any other charges the rights require them to pay.
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Other Distributions
The Bank of New York Mellon will send to holders of ADSs any other distributions that AngloGold Ashanti makes on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, The Bank of New York Mellon may decide to sell what AngloGold Ashanti distributes, and then distribute the net proceeds in the same way as it distributes cash, or it may decide to hold what AngloGold Ashanti distributes, in which case the outstanding ADSs will also represent the newly distributed property. However, The Bank of New York Mellon is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from AngloGold Ashanti that it is legal to make that distribution. The Bank of New York Mellon may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution.
The Bank of New York Mellon is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. AngloGold Ashanti has no obligation to register ADSs, AngloGold Ashanti ordinary shares, rights or other securities under the US Securities Act of 1933. AngloGold Ashanti also has no obligation to take any other action to permit the distribution of ADSs, AngloGold Ashanti ordinary shares, rights or anything else to ADS holders. This means that the holders of ADSs may not receive the distribution AngloGold Ashanti makes on its ordinary shares or any value for them if it is illegal or impractical for AngloGold Ashanti to make them available to the holders of ADSs.
Deposit, Withdrawal and Cancellation
The Bank of New York Mellon will deliver ADSs if a holder of AngloGold Ashanti’s ordinary shares or their broker deposits AngloGold Ashanti’s ordinary shares or evidence of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New York Mellon will register the appropriate number of ADSs in the names such holder of AngloGold Ashanti ordinary shares requests and will deliver the ADSs at its Corporate Trust office to the persons such holders request.
Holders of ADSs may turn in their ADSs at The Bank of New York Mellon’s Corporate Trust Office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New York Mellon will deliver (1) the underlying ordinary shares to an account designated by the relevant holder of ADSs and (2) any other deposited securities underlying the ADSs at the office of the Custodian. Or, at the request, risk and expense of ADS holders, The Bank of New York Mellon will deliver the deposited securities at its Corporate Trust Office.
Interchange Between Certificated ADSs and Uncertificated ADSs
ADS registered holders may surrender their ADR to The Bank of New York Mellon for the purpose of exchanging such ADR for uncertificated ADSs. The Bank of New York Mellon will cancel that ADR and will send to the ADS registered holder a statement confirming that the ADS registered holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by The Bank of New York Mellon of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, The Bank of New York Mellon will execute and deliver to the ADS registered holder an ADR evidencing those ADSs.
Voting Rights
ADS registered holders may instruct The Bank of New York Mellon to vote the number of deposited shares their ADSs represent. The Bank of New York Mellon will notify ADS registered holders of shareholders’ meetings and arrange to deliver AngloGold Ashanti’s voting materials to them if AngloGold Ashanti asks it to. Those materials will describe the matters to be voted on and explain how ADS registered holders may instruct The Bank of New York Mellon how to vote. For instructions to be valid, they must reach The Bank of New York Mellon by a date set by The Bank of New York Mellon.
Otherwise, ADS registered holders will not be able to exercise their right to vote unless they withdraw the shares. However, ADS registered holders may not know about the meeting sufficiently in advance to withdraw the shares.
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AngloGold Ashanti cannot assure the holders of ADSs that they will receive the voting materials in time for them to instruct The Bank of New York Mellon to vote their ordinary shares. In addition, The Bank of New York Mellon and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that holders of ADSs may not be able to exercise their right to vote and there may be nothing they can do if their ordinary shares are not voted as they requested.
| Fees and expenses | ||||||||
| ADS holders must pay: |
| |||||||
$5.00 (or less) per 100 ADSs | Each issuance of an ADS, including as a result of a distribution of AngloGold Ashanti ordinary shares or rights or other property | |||||||
Each cancellation of an ADS, including if the Deposit Agreement terminates | ||||||||
$0.02 (or less) per ADS | Any cash payment | |||||||
Registration or transfer fees | Transfer and registration of AngloGold Ashanti ordinary shares on the AngloGold Ashanti share register to or from the name of The Bank of New York Mellon or its agent when AngloGold Ashanti ordinary shares are deposited or withdrawn | |||||||
$0.02 (or less) per ADS per year | ||||||||
Depositary services | ||||||||
Expenses of The Bank of New York Mellon | Conversion of non-US currency to US dollars Cable, telex and facsimile transmission expenses Servicing the deposited securities | |||||||
Taxes and other governmental charges that The Bank of New York Mellon or any custodian has to pay on any ADS or AngloGold Ashanti ordinary share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | As necessary | |||||||
A fee equivalent to the fee that would have been payable if the securities distributed had been ordinary shares deposited for issuance of ADSs | Distribution of securities distributed to holders of deposited securities that are distributed by The Bank of New York Mellon to ADS holders |
Payment of Taxes
Holders of ADSs will be responsible for any taxes or other governmental charges payable on their ADSs or on the deposited securities underlying their ADSs. The Bank of New York Mellon may refuse to transfer their ADSs or allow them to withdraw the deposited securities underlying their ADSs until such taxes or other charges are paid. It may apply payments owed to holders of ADSs or sell deposited securities underlying their ADSs to pay any taxes they owe, and they will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to holders of ADSs any proceeds, or send to them any property, remaining after it has paid the taxes.
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| If AngloGold Ashanti: | Then: | |||||||
Changes the nominal or par value of the ordinary shares; Reclassifies, splits up or consolidates any of the deposited securities; Distributes securities on the ordinary shares that are not distributed to holders of ADSs; or Recapitalizes, reorganizes, merges, liquidates, sells all or substantially all of AngloGold Ashanti’s assets, or takes any similar action. | The cash, ordinary shares or other securities received by The Bank of New York Mellon will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities. | |||||||
The Bank of New York Mellon may, and will if AngloGold Ashanti asks it to, distribute some or all of the cash, AngloGold Ashanti ordinary shares or other securities it receives. It may also issue new ADSs or ask holders of ADSs to surrender their outstanding ADSs in exchange for new ADSs identifying the new deposited securities. | ||||||||
Amendment and Termination
AngloGold Ashanti may agree with The Bank of New York Mellon to amend the Deposit Agreement and the ADSs without the consent of holders for any reason. If the amendment adds or increases fees or charges (except for taxes and other governmental charges or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses) or if the amendment prejudices an important right of ADS holders, it will only become effective 30 days after The Bank of New York Mellon notifies holders of ADSs of the amendment. At the time an amendment becomes effective, holders of ADSs are considered, by continuing to hold their ADSs, to agree to the amendment and to be bound by the ADSs and the agreement as amended.
The Bank of New York Mellon may terminate the Deposit Agreement by mailing notice of termination to ADS holders at least 30 days prior to the date fixed in the notice if AngloGold Ashanti asks it to do so. The Bank of New York Mellon may also terminate the Deposit Agreement if The Bank of New York Mellon has told AngloGold Ashanti that it would like to resign and AngloGold Ashanti has not appointed a new depositary bank within 90 days. In both cases, The Bank of New York Mellon must notify holders of AngloGold Ashanti ADSs at least 30 days before termination.
After termination, The Bank of New York Mellon and its agents will be required to do only the following under the Deposit Agreement: collect distributions on the deposited securities, sell rights, and, upon surrender of ADSs, deliver AngloGold Ashanti ordinary shares and other deposited securities. Four months after the date of termination or later, The Bank of New York Mellon may sell any remaining deposited securities by public or private sale and will hold the proceeds of the sale, as well as any other cash it is holding under the Deposit Agreement, for the pro rata benefit of the ADS holders who have not surrendered their ADSs. It will not invest the money and will have no liability for interest. The Bank of New York Mellon’s only obligations will be to account for the proceeds of the sale and other cash. After termination, AngloGold Ashanti’s only obligations will be with respect to indemnification of, and payment of certain amounts to, The Bank of New York Mellon.
Limitations on Obligations and Liability to ADS Holders
The Deposit Agreement expressly limits AngloGold Ashanti’s obligations and the obligations of The Bank of New York Mellon, and limits AngloGold Ashanti’s liability and the liability of The Bank of New York Mellon. AngloGold Ashanti and The Bank of New York Mellon:
are only obligated to take the actions specifically set forth in the Deposit Agreement without negligence or bad faith;
are not liable if either of AngloGold Ashanti or The Bank of New York Mellon is prevented or delayed by law or circumstances beyond their control from performing their obligations under the Deposit Agreement; are not liable if either of AngloGold Ashanti or The Bank of New York Mellon exercises discretion permitted under the Deposit Agreement; are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the Deposit Agreement, or for any special, consequential or punitive damages for any breach of the terms of the Deposit Agreement; have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the Deposit Agreement on behalf of the holders of ADSs or on behalf of any other party; may rely on advice of or information from legal counsel, accountants, and any persons presenting AngloGold Ashanti’s ordinary shares for deposit, any registered holder or any other person believed by AngloGold Ashanti in good faith to be competent to give such advice or information; and pursuant to the Deposit Agreement, AngloGold Ashanti and The Bank of New York Mellon agree to indemnify each other under certain circumstances. |
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Before The Bank of New York Mellon will issue, transfer or register the transfer of an ADS, make a distribution on an ADS, or allow withdrawal of AngloGold Ashanti ordinary shares, The Bank of New York Mellon may require:
payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any ordinary shares or other deposited securities;
production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
compliance with regulations it may establish, from time to time, consistent with the Deposit Agreement, including presentation of transfer documents.
The Bank of New York Mellon may refuse to deliver, transfer or register transfers of ADSs generally when the books of The Bank of New York Mellon or AngloGold Ashanti’s books are closed, or at any time if either AngloGold Ashanti or The Bank of New York Mellon thinks it advisable to do so.
Holders of ADSs have the right to cancel their ADSs and withdraw the underlying ordinary shares at any time except:
when temporary delays arise because: (1) either AngloGold Ashanti or The Bank of New York Mellon have closed AngloGold Ashanti’s transfer books; (2) the transfer of the ordinary shares is blocked in connection with voting at a general meeting of shareholders; or (3) AngloGold Ashanti is paying a dividend on the ordinary shares;
when ADS holders seeking to withdraw the ordinary shares owe money to pay fees, taxes and similar charges; or
when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of the ordinary shares or other deposited securities.
This right of withdrawal may not be limited by any other provision of the Deposit Agreement.
Pre-release of ADSs
In certain circumstances, subject to the provisions of the Deposit Agreement, The Bank of New York Mellon may deliver ADSs before deposit of the underlying ordinary shares. This is called a pre-release of the ADS.
The Bank of New York Mellon may also deliver AngloGold Ashanti ordinary shares upon cancellation of pre-released ADSs (even if the ADSs are cancelled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying AngloGold Ashanti ordinary shares are delivered to The Bank of New York Mellon. The Bank of New York Mellon may receive ADSs instead of ordinary shares to close out a pre-release.
The Bank of New York Mellon may pre-release ADSs only under the following conditions:
before or at the time of the pre-release, the person to whom the pre-release is being made must represent to The Bank of New York Mellon in writing that it or its customer: (a) owns the ordinary shares or ADSs to be remitted, (b) assigns all beneficial rights, title and interest in such ADSs or ordinary shares, as the case may be, to The Bank of New York Mellon in its capacity as the depositary and for the benefit of the ADS holders, and (c) will not take any action with respect to such ADSs or ordinary shares, as the case may be, that is consistent with the transfer of beneficial ownership (including, without the consent of The Bank of New York Mellon, disposing of such ADSs or ordinary shares, as the case may be) other than satisfaction of such pre-release;
the pre-release must be fully collateralized with cash, US government securities, or other collateral that The Bank of New York Mellon considers appropriate; and
the Bank of New York Mellon must be able to close out the pre-release on not more than five business days’ notice. Each pre-release will be subject to any further indemnities and credit regulations that The Bank of New York Mellon deems appropriate. The Bank of New York Mellon will normally limit the number of AngloGold Ashanti ordinary shares not deposited but represented by ADSs outstanding at any time as a result of pre-release so that they do not exceed 30 percent of the ordinary shares deposited, although The Bank of New York Mellon may disregard this limit from time to time, if it thinks it is appropriate to do so.
Direct Registration System
In the Deposit Agreement, all parties to the Deposit Agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by The Depository Trust Company, also referred to as DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. Profile is a required feature of DRS which allows a DTC
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In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the Deposit Agreement understand that The Bank of New York Mellon will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the Deposit Agreement, the parties agree that The Bank of New York Mellon’s reliance on and compliance with instructions received by The Bank of New York Mellon through the DRS/Profile System and in accordance with the Deposit Agreement will not constitute negligence or bad faith on the part of The Bank of New York Mellon.
Shareholder Communications;Communications: Inspection of Register of Holders of ADSs
The Bank of New York Mellon will make available for inspection at its office all communications that it receives from AngloGold Ashanti as a holder of deposited securities that AngloGold Ashanti makes generally available to holders of deposited securities. The Bank of New York Mellon sends copies of those communications if requested by AngloGold Ashanti. ADS holders have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to AngloGold Ashanti’s business or the ADSs.
Shareholders’ meetings
The directors may convene general meetings of AngloGold Ashanti shareholders. Subject to the provisions of the Companies Act, the shareholders may requisition for the convening of a general meeting.
An AngloGold Ashanti annual general meeting and a meeting of AngloGold Ashanti shareholders for the purpose of passing a special resolution may be called by giving 21 clear days’ notice in writing of that shareholders’ meeting. For any other meeting of AngloGold Ashanti shareholders, 14 clear days’ notice must be given. “Clear days” means calendar days excluding the day on which the notice is given and the date of the meeting. All shareholders are entitled to attend.
AngloGold Ashanti’s articles of association provideMoI provides that a quorum for a general meeting (other than a meeting at which a special resolution will be passed) consists of three shareholders present personally, or if the shareholders are a corporate entity, represented and entitled to vote. If a general meeting is not quorate, the meeting is dissolved and a new meeting will have to be called following the relevant notice provision.
The quorum of a shareholders’ meeting convened foris sufficient persons present at the purpose of passing a special resolution consists of present shareholders personally or by proxy, holdingmeeting to exercise, in aggregate, at least 25 percent of all of the total shareholder votes.voting rights that are entitled to be exercised in respect of at least one matter to be decided at the meeting. In addition at least three shareholders must be present at the meeting. If the meeting is not quorate, it will be adjourned to a date between seven and 21 days after the adjourned meeting, and the shareholders present at the second meeting will constitute a quorum as long as there are at least three of them at the second meeting. AFor an ordinary resolution to be approved by shareholders, it must be supported by more than 50 percent of the voting rights exercised on the resolution. For a special resolution to be approved by shareholders, it must be passedsupported by a vote ofat least 75 percent of the shareholders present atvoting rights exercised on the meeting, personally or by proxy, and entitled to vote or by a vote of 75 percent of the total votes to which these shareholders are entitled.
If the meeting is not quorate and is convened upon the requisition of shareholders, the meeting is dissolved.
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Under South African law, a registered holderperson must notify AngloGold Ashanti within three business days after that person acquires a beneficial interest in sufficient securities of a class issued by AngloGold Ashanti such that, as a result of the acquisition, the person holds a beneficial interest in securities amounting to 5 percent, 10 percent, 15 percent or any further multiple of 5 percent of the issued securities of that class or disposes of any beneficial interest in sufficient securities of a class issued by AngloGold Ashanti such that the result of the disposition the person no longer holds a beneficial interest in securities amounting to a particular multiple of 5 percent of issued securities of that class. When AngloGold Ashanti has received the notice referred to above it must file a copy with the Takeover Regulation Panel and report the information to holders of the relevant class of security unless the notice concerned a disposition of less than 1 percent of the class of securities.
If the securities of AngloGold Ashanti sharesis registered in the name of a person who is not the beneficial owner of such shares is required to disclose every three months to AngloGold Ashanti the identityholder of the beneficial owner and the number and class of securities held on behalfinterest then all of the beneficial owner. Moreover, AngloGold Ashanti may, by notice in writing, require a person who is a registered shareholder, or whom AngloGold Ashanti knows or has reasonable cause to believe has a beneficial interestsecurities in AngloGold Ashanti ordinary shares, to confirm or deny whether or not suchheld by that person, holdsthat registered holder of the ordinary shares or beneficial interest and, if the ordinary shares are held for another person, tosecurities must disclose to AngloGold Ashanti the identity of the person on whose behalf that security is held and the ordinary sharesidentity of each person with a beneficial interest in securities so held, the number and the class of securities held for each such person with a beneficial interest and the extent of each such beneficial interest. This information must be disclosed in writing to the company within five business days after the end of every month during which a change has occurred in the information or more promptly or frequently to the extent so provided by the requirements of a Central Securities Depository. A company that knows or has reasonable cause to believe that any of its securities are held. AngloGold Ashantiheld by one person for the beneficial interest of another may alsoby notice in writing require the personeither of those persons to giveconfirm or deny that fact, provide particulars of the extent of the beneficial interest held during the three years preceding the date of the notice.
AngloGold Ashanti is obligated to establish and maintain a register of the disclosures described above and to publish in its annual financial statements a list of the persons who hold beneficial interest equal to or in excess of 5 percent of the total number of ordinary shares issued by AngloGold Ashanti together with the extent of those beneficial interests.
Rights of Minority Shareholders
Majority shareholders of South African companies have no fiduciary obligations under South African common law to minority shareholders. However, under the Companies Act, a shareholder may, under certain circumstances, seek relief from the court if he has been unfairly prejudiced by the company. There may also be common law personal actions available to a shareholder of a company.
Pursuant to the 2008 Companies Act, a shareholder may petition a South African court for relief from the actions or omissions or, business conduct of the company or the actions of the company’s directors or officers that is oppressive or unfairly prejudicial to, or unfairly disregards the interest of the shareholder.
Golden Share
Under the Stability Agreement, the Government of Ghana (Government) has confirmed and agreed that the Government’s rights with respect to the Golden Share apply only in respect of AngloGold Ashanti’s assets and operations in Ghana. The rights do not extend to any other assets or operations of AngloGold Ashanti outside Ghana, nor to any assets or operations of AngloGold Ashanti.
The Government has also agreed to waive any right it may have under Section 60(I) of the Minerals and Mining Law, 1986, as amended to acquire a special share in AngloGold Ashanti or any of its direct or indirect subsidiaries or joint ventures.
The Golden Share may only be held by or transferred to a Minister of the Government or any person acting on behalf of such Government and authorized in writing by such Minister.
The following matters require, and will not be effective without, the written consent of the holder of the Golden Share:
| (i) | any amendment to or removal of the relevant provisions of the AngloGold Ashanti (Ghana) Limited Regulations setting out the rights and restrictions attaching to the Golden Share; | |
| (ii) | the voluntary winding-up or voluntary liquidation of AngloGold Ashanti (Ghana) Limited; | |
| (iii) | the redemption of or purchase by AngloGold Ashanti of the Golden Share; | |
| (iv) | the disposal of any mining lease held by AngloGold Ashanti (Ghana) Limited or any subsidiary of AngloGold Ashanti (Ghana) Limited; | |
| (v) | any disposal by AngloGold Ashanti (Ghana) Limited (other than any disposal in the ordinary course of business of AngloGold Ashanti) which, alone or when aggregated with any disposal or disposals forming part of, or connected with, the same or a connected transaction, constitutes a disposal of the whole or a material part of the assets of the AngloGold Ashanti group taken as a whole. For this purpose, a part of the AngloGold Ashanti group’s assets will be considered material if either (a) its book value (calculated by reference to the then latest audited consolidated accounts), or the total consideration to be received on its disposal, is not less than 25 percent of the book value of the net assets of the AngloGold Ashanti group or (b) the average profits attributable to it represent at least 25 percent of the average profits of the AngloGold Ashanti group for the last three years for which audited accounts are available (before deducting all charges, except taxation and extraordinary items). |
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The holder of the Golden Share may require AngloGold Ashanti (Ghana) Limited to redeem the Golden Share at any time in consideration of the payment to such holder of 0.10 cedis (approximately 7 US cents).
The following is a general outline of South African exchange controls and such outline may not apply to former residents of South Africa. Investors should consult a professional advisor as to the exchange control implications of their particular investments.
South African law provides for exchange control regulations, which restrict the export of capital from the Common Monetary Area, which comprises South Africa, the Kingdoms of Lesotho and Swaziland and the Republic of Namibia. The exchange control regulations, which are administered by the Exchange Control Department of the South African Reserve Bank (SARB), are applied throughout the Common Monetary Area and regulate transactions involving South African residents, including natural persons and legal entities. Government officials have from time to time stated their intentions to relax South Africa’s exchange control regulations when economic conditions permit such action. In his budget speech in March 1998, the then Minister of Finance announced that restrictions relating to offshore investments by South African companies and individuals subject to South African exchange control would, to a limited extent, be lifted.
Since then, the government has incrementally relaxed aspects of exchange control for financial institutions and individuals. However, it is impossible to predict with any certainty if and when the government will remove exchange controls in their entirety.
The comments below relate to exchange controls in place at the date of this annual report.
Investments in South African companies
A foreign investor may invest freely in ordinary shares in a South African company. Any foreign investor may also sell shares in a South African company and transfer the proceeds out of South Africa without restriction. Acquisitions of shares or assets of South African companies by non-South African purchasers are not generally subject to review by the SARB when the consideration is in cash, but may require SARB review in certain circumstances, including when the consideration is equity in a non-South African company or when the acquisition is financed by a loan from a South African lender.
Dividends
Dividends declared to foreign stockholders are not subject to the approval by the (SARB). Dividends are freely transferable to foreign stockholders from both trading and non-trading profits earned in South Africa by publicly listed companies.
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Interest
Voting rights
There are no limitations imposed by South African law or by the memorandum and articles of association of AngloGold Ashanti on the rights of non-South African shareholders to vote the ordinary shares.
Overseas financing and investments
AngloGold Ashanti and its South African subsidiaries require SARB approval to raise debt from and repay debt to non-residents of the Common Monetary Area, mainly in respect of the interest rate and terms of repayment applicable to the loan.
Debt raised outside the Common Monetary Area by AngloGold Ashanti’s non-South African subsidiaries is not restricted under South African exchange control regulations and can be used for overseas investment, subject to any conditions imposed by the SARB in connection with establishing such a subsidiary. AngloGold Ashanti and its South African subsidiaries would, however, require SARB approval in order to provide guarantees for the obligations of any of its subsidiaries with regard to funds obtained from non-residents of the Common Monetary Area.
Debt raised outside the Common Monetary Area by AngloGold Ashanti’s non-South African subsidiaries must be repaid or serviced by AngloGold Ashanti’s foreign subsidiaries.
A listing by a South African company on any stock exchange other than the JSE in connection with raising capital requires permission from the SARB.
Under current exchange control regulations, offshore investments by AngloGold Ashanti and its South African subsidiaries require the approval of the SARB. Subject to approval, there is no limit on the amount of capital that may be invested offshore.
The following discussion summarizes South African tax consequences of the ownership and disposition of shares or ADSs by a US holder (as defined below). This summary is based upon current South African tax law and South African Inland Revenue Service (SARS) practice, the convention betweenConvention Between the Government of the United States of America and the Republic of South Africa for the avoidanceAvoidance of double taxationDouble Taxation and the preventionPrevention of fiscal evasionFiscal Evasion with respectRespect to taxesTaxes on incomeIncome and capital gains,Capital Gains, signed February 17, 1997 (the “Treaty”), and in part upon representations of the depositary, and assumes that each obligation provided for in, or otherwise contemplated by, a Deposit Agreement and any related agreement will be performed in accordance with its respective terms.
The following summary of South African tax considerations does not address the tax consequences to a US holder that is resident in South Africa for South African tax purposes, whose holding of shares or ADSs is effectively connected with a permanent establishment in South Africa through which such US holder carries on business activities or, in the case of an individual who performs independent personal services, with a fixed base situated therein, or who is otherwise not entitled to full benefits under the Treaty.
The statements of law set forth below are subject to any changes (which may be applied retroactively) in South African law or in the interpretation thereof by the South African tax authorities,SARS, or in the Treaty, occurring after the date hereof. It should be expressly noted that South African tax law does not specifically address the treatment of ADSs. However, it is reasonable to assume (although no assurance can be made) that the tax treatment of US holders of shares is also applicable to US holders of ADSs.
Holders are strongly urged to consult their own tax advisors as to the consequences under South African, US federal, state and local, and other applicable laws, of the ownership and disposition of shares or ADSs.
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South Africa currently imposes a corporate tax known as Secondary Tax on Companies (STC) at a rate of 10 percent on the distributionnet amount of earnings in the form of dividends.dividend declared by a resident company, other than a headquarter company. Under the terms of an option granted to gold mining corporations (Gold Mining Election), AngloGold Ashanti has elected not to be subject to STC. As a result, although AngloGold Ashanti’s dividend payments are not subject tothe payment of STC on dividends it declares. This election results in AngloGold Ashanti payspaying corporate income tax at a slightly higher corporate income tax rate than would otherwise have been the case. ThisHowever, this election resulted in the overall effective tax paid by AngloGold Ashanti being lower than the tax payable using the standard corporate tax rate together with STC. STC will be phased out over the next two years and replaced by a dividend withholding tax.
Effective April 1, 2012, South Africa does not currently impose any withholdingwill replace its current STC regime with a dividends tax. The dividends tax or any other formwas originally set to be introduced at 10 percent, but the South African Minister of Finance announced in his 2012/13 Budget Speech on February 22, 2012, that the dividends tax will increase to 15 percent. Other than STC, the dividends tax is generally imposed on the beneficial owner. The dividends paidtax could be reduced to US holders with respect to shares, but there has been a recent announcement (as set out below) that this is about to change.lower rate under an applicable double tax treaty, if all requirements are met. In the case of a South African withholding tax on dividends paid to a US holder with respect to shares, the Treaty would generally limit the dividends tax rate of this tax to 5 percent of the gross amount of the dividends if a US holder (it must be a corporate) holds directly at least 10 percent of the voting stock of AngloGold Ashanti andAshanti. In all other cases, the maximum tax rate under the Treaty is 15 percent of the gross amount of the dividends in all other cases. The above provisions will not applydividend. There are different rules to consider if the beneficial owner of the dividends is a US resident who carries on business in South Africa through a permanent establishment situated in South Africa, or performs in South Africa independent personal services from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base.
The abolishment of STC will also result in the deletion of the option to elect the Gold Mining Exemption. This means that the taxable income derived by any company from mining for gold on Companies with a 10 percent withholdingany gold mine will be determined using the remaining formula. The new change will be applicable in respect of any year of assessment ending during the period of 12 months ending on March 31, 2013 reducing the tax on dividends and other distributions payablerate applicable to shareholders. The date forAngloGold Ashanti’s South African operations, thereby increasing distributable earnings, but the implementationeffect of the withholding tax on dividends has now been announced as April 1, 2012. Although this may reduce the tax payable by the South African operationswill, over a period of the group thereby increasing distributable earnings, the withholding tax willtime, generally reduce the amount of dividends or other distributions received by AngloGold Ashanti shareholders.
Taxation of capital gains on sale or other disposition
South African residents are (subject to certain exemptions) taxed on their worldwide income, while non-residents are only taxed on South African sourced income (subject to the provisions of any relevant double taxation agreement).
Capital gains tax is not a separate tax to income tax; instead, a percentile of the taxpayer’s net capital gain (that is the taxable capital gain) is included in its taxable income on which it is taxed at the income tax rate.
Non-residents are only subject to the South African capital gains tax provisions in respect of the disposal of any immovable property (such as land or mining rights) or any interest or right of whatever nature to or in immovable property situated in South Africa, imposesor any asset of a taxpermanent establishment through which that non-resident is carrying on capital gains, which only appliesa trade in South Africa. In the instance of a shareholder holding shares in a South African company, the ‘interest in immovable property’ requirements are met if 80 percent or more of the market value of is directly or indirectly attributable to South African residents. The meaningimmovable property held on capital account, and that shareholder (whether alone or together with any connected person in relation to that person), directly or indirectly, holds at least 20 percent of the word “residents” is different for individuals and corporations and is governed by theequity shares of that South African Income Tax Act of 1962, as amended, and by the Treaty. In contrast, gains on the disposal of securities which are not capital in nature are usually subject to income tax. However, even in the latter case, a US holder will not be subject to income tax unless the US holder carries on business incompany.
If South Africa throughhas such a permanent establishment situated therein.
UNITED STATES TAXATION
The following is a general summary of the material US federal income tax consequences of the ownership and disposition of shares or ADSs to a US holder (as defined below) that holds its shares or ADSs as a capital asset. This summary is based on US tax laws including the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated thereunder, rulings, judicial decisions, administrative pronouncements, and the Treaty, all as currently in effect as of the date of this annual report, and all of which are subject to change or changes in interpretation, possibly with retroactive effect. In addition, this summary is based in part upon the representations of the depositary and the assumption that each obligation in the Deposit Agreement relating to the ADSs and any related agreement will be performed in accordance with its terms.
This summary does not address all aspects of US federal income taxation that may apply to holders that are subject to special tax rules, including US expatriates, insurance companies, tax-exempt entities, banks, certain financial institutions, persons subject to the alternative minimum tax, regulated investment companies, securities broker-dealers, traders in securities who elect to apply a mark-to-market method of accounting, investors that own (directly, indirectly or by attribution) 10 percent or more of the outstanding share capital or voting stock of AngloGold Ashanti, partnerships, persons holding their shares or ADSs as part of a straddle, hedging or conversion transaction, persons who acquired their shares or ADSs pursuant to the exercise of employee stock options or otherwise as compensation, or persons whose functional currency is not the US dollar. Such holders may be subject to US federal income tax consequences different from those set forth below.
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US holders should consult their own tax advisors regarding the specific South African and US federal, state and local tax consequences of owning and disposing of shares or ADSs in light of their particular circumstances as well as any consequences arising under the laws of any other taxing jurisdiction. In particular, US holders are urged to consult their own tax advisors regarding whether they are eligible for benefits under the Treaty.
For South African and US federal income tax purposes, a US holder of ADSs should be treated as owning the underlying shares represented by those ADSs. Therefore, deposits or withdrawals by a US holder of shares for ADSs or of ADSs for shares will not be subject to US federal income tax. The following discussion (except where otherwise expressly noted) applies equally to US holders of shares and US holders of ADSs.
Taxation of dividends
The gross amount of any distribution (including the amount of any South African withholding tax thereon) paid to a US holder by AngloGold Ashanti generally will be taxable as dividend income to the US holder for US federal income tax purposes on the date the distribution is actually or constructively received by the US holder, in the case of shares, or by the depositary, in the case of ADSs. Corporate US holders will not be eligible for the dividends received deduction in respect of dividends paid by AngloGold Ashanti. For foreign tax credit limitation purposes, dividends paid by AngloGold Ashanti will be income from sources outside the United States. At present, South Africa does not impose a withholding tax or any other form of tax on dividends paid to US holders with respect to shares. The South African government, however, has recently announced its intent to enact a dividend withholding tax, which is expected toand the necessary government notice has now been issued and it will be implemented on April 1, 2012. See ‘Taxation —– South African Taxation —– Taxation of dividends. Once the dividend withholding tax becomes effective, US holders who are eligible for benefits under the current Treaty will be subject to a maximum withholding tax of 15 percent on the gross amount of dividend distributions paid by AngloGold Ashanti.
The amount of any distribution paid in foreign currency (including the amount of any South African withholding tax thereon) generally will be includible in the gross income of a US holder of shares in an amount equal to the US dollar value of the foreign currency calculated by reference to the spot rate in effect on the date of receipt by the US holder, in the case of shares, or by the depositary, in the case of ADSs, regardless of whether the foreign currency is converted into US dollars on such date. If the foreign currency is converted into US dollars on the date of receipt, a US holder of shares generally should not be required to recognize foreign currency gain or loss in respect of the dividend. If the foreign currency received in the distribution is not converted into US dollars on the date of receipt, a US holder of shares generally will have a tax basis in the foreign currency equal to its US dollar value on the date of receipt. Any gain or loss recognized upon a subsequent conversion or other disposition of the foreign currency generally will be treated as US source ordinary income or loss. In the case of a US holder of ADSs, the amount of any distribution paid in a foreign currency generally will be converted into US dollars by the depositary upon its receipt. Accordingly, a US holder of ADSs generally will not be required to recognize foreign currency gain or loss in respect of the distribution. Special rules govern and specific elections are available to accrual method taxpayers to determine the US dollar amount includible in income in the case of taxes withheld in a foreign currency. Accrual basis taxpayers are therefore urged to consult their own tax advisors regarding the requirements and elections applicable in this regard.
Subject to certain limitations, South African withholding taxes will be treated as foreign taxes eligible for credit against a US holder’s US federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. Dividend income generally will constitute ‘passive category’ income, or in the case of certain US holders, ‘general category’ income. The use of foreign tax credits is subject to complex conditions and limitations. In lieu of a credit, a US holder who itemizes deductions may elect to deduct all of such holder’s foreign taxes in the taxable year. A deduction does not reduce US tax on a dollar-for-dollar basis like a tax credit, but the deduction for foreign taxes is not subject to the same limitations applicable to foreign tax credits. US holders are urged to consult their own tax advisors regarding the availability of foreign tax credits.
237
The US Treasury has expressed concern that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits for US holders of ADSs. Such actions would also be inconsistent with the claiming of the reduced rate of tax described above, applicable to dividends received by certain non-corporate holders. Accordingly, the analysis of the creditability of South African withholding taxes or the availability of qualified dividend treatment could be affected by future actions that may be taken by the US Treasury with respect to ADSs.
Taxation of capital gains
If a US holder is a resident of the United States for purposes of the Treaty, such holder will not be subject to South African tax on any capital gain if it sells or disposes of its shares or ADSs. Special rules apply to individuals who are residents of more than one country.
In general, upon a sale, exchange or other disposition of shares or ADSs, a US holder will recognize capital gain or loss for US federal income tax purposes in an amount equal to the difference between the US dollar value of the amount realized on the disposition and the holder’s tax basis, determined in US dollars, in the shares or ADSs. Such gain or loss generally will be US source gain or loss, and will be treated as a long-term capital gain or loss if the holder’s holding period in the shares exceeds one year at the time of disposition. If the US holder is an individual, any capital gain generally will be subject to US federal income tax at preferential rates if specified minimum holding periods are met. The deductibility of capital losses is subject to significant limitations.
A US holder’s tax basis in a share will generally be its US dollar cost. The US dollar cost of a share purchased with foreign currency will generally be the US dollar value of the purchase price on the date of purchase, or the settlement date for the purchase in the case of shares traded on an established securities market that are purchased by a cash basis US holder or an electing accrual basis US holder. The amount realized on a sale or other disposition of shares for an amount in foreign currency will be the US dollar value of this amount on the date of sale or disposition. On the settlement date, the US holder will recognize US source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the US dollar value of the amount received based on the exchange rates in effect on the date of sale or other disposition and the settlement date. However, in the case of shares traded on an established securities market that are sold by a cash US holder (or an accrual basis US holder that so elects), the amount realized will be based on the exchange rate in effect between the settlement date for the sale, and no exchange gain or loss will be recognized at that time. If an accrual basis US holder makes either of the elections described above, it must be applied consistently from year to year and cannot be revoked without the consideration of the IRS.
Foreign currency received on the sale or other disposition of a share will have a tax basis equal to its US dollar value on the settlement date. Any gain or loss recognized on a sale or other disposition of foreign currency (including its use to purchase shares or upon exchange for US dollars) will be US source ordinary income or loss.
Passive foreign investment company considerations
A non-US corporation will be classified a Passive Foreign Investment Company (a “PFIC”) for any taxable year if at least 75 percent of its gross income consists of passive income (such as dividends, interest, rents or royalties (other than rents or royalties derived in the active conduct of a trade or business and received from an unrelated person), or gains on the disposition of certain minority interests), or at least 50 percent of the average value of its assets consists of assets that produce, or are held for the production of, passive income. AngloGold Ashanti believes that it was not treated as a PFIC for the taxable year ended December 31, 20092011 and does not expect to become a PFIC in the foreseeable future. If AngloGold Ashanti were characterized as a PFIC for any taxable year, a US holder would suffer adverse tax consequences.
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US information reporting and backup withholding
Dividend payments made to a holder and proceeds paid from the sale, exchange, or other disposition of shares may be subject to information reporting to the Internal Revenue Service (the “IRS”). US federal backup withholding generally is imposed at a current rate of 28 percent on specified payments to persons who fail to furnish required information. Backup withholding will not apply to a holder who furnishes a correct taxpayer identification number or certificate of foreign status and makes any other required certification, or who is otherwise exempt from backup withholding. US persons who are required to establish their exempt status generally must provide IRS Form W-9 (Request for Taxpayer Identification Number and Certification). Non-US holders generally will not be subject to US information reporting or backup withholding. However, these holders may be required to provide certification of non-US status (generally on IRS Form W-8BEN) in connection with payments received in the United States or through certain US-related financial intermediaries. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s US federal income tax liability. A holder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information.
Information with respect to foreign financial assets
Individuals that own “specified foreign financial assets” with an aggregate value in excess of $50,000 are generally required to file information reports with respect to such assets with their U.S. federal income tax returns. Depending on the individual’s circumstances, higher threshold amounts may apply. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non–United States persons, (ii) financial instruments and contracts held for investment that have non-United States issuers or counterparties and (iii) interests in non-United States entities. The shares may be treated as specified foreign financial assets. You may be subject to this information reporting regime and be required to file IRS form 8938 listing these assets with your U.S. federal income tax return. Failure to file information reports may subject you to penalties. You are urged to consult your own tax advisor regarding your obligations to file information reports with respect to the shares.
| 10F. | DIVIDENDS AND PAYING AGENTS |
Not applicable.
| 10H. | DOCUMENTS ON DISPLAY |
AngloGold Ashanti files annual reports on Form 20-F and reports on Form 6-K with the SEC. You may read and copy this information at the SEC’s Public Reference Room at 100F Street, N.E., Room 1580, Washington D.C. 20549 or by accessing the SEC’s home page (http://www.sec.gov). You can also request copies of documents, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition, AngloGold Ashanti’s reports and other information may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Copies of the documents referred to herein may also be inspected at AngloGold Ashanti’s offices by contacting AngloGold Ashanti at 76 Jeppe Street, Newtown, Johannesburg, 2001 (P.O. Box 62117, Marshalltown, 2107) South Africa, Attention: Company Secretary, telephone number: +27 11 637 6000.
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TREASURY POLICY
Risk management activities within the group are the ultimate responsibility of the board of directors. The chief executive officer is responsible to the board of directors for the design, implementation and monitoring of the risk management plan. The newly formed Risk and Information Integrity Committee is responsible for overseeing risk management plans and systems, and the Audit and Corporate Governance Committee oversees financial risks which include a review of treasury activities and exposure to the group’s counterparties.
Under the treasury and risk management policy, hedges may be put in place using approved instruments over the group’s planned gold production and resultant gold sales currency exposures. The tenor of the hedges may extend out to ten years. The treasury and risk management policy sets limits on the extent to which the hedge position may change for the various levels of treasury management from dealer, through treasurer, executive management and board.
The financial risk management activities objectives of the group are as follows:
Safeguarding the group’s core earnings stream through the effective control and management of gold and other commodity price risk, foreign exchange risk and interest rate risk;
Effective and efficient usage of credit facilities through the adoption of reliable liquidity planning and procedures;
Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts; and
Ensuring that all contracts and agreements related to financial risk management activities are co-ordinated and consistent throughout the group and comply where necessary with all relevant regulatory and statutory requirements.
Under the treasury and risk management policy, treasury reports that are produced at the following minimum intervals for review by management and the board of directors.
Daily | Treasurer | |
Monthly | Executive Committee | |
Quarterly | ||
Audit and Corporate Governance Committee, Board of Directors and shareholder reports |
The Treasury Risk Analyst is responsible for monitoring all reports for completeness and accuracy which are reviewed by the Treasurer.
At AngloGold Ashanti, all front office (dealing), middle office (risk reporting), back office (deal confirmations) and payment (treasury settlements) activities are segregated. All treasury transactions are captured on a third party developed treasury and risk management system that is widely used in corporate treasuries. The group internal audit function conducts regular and ad-hoc reviews of the activities of treasury and the group’s treasury system.
GOLD PRICE RISK MANAGEMENT ACTIVITIES
In the normal course of its operations, the group is exposed to gold price, other commodity price, foreign exchange, interest rate, liquidity, equity price and credit risks. A number of products, including derivatives, are usedThe Company is also exposed to certain by-product commodity price risk. In order to manage these risks, the priceCompany may enter into transactions which make use of gold and other commodities, interest rate and foreign exchange, liquidity and non-performance risk, which includes credit risk that arise out of the group’s core business activities.derivatives. AngloGold Ashanti does not acquire, hold or issue derivative instruments for economic trading purposes. The group has developed a comprehensive risk management process to facilitate, control and monitor these risks.
Gold price risk arises from the risk of an adverse effect onof current or future earnings resulting from fluctuations in the price of gold. DuringThe Company historically utilized derivatives as part of its hedging of the year, the group had utilized forward purchase and sale contracts and purchased or sold call and put options to manage its exposure to gold price.risk. In order to provide financial exposure to the rising spot price of gold and the potential for enhanced cash-flow generation the groupCompany completed its final tranche of the hedge buy-back programmeprogram during 2010 and settled all forward gold and foreign exchange contracts that had been used by the groupCompany in the past to manage those risks. The group is also exposed to certain by-product commodity price risk. At year-endyear end there were no net forward sales contracts (2009:(2010: nil kg; 2009: 571kg), no net call options sold (2009:(2010: nil kg; 2009: 120,594kg) and no net put options sold (2009:(2010: nil kg; 2009: 27,071kg) outstanding.
240.
Contracts that meet the criteria for hedge accounting are designated as the hedging instruments hedging the variability of forecasted cash flows from the sale of production into the spot market and from capital expenditure denominated in a foreign currency and are classified as cash flow hedges under the FASB ASC guidance. The ineffective portion of matured and existing cash flow hedges recognized in loss on non-hedge derivatives in the income statement during the year was $nil million |
All other derivatives are measured at their estimated fair value, with the changes in estimated fair value at each reporting date reported as gains or losses on derivatives in earnings in the period in which they occur. |
Cash flows from derivative instruments accounted for as cash flow hedges are included in net cash provided by operating activities in the statements of consolidated cash flows.Contracts that contain ‘off-market’ terms that result in the inflow of cash at inception are analogous to borrowing activities and, as such, are treated as financing activities. All current and future cash flows associated with such instruments are classified as financing activities within of the consolidated cash flow statement. Contracts that contain ‘off-market’ terms that result in the outflow of cash at inception are analogous to lending activities and, as such, are treated as investing activities.flows. All current and future cash flows associated with such instruments are classified within the investing activities of the consolidated cash flow statement.
As at December 31, 2011 and 2010 the Company had no outstanding commitments against future production as a result of the elimination of the hedge book. As of December 31, 2009, the hedge book reflected a net delta tonnage position of 3.49 million ounces (108 tonnes) out of a committed position of 3.90 million ounces (121 tonnes).
Foreign exchange price risk protection agreements
The Company, entersfrom time to time, may enter into currency forward exchange and currency option contracts to hedge certain anticipated transactions denominated in foreign currencies. The objective of the Company’s foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from transactions denominated in US dollars will be adversely affected by changes in exchange rates.
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Interest rate and liquidity risk
Fluctuations in interest rates impacts interest paid and received on the short-term cash investments and financing activities, giving rise to interest rate risk.
In the ordinary course of business, the Company receives cash from the proceeds of its gold sales and is required to fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market related returns while minimizing risks.
The Company is able to actively source financing at competitive rates. The counterparts are financial and banking institutions and their credit ratings are regularly monitored by the Company.
Cash and loans advanced maturity profile
| 2010 | 2009 | |||||||||||||||||||||||||||||||||||
| Fixed rate | Floating rate | Fixed rate | Floating rate | |||||||||||||||||||||||||||||||||
| investment amount | Effective | investment amount | Effective | investment amount | Effective | investment amount | Effective | |||||||||||||||||||||||||||||
| Maturity date | Currency | (million) | rate % | (million) | rate % | (million) | rate % | (million) | rate % | |||||||||||||||||||||||||||
| All less than one year | USD | 13 | 0.20 | 171 | 0.19 | 506 | 0.29 | 178 | 0.13 | |||||||||||||||||||||||||||
| ZAR | 969 | 5.58 | 57 | 4.64 | 1,135 | 7.03 | 839 | 6.38 | ||||||||||||||||||||||||||||
| AUD | 42 | 4.45 | 25 | 4.44 | — | — | 13 | 3.52 | ||||||||||||||||||||||||||||
| EUR | — | — | 3 | 1.00 | — | — | 1 | 0.50 | ||||||||||||||||||||||||||||
| CAD | — | — | 2 | 0.20 | — | — | 1 | 0.08 | ||||||||||||||||||||||||||||
| HKD | — | — | — | — | — | — | 1 | 0.01 | ||||||||||||||||||||||||||||
| BRL | — | — | 30 | 8.90 | — | — | 152 | 10.20 | ||||||||||||||||||||||||||||
| ARS | — | — | 2 | 9.00 | — | — | 4 | 10.23 | ||||||||||||||||||||||||||||
| NAD | 102 | 5.00 | 207 | 5.00 | — | — | — | — | ||||||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||||||||||||||
| Maturity date | Currency | Fixed rate investment amount (million) | Effective rate % | Floating rate investment amount (million) | Effective rate % | Fixed rate investment amount (million) | Effective rate % | Floating rate investment amount (million) | Effective rate % | |||||||||||||||||||||||||||
All less than one year | USD | 10 | 0.48 | 467 | 0.20 | 13 | 0.20 | 171 | 0.19 | |||||||||||||||||||||||||||
| ZAR | 3,030 | 5.50 | 164 | 3.55 | 969 | 5.58 | 57 | 4.64 | ||||||||||||||||||||||||||||
| AUD | 81 | 4.65 | 23 | 4.45 | 42 | 4.45 | 25 | 4.44 | ||||||||||||||||||||||||||||
| EUR | - | - | - | - | - | - | 3 | 1.00 | ||||||||||||||||||||||||||||
| CAD | - | - | - | - | - | - | 2 | 0.20 | ||||||||||||||||||||||||||||
| BRL | - | - | 27 | 6.61 | - | - | 30 | 8.90 | ||||||||||||||||||||||||||||
| ARS | - | - | 1 | 10.23 | - | - | 2 | 9.00 | ||||||||||||||||||||||||||||
| NAD | - | - | 119 | 4.08 | 102 | 5.00 | 207 | 5.00 | ||||||||||||||||||||||||||||
Borrowings maturity profile
| Within one year | Between one and two years | Between Two and five years | After five years | Total | ||||||||||||||||||||||||||||||||
| Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | ||||||||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | Amount | Rate | Amount | ||||||||||||||||||||||||||||
| Currency | (million) | % | (million) | % | (million) | % | (million) | % | (million) | |||||||||||||||||||||||||||
| $ | 26 | 4.7 | 5 | 5.5 | 1,560 | 4.9 | 994 | 5.7 | 2,585 | |||||||||||||||||||||||||||
| ZAR | 703 | 6.4 | — | — | 20 | 9.8 | 237 | 9.8 | 960 | |||||||||||||||||||||||||||
| BRL | 3 | 4.7 | 5 | 5.1 | 2 | 6.0 | — | — | 10 | |||||||||||||||||||||||||||
| Within one year | Between one and two years | Between two and five years | After five years | Total | ||||||||||||||||||||||||||||||||
| Currency |
Borrowings | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | |||||||||||||||||||||||||||
| $ | 22 | 5.4 | 761 | 6.0 | 660 | 3.5 | 994 | 5.7 | 2,437 | |||||||||||||||||||||||||||
| ZAR | - | - | 8 | 9.8 | 40 | 9.8 | 217 | 9.8 | 265 | |||||||||||||||||||||||||||
| BRL | 4 | 5.8 | 3 | 5.2 | 4 | 4.0 | - | - | 11 | |||||||||||||||||||||||||||
| NAD | 64 | 8.4 | 72 | 8.4 | 97 | 8.4 | - | - | 233 | |||||||||||||||||||||||||||
Interest rate risk
| Fixed for less than one year | Fixed for between one and three years | Fixed for greater than three years | Total | |||||||||||||||||||||||||
| Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | ||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | Amount | ||||||||||||||||||||||
| Currency | (million) | % | (million) | % | (million) | % | (million) | |||||||||||||||||||||
| | | | | | | | | ||||||||||||||||||||||||||||
| $ | 26 | 4.7 | 880 | 6.0 | 1,679 | 4.8 | 2,585 | |||||||||||||||||||||
| ZAR | 703 | 6.4 | 7 | 9.8 | 250 | 9.8 | 960 | |||||||||||||||||||||
| BRL | 3 | 4.7 | 7 | 5.3 | — | — | 10 | |||||||||||||||||||||
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Fixed for less than one year
|
Fixed for between one and three years
| Fixed for greater than three years
| Total
| |||||||||||||||||||||||||
| Currency | Borrowings amount (million) | Effective rate % | Borrowings amount (million) | Effective rate % | Borrowings amount (million) | Effective rate % | Borrowings amount (million) | |||||||||||||||||||||
| $ | 22 | 5.4 | 1,420 | 4.8 | 995 | 5.7 | 2,437 | |||||||||||||||||||||
| ZAR | - | - | 24 | 9.8 | 241 | 9.8 | 265 | |||||||||||||||||||||
| BRL | 4 | 5.8 | 5 | 4.6 | 2 | 4.5 | 11 | |||||||||||||||||||||
| NAD | 64 | 8.4 | 161 | 8.4 | 8 | 8.4 | 233 | |||||||||||||||||||||
Realization of contracts is dependent upon counterparts’ performance. The Company has not obtained collateral or other security to support the financial instruments subject to non-performance risk, but the credit standing of counterparts was monitored on a regular basis throughout the year. The Company spreads itits business over a number of financial and banking institutions to minimize the risk of potential non-performance risk. Furthermore, the approval process of counterparts and the limits applied to each counterpart were monitored by the audit sub-committee of the board of directors. Where possible, ISDA netting agreements were put into place by management.
The combined maximum credit risk exposure at balance sheet date amounts to $1$198 million (2009: $335(2010: $177 million). Credit risk exposure netted by open derivative positions with counterparts was $nil million (2009: $104(2010: $1 million). No set-off is applied to balance sheet amounts due to the different maturity profiles of assets and liabilities.
The fair value of derivative assets and liabilities reflects non-performance risk relating to the counterparts and the Company, respectively.
Fair value of financial instruments
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. The estimated fair values of the Company’s financial instruments, as measured at December 31, 20102011 and 2009,2010, are as follows (assets/(assets (liabilities)):
| December 31, 2010 | December 31, 2009 | |||||||||||||||
| Carrying | Carrying | |||||||||||||||
| Amount | Fair Value | Amount | Fair Value | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cash and cash equivalents | 575 | 575 | 1,100 | 1,100 | ||||||||||||
| Restricted cash | 43 | 43 | 65 | 65 | ||||||||||||
| Short-term debt | (135 | ) | (135 | ) | (1,292 | ) | (1,292 | ) | ||||||||
| Long-term debt | (1,730 | ) | (2,059 | ) | (667 | ) | (889 | ) | ||||||||
| Long-term debt at fair value | (872 | ) | (872 | ) | — | — | ||||||||||
| Derivatives | (175 | ) | (175 | ) | (2,366 | ) | (2,366 | ) | ||||||||
| Marketable equity securities — available for sale | 124 | 124 | 111 | 111 | ||||||||||||
| Marketable debt securities — held to maturity | 13 | 14 | 10 | 10 | ||||||||||||
| Non-marketable assets — held to maturity | 2 | 2 | 2 | 2 | ||||||||||||
| Non-marketable debt securities — held to maturity | 89 | 89 | 48 | 48 | ||||||||||||
| December 31, 2011 | December 31, 2010 | |||||||||||||||||
Carrying amount $ | Fair value $ | Carrying amount $ | Fair value $ | |||||||||||||||
Cash and cash equivalents | 1,112 | 1,112 | 575 | 575 | ||||||||||||||
Restricted cash | 58 | 58 | 43 | 43 | ||||||||||||||
Short-term debt | (30) | (30) | (133) | (133) | ||||||||||||||
Short-term debt at fair value | (2) | (2) | (2) | (2) | ||||||||||||||
Long-term debt | (1,715) | (1,857) | (1,730) | (2,059) | ||||||||||||||
Long-term debt at fair value | (758) | (758) | (872) | (872) | ||||||||||||||
Derivatives | (93) | (93) | (175) | (175) | ||||||||||||||
Marketable equity securities - available for sale | 82 | 82 | 124 | 124 | ||||||||||||||
Marketable debt securities - held to maturity | 8 | 11 | 13 | 14 | ||||||||||||||
Non-marketable assets - held to maturity | 2 | 2 | 2 | 2 | ||||||||||||||
Non-marketable debt securities - held to maturity | 85 | 85 | 89 | 89 | ||||||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash restricted for use, cash and cash equivalents and short-term debt
The carrying amounts approximate fair value because of the short-term duration of these instruments.
Long-term debt
The mandatory convertible bonds are carried at fair value. The fair value of the convertible and rated bonds are shown at their quoted market value. Other long-term debt re-prices on a short-term floating rate basis, and accordingly the carrying amount approximates to fair value.
243
Derivatives
Investments
Marketable equity securities classified as available-for-sale are carried at fair value. Marketable debt securities classified as held to maturity are measured at amortized cost. Non-marketable assets classified as held to maturity are measured at amortized cost. The fair value of marketable debt securities and non-marketable assets has been calculated using market interest rates. Investments in non-marketable debt securities classified as held to maturity are measured at amortized cost. The cost method investment is carried at cost. There is no active market for the investment and the fair value cannot be reliably measured.
The following is the fair value of the derivative (liabilities)/assets and liabilities split by accounting designation:
| December 31, 2010 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| hedge | Non-hedge | |||||||||||||||
| accounted | accounted | Total | ||||||||||||||
| Assets | Balance Sheet location | $ | $ | $ | ||||||||||||
| Warrants on shares | Current assets - derivatives | — | 1 | 1 | ||||||||||||
| Total derivatives | — | 1 | 1 | |||||||||||||
| December 31, 2010 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| hedge | Non-hedge | |||||||||||||||
| accounted | accounted | Total | ||||||||||||||
| Liabilities | Balance Sheet location | $ | $ | $ | ||||||||||||
| Option component of convertible bonds | Non-current liabilities - derivatives | — | (176 | ) | (176 | ) | ||||||||||
| Total derivatives | — | (176 | ) | (176 | ) | |||||||||||
| December 31, 2009 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| hedge | Non-hedge | |||||||||||||||
| accounted | accounted | Total | ||||||||||||||
| Balance Sheet location | $ | $ | $ | |||||||||||||
Assets | ||||||||||||||||
| Forward sales type agreements — commodity | Current assets - derivatives | — | 283 | 283 | ||||||||||||
| Option contracts — commodity | Current assets - derivatives | — | 47 | 47 | ||||||||||||
| Total hedging contracts | — | 330 | 330 | |||||||||||||
| Warrants on shares | Non-current assets - derivatives | — | 5 | 5 | ||||||||||||
| Total derivatives | — | 335 | 335 | |||||||||||||
Liabilities | ||||||||||||||||
| Forward sales type agreements — commodity | Current liabilities - derivatives | (37 | ) | (441 | ) | (478 | ) | |||||||||
| Option contracts — commodity | Current liabilities - derivatives | — | (2,034 | ) | (2,034 | ) | ||||||||||
| Interest rate swaps — gold | Current liabilities - derivatives | — | (13 | ) | (13 | ) | ||||||||||
| Total hedging contracts | (37 | ) | (2,488 | ) | (2,525 | ) | ||||||||||
| Embedded derivatives | Non-current liabilities - derivatives | — | (1 | ) | (1 | ) | ||||||||||
| Option component of convertible bonds | Non-current liabilities - derivatives | — | (175 | ) | (175 | ) | ||||||||||
| Total derivatives | (37 | ) | (2,664 | ) | (2,701 | ) | ||||||||||
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| ||||||||||
| December 31, 2011 | ||||||||||
Assets
| ||||||||||
| Balance Sheet location | Non-hedge accounted $ | Total $ | ||||||||
| ||||||||||
Warrants on shares | Current assets - derivatives | - | - | |||||||
| ||||||||||
Total derivatives | - | - | ||||||||
| ||||||||||
| ||||||||||
| December 31, 2011 | ||||||||||
Liabilities
| ||||||||||
| Balance Sheet location | Non-hedge accounted $ | Total $ | ||||||||
| ||||||||||
Option component of convertible bonds | Non-current liabilities - derivatives | (92) | (92) | |||||||
Embedded derivatives | Non-current liabilities - derivatives | (1) | (1) | |||||||
| ||||||||||
Total derivatives | (93) | (93) | ||||||||
| ||||||||||
| ||||||||||
December 31, 2010 Assets
| ||||||||||
| Balance Sheet location | Non-hedge accounted $ | Total $ | ||||||||
| ||||||||||
Warrants on shares | Current assets - derivatives | 1 | 1 | |||||||
| ||||||||||
Total derivatives | 1 | 1 | ||||||||
| ||||||||||
| ||||||||||
December 31, 2010 Liabilities
| ||||||||||
| Balance Sheet location | Non-hedge accounted $ | Total $ | ||||||||
| ||||||||||
Option component of convertible bonds | Non-current liabilities - derivatives | (176) | (176) | |||||||
| ||||||||||
Total derivatives | (176) | (176) | ||||||||
| ||||||||||
| 000,000,000,00 | 000,000,000,00 | 000,000,000,00 | ||||||||||
| ||||||||||||
| Year ended December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
| |||||||||||
| $ | $ | $ | ||||||||||
| ||||||||||||
Realized (1) | ||||||||||||
Forward sales type agreements - commodity | - | 377 | 535 | |||||||||
Option contracts - commodity | - | 2,573 | 144 | |||||||||
Forward sales agreements - currency | - | 13 | (107) | |||||||||
Option contracts - currency | - | (3) | (12) | |||||||||
Interest rate swaps - Gold | - | 15 | (16) | |||||||||
|
| |||||||||||
| - | 2,975 | (2) | 544 | (3) | ||||||||
|
| |||||||||||
Unrealized (1) | ||||||||||||
Forward sales type agreements - commodity | - | (265) | 188 | |||||||||
Option contracts - commodity | - | (1,999) | 648 | |||||||||
Forward sales agreements - currency | - | - | 15 | |||||||||
Option contracts - currency | - | - | 3 | |||||||||
Interest rate swaps - Gold | - | (13) | 25 | |||||||||
Option component of convertible bonds | (84) | 1 | 33 | |||||||||
Embedded derivatives | 1 | (1) | 1 | |||||||||
Warrants on shares | - | 5 | (5) | |||||||||
|
| |||||||||||
| (83) | (2,272) | 908 | ||||||||||
|
| |||||||||||
Non-hedge derivatives (gain)/loss | (83) | 703 | 1,452 | |||||||||
|
| |||||||||||
| (1) | ||||||||
Realized and unrealized gains and losses on non-hedge derivatives are included in | ||||||||
| bonds” in the income statement. | ||||||||
| (2) | ||
Includes $2,698 million loss related to the final tranche of the accelerated hedge |
| (3) | ||||||||
Includes $797 million loss related to the accelerated hedge |
245
| Year ended December 31, 2011 | |||||||||||||||||||||||||||||||||||
| Cash flow hedges, before taxation | Cash flow hedges removed from equity, before taxation | Hedge ineffectiveness, before taxation | |||||||||||||||||||||||||||||||||
| $ | $ | $ | |||||||||||||||||||||||||||||||||
Gain/(loss) recognized in accumulated other comprehensive income (effective portion) | Location of (gain)/loss reclassified from accumulated other comprehensive income into income (effective portion) | Amount of (gain)/loss reclassified from accumulated other comprehensive income into income (effective portion) | Location of (gain)/loss recognized in income (ineffective portion) | Amount of (gain)/loss recognized in income (ineffective portion) | |||||||||||||||||||||||||||||||
| Forward sales type agreements - commodity | Product sales | - | Non-hedge derivatives (gain)/loss and movement on bonds | - | |||||||||||||||||||||||||||||||
| - | - | - | |||||||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||
| Year ended December 31, 2010 | |||||||||||||||||||||||||||||||||||
| Cash flow hedges, before taxation | Cash flow hedges removed from equity, before taxation | Hedge ineffectiveness, before taxation | |||||||||||||||||||||||||||||||||
| $ | $ | $ | |||||||||||||||||||||||||||||||||
Gain/(loss) recognized in accumulated other comprehensive income (effective portion) | Location of (gain)/loss reclassified from accumulated other comprehensive income into income (effective portion) | Amount of (gain)/loss reclassified from accumulated other comprehensive income into income (effective portion) | Location of (gain)/loss recognized in income (ineffective portion) | Amount of (gain)/loss recognized in income (ineffective portion) | |||||||||||||||||||||||||||||||
| Forward sales type agreements - commodity | - | Product sales | 52 | Non-hedge derivatives | |||||||||||||||||||||||||||||||
| - | 52 | - | |||||||||||||||||||||||||||||||||
Other comprehensive income
| Year ended December 31, 2009 | ||||||||||||||||||||
| Cash flow hedges, | Cash flow hedges removed from equity, | |||||||||||||||||||
| before tax | before tax | Hedge ineffectiveness, before tax | ||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
| Amount of | ||||||||||||||||||||
| Gain/(loss) | Location of | (gain)/loss | ||||||||||||||||||
| recognized in | (gain)/loss | reclassified from | Amount of | |||||||||||||||||
| accumulated | reclassified from | accumulated other | (gain)/loss | |||||||||||||||||
| other | accumulated other | comprehensive | recognized | |||||||||||||||||
| comprehensive | comprehensive | income into | Location of (gain)/loss | in income | ||||||||||||||||
| income (effective | income into income | income (effective | recognized in income | (ineffective | ||||||||||||||||
| portion) | (effective portion) | portion) | (ineffective portion) | portion) | ||||||||||||||||
| Forward sales type agreements - commodity | (16 | ) | Product sales | 137 | Non-hedge derivatives gain/(loss) and movement on bonds | 5 | ||||||||||||||
| Forward sales agreements - currency | (1 | ) | Depreciation | — | Non-hedge derivatives gain/(loss) and movement on bonds | — | ||||||||||||||
| (17 | ) | 137 | 5 | |||||||||||||||||
| Accumulated other | Changes in fair | Accumulated other | ||||||||||||||
| comprehensive income as | value recognized | Reclassification | comprehensive income | |||||||||||||
| of January 1, 2010 | in 2010 | adjustments | as of December 31, 2010 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Derivatives designated as Gold sales | (52 | ) | — | 52 | — | |||||||||||
| Capital expenditure | (3 | ) | — | — | (3 | ) | ||||||||||
| Before tax totals | (55 | ) | — | 52 | (3 | )(1) | ||||||||||
| After tax totals | (22 | ) | — | 20 | (2 | ) | ||||||||||
246
| ||||||||||||||||
Accumulated other comprehensive income as of January 1, 2011 $ | Changes in fair value recognized in 2011 $ | Reclassification adjustments $ |
Accumulated other comprehensive income as of December 31, 2011 $ | |||||||||||||
| ||||||||||||||||
Derivatives designated as | ||||||||||||||||
Capital expenditure | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
Before tax totals | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
After tax totals | (2) | - | - | (2) | ||||||||||||
|
| |||||||||||||||
| ||||||||||||||||
Accumulated other comprehensive income as of January 1, 2010 $ | Changes in fair value recognized in 2010 $ | Reclassification adjustments $ |
Accumulated other comprehensive income as of December 31, 2010 $ | |||||||||||||
| ||||||||||||||||
Derivatives designated as | ||||||||||||||||
Gold sales | (52) | - | 52 | - | ||||||||||||
Capital expenditure | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
Before tax totals | (55) | - | 52 | (3) | ||||||||||||
|
| |||||||||||||||
After tax totals | (22) | - | 20 | (2) | ||||||||||||
|
| |||||||||||||||
| Accumulated other | Accumulated other | |||||||||||||||
| comprehensive | Changes in fair | comprehensive income | ||||||||||||||
| income as | value recognized | Reclassification | as of December 31, | |||||||||||||
| of January 1, 2009 | in 2009 | adjustments | 2009 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| | | | | | ||||||||||||||||
| Derivatives designated as | ||||||||||||||||
| Gold sales | (178 | ) | (16 | ) | 142 | (52 | ) | |||||||||
| Capital expenditure | (2 | ) | (2 | ) | 1 | (3 | ) | |||||||||
| Before tax totals | (180 | ) | (18 | ) | 143 | (55 | )(1) | |||||||||
| After tax totals | (112 | ) | (13 | ) | 103 | (22 | ) | |||||||||
| 2010 | ||||||||||||
| Total | Assets | Liabilities | ||||||||||
| $ | $ | $ | ||||||||||
| Amounts to mature within twelve months of balance sheet date | 1 | 1 | — | |||||||||
| Amounts maturing between one and two years | — | — | — | |||||||||
| Amounts maturing between two and five years (176) | 176 | — | (176 | ) | ||||||||
| Total | (175 | ) | 1 | (176 | ) | |||||||
| 2009 | ||||||||||||
| Total | Assets | Liabilities | ||||||||||
| $ | $ | $ | ||||||||||
| Amounts to mature within twelve months of balance sheet date | (2,195 | ) | 330 | (2,525 | ) | |||||||
| Amounts maturing between one and two years | 5 | 5 | — | |||||||||
| Amounts maturing between two and five years | (175 | ) | — | (175 | ) | |||||||
| Amounts to mature thereafter | (1 | ) | — | (1 | ) | |||||||
| Total | (2,366 | ) | 335 | (2,701 | ) | |||||||
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||||
| ||||||||||||
Total $ |
2011 Assets $ | Liabilities $ | ||||||||||
| ||||||||||||
Amounts to mature within twelve months of balance sheet date | - | - | - | |||||||||
Amounts maturing between one and two years | - | - | - | |||||||||
Amounts maturing between two and five years | (92) | - | (92) | |||||||||
Amounts to mature thereafter | (1) | - | (1) | |||||||||
|
| |||||||||||
Total | (93) | - | (93) | |||||||||
|
| |||||||||||
| ||||||||||||
Total $ |
2010 Assets $ | Liabilities $ | ||||||||||
| ||||||||||||
Amounts to mature within twelve months of balance sheet date | 1 | 1 | - | |||||||||
Amounts maturing between one and two years | - | - | - | |||||||||
Amounts maturing between two and five years | (176) | - | (176) | |||||||||
Amounts to mature thereafter | - | - | - | |||||||||
|
| |||||||||||
Total | (175) | 1 | (176) | |||||||||
|
| |||||||||||
Sensitivity analysis
Derivatives
The Company monitors the sensitivity of the convertible bonds to changes in AngloGold Ashanti Limited’sits share price and warrants on shares.
247
| 2010 | ||||||||||||||||
| Cash flow | Total | |||||||||||||||
| Change in | hedge | Non-hedge | change in | |||||||||||||
| underlying | accounted | accounted | fair value | |||||||||||||
| factor (+) | $ | $ | $ | |||||||||||||
Convertible bonds | ||||||||||||||||
| AngloGold Ashanti Limited share price (US$) | Spot (+$1) | — | (10 | ) | (10 | ) | ||||||||||
Warrants on shares | ||||||||||||||||
| B2Gold Corporation share price (C$) | Spot (+C$0.25) | — | 1 | 1 | ||||||||||||
| 2010 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Change in | hedge | Non-hedge | Total change in | |||||||||||||
| underlying | accounted | accounted | fair value | |||||||||||||
| factor (-) | $ | $ | $ | |||||||||||||
Convertible bonds | ||||||||||||||||
| AngloGold Ashanti Limited share price (US$) | Spot (-$1) | — | 9 | 9 | ||||||||||||
Warrants on shares | ||||||||||||||||
| B2Gold Corporation share price (C$) | Spot (-C$0.25) | — | — | — | ||||||||||||
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||
| ||||||||||
| 2011 | ||||||||||
| ||||||||||
Change in underlying factor (+) | Non-hedge accounted | Total change in fair value | ||||||||
| $ | $ | |||||||||
| ||||||||||
Convertible bonds | ||||||||||
AngloGold Ashanti Limited share price | Spot (+$3) | (23) | (23) | |||||||
| ||||||||||
| 2011 | ||||||||||
| ||||||||||
Change in factor (-) | Non-hedge accounted | Total change in fair value | ||||||||
| $ | $ | |||||||||
| ||||||||||
Convertible bonds | ||||||||||
AngloGold Ashanti Limited share price | Spot (-$3) | 21 | 21 | |||||||
| ||||||||||
Mandatory convertible bonds
The mandatory convertible bond valuation is primaryprimarily linked to the AngloGold Ashanti Limited share price traded on the New York Stock Exchange (NYSE) and fluctuates with reference to the NYSE share price and market interest rates. A changeAn increase or decrease of $1$3 in the AngloGold Ashanti Limited share price will generally impact the value of the mandatory convertible bond priceliability in a stable interest environment by $0.83.
Foreign exchange risk
Foreign exchange risk arises on financial instruments that are denominated in a foreign currency.
The following table discloses the approximate foreign exchange risk sensitivities of debt at December 31, 20102011 (actual changes in the timing and amount of the following variables may differ from the assumed changes below).
Change in exchange rate | Change in borrowings total | ||||||||||||
$ | |||||||||||||
Debt | |||||||||||||
ZAR denominated (R/$) | Spot (+R1) | ||||||||||||
BRL denominated (BRL/$) | Spot (+BRL0.25) | ||||||||||||
NAD denominated (NAD/$) | Spot (+NAD1) | (3) | |||||||||||
Change in exchange rate | Change in borrowings total | ||||||||||||
$ | |||||||||||||
Debt | |||||||||||||
ZAR denominated (R/$) | Spot (-R1) | ||||||||||||
BRL denominated (BRL/$) | Spot (-BRL0.25) | 1 | |||||||||||
NAD denominated (NAD/$) | Spot (-NAD1) | 4 | |||||||||||
248
| 12A. |
Not applicable |
| 12B. | Warrants and Rights |
Not applicable |
| 12C. | Other Securities |
Not applicable |
| 12D. | American Depositary Shares |
AngloGold Ashanti’s American Depositary Shares, or ADSs, each representing one of AngloGold Ashanti’s ordinary shares, are traded on the New York Stock Exchange under the symbol “AU.” The ADSs are evidenced by American Depositary Receipts, or ADRs, issued by The Bank of New York Mellon, as Depositary under the Amended and Restated Deposit Agreement dated as of June 3, 2008, among AngloGold Ashanti Limited, The Bank of New York Mellon and owners and beneficial owners of from time to time of ADRs. ADS holders may have to pay the following service fees to the Depositary:
Service | Fees (USD) | |
Issuance of ADSs | ||
| Up to 5 cents per ADS(1) | ||
Cancellation of ADSs | Up to 5 cents per ADS(1) | |
Distribution of cash dividends or other cash distributions | Up to 2 cents per ADS(2) | |
Distribution of securities pursuant to | ||
• (i) stock dividends, free stock distributions or | ||
• (ii) exercises of rights to purchase additional ADSs | Up to 5 cents per ADS(2) | |
ADR Depositary Services fee | Up to 2 cents per year(2) |
| (1) | These fees are typically paid to the Depositary by the brokers on behalf of their clients receiving the newly-issued ADSs from the Depositary and by the brokers on behalf of their clients delivering the ADSs to the Depositary for cancellation. The brokers in turn charge these transaction fees to their clients. |
| (2) | In practice, the Depositary has not collected these fees. If collected, such fees are offset against the related distribution made to the ADR holder. |
In addition, ADS holders are responsible for certain fees and expenses incurred by the Depositary on their behalf including (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of ordinary shares generally on the share register and applicable to transfers of ordinary shares to the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals, and (3) such cable, telex and facsimile transmission expenses as are expressly incurred by the Depositary in the conversion of foreign currency.
Fees and other charges payable by the Depositary, any of the Depositary’s agents, including the Custodian, or the agents of the Depositary’s agents in connection with the servicing of Shares or other Deposited Securities, shall be collected at the sole discretion of the Depositary by billing such owners for such charge or by deducting such charge from one or more cash dividends or other cash distributions.
For further information, refer to “Item 10.B —10B.: Memorandum and articles of association – The Deposit Agreement”deposit agreement”.
For the year ended December 31, 2010,2011, The Bank of New York Mellon, as Depositary, has agreed to reimbursereimbursed AngloGold Ashanti an amount of $798,343 (2009:$1,208,174)$725,780 (2010: $798,343) mainly for contributions towards the company’s investor relations activities (including investor meetings, conferences and fees of investor relations service vendors).
249
None.
None.
| (a) | Disclosure Controls and Procedures:As of December 31, |
| (b) | Management’s Annual Report on Internal Control over Financial Reporting:Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company, as defined in the Exchange Act Rule 13(a) |
The company’s internal control over financial reporting includes those policies and procedures that:
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the company;
Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and the Directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of the Evaluation Date. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —– Integrated Framework. Based on this assessment, and using those criteria, management concluded that the company’s internal control over financial reporting was effective as of the Evaluation Date.
| (c) | Changes in Internal Control over Financial Reporting:There have been no changes in the company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13(a) |
| (d) | Attestation Report of the Registered Public Accounting Firm:The company’s independent registered accounting firm, Ernst & Young Inc., has issued an audit report on the effectiveness of the company’s internal control over financial reporting. This report appears below. |
/s/ M Cutifani | /s/ S Venkatakrishnan | |||
Mark Cutifani | ||||
SrinivasanVenkatakrishnan | ||||
Chief Executive Officer | Chief Financial Officer |
252
The board of directors and stockholders of AngloGold Ashanti Limited
We have audited AngloGold Ashanti Limited’s internal control over financial reporting as of December 31, 2010,2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). AngloGold Ashanti Limited’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management certification.Management’s Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, AngloGold Ashanti Limited maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010,2011, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 20102011 consolidated financial statements of AngloGold Ashanti Limited and our report dated May 27, 2011April 23, 2012 expressed an unqualified opinion thereon.
Ernst & Young Inc.
Registered Auditor
Johannesburg, Republic of South AfricaMay 27, 2011
253
April 23, 2012
Membership of the audit and corporate governance committee, including its chairman, comprises only independent non-executive directors, in compliance with the Sarbanes-Oxley Act. This also fulfils the guidelines of the King III, Code, which became effective in March 2010, and the requirements of the Companies Act 71, of 2008, which becomesbecame effective on May 1, 2011. The Sarbanes-Oxley Act requires the board to identify a financial expert from within its ranks. The board has resolved that the committee’s chairman, Prof Wiseman Nkuhlu is the auditAudit and corporate governanceCorporate Governance committee’s financial expert. All threeThree of the four members of the committee have considerable financial knowledge and experience to help oversee and guide the board and the company in respect of the audit and corporate governance disciplines.
In order to comply with the company’s obligation in terms of the Sarbanes-Oxley Act and the South African King Code on Corporate Governance,III, and in the interests of good governance, the company has systems and procedures to introduce, monitor and enforce its ethical codes and has adopted a code of business principles and ethics for employees and directors, a code of ethics for the chief executive officer, principal financial officer and senior financial officers, and a whistle-blowing policy that encourages employees and other stakeholders to confidentially and anonymously report acts of an unethical or illegal nature that affect the company’s interests. Senior management oversee compliance withThe code of business principles and ethics expresses the ethical code by means of several mechanisms including:
The whistle-blowing policy applies to all companies in the AngloGold Ashanti group and provides a channel for shareholders, employees and the general public to report acts and practices that are in conflict with the company’s business principles, unlawful, financial malpractice or dangers to the public or the environment. Reports are made through several mediums including the intranet, internet, telephone, fax and post. An initiative is being undertaken to also implement short messaging system (sms) as a medium for reporting., fax and post. All reports made in terms of the whistle-blowing policy are administered by a third party, Tip-Offs Anonymous, to ensure confidentiality and independence of the process. Reported cases are relayed to management through internal audit. A report is provided to the Executive Committee and the Audit and Corporate Governance Committee on a quarterly basis. Reporters have the option to request feedback on reported cases. The process encourages reports to be made in good faith in a responsible and ethical manner. Employees are encouraged to first seek resolution of alleged malpractices through discussion with their direct managers, if appropriate, or, if unresolved, they should then report these through the whistle-blowing line or directly to internal audit or the legal department.
In addition, the company has adopted a disclosures policy, the objective of which is to ensure compliance with the rules of the various exchanges on which it is listed and provide timely, accurate and reliable information fairly to all stakeholders, including investors (and potential investors), regulators and analysts.
Each code of ethics, whistle blowing and disclosure policy is available on the company’s websitehttp://www.anglogoldashanti.co.za/About+our+business/Gov+Policies.htm. Each code of ethics and disclosure policy is also available on request from the company secretary.
254Policies.htm.
Ernst & Young Inc. has served as AngloGold Ashanti’s independent public accountants for each of the financial years in the three-year period ended December 31, 20102011 for which audited financial statements appear in this annual report on Form 20-F.
The following table presents the aggregate fees for professional services and other services rendered by Ernst & Young Inc. to AngloGold Ashanti in 20102011 and 2009.
| 2010 | 2009 | |||||||
| (in millions) | $ | $ | ||||||
Audit fees(1) | 7.76 | 5.80 | ||||||
Audit-related fees(2) | 1.98 | 1.77 | ||||||
Tax fees(3) | 0.17 | 0.40 | ||||||
| Total | 9.91 | 7.97 | ||||||
| (in millions) | 2011 $ | 2010 $ | ||||||
Audit fees(1) | 6.97 | 7.76 | ||||||
Audit-related fees(2) | 6.76 | 1.98 | ||||||
Tax fees(3) | 0.39 | 0.17 | ||||||
Total | 14.12 | 9.91 | ||||||
Rounding may result in computational differences.
| (1) | The Audit fees consist of fees billed for the annual audit services engagement and other audit services, which are those services that only the external auditor reasonably can provide, and include the Company audit; statutory audits; attest services; and assistance with and review of documents filed with the SEC. Included in the Audit Fees for | |
| (2) | Audit-related fees consist of fees billed for assurance and related services and include consultations concerning financial accounting and reporting standard, comfort letters and consents. |
| (3) | Tax fees include fees billed for tax advice and tax compliance services. |
Audit and Corporate Governance Committee Pre-approval Policies and Procedures
It is the policy of AngloGold Ashanti to maintain compliance with the requirements of the various applicable legislation and good governance practices when appointing or assigning work to the Company’s external auditor. Non-audit services may not be undertaken without an employee of AngloGold Ashanti obtaining the pre-approval of the Audit and Corporate Governance Committee as is laid out in the procedures relating to the pre-approval process.
The auditAudit and corporate governance committeeCorporate Governance Committee has delegated the approval authority to the chairman of the committee, Prof Wiseman Nkuhlu or his designated official. The approval may take the form of a written or oral instruction, and in the case of an oral instruction this would be ratified at the next auditAudit and corporate governance committeeCorporate Governance Committee meeting. On a quarterly basis a summary of all approvals and work to date is tabled at the auditAudit and corporate governance committeeCorporate Governance Committee meeting.
All non-audit services provided to AngloGold Ashanti by the principal independent registered public accounting firm during 20102011 were reviewed and approved according to the procedures above. None of the services provided during 20102011 were approved under thede minimisexception allowed under the Exchange Act.
No work was performed by persons other than the principal accountant’s employees in respect of the audit of AngloGold Ashanti’s financial statements for 2010.
Not applicable.
Neither the issuer nor any affiliate of the issuer purchased any of the company’s shares during 2010.
2552011.
Not applicable.
The following is a summary of the significant ways in which AngloGold Ashanti’s corporate governance practices differ from those followed by US domestic companies under the New York Stock Exchange’s corporate governance listing standards (the “NYSE listing standards”).
The NYSE listing standards require the appointment of a Nominations Committee to oversee the appointment of new directors to the board, and that such committee be comprised solely of independent directors. The JSE Listing Requirements also require the appointment of such a committee, but require that it be comprised solely of non-executive directors, the majority of whom must be independent.
The company has appointed a Nominations Committee of the board. The nominations committee’s membership comprises only of non-executive board members, all of whom are independent, as defined in the JSE Listing Requirements, and is chaired by the independent chairman of the board.
ITEM 16H: MINE SAFETY DISCLOSURE
The NYSE listing standards require that a majorityinformation concerning certain mine safety violations or other regulatory matters required pursuant to Section 1503(a) of the boardDodd-Frank Wall Street Reform and Consumer Protection Act and this Item 16H is included in Exhibit 19.16 to be comprised of independent directors, as such term is defined in the NYSE listing standards, and that the remunerations committee of the board be fully independent. In previous years, AngloGold Ashanti did not comply with these standards as the JSE Listing Requirements did not have similar standards. However, since May 6, 2008, the board comprises of a majority of independent directors, as defined in the JSE Listing Requirements, and the remuneration committee of the board is fully independent.
256this annual report on Form 20-F.
The board of directors and stockholders of AngloGold Ashanti Limited
We have audited the accompanying consolidated balance sheets of AngloGold Ashanti Limited (the “Company”) as of December 31, 2010, 20092011 and 20082010 and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2010.2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
The financial statements of Société d’Exploitation des Mines d’Or de Sadiola S.A. (“Sadiola”), a corporation in which the Company has a 41 percent (Decemberinterest at December 31, 2008: 38 percent) interest,2010, have been audited by other auditors for the years endedas at December 31, 2010 and December 31, 2008 and for the periodsperiod then ended, whose reportsreport has been furnished to us, and our opinion on the consolidated financial statements, insofar as it relates to the amounts included for Sadiola, is based solely on the report of the other auditors. In the consolidated financial statements, the Company’s investment in Sadiola is stated at $99 million at December 31, 2010, and $97 million at December 31, 2008, the Company’s equity in net income is stated at $35 million for the year ended December 31, 2010, and the Company’s equity in net loss is stated at $52 million for the year ended December 31, 2008.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AngloGold Ashanti Limited at December 31, 2010, 20092011 and 2008,2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 20102011 in conformity with U.SU.S. generally accepted accounting principles.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of AngloGold Ashanti Limited’s internal control over financial reporting as of December 31, 2010,2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 27, 2011April 23, 2012 expressed an unqualified opinion thereon.
Ernst & Young Inc.
Registered Auditor
Johannesburg, Republic of South AfricaMay 27, 2011
259
April 23, 2012
The Board of Directors and stockholders of Societe d’Exploitation des Mines d’Or de Sadiola S.A.:
We have audited the balance sheet of Societe d’Exploitation des Mines d’Or de Sadiola S.A. (the company) as of December 31, 2010, and the related statements of income, changes in stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
ln our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Societe d’Exploitation des Mines d’Or de Sadiola S.A.SA as of December 31, 2010, and the results of its operations and its cash flows for the year ended December 31, 2010 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
KPMG Inc.
Registered Auditor
Bloemfontein, South Africa
May 26, 2011
260
261
262
263
Consolidated statements of income
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 2009 and 2008
2009
(In millions, except share and per share information)
| 2010 | 2009 | 2008 | ||||||||||||||
| Notes | $ | $ | $ | |||||||||||||
Sales and other income | 5,402 | 3,954 | 3,730 | |||||||||||||
| Product sales | 5,334 | 3,784 | 3,655 | |||||||||||||
| Interest, dividends and other | 68 | 170 | 75 | |||||||||||||
Costs and expenses | 5,021 | 4,852 | 4,103 | |||||||||||||
| Production costs | 2,656 | 2,229 | 2,159 | |||||||||||||
| Exploration costs | 206 | 150 | 126 | |||||||||||||
| Related party transactions | 6 | (15 | ) | (18 | ) | (10 | ) | |||||||||
| General and administrative | 228 | 158 | 136 | |||||||||||||
| Royalties | 142 | 84 | 78 | |||||||||||||
| Market development costs | 14 | 10 | 13 | |||||||||||||
| Depreciation, depletion and amortization | 720 | 615 | 615 | |||||||||||||
| Impairment of assets | 5 | 91 | 8 | 670 | ||||||||||||
| Interest expense | 5 | 151 | 123 | 72 | ||||||||||||
| Accretion expense | 5 | 22 | 17 | 22 | ||||||||||||
| Employment severance costs | 5 | 23 | 14 | 9 | ||||||||||||
| (Profit)/loss on sale of assets, realization of loans, indirect taxes and other | 5 | (3 | ) | 10 | (64 | ) | ||||||||||
| Non-hedge derivative loss and movement on bonds | 5 | 786 | 1,452 | 258 | ||||||||||||
| Other operating items | 5 | — | — | 19 | ||||||||||||
Income/(loss) from continuing operations before income tax and equity income in associates | 381 | (898 | ) | (373 | ) | |||||||||||
| Taxation (expense)/benefit | 7 | (255 | ) | 33 | (22 | ) | ||||||||||
| Equity income/(loss) in associates | 40 | 88 | (149 | ) | ||||||||||||
Net income/(loss) from continuing operations | 166 | (777 | ) | (544 | ) | |||||||||||
| Discontinued operations | 8 | — | — | 23 | ||||||||||||
Net income/(loss) | 166 | (777 | ) | (521 | ) | |||||||||||
| Less: Net income attributable to noncontrolling interests | (54 | ) | (48 | ) | (42 | ) | ||||||||||
Net income/(loss) — attributable to AngloGold Ashanti | 112 | (825 | ) | (563 | ) | |||||||||||
| Net income/(loss) — attributable to AngloGold Ashanti | ||||||||||||||||
| Income/(loss) from continuing operations | 112 | (825 | ) | (586 | ) | |||||||||||
| Discontinued operations | — | — | 23 | |||||||||||||
| 112 | (825 | ) | (563 | ) | ||||||||||||
Earnings/(loss) per share attributable to AngloGold Ashanti common stockholders: (cents) | ||||||||||||||||
| From continuing operations | 9 | |||||||||||||||
| Ordinary shares | 30 | (230 | ) | (186 | ) | |||||||||||
| E Ordinary shares | 15 | (115 | ) | (93 | ) | |||||||||||
| Ordinary shares — diluted | 30 | (230 | ) | (186 | ) | |||||||||||
| E Ordinary shares — diluted | 15 | (115 | ) | (93 | ) | |||||||||||
| Discontinued operations | 9 | |||||||||||||||
| Ordinary shares | — | — | 7 | |||||||||||||
| E Ordinary shares | — | — | 4 | |||||||||||||
| Ordinary shares — diluted | — | — | 7 | |||||||||||||
| E Ordinary shares — diluted | — | — | 4 | |||||||||||||
| Net income/(loss) | 9 | |||||||||||||||
| Ordinary shares | 30 | (230 | ) | (179 | ) | |||||||||||
| E Ordinary shares | 15 | (115 | ) | (89 | ) | |||||||||||
| Ordinary shares — diluted | 30 | (230 | ) | (179 | ) | |||||||||||
| E Ordinary shares — diluted | 15 | (115 | ) | (89 | ) | |||||||||||
Weighted average number of shares used in computation | 9 | |||||||||||||||
| Ordinary shares | 368,688,159 | 357,355,126 | 313,157,584 | |||||||||||||
| E Ordinary shares — basic and diluted | 3,182,662 | 3,873,169 | 4,046,364 | |||||||||||||
| Ordinary shares — diluted | 370,257,765 | 357,355,126 | 313,157,584 | |||||||||||||
Dividend paid per ordinary share (cents) | 18 | 13 | 13 | |||||||||||||
Dividend paid per E ordinary share (cents) | 9 | 7 | 7 | |||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements. | ||||||||||||||||
F-1
| Notes | 2011 $ | 2010 $ | 2009 $ | |||||||||||||
Sales and other income | 6,642 | 5,402 | 3,954 | |||||||||||||
Product sales | 6,570 | 5,334 | 3,784 | |||||||||||||
Interest, dividends and other | 72 | 68 | 170 | |||||||||||||
Costs and expenses | 4,521 | 5,021 | 4,852 | |||||||||||||
Production costs | 2,977 | 2,656 | 2,229 | |||||||||||||
Exploration costs | 279 | 206 | 150 | |||||||||||||
Related party transactions | 6 | (12) | (15) | (18) | ||||||||||||
General and administrative | 287 | 228 | 158 | |||||||||||||
Royalties | 193 | 142 | 84 | |||||||||||||
Market development costs | 9 | 14 | 10 | |||||||||||||
Depreciation, depletion and amortization | 789 | 720 | 615 | |||||||||||||
Impairment of assets | 5 | 17 | 91 | 8 | ||||||||||||
Interest expense | 5 | 178 | 151 | 123 | ||||||||||||
Accretion expense | 5 | 28 | 22 | 17 | ||||||||||||
Employment severance costs | 5 | 15 | 23 | 14 | ||||||||||||
(Profit)/loss on sale of assets, realization of loans, indirect taxes and other | 5 | (43) | (3) | 10 | ||||||||||||
Non-hedge derivative (gain)/loss and movement on bonds | 5 | (196) | 786 | 1,452 | ||||||||||||
Income/(loss) from continuing operations before income tax and equity income in associates | 2,121 | 381 | (898) | |||||||||||||
Taxation (expense)/benefit | 7 | (705) | (255) | 33 | ||||||||||||
Equity income in associates | 59 | 40 | 88 | |||||||||||||
Net income/(loss) from continuing operations | 1,475 | 166 | (777) | |||||||||||||
Net income/(loss) | 1,475 | 166 | (777) | |||||||||||||
Less: Net income attributable to noncontrolling interests | (50) | (54) | (48) | |||||||||||||
Net income/(loss) - attributable to AngloGold Ashanti | 1,425 | 112 | (825) | |||||||||||||
Earnings/(loss) per share attributable to AngloGold Ashanti common stockholders: (cents) | ||||||||||||||||
Net income/(loss) | 8 | |||||||||||||||
Ordinary shares | 371 | 30 | (230) | |||||||||||||
E Ordinary shares | 185 | 15 | (115) | |||||||||||||
Ordinary shares - diluted | 317 | 30 | (230) | |||||||||||||
E Ordinary shares - diluted | 171 | 15 | (115) | |||||||||||||
Weighted average number of shares used in computation | 8 | |||||||||||||||
Ordinary shares | 383,010,809 | 368,688,159 | 357,355,126 | |||||||||||||
Ordinary shares - diluted | 418,107,439 | 370,257,765 | 357,355,126 | |||||||||||||
E Ordinary shares - basic and diluted | 2,950,804 | 3,182,662 | 3,873,169 | |||||||||||||
Dividend paid per ordinary share (cents) | 34 | 18 | 13 | |||||||||||||
Dividend paid per E ordinary share (cents) | 17 | 9 | 7 | |||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements. | ||||||||||||||||
F - 1
Consolidated balance sheets
AT DECEMBER 31, 20102011 and 2009
2010
(In millions, except share information)
| 2010 | 2009 | |||||||||||
| Notes | $ | $ | ||||||||||
ASSETS | ||||||||||||
Current Assets | 1,997 | 2,758 | ||||||||||
| Cash and cash equivalents | 575 | 1,100 | ||||||||||
| Restricted cash | 10 | 10 | 12 | |||||||||
| Receivables | 298 | 206 | ||||||||||
| Trade | 11 | 53 | 45 | |||||||||
| Recoverable taxes, rebates, levies and duties | 156 | 82 | ||||||||||
| Related parties | 3 | 5 | ||||||||||
| Other | 11 | 86 | 74 | |||||||||
| Inventories | 12 | 792 | 663 | |||||||||
| Materials on the leach pad | 12 | 91 | 40 | |||||||||
| Derivatives | 24 | 1 | 330 | |||||||||
| Deferred taxation assets | 7 | 214 | 333 | |||||||||
| Assets held for sale | 17 | 16 | 74 | |||||||||
Property, plant and equipment, net | 13 | 5,926 | 5,454 | |||||||||
Acquired properties, net | 14 | 836 | 831 | |||||||||
Goodwill | 15 | 180 | 162 | |||||||||
Other intangibles, net | 15 | 17 | 18 | |||||||||
Derivatives | 24 | — | 5 | |||||||||
Other long-term inventory | 12 | 27 | 26 | |||||||||
Materials on the leach pad | 12 | 331 | 324 | |||||||||
Other long-term assets | 16 | 1,073 | 1,022 | |||||||||
Deferred taxation assets | 7 | 1 | 62 | |||||||||
Total assets | 10,388 | 10,662 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities | 1,004 | 4,475 | ||||||||||
| Trade accounts payable | 404 | 340 | ||||||||||
| Payroll and related benefits | 175 | 147 | ||||||||||
| Other current liabilities | 18 | 153 | 120 | |||||||||
| Derivatives | 24 | — | 2,525 | |||||||||
| Short-term debt | 19 | 135 | 1,292 | |||||||||
| Tax payable | 134 | 42 | ||||||||||
| Liabilities held for sale | 17 | 3 | 9 | |||||||||
Other non-current liabilities | 18 | 69 | 163 | |||||||||
Long-term debt | 19 | 1,730 | 667 | |||||||||
Long-term debt at fair value | 19 | 872 | — | |||||||||
Derivatives | 24 | 176 | 176 | |||||||||
Deferred taxation liabilities | 7 | 1,200 | 1,171 | |||||||||
Provision for environmental rehabilitation | 5 / 20 | 530 | 385 | |||||||||
Provision for labor, civil, compensation claims and settlements | 38 | 33 | ||||||||||
Provision for pension and other post-retirement medical benefits | 26 | 180 | 147 | |||||||||
Commitments and contingencies | 21 | — | — | |||||||||
Equity | 4,589 | 3,445 | ||||||||||
Common stock | ||||||||||||
| Share capital — 600,000,000 (2009 — 600,000,000) authorized common stock of 25 ZAR cents each. Stock issued 2010 — 381,204,080 (2009 — 362,240,669) | 13 | 12 | ||||||||||
| Additional paid in capital | 8,670 | 7,836 | ||||||||||
| Accumulated deficit | (3,869 | ) | (3,914 | ) | ||||||||
| Accumulated other comprehensive income | (385 | ) | (654 | ) | ||||||||
| Other reserves | 37 | 37 | ||||||||||
| Total AngloGold Ashanti stockholders’ equity | 4,466 | 3,317 | ||||||||||
| Noncontrolling interests | 123 | 128 | ||||||||||
Total liabilities and equity | 10,388 | 10,662 | ||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements. | ||||||||||||
F-2
Notes | 2011 $ | 2010 $ | ||||||||||||
ASSETS | ||||||||||||||
Current Assets | 2,631 | 1,997 | ||||||||||||
Cash and cash equivalents | 1,112 | 575 | ||||||||||||
Restricted cash | 9 | 35 | 10 | |||||||||||
Receivables | 351 | 298 | ||||||||||||
Trade | 10 | 46 | 53 | |||||||||||
Recoverable taxes, rebates, levies and duties | 170 | 156 | ||||||||||||
Other | 10 | 135 | 89 | |||||||||||
Inventories | 11 | 959 | 792 | |||||||||||
Materials on the leach pad | 11 | 98 | 91 | |||||||||||
Derivatives | 23 | - | 1 | |||||||||||
Deferred taxation assets | 7 | 75 | 214 | |||||||||||
Assets held for sale | 16 | 1 | 16 | |||||||||||
Property, plant and equipment, net | 12 | 6,123 | 5,926 | |||||||||||
Acquired properties, net | 13 | 779 | 836 | |||||||||||
Goodwill | 14 | 182 | 180 | |||||||||||
Other intangibles, net | 14 | 31 | 17 | |||||||||||
Other long-term inventory | 11 | 31 | 27 | |||||||||||
Materials on the leach pad | 11 | 393 | 331 | |||||||||||
Other long-term assets | 15 | 1,001 | 1,073 | |||||||||||
Deferred taxation assets | 7 | 14 | 1 | |||||||||||
Total assets | 11,185 | 10,388 | ||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities | 919 | 1,004 | ||||||||||||
Trade accounts payable | 473 | 404 | ||||||||||||
Payroll and related benefits | 186 | 175 | ||||||||||||
Other current liabilities | 17 | 120 | 153 | |||||||||||
Short-term debt | 18 | 30 | 133 | |||||||||||
Short-term debt at fair value | 18 | 2 | 2 | |||||||||||
Tax payable | 108 | 134 | ||||||||||||
Liabilities held for sale | 16 | - | 3 | |||||||||||
Other non-current liabilities | 17 | 63 | 69 | |||||||||||
Long-term debt | 18 | 1,715 | 1,730 | |||||||||||
Long-term debt at fair value | 18 | 758 | 872 | |||||||||||
Derivatives | 23 | 93 | 176 | |||||||||||
Deferred taxation liabilities | 7 | 1,242 | 1,200 | |||||||||||
Provision for environmental rehabilitation | 5 / 19 | 653 | 530 | |||||||||||
Provision for labor, civil, compensation claims and settlements | 35 | 38 | ||||||||||||
Provision for pension and other post-retirement medical benefits | 25 | 185 | 180 | |||||||||||
Commitments and contingencies | 20 | - | - | |||||||||||
Equity | 5,522 | 4,589 | ||||||||||||
Common��stock | ||||||||||||||
| Share capital - 600,000,000 (2010 - 600,000,000) authorized common stock of 25 ZAR cents each. Share capital - 4,280,000 (2010 - 4,280,000) authorized E ordinary shares of 25 ZAR cents each. Ordinary shares issued 2011 - 381,915,437 (2010 - 380,769,139). E ordinary shares issued 2011 - 1,050,000 (2010 - 1,120,000) | 13 | 13 | ||||||||||||
Additional paid in capital | 8,740 | 8,670 | ||||||||||||
Accumulated deficit | (2,575) | (3,869) | ||||||||||||
Accumulated other comprehensive income | (832) | (385) | ||||||||||||
Other reserves | 36 | 37 | ||||||||||||
Total AngloGold Ashanti stockholders’ equity | 5,382 | 4,466 | ||||||||||||
Noncontrolling interests | 140 | 123 | ||||||||||||
Total liabilities and equity | 11,185 | 10,388 | ||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements. | ||||||||||||||
F - 2
Consolidated statements of cash flows
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 2009 and 2008
2009
(In millions)
| 2010 | 2009 | 2008 | ||||||||||||||
| Notes | $ | $ | $ | |||||||||||||
Net cash provided by operating activities | 1,038 | 443 | 64 | |||||||||||||
| Net income/(loss) | 166 | (777 | ) | (521 | ) | |||||||||||
| Reconciled to net cash provided by operations: | ||||||||||||||||
| Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 22 | 18 | (64 | ) | ||||||||||||
| Depreciation, depletion and amortization | 720 | 615 | 615 | |||||||||||||
| Impairment of assets | 91 | 8 | 670 | |||||||||||||
| Deferred taxation | 138 | (199 | ) | (72 | ) | |||||||||||
| Cash utilized for hedge book settlements | (2,611 | ) | (797 | ) | (1,113 | ) | ||||||||||
| Movement in non-hedge derivatives and bonds | 2,544 | 1,689 | 511 | |||||||||||||
| Equity (income)/loss in associates | (40 | ) | (88 | ) | 149 | |||||||||||
| Dividends received from associates | 143 | 101 | 78 | |||||||||||||
| Other non cash items | 48 | (125 | ) | 27 | ||||||||||||
| Net increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | 131 | 19 | 24 | |||||||||||||
| Effect of changes in operating working capital items: | ||||||||||||||||
| Receivables | (153 | ) | (44 | ) | (7 | ) | ||||||||||
| Inventories | (215 | ) | (169 | ) | (131 | ) | ||||||||||
| Accounts payable and other current liabilities | 54 | 192 | (101 | ) | ||||||||||||
| Net cash provided by continuing operations | 1,038 | 443 | 65 | |||||||||||||
| Net cash used in discontinued operations | — | — | (1 | ) | ||||||||||||
Net cash used in investing activities | (1,887 | ) | (268 | ) | (1,593 | ) | ||||||||||
| Increase in non-current investments | (114 | ) | (89 | ) | (93 | ) | ||||||||||
| Associates and equity accounted joint ventures acquired | (44 | ) | (354 | ) | — | |||||||||||
| Proceeds on disposal of associates | 1 | — | 48 | |||||||||||||
| Associates loans advanced | (3 | ) | (2 | ) | (4 | ) | ||||||||||
| Associates loans repaid | — | — | 4 | |||||||||||||
| Additions to property, plant and equipment | (973 | ) | (1,019 | ) | (1,194 | ) | ||||||||||
| Proceeds on sale of mining assets | 69 | 1,142 | 39 | |||||||||||||
| Proceeds on sale of discontinued assets | — | — | 10 | |||||||||||||
| Proceeds on sale of available for sale investments | 79 | 2 | 4 | |||||||||||||
| Proceeds on redemption of held to maturity investments | 63 | 79 | 84 | |||||||||||||
| Cash outflows from derivatives purchased | (984 | ) | (18 | ) | (485 | ) | ||||||||||
| Loans receivable advanced | (6 | ) | — | — | ||||||||||||
| Loans receivable repaid | — | 1 | — | |||||||||||||
| Change in restricted cash | 25 | (10 | ) | (6 | ) | |||||||||||
Net cash generated by financing activities | 230 | 303 | 1,715 | |||||||||||||
| Short-term debt repaid | (1,522 | ) | (1,867 | ) | (298 | ) | ||||||||||
| Short-term debt raised | 363 | 1,014 | 110 | |||||||||||||
| Issuance of stock | 798 | 306 | 1,722 | |||||||||||||
| Share issue expenses | (20 | ) | (11 | ) | (54 | ) | ||||||||||
| Long-term debt repaid | (120 | ) | (864 | ) | (316 | ) | ||||||||||
| Long-term debt raised | 1,953 | 1,760 | 743 | |||||||||||||
| Debt issue costs | (39 | ) | (14 | ) | — | |||||||||||
| Cash outflows from derivatives with financing | (1,066 | ) | — | (134 | ) | |||||||||||
| Cash inflows from derivatives with financing | — | 35 | — | |||||||||||||
| Dividends paid to common stockholders | (67 | ) | (45 | ) | (41 | ) | ||||||||||
| Dividends paid to noncontrolling interests | (50 | ) | (11 | ) | (17 | ) | ||||||||||
Net (decrease)/increase in cash and cash equivalents | (619 | ) | 478 | 186 | ||||||||||||
Effect of exchange rate changes on cash | 105 | 47 | (88 | ) | ||||||||||||
Cash and cash equivalents — January 1, | 1,100 | 575 | 477 | |||||||||||||
Cash and cash equivalents — December 31, | 586 | (1) | 1,100 | 575 | ||||||||||||
| Notes | 2011 $ | 2010 $ | 2009 $ | |||||||||||||
Net cash provided by operating activities | 2,550 | 1,038 | 443 | |||||||||||||
Net income/(loss) | 1,475 | 166 | (777) | |||||||||||||
Reconciled to net cash provided by operations: | ||||||||||||||||
Loss on sale of assets, realization of loans, indirect taxes and other | 27 | 22 | 18 | |||||||||||||
Depreciation, depletion and amortization | 789 | 720 | 615 | |||||||||||||
Impairment of assets | 17 | 91 | 8 | |||||||||||||
Deferred taxation | 299 | 138 | (199) | |||||||||||||
Cash utilized for hedge book settlements | - | (2,611) | (797) | |||||||||||||
Movement in non-hedge derivatives and bonds | (196) | 2,544 | 1,689 | |||||||||||||
Equity income in associates | (59) | (40) | (88) | |||||||||||||
Dividends received from associates | 111 | 143 | 101 | |||||||||||||
Other non cash items | 29 | 48 | (125) | |||||||||||||
Net increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | 189 | 131 | 19 | |||||||||||||
Effect of changes in operating working capital items: | ||||||||||||||||
Receivables | (13) | (153) | (44) | |||||||||||||
Inventories | (244) | (215) | (169) | |||||||||||||
Accounts payable and other current liabilities | 126 | 54 | 192 | |||||||||||||
Net cash used in investing activities | (1,603) | (1,887) | (268) | |||||||||||||
Available for sale investments acquired | (47) | (22) | (12) | |||||||||||||
Held to maturity investments acquired | (100) | (92) | (77) | |||||||||||||
Associates and equity accounted joint ventures acquired | �� | (8) | (3) | (354) | ||||||||||||
Contributions to associates and equity accounted joint ventures | (107) | (41) | - | |||||||||||||
Proceeds on disposal of associates | - | 1 | - | |||||||||||||
Associates and equity accounted joint ventures loans advanced | (25) | (3) | (2) | |||||||||||||
Associates loans repaid | - | - | - | |||||||||||||
Additions to property, plant and equipment | (1,393) | (973) | (1,019) | |||||||||||||
Expenditure on intangible assets | (16) | - | - | |||||||||||||
Proceeds on sale of mining assets | 19 | 69 | 1,142 | |||||||||||||
Proceeds on sale of available for sale investments | 2 | 79 | 2 | |||||||||||||
Proceeds on redemption of held to maturity investments | 89 | 63 | 79 | |||||||||||||
Cash outflows from derivatives purchased | - | (984) | (18) | |||||||||||||
Loans receivable advanced | - | (6) | - | |||||||||||||
Loans receivable repaid | 4 | - | 1 | |||||||||||||
Proceeds on disposal of subsidiary | 9 | - | - | |||||||||||||
Cash of subsidiary disposed | (11) | - | - | |||||||||||||
Change in restricted cash | (19) | 25 | (10) | |||||||||||||
Net cash (used)/generated by financing activities | (319) | 230 | 303 | |||||||||||||
Short-term debt repaid | (118) | (1,522) | (1,867) | |||||||||||||
Short-term debt raised | 9 | 363 | 1,014 | |||||||||||||
Issuance of stock | 10 | 798 | 306 | |||||||||||||
Share issue expenses | (1) | (20) | (11) | |||||||||||||
Long-term debt repaid | (150) | (120) | (864) | |||||||||||||
Long-term debt raised | 100 | 1,953 | 1,760 | |||||||||||||
Debt issue costs | - | (39) | (14) | |||||||||||||
Cash outflows from derivatives with financing | - | (1,066) | - | |||||||||||||
Cash inflows from derivatives with financing | - | - | 35 | |||||||||||||
Dividends paid to common stockholders | (131) | (67) | (45) | |||||||||||||
Dividends paid to noncontrolling interests | (38) | (50) | (11) | |||||||||||||
Net increase/(decrease) in cash and cash equivalents | 628 | (619) | 478 | |||||||||||||
Effect of exchange rate changes on cash | (102) | 105 | 47 | |||||||||||||
Cash and cash equivalents - January 1, | 586 | 1,100 | 575 | |||||||||||||
Cash and cash equivalents - December 31, | 1,112 | 586 | (1) | 1,100 | ||||||||||||
| (1) | Includes cash and cash equivalents of held for sale assets of $11 million at December 31, 2010. | |
F-3The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 3
Consolidated statements of stockholders’ equity
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 2009 and 2008
2009
(In millions, except share information)
| AngloGold Ashanti stockholders | ||||||||||||||||||||||||||||||||
| Accumulated other | ||||||||||||||||||||||||||||||||
| Common | Additional paid | comprehensive | Accumulated | Other | Noncontrolling | |||||||||||||||||||||||||||
| Common | stock | in capital | income* | deficit | reserves | interests | Total | |||||||||||||||||||||||||
| stock | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Balance — January 1, 2008 | 276,544,061 | 10 | 5,607 | (625 | ) | (2,440 | ) | 63 | 2,615 | |||||||||||||||||||||||
| Net (loss)/income | (563 | ) | 42 | (521 | ) | |||||||||||||||||||||||||||
| Translation loss | (597 | ) | (8 | ) | (605 | ) | ||||||||||||||||||||||||||
| Net loss on cash flow hedges removed from other comprehensive income and reported in income, net of tax | 157 | 3 | 160 | |||||||||||||||||||||||||||||
| Net loss on cash flow hedges, net of tax | (61 | ) | (61 | ) | ||||||||||||||||||||||||||||
| Hedge ineffectiveness on cash flow hedges, net of tax | 8 | 8 | ||||||||||||||||||||||||||||||
| Net loss on available-for-sale financial assets arising during the period, net of tax | (29 | ) | (29 | ) | ||||||||||||||||||||||||||||
| Release on disposal of available-for-sale financial assets during the period, net of tax | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||
| Other comprehensive loss | (528 | ) | ||||||||||||||||||||||||||||||
| Comprehensive loss | (1,049 | ) | ||||||||||||||||||||||||||||||
| Acquisition of subsidiary | 1 | 1 | ||||||||||||||||||||||||||||||
| Stock issues as part of rights offer | 69,470,442 | 2 | 1,664 | 1,666 | ||||||||||||||||||||||||||||
| Stock issues as part of Golden Cycle acquisition | 3,181,198 | — | 118 | 118 | ||||||||||||||||||||||||||||
| Stock issues as part of Sao Bento acquisition | 2,701,660 | — | 70 | 70 | ||||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 672,545 | — | 14 | 14 | ||||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | 94 | — | 3 | 3 | ||||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 57,761 | — | 2 | 2 | ||||||||||||||||||||||||||||
| Stock based compensation expense | 24 | 24 | ||||||||||||||||||||||||||||||
| Dividends | (41 | ) | (17 | ) | (58 | ) | ||||||||||||||||||||||||||
Balance — December 31, 2008 | 352,627,761 | 12 | 7,502 | (1,148 | ) | (3,044 | ) | 84 | 3,406 | |||||||||||||||||||||||
| Net (loss)/income | (825 | ) | 48 | (777 | ) | |||||||||||||||||||||||||||
| Translation gain | 320 | 6 | 326 | |||||||||||||||||||||||||||||
| Net loss on cash flow hedges removed from other comprehensive income and reported in income, net of tax | 97 | 1 | 98 | |||||||||||||||||||||||||||||
| Net loss on cash flow hedges, net of tax | (12 | ) | (12 | ) | ||||||||||||||||||||||||||||
| Hedge ineffectiveness on cash flow hedges, net of tax | 5 | 5 | ||||||||||||||||||||||||||||||
| Net gain on available-for-sale financial assets arising during the period, net of tax | 72 | 72 | ||||||||||||||||||||||||||||||
| Realized loss in earnings on available-for-sale financial assets during the period, net of tax | 12 | 12 | ||||||||||||||||||||||||||||||
| Other comprehensive income | 501 | |||||||||||||||||||||||||||||||
| Comprehensive loss | (276 | ) | ||||||||||||||||||||||||||||||
| Share of capital transaction at equity accounted joint venture | 37 | 37 | ||||||||||||||||||||||||||||||
| Stock issues as part of equity offering | 7,624,162 | — | 280 | 280 | ||||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 1,131,916 | — | 25 | 25 | ||||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | 1,181 | — | 3 | 3 | ||||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 189,787 | — | 7 | 7 | ||||||||||||||||||||||||||||
| Stock based compensation expense | 19 | 19 | ||||||||||||||||||||||||||||||
| Dividends | (45 | ) | (11 | ) | (56 | ) | ||||||||||||||||||||||||||
Balance — December 31, 2009 | 361,574,807 | 12 | 7,836 | (654 | ) | (3,914 | ) | 37 | 128 | 3,445 | ||||||||||||||||||||||
| Net income | 112 | 54 | 166 | |||||||||||||||||||||||||||||
| Translation gain | 229 | 5 | 234 | |||||||||||||||||||||||||||||
| Net loss on cash flow hedges removed from other comprehensive income and reported in income, net of tax | 20 | 20 | ||||||||||||||||||||||||||||||
| Net gain on available-for-sale financial assets arising during the period, net of tax | 74 | 74 | ||||||||||||||||||||||||||||||
| Release on disposal of available-for-sale financial assets during the period, net of tax | (56 | ) | (56 | ) | ||||||||||||||||||||||||||||
| Realized loss in earnings on available-for-sale financial assets during the period, net of tax | 2 | 2 | ||||||||||||||||||||||||||||||
| Other comprehensive income | 274 | |||||||||||||||||||||||||||||||
| Comprehensive loss | 440 | |||||||||||||||||||||||||||||||
| Stock issues as part of equity offering | 18,140,000 | 1 | 772 | 773 | ||||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 823,411 | — | 26 | 26 | ||||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | — | — | 12 | 12 | ||||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 230,921 | — | 10 | 10 | ||||||||||||||||||||||||||||
| Stock based compensation expense | 14 | 14 | ||||||||||||||||||||||||||||||
| Dividends | (67 | ) | (64 | ) | (131 | ) | ||||||||||||||||||||||||||
Balance — December 31, 2010 | 380,769,139 | 13 | 8,670 | (385 | ) | (3,869 | ) | 37 | 123 | 4,589 | ||||||||||||||||||||||
| AngloGold Ashanti stockholders | ||||||||||||||||||||||||||||||
| Common stock | Common stock $ | Additional paid $ | Accumulated other comprehensive income* $ | Accumulated deficit $ | Other reserves | Noncontrolling interests $ | Total $ | |||||||||||||||||||||||
| Balance - January 1, 2009 | 354,027,761 | 12 | 7,502 | (1,148) | (3,044) | - | 84 | 3,406 | ||||||||||||||||||||||
| Net (loss)/income | (825) | 48 | (777) | |||||||||||||||||||||||||||
| Translation gain | 320 | 6 | 326 | |||||||||||||||||||||||||||
| Net loss on cash flow hedges removed from other comprehensive income and reported in income, net of tax | 97 | 1 | 98 | |||||||||||||||||||||||||||
| Net loss on cash flow hedges, net of tax | (12) | (12) | ||||||||||||||||||||||||||||
| Hedge ineffectiveness on cash flow hedges, net of tax | 5 | 5 | ||||||||||||||||||||||||||||
| Net gain on available-for-sale financial assets arising during the period, net of tax | 72 | 72 | ||||||||||||||||||||||||||||
| Realized loss in earnings on available-for-sale financial assets during the period, net of tax | 12 | 12 | ||||||||||||||||||||||||||||
| Other comprehensive income | 501 | |||||||||||||||||||||||||||||
| Comprehensive loss | (276) | |||||||||||||||||||||||||||||
| Share of capital transaction at equity accounted joint venture | 37 | 37 | ||||||||||||||||||||||||||||
| Stock issues as part of equity offering | 7,624,162 | - | 280 | 280 | ||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 1,131,916 | - | 25 | 25 | ||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | 1,181 | - | 3 | 3 | ||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 189,787 | - | 7 | 7 | ||||||||||||||||||||||||||
| Stock based compensation expense | 19 | 19 | ||||||||||||||||||||||||||||
| Dividends | (45) | (11) | (56) | |||||||||||||||||||||||||||
| Balance - December 31, 2009 | 362,974,807 | 12 | 7,836 | (654) | (3,914) | 37 | 128 | 3,445 | ||||||||||||||||||||||
| Net income | 112 | 54 | 166 | |||||||||||||||||||||||||||
| Translation gain | 229 | 5 | 234 | |||||||||||||||||||||||||||
| Net loss on cash flow hedges removed from other comprehensive income and reported in income, net of tax | 20 | 20 | ||||||||||||||||||||||||||||
| Net gain on available-for-sale financial assets arising during the period, net of tax | 69 | 69 | ||||||||||||||||||||||||||||
| Release on disposal of available-for-sale financial assets during the period, net of tax | (51) | (51) | ||||||||||||||||||||||||||||
| Realized loss in earnings on available-for-sale financial assets during the period, net of tax | 2 | 2 | ||||||||||||||||||||||||||||
| Other comprehensive income | 274 | |||||||||||||||||||||||||||||
| Comprehensive income | 440 | |||||||||||||||||||||||||||||
| Stock issues as part of equity offering | 18,140,000 | 1 | 772 | 773 | ||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 823,411 | - | 26 | 26 | ||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | - | - | 12 | 12 | ||||||||||||||||||||||||||
| E Ordinary shares of common stock cancelled - Izingwe Holdings | (280,000) | - | - | - | ||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 230,921 | - | 10 | 10 | ||||||||||||||||||||||||||
| Stock based compensation expense | 14 | 14 | ||||||||||||||||||||||||||||
| Dividends | (67) | (64) | (131) | |||||||||||||||||||||||||||
| Balance - December 31, 2010 | 381,889,139 | 13 | 8,670 | (385) | (3,869) | 37 | 123 | 4,589 | ||||||||||||||||||||||
| Net income | 1,425 | 50 | 1,475 | |||||||||||||||||||||||||||
| Translation loss | (388) | (6) | (394) | |||||||||||||||||||||||||||
| Net loss on available-for-sale financial assets arising during the period, net of tax | (81) | (81) | ||||||||||||||||||||||||||||
| Release on disposal of available-for-sale financial assets during the period, net of tax | 1 | 1 | ||||||||||||||||||||||||||||
| Realized loss in earnings on available-for-sale financial assets during the period, net of tax | 21 | 21 | ||||||||||||||||||||||||||||
| Other comprehensive income | (453) | |||||||||||||||||||||||||||||
| Comprehensive income | 1,022 | |||||||||||||||||||||||||||||
| Share of equity accounted joint venture’s other comprehensive income | (1) | (1) | ||||||||||||||||||||||||||||
| Stock issues as part of Share Incentive Scheme | 889,593 | - | 33 | 33 | ||||||||||||||||||||||||||
| Stock issues in exchange for E Ordinary shares cancelled | 99,747 | - | 20 | 20 | ||||||||||||||||||||||||||
| E Ordinary shares of common stock cancelled - Izingwe Holdings | (70,000) | - | - | - | ||||||||||||||||||||||||||
| Stock issues transferred from Employee Share Ownership Plan to exiting employees | 156,958 | - | 7 | 7 | ||||||||||||||||||||||||||
| Stock based compensation expense | 10 | 10 | ||||||||||||||||||||||||||||
| Dividends | (131) | (27) | (158) | |||||||||||||||||||||||||||
| Balance - December 31, 2011 | 382,965,437 | 13 | 8,740 | (832) | (2,575) | 36 | 140 | 5,522 | ||||||||||||||||||||||
*The cumulative translation loss included in accumulated other comprehensive income amounted to $924 million (2010: $536 million). The translation loss has no tax effect. The cumulative charge, net of deferred taxation of $1 million (2010: $1 million), included in accumulated other comprehensive income in respect of cash flow hedges amounted to $2 million (2010: $2 million). The cumulative gain, net of deferred taxation of $nil million (2010: $nil million), included in accumulated other comprehensive income in respect of available for sale financial assets amounted to $30 million (2010: $89 million). The cumulative gain included in accumulated other comprehensive income in respect of the hedge of a net investment in foreign entities amounted to $64 million (2010: $64 million). This gain is offset by $64 million (2010: $64 million) arising from translation of net investments in foreign entities.
As at December 31, 2011 and 2010, and 2009, $133$305 million and $254$133 million, respectively, of retained earnings arising from the Company’s equity accounted joint ventures and certain subsidiaries may not be remitted without third-party shareholder consent.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-4
F - 4
Notes to the consolidated financial statements
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 2009 and 2008
2009
(In millions, except share and per share information)
| 1. | NATURE OF OPERATIONS | |
AngloGold Limited was founded in June 1998 with the consolidation of the gold mining interests of Anglo American plc. AngloGold Ashanti Limited, |
AngloGold |
AngloGold Ashanti conducts gold-mining operations in the following |
• South |
• Continental Africa |
• Australasia |
• Americas | |
| 2. | ACCOUNTING CHANGES | |
Disclosures about the credit quality of financing receivables and the allowance for credit losses | ||
In July 2010, the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“the Codification” or “ASC”) guidance was issued for the disclosure of the allowance for credit losses and financing receivable modifications. The expanded disclosures include roll-forward schedules of the allowance for credit losses and enhanced disclosure of financing receivables that were modified during a reporting period and those that were previously modified and have re-defaulted. The new disclosure requirements are required for interim and annual periods beginning on or after December 15, 2010. Except for presentation changes, the adoption had no impact on the Company’s financial statements. |
In July 2010, the FASB issued guidance to address concerns about the sufficiency, transparency, and robustness of credit risk disclosures for financing receivables and the related allowance for credit losses. The guidance requires that entities disclose information at disaggregated levels. The expanded disclosures include information regarding the credit quality of receivables as of the end of a reporting period. | |
The new disclosure requirements apply to all entities that have lending arrangements in the form of receivables or a lessor’s right to lease payments (other than operating leases), although disclosures for trade accounts receivable with a contractual maturity of one year or less are exempt. For public entities, the new disclosures are required for interim and annual periods ending on or after December 15, 2010. Except for disclosure changes, the adoption had no impact on the Company’s financial statements. | ||
F-5
F - 5
| 2. | ACCOUNTING CHANGES(continued) | |
Fair value measurements | ||
F-6
| In January 2010, the ASC guidance for disclosures about fair value measurements was updated, providing amendments to the guidance which requires entities to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The updated guidance further clarified the level of disaggregation required for assets and liabilities and the disclosures required for inputs and valuation techniques used to measure the fair value of assets and liabilities that fall in either Level 2 or Level 3. The disclosures related to Level 1 and Level 2 fair value measurements are effective for interim and annual reporting periods beginning after December 15, 2009. Except for disclosure changes, the adoption of the updated guidance had no material impact on the Company’s financial statements. |
F-7
In January 2010, the FASB ASC guidance for disclosures about fair value measurements was updated requiring level 3 disclosure details regarding separate information about purchases, sales, issuances, and settlements in the reconciliation of fair value measurements using significant unobservable inputs. The disclosures related to Level 3 fair value measurements are effective for interim and annual reporting periods beginning after December 15, 2010. The adoption of the updated guidance had no impact on the Company’s financial statements as the Company does not have Level 3 fair value measurements. |
Interim disclosures about fair value of financial instruments |
In April 2009, the FASB updated the ASC guidance for interim disclosures about fair value of financial instruments which requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. It is effective for interim reporting periods ending after June 15, 2009. Except for presentation changes, the adoption had no impact on the Company’s financial statements. |
Assets and liabilities from contingencies in business combinations |
In April 2009, the FASB updated the ASC guidance for accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. The guidance addresses issues raised on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. It is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The Company adopted the provisions to be applied to all future business combinations. |
F - 6
| 3. | ACQUISITIONS AND DISPOSALS OF BUSINESSES AND ASSETS |
2011 acquisitions |
The Company made the following acquisition during the year: |
Ÿ Acquisition of an interest in First Uranium |
On July 22, 2011, AngloGold Ashanti acquired 47,065,916 shares (or 19.79 percent) in First Uranium Corporation, a Canadian incorporated company, from Village Main Reef Limited, a South African incorporated company, at a price of CAD0.60 per share ($0.64 per share), representing an aggregate consideration of $30 million. |
2011 disposal |
The Company’s disposal during the year included: |
ŸDisposal of ISSI |
AngloGold Ashanti disposed of its subsidiary ISS International Limited (“ISSI”) during the first quarter of 2011. The Company entered into a memorandum of understanding with The Institute of Mine Seismology relating to the disposal of ISSI. The sale was concluded on February 28, 2011, proceeds amounted to $9 million and the Company realized a profit of $2 million on disposal. |
2010 disposals |
The Company’s disposals during the year included: |
ŸDisposal of Tau Lekoa | |
On February 17, 2009, AngloGold Ashanti announced the terms of the sale of its Tau Lekoa mine, together with the adjacent properties Weltevreden, Jonkerskraal and Goedgenoeg, to Simmer & Jack Mines Limited (“Simmers”). The sale was concluded effective August 1, 2010. The selling price of R600 million ($85 million) was payable in two tranches, R450 million ($64 million) was paid in cash on August 4, 2010 with the remaining R150 million ($21 million) (which was subject to certain offset adjustments) being settled on November 1, 2010. The Company realized a loss of $7 million on the sale of Tau Lekoa. | |||
ŸDisposal of B2Gold | |||
AngloGold Ashanti |
F - 7
2009 acquisitionsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| 3. | ACQUISITIONS AND DISPOSALS OF BUSINESSES AND ASSETS(continued) |
2009 acquisitions |
The Company made the following acquisitions during the year: |
ŸAcquisition of an effective 45 percent interest in the Kibali gold project | |
With effect from December 22, 2009, AngloGold Ashanti and Randgold Resources Limited (“Randgold”) each hold an effective 45 percent interest in the Kibali gold project (formerly the Moto gold project), while Société des Mines d’Or de Kilo-Moto (“SOKIMO”) (formerly L’Office des Mines d’Or de Kilo-Moto (“OKIMO”)), a Congolese parastatal, holds the remaining 10 percent stake, thereby maintaining the continued vested interest of the Government of the Democratic Republic of the Congo (“the DRC”) in the Kibali gold project. |
The purchase price for the acquisition of AngloGold Ashanti’s initial interest of 35 percent in the Kibali gold project was funded by an offering of 7,624,162 ordinary shares at an issue price of $37.25 per ADS (or R288.32 per ordinary share) which represented | |
ŸAcquisition of an additional interest in Sadiola | |||
On December 29, 2009, AngloGold Ashanti, together with IAMGOLD Corporation purchased from the International Finance Corporation (“IFC”), the IFC’s 6 percent stake in Société d’Exploitation des Mines d’or de Sadiola (“SEMOS”), which owns the Sadiola Gold Mine for $12 million (AngloGold Ashanti’s share being $6 million) to be followed by contingent payments not exceeding $3 million (of which AngloGold Ashanti’s share is $1.5 million). This transaction has resulted in AngloGold Ashanti and IAMGOLD each increasing their respective interest in Sadiola from 38 percent to 41 percent. |
F-8
2009 disposal |
The Company’s disposal during the year included: |
ŸDisposal of Boddington Gold Mine | |
On January 28, 2009, AngloGold Ashanti announced that it had agreed to sell its 33.33 percent interest in the Boddington Gold Mine to Newmont Mining Corporation (“Newmont”). The transaction was completed on June 26, |
In terms of the agreement, the Company received payment of $750 million in cash during June 2009 and a further $240 million in December 2009. In addition, the Company is entitled to receive a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington Gold Mine’s cash costs plus $600 per ounce. The royalty |
F-9
F - 8
SIGNIFICANT ACCOUNTING POLICIES |
F-10
Basis of presentation: The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The Company presents its consolidated financial statements in United States dollars. The functional currency of a significant portion of the group’s operations is the South African rand. Other main subsidiaries have functional currencies of US dollars and Australian dollars. | ||
Use of estimates: The preparation of the financial statements requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. The Company regularly reviews estimates and assumptions that affect the annual financial statements, however, actual results could differ from those estimates. | ||
The more significant areas requiring the use of management estimates and assumptions include mineral reserves that are the basis of future cash flow estimates and unit-of-production depreciation, depletion and amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other materials in heap leach pads; asset impairments (including impairments of goodwill, long-lived assets, and investments); write-downs of inventory to net realizable value; post employment, post retirement and other employee benefit liabilities; valuation allowances for deferred taxation assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. | ||
The following are the accounting policies used by the Company which have been consistently applied: |
| 4.1 | Consolidation | ||
The consolidated financial information includes the financial statements of the Company and its subsidiaries. Where the Company has a direct or indirect controlling interest in an entity through a subsidiary, the entity is classified as a subsidiary. Interests in incorporated mining joint ventures in which the Company has joint control are accounted for by the equity method. | |||
The financial statements of subsidiaries and the Environmental Trust Fund (a rehabilitation trust under the Company’s control) are prepared for the same reporting period as the Company, using the same accounting policies, except for Rand Refinery Limited (a subsidiary of the Company) which reports on a three-month time lag. Adjustments are made to subsidiary financial results for material transactions and events in the intervening period. | |||
Subsidiaries are consolidated from the date on which control is transferred. They are de-consolidated from the date on which control ceases. | |||
All significant intercompany transactions and |
F-11
F - 9
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.2 | Investments in equity investees (associates and incorporated joint ventures) | ||
An associate is an entity other than a subsidiary in which the Company has a material long-term interest and in respect of which the Company has the ability to exercise significant influence over operational and financial policies, normally owning between 20 percent and 50 percent of the voting equity. | |||
A joint venture is an entity in which the Company holds a long-term interest and which is jointly controlled by the Company and one or more external joint venture partners under a contractual arrangement that provides for strategic, financial and operating policy decisions relating to the activities requiring unanimous consent. | |||
Investments in associates and incorporated joint ventures are accounted for using the equity method. | |||
Goodwill relating to associates and incorporated joint ventures is included in the carrying value of the Company’s investment. The total carrying value of equity accounted investments in associates and incorporated joint ventures, including goodwill, is evaluated for impairment when conditions indicate that a decline in fair value below the carrying amount is other than temporary or at least annually. When an | |||
Profits realized in connection with transactions between the Company and associated companies are eliminated in proportion to ownership. | |||
| 4.3 | Foreign currency transactions and foreign currency statements | ||
Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). | |||
Transactions and balances | |||
Transactions in foreign currencies are converted at the rates of exchange ruling at the date of these transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange ruling at balance sheet date. Non-monetary items are translated at historic rates. Gains, losses and costs associated with foreign currency transactions are recognized in the income statement in the period to which they relate, except where hedge accounting is applied. These transactions are included in the determination of other income. | |||
Group companies |
The results and financial position of all group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: |
share capital and premium are translated at historical rates of exchange; | |||
equity items other than profit attributable to equity shareholders are translated at the closing rate; | |||
assets and liabilities for each balance sheet presented are translated at the closing rate; | |||
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and | |||
all resulting exchange differences are recognized as a separate component of equity and included within accumulated other comprehensive income. |
F - 10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.3 | Foreign currency transactions and foreign currency statements(continued) |
Exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to stockholders’ equity on consolidation. | |||
When a foreign operation is sold, cumulative exchange differences are recognized in the income statement as part of the gain or loss on sale. | |||
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate at each balance sheet date. |
F-12
| 4.4 | Segmental reporting | ||
A segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other segments and are reported on a reporting segment basis using the management approach. This approach is based on the way management organizes segments within the Company for making operating decisions and assessing performance. The Chief Operating Decision Maker has determined that the Company operates primarily in the delivery of gold. | |||
| 4.5 | Cash and cash equivalents and restricted cash | ||
Cash and cash equivalents consist of cash balances and highly liquid investments with an original maturity of three months or less. Due to the short maturity of cash equivalents, their carrying amounts approximate their fair value. Restricted cash, classified as short-term, is reported separately in the consolidated balance sheets. Cash that is restricted as to withdrawal or use for other than current operations is classified as | |||
| 4.6 | Non-marketable debt securities | ||
Investments in non-marketable debt securities, for which the Company does not control or exercise significant influence, are classified as held to maturity and are subsequently measured at amortized cost. If there is evidence that held to maturity financial assets are impaired the carrying amount is reduced and the loss recognized in the income statement. | |||
| 4.7 | Marketable equity investments and debt securities | ||
Marketable equity investments and debt securities which are considered available-for-sale, are carried at fair value, and the unrealized gains and losses, net of tax, computed in marking these securities to market are reported within accumulated other comprehensive income in the period in which they arise. These amounts are removed from accumulated other comprehensive income and reported in income when the asset is derecognized or when there is evidence that the asset is impaired in accordance with the FASB ASC guidance on accounting for certain investments in debt and equity securities. AngloGold Ashanti considers several factors in determining other-than-temporary impairment losses: including the current and expected long-term business prospects of the issuer; the length of time and relative magnitude of the price decline and its ability and intent to hold the investment until the price recovers. | |||
Marketable debt securities that are classified as held to maturity are subsequently measured at amortized cost. If there is evidence that held to maturity financial assets are impaired the carrying amount is reduced and the loss recognized in the income statement. |
F - 11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.8 | Inventories | ||
Inventories, including gold in process, gold on hand (doré/bullion), uranium oxide, sulfuric acid, ore stockpiles and supplies, are stated at the lower of cost or market value. Gold in process is valued at the average total production cost at the relevant stage of production as described below. The cost of gold, uranium oxide and sulfuric acid is determined principally by the weighted average cost method using related production costs. | |||
Ore stockpiles are valued at the average moving cost of mining the ore. Supplies are valued at the lower of weighted average cost or market value. Heap leach pad materials are measured on an average total production cost basis. | |||
The cost of inventory is determined using the full absorption costing method. Gold in process and ore stockpile inventory include all costs attributable to the stage of completion. Costs capitalized to inventory include amortization of property, plant and equipment and capitalized mining costs, direct and indirect materials, direct labor, shaft overhead expenses, repairs and maintenance, utilities, metallurgy costs, attributable production taxes and royalties, and directly attributable mine costs. Gold on hand (doré/bullion) includes all gold in process and refining costs. Ore is recorded in inventory when blasted underground, or when placed on surface stockpiles in the case of open-pit operations. | |||
The costs of materials currently contained on the leach pad are reported as a separate line item and classified as either short-term or long-term. Materials on the leach pad are classified as short-term if the Company expects the related gold to be recovered within twelve months. The short-term portion is determined by multiplying the average cost per ounce in inventory by the expected production ounces for the next twelve months. Heap leach pad inventory occurs in two forms: (1) gold recoverable but yet to be dissolved (i.e. gold still in the ore), and (2) gold recoverable from gold dissolved in solution within the leach pad (i.e. pore water). This estimate was used in determining the short-term portion of materials on the leach pad. |
F-13
| 4.9 | Development costs and stripping costs | ||
Development costs relating to major programs at existing mines are capitalized. Development costs consist primarily of expenditures to initially establish a mine and to expand the capacity of operating mines. | |||
Post production stripping costs are considered costs of the extracted minerals under a full absorption costing system and recognized as a component of inventory to be recognized in cost of sales in the same period as the revenue from the sale of the inventory. Additionally, capitalization of such costs only occurs to the extent inventory exists at the end of a reporting period. | |||
Costs associated with the opening of a new pit, are capitalized as mine development costs. |
F - 12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.10 | Depreciation, depletion and amortization | ||
Mine development costs, mine plant facilities and other fixed assets | |||
Mine development costs, mine plant facilities and other fixed assets are recorded at cost less accumulated amortization and impairments. Cost includes pre-production expenditure incurred during the development of a mine and the present value of future decommissioning costs. | |||
Capitalized mine development costs include expenditure incurred to develop new orebodies, to define further mineralization in existing orebodies and to expand the capacity of a mine. Where funds have been borrowed specifically to finance a project, the amount of interest capitalized represents the actual borrowing costs incurred. | |||
Depreciation, depletion and amortization of mine development costs are computed principally by the units-of-production method based on estimated proven and probable mineral reserves. Proven and probable mineral reserves reflect estimated quantities of economically recoverable reserves which can be recovered in the future from known mineral deposits. | |||
Mine plant facilities are amortized using the lesser of their useful life or units-of-production method based on estimated proven and probable mineral reserves. Main shafts are depleted using the units-of-production method based on total proven and probable reserves as the shaft will be used over the life of the mine. Other infrastructure costs including ramps, stopes, laterals, etc. and ore reserve development are depleted using proven and probable reserves applicable to that specific area. When an area is vacated and there is no longer an intention to mine due to a change in mine plans, all costs that have not been depleted are written off. | |||
Other fixed assets comprising vehicles and computer equipment, are depreciated by the straight-line method over their estimated useful lives as follows: |
Ÿvehicles up to five years; and | |||
Ÿcomputer equipment up to three years. |
Acquired properties |
Acquired properties are carried at amortized cost. Purchased undeveloped mineral interests are acquired mineral rights and are recorded as tangible assets as part of acquired properties. The amount capitalized related to a mineral interest represents its fair value at the time it was acquired, either as an individual asset purchase or as a part of a business combination. “Brownfield” stage mineral interests represent interests in properties that are believed to potentially contain other mineralized material, such as measured, indicated or inferred mineral resources with insufficient drill spacing to qualify as proven and probable mineral reserves, that is in proximity to proven and probable mineral reserves and within an immediate mine structure. “Greenfield” stage mineral interests represent interests in properties that are other mine-related or greenfields exploration potential that are not part of measured or indicated resources and are comprised mainly of material outside of a mine’s infrastructure. The Company’s mineral rights are enforceable regardless of whether proven and probable mineral reserves have been established. The Company has the ability and intent to renew mineral rights where the existing term is not sufficient to recover all identified and valued proven and probable mineral reserves and/or undeveloped mineral interests. |
F-14
Both Brownfield properties | |||
| Greenfield mineral interests are carried at acquired costs until such time as a mineral interest enters the production stage and are amortized using the unit-of-production method based on estimated proven and probable mineral reserves. | |||
Both Brownfield properties and Greenfield mineral interests are evaluated for impairment as held-for-use assets in accordance with the Company’s asset impairment accounting policy. See Note 4.13. |
F - 13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.11 | Other mining costs | ||
Other mining costs including repair and maintenance costs incurred in connection with major maintenance activities are charged to | |||
| 4.12 | Goodwill and other intangibles | ||
Goodwill |
Where an investment in a subsidiary, joint venture or an associate is made, any excess of the purchase price over the fair value of the attributable mineral reserves including value beyond proven and probable, acquired properties and other net assets is recognized as goodwill. | ||
Goodwill relating to subsidiaries is tested for impairment at least annually or when indicators of impairment exist and is carried at cost less accumulated impairment losses. Potential impairment is identified by comparing the fair value of a reporting unit with its carrying amount. The fair value of a reporting unit is determined using an expected present value technique. | |||
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to reporting units for the purpose of impairment testing. | |||
Goodwill relating to incorporated joint ventures and associates is included within the carrying value of the investment in incorporated joint ventures and associates and tested for impairment when indicators exist. See Note 4.2. | |||
The allocation of goodwill to an individual operating mine will result in an eventual goodwill impairment due to the wasting nature of the mine reporting unit. The Company performs its annual impairment review of assigned goodwill during the fourth quarter of each year. |
Software |
Software purchased, including direct costs associated with customization and installation of the software, is capitalized as other intangible assets. |
Internally-developed software is capitalized when it meets the criteria for capitalization. Other software development expenditure is charged to the income statement as incurred. Software is amortized on a straight-line basis over its useful life which is determined to be the lesser of: |
Ÿ the license period of the software; |
Ÿ the period to the manufacturer’s next announced upgrade that management intends to implement; or |
Ÿ three years. |
Useful lives are reviewed, and adjusted if appropriate, at the beginning of each financial year. |
| 4.13 | Asset impairment | ||
The Company evaluates its held-for-use long lived assets for impairment when events or changes in circumstances indicate that the related carrying amount may not be recoverable. If the sum of estimated future cash flows on an undiscounted basis is less than the carrying amount of the related asset, including goodwill, if any, an asset impairment is considered to exist. The related impairment loss is measured by comparing estimated future cash flows on a discounted basis to the carrying amount of the asset. Management’s estimate of future cash flows is subject to risk and uncertainties. It is therefore reasonably possible that changes could occur which may affect the recoverability of the group’s mining assets. The Company records a reduction of a group of assets to fair value as a charge to earnings if expected future cash flows are less than the carrying amount. The Company estimates fair value by discounting the expected future cash flows using a discount factor that is commensurate with the risks involved, considering the term of the expected cash flows and any asset specific and country risks. In addition, an asset impairment is considered to exist where the fair value less costs to sell of an asset held for sale is below its carrying amount. |
F - 14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.14 | Borrowing costs | ||
Interest on borrowings relating to the financing of major capital projects under construction is capitalized during the construction phase as part of the cost of the project. Such borrowing costs are capitalized over the period during which the asset is being acquired or constructed and borrowings have been incurred. Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete. Other borrowing costs are expensed as incurred. |
F-15
| 4.15 | Leased assets | ||
Assets subject to finance leases are capitalized at the lower of fair value or present value of minimum lease payments with the related lease obligation recognized at the same amount. Capitalized leased assets are depreciated over the shorter of their estimated useful lives and the lease term. Finance lease payments are allocated using the effective interest rate method, between the lease finance cost, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor. | |||
Operating lease rentals are charged against operating profits in a systematic manner related to the period the assets concerned will be used. | |||
| 4.16 | Provisions | ||
Provisions are recognized when the Company has a present obligation, whether legal or constructive, as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. | |||
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. | |||
| 4.17 | Taxation | ||
Current and deferred taxation is recognized as income or expense and included in the profit or loss for the period, except to the extent that the tax arises from a transaction or event which is recognized, in the same or a different period directly in equity; or a business combination that is an acquisition. See Note 4.22. | |||
Current taxation is measured on taxable income at the applicable enacted statutory rates. | |||
The Company’s operation involves dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities and resolution of disputes arising from federal, state, and international tax audits. A tax position is recognized in the financial statements when it is ‘more-likely-than-not’ that the tax position will be sustained upon examination by the relevant taxing authority based on the technical merits. The Company recognizes tax liabilities for anticipated tax audit issues in tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company recognizes interest and penalties, if any, in the income statement as part of |
F - 15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.18 | Asset retirement obligations and rehabilitation costs | ||
The Company accounts for asset retirement obligations (“AROs”) in accordance with the FASB ASC guidance on accounting for asset retirement obligations. | |||
AROs, also referred to as decommissioning costs, arise from the acquisition, development, construction and operation of mining property, plant and equipment, due to government controls and regulations that protect the environment on the closure and reclamation of mining properties. The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred. When the liability is initially recorded, the cost is capitalized by increasing the carrying amount of the related long-lived asset. Over time, the liability is increased to reflect an interest element (accretion) considered in its initial measurement at fair value, and the capitalized cost is amortized over the useful life of the related asset. Where the obligation arises from activities that are operational in nature and does not give rise to future economic benefit, the capitalized cost is amortized in the period incurred. Upon settlement of the liability, a gain or loss will be recorded if the actual cost incurred is different from the liability recorded. | |||
Rehabilitation costs and related liabilities are based on the Company’s interpretation of current environmental and regulatory requirements. | |||
Based on current environmental regulations and known rehabilitation requirements, management has included its best estimate of these obligations in its rehabilitation accrual. However, it is reasonably possible that the Company’s estimates of its ultimate rehabilitation liabilities could change as a result of changes in regulations or cost estimates. | |||
Environmental liabilities other than rehabilitation costs which relate to liabilities from specific events are accrued when they are known, probable and reasonably estimable. |
F-16
| 4.19 | Product sales | ||
Revenue from product sales is recognized when: |
Ÿpersuasive evidence of an arrangement exists; | |||
Ÿdelivery has occurred or services have been rendered; | |||
Ÿthe seller’s price to the buyer is fixed or determinable; and | |||
Ÿ collectability is reasonably assured. |
The sales price, net of any taxes, is fixed on either the terms of gold sales contracts or the gold spot price. | ||
| 4.20 | Financial instruments | ||
Financial instruments recognized on the balance sheet include investments, loans receivable, trade and other receivables, cash and cash equivalents, borrowings, derivatives, and trade and other payables. Financial instruments are initially measured at cost, including transaction costs, when the Company becomes a party to the contractual arrangements. Subsequent measurement of derivative instruments is dealt with below. | |||
Derivatives |
The Company accounts for derivative contracts in accordance with the FASB ASC guidance on accounting for derivative instruments and hedging activities, which requires all contracts that meet the definition of a derivative to be recognized on the balance sheet as either assets or liabilities and recorded at fair value. Gains or losses arising from remeasuring derivatives to fair value at each reporting period are accounted for either in the income statement or in accumulated other comprehensive income, depending on the use and designation of the derivative and whether it qualifies for hedge accounting. The key criterion which must be met in order to qualify for hedge accounting, is that the derivative must be highly effective in offsetting the change in the fair value or cash flows of the hedged item. |
F - 16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.20 | Financial instruments(continued) |
Contracts that meet the criteria for hedge accounting are designated as the hedging instruments hedging the variability of forecasted cash flows from capitalized expenditure and the sale of production into the spot market, and are classified as cash flow hedges. Where a derivative qualifies as the hedging instrument in a cash flow hedge, changes in fair value of the hedging instruments, to the extent effective, are deferred in accumulated other comprehensive income and reclassified to earnings as product sales or as an adjustment to depreciation expense pertaining to capital expenditure, when the hedged transaction occurs. The ineffective portion of changes in fair value of the cash flow hedging instruments is reported in earnings as gains or losses on non-hedge derivatives in the period in which they occur. | |||
All other contracts not meeting the criteria for the normal purchases and sales exemption or hedge accounting are recorded at their fair market value, with changes in value at each reporting period recorded in earnings as gains or losses on non-hedge derivatives. | |||
Cash flows from derivative instruments accounted for as cash flow hedges and non-hedge derivatives are included in net cash provided by operating activities in the consolidated statements of | |||
The estimated fair values of derivatives are determined at discrete points in time based on relevant market information. These estimates are calculated with reference to the market rates using industry standard valuation techniques. | |||
Certain derivative instruments are designated as hedges of foreign currency denominated borrowings and investments in foreign entities. This designation is reviewed at least quarterly, or as borrowing and investment levels change. The hedge amounts (to the extent effective) are recorded as an offset to the translation gains/losses being hedged. |
F-17
| 4.21 | Employee benefits | ||
Pension obligations |
Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee administered funds, determined by annual actuarial calculations. The Company has both defined benefit and defined contribution plans. | ||
The current service cost in respect of defined benefit plans is recognized as an expense in the current year. Past service costs, experience adjustments, the effect of changes in actuarial assumptions and the effects of plan amendments in respect of existing employees are recognized as an expense or income as and when they arise. This method is applied consistently in each period end to all gains and losses. | |||
The asset/liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. | |||
The contributions on defined contribution plans are recognized as employee benefit expense when due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. |
F - 17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.21 | Employee benefits(continued) |
Other post-employment benefit obligations | ||
Some group companies provide post-retirement healthcare benefits. The expected costs of these benefits are accrued over the period of employment using an accounting methodology on the same basis as that used for defined benefit pension plans. These obligations are valued annually by independent qualified actuaries. Actuarial gains and losses arising in the plan are recognized as income or expense as and when they arise. | |||
Termination benefits |
The Company recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan; or providing termination benefits as a result of an offer made to encourage voluntary redundancy based on the number of employees expected to accept the offer. Benefits falling due more than twelve months after balance sheet date are discounted to present value. | ||
| 4.22 | Deferred taxation | ||
The Company follows the liability method of accounting for deferred taxation whereby the Company recognizes the tax consequences of temporary differences by applying enacted tax rates applicable to future years to differences between financial statement amounts and the tax bases of certain assets and liabilities. Changes in deferred taxation assets and liabilities include the impact of any tax rate changes enacted during the year. Principal temporary differences arise from depreciation on property, plant and equipment, derivatives, provisions and tax losses carried forward. A valuation allowance is recorded to reduce the carrying amounts of deferred taxation assets if it is more likely than not that such assets will not be realized. | |||
| 4.23 | Dividends | ||
Dividends are recognized when declared by the board of directors. Dividends may be payable in Australian dollars, South African rands, United Kingdom pounds or Ghanaian cedis. Dividends declared to foreign stockholders are not subject to approval by the South African Reserve Bank in terms of South African foreign exchange control regulations. Dividends are freely transferable to foreign stockholders from both trading and non-trading profits earned in South Africa by publicly listed companies. Under South African law, the Company may declare and pay dividends from any reserves included in total shareholders’ equity (including share capital and premium) calculated in accordance with International Financial Reporting Standards |
F-18
| 4.24 | Earnings per share | ||
Earnings and diluted earnings per share have been calculated, for each class of common stock outstanding, | |||
The rights, including the liquidation, voting and dividend rights, of holders of Ordinary shares and E Ordinary shares are identical. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Ordinary and E Ordinary shares as if the earnings for the year had been distributed. As only 50 percent of dividends are paid to E ordinary share holders in cash (the remaining 50 percent reduces the exercise price of the E ordinary shares), the undistributed earnings are allocated between E ordinary shares and ordinary shares based on this proportionate basis. Further, as the Company assumes the conversion of E Ordinary shares in the computation of the diluted net income (loss) per share of Ordinary shares, the undistributed earnings are equal to net income (loss) for the computation. |
F - 18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.25 | Exploration and evaluation costs | ||
The Company expenses all exploration costs until the directors conclude that a future economic benefit is more likely than not of being realized. In evaluating if expenditures meet this criterion to be capitalized, the directors utilize several different sources of information depending on the level of exploration. While the criteria for concluding that expenditure should be capitalized is always probable, the information that the directors use to make that determination depends on the level of exploration. |
Costs on greenfields sites, being those where the Company does not have any mineral deposits which are already being mined or developed, are expensed as incurred until the directors are able to demonstrate that future economic benefits are probable, which generally will be the establishment of proven and probable reserves at this location.
Costs on brownfields sites, being those adjacent to mineral deposits which are already being mined or developed, are expensed as incurred until the directors are able to demonstrate that future economic benefits are probable, which generally will be the establishment of increased proven and probable reserves after which the expenditure is capitalized as a mine development cost.
Costs relating to extensions of mineral deposits, which are already being mined or developed, including expenditure on the definition of mineralization of such mineral deposits, are capitalized as mine development costs.
Costs relating to property acquisitions are capitalized within development costs. | |||
Drilling and related costs incurred on sites without an existing mine and on areas outside the boundary of a known mineral deposit that contain proven and probable reserves are recorded as exploration expenditures and are expensed as incurred. | |||
Drilling and related costs incurred to define and delineate a residual mineral deposit that has not been classified as proven and probable reserves at a development stage or production stage mine are capitalized when management determines that there is sufficient evidence that the expenditure will result in a future economic benefit to the Company in the accounting period when the expenditure is made. Management evaluates whether or not there is sufficient geologic and economic certainty of being able to convert a residual mineral deposit into a proven and probable reserve at a development stage or production stage mine, based on the known geologic and metallurgy, existing mining and processing facilities, operating permits and environmental programs. Therefore prior to capitalizing such costs, management determines that the following conditions have been met: |
F-19
| a. | There is a probable future benefit; | ||
| b. | AngloGold Ashanti can obtain the benefit and control access to it; and | ||
| c. | The transaction or event giving rise to it has already occurred. |
F - 19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.25 | Exploration and evaluation costs(continued) |
The Company understands that there is diversity in practice within the mining industry, in that some companies expense the drilling and related costs incurred to define and delineate residual mineral deposits that have not been classified as proven and probable reserves at a development stage or production stage mine. Had AngloGold Ashanti expensed such costs as incurred, net income, earnings per share and retained earnings would have been lower by |
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| ||||||||
Net income ($ millions) | 10 | 27 | 16 | |||||
Earnings per share (1)(cents) | 3 | 7 | 4 | |||||
Retained income - January 1 ($ millions) | 113 | 86 | 70 | |||||
Retained income - December 31 ($ millions) | 123 | 113 | 86 | |||||
| ||||||||
(1) Impact per basic and diluted earnings per common share. | ||||||||
| 2010 | 2009 | 2008 | ||||||||||
| Net income ($ millions) | 27 | 16 | 10 | |||||||||
Earnings per share(1)(cents) | 7 | 4 | 3 | |||||||||
| Retained income — January 1 ($ millions) | 86 | 70 | 60 | |||||||||
| Retained income — December 31 ($ millions) | 113 | 86 | 70 | |||||||||
| 4.26 | Stock-based compensation plans | ||
The Company’s management awards certain employees stock options on a discretionary basis. | |||
The fair value of the stock-based payments is calculated at grant date using an appropriate model. For equity settled stock-based payments, the fair value is determined using a Black-Scholes method and expensed on a straight-line basis over the vesting period based on the group’s estimate of shares that will eventually vest. | |||
Option schemes which include non-market vesting conditions have been calculated using the Black-Scholes model. For all other stock-based payments to employees the fair value is determined by reference to the market value of the underlying stock at grant date adjusted for the effects of the relevant terms and conditions. | |||
For schemes with non-market related vesting conditions, the likelihood of vesting has been taken into account when determining the income statement charge. Vesting assumptions are reviewed during each reporting period. | |||
Stock options are subject to a three year vesting condition and their fair value is recognized as an employee benefit expense with a corresponding increase in Additional paid in capital over the vesting period. The proceeds received, net of any directly attributable transaction costs are credited to Common stock and Additional paid in capital when the options are exercised. |
F-20
F - 20
| 4. | SIGNIFICANT ACCOUNTING POLICIES(continued) |
| 4.27 | Recent pronouncements | ||
Goodwill impairment testing |
In | |||
Presentation of comprehensive income |
In | |||
Fair value measurements |
In |
F-21
F - 21
| 5. | COSTS AND EXPENSES | |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| South Africa | 19 | 10 | 9 | |||||||||
| Continental Africa | 1 | 3 | — | |||||||||
| Americas | 3 | 1 | — | |||||||||
| 23 | 14 | 9 | ||||||||||
Employment severance costs |
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| $ | $ | $ | ||||||
| ||||||||
South Africa | 9 | 19 | 10 | |||||
Continental Africa | 3 | 1 | 3 | |||||
Americas | 3 | 3 | 1 | |||||
| ||||||||
| 15 | 23 | 14 | ||||||
| ||||||||
Employee severance costs were due to retrenchments reflecting downsizing and rationalization of operations resulting in a planned reduction in workforce. | |
Interest |
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| $ | $ | $ | ||||||
| ||||||||
Finance costs on rated bonds (1) | 56 | 38 | - | |||||
Finance costs on convertible bonds (2) | 25 | 22 | 18 | |||||
Finance costs on mandatory convertible bonds (3) | 47 | 13 | - | |||||
Finance costs on bank loans and overdrafts | 10 | 19 | 55 | |||||
Unwinding of discount on convertible bonds | 28 | 27 | 18 | |||||
Amortization of deferred loan fees (4) | 7 | 20 | 31 | |||||
Capital lease charges | 5 | 5 | 3 | |||||
Discounting of non-current trade and other debtors | - | 6 | 6 | |||||
Other | 3 | 1 | 5 | |||||
| ||||||||
| 181 | 151 | 136 | ||||||
Less : Amounts capitalized on qualifying assets | (3) | - | (13) | |||||
| ||||||||
| 178 | 151 | 123 | ||||||
| ||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Finance costs on rated bonds | 38 | — | — | |||||||||
Finance costs on convertible bonds(1) | 22 | 18 | 7 | |||||||||
| Finance costs on mandatory convertible bonds | 13 | — | — | |||||||||
| Finance costs on bank loans and overdrafts | 19 | 55 | 47 | |||||||||
| Finance costs on corporate bond | — | — | 18 | |||||||||
| Unwinding of discount on convertible bonds | 27 | 18 | 20 | |||||||||
| Amortization of deferred loan fees | 20 | 31 | 2 | |||||||||
| Capital lease charges | 5 | 3 | 3 | |||||||||
| Discounting of non-current trade and other debtors | 6 | 6 | 1 | |||||||||
| Other | 1 | 5 | 4 | |||||||||
| 151 | 136 | 102 | ||||||||||
Less : Amounts capitalized(2) | — | (13 | ) | (30 | ) | |||||||
| 151 | 123 | 72 | ||||||||||
| (1) | On April 28, 2010, AngloGold Ashanti Holdings plc issued $1.0 billion of 10-year and 30-year unsecured notes. The issue consisted of $700 million of 10-year unsecured notes at a semi-annual coupon of 5.375 percent and $300 million of 30-year unsecured notes at a semi-annual coupon of 6.5 percent. See Note 18. |
| (2) | The $1.0 billion 2.375 percent convertible bond (issued February 27, 2004) was repaid on February 27, 2009. On May 22, 2009, AngloGold Ashanti Holdings Finance plc |
| (3) | In September 2010, AngloGold Ashanti Holdings Finance plc issued $789 million of mandatory convertible bonds at a coupon rate of 6 percent due in September 2013. See Note 18. |
| (4) |
|
F-22
F - 22
| 5. | COSTS AND EXPENSES(continued) | |
Impairment of assets |
Impairments are made up as follows: |
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| $ | $ | $ | ||||||
| ||||||||
South Africa | ||||||||
Impairment of abandoned shaft pillar development at TauTona(1) | 9 | - | - | |||||
Impairment and write-off of Savuka(2) | 3 | 16 | - | |||||
Impairment and write-off of waste wash plant at Kopanang mine(3) | 2 | - | - | |||||
Below 120 level at TauTona(4) | - | 47 | - | |||||
Impairment of Tau Lekoa(5) | - | 8 | 4 | |||||
Continental Africa | ||||||||
Impairment and write-off of vehicles and mining equipment at Obuasi mine | 2 | - | - | |||||
Impairment of Iduapriem obsolete tailings storage facility(6) | - | 8 | - | |||||
Impairment and write-off of vehicles and heavy mining equipment at Geita mine | - | 5 | - | |||||
Impairment and write-off of tailings treatment plant at Obuasi mine(7) | - | 3 | - | |||||
Impairment and write-off of oxide treatment plant at Obuasi mine(8) | - | - | 4 | |||||
Americas | ||||||||
Write-off of mining assets at Serra Grande | - | 3 | - | |||||
Other | ||||||||
Impairment and write-off of various minor tangible assets and equipment | 1 | 1 | - | |||||
| ||||||||
| 17 | 91 | 8 | ||||||
| ||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
South Africa | ||||||||||||
Below 120 level at TauTona(1) | 47 | — | 16 | |||||||||
Impairment and write-off of Savuka(2) | 16 | — | — | |||||||||
Impairment of Tau Lekoa(3) | 8 | 4 | — | |||||||||
Continental Africa | ||||||||||||
Impairment of Iduapriem obsolete tailings storage facility(4) | 8 | — | — | |||||||||
Impairment of Geita mining assets(5) | 5 | — | 299 | |||||||||
Impairment of goodwill held in Geita mine(5) | — | — | 181 | |||||||||
Impairment and write-off of tailings treatment plant at Obuasi mine(6) | 3 | — | — | |||||||||
Impairment and write-off of oxide treatment plant at Obuasi mine(7) | — | 4 | — | |||||||||
Impairment of goodwill held in Obuasi mine(8) | — | — | 104 | |||||||||
Impairment of abandoned shaft infrastructure and reserve power plant at Obuasi mine(9) | — | — | 15 | |||||||||
Impairment of reserve power plant at Iduapriem mine(9) | — | — | 3 | |||||||||
Impairment of goodwill held in Iduapriem mine(10) | — | — | 14 | |||||||||
Impairment of exploration assets in the DRC(11) | — | — | 29 | |||||||||
| Impairment of obsolete heap leach plant infrastructure at Siguiri mine | — | — | 7 | |||||||||
Americas | ||||||||||||
| Write-off of mining assets at Serra Grande | 3 | — | — | |||||||||
Other | ||||||||||||
| Impairment and write-off of various minor tangible assets and equipment | 1 | — | 2 | |||||||||
| 91 | 8 | 670 | ||||||||||
| (1) | Due to a change in the mine plan resulting from safety related concerns following seismic activity, the VCR shaft pillar and ore pass development have been abandoned and is no longer expected to generate future cash flows. |
| (2) | Due to a further change in the mine plan during 2011, the Savuka assets have been abandoned and are not expected to generate future cash flows. |
| (3) | The use of the waste wash plant was discontinued as it did not yield the desired benefit. |
| (4) | Due to a change in the mine plan resulting from safety related concerns following seismic activity, a portion of the below 120 level development has been abandoned and |
Following the classification of Tau Lekoa as held for sale in 2009, impairment testing was performed on the held for sale asset. As the estimated fair value less costs to sell did not support the carrying value, an impairment was recorded for held for sale assets. The sale of Tau Lekoa was concluded effective August 1, 2010. |
The use of the tailings storage facility was |
Due to safety related concerns the use of the tailings treatment plant was discontinued. |
Due to damage suffered by the leach tanks of the treatment plant, its use was discontinued in 2009. | ||
F-23
F - 23
| 5. | COSTS AND EXPENSES(continued) | |
The following estimates and assumptions were used by management when reviewing goodwill and long-lived assets for impairment: |
the gold price assumption represented management’s best estimate of the future price of gold. In arriving at the estimated long-term gold price, management considered all available market information including current prices, historical averages, and forward pricing curves. The long-term gold price is based on a range of economic and market conditions | |||
proven and probable ore reserves as well as value beyond proven and probable reserves estimates. For these purposes proven and probable ore reserves of approximately | |||
the real pre-tax discount rate is commensurate with the risks involved which is consistent with the basis used in | |||
foreign currency cash flows were translated at estimated forward exchange rates and then discounted using appropriate discount rates for that currency; and | |||
cash flows used in impairment calculations were based on life of mine plans. | |||
Estimates and assumptions used by management included the following: |
| ||||||||||
2011 $ per ounce | 2010 $ per ounce | 2009 $ per ounce | ||||||||
| ||||||||||
(1) | Long-term real gold price | 1,530 | 1,113 | 906 | ||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ per ounce | $ per ounce | $ per ounce | ||||||||||
(1) Long-term real gold price | 1,113 | 906 | 817 | |||||||||
The real pre-tax discount rates applied in the |
| Percentage | ||||||||
Australasia | ||||||||
Sunrise Dam | 8.4% | |||||||
Americas | ||||||||
Cripple Creek | 7.4% | |||||||
In addition to the gold price and discount rate assumptions described above, the factors affecting the estimates include: |
changes in proven and probable ore reserves as well as value beyond proven and probable reserves; | |||
the grade of ore reserves as well as value beyond proven and probable reserves may vary significantly from time to time; | |||
differences between actual commodity prices and commodity price assumptions; | |||
unforeseen operational issues; and | |||
changes in capital, operating mining, processing and reclamation costs and foreign exchange rates. |
F-24
F - 24
| 5. | COSTS AND EXPENSES(continued) | |
Environmental rehabilitation obligations | ||
Long-term environmental obligations comprising decommissioning and restoration are based on the Company’s environmental management plans, in compliance with the current environmental and regulatory requirements. |
| $ | |||||||
The following is a reconciliation of the total liabilities for asset retirement obligations: | |||||||
Balance as at December 31, 2010 | 530 | ||||||
Additions to liabilities | 5 | ||||||
Liabilities settled | (18) | ||||||
Accretion expense | 28 | ||||||
Change in assumptions(1) | 140 | ||||||
Other movements | 2 | ||||||
Translation | (34) | ||||||
Balance as at December 31, 2011 | 653 | ||||||
| (1) | Revisions relate to | |
These liabilities mainly relate to obligations at the Company’s active and inactive mines to perform reclamation and remediation activities in order to meet applicable existing environmental laws and regulations. | ||
Certain amounts have been contributed to a rehabilitation trust and environmental protection bond under the Company’s control. The monies in the trust and bond are invested primarily in interest bearing debt securities and cash and are included in Other long-term assets in the Company’s consolidated balance sheet. Cash balances held in the trust and bond are classified as restricted cash and are included in Other long-term assets in the Company’s consolidated balance |
| December 31, 2010 | December 31, 2009 |
| ||||||||||||||||||||||||||||||||
| Carrying | Carrying | December 31, 2011 | December 31, 2010 | |||||||||||||||||||||||||||||||
| amount | Fair value | amount | Fair value | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | Carrying amount $ | Fair value $ | Carrying amount $ | Fair value $ | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
| Securities | 117 | 118 | 69 | 69 | 111 | 114 | 117 | 118 | ||||||||||||||||||||||||||
| Cash | 32 | 32 | 53 | 53 | 22 | 22 | 32 | 32 | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
| 149 | 150 | 122 | 122 | 133 | 136 | 149 | 150 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Operating lease charges | ||
Operating lease rentals are charged against income in a systematic manner related to the period the leased property will be used. Lease charges relate mainly to the hire of plant and machinery and other land and buildings. | ||
Operating leases for plant and machinery are for contracts entered into with mining contractors. The contracts are for specified periods and include escalation clauses. Renewals are at the discretion of the respective operating mine. Certain contracts include the provision of penalties payable on early exiting or cancellation. | ||
Rental expense(1) |
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
Comprising of: | ||||||||
Minimum rentals | 29 | 23 | 33 | |||||
| ||||||||
(1)Included in production costs for each period presented. | ||||||||
Future minimum rental payments are: | ||||||||
2012 | 23 | |||||||
2013 | 1 | |||||||
2014 | 1 | |||||||
Thereafter | - | |||||||
| ||||||||
| 25 | ||||||||
| ||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Comprising of: | ||||||||||||
| Minimum rentals | 23 | 33 | 30 | |||||||||
| Future minimum rental payments are: | ||||
| 2011 | 18 | |||
| 2012 | 7 | |||
| 2013 | 1 | |||
| 2014 | 1 | |||
| Thereafter | — | |||
| 27 | ||||
F-25
F - 25
| 5. | COSTS AND EXPENSES(continued) | |
(Profit)/loss on sale of assets, realization of loans, indirect taxes and other |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Mandatory convertible bonds underwriting and professional fees | 26 | — | — | |||||||||
Loss on disposal of land, equipment and assets, mineral rights and exploration properties(1) | 19 | 13 | 2 | |||||||||
Indirect tax expenses and legal claims(2) | 17 | 29 | (18 | ) | ||||||||
| Impairment of other receivables | 9 | 7 | — | |||||||||
Loss on sale of Tau Lekoa Gold mine(3) | 7 | — | — | |||||||||
Impairment of investments(4) | 2 | 12 | 6 | |||||||||
| Mining contractor termination costs | 1 | — | 1 | |||||||||
Profit on disposal of investments(5) | (52 | ) | — | — | ||||||||
Net insurance claim recovery(6) | (19 | ) | (7 | ) | — | |||||||
Royalties received(7) | (8 | ) | — | — | ||||||||
| (Recovery)/loss on consignment inventory | (5 | ) | 12 | — | ||||||||
Profit on disposal of joint venture interest in Boddington Gold mine in Australia(8) | — | (56 | ) | — | ||||||||
| Profit on disposal of certain exploration interests in Colombia to B2Gold Corporation | — | — | (33 | ) | ||||||||
| Certain royalty and production related payment interests in the United States of America sold to Royal Gold Inc. | — | — | (14) | |||||||||
| Deferred income on sale of La Rescatada exploration interest recognized in Peru | — | — | (8 | ) | ||||||||
| Recovery of exploration costs previously expensed in South Africa and Peru | — | — | (4 | ) | ||||||||
| Contributions by other members to Nufcor Uranium Trust situated in South Africa | — | — | (3 | ) | ||||||||
| Profit on disposal of the Company’s equity interest held in Nufcor International Limited | — | — | (2 | ) | ||||||||
| Costs relating to the issue of rights granted to E ordinary shareholders | — | — | 9 | |||||||||
| (3 | ) | 10 | (64 | ) | ||||||||
South Africa | 1 | |||||||||||
Tanzania | 6 | 25 | (15 | ) | ||||||||
Guinea | 10 | 7 | (3 | ) | ||||||||
Brazil | (3 | ) |
Business interruption recoveries | (19 | ) | (11 | ) | ||||
Reimbursement of costs (included in Production costs) | (16 | ) |
| ||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||
| ||||||||||
| Impairment of investments | 21 | 2 | 12 | |||||||
| Loss on disposal of land, equipment and assets, mineral rights and exploration properties | 8 | 19 | 13 | |||||||
| Black economic empowerment transaction restructuring costs for Izingwe Holdings (Proprietary) Limited | 7 | - | - | |||||||
| Indirect tax expenses and legal claims(1) | 6 | 17 | 29 | |||||||
| Royalties received(2) | (79) | (8) | - | |||||||
| Insurance claim recovery on capital items at Obuasi | (3) | - | - | |||||||
| Profit on disposal of the Company’s subsidiary ISS International Limited(3) | (2) | - | - | |||||||
| Reassessment of other receivables | (1) | 9 | 7 | |||||||
| Mandatory convertible bonds underwriting and professional fees | - | 26 | - | |||||||
| Loss on sale of Tau Lekoa Gold mine(4) | - | 7 | - | |||||||
| Mining contractor termination costs | - | 1 | - | |||||||
| Profit on disposal of investments(5) | - | (52) | - | |||||||
| Net insurance claim recovery(6) | - | (19) | (7) | |||||||
| (Recovery)/loss on consignment inventory | - | (5) | 12 | |||||||
| Profit on disposal of joint venture interest in Boddington Gold mine in Australia(7) | - | - | (56) | |||||||
| ||||||||||
| (43) | (3) | 10 | ||||||||
| ||||||||||
(1) | Indirect taxes and legal claims are in respect of: | |||||||||
| Guinea | 9 | 10 | 7 | |||||||
| Ghana | 5 | |||||||||
| Argentina | 2 | |||||||||
| Namibia | 1 | |||||||||
| Tanzania | (10) | 6 | 25 | |||||||
| Brazil | (1) | (3) | ||||||||
| South Africa | 1 | |||||||||
(2) | Royalties received include: | |||||||||
| Newmont Mining Corporation (2009 Boddington Gold mine sale) | (38) | (4) | ||||||||
| Franco Nevada Corporation (2011 sale of royalty stream in Ayanfuri mine) | (35) | |||||||||
| Simmers & Jack Mines Limited (2010 sale of Tau Lekoa Gold mine) | (5) | (3) | ||||||||
| Other royalties | (1) | (1) | ||||||||
(3) | ISS International Limited (“ISSI”) was classified as held for sale effective November 3, 2010, after AngloGold Ashanti entered into a memorandum of understanding with the Institute of Mine Seismology for the disposal of ISSI. The sale was concluded on February 28, 2011. | |||||||||
(4) | The sale of Tau Lekoa Gold mine was concluded effective August 1, 2010. | |||||||||
(5) | Profit on disposal of investments include: | |||||||||
B2Gold Corporation (Colombia) | (45) | |||||||||
Red 5 Limited (Australia) | (7) | |||||||||
(6) | Includes business interruption insurance following a seismic event which resulted in the suspension of operations at Savuka Gold mine (in South Africa) during 2009. The Company recovered $46 million from its insurers. Amounts received included: | |||||||||
| Business interruption recoveries | (19) | (11) | ||||||||
| Reimbursement of costs (included in Production costs) | (16) | |||||||||
(7) | Included $31 million foreign exchange transaction loss. | |||||||||
F-26
F - 26
| 5. | COSTS AND EXPENSES(continued) | |
Non-hedge derivative (gain)/loss and movement on bonds | ||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Loss on non-hedge derivatives | 703 | 1,452 | 258 | |||||||||
Non-hedge derivative (gain)/loss |
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
(Gain)/loss on non-hedge derivatives | (83) | 703 | 1,452 | |||||
The net | |
During 2010, the Company eliminated its gold hedge book. The loss of scheduled hedge book maturities during 2010 was | ||
During July 2009, the Company embarked on a hedge buy back that resulted in the accelerated settlement of both non-hedge and forward gold contracts qualifying for the normal purchases and sales exemption (which permits the Company to not record such amounts in its financial statements until the maturity date of the contract) under which the Company had committed to deliver a specified quantity of gold at a future date in exchange for an agreed price. These effects are reflected in the table below. | ||
Effects of the accelerated hedge settlements |
| ||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||
| ||||||||||||
Accelerated hedge settlement of non-hedge derivatives | - | 2,698 | 797 | |||||||||
Previously designated NPSE contracts | - | 405 | 580 | |||||||||
Other non-hedge derivative contracts | - | 2,293 | 217 | |||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Accelerated hedge settlement of non-hedge derivatives | 2,698 | 797 | 1,088 | |||||||||
| Previously designated NPSE contracts | 405 | 580 | — | |||||||||
| Other non-hedge derivative contracts | 2,293 | 217 | 1,088 | |||||||||
As a result of the accelerated cash settlement of the | ||
The hedge buy-back and re-designation of contracts effected in 2009 resulted in an increase in current non-hedge derivative liabilities and a consequential loss on non-hedge derivatives. During 2010, all the contracts that were previously designated as NPSE were closed out and recorded as a non-hedge derivative loss. |
The effect of the NPSE re-designation in July 2009 and subsequent accounting for these contracts is stated below. |
| 2010 | 2009 |
| ||||||||||||||
| $ | $ | 2011 $ | 2010 $ | |||||||||||||
| ||||||||||||||||
| Liability at beginning of period | 556 | — | - | 556 | ||||||||||||
| Non-hedge derivative losses recognized in respect of NPSE re-designation | — | 543 | ||||||||||||||
| Fair value movements (recorded in non-hedge derivative loss) | 131 | 143 | ||||||||||||||
Fair value movements (recorded in non-hedge derivative (gain)/loss) | - | 131 | ||||||||||||||
| Realized settlements | (687 | ) | (130 | ) | - | (687) | ||||||||||
| ||||||||||||||||
| Liability as at December 31 | — | 556 | - | - | ||||||||||||
| ||||||||||||||||
F-27
Movement on bonds |
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
Fair value (gain)/loss on mandatory convertible bonds (See Note 18) | (113) | 83 | - | |||||
F - 27
RELATED PARTY TRANSACTIONS |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Fair value loss on mandatory convertible bonds | 83 | — | — | |||||||||
The Company had the | ||
| ||||||||||||||||||||
| December 31, 2011 | December 31, 2010 | December 31, 2009 | ||||||||||||||||||
|
| |||||||||||||||||||
Purchases (by)/from related party | Amounts owed to/(by) related party | Purchases (by)/from related party | Amounts owed to/(by) related party | Purchases (by)/from related party | ||||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
| ||||||||||||||||||||
Purchases of goods and services (by)/from equity accounted joint ventures and associates | ||||||||||||||||||||
| Margaret Water Company | 6 | - | 3 | - | 1 | |||||||||||||||
| Societe d’Exploitation des Mines d’Or de Sadiola S.A. | (12) | (2) | (8) | (2) | (10) | |||||||||||||||
| Societe d’Exploitation des Mines d’Or de Yatela S.A. | (2) | (1) | (3) | - | (3) | |||||||||||||||
Societe des Mines de Morila S.A. | (4) | - | (8) | (1) | (6) | |||||||||||||||
Trans-Siberian Gold plc | - | - | 1 | - | - | |||||||||||||||
|
| |||||||||||||||||||
| (12) | (3) | (15) | (3) | (18) | ||||||||||||||||
|
| |||||||||||||||||||
Amounts due by joint venture and associate related parties arising from purchases of goods and services are unsecured and non-interest bearing. See Note 10. |
As at December 31, 2011 and 2010, there are no outstanding balances arising from purchases of goods and services owed to related parties. |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Comprising of: | ||||||||||||
| Realized loss on other commodity contracts | — | — | 32 | |||||||||
| Provision reversed on loss on future deliveries of other commodities | — | — | (5 | ) | ||||||||
| Unrealized gain on other commodity physical borrowings | — | — | (8 | ) | ||||||||
| — | — | 19 | ||||||||||
F-28
| December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||
| Amounts | Amounts owed | Purchases | ||||||||||||||||||
| Purchases (by)/from | owed to/(by) | Purchases (by)/from | to/(by) related | (by)/from | ||||||||||||||||
| related party | related party | related party | party | related party | ||||||||||||||||
| (in millions) | $ | $ | $ | $ | $ | |||||||||||||||
| Purchases of goods and services (by)/from equity accounted joint ventures and associates | ||||||||||||||||||||
| Margaret Water Company | 3 | — | 1 | — | 1 | |||||||||||||||
| Societe d’Exploitation des Mines d’Or de Sadiola S.A. | (8 | ) | (2 | ) | (10 | ) | (3 | ) | (5 | ) | ||||||||||
| Societe d’Exploitation des Mines d’Or de Yatela S.A. | (3 | ) | — | (3 | ) | — | (1 | ) | ||||||||||||
| Societe des Mines de Morila S.A. | (8 | ) | (1 | ) | (6 | ) | (1 | ) | (5 | ) | ||||||||||
| Trans-Siberian Gold plc | 1 | — | — | (1 | ) | — | ||||||||||||||
| (15 | ) | (3 | ) | (18 | ) | (5 | ) | (10 | ) | |||||||||||
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| | | | ||||||||
AGA-Polymetal Strategic Alliance (joint venture) (1) | — | 3 | ||||||
Oro Group (Proprietary) Limited (2) | 2 | 2 | ||||||
AuruMar (Proprietary) Limited (joint venture) (3) | 5 | 2 | ||||||
Orpheo (Proprietary) Limited (3) | 1 | 1 | ||||||
Loans due by equity accounted joint ventures and associates included in Other long-term assets |
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Oro Group (Proprietary) Limited (1) | 1 | 2 | ||||||
AuruMar (Proprietary) Limited (joint venture) (2) | 5 | 5 | ||||||
Orpheo (Proprietary) Limited (3) | - | 1 | ||||||
Trans-Siberian Gold plc (4) | 3 | - | ||||||
Thani Ashanti Alliance Limited (joint venture) (5) | 20 | - | ||||||
| (1) | ||
The loan bears interest at a rate determined by the Oro Group (Proprietary) Limited’s board of directors and is repayable at their discretion. |
The loan is unsecured, interest free and there are no fixed terms of repayment. | ||
| (3) | The loan was written off during 2011. The write-off is included in equity income in associates. |
| (4) | The loan is unsecured, bears interest at 8 percent per annum and is repayable in April 2012. |
| (5) | The loan bears interest at a margin of 0.95 percent over the Johannesburg Interbank Agreed Rate (“JIBAR”) and is repayable in December 2012. |
There are no allowances for credit losses relating to the loans described above. Credit quality of loans is monitored on an ongoing basis. | |
As at December 31, |
F-29
F - 28
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Income/(loss) from continuing operations before income tax and equity income in associates was derived from the following jurisdictions: | ||||||||||||
| South Africa | 203 | (340 | ) | 251 | ||||||||
| Continental Africa | 391 | (249 | ) | (714 | ) | |||||||
| Australasia | (149 | ) | (147 | ) | (69 | ) | ||||||
| Americas | 282 | (19 | ) | 200 | ||||||||
Other, including Corporate and Non-gold producing subsidiaries(1) | (346 | ) | (143 | ) | (41 | ) | ||||||
| 381 | (898 | ) | (373 | ) | ||||||||
| 7. | ||
TAXATION |
| Benefit/(charge) for income taxes attributable to continuing operations is as follows: | ||||||||||||
Current: | ||||||||||||
South Africa(1) | 106 | (36 | ) | (20 | ) | |||||||
Continental Africa(2) | (81 | ) | (38 | ) | (32 | ) | ||||||
Australasia(3) | (36 | ) | (34 | ) | 3 | |||||||
Americas(4) | (106 | ) | (54 | ) | (34 | ) | ||||||
| Other | — | (4 | ) | (11 | ) | |||||||
| Total current | (117 | ) | (166 | ) | (94 | ) | ||||||
Deferred: | ||||||||||||
South Africa(1) | (119 | ) | 141 | (40 | ) | |||||||
Continental Africa(2) | (19 | ) | 27 | 122 | ||||||||
Australasia(3) | (1 | ) | 49 | (4 | ) | |||||||
| Americas | (1 | ) | (18 | ) | (16 | ) | ||||||
| Other | 2 | — | 10 | |||||||||
| Total deferred | (138 | ) | 199 | 72 | ||||||||
| Total income and mining tax (expense)/benefit | (255 | ) | 33 | (22 | ) | |||||||
| ||||||||||
| 2011 | 2010 | 2009 | ||||||||
| $ | $ | $ | ||||||||
| ||||||||||
Income/(loss) from continuing operations before income tax and equity income in associates was derived from the following jurisdictions: | ||||||||||
South Africa | 813 | 203 | (340) | |||||||
Continental Africa | 745 | 391 | (249) | |||||||
Australasia | (25) | (149) | (147) | |||||||
Americas | 690 | 282 | (19) | |||||||
Other, including Corporate and Non-gold producing subsidiaries(1) | (102) | (346) | (143) | |||||||
| ||||||||||
| 2,121 | 381 | (898) | ||||||||
| ||||||||||
| (1) | The decrease in the loss is mainly due to fair value movements on the mandatory convertible and rated bonds. | |||||||||
| (Charge)/benefit for income taxes attributable to continuing operations is as follows: | ||||||||||
Current: | ||||||||||
South Africa(1) | (128) | 106 | (36) | |||||||
Continental Africa(2) | (146) | (81) | (38) | |||||||
Australasia(3) | - | (36) | (34) | |||||||
Americas(4) | (124) | (106) | (54) | |||||||
Other | (8) | - | (4) | |||||||
| ||||||||||
Total current | (406) | (117) | (166) | |||||||
| ||||||||||
(1) | The increase in the tax charge in 2011 is mainly due to higher income and non-hedge derivative losses having been fully utilized during the current year. The tax benefit in 2010 is mainly related to tax benefits on losses relating to the early hedge settlement and tax benefits relating to prior years. | |||||||||
(2) | The increase in the tax charge in 2011 is mainly due to net operating losses at Geita having been fully utilized during the current year. The increase in the tax charge in 2010 is mainly related to higher earnings at Siguiri and Iduapriem from an improved gold price as well as lower capital expenditure. | |||||||||
(3) | The lower tax charge in 2011 is due to lower earnings resulting from flooding and the ramp failure which severely affected all aspects of the operation at Sunrise Dam during 2011. The increase in the tax charge in 2010 is due to higher taxable earnings from an improved gold price. | |||||||||
(4) | The increase in the tax charge in 2011 mainly relates to higher earnings in line with the improved gold price. | |||||||||
Mining tax on mining income in South Africa is determined according to a formula which adjusts the tax rate in accordance with the ratio of profit to revenue from operations. This formula also allows an initial portion of mining income to be free of tax. Non-mining income is taxed at a standard rate. | ||||||||||
Deferred: | ||||||||||
South Africa(1) | (212) | (119) | 141 | |||||||
Continental Africa(2) | (93) | (19) | 27 | |||||||
Australasia(3) | 4 | (1) | 49 | |||||||
Americas | 2 | (1) | (18) | |||||||
Other | - | 2 | - | |||||||
| ||||||||||
Total deferred | (299) | (138) | 199 | |||||||
| ||||||||||
| ||||||||||
Total income and mining tax (expense)/benefit | (705) | (255) | 33 | |||||||
| ||||||||||
| (1) | The increase in the tax charge in 2011 is mainly due to the reversal of deferred tax credits on losses utilized. The increase in the tax charge in 2010 related mainly to the reversal of deferred tax on unrealized non-hedge derivative losses. Deferred tax credits in 2009 are mainly from unrealized non-hedge derivative losses arising from an improved gold price and the remaining NPSE contracts being re-designated as non-hedge derivatives and recorded on the balance sheet, following the hedge buy-back in July 2009. | |||||||||
| (2) | The increase in the tax charge in 2011 is mainly due to the reversal of deferred tax credits from the utilization of tax losses at Geita. The increase in the tax in 2010 charge is mainly due to the tax benefits at Geita in 2009 not recurring in 2010. | |||||||||
| (3) | The deferred tax benefit in 2009 relates to the reversal of timing differences on the sale of Boddington Gold Mine. | |||||||||
F-30
F - 29
| 2010 | 2009 | 2008 | ||||||||||
| Maximum anticipated deferred taxation rate | 38 | % | 39 | % | 38 | % | ||||||
| Minimum anticipated deferred taxation rate | 35 | % | 36 | % | 36 | % | ||||||
| Year ended December 31 | ||||||||||||||||||||||||
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| Per basic and | ||||||||||||||||||||||||
| diluted common | Per basic and diluted | Per basic and diluted | ||||||||||||||||||||||
| Impact | share(a)(b) | Impact | common share(a)(b) | Impact | common share(a)(b) | |||||||||||||||||||
| $ | cents | $ | cents | $ | cents | |||||||||||||||||||
| Net (benefit)/expense | (8 | ) | (2 | ) | (21 | ) | (6 | ) | 4 | 1 | ||||||||||||||
| 7. | ||
TAXATION | ||
| 2010 | 2009 | 2008 | ||||||||||
| Issuable upon the exercise of convertible bonds | 33,524,615 | 15,384,615 | 15,384,615 | |||||||||
| Issuable upon the exercise of stock incentive options | 1,234,858 | 872,373 | ||||||||||
Estimated deferred taxation rates in South Africa reflect the future anticipated taxation rates at the time temporary differences reverse. | ||||||||||
| During 2011, 2010 and 2009, deferred taxation in South Africa was provided at the future anticipated taxation rates ranging as follows: | ||||||||||
| ||||||||||
| 2011 | 2010 | 2009 | ||||||||
| ||||||||||
| Maximum anticipated deferred taxation rate | 39% | 38% | 39% | |||||||
| Minimum anticipated deferred taxation rate | 36% | 35% | 36% | |||||||
The effect of the change in estimated deferred taxation rate in South Africa on the results for 2011, 2010 and 2009 were as follows: | ||||||||||
| ||||||||||||||||||||
| Year ended December 31 | ||||||||||||||||||||
| ||||||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||
| ||||||||||||||||||||
| Impact |
| Per basic and diluted common share |
(a)(b) | Impact |
| Per basic and diluted common share |
(a)(b) | Impact |
| Per basic and diluted common share |
(a)(b) | |||||||||
| $ | cents | $ | cents | $ | cents | |||||||||||||||
| ||||||||||||||||||||
Net (expense)/benefit | (11) | (3 | ) | 8 | 2 | 21 | 6 | |||||||||||||
| ||||||||||||||||||||
(a) Per basic and diluted ordinary and E ordinary shares. | ||||||||||||||||||||
(b) The calculation of diluted earnings per common share did not assume the effect of the following number of shares as their effects are anti-dilutive. | ||||||||||||||||||||
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| ||||||||
Issuable upon the exercise of convertible bonds | - | 33,524,615 | 15,384,615 | |||||
Issuable upon the exercise of stock incentive options | - | - | 1,234,858 | |||||
| 2010 $ | 2009 $ | 2008 $ | ||||||||||
Unutilized tax losses (1) | 1,200 | 1,032 | 841 | |||||||||
Unutilized tax losses | ||||
Unutilized tax losses as at December 31, 2011, 2010 and 2009 amounted to: | ||||
| ||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||
| ||||||||||
Unutilized tax losses (1) | 321 | 1,200 | 1,032 | |||||||
(1) Decrease in unutilized operating loss carryforwards over 2010 are due to utilization of losses in South Africa, Geita and the Americas. | ||||||||||
| Unutilized operating loss carryforwards remaining to be used against future profits can be split into the following periods: | ||||||||||
| Within one year | 71 | |||||||||
Within one and two years | 65 | |||||||||
Within two and five years | 23 | |||||||||
In excess of five years | 162 | |||||||||
| ||||||||||
| 321 | ||||||||||
| ||||||||||
F-31
F - 30
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Corporate income tax at statutory rates | 133 | (314 | ) | (131 | ) | |||||||
| Formula variation in mining taxation rate | — | (21 | ) | (1 | ) | |||||||
Disallowable expenditure(1) | 83 | 292 | 47 | |||||||||
| Effect of income tax rates of other countries | 46 | 38 | 118 | |||||||||
| Impact of change in estimated deferred taxation rate | (8 | ) | (21 | ) | 4 | |||||||
| Other | 1 | (7 | ) | (15 | ) | |||||||
| Total income and mining tax expense/(benefit) | 255 | (33 | ) | 22 | ||||||||
| 7. | TAXATION(continued) |
Reconciliation between corporate income tax and |
| ||||||||||
| 2011 | 2010 | 2009 | ||||||||
| $ | $ | $ | ||||||||
| ||||||||||
Corporate income tax at statutory rates | (742) | (133) | 314 | |||||||
Formula variation in mining taxation rate | (7) | - | 21 | |||||||
Disallowable items(1) | (36) | (107) | (303) | |||||||
Reversal of valuation allowances | 41 | 24 | 11 | |||||||
Effect of income tax rates of other countries | 50 | (46) | (38) | |||||||
Impact of change in estimated deferred taxation rate | (11) | 8 | 21 | |||||||
Other | - | (1) | 7 | |||||||
| ||||||||||
Total income and mining tax (expense)/benefit | (705) | (255) | 33 | |||||||
| ||||||||||
(1) |
Disallowable items includes the impact of hedge losses in non-taxable jurisdictions and share expense costs. In 2009, the losses on the hedge settlements were mainly in non-tax effective entities. | |||||||||
Deferred taxation liabilities and assets on the |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Deferred tax liabilities: | ||||||||
| Depreciation, depletion and amortization | 1,555 | 1,471 | ||||||
| Product inventory not taxed | 15 | 15 | ||||||
| Unrealized non-hedge derivatives | 1 | 8 | ||||||
| Other | 34 | 4 | ||||||
| Total | 1,605 | 1,498 | ||||||
| Deferred tax assets: | ||||||||
| Provisions, including rehabilitation accruals | (363 | ) | (175 | ) | ||||
| Derivatives | (1 | ) | (14 | ) | ||||
| Unrealized non-hedge derivatives | — | (415 | ) | |||||
| Other | (5 | ) | (6 | ) | ||||
| Tax loss carry forwards | (364 | ) | (298 | ) | ||||
| Total | (733 | ) | (908 | ) | ||||
| Less: Valuation allowances | 125 | 194 | ||||||
| Total | (608 | ) | (714 | ) | ||||
| Disclosed as follows: | ||||||||
| Long-term portion deferred taxation assets | 1 | 62 | ||||||
| Short-term portion deferred taxation assets | 214 | 333 | ||||||
| Long-term portion deferred taxation liabilities | 1,200 | 1,171 | ||||||
| Short-term portion classified as other current liabilities. Refer to Note 18. | 12 | 8 | ||||||
|
| |||||||||||||||
2011 $ | 2010 $ | |||||||||||||||
|
| |||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Depreciation, depletion and amortization | 1,611 | 1,555 | ||||||||||||||
Product inventory not taxed | 24 | 15 | ||||||||||||||
Derivatives | 8 | 1 | ||||||||||||||
Other | 5 | 34 | ||||||||||||||
| ||||||||||||||||
Total | 1,648 | 1,605 | ||||||||||||||
| ||||||||||||||||
Deferred tax assets: | ||||||||||||||||
Provisions, including rehabilitation accruals | (389) | (363) | ||||||||||||||
Derivatives | (1) | (1) | ||||||||||||||
Other | (28) | (5) | ||||||||||||||
Tax loss carry forwards | (69) | (364) | ||||||||||||||
| ||||||||||||||||
Total | (487) | (733) | ||||||||||||||
Less: Valuation allowances | 7 | 125 | ||||||||||||||
| ||||||||||||||||
Total | (480) | (608) | ||||||||||||||
| ||||||||||||||||
Disclosed as follows: | ||||||||||||||||
Long-term portion deferred taxation assets | 14 | 1 | ||||||||||||||
Short-term portion deferred taxation assets | 75 | 214 | ||||||||||||||
Long-term portion deferred taxation liabilities | 1,242 | 1,200 | ||||||||||||||
Short-term portion classified as other current liabilities. See Note 17. | 15 | 12 | ||||||||||||||
The classification of deferred taxation assets is based on the related asset or liability creating the deferred taxation. Deferred taxes not related to a specific asset or liability are classified based on the estimated period of reversal. As at December 31, the Company’s losses in South Africa, on which deferred tax had been provided at the anticipated tax rate to be utilized are noted as follows: | ||||||||||||||||
| ||||||||||||||||
| 2010 | 2009 | 2011 | 2010 | |||||||||||||
| ||||||||||||||||
South Africa | ||||||||||||||||
| Losses ($ millions) | 508 | 4 | 3 | 508 | ||||||||||||
| Deferred tax at the anticipated tax rate to be utilized (percent) | 33 | 37 | 37 | 33 | ||||||||||||
F-32
F - 31
| 7. | TAXATION(continued) |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Unremitted earnings as at December 31 | 1,519 | 624 | ||||||
| Balance at beginning | Balance at end of | |||||||||||
| of period | Movement | period | ||||||||||
| $ | $ | $ | ||||||||||
| Year ended December 31, 2010 | ||||||||||||
| - Valuation allowance | 194 | (69 | ) | 125 | ||||||||
| Year ended December 31, 2009 | ||||||||||||
| - Valuation allowance | 226 | (32 | ) | 194 | ||||||||
| Year ended December 31, 2008 | ||||||||||||
| - Valuation allowance | 98 | 128 | 226 | |||||||||
Unremitted earnings of foreign subsidiaries and foreign incorporated joint ventures
Dividends from incorporated joint ventures may be remitted to the Company without being subject to income or withholding taxes. No provision is made for the income tax effect that may arise on the remittance of unremitted earnings by certain foreign subsidiaries. It is management’s intention that these earnings will be permanently re-invested into future capital expansion projects, maintenance capital and ongoing working capital funding requirements. In the event that the Company repatriated these earnings, income taxes and withholding taxes may be incurred. The determination of such taxes is subject to various complex calculations and accordingly, the Company has determined that it is impractical to estimate the amount of the deferred tax liability on such unremitted earnings. The amounts of these unremitted earnings are as follows: | ||||||||
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Unremitted earnings as at December 31 | 1,812 | 1,221 | ||||||
Analysis of valuation allowances
The movement in valuation allowances for the three years in the period ended December 31, is summarized as follows: | ||||||||
F-33
| ||||||||||
Balance at beginning of period $ | Movement $ | Balance at end of period $ | ||||||||
| ||||||||||
Year ended December 31, 2011 | ||||||||||
- Valuation allowance | 125 | (118) | 7 | |||||||
Year ended December 31, 2010 | ||||||||||
- Valuation allowance | 194 | (69) | 125 | |||||||
Year ended December 31, 2009 | ||||||||||
- Valuation allowance | 226 | (32) | 194 | |||||||
| ||||||||||
The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized. The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which it is more-likely-than-not that these items will not be realized. Although realization is not assured, the Company has concluded that it is more-likely-than-not that the deferred tax assets for which a valuation allowance was determined to be unnecessary will be realized based on the available evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could change in the near term if actual future income or income tax rates differ from that estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences. | ||||||
F - 32
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Balance at January 1, | 149 | 106 | ||||||
| Additions for tax positions of prior years | 8 | 14 | ||||||
| Reductions for tax position of prior years | (113 | ) | — | |||||
| Translation | 8 | 29 | ||||||
Balance at December 31, (1) | 52 | 149 | ||||||
| 7. | TAXATION(continued) |
Uncertain tax positions |
A reconciliation of the beginning and ending amount of unrecognized tax benefits, |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Interest recognized | 2 | 9 | 6 | |||||||||
| Interest accrued as at December 31 | 8 | 53 | 34 | |||||||||
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Balance at January 1, | 52 | 149 | ||||||
Additions for tax positions of prior years | 38 | 8 | ||||||
Reductions for tax position of prior years | (3) | (113) | ||||||
Translation | (9) | 8 | ||||||
| ||||||||
Balance at December 31, | 78 | 52 | ||||||
| ||||||||
Unrecognized tax benefits are summarized as follows: | ||||||||
Recognized as a reduction of deferred tax assets | 29 | - | ||||||
Recognized in other non-current liabilities (See Note 17) (1) | 49 | 52 | ||||||
| ||||||||
Balance at December 31, | 78 | 52 | ||||||
| ||||||||
(1) Unrecognized tax benefits which, if recognized, would affect the Company’s effective tax rate. | ||||||||
The Company’s continuing practice is to recognize interest and penalties related to unrecognized tax benefits as part of its income tax expense. For the years ended and as at December 31, interest recognized and interest accrued amounted to:
| ||||||||
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
Interest recognized | 5 | 2 | 9 | |||||
Interest accrued as at December 31 | 12 | 8 | 53 | |||||
As at December 31, 2011, the Company’s South African tax assessments for the years 2004 – 2011 remain open to scrutiny by the South African Revenue Service.
In other jurisdictions, the revenue system is based on a self-assessment process, all tax filings due by December 31, 2011 have been filed, and the self-assessed position recorded in the consolidated financial statements. The legislation of individual jurisdictions provides for different periods for the authorities to review the filings with specified expiry dates. The Company is disputing assessments received in some jurisdictions where it operates and these arguments are under consideration by the authorities. Based on current legal advice, the Company does not expect the resolution will significantly affect the Company’s consolidated financial statements. | ||||||||
F-34
F - 33
| 2008 | ||||||||||||
| $ | (cents)(1)(3) | (cents)(2)(3) | ||||||||||
| Revenue | — | — | — | |||||||||
| Costs, expenses and recoveries | 1 | — | — | |||||||||
| Gain on disposal | 27 | 8 | 5 | |||||||||
| Pre-tax profit | 28 | 8 | 5 | |||||||||
| Taxation expense | (5 | ) | (1 | ) | (1 | ) | ||||||
| Net profit attributable to discontinued operations | 23 | 7 | 4 | |||||||||
| 8. | ||
INCOME/(LOSS) PER COMMON SHARE |
2011 $ | 2010 $ | 2009 $ | ||||||||||
| The following table sets forth the computation of basic and diluted income/(loss) per share (in millions, except per share data): | ||||||||||||
Ordinary shares undistributed income/(loss) | 1,289 | 45 | (865) | |||||||||
E Ordinary shares undistributed income/(loss) | 5 | - | (5) | |||||||||
|
| |||||||||||
Total undistributed income/(loss) | 1,294 | 45 | (870) | |||||||||
|
| |||||||||||
Ordinary shares distributed income | 131 | 67 | 45 | |||||||||
E Ordinary shares distributed income | - | - | - | |||||||||
|
| |||||||||||
Total distributed income | 131 | 67 | 45 | |||||||||
|
| |||||||||||
Numerator - Net income/(loss) | ||||||||||||
Attributable to Ordinary shares | 1,420 | 112 | (820) | |||||||||
Attributable to E Ordinary shares | 5 | - | (5) | |||||||||
|
| |||||||||||
Total attributable to AngloGold Ashanti | 1,425 | 112 | (825) | |||||||||
|
| |||||||||||
In calculating diluted income/(loss) per ordinary share, the following were taken into consideration: | ||||||||||||
Income/(loss) attributable to equity shareholders | 1,420 | 112 | (820) | |||||||||
Interest expense on convertible bonds | 72 | - | - | |||||||||
Amortization of issue cost and discount on convertible bonds | 31 | - | - | |||||||||
Fair value adjustment on convertible bonds included in income | (197 | ) | - | - | ||||||||
|
| |||||||||||
Income/(loss) used in calculation of diluted earnings per ordinary share | 1,326 | 112 | (820) | |||||||||
|
| |||||||||||
Denominator for basic income/(loss) per ordinary share | ||||||||||||
Ordinary shares | 381,621,687 | 367,664,700 | 356,563,773 | |||||||||
Fully vested options(1) | 1,389,122 | 1,023,459 | 791,353 | |||||||||
|
| |||||||||||
Weighted average number of ordinary shares | 383,010,809 | 368,688,159 | 357,355,126 | |||||||||
Effect of dilutive potential ordinary shares | ||||||||||||
Dilutive potential of stock incentive options(2) | 1,572,015 | 1,569,606 | - | |||||||||
Dilutive potential of convertible bonds(3) | 33,524,615 | - | - | |||||||||
Dilutive potential of E Ordinary shares(4) | - | - | - | |||||||||
|
| |||||||||||
Denominator for diluted income/(loss) per share – adjusted weighted average number of ordinary shares and assumed conversions | 418,107,439 | 370,257,765 | 357,355,126 | |||||||||
|
| |||||||||||
Weighted average number of E Ordinary shares used in calculation of basic and diluted income/(loss) per E Ordinary share | 2,950,804 | 3,182,662 | 3,873,169 | |||||||||
|
| |||||||||||
Income/(loss) per share attributable to AngloGold Ashanti common stockholders (cents) | ||||||||||||
Net income/(loss) per share | ||||||||||||
Ordinary shares(5) | 371 | 30 | (230) | |||||||||
E Ordinary shares | 185 | 15 | (115) | |||||||||
Ordinary shares – diluted | 317 | 30 | (230) | |||||||||
E Ordinary shares – diluted | 171 | 15 | (115) | |||||||||
|
| |||||||||||
(1) Compensation awards are included in the calculation of basic income/(loss) per common share from when the necessary conditions have been met, and it is virtually certain that shares will be issued as a result of employees exercising their options. | ||||||||||||
The calculation of diluted income/(loss) per common share did not assume the effect of the following number of shares as their effects are anti-dilutive: | ||||||||||||
(2) Issuable upon the exercise of stock incentive options | 1,234,858 | |||||||||||
(3) Issuable upon the exercise of convertible bonds | 33,524,615 | 15,384,615 | ||||||||||
(4) Issuable upon the conversion of E Ordinary shares | 343,716 | - | ||||||||||
The calculation of diluted loss per common share for 2009 did not assume the effect of conversion of E Ordinary shares as the Company recorded a loss from continuing operations during this period. | ||||||||||||
(5) The mandatory convertible bonds issued during 2010 are not included in basic income/(loss) per common share as they contain features that could result in their settlement in cash and therefore do not meet the definition of an equity instrument. | ||||||||||||
F-35
F - 34
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| The following table sets forth the computation of basic and diluted income/(loss) per share (in millions, except per share data): | ||||||||||||
| Numerator | ||||||||||||
| Net income/(loss) — attributable to AngloGold Ashanti | ||||||||||||
| Income/(loss) from continuing operations | 112 | (825 | ) | (586 | ) | |||||||
| Discontinued operations | — | — | 23 | |||||||||
| Net income/(loss) | 112 | (825 | ) | (563 | ) | |||||||
| Less Dividends: | ||||||||||||
| Ordinary shares | 67 | 45 | 41 | |||||||||
| E Ordinary shares | — | — | — | |||||||||
| Undistributed income/(losses) | 45 | (870 | ) | (604 | ) | |||||||
| Ordinary shares undistributed income/(losses) | 45 | (865 | ) | (600 | ) | |||||||
| E Ordinary shares undistributed losses | — | (5 | ) | (4 | ) | |||||||
| Total undistributed income/(losses) | 45 | (870 | ) | (604 | ) | |||||||
| Denominator for basic income/(loss) per ordinary share | ||||||||||||
| Ordinary shares | 367,664,700 | 356,563,773 | 312,610,124 | |||||||||
Fully vested options(1) | 1,023,459 | 791,353 | 547,460 | |||||||||
| Weighted average number of ordinary shares | 368,688,159 | 357,355,126 | 313,157,584 | |||||||||
| Effect of dilutive potential ordinary shares | ||||||||||||
Dilutive potential of stock incentive options(2) | 1,569,606 | — | — | |||||||||
Dilutive potential of convertible bonds(3) | — | — | — | |||||||||
Dilutive potential of E Ordinary shares(4) | — | — | — | |||||||||
| Denominator for diluted income/(loss) per share — adjusted weighted average number of ordinary shares and assumed conversions | 370,257,765 | 357,355,126 | 313,157,584 | |||||||||
| Weighted average number of E Ordinary shares used in calculation of basic and diluted income/(loss) per E Ordinary share | 3,182,662 | 3,873,169 | 4,046,364 | |||||||||
| Income/(loss) per share attributable to AngloGold Ashanti common stockholders (cents) | ||||||||||||
| From continuing operations | ||||||||||||
| Ordinary shares | 30 | (230 | ) | (186 | ) | |||||||
| E Ordinary shares | 15 | (115 | ) | (93 | ) | |||||||
| Ordinary shares — diluted | 30 | (230 | ) | (186 | ) | |||||||
| E Ordinary shares — diluted | 15 | (115 | ) | (93 | ) | |||||||
| Discontinued operations | ||||||||||||
| Ordinary shares | — | — | 7 | |||||||||
| E Ordinary shares | — | — | 4 | |||||||||
| Ordinary shares — diluted | — | — | 7 | |||||||||
| E Ordinary shares — diluted | — | — | 4 | |||||||||
| Net income/(loss) | ||||||||||||
| Ordinary shares | 30 | (230 | ) | (179 | ) | |||||||
| E Ordinary shares | 15 | (115 | ) | (89 | ) | |||||||
| Ordinary shares — diluted | 30 | (230 | ) | (179 | ) | |||||||
| E Ordinary shares — diluted | 15 | (115 | ) | (89 | ) | |||||||
| 9. | RESTRICTED CASH |
2011 $ | 2010 $ | |||||
Cash classified as restricted for use comprise of the following: | ||||||
Cash restricted by prudential solvency requirements | 9 | 8 | ||||
Cash balances held by the Tropicana project | 22 | 1 | ||||
Other | 4 | 1 | ||||
|
| |||||
| 35 | 10 | |||||
|
| |||||
Long-term restricted cash balances are included in Other long-term assets (See Note 15).
| 10. | TRADE AND OTHER RECEIVABLES |
2011 $ | 2010 $ | |||||
Trade debtors are net of: | ||||||
Provision for doubtful debt | 24 | 19 | ||||
|
| |||||
Other receivables include: | ||||||
Prepayments and accrued income | 80 | 60 | ||||
Interest receivable | 3 | 9 | ||||
Related parties. See Note 6. | 3 | 3 | ||||
Exploration debtors | 7 | 6 | ||||
Royalties receivable | 14 | 5 | ||||
Short-term loan (1) | 12 | - | ||||
Deferred loan fees | 5 | - | ||||
Other debtors | 11 | 6 | ||||
|
| |||||
| 135 | 89 | |||||
|
| |||||
The loan bears interest at 6.5 percent per annum and is due in | |||
| 11. | INVENTORIES |
(2) Issuable upon the exercise of stock incentive options | 1,234,858 | 872,373 | ||||||||||
(3) Issuable upon the exercise of convertible bonds | 33,524,615 | 15,384,615 | 15,384,615 | |||||||||
(4) The calculation of diluted loss per common share for 2009 and 2008 did not assume the effect of conversion of E Ordinary shares as the Company recorded a loss from continuing operations during these periods. | ||||||||||||
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Cash classified as restricted for use comprise of the following: | ||||||||
| Cash restricted by prudential solvency requirements | 8 | 8 | ||||||
| Cash balances held by the Tropicana project | 1 | 3 | ||||||
| Other | 1 | 1 | ||||||
| 10 | 12 | |||||||
2011 $ | 2010 $ | |||||
Short-term: | ||||||
Metals in process | 189 | 184 | ||||
Gold on hand (doré/bullion) | 94 | 77 | ||||
Ore stockpiles | 454 | 324 | ||||
Uranium oxide and sulfuric acid | 24 | 43 | ||||
Supplies | 296 | 255 | ||||
|
| |||||
| 1,057 | 883 | |||||
Less: Materials on the leach pad(1) | (98 | ) | (91) | |||
|
| |||||
| 959 | 792 | |||||
|
| |||||
(1) Short-term portion relating to heap leach inventory classified separately, as materials on the leach pad. | ||||||
Long-term: | ||||||
Metals in process | 393 | 331 | ||||
Ore stockpiles | 31 | 27 | ||||
|
| |||||
| 424 | 358 | |||||
Less: Materials on the leach pad(1) | (393 | ) | (331) | |||
|
| |||||
| 31 | 27 | |||||
|
| |||||
(1) Long-term portion relating to heap leach inventory classified separately, as materials on the leach pad. | ||||||
The aggregate write-down of inventory to reduce the carrying value to net realizable value for the years ended December 31 were as follows: | ||||||
F-36
2011 $ | 2010 $ | 2009 $ | ||||||||
Inventory write-downs (included in production costs) | 4 | 21 | 48 | |||||||
F - 35
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Trade debtors are net of: | ||||||||
| Provision for doubtful debt | 19 | 12 | ||||||
| Other receivables include: | ||||||||
| Prepayments and accrued income | 60 | 52 | ||||||
| Interest receivable | 9 | 2 | ||||||
| Exploration debtors | 11 | — | ||||||
| Deferred loan fees | — | 15 | ||||||
| Other debtors | 6 | 5 | ||||||
| 86 | 74 | |||||||
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Short-term: | ||||||||
| Metals in process | 184 | 115 | ||||||
| Gold on hand (doré/bullion) | 77 | 75 | ||||||
| Ore stockpiles | 324 | 227 | ||||||
| Uranium oxide and sulfuric acid | 43 | 34 | ||||||
| Supplies | 255 | 252 | ||||||
| 883 | 703 | |||||||
Less: Heap leach inventory(1) | (91 | ) | (40 | ) | ||||
| 792 | 663 | |||||||
| Metals in process | 331 | 324 | ||||||
| Ore stockpiles | 27 | 25 | ||||||
| Supplies | — | 1 | ||||||
| 358 | 350 | |||||||
Less: Heap leach inventory(1) | (331 | ) | (324 | ) | ||||
| 27 | 26 | |||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Inventory write-downs (included in production costs) | 21 | 48 | 60 | |||||||||
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Mine development | 6,590 | 5,604 | ||||||
| Buildings and mine infrastructure | 3,263 | 2,957 | ||||||
| Mineral rights and other | 1,045 | 1,053 | ||||||
Assets under construction(1) | 502 | 251 | ||||||
| Land | 37 | 30 | ||||||
| 11,437 | 9,895 | |||||||
| Accumulated depreciation, depletion and amortization | (5,511 | ) | (4,441 | ) | ||||
| Net book value December 31, | 5,926 | 5,454 | ||||||
(1) Interest capitalized during the year (See Note 5) amounted to: | — | 13 | ||||||
| Net book value of mining assets encumbered by capital leases (See Note 19) | 48 | 50 |
F-37
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Acquired properties, at cost | 2,168 | 2,053 | ||||||
| Accumulated amortization | (1,332 | ) | (1,222 | ) | ||||
| Net book value December 31, | 836 | 831 | ||||||
| Continental | ||||||||||||||||
| Americas | Australasia | Africa | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Balance at January 1, 2009 | 18 | 103 | 11 | 132 | ||||||||||||
| Translation | — | 30 | — | 30 | ||||||||||||
| Balance at December 31, 2009 | 18 | 133 | 11 | 162 | ||||||||||||
| Translation | — | 18 | — | 18 | ||||||||||||
| Balance at December 31, 2010 | 18 | 151 | 11 | 180 | ||||||||||||
| Net carrying amount of goodwill as at December 31, 2010 and 2009 is reconciled as follows: | ||||||||||||||||
| - Gross carrying amount | 18 | 151 | 310 | 479 | ||||||||||||
| - Accumulated impairment losses | — | — | (299 | ) | (299 | ) | ||||||||||
| Net carrying amount as at December 31, 2010 | 18 | 151 | 11 | 180 | ||||||||||||
| - Gross carrying amount | 18 | 133 | 310 | 461 | ||||||||||||
| - Accumulated impairment losses | — | — | (299 | ) | (299 | ) | ||||||||||
| Net carrying amount as at December 31, 2009 | 18 | 133 | 11 | 162 | ||||||||||||
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Royalty rate concession agreement(1) | ||||||||
| Gross carrying value | 30 | 29 | ||||||
| Accumulated amortization | (13 | ) | (11 | ) | ||||
| 17 | 18 | |||||||
| 12. | ||
PROPERTY, PLANT AND EQUIPMENT, NET |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Amortization expense | 2 | 2 | 2 | |||||||||
| 2011 | 2 | |||||||||||
| 2012 | 2 | |||||||||||
| 2013 | 2 | |||||||||||
| 2014 | 2 | |||||||||||
| 2015 | 2 | |||||||||||
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Mine development | 6,652 | 6,590 | ||||||
Buildings and mine infrastructure | 3,613 | 3,263 | ||||||
Mineral rights and other | 1,023 | 1,045 | ||||||
Assets under construction | 522 | 502 | ||||||
Land | 41 | 37 | ||||||
|
| |||||||
| 11,851 | 11,437 | |||||||
Accumulated depreciation, depletion and amortization | (5,728) | (5,511) | ||||||
|
| |||||||
Net book value December 31, | 6,123 | 5,926 | ||||||
|
| |||||||
Net book value of mining assets encumbered by capital leases (See Note 18) | 67 | 48 | ||||||
F-38
| 13. | ACQUIRED PROPERTIES, NET |
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Acquired properties, at cost | 2,010 | 2,168 | ||||||
Accumulated amortization | (1,231) | (1,332) | ||||||
|
| |||||||
Net book value December 31, | 779 | 836 | ||||||
|
| |||||||
The decrease in the net book value includes the impact of the weakening of certain local functional currencies against the US dollar. | ||||||||
F - 36
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Investments in associates — unlisted | 7 | 6 | ||||||
| Investments in associates — listed | 3 | 2 | ||||||
| Investments in equity accounted joint ventures | 601 | 659 | ||||||
Carrying value of equity method investments | 611 | 667 | ||||||
Investment in marketable equity securities — available for sale | 124 | 111 | ||||||
Investment in marketable debt securities — held to maturity | 13 | 10 | ||||||
Investment in non-marketable assets — held to maturity | 2 | 2 | ||||||
Cost method investment | 9 | 4 | ||||||
Investment in non-marketable debt securities — held to maturity | 89 | 48 | ||||||
Restricted cash | 33 | 53 | ||||||
Other non-current assets | 192 | 127 | ||||||
| 1,073 | 1,022 | |||||||
Investments in associates | ||||||||
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| percentage held | percentage held | |||||||
| Unlisted | ||||||||
South Africa | ||||||||
Oro Group (Proprietary) Limited(1) | 25.00 | 25.00 | ||||||
| Margaret Water Company | 33.33 | 33.33 | ||||||
Orpheo (Proprietary) Limited(1) | 50.00 | 33.33 | ||||||
Wonder Wise Holdings Limited(2) | — | 25.00 | ||||||
| Listed | ||||||||
Other | ||||||||
Trans-Siberian Gold plc(1)(3)(4) | 30.70 | 29.74 | ||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
(1)Results are included for the twelve months ended September 30, 2010, adjusted for material transactions. | ||||||||||||
(2)Investment disposed of during 2010. | ||||||||||||
(3)Market value of the Company’s investment in Trans-Siberian Gold plc as at December 31 | 33 | 12 | 5 | |||||||||
(4)Impairment losses recorded during the years ended December 31 | — | — | 8 | |||||||||
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| percentage held | percentage held | |||||||
South Africa | ||||||||
| AuruMar (Proprietary) Limited | 50.00 | 50.00 | ||||||
Continental Africa | ||||||||
| Sadiola | 41.00 | 41.00 | ||||||
| Morila | 40.00 | 40.00 | ||||||
| Yatela | 40.00 | 40.00 | ||||||
| Kibali Goldmines s.p.r.l. | 45.00 | 45.00 | ||||||
Other | ||||||||
AGA — Polymetal Strategic Alliance(1) | 50.00 | 50.00 | ||||||
| 14. | ||
GOODWILL AND OTHER INTANGIBLES |
F-39Goodwill
The carrying amount of goodwill by reporting unit as of December 31, 2011 and 2010 and changes in the carrying amount of goodwill are summarized as follows: | ||||||||||||||||
| Americas $ | Australasia $ | Continental $ | Total $ | |||||||||||||
Balance at January 1, 2010 | 18 | 133 | 11 | 162 | ||||||||||||
Translation | - | 18 | - | 18 | ||||||||||||
Balance at December 31, 2010 | 18 | 151 | 11 | 180 | ||||||||||||
Translation | - | 2 | - | 2 | ||||||||||||
Balance at December 31, 2011 | 18 | 153 | 11 | 182 | ||||||||||||
Net carrying amount of goodwill as at December 31, 2011 and 2010 is reconciled as follows:
| ||||||||||||||||
- Gross carrying amount | 18 | 153 | 310 | 481 | ||||||||||||
- Accumulated impairment losses | - | - | (299 | ) | (299) | |||||||||||
Net carrying amount as at December 31, 2011 | 18 | 153 | 11 | 182 | ||||||||||||
- Gross carrying amount | 18 | 151 | 310 | 479 | ||||||||||||
- Accumulated impairment losses | - | - | (299 | ) | (299) | |||||||||||
Net carrying amount as at December 31, 2010 | 18 | 151 | 11 | 180 | ||||||||||||
Other intangibles, net | ||||||||||||||||
| Royalty rate concession agreement (1) $ | Software and $ | Total $ | ||||||||||||||
Gross carrying value at January 1, 2010 | 30 | - | 30 | |||||||||||||
Accumulated amortization | (13 | ) | - | (13) | ||||||||||||
Balance at December 31, 2010 | 17 | - | 17 | |||||||||||||
Gross carrying value at January 1, 2011 | 30 | - | 30 | |||||||||||||
Additions | - | 16 | 16 | |||||||||||||
Accumulated amortization | (15 | ) | - | (15) | ||||||||||||
Balance at December 31, 2011 | 15 | 16 | 31 | |||||||||||||
(1) The government of Ghana agreed to a concession on royalty payments at a fixed rate of 3 percent per year for a period of fifteen years from 2004. |
| |||||||||||||||
The royalty rate concession and software and licences are amortized on a straight line basis with nil residual value. The amortization expense included in the consolidated statements of income were as follows: | ||||||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||||||
Royalty rate concession amortization expense | 2 | 2 | 2 | |||||||||||||
Software and licences amortization expense (2) | - | - | - | |||||||||||||
(2) No amortization expense was recorded for purchased software and licences in 2011 as these have not been brought into use. |
| |||||||||||||||
F - 37
| 14. | GOODWILL AND OTHER INTANGIBLES(continued) |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Investment in marketable equity securities — available for sale | ||||||||
| Available for sale investments in marketable equity securities consists of investments in ordinary shares. | ||||||||
| Cost | 35 | 39 | ||||||
| Gross unrealized gains | 89 | 72 | ||||||
| Gross unrealized losses | — | — | ||||||
| Fair value (net carrying value) | 124 | 111 | ||||||
Other-than-temporary impairments recognized (1) | 2 | 12 | ||||||
| See “Note 5 - Costs and expenses: (Profit)/loss on sale of assets, realization of loans, indirect taxes and other” for additional information. In addition to these investments, the Company holds various equities as strategic investments in gold exploration companies. Three of the strategic investments are in an unrealized loss position and the Company has the intent and ability to hold these investments until the losses are recovered. | ||||||||
| The following tables present the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position: | ||||||||
| More than 12 | ||||||||||||
| Less than 12 months | months | Total | ||||||||||
| $ | $ | $ | ||||||||||
2010 | ||||||||||||
| Aggregate fair value of investments with unrealized losses | 4 | — | 4 | |||||||||
| Aggregate unrealized losses | — | — | — | |||||||||
2009 (2) | ||||||||||||
| Aggregate fair value of investments with unrealized losses | — | — | — | |||||||||
| Aggregate unrealized losses | — | — | — | |||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
(1)Impairments relating to available for sale investments in marketable equity securities recorded during the years ending December 31, included: | ||||||||||||
Corvus Gold Incorporated shares (United States of America) | 2 | — | — | |||||||||
B2Gold Corporation shares (Colombia) | — | 12 | — | |||||||||
Red 5 Limited shares (Australia) | — | — | 4 | |||||||||
Dynasty Gold Corporation shares (China) | — | — | 2 | |||||||||
The impairments resulted in a transfer of fair value adjustments previously included in accumulated other comprehensive income to the income statement. | ||||||||||||
(2)In aggregate, the fair value of strategic investments in an unrealized loss position, as well as the aggregate unrealized losses amount to less than $1 million, respectively. | ||||||||||||
| Based on carrying value at December 31, 2011, the estimated aggregate amortization expense for each of the next five years is as follows: | ||||
| Royalty rate concession agreement $ | Software and $ | |||
2012 | 2 | - | ||
2013 | 2 | 3 | ||
2014 | 2 | 5 | ||
2015 | 2 | 5 | ||
2016 | 2 | 3 | ||
|
|
F-40
F - 38
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Investment in marketable debt securities — held to maturity | 13 | 10 | ||||||
| Investments in marketable debt securities represent held to maturity government bonds held by the Environmental Rehabilitation Trust Fund with a total fair value of $14 million (2009: $10 million) and gross unrealized gains of $1 million (2009: nil). | ||||||||
Investment in non-marketable assets — held to maturity | 2 | 2 | ||||||
| Investments in non-marketable assets represent secured loans and receivables secured by pledge of assets. | ||||||||
Cost method investment | 9 | 4 | ||||||
The cost method investment mainly represent shares held in XDM Resources Limited. (1) | ||||||||
Investment in non-marketable debt securities — held to maturity | 89 | 48 | ||||||
| Investments in non-marketable debt securities represent the held to maturity fixed-term deposits required by legislation for the Environmental Rehabilitation Trust Fund and Nufcor Uranium Trust Fund. | ||||||||
| As of December 31, 2010 the contractual maturities of debt securities were as follows: | ||||||||
Marketable debt securities | ||||||||
| Up to three years | 2 | |||||||
| Three to seven years | 11 | |||||||
| 13 | ||||||||
Non-marketable debt securities | ||||||||
| Less than one year | 89 | |||||||
Restricted cash | 33 | 53 | ||||||
| Restricted cash mainly represent cash balances held by the Environmental Rehabilitation Trust Fund and Environmental Protection Bond. | ||||||||
Other non-current assets | ||||||||
Unsecured | ||||||||
Other loans and assets (2) | 9 | 8 | ||||||
Non-current debtors | ||||||||
| Prepayments and accrued income | 31 | 27 | ||||||
| Recoverable tax, rebates, levies and duties | 82 | 56 | ||||||
| Unamortized issue costs of long-term debt, bonds and revolving credit facility | 32 | 13 | ||||||
| Other debtors | 38 | 23 | ||||||
| 192 | 127 | |||||||
| 15. | ||
OTHER LONG-TERM ASSETS |
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Investments in associates - unlisted | 5 | 7 | ||||||
Investments in associates - listed | 15 | 3 | ||||||
Investments in equity accounted joint ventures | 671 | 601 | ||||||
| ||||||||
Carrying value of equity method investments | 691 | 611 | ||||||
Investment in marketable equity securities – available for sale | 82 | 124 | ||||||
Investment in marketable debt securities – held to maturity | 8 | 13 | ||||||
Investment in non-marketable assets – held to maturity | 2 | 2 | ||||||
Cost method investment | 9 | 9 | ||||||
Investment in non-marketable debt securities – held to maturity | 85 | 89 | ||||||
Restricted cash | 23 | 33 | ||||||
Other non-current assets | 101 | 192 | ||||||
| ||||||||
| 1,001 | 1,073 | |||||||
| ||||||||
Investments in associates | ||||||||
| ||||||||
December 31, percentage | December 31, percentage | |||||||
| ||||||||
Unlisted | ||||||||
South Africa | ||||||||
Oro Group (Proprietary) Limited(1) | 25.00 | 25.00 | ||||||
Margaret Water Company | 33.33 | 33.33 | ||||||
Orpheo (Proprietary) Limited(2) | - | 50.00 | ||||||
Listed | ||||||||
Other | ||||||||
Trans-Siberian Gold plc(1)(3) | 30.90 | 30.70 | ||||||
Mariana Resources Limited(1)(4)(5) | 19.86 | - | ||||||
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
| (1) | Results are included for the twelve months ended September 30, 2011, adjusted for material transactions. | |||||||
| (2) | Investment disposed of during 2011. | |||||||
| (3) | Market value of the Company’s investment in Trans-Siberian Gold plc as at December 31 | 35 | 33 | 12 | ||||
| (4) | Market value of the Company’s investment in Mariana Resources Limited as at December 31 | 7 | - | - | ||||
| (5) | The Company acquired its stake in Mariana Resources Limited for $8 million during December 2011 and accounts for it using the equity method as it has the right to representation on the Mariana Resources Limited board of directors and is therefore considered to have significant influence in the company. | |||||||
F-41
F - 39
| 15. | OTHER LONG-TERM ASSETS(continued) |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Statements of income for the period | ||||||||||||
| Sales and other income | 823 | 880 | 464 | |||||||||
| Costs and expenses | (528 | ) | (508 | ) | (726 | ) | ||||||
| Taxation | (126 | ) | (120 | ) | (97 | ) | ||||||
| Net income/(loss) | 169 | 252 | (359 | ) | ||||||||
Balance sheets at December 31, | ||||||||||||
| Non-current assets | 1,205 | 1,166 | ||||||||||
| Current assets | 550 | 523 | ||||||||||
| 1,755 | 1,689 | |||||||||||
| Long-term liabilities | (126 | ) | (111 | ) | ||||||||
| Loans from shareholders | (4 | ) | (5 | ) | ||||||||
| Current liabilities | (260 | ) | (169 | ) | ||||||||
| Net assets | 1,365 | 1,404 | ||||||||||
Investments in equity accounted joint ventures | ||||||||
The Company holds the following interests in incorporated mining joint ventures, of which the significant financial operating policies are, by contractual arrangement, jointly controlled: | ||||||||
| ||||||||
December 31, percentage | December 31, percentage | |||||||
| ||||||||
South Africa | ||||||||
AuruMar (Proprietary) Limited | 50.00 | 50.00 | ||||||
Continental Africa | ||||||||
Société d’Exploitation des Mines d’Or de Sadiola S.A. | 41.00 | 41.00 | ||||||
Société des Mines de Morila S.A. | 40.00 | 40.00 | ||||||
Société d’Exploitation des Mines d’Or de Yatela S.A. | 40.00 | 40.00 | ||||||
Kibali Goldmines s.p.r.l. | 45.00 | 45.00 | ||||||
Other | ||||||||
AGA-Polymetal Strategic Alliance(1) | 50.00 | 50.00 | ||||||
Thani Ashanti Alliance Limited | 50.00 | 50.00 | ||||||
(1) | Results are included for the twelve months ended September 30, 2011, adjusted for material transactions. The AGA-Polymetal Strategic Alliance consists of the AGA-Polymetal Strategic Alliance Management Company Holdings Limited, Amikan Holding Limited (“Amikan”), AS APK Holdings Limited, Imizoloto Holdings Limited and Yeniseiskaya Holdings Limited. The investment was sold subsequent to year end. See Note 29. | |||||||
Impairments of associates and equity accounted joint ventures(1) | ||||||||
The Company recognized the following impairments which are included in equity income in associates:
| ||||||||
| ||||||||
| Year ended December 31, | ||||||||
| 2011 | 2010 | 2009 | ||||||
| ||||||||
| $ | $ | $ | ||||||
| ||||||||
Associates | ||||||||
Mariana Resources Limited(2) | 1 | - | - | |||||
Margaret Water Company(3) | 1 | 1 | - | |||||
Orpheo (Proprietary) Limited(4) | 2 | - | - | |||||
Equity accounted joint ventures | ||||||||
Société d’Exploitation des Mines d’Or de Yatela S.A.(4) | 6 | - | - | |||||
AGA-Polymetal Strategic Alliance(5) | - | 23 | 9 | |||||
| ||||||||
| 10 | 24 | 9 | ||||||
| ||||||||
(1) | The impairments recognized had no tax effects. | |||||||
(2) | The carrying amount of the listed associate was written down to fair value. | |||||||
(3) | Contributions to the investment during both 2011 and 2010 were impaired in full. | |||||||
(4) | Investments fully impaired. | |||||||
(5) | Effective December 2, 2009, AngloGold Ashanti Holdings plc, a wholly owned subsidiary, entered into a memorandum of understanding with Polyholding Limited relating to the disposal of Amikan. Completion was expected to occur on or before April 30, 2010, but agreement could not be reached and the transaction was subsequently cancelled. The Company recognized an impairment of $9 million relating to Amikan in 2009 to reduce the carrying amount of the investment to fair value. During 2010, the Company fully impaired its investment in the AGA-Polymetal Strategic Alliance. | |||||||
F-42
F - 40
| 15. | OTHER LONG-TERM ASSETS(continued) |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Effective November 3, 2010, ISS International Limited (“ISSI”) in South Africa was classified as held for sale. AngloGold Ashanti entered into a memorandum of understanding with The Institute of Mine Seismology (“IMS”) relating to the disposal of ISSI. The transaction closed on February 28, 2011 and the proceeds from disposal amounted to $13 million. At December 31, 2009, net assets of ISSI amounted to $9 million. | 12 | — | ||||||
| Effective December 2007, Rand Refinery Limited in South Africa (a subsidiary of the Company) transferred parts of its premises that were no longer utilized (previously recognized as a tangible asset), to held for sale. On April 1, 2008, a sale agreement was concluded, subject to achievement of the suspensive condition regarding rezoning of the land and transfer of title deeds. Rand Refinery Limited is currently awaiting the rezoning transfer notification from the municipal and deeds office in order to conclude the sales transaction. | 1 | 1 | ||||||
On February 17, 2009, AngloGold Ashanti announced the terms of the sale of its Tau Lekoa mine together with the adjacent properties of Weltevreden, Jonkerskraal and Goedgenoeg (“Tau Lekoa”) in South Africa to Simmer & Jack Mines Limited (“Simmers”). Tau Lekoa was previously recognized as a combination of tangible assets, current assets and current and long-term liabilities. The sale was concluded effective August 1, 2010, following the transfer of the mineral rights of Tau Lekoa to Buffelsfontein Gold Mines Limited, a wholly-owned subsidiary of Simmers on July 20, 2010. The Company recorded a loss on disposal of $7 million on the sale. Refer to “Note 5 — Costs and expenses: Profit/loss on sale of assets, realization of loans, indirect taxes and other”. | ||||||||
| Following the effective date of the disposal, Simmers will treat all ore produced from the assets at its own processing facilities. As a result, AngloGold Ashanti will have increased processing capacity available at its Vaal River plants, allowing for the processing of additional material from its surface sources and the other Vaal River mines. | ||||||||
| The additional treatment capacity will ensure significant continuing direct cash flows from the same gold commodity in an active market. Consequently, due to the migration of cash flows and in accordance with the FASB ASC guidance on discontinued operations, Tau Lekoa was not classified as a discontinued operation. | ||||||||
| Tau Lekoa was classified as held for sale in the balance sheet as at December 31, 2009. | — | 64 | ||||||
Following the classification of Tau Lekoa as held for sale, the Company recognized impairment losses of $8 million (2009: $4 million) in earnings to reduce the carrying amount of Tau Lekoa to fair value less costs to sell. Refer to “Note 5 — Costs and expenses: Impairment of assets”. | ||||||||
| ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| ||||||||
Investment in marketable equity securities – available for sale | ||||||||
| Available for sale investments in marketable equity securities consists of investments in ordinary shares. | ||||||||
Cost | 51 | 35 | ||||||
Gross unrealized gains | 34 | 89 | ||||||
Gross unrealized losses | (3) | - | ||||||
| ||||||||
Fair value (net carrying value) | 82 | 124 | ||||||
| ||||||||
Other-than-temporary impairments and disposals of marketable equity securities – available for sale | ||||||||
| ||||||||
| Year ended December 31, | ||||||||
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| $ | $ | $ | ||||||
| ||||||||
Other-than-temporary impairments | ||||||||
First Uranium Corporation (South Africa) | 19 | - | - | |||||
Village Main Reef Limited (South Africa) | 2 | - | - | |||||
Corvus Gold Incorporated (United States of America) | - | 2 | - | |||||
B2Gold Corporation (Colombia) | - | - | 12 | |||||
| ||||||||
| 21 | 2 | 12 | ||||||
| ||||||||
The impairments recognized resulted in a transfer of fair value adjustments previously included in accumulated other comprehensive income to the income statement (See Note 5). | ||||||||
Disposals of marketable equity securities | ||||||||
The Company’s disposals of marketable equity securities resulted in the following reclassification of losses/(gains) of fair value adjustments to the income statement: | ||||||||
Equity investments held by the Environmental Rehabilitation Trust Fund (net of tax of $nil million) | 1 | - | - | |||||
B2Gold Corporation (net of tax of $nil million) | - | (47) | - | |||||
Red5 Limited (net of tax of $2 million) | - | (4) | - | |||||
| ||||||||
| 1 | (51) | - | ||||||
| ||||||||
In addition, the Company holds various equities as strategic investments in gold exploration companies. Five of the strategic investments are in an unrealized loss position and the Company has the intent and ability to hold these investments until the losses are recovered. | ||||||||
The following tables present the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:
| ||||||||
| ||||||||
Less than 12 months | More than 12 months | Total | ||||||
| $ | $ | $ | ||||||
| ||||||||
2011 | ||||||||
Aggregate fair value of investments with unrealized losses | 8 | - | 8 | |||||
Aggregate unrealized losses | (3) | - | (3) | |||||
2010 | ||||||||
Aggregate fair value of investments with unrealized losses | 4 | - | 4 | |||||
Aggregate unrealized losses | - | - | - | |||||
F-43
F - 41
| 15. | OTHER LONG-TERM ASSETS(continued) |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| As at December 31, 2010 and 2009 the carrying amounts of major classes of assets and liabilities classified as held for sale included: | ||||||||
| Cash and cash equivalents | 11 | — | ||||||
| Trade and other receivables | 2 | — | ||||||
| Inventories | 1 | 3 | ||||||
| Property, plant and equipment | 2 | 70 | ||||||
| Acquired properties | — | 1 | ||||||
| Trade and other payables | (3 | ) | (3 | ) | ||||
| Provision for environmental rehabilitation | — | (6 | ) | |||||
| Net assets | 13 | 65 | ||||||
| Deferred income | 10 | 13 | ||||||
| Deferred taxation. Refer to Note 7. | 12 | 8 | ||||||
| Pension and other post-retirement medical benefits. Refer to Note 26. | 14 | 14 | ||||||
| Accrual for power | 42 | 18 | ||||||
| Other (including accrued liabilities) | 75 | 67 | ||||||
| 153 | 120 | |||||||
| Deferred income | 7 | 5 | ||||||
| Taxation. Refer to Note 7. | 52 | 149 | ||||||
| Other creditors | 10 | 9 | ||||||
| 69 | 163 | |||||||
| ||||||||||
| 2011 | 2010 | |||||||||
| $ | $ | |||||||||
| ||||||||||
Investment in marketable debt securities - held to maturity | 8 | 13 | ||||||||
Investments in marketable debt securities represent held to maturity government bonds held by the Environmental Rehabilitation Trust Fund with a total fair value of $11 million (2010: $14 million) and gross unrealized gains of $3 million (2010: $1 million). | ||||||||||
Investment in non-marketable assets - held to maturity | 2 | 2 | ||||||||
Investments in non-marketable assets represent secured loans and receivables secured by pledge of assets. | ||||||||||
Cost method investment | 9 | 9 | ||||||||
The cost method investment mainly represent shares held in XDM Resources Limited.(1) | ||||||||||
Investment in non-marketable debt securities - held to maturity | 85 | 89 | ||||||||
Investments in non-marketable debt securities represent the held to maturity fixed-term deposits required by legislation for the Environmental Rehabilitation Trust Fund and Nufcor Uranium Trust Fund. | ||||||||||
As at December 31, 2011 the contractual maturities of debt securities were as follows: | ||||||||||
Marketable debt securities | ||||||||||
Three to seven years | 8 | |||||||||
| ||||||||||
Non-marketable debt securities | ||||||||||
Less than one year | 85 | |||||||||
| ||||||||||
Restricted cash | 23 | 33 | ||||||||
Restricted cash mainly represent cash balances held by the Environmental Rehabilitation Trust Fund and Environmental Protection Bond. | ||||||||||
Financing receivables | ||||||||||
Loans to equity accounted joint ventures and associates of $29 million (2010: $8 million) are disclosed in Note 6. | ||||||||||
Other non-current assets | ||||||||||
Unsecured | ||||||||||
Other loans and assets(2) | 9 | 9 | ||||||||
Non-current debtors | ||||||||||
Prepayments and accrued income | 22 | 31 | ||||||||
Recoverable tax, rebates, levies and duties | 14 | 82 | ||||||||
Reclamation sites trust fund | 29 | 35 | ||||||||
Unamortized issue costs of long-term debt, bonds and syndicated revolving credit facilities | 26 | 32 | ||||||||
Other debtors | 1 | 3 | ||||||||
| ||||||||||
| 101 | 192 | |||||||||
| ||||||||||
(1) | The fair value is not estimated as there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment and it is not practicable to estimate the fair value of the investment. | |||||||||
(2) | Other comprises the following: | |||||||||
Loans and receivables measured at amortized cost | 6 | 6 | ||||||||
Post-retirement assets measured according to the employee benefits accounting policy | 3 | 3 | ||||||||
F-44
F - 42
| 15. | OTHER LONG-TERM ASSETS(continued) |
Equity accounted joint ventures |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Unsecured | ||||||||
| Debt carried at fair value | ||||||||
Mandatory convertible bonds — issued September 2010(1) | 874 | — | ||||||
| Quarterly coupon of 6 percent per annum. The bonds are convertible into ADS’s in September 2013 and are US dollar-based. The bonds are convertible into a variable number of shares as set forth in the indenture | ||||||||
| Accrued interest included in short-term debt | (2 | ) | — | |||||
Long-term debt at fair value | 872 | — | ||||||
Debt carried at amortized cost | ||||||||
Rated bonds — issued April 2010(2) | 1,006 | — | ||||||
| The rated bonds have two components, $700 million 10-year bonds and $300 million 30-year bonds. Semi-annual coupons of 5.375 percent per annum on $700 million 10-year bonds and 6.5 percent per annum on $300 million 30-year bonds. The $700 million 10-year bonds are repayable in April 2020 and the $300 million 30-year bonds are repayable in April 2040. The bonds are US dollar-based | ||||||||
Syndicated loan facility ($1.0 billion)(3) | 50 | — | ||||||
| Interest charged at LIBOR plus 1.75 percent per annum. The loan is repayable in April 2014 and is US dollar-based | ||||||||
Syndicated loan facility ($1.15 billion)(4) | — | 1,025 | ||||||
| Interest charged at LIBOR plus 0.4 percent per annum. Loan was repaid in June 2010 and was US dollar-based | ||||||||
3.5% Convertible bonds(5) | 633 | 609 | ||||||
| Semi-annual coupon of 3.5 percent per annum. The bonds are convertible, at the holders’ option, into ADSs up to May 2014 and are US dollar-based. The bonds are convertible at an initial conversion price of $47.6126 per ADS | ||||||||
FirstRand Bank Limited loan facility (R1.5 billion) | 107 | — | ||||||
| Interest charged at JIBAR plus 0.95 percent per annum. Loan is repayable in May 2011 and is ZAR-based | ||||||||
2009 Term Facility(6) | — | 252 | ||||||
| Interest charged at a margin of 4.25 percent per annum over the higher of the applicable LIBOR and the lenders’ cost of funds (subject to a cap of LIBOR plus 1.25 percent per annum). Loan was repaid in May 2010 and was US dollar-based | ||||||||
Grupo Santander Brasil | 5 | 8 | ||||||
| Interest charged at LIBOR plus 1.45 percent per annum. Loan is repayable in quarterly installments terminating in September 2011 and is US dollar-based | ||||||||
Grupo Santander Brasil | 4 | 6 | ||||||
| Interest charged at 6 percent per annum. Loans are repayable in monthly installments terminating in November 2013 and April 2014 and are Brazilian real-based | ||||||||
Summarized financial statements of the joint ventures which have been equity accounted are as follows (100 percent shown): | ||||||||
F-45
| ||||||||
| 2011 | 2010 | 2009 | ||||||
| $ | $ | $ | ||||||
| ||||||||
Statements of income for the period | ||||||||
Sales and other income | 966 | 823 | 880 | |||||
Costs and expenses | (679) | (528) | (508) | |||||
Taxation | (120) | (126) | (120) | |||||
| ||||||||
Net income | 167 | 169 | 252 | |||||
| ||||||||
Balance sheets as at December 31, | ||||||||
Non-current assets | 1,337 | 1,205 | ||||||
Current assets | 675 | 550 | ||||||
| ||||||||
| 2,012 | 1,755 | |||||||
Long-term liabilities | (64) | (126) | ||||||
Loans from shareholders | (53) | (4) | ||||||
Current liabilities | (473) | (260) | ||||||
| ||||||||
Net assets | 1,422 | 1,365 | ||||||
| ||||||||
F - 43
| 16. | ASSETS AND LIABILITIES HELD FOR SALE |
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Secured | ||||||||
Capital leases | ||||||||
Turbine Square Two (Proprietary) Limited(7) | 39 | 35 | ||||||
The leases are capitalized at an implied interest rate of 9.8 percent per annum. Lease payments are due in monthly installments terminating in March 2022 and are ZAR-based. The buildings financed are used as security for these loans. Refer to Note 13 | ||||||||
Caterpillar Financial Services Corporation(7) | 13 | 16 | ||||||
| Interest charged at an average rate of 5.46 percent per annum. Loans are repayable in monthly installments terminating in January 2015 and are US dollar-based. The equipment financed is used as security for these loans. Refer to Note 13 | ||||||||
Mazuma Capital Corporation(7) | 4 | 7 | ||||||
| Interest charged at an average rate of 5.6 percent per annum. Loans are repayable in monthly installments terminating in November 2012 and are US dollar-based. The equipment financed is used as security for these loans. Refer to Note 13 | ||||||||
CSI Latina Arrendamento Mercantil S.A.(7) | 2 | 1 | ||||||
| Interest charged at a rate of 3.3 percent per annum. Loans are repayable in monthly installments terminating in June 2013 and are Brazilian real-based. The equipment financed is used as security for these loans. Refer to Note 13 | ||||||||
Total debt at amortized cost | 1,863 | 1,959 | ||||||
| Current maturities included in short-term debt | (133 | ) | (1,292 | ) | ||||
Long-term debt at amortized cost | 1,730 | 667 | ||||||
| Certain long-term debt facilities are subject to debt covenant arrangements for which no breaches have occurred | ||||||||
| Scheduled minimum total debt maturities are: | ||||||||
| 2011 | 135 | |||||||
| 2012 | 8 | |||||||
| 2013 | 877 | |||||||
| 2014 | 685 | |||||||
| 2015 | 2 | |||||||
| Thereafter | 1,030 | |||||||
| 2,737 | ||||||||
| The currencies in which the borrowings are denominated are as follows: | ||||||||
| United States dollars | 2,585 | 1,917 | ||||||
| South African rands | 146 | 35 | ||||||
| Brazilian real | 6 | 7 | ||||||
| 2,737 | 1,959 | |||||||
| ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| ||||||||
Effective November 3, 2010, ISS International Limited (“ISSI”) in South Africa was classified as held for sale. AngloGold Ashanti entered into a memorandum of understanding with The Institute of Mine Seismology (“IMS”) relating to the disposal of ISSI. The transaction closed on February 28, 2011. The Company recorded a profit on disposal of $2 million on the sale. See “Note 5 - Costs and expenses: Profit/loss on sale of assets, realization of loans, indirect taxes and other”. | - | 12 | ||||||
Effective December 2007, Rand Refinery Limited in South Africa (a subsidiary of the Company) transferred parts of its premises that were no longer utilized (previously recognized as a tangible asset), to held for sale. On April 1, 2008, a sale agreement was concluded, subject to achievement of the suspensive condition regarding rezoning of the land and transfer of title deeds. Rand Refinery Limited is currently awaiting the rezoning transfer notification from the municipal and deeds office in order to conclude the sales transaction. | 1 | 1 | ||||||
As at December 31, 2011 and 2010 the carrying amounts of major classes of assets and liabilities classified as held for sale included: | ||||||||
Cash and cash equivalents | - | 11 | ||||||
Trade and other receivables | - | 2 | ||||||
Inventories | - | 1 | ||||||
Property, plant and equipment | 1 | 2 | ||||||
Trade and other payables | - | (3) | ||||||
| ||||||||
Net assets | 1 | 13 | ||||||
| ||||||||
F-46
| 17. | OTHER LIABILITIES |
Current | ||||||||
Deferred income | 6 | 10 | ||||||
Deferred taxation. See Note 7. | 15 | 12 | ||||||
Pension and other post-retirement medical benefits. See Note 25. | 12 | 14 | ||||||
Accrual for power | 27 | 42 | ||||||
Other (including accrued liabilities) | 60 | 75 | ||||||
| ||||||||
| 120 | 153 | |||||||
| ||||||||
Non-current | ||||||||
Deferred income | 3 | 7 | ||||||
Provision for uncertain tax positions. See Note 7. | 49 | 52 | ||||||
Other creditors | 11 | 10 | ||||||
| ||||||||
| 63 | 69 | |||||||
| ||||||||
F - 44
| 18. | LONG-TERM DEBT |
| ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| ||||||||
Unsecured | ||||||||
Debt carried at fair value | ||||||||
Mandatory convertible bonds - issued September 2010(1) | 760 | 874 | ||||||
Quarterly coupon of 6 percent per annum. The bonds are convertible into ADS’s in September 2013 and are US dollar-based. The bonds are convertible into a variable number of shares as set forth in the indenture. | ||||||||
Accrued interest included in short-term debt at fair value | (2) | (2) | ||||||
| ||||||||
Long-term debt at fair value | 758 | 872 | ||||||
| ||||||||
Debt carried at amortized cost | ||||||||
Rated bonds - issued April 2010(2) | 1,006 | 1,006 | ||||||
The rated bonds have two components, $700 million 10-year bonds and $300 million 30-year bonds. Semi-annual coupons of 5.375 percent per annum on $700 million 10-year bonds and 6.5 percent per annum on $300 million 30-year bonds. The $700 million 10-year bonds are repayable in April 2020 and the $300 million 30-year bonds are repayable in April 2040. The bonds are US dollar-based. | ||||||||
Syndicated revolving credit facility ($1.0 billion)(3) | - | 50 | ||||||
Interest charged at LIBOR plus 1.75 percent per annum. The loan is repayable in April 2014 and is US dollar-based. | ||||||||
3.5 % Convertible bonds(4) | 659 | 633 | ||||||
Semi-annual coupon of 3.5 percent per annum. The bonds are convertible, at the holders’ option, into ADSs up to May 2014 and are US dollar-based. The bonds are convertible at an initial conversion price of $47.6126 per ADS. | ||||||||
FirstRand Bank Limited loan facility (R1.5 billion) | - | 107 | ||||||
Interest charged at JIBAR plus 0.95 percent per annum. Loan was repaid in February 2011 and was ZAR-based. | ||||||||
Grupo Santander Londres | - | 4 | ||||||
Interest charged at LIBOR plus 1.45 percent per annum. Loan was repaid September 2011 and was US dollar-based. | ||||||||
Grupo Santander Brasil | 2 | 4 | ||||||
Interest charged at 8.11 percent per annum. Loans are repayable in monthly installments terminating in November 2013 and April 2014 and are Brazilian real-based. | ||||||||
Brazilian Economic and Social Development Bank | 1 | 1 | ||||||
Interest charged at a rate of 2.3 percent plus delta exchange rate on individual installments per annum. Loans are repayable in monthly installments terminating in April 2014 and are Brazilian real-based. | ||||||||
Banco de Desenvolvimento de Minas Gerais | 1 | - | ||||||
Interest charged at a rate of 4.5 percent per annum. Loans are repayable in monthly installments terminating in June 2020 and are Brazilian real-based. | ||||||||
F - 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Undrawn borrowing facilities as at December 31 are as follows: | ||||||||
| Syndicated loan facility ($1.0 billion) — US dollar | 950 | — | ||||||
| Syndicated loan facility ($1.15 billion) — US dollar | — | 125 | ||||||
| Standard Chartered PLC (2009 Revolving Credit Facility) — US dollar | — | 250 | ||||||
| FirstRand Bank Limited — US dollar | 50 | 50 | ||||||
| Absa Bank Limited — US dollar | 42 | 42 | ||||||
| Nedbank Limited — US dollar | — | 2 | ||||||
| FirstRand Bank Limited — rands | 139 | 30 | ||||||
| Standard Bank of South Africa Limited — rands | 28 | 25 | ||||||
| Nedbank Limited — rands | 18 | 14 | ||||||
| Absa Bank Limited — rands | 5 | 4 | ||||||
| 1,232 | 542 | |||||||
| 18. | LONG-TERM DEBT(continued) |
| ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| ||||||||
Secured | ||||||||
Capital leases | ||||||||
Turbine Square Two (Proprietary) Limited(5) | 33 | 39 | ||||||
The leases are capitalized at an implied interest rate of 9.8 percent per annum. Lease payments are due in monthly installments terminating in March 2022 and are ZAR-based. The buildings financed are used as security for these loans. See Note 12. | ||||||||
Caterpillar Financial Services Corporation(5) | 10 | 13 | ||||||
Interest charged at an average rate of 5.46 percent per annum. Loans are repayable in monthly installments terminating in January 2015 and are US dollar-based. The equipment financed is used as security for these loans. See Note 12. | ||||||||
Mazuma Capital Corporation(5) | 2 | 4 | ||||||
Interest charged at an average rate of 5.6 percent per annum. Loans are repayable in monthly installments terminating in November 2012 and are US dollar-based. The equipment financed is used as security for these loans. See Note 12. | ||||||||
CSI Latina Arrendamento Mercantil S.A.(5) | 2 | 2 | ||||||
Interest charged at a rate of 3.4 percent per annum. Loans are repayable in monthly installments terminating in March 2014 and are Brazilian real-based. The equipment financed is used as security for these loans. See Note 12. | ||||||||
Navachab Lewcor Mining Contract(5) | 29 | - | ||||||
Interest charged at a rate of 8.4 percent per annum. Loans are repayable in April 2015 and are Namibian dollar-based. The equipment financed is used as security for these loans. See Note 12. | ||||||||
| ||||||||
Total debt at amortized cost | 1,745 | 1,863 | ||||||
Current maturities included in short-term debt | (30) | (133) | ||||||
| ||||||||
Long-term debt at amortized cost | 1,715 | 1,730 | ||||||
| ||||||||
Certain long-term debt facilities are subject to debt covenant arrangements for which no breaches have occurred. | ||||||||
Scheduled minimum total debt maturities are: | ||||||||
2012 | 32 | |||||||
2013 | 773 | |||||||
2014 | 673 | |||||||
2015 | 4 | |||||||
2016 | 2 | |||||||
Thereafter | 1,021 | |||||||
| ||||||||
| 2,505 | ||||||||
| ||||||||
The currencies in which the borrowings are denominated are as follows: | ||||||||
United States dollars | 2,437 | 2,585 | ||||||
South African rands | 33 | 146 | ||||||
Brazilian real | 6 | 6 | ||||||
Namibian dollars | 29 | - | ||||||
| ||||||||
| 2,505 | 2,737 | |||||||
| ||||||||
F - 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 18. | LONG-TERM DEBT(continued) |
| ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| ||||||||
Undrawn borrowing facilities as at December 31 are as follows: | ||||||||
Syndicated revolving credit facility ($1.0 billion) - US dollar | 1,000 | 950 | ||||||
Syndicated revolving credit facility (A$600 million) - Australian dollar | 617 | - | ||||||
FirstRand Bank Limited - US dollar | 50 | 50 | ||||||
Absa Bank Limited - US dollar | 42 | 42 | ||||||
Nedbank Limited - US dollar | 2 | - | ||||||
FirstRand Bank Limited - rands | 14 | 139 | ||||||
Standard Bank of South Africa Limited - rands | 23 | 28 | ||||||
Nedbank Limited - rands | 13 | 18 | ||||||
Absa Bank Limited - rands | 4 | 5 | ||||||
| ||||||||
| 1,765 | 1,232 | |||||||
| ||||||||
| (1) | Mandatory convertible bonds | |||||
In September 2010, the Company issued mandatory convertible bonds at a coupon rate of 6 percent due in September 2013. The conversion of the mandatory convertible bonds into ADSs was subject to shareholder approval, which was granted in October 2010. These bonds are convertible into a variable number of ADSs, ranging from 18,140,000 at a share price equal to or lesser than $43.50, to 14,511,937 at a share price equal to or greater than $54.375, each as calculated in accordance with the formula set forth in the indenture and subject to adjustment. | ||||||
The mandatory convertible bonds contain certain embedded derivatives relating to change in control and anti-dilution protection provisions. The FASB ASC guidance contains an election for the Company to record the entire instrument at fair value as opposed to separating the embedded derivatives from the instrument. The shareholders have authorized that the convertible bonds will be settled in equity and not have any cash settlement potential except if a fundamental change or conversion rate adjustment causes the number of ADSs deliverable upon conversion to exceed the number of shares reserved for such purpose, among other circumstances provided in the indenture, and therefore the Company has chosen to recognize the instrument, in its entirety, at fair value. Depending on the final calculated share price on the date of conversion, the liability recognized may differ from the principal amount. | ||||||
Other convertible bonds that have been issued by the Company will only be settled in equity if future events, outside of the control of the Company, result in equity settlement and thus have a potential cash settlement at maturity that will not exceed the principal amount, in those circumstances the liabilities are recognized at amortized cost. | ||||||
In determining the fair value liability of the mandatory convertible bonds, the Company has measured the effect based on the ex interest NYSE closing price on the reporting date. The ticker code used by the NYSE for the mandatory convertible bonds is AUPRA. The accounting policy of the Company is to recognize interest expense separately from the fair value adjustments in the income statement. Interest is recognized at a quarterly coupon rate of 6 percent per annum. Fair value adjustments are included in Non-hedge derivative gain/loss and movement on bonds in the income statement | ||||||
The contractual principal amount of the mandatory convertible bonds is $789 million, provided the calculated share price of the Company is within the range of $43.50 to $54.375. If the calculated share price is below $43.50, the Company will recognize a gain on the principal amount and above $54.375 a loss. As at December | ||||||
| $42.45 (December 31, 2010: $49.23). | ||||||
The mandatory convertible bonds were issued by AngloGold Ashanti Holdings Finance plc, a finance company wholly-owned by AngloGold Ashanti Limited. AngloGold Ashanti Limited has fully and unconditionally guaranteed the mandatory subordinated convertible bonds issued by AngloGold Ashanti Holdings Finance plc. There are no significant restrictions on the ability of AngloGold Ashanti Limited to obtain funds from its subsidiaries by dividend or loan. | ||||||
F-47
F - 47
| 2010 | 2009 | |||||||
| $ | $ | |||||||
(2)Rated bonds | ||||||||
| Senior unsecured fixed rate bonds | 1,000 | — | ||||||
| Less: Unamortized discount | (6 | ) | — | |||||
| Add: Accrued interest | 12 | — | ||||||
| 1,006 | — | |||||||
| On April 22, 2010, the Company announced the pricing of an offering of 10-year and 30-year notes. The offering closed on April 28, 2010. The notes were issued by AngloGold Ashanti Holdings plc, a wholly-owned subsidiary of AngloGold Ashanti Limited, and are fully and unconditionally guaranteed by AngloGold Ashanti Limited. The notes are unsecured and interest is payable semi-annually | ||||||||
(3)Syndicated loan facility ($1.0 billion) | ||||||||
| Drawn down | 50 | — | ||||||
| Add: Accrued interest | — | — | ||||||
| 50 | — | |||||||
| On April 20, 2010, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Inc., each a wholly-owned subsidiary of AngloGold Ashanti Limited, as borrowers, and AngloGold Ashanti Limited entered into a $1.0 billion four year revolving credit facility with a syndicate of lenders to replace the existing $1.15 billion syndicated facility. AngloGold Ashanti Limited, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Inc. each guaranteed the obligations of the borrowers and other guarantors under the facility. Amounts may be repaid and reborrowed under the facility during its four year term. A commitment fee of 0.70 percent is payable quarterly in arrears on the undrawn portion of the facility | ||||||||
(4)Syndicated loan facility ($1.15 billion) | ||||||||
| Drawn down | — | 1,025 | ||||||
| — | 1,025 | |||||||
| In December 2007, the Company entered into a three year $1.15 billion unsecured syndicated borrowing facility, at a margin of 0.4 percent over LIBOR. On April 20, 2010, the Company entered into a $1.0 billion four year revolving credit facility to replace the $1.15 billion syndicated loan facility. During the second quarter of 2010, the Company applied proceeds from the rated bonds issued in April 2010, to repay the $1.15 billion syndicated facility | ||||||||
| During the year ended December 31, 2010, the Company drew down and repaid the following amounts: | ||||||||
| Amount drawn down under the $1.15 billion facility | 35 | |||||||
| Amount repaid under the $1.15 billion facility | 1,060 | |||||||
F-48
| 2010 | 2009 | |||||||
| $ | $ | |||||||
(5)3.5% Convertible bonds | ||||||||
| Senior unsecured fixed rate bonds | 630 | 607 | ||||||
| Add: Accrued interest | 3 | 2 | ||||||
| 633 | 609 | |||||||
| The issue of convertible bonds in the aggregate principal amount of $732.5 million at an interest rate of 3.5 percent was concluded on May 22, 2009. These bonds are convertible into ADSs at an initial conversion price of $47.6126. The conversion price is subject to standard weighted average anti-dilution protection. The convertible bonds were issued by AngloGold Ashanti Holdings Finance plc, a finance company wholly-owned by AngloGold Ashanti Limited. AngloGold Ashanti Limited has fully and unconditionally guaranteed the convertible bonds issued by AngloGold Ashanti Holdings Finance plc. There are no significant restrictions on the ability of AngloGold Ashanti Limited to obtain funds from its subsidiaries by dividend or loan | ||||||||
| The convertible bonds mature on May 22, 2014. However, at any time on or after June 12, 2012 the Company has the right, but not the obligation, to redeem all (but not part) of the convertible bonds at their principal amount together with accrued interest if the volume weighted average price of the ADSs that would be delivered by the Company on the conversion of a convertible bond of a principal amount of $100,000 exceeds $130,000 on each of at least 20 consecutive dealing days ending not earlier than five days prior to the date that the Company gives notice of the redemption | ||||||||
| Upon the occurrence of a change of control of the Company, each convertible bond holder will have the right to require the Company to redeem its convertible bonds at their principal amount plus accrued interest thereon. If the convertible bond holder elects to convert its convertible bonds in connection with such change of control, the Company will pay a “make whole” premium to such convertible bond holder in connection with such conversion | ||||||||
| The Company is separately accounting for the conversion features of the convertible bonds at fair value as a derivative liability with subsequent changes in fair value recorded in earnings each period. The total fair value of the derivative liability on May 22, 2009 (date of issue) amounted to $142.2 million. The difference between the initial carrying value and the stated value of the convertible bonds is being accreted to interest expense using the effective interest method over the 5 year term of the bonds | ||||||||
| The associated derivative liability (which has been accounted for separately) are summarized as follows: | ||||||||
| Convertible bond derivative liability | ||||||||
| Balance at beginning of period | 175 | 142 | ||||||
| Fair value movements on conversion features of convertible bonds | 1 | 33 | ||||||
| Balance at end of period | 176 | 175 | ||||||
(6)2009 Term Facility | ||||||||
| Drawn down | — | 250 | ||||||
| Add: Accrued interest | — | 2 | ||||||
| — | 252 | |||||||
| On November 20, 2008, AngloGold Ashanti Holdings plc entered into a $1.0 billion term loan facility agreement (the “Term Facility”) | ||||||||
| During 2009, the Company completed an amendment to the Term Facility by prepaying an amount of $750 million and, as a result, the balance of the Term Facility was converted into a new term loan of $250 million (the “2009 Term Facility”) and a new revolving credit facility of $250 million was made available (the “2009 Revolving Credit Facility”) | ||||||||
| During the second quarter of 2010, the Company applied proceeds from the rated bonds issued in April 2010, to repay the 2009 Term Facility and to cancel the 2009 Revolving Credit Facility. The cancellation of these debt facilities in the June quarter resulted in a once-off charge to earnings of $8 million related to accelerated amortization of fees | ||||||||
F-49
LONG-TERM DEBT(continued) |
| 2010 | 2009 | |||||||||||||||
| Accumulated | Accumulated | |||||||||||||||
| Cost | depreciation | Cost | depreciation | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Turbine Square Two (Proprietary) Limited | 37 | 9 | 33 | 6 | ||||||||||||
| Caterpillar Financial Services Corporation | 15 | 2 | 16 | — | ||||||||||||
| Mazuma Capital Corporation | 8 | 2 | 7 | 1 | ||||||||||||
| CSI Latina Arrendamento Mercantil S.A. | 3 | 2 | 2 | 1 | ||||||||||||
| 63 | 15 | 58 | 8 | |||||||||||||
| 2010 | ||||
| $ | ||||
| 2011 | 10 | |||
| 2012 | 11 | |||
| 2013 | 8 | |||
| 2014 | 9 | |||
| 2015 | 6 | |||
| Thereafter | 48 | |||
| Total minimum lease payments | 92 | |||
| Less interest | 34 | |||
| Present value of net minimum lease payments | 58 | |||
| Less current portion | 6 | |||
| Long-term capital lease obligation | 52 | |||
| ||||||||||
| 2011 | 2010 | |||||||||
| $ | $ | |||||||||
| ||||||||||
(2) | Rated bonds | |||||||||
Senior unsecured fixed rate bonds | 1,000 | 1,000 | ||||||||
Less: Unamortized discount | (6) | (6) | ||||||||
Add: Accrued interest | 12 | 12 | ||||||||
| ||||||||||
| 1,006 | 1,006 | |||||||||
| ||||||||||
On April 22, 2010, the Company announced the pricing of an offering of 10-year and 30-year notes. The offering closed on April 28, 2010. The notes were issued by AngloGold Ashanti Holdings plc, a wholly-owned subsidiary of AngloGold Ashanti Limited, and are fully and unconditionally guaranteed by AngloGold Ashanti Limited. The notes are unsecured and interest is payable semi-annually. | ||||||||||
(3) | Syndicated revolving credit facility ($1.0 billion) | |||||||||
Drawn down | - | 50 | ||||||||
Add: Accrued interest | - | - | ||||||||
| ||||||||||
| - | 50 | |||||||||
| ||||||||||
On April 20, 2010, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Inc., each a wholly-owned subsidiary of AngloGold Ashanti Limited, as borrowers, and AngloGold Ashanti Limited entered into a $1.0 billion four year revolving credit facility with a syndicate of lenders to replace the existing $1.15 billion syndicated facility. AngloGold Ashanti Limited, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Inc. each guaranteed the obligations of the borrowers and other guarantors under the facility. Amounts may be repaid and reborrowed under the facility during its four year term. During the year ended December 31, 2011, the Company drew down $100 million and repaid $150 million under this facility. A commitment fee of 0.70 percent is payable quarterly in arrears on the undrawn portion of the facility. | ||||||||||
F-50
F - 48
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Accrued environmental rehabilitation costs | 530 | 385 | ||||||
| 18. | ||
LONG-TERM DEBT(continued) |
| ||||||||||
| 2011 | 2010 | |||||||||
| $ | $ | |||||||||
| ||||||||||
(4) | 3.5% Convertible bonds | |||||||||
Senior unsecured fixed rate bonds | 656 | 630 | ||||||||
Add: Accrued interest | 3 | 3 | ||||||||
| ||||||||||
| 659 | 633 | |||||||||
| ||||||||||
The issue of convertible bonds in the aggregate principal amount of $732.5 million at an interest rate of 3.5 percent was concluded on May 22, 2009. These bonds are convertible into ADSs at an initial conversion price of $47.6126. The conversion price is subject to standard weighted average anti-dilution protection. The convertible bonds were issued by AngloGold Ashanti Holdings Finance plc, a finance company wholly-owned by AngloGold Ashanti Limited. AngloGold Ashanti Limited has fully and unconditionally guaranteed the convertible bonds issued by AngloGold Ashanti Holdings Finance plc. There are no significant restrictions on the ability of AngloGold Ashanti Limited to obtain funds from its subsidiaries by dividend or loan. | ||||||||||
The convertible bonds mature on May 22, 2014. However, at any time on or after June 12, 2012 the Company has the right, but not the obligation, to redeem all (but not part) of the convertible bonds at their principal amount together with accrued interest if the volume weighted average price of the ADSs that would be delivered by the Company on the conversion of a convertible bond of a principal amount of $100,000 exceeds $130,000 on each of at least 20 consecutive dealing days ending not earlier than five days prior to the date that the Company gives notice of the redemption. | ||||||||||
Upon the occurrence of a change of control of the Company, each convertible bond holder will have the right to require the Company to redeem its convertible bonds at their principal amount plus accrued interest thereon. If the convertible bond holder elects to convert its convertible bonds in connection with such change of control, the Company will pay a “make whole” premium to such convertible bond holder in connection with such conversion. The conversion price is subject to adjustment on occurrence of certain events, as described in the terms and conditions of the bonds. | ||||||||||
The Company is separately accounting for the conversion features of the convertible bonds at fair value as a derivative liability with subsequent changes in fair value recorded in earnings each period. The total fair value of the derivative liability on May 22, 2009 (date of issue) amounted to $142.2 million. The difference between the initial carrying value and the stated value of the convertible bonds is being accreted to interest expense using the effective interest method over the 5 year term of the bonds. | ||||||||||
The associated derivative liability (which has been accounted for separately) are summarized as follows: | ||||||||||
Convertible bond derivative liability | ||||||||||
Balance at beginning of period | 176 | 175 | ||||||||
Fair value movements on conversion features of convertible bonds | (84) | 1 | ||||||||
| ||||||||||
Balance at end of period | 92 | 176 | ||||||||
| ||||||||||
Syndicated revolving credit facility (A$600 million) | ||||||||||
On December 22, 2011, AngloGold Ashanti Australia Limited entered into a four year revolving credit facility of A$600 million with a syndication of banks. Interest is charged at BSSY plus 2 percent per annum. AngloGold Ashanti Limited together with AngloGold Ashanti Holdings plc has each guaranteed all payments and other obligations of AngloGold Ashanti Australia Limited under the facility. Amounts may be repaid and reborrowed under the facility during its four year term. No draw down was made during 2011 under the facility. A committment fee of 50 percent of the applicable margin is payable quarterly in arrears on the undrawn portion of the facility. | ||||||||||
F-51
F - 49
| 2010 | 2009 | |||||||
| $ | $ | |||||||
Capital expenditure commitments(1) | ||||||||
| Contracts for capital expenditure | 176 | 131 | ||||||
| Authorized by the directors but not yet contracted for | 988 | 1,683 | ||||||
| 1,164 | 1,814 | |||||||
| Allocated for: | ||||||||
| Project expenditure | ||||||||
| - within one year | 433 | 264 | ||||||
| - thereafter | 107 | 594 | ||||||
| 540 | 858 | |||||||
| Stay in business expenditure | ||||||||
| - within one year | 404 | 705 | ||||||
| - thereafter | 220 | 251 | ||||||
| 624 | 956 | |||||||
(1)Including commitments through contractual arrangements by equity accounted joint venturesamounting to: | 12 | 6 | ||||||
Other contractual purchase obligations(2) | ||||||||
| - within one year | 398 | 346 | ||||||
| - thereafter | 140 | 96 | ||||||
| 538 | 442 | |||||||
LONG-TERM DEBT |
| (5) | Capital leases | |||||||||||||
Capital leases are for specific periods, with terms of renewal but no purchase options. Renewals are at the discretion of the entity that holds the lease. | ||||||||||||||
Property, plant and equipment, allocated to Buildings and mine infrastructure, includes the following assets under capital leases: | ||||||||||||||
| ||||||||||||||
| 2011 | 2010 | |||||||||||||
| Cost | Accumulated depreciation | Cost | Accumulated depreciation | |||||||||||
| $ | $ | $ | $ | |||||||||||
| ||||||||||||||
Turbine Square Two (Proprietary) Limited | 39 | 18 | 37 | 9 | ||||||||||
Caterpillar Financial Services Corporation | 16 | 5 | 15 | 2 | ||||||||||
Mazuma Capital Corporation | 7 | 3 | 8 | 2 | ||||||||||
CSI Latina Arrendamento Mercantil S.A. | 4 | 2 | 3 | 2 | ||||||||||
Navachab Lewcor Mining Contract | 31 | 2 | - | - | ||||||||||
| ||||||||||||||
| 97 | 30 | 63 | 15 | |||||||||||
| ||||||||||||||
Amortization charges relating to capital leases are included in Depreciation, depletion and amortization expense. |
| |||||||||||||
Future minimum lease payments under all the above capital leases together with the present value of minimum lease payments as of December 31, 2011 are: | ||||||||||||||
| ||||||||
| 2011 | ||||||||
| $ | ||||||||
| ||||||||
2012 | 20 | |||||||
2013 | 19 | |||||||
2014 | 19 | |||||||
2015 | 7 | |||||||
2016 | 5 | |||||||
Thereafter | 35 | |||||||
| ||||||||
Total minimum lease payments | 105 | |||||||
Less interest | (29) | |||||||
| ||||||||
Present value of net minimum lease payments | 76 | |||||||
Less current portion | (14) | |||||||
| ||||||||
Long-term capital lease obligation | 62 | |||||||
| ||||||||
F - 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 19. | PROVISION FOR ENVIRONMENTAL REHABILITATION |
| ||||
2011 $ | 2010 $ | |||
| ||||
Accrued environmental rehabilitation costs | 653 | 530 | ||
| ||||
Long-term environmental obligations comprising decommissioning and restoration are based on the Company’s environmental management plans, in compliance with the current environmental and regulatory requirements. | ||||
While the ultimate amount of rehabilitation is uncertain, the Company has estimated that the total cost for mine rehabilitation and closure, on an undiscounted basis, will be $2,542 million which includes a total estimated liability of $57 million in respect of equity accounted joint ventures. AngloGold Ashanti USA has posted reclamation bonds with various federal and governmental agencies to cover environmental rehabilitation obligations. See Note 20. | ||||
The Company intends to finance the ultimate rehabilitation costs from the monies invested with the rehabilitation trust fund, the environmental protection bond as well as the proceeds on sale of assets and gold from plant clean-up at the time of mine closure. | ||||
F - 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 20. | COMMITMENTS AND CONTINGENCIES |
| ||||||||
2011 $ | 2010 $ | |||||||
| ||||||||
Capital expenditure commitments(1) | ||||||||
Contracts for capital expenditure | 202 | 176 | ||||||
Authorized by the directors but not yet contracted for | 1,128 | 988 | ||||||
|
| |||||||
| 1,330 | 1,164 | |||||||
|
| |||||||
Allocated for: | ||||||||
Project expenditure | ||||||||
- within one year | 832 | 433 | ||||||
- thereafter | 46 | 107 | ||||||
|
| |||||||
| 878 | 540 | |||||||
|
| |||||||
Stay in business expenditure | ||||||||
- within one year | 421 | 404 | ||||||
- thereafter | 31 | 220 | ||||||
|
| |||||||
| 452 | 624 | |||||||
|
| |||||||
(1) Including commitments through contractual arrangements by equity accounted joint ventures amounting to: | 14 | 12 | ||||||
Other contractual purchase obligations(2) | ||||||||
- within one year | 334 | 398 | ||||||
- thereafter | 129 | 140 | ||||||
|
| |||||||
| 463 | 538 | |||||||
|
| |||||||
(2) Other purchase obligations represent contractual obligations for the purchase of mining contract services, power, supplies, consumables, inventories, explosives and activated carbon. Amounts exclude purchase obligations of equity accounted joint ventures. | ||||||||
Summary of contracted uranium sales as at December 31, 2010
The Company had the following uranium commitments:
| Average contracted | ||||||||
| Year | lbs (000)(1) | price ($/lbs) | ||||||
| 2011 | 494 | 33.97 | ||||||
| 2012 | 494 | 34.35 | ||||||
| 2013 | 494 | 34.74 | ||||||
| ||||||||
| Year | lbs (000) | Average contracted price ($/lbs) | ||||||
| ||||||||
2012 | 858 | 61.54 | ||||||
F-52
F - 52
C |
Contingencies and guarantees are summarized as follows for disclosure purposes. Amounts represent possible losses for loss contingencies, where an estimate can be made, and quantification of guarantees:
| 2010 | 2009 | |||||||||
| $ | $ | |||||||||
| Contingent liabilities | ||||||||||
| Groundwater pollution (1) | — | — | ||||||||
| Deep groundwater pollution — South Africa (2) | — | — | ||||||||
| Sales tax on gold deliveries — Brazil (3) | 89 | 76 | ||||||||
| Other tax disputes — Brazil (4) | 34 | 25 | ||||||||
| Indirect taxes — Ghana (5) | 11 | 9 | ||||||||
| Occupational Diseases in Mines and Works Act (“ODMWA”) litigation (6) | — | — | ||||||||
| Contingent assets | ||||||||||
| Royalty — Boddington Gold Mine (7) | — | — | ||||||||
| Royalty — Tau Lekoa Gold Mine (8) | — | — | ||||||||
| Financial guarantees | ||||||||||
| Oro Group surety (9) | 15 | 13 | ||||||||
| AngloGold Ashanti USA reclamation bonds (10) | 88 | 84 | ||||||||
| AngloGold Ashanti environmental guarantees (11) | 172 | 134 | ||||||||
| Guarantee provided for revolving credit facility (12) | 50 | — | ||||||||
| Guarantee provided for rated bonds (13) | 1,012 | — | ||||||||
| Guarantee provided for convertible bonds (14) | 736 | 735 | ||||||||
| Guarantee provided for mandatory convertible bonds (15) | 791 | — | ||||||||
| Guarantee provided for term loan facility and revolving credit facility (16) | — | 252 | ||||||||
| Guarantee provided for syndicated loan facility (17) | — | 1,025 | ||||||||
| Hedging guarantees | ||||||||||
| Gold delivery guarantees (18) | — | 370 | ||||||||
| Ashanti Treasury Services Limited (“ATS”) hedging guarantees (19) | — | 443 | ||||||||
| Geita Management Company Limited (“GMC”) hedging guarantees (20) | — | 432 | ||||||||
| 2,998 | 3,598 | |||||||||
| The Company assesses the credit quality of counterparts at least on a quarterly basis. As of December 31, 2010, the probability of non-performance is considered minimal. | ||||||||||
(1) | Ground water pollution | |||||||||
| The Company has identified groundwater contamination plumes at certain of its operations, which have occurred primarily as a result of seepage from mine residue stockpiles. Numerous scientific, technical and legal studies have been undertaken to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The Company has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvement in some instances. Furthermore, literature reviews, field trials and base line modeling techniques suggest, but are not yet proven, that the use of phyto-technologies can address the soil and groundwater contamination. Subject to the completion of trials and the technology being a proven remediation technique, no reasonable estimate can be made for the obligation. | ||||||||||
| ||||
2011 $ | 2010 $ | |||
| ||||
Contingent liabilities | ||||
Groundwater pollution (1) | - | - | ||
Deep groundwater pollution - South Africa (2) | - | - | ||
Sales tax on gold deliveries - Brazil (3) | 88 | 89 | ||
Other tax disputes - Brazil (4) | 38 | 34 | ||
Indirect taxes - Ghana (5) | 12 | 11 | ||
Tax disputes - Tanzania (6) | - | - | ||
Occupational Diseases in Mines and Works Act (“ODMWA”) litigation (7) | - | - | ||
Contingent assets | ||||
Royalty - Boddington Gold Mine (8) | - | - | ||
Royalty - Tau Lekoa Gold Mine (9) | - | - | ||
Financial guarantees | ||||
Oro Group surety (10) | 12 | 15 | ||
AngloGold Ashanti USA reclamation bonds (11) | 101 | 88 | ||
AngloGold Ashanti Australia environmental bonds (12) | 30 | 28 | ||
AngloGold Ashanti environmental guarantees (13) | 166 | 193 | ||
Guarantee provided for syndicated revolving credit facility (14) | - | 50 | ||
Guarantee provided for rated bonds (15) | 1,012 | 1,012 | ||
Guarantee provided for convertible bonds (16) | 736 | 736 | ||
Guarantee provided for mandatory convertible bonds (17) | 791 | 791 | ||
Guarantee provided for A$ syndicated revolving credit facility (18) | - | - | ||
Hedging guarantees | ||||
Gold delivery guarantees (19) | - | - | ||
Ashanti Treasury Services Limited (“ATS”) hedging guarantees (20) | - | - | ||
Geita Management Company Limited (“GMC”) hedging guarantees (21) | - | - | ||
| ||||
| 2,986 | 3,047 | |||
| ||||
The Company assesses the credit quality of counterparts at least on a quarterly basis. As of December 31, 2011, the probability of non-performance is considered | ||||
F-53
| (1) | Ground water pollution |
The Company has identified groundwater contamination plumes at certain of its operations, which have occurred primarily as a result of seepage from mine residue stockpiles. Numerous scientific, technical and legal studies have been undertaken to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The Company has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (“MNA”) by the existing environment will contribute to improvement in some instances. Furthermore, literature reviews, field trials and base line modeling techniques suggest, but are not yet proven, that the use of phyto-technologies can address the soil and groundwater contamination. Subject to the completion of trials and the technology being a proven remediation technique, no reasonable estimate can be made for the obligation. |
F - 53
COMMITMENTS AND CONTINGENCIES(continued) |
| 2010 | 2009 | |||||||||
| $ | $ | |||||||||
(2) | Deep ground water pollution — South Africa | |||||||||
| The Company has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West Rand gold fields. Various studies have been undertaken by AngloGold Ashanti since 1999. Due to the interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines located in these gold fields. As a result, the Department of Mineral Resources and affected mining companies are involved in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the estimation of a liability, no reasonable estimate can be made for the obligation. | ||||||||||
(3) | Sales tax on gold deliveries — Brazil | |||||||||
| Mineração Serra Grande S.A. (“MSG”) received two tax assessments from the State of Goiás related to payments of sales taxes on gold deliveries for export. AngloGold Ashanti Córrego do Sitío Mineração S.A. manages the operation. In November 2006, the administrative council’s second chamber ruled in favor of MSG and fully cancelled the tax liability related to the first period. The State of Goiás has appealed to the full board of the State of Goiás tax administrative council. The second assessment was issued by the State of Goiás in October 2006 on the same grounds as the first assessment. The Company believes both assessments are in violation of federal legislation on sales taxes. | ||||||||||
| The Company’s attributable share of the assessments are as follows: | ||||||||||
| First assessment | 55 | 47 | ||||||||
| Second assessment | 34 | 29 | ||||||||
| 89 | 76 | |||||||||
(4) | Other tax disputes — Brazil | |||||||||
| MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold. The tax administrators rejected the Company’s appeal against the assessment. The Company is now appealing the dismissal of the case. The Company’s attributable share of the assessment is approximately: | 10 | 8 | ||||||||
| Subsidiaries of the Company in Brazil are involved in various disputes with tax authorities. These disputes involve federal tax assessments including income tax, royalties, social contributions and annual property tax. The amount involved is approximately: | 24 | 17 | ||||||||
| 34 | 25 | |||||||||
(5) | Indirect taxes — Ghana | |||||||||
| AngloGold Ashanti (Ghana) Limited received a tax assessment during September 2009 in respect of the 2006, 2007 and 2008 tax years following an audit by the tax authorities related to indirect taxes on various items. Management is of the opinion that the indirect taxes are not payable and the Company has lodged an objection. | ||||||||||
| The assessment is approximately: | 11 | 9 | ||||||||
(6) | ODMWA litigation | |||||||||
| The case of Mr Thembekile Mankayi was heard in the High Court of South Africa in June 2008, and an appeal heard in the Supreme Court of Appeals in 2010. In both instances judgment was awarded in favor of AngloGold Ashanti Limited. A further appeal that was lodged by Mr Mankayi was heard in the Constitutional Court in 2010. Judgment in the Constitutional Court was handed down on March 3, 2011. | ||||||||||
| Following the judgment, Mr Mankayi’s executor may proceed with his case in the High Court. This will comprise, amongst others, providing evidence showing that Mr Mankayi contracted silicosis as a result of negligent conduct on the part of AngloGold Ashanti. | ||||||||||
| The Company will defend the case and any subsequent claims on their merits. Should other individuals or groups lodge similar claims, these too would be defended by the Company and adjudicated by the Courts on their merits. In view of the limitation of current information for the estimation of a possible liability, no reasonable estimate can be made for this possible obligation. | ||||||||||
F-54
| ||||||
2011 $ | 2010 $ | |||||
| ||||||
(2) | Deep ground water pollution - South Africa | |||||
The Company has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West Rand gold fields. Various studies have been undertaken by AngloGold Ashanti since 1999. Due to the interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines located in these gold fields. As a result, the Department of Mineral Resources and affected mining companies are involved in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the estimation of a liability, no reasonable estimate can be made for the obligation. | ||||||
(3) | Sales tax on gold deliveries - Brazil | |||||
In 2006, Mineração Serra Grande S.A. (“MSG”) received two tax assessments from the State of Goiás related to payments of state sales taxes at the rate of 12 percent on gold deliveries for export from one Brazilian state to another during the period from February 2004 to the end of May 2006. AngloGold Ashanti Córrego do Sitío Mineração S.A. manages the operation. In November 2006, the administrative council’s second chamber ruled in favor of MSG and fully cancelled the tax liability related to the first period. In July 2011, the administrative council’s second chamber ruled in favor of MSG and fully cancelled the tax liability related to the second period. The State of Goiás has appealed to the full board of the State of Goiás tax administrative council. In November 2011, the administrative council’s second chamber approved the suspension of proceedings and the remittance of the matter to the Department of Supervision of Foreign Trade (“Comex”) for review and verification. The Company believes both assessments are in violation of federal legislation on sales taxes. | ||||||
The Company’s attributable share of the assessments are as follows: | ||||||
First assessment | 54 | 55 | ||||
Second assessment | 34 | 34 | ||||
| ||||||
| 88 | 89 | |||||
(4) | Other tax disputes - Brazil | |||||
MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold. The tax administrators rejected the Company’s appeal against the assessment. The Company is now appealing the dismissal of the case. The Company’s attributable share of the assessment is approximately: | 9 | 10 | ||||
In addition, in November 2007, the Departamento Nacional de Produçâo Mineral (“DNPM”), a Brazilian federal mining authority, issued a tax assessment against AngloGold Ashanti Brazil Mineração (“AABM”) relating to the calculation and payment by AABM of the financial contribution on mining exploitation (“CFEM”) in the period from 1991 to 2006. The amount involved is approximately: | 21 | 3 | ||||
Subsidiaries of the Company in Brazil are involved in various other disputes with tax authorities. These disputes involve federal tax assessments including income tax, royalties, social contributions and annual property tax. The amount involved is approximately: | 8 | 21 | ||||
| ||||||
| 38 | 34 | |||||
(5) | Indirect taxes - Ghana | |||||
AngloGold Ashanti (Ghana) Limited received a tax assessment during September 2009 in respect of the 2006, 2007 and 2008 tax years following an audit by the tax authorities related to indirect taxes on various items. Management is of the opinion that the indirect taxes are not payable and the Company has lodged an objection. | ||||||
The assessment is approximately: | 12 | 11 | ||||
F - 54
COMMITMENTS AND CONTINGENCIES(continued) |
| 2010 | 2009 | |||||||||
| $ | $ | |||||||||
(7) | Royalty — Boddington Gold Mine | |||||||||
| As a result of the sale of the interest in the Boddington Gold Mine during 2009, the Company is entitled to receive a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington Gold Mine’s cash costs plus $600 per ounce. The royalty is payable in each quarter from and after the second quarter in 2010, within forty five days of reporting period close and is capped at a total of $100 million. | ||||||||||
| Details of the royalty are as follows: | ||||||||||
| Royalties received during the year ended December 31. See Note 5. | 4 | — | ||||||||
| Royalties received subsequent to December 31, 2010 | 6 | — | ||||||||
(8) | Royalty — Tau Lekoa Gold Mine | |||||||||
| As a result of the sale of the Tau Lekoa Gold Mine during 2010, the Company is entitled to receive a royalty on the production of a total of 1.5 million ounces by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of gold exceeds R180,000 per kilogram (subject to an inflation adjustment). Where the average monthly rand price of gold does not exceed R180,000 per kilogram (subject to an inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5 million ounces upon which the royalty is payable. The royalty will be determined at 3 percent of the net revenue (being gross revenue less state royalties) generated by the Tau Lekoa assets. | ||||||||||
| Royalties received during the year ended December 31. See Note 5. | 3 | — | ||||||||
(9) | Oro Group surety | 15 | 13 | |||||||
| The Company has provided surety in favor of a lender on a gold loan facility with its associate Oro Group (Proprietary) Limited and one of its subsidiaries. The Company has a total maximum liability, in terms of the suretyships, of R100 million. The probability of the non-performance under the suretyships is considered minimal. | ||||||||||
(10) | AngloGold Ashanti USA reclamation bonds | 88 | 84 | |||||||
| Pursuant to US environmental and mining requirements, gold mining companies are obligated to close their operations and rehabilitate the lands that they mine in accordance with these requirements. AngloGold Ashanti USA has posted reclamation bonds with various federal and state governmental agencies to cover potential rehabilitation obligations. The Company has provided a guarantee for these obligations which would be payable in the event of AngloGold Ashanti USA not being able to meet its rehabilitation obligations. The obligations will expire upon completion of such rehabilitation and release of such areas by the applicable federal and/or state agency. AngloGold Ashanti is not indemnified by third parties for any of the amounts that may be paid by AngloGold Ashanti under its guarantee. | ||||||||||
(11) | AngloGold Ashanti environmental guarantees | 172 | 134 | |||||||
| Pursuant to South African mining laws, mining companies are obligated to close their operations and rehabilitate the lands that they mine in accordance with these laws. In order to cover against premature closure costs, the Company has secured bank guarantees to cover potential rehabilitation obligations of certain mines in South Africa. The Company has provided a guarantee for these obligations which would be payable in the event of the South African mines not being able to meet such rehabilitation obligations. The obligations will expire upon compliance with all provisions of the environment management program in terms of South African mining laws. AngloGold Ashanti is not indemnified by third parties for any of the amounts that may be paid by AngloGold Ashanti under its guarantee. | ||||||||||
(12) | Guarantee provided for revolving credit facility | |||||||||
| AngloGold Ashanti Limited, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Incorporated, as guarantors, have each guaranteed all payments and other obligations of the borrowers and the other guarantors under the $1.0 billion four year revolving credit facility. | ||||||||||
| The total amount outstanding under this facility as at December 31 amounted to: | 50 | — | ||||||||
F-55
| ||||||
2011 $ | 2010 $ | |||||
| ||||||
(6) |
Tax disputes - Tanzania | |||||
Geita Gold Mine Limited (“GGML”) and Samax Resources Limited (Tanzania Branch) received a letter from the Tanzania Revenue Authority (“TRA”) dated March 15, 2012. | ||||||
The TRA advised that it intends to issue assessments or demands in relation to a number of tax matters. The Company intends to defend the assessments and demands. As no assessments or demands have been received to date, no reasonable estimate can be made for the obligation. | ||||||
| (7) | ODMWA litigation | |||||
The case of Mr Thembekile Mankayi was heard in the High Court of South Africa in June 2008, and an appeal heard in the Supreme Court of Appeal in 2010. In both instances judgment was awarded in favor of AngloGold Ashanti Limited on basis that an employer is indemnified against such a claim for damages by virtue of the provisions of section 35 of the Compensation for Occupational Injuries and Diseases Act, 1993 (“COIDA”). A further appeal that was lodged by Mr Mankayi was heard in the Constitutional Court in 2010. Judgment in the Constitutional Court was handed down on March 3, 2011. The Constitutional Court held that section 35 of COIDA does not indemnify the employer against such claims. | ||||||
Mr Mankayi passed away subsequent to the hearing in the Supreme Court of Appeal. Following the Constitutional Court judgment, Mr Mankayi’s executor may proceed with his case in the High Court. This will comprise, amongst others, providing evidence showing that Mr Mankayi contracted silicosis as a result of negligent conduct on the part of AngloGold Ashanti Limited. | ||||||
The Company will defend the case and any subsequent claims on their merits. Should other individuals or groups lodge similar claims, these too will be defended by the Company and adjudicated by the Courts on their merits. In view of the limitation of current information for the estimation of a possible liability, no reasonable estimate can be made of this possible obligation. | ||||||
| (8) | Royalty - Boddington Gold Mine | |||||
As a result of the sale of the interest in the Boddington Gold Mine during 2009, the Company is entitled to receive a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington Gold Mine’s cash costs plus $600 per ounce. The royalty is payable in each quarter from and after the second quarter in 2010, within forty five days of reporting period close and is capped at a total of $100 million. | ||||||
Details of the royalty are as follows: | ||||||
Total royalties received and receivable to date | 42 | 4 | ||||
| (9) | Royalty - Tau Lekoa Gold Mine | |||||
As a result of the sale of the Tau Lekoa Gold Mine during 2010, the Company is entitled to receive a royalty on the production of a total of 1.5 million ounces by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of gold exceeds R180,000 per kilogram (subject to an inflation adjustment). Where the average monthly rand price of gold does not exceed R180,000 per kilogram (subject to an inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5 million ounces upon which the royalty is payable. The royalty will be determined at 3 percent of the net revenue (being gross revenue less state royalties) generated by the Tau Lekoa assets. Royalties on 219,005 ounces produced have been received to date. | ||||||
Royalties received in cash during the year ended December 31 | 5 | 3 | ||||
| (10) | Oro Group surety | 12 | 15 | |||
The Company has provided surety in favor of a lender on a gold loan facility with its associate Oro Group (Proprietary) Limited and one of its subsidiaries. The Company has a total maximum liability, in terms of the suretyships, of R100 million. The probability of the non-performance under the suretyships is considered minimal. | ||||||
F - 55
COMMITMENTS AND CONTINGENCIES(continued) |
| 2010 | 2009 | |||||||||
| $ | $ | |||||||||
(13) | Guarantee provided for rated bonds | 1,012 | — | |||||||
| AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings plc regarding the issued $700 million 5.375 percent rated bonds due 2020 and the issued $300 million 6.5 percent rated bonds due 2040. | ||||||||||
(14) | Guarantee provided for convertible bonds | 736 | 735 | |||||||
| AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings Finance plc regarding the issued $732.5 million 3.5 percent convertible bonds due 2014. | ||||||||||
(15) | Guarantee provided for mandatory convertible bonds | 791 | — | |||||||
| AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings Finance plc regarding the issued $789 million 6 percent mandatory convertible bonds due 2013. | ||||||||||
(16) | Guarantee provided for term loan facility and revolving credit facility | — | 252 | |||||||
| AngloGold Ashanti Limited, AngloGold Ashanti USA Incorporated and AngloGold Ashanti Australia Limited, as guarantors, had each guaranteed all payments and other obligations of AngloGold Ashanti Holdings plc and the other guarantors under the 2009 Term Facility and the 2009 Revolving Credit Facility. During the second quarter of 2010, the Company repaid the 2009 Term Facility and cancelled the 2009 Revolving Credit Facility. | ||||||||||
(17) | Guarantee provided for syndicated loan facility | — | 1,025 | |||||||
| AngloGold Ashanti Limited, AngloGold Ashanti Holdings plc, AngloGold Ashanti USA Incorporated and AngloGold Ashanti Australia Limited, as guarantors, had each guaranteed all payments and other obligations of the borrowers and the other guarantors under the $1.15 billion syndicated loan facility. During the second quarter of 2010, the Company repaid and cancelled the $1.15 billion syndicated loan facility. | ||||||||||
(18) | Gold delivery guarantees | — | 370 | |||||||
| The Company has issued gold delivery guarantees to several counterpart banks pursuant to which it guarantees the due performance of its subsidiaries AngloGold (USA) Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements. At December 31, 2010 the Company had no open gold hedge contracts. | ||||||||||
(19) | ATS hedging guarantees | — | 443 | |||||||
| The Company together with its wholly-owned subsidiary AngloGold Ashanti Holdings plc has provided guarantees to several counterpart banks for the hedging commitments of its wholly-owned subsidiary ATS. The maximum potential amount of future payments is all moneys due, owing or incurred by ATS under or pursuant to the hedging agreements. At December 31, 2010 the Company had no open gold hedge contracts. | ||||||||||
F-56
| ||||||
2011 $ | 2010 $ | |||||
| ||||||
(11) |
AngloGold Ashanti USA reclamation bonds | 101 | 88 | |||
Pursuant to US environmental and mining requirements, gold mining companies are obligated to close their operations and rehabilitate the lands that they mine in accordance with these requirements. AngloGold Ashanti USA has posted reclamation bonds with various federal and state governmental agencies to cover potential rehabilitation obligations. The Company has provided a guarantee for these obligations which would be payable in the event of AngloGold Ashanti USA not being able to meet its rehabilitation obligations. The obligations will expire upon completion of such rehabilitation and release of such areas by the applicable federal and/or state agency. AngloGold Ashanti is not indemnified by third parties for any of the amounts that may be paid by AngloGold Ashanti under its guarantee. | ||||||
(12) | AngloGold Ashanti Australia environmental bonds | 30 | 28 | |||
Pursuant to Australia environmental and mining requirements, gold mining companies are obligated to close their operations and rehabilitate the lands that they mine in accordance with these requirements. AngloGold Ashanti Australia has posted bonds with state governmental agencies to cover potential rehabilitation obligations. The Company has provided a guarantee for these obligations which would be payable in the event of AngloGold Ashanti Australia not being able to meet its rehabilitation obligations. The obligations will expire upon completion of such rehabilitation and release of such areas by the applicable state agency. AngloGold Ashanti is not indemnified by third parties for any of the amounts that may be paid by AngloGold Ashanti under its guarantee. | ||||||
(13) | AngloGold Ashanti environmental guarantees | 166 | 193 | |||
Pursuant to South African mining laws, mining companies are obligated to close their operations and rehabilitate the lands that they mine in accordance with these laws. In order to cover against premature closure costs, the Company has secured bank guarantees to cover potential rehabilitation obligations of certain mines in South Africa. The Company has provided a guarantee for these obligations which would be payable in the event of the South African mines not being able to meet such rehabilitation obligations. The obligations will expire upon compliance with all provisions of the environment management program in terms of South African mining laws. AngloGold Ashanti is not indemnified by third parties for any of the amounts that may be paid by AngloGold Ashanti under its guarantee. | ||||||
(14) | Guarantee provided for syndicated revolving credit facility | |||||
AngloGold Ashanti Limited, AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Incorporated, as guarantors, have each guaranteed all payments and other obligations of the borrowers and the other guarantors under the $1.0 billion four year revolving credit facility. | ||||||
The total amount outstanding under this facility as at December 31 amounted to: | - | 50 | ||||
(15) | Guarantee provided for rated bonds | 1,012 | 1,012 | |||
AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings plc regarding the issued $700 million 5.375 percent rated bonds due 2020 and the issued $300 million 6.5 percent rated bonds due 2040. | ||||||
(16) | Guarantee provided for convertible bonds | 736 | 736 | |||
AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings Finance plc regarding the issued $732.5 million 3.5 percent convertible bonds due 2014. | ||||||
(17) | Guarantee provided for mandatory convertible bonds | 791 | 791 | |||
AngloGold Ashanti Limited has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings Finance plc regarding the issued $789 million 6 percent mandatory convertible bonds due 2013. | ||||||
F - 56
COMMITMENTS AND CONTINGENCIES(continued) |
| 2010 | 2009 | |||||||||
| $ | $ | |||||||||
| Vulnerability from concentrations | ||||||||||
| The majority of AngloGold Ashanti’s 62,046 employees (2009: 63,364, 2008: 62,895) are subject to collective bargaining agreements. These agreements are established in negotiations between the Chamber of Mines, the body that represents the gold mining industry in South Africa, and representative groups of labor. The agreements have a two-year validity period. The most recent settlement negotiation was completed in July 2009, when the parties reached an agreement covering the period from July 1, 2009 to June 30, 2011. | ||||||||||
| There is a concentration of risk in respect of recoverable value added tax and fuel duties from the Tanzanian government. The outstanding amounts have been discounted to their present value at a rate of 7.82 percent. | ||||||||||
| The recoverable value added tax and fuel duties are summarized as follows: | ||||||||||
| Recoverable value added tax due to the Company | 49 | 36 | ||||||||
| Recoverable fuel duties due to the Company (1) | 62 | 48 | ||||||||
| (1) | Fuel duty claims are required to be submitted after consumption of the related fuel and are subject to authorization by the Customs and Excise authorities. | |||||||||
F-57
| ||||||
2011 $ | 2010 $ | |||||
| ||||||
(18) |
Guarantee provided for A$ syndicated revolving credit facility | |||||
AngloGold Ashanti Limited together with AngloGold Ashanti Holdings plc, as guarantors, has each guaranteed all payments and other obligations of AngloGold Ashanti Australia Limited under the A$600 million four year revolving credit facility entered into during December 2011. | ||||||
The total amount outstanding under this facility as at December 31 amounted to: | - | - | ||||
| (19) | Gold delivery guarantees | - | - | |||
The Company has issued gold delivery guarantees to several counterpart banks pursuant to which it guarantees the due performance of its subsidiaries AngloGold (USA) Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements. At December 31, 2011 and 2010 the Company had no open gold hedge contracts. | ||||||
| (20) | ATS hedging guarantees | - | - | |||
The Company together with its wholly-owned subsidiary AngloGold Ashanti Holdings plc has provided guarantees to several counterpart banks for the hedging commitments of its wholly-owned subsidiary ATS. The maximum potential amount of future payments is all moneys due, owing or incurred by ATS under or pursuant to the hedging agreements. At December 31, 2011 and 2010 the Company had no open gold hedge contracts. | ||||||
| (21) | GMC hedging guarantees | - | - | |||
The Company and its wholly-owned subsidiary AngloGold Ashanti Holdings plc have issued hedging guarantees to several counterpart banks in which they have guaranteed the due performance by GMC of its obligations under or pursuant to the hedging agreements entered into by GMC, and to the payment of all money owing or incurred by GMC as and when due. The maximum potential amount of future payments is all moneys due, owing or incurred by GMC under or pursuant to the hedging agreements. At December 31, 2011 and 2010 the Company had no open gold hedge contracts. | ||||||
Vulnerability from concentrations | ||||||
The majority of AngloGold Ashanti’s 61,242 employees (2010: 62,046, 2009: 63,364) are subject to collective bargaining agreements. In South Africa agreements are established in negotiations between the Chamber of Mines, the body that represents the gold mining industry in South Africa, and representative groups of labor. The agreements have a two-year validity period. The most recent settlement negotiation was completed in August 2011, when the parties reached an agreement covering the period from July 1, 2011 to June 30, 2013. | ||||||
F - 57
| 21. | STOCKHOLDERS’ EQUITY |
On May 15, 2009, shareholders approved the increase in the authorized common stock from 400,000,000 shares of common stock to 600,000,000 shares of common stock of 25 ZAR cents each.
| No of shares | |||||||
At the annual general meeting of shareholders held on May | |||||||
The Company’s redeemable preference shares, held within the group, consist of the following: | |||||||
A redeemable preference shares issued | 2,000,000 | ||||||
B redeemable preference shares issued | 778,896 | ||||||
A and B redeemable preference shares issued which are held by a wholly-owned subsidiary Eastvaal Gold Holdings Limited, may not be transferred and are redeemable from the realization of the assets relating to the Moab Lease area after cessation of mining operations in the area. The shares carry the right to receive dividends equivalent to the profits (net of royalty, ongoing capital expenditure and taxation) from operations in the area. No further A and B redeemable preference shares will be issued. | |||||||
The issues of common stock and the cancellations of E shares of common stock resulted in the following year-on-year movements in share capital and premium:
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
| Number of | Number of | Number of | ||||||||||||||||||||||
| $ | shares | $ | shares | $ | shares | |||||||||||||||||||
| Stock issued as part of equity offering completed on September 15, 2010 | 773 | 18,140,000 | — | — | — | — | ||||||||||||||||||
| Stock issued on the exercise of options/awards granted in terms of the share incentive scheme | 26 | 823,411 | 25 | 1,131,916 | 14 | 672,545 | ||||||||||||||||||
E shares cancelled and stock issued in accordance with the cancellation formula pertaining to the Employee Share Ownership Plan and Izingwe Holdings (1) | 12 | — | 3 | 1,181 | 3 | 94 | ||||||||||||||||||
| Stock issued as part of equity offering, the funds of which were applied to initial 35 percent interest in the Kibali gold project | — | — | 280 | 7,624,162 | — | — | ||||||||||||||||||
| Stock issued as part of rights offer completed on July 11, 2008, the funds of which were applied to reduce the hedge book | — | — | — | — | 1,666 | 69,470,442 | ||||||||||||||||||
| Stock issued to acquire the remaining 33 percent shareholding in the Cripple Creek & Victor mine from Golden Cycle Gold Corporation | — | — | — | — | 118 | 3,181,198 | ||||||||||||||||||
| Stock issued to purchase São Bento Gold Company Limited | — | — | — | — | 70 | 2,701,660 | ||||||||||||||||||
| Stock transferred from the Employee Share Ownership Plan to exiting employees pursuant to the rules of the scheme | 10 | 230,921 | 7 | 189,787 | 2 | 57,761 | ||||||||||||||||||
| 821 | 19,194,332 | 315 | 8,947,046 | 1,873 | 76,083,700 | |||||||||||||||||||
(1) E Shares of common stock cancelled — Employee Share Ownership Plan | 708,872 | 171,943 | 173,289 | |||||||||||||||||||||
| E Shares of common stock cancelled — Izingwe Holdings | 280,000 | — | — |
| ||||||||||||||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||||||||||||||
| $ | Number of shares | $ | Number of shares | $ | Number of shares | |||||||||||||||||||||
| ||||||||||||||||||||||||||
Stock issued as part of equity offering completed on September 15, 2010 | - | - | 773 | 18,140,000 | - | - | ||||||||||||||||||||
Stock issued on the exercise of options/awards granted in terms of the share incentive scheme | 33 | 889,593 | 26 | 823,411 | 25 | 1,131,916 | ||||||||||||||||||||
E shares cancelled and stock issued in accordance with the cancellation formula pertaining to the Employee Share Ownership Plan and Izingwe Holdings (1) | 20 | 99,747 | 12 | - | 3 | 1,181 | ||||||||||||||||||||
E Shares of common stock cancelled - Izingwe Holdings | - | (70,000 | ) | - | (280,000 | ) | - | - | ||||||||||||||||||
Stock issued as part of equity offering, the funds of which were applied to initial 35 percent interest in the Kibali gold project | - | - | - | - | 280 | 7,624,162 | ||||||||||||||||||||
Stock transferred from the Employee Share Ownership Plan to exiting employees pursuant to the rules of the scheme | 7 | 156,958 | 10 | 230,921 | 7 | 189,787 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||
| 60 | 1,076,298 | 821 | 18,914,332 | 315 | 8,947,046 | |||||||||||||||||||||
|
| |||||||||||||||||||||||||
| (1) | E Shares of common stock cancelled - Employee Share Ownership Plan | 922,328 | 708,872 | 171,943 | ||||||||||||||||||||||
F-58
F - 58
| 22. | FAIR VALUE MEASUREMENTS |
The FASB ASC guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 | ||||
Quoted prices in active markets for identical assets or liabilities. | ||||
Level 2 | ||||
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||||
Level 3 | ||||
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | ||||
The Company utilizes the market approach to measure fair value. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
The following table sets out the Company’s financial assets and (liabilities) measured on a recurring basis at fair value, by level within the hierarchy as at December 31, 2011 (in US Dollars, millions):
Items measured at fair value on a recurring basis
| ||||||||
| ||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||
| ||||||||
Cash and cash equivalents | 1,112 | 1,112 | ||||||
Marketable equity securities | 82 | 82 | ||||||
Mandatory convertible bonds | (760) | (760) | ||||||
Embedded derivatives | (1) | (1) | ||||||
Option component of convertible bonds | (92) | (92) | ||||||
| ||||||||
The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash instruments that are valued based on quoted market prices in active markets are primarily money market securities. Due to the short maturity of cash, carrying amounts approximate fair values.
The Company’s marketable equity securities (see Note 15) are included in Other long-term assets in the Company’s consolidated balance sheet. They consist of investments in ordinary shares and are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.
The Company’s mandatory convertible bonds (see Note 18) are included in debt at fair value in the Company’s consolidated balance sheet. The bonds are valued using quoted market prices in an active market and as such are classified within Level 1 of the fair value hierarchy. The fair value of the bonds is calculated as the quoted market price of the bond multiplied by the quantity of bonds issued by the Company.
Embedded derivatives and the conversion features of convertible bonds are included as derivatives on the balance sheet. Such instruments are typically classified within Level 2 of the fair value hierarchy.
The following inputs were used in the valuation of the conversion features of convertible bonds as at December 31:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Cash and cash equivalents | 575 | 575 | ||||||||||||||
| Marketable equity securities | 124 | 124 | ||||||||||||||
| Mandatory convertible bonds | (872 | ) | (872 | ) | ||||||||||||
| Warrants on shares | 1 | 1 | ||||||||||||||
| Option component of convertible bonds | (176 | ) | (176 | ) | ||||||||||||
Market quoted bond price (percent) | 111.50 | |||
Fair value of bond excluding conversion feature (percent) | ||||
Fair value of conversion feature (percent) | ||||
Total issued bond value ($ million) | 732.5 | |||
F-59The option component of the convertible bonds is calculated as the difference between the price of the bonds including the option component (bond price) and the price excluding the option component (bond floor price).
F - 59
FAIR VALUE MEASUREMENTS(continued) |
| Items measured at fair value on a non-recurring basis | ||||
2011 $ | |||||||
During | |||||||
See “Note 5 | |||||||
In | |||||||
The above items are summarized as follows:
| Total | ||||||||||||||||||||||||||||||||||||||||
| Fair value | Level 1 | Level 2 | Level 3 | gain/(loss) |
| |||||||||||||||||||||||||||||||||||
| Description | $ | $ | $ | $ | $ | Fair value $ | Level 1 $ | Level 2 $ | Level 3 $ |
Total gain/(loss) $ | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
| Long-lived assets abandoned | — | (83 | ) | - | (17) | |||||||||||||||||||||||||||||||||||
| Long-lived assets held for sale | 61 | 61 | (8 | ) | ||||||||||||||||||||||||||||||||||||
| Associates and equity accounted joint ventures | — | (24 | ) | 7 | 7 | (10) | ||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
| 61 | — | 61 | — | (115 | ) | 7 | 7 | - | - | (27) | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
F-60
F - 60
FINANCIAL RISK MANAGEMENT ACTIVITIES | ||
In the normal course of its operations, the Company is exposed to gold and other commodity price, currency, interest rate, equity price, liquidity and non-performance risk, which includes credit risk. The Company is also exposed to certain by-product commodity price risk. In order to manage these risks, the Company may enter into transactions which make use of derivatives. The Company has developed a risk management process to facilitate, control and monitor these risks. The Audit and Corporate Governance Committee has approved and monitors this risk management process, inclusive of documented treasury policies, counterpart limits, controlling and reporting structures. The Company does not acquire, hold or issue derivatives for speculative purposes. Although all derivative transactions executed by the Company serve to economically manage the Company’s risk to the market factors discussed above, not all such derivatives qualify for hedge accounting treatment, including instances whereby management has elected to not designate such derivatives as part of a qualifying hedge accounting relationship.
The financial risk management activities objectives of the Company are as follows:
Safeguarding the Company’s core earnings stream through the effective control and management of gold and other commodity price risk, foreign exchange risk and interest rate risk;
Effective and efficient usage of credit facilities through the adoption of liquidity planning procedures;
Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts; and
Ensuring that contracts and agreements related to risk management activities are coordinated, consistent throughout the Company and comply where necessary with relevant regulatory and statutory requirements.
F-61A number of products, including derivatives are used to satisfy these objectives. Contracts that meet the criteria for hedge accounting are designated as the hedging instruments hedging the variability of forecasted cash flows from the sale of production into the spot market and from capital expenditure denominated in a foreign currency and are classified as cash flow hedges under the FASB ASC guidance on derivatives and hedging. Cash flows related to these instruments designated as qualifying hedges are reflected in the consolidated statement of cash flows in the same category as the cash flow from the items being hedged. Accordingly, cash flows relating to the settlement of forward sale commodity derivatives contracts hedging the forecasted sale of production into the spot market as well as the forward sale currency derivative contracts hedging the forecasted capital expenditure, have been reflected upon settlement as a component of operating cash flows. The ineffective portion of cash flow hedges recognized in (gain)/loss on non-hedge derivatives in the income statement during the year was $nil million (2010: $nil million; 2009: $5 million). The Company does not have any open cash flow hedge contracts relating to product sales or forecasted capital expenditure as at December 31, 2011 (2010: $nil million; 2009: $37 million). Cash flow hedge losses pertaining to capital expenditure of $3 million as at December 31, 2011 (2010: $3 million; 2009: $4 million) are expected to be reclassified from accumulated other comprehensive income and recognized as an adjustment to depreciation expense until 2017.
A gain on non-hedge derivatives of $83 million was recorded in 2011 (2010: loss of $703 million; 2009: loss of $1,452 million). See “Note 5 – Cost and expenses: Non-hedge derivative (gain)/loss and movement on bonds” for additional information.
Gold price risk management activities
Gold price risk arises from the risk of an adverse effect of current or future earnings resulting from fluctuations in the price of gold. The Company historically utilized derivatives as part of its hedging of the risk. In order to provide financial exposure to the rising spot price of gold and the potential for enhanced cash-flow generation the Company completed its final tranche of the hedge buy-back program during 2010 and settled all forward gold and foreign exchange contracts that had been used by the Company in the past to manage those risks. At year end there were no net forward sales contracts (2010: nil kg; 2009: 571kg), net call options sold (2010: nil kg; 2009: 120,594kg) and net put options sold (2010: nil kg; 2009: 27,071kg).
The mix of derivative instruments, the volume of production hedged and the tenor of the hedge book is continuously reviewed in light of changes in operational forecasts, market conditions and the Company’s hedging policy as set by the board of directors.
F - 61
FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
F-62
Elimination of hedge book
The Company communicated a board approved strategy in prior years to begin reducing its outstanding gold derivatives position in order to be more exposed to spot gold prices. During 2010, the Company completed the final phase of this strategy and eliminated its gold hedge book. See “Note 5 – Cost and expenses: Non-hedge derivative (gain)/loss and movement on bonds” for additional information relating to the final 2010 hedge book elimination and the hedge buy-back transactions, including the impact thereof on the 2009 and 2010 consolidated financial statements.
The results of operations and cash flows for 2009, 2010 and 2011 were adversely impacted given the early cash settlement of non-hedge derivatives and previously designated NPSE contracts with low contracted sales prices, respectively, committed ounces have been fully eliminated as at December 31, 2011 (December 31, 2010: nil committed ounces; December 31, 2009: 3.90 million committed ounces). The Company has since had full exposure to the spot price of gold.
Foreign exchange price risk protection agreements
The Company, from time to time, may enter into currency forward exchange and currency option contracts to hedge certain anticipated transactions denominated in foreign currencies. The objective of the Company’s foreign currency hedging activities is to protect the Company from the risk that the eventual cash flows resulting from transactions denominated in US dollars will be adversely affected by changes in exchange rates.
As at December 31, 2011 and 2010, the Company had no open forward exchange or currency option contracts in its currency hedge position.
Interest rate and liquidity risk
Fluctuations in interest rates impacts interest paid and received on the short-term cash investments and financing activities, giving rise to interest rate risk.
In the ordinary course of business, the Company receives cash from the proceeds of its gold sales and is required to fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market related returns while minimizing risks.
The Company is able to actively source financing at competitive rates. The counterparts are financial and banking institutions and their credit ratings are regularly monitored by the Company.
F - 62
FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Cash and loans advanced maturity profile
| 2010 | 2009 | |||||||||||||||||||||||||||||||||||
| Fixed rate | Floating rate | Fixed rate | Floating rate | |||||||||||||||||||||||||||||||||
| Investment | Investment | Investment | Investment | |||||||||||||||||||||||||||||||||
| Amount | Effective | Amount | Effective | Amount | Effective | Amount | Effective | |||||||||||||||||||||||||||||
| Maturity date | Currency | (million) | rate % | (million) | rate % | (million) | rate % | (million) | rate % | |||||||||||||||||||||||||||
| All less than one year | USD | 13 | 0.20 | 171 | 0.19 | 506 | 0.29 | 178 | 0.13 | |||||||||||||||||||||||||||
| ZAR | 969 | 5.58 | 57 | 4.64 | 1,135 | 7.03 | 839 | 6.38 | ||||||||||||||||||||||||||||
| AUD | 42 | 4.45 | 25 | 4.44 | — | — | 13 | 3.52 | ||||||||||||||||||||||||||||
| EUR | — | — | 3 | 1.00 | — | — | 1 | 0.50 | ||||||||||||||||||||||||||||
| CAD | — | — | 2 | 0.20 | — | — | 1 | 0.08 | ||||||||||||||||||||||||||||
| HKD | — | — | — | — | — | — | 1 | 0.01 | ||||||||||||||||||||||||||||
| BRL | — | — | 30 | 8.90 | — | — | 152 | 10.20 | ||||||||||||||||||||||||||||
| ARS | — | — | 2 | 9.00 | — | — | 4 | 10.23 | ||||||||||||||||||||||||||||
| NAD | 102 | 5.00 | 207 | 5.00 | — | — | — | — | ||||||||||||||||||||||||||||
| Between | Between | |||||||||||||||||||||||||||||||||||
| Within one year | one and two years | two and five years | After five years | Total | ||||||||||||||||||||||||||||||||
| Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | ||||||||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | Amount | Rate | Amount | ||||||||||||||||||||||||||||
| Currency | (million) | % | (million) | % | (million) | % | (million) | % | (million) | |||||||||||||||||||||||||||
| $ | 26 | 4.7 | 5 | 5.5 | 1,560 | 4.9 | 994 | 5.7 | 2,585 | |||||||||||||||||||||||||||
| ZAR | 703 | 6.4 | — | — | 20 | 9.8 | 237 | 9.8 | 960 | |||||||||||||||||||||||||||
| BRL | 3 | 4.7 | 5 | 5.1 | 2 | 6.0 | — | — | 10 | |||||||||||||||||||||||||||
| Fixed for between one and three | Fixed for greater than three | |||||||||||||||||||||||||||
| Fixed for less than one yearthree years | years | years | Total | |||||||||||||||||||||||||
| Borrowings | Effective | Borrowings | Effective | Borrowings | Effective | Borrowings | ||||||||||||||||||||||
| Amount | Rate | Amount | Rate | Amount | Rate | amount | ||||||||||||||||||||||
| Currency | (million) | % | (million) | % | (million) | % | (million) | |||||||||||||||||||||
| $ | 26 | 4.7 | 880 | 6.0 | 1,679 | 4.8 | 2,585 | |||||||||||||||||||||
| ZAR | 703 | 6.4 | 7 | 9.8 | 250 | 9.8 | 960 | |||||||||||||||||||||
| BRL | 3 | 4.7 | 7 | 5.3 | — | — | 10 | |||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||||||||||||
| Maturity date | Currency | Fixed rate investment amount (million) | Effective rate % | Floating rate investment amount (million) | Effective rate % | Fixed rate investment amount (million) | Effective rate % | Floating rate investment amount (million) | Effective rate % | |||||||||||||||||||||||||
All less than one year | USD | 10 | 0.48 | 467 | 0.20 | 13 | 0.20 | 171 | 0.19 | |||||||||||||||||||||||||
| ZAR | 3,030 | 5.50 | 164 | 3.55 | 969 | 5.58 | 57 | 4.64 | ||||||||||||||||||||||||||
| AUD | 81 | 4.65 | 23 | 4.45 | 42 | 4.45 | 25 | 4.44 | ||||||||||||||||||||||||||
| EUR | - | - | - | - | - | - | 3 | 1.00 | ||||||||||||||||||||||||||
| CAD | - | - | - | - | - | - | 2 | 0.20 | ||||||||||||||||||||||||||
| BRL | - | - | 27 | 6.61 | - | - | 30 | 8.90 | ||||||||||||||||||||||||||
| ARS | - | - | 1 | 10.23 | - | - | 2 | 9.00 | ||||||||||||||||||||||||||
| NAD | - | - | 119 | 4.08 | 102 | 5.00 | 207 | 5.00 | ||||||||||||||||||||||||||
F-63Borrowings maturity profile
| 0000000 | 0000000 | 0000000 | 0000000 | 0000000 | 0000000 | 0000000 | 0000000 | 0000000 | ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
| Between | Between | |||||||||||||||||||||||||||||||||||
| Within one year | one and two years | two and five years | After five years | Total | ||||||||||||||||||||||||||||||||
| Currency |
Borrowings | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | Effective % | Borrowings amount (million) | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
$ | 22 | 5.4 | 761 | 6.0 | 660 | 3.5 | 994 | 5.7 | 2,437 | |||||||||||||||||||||||||||
ZAR | - | - | 8 | 9.8 | 40 | 9.8 | 217 | 9.8 | 265 | |||||||||||||||||||||||||||
BRL | 4 | 5.8 | 3 | 5.2 | 4 | 4.0 | - | - | 11 | |||||||||||||||||||||||||||
NAD | 64 | 8.4 | 72 | 8.4 | 97 | 8.4 | - | - | 233 | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Interest rate risk
| ||||||||||||||||||||||||||||
| Fixed for less than one year |
Fixed for between one and three | Fixed for greater than three years | Total | |||||||||||||||||||||||||
| Currency |
Borrowings amount (million) | Effective rate % | Borrowings amount (million) | Effective rate % | Borrowings amount (million) | Effective rate % | Borrowings amount (million) | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
$ | 22 | 5.4 | 1,420 | 4.8 | 995 | 5.7 | 2,437 | |||||||||||||||||||||
ZAR | - | - | 24 | 9.8 | 241 | 9.8 | 265 | |||||||||||||||||||||
BRL | 4 | 5.8 | 5 | 4.6 | 2 | 4.5 | 11 | |||||||||||||||||||||
NAD | 64 | 8.4 | 161 | 8.4 | 8 | 8.4 | 233 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Non-performance risk
Realization of contracts is dependent upon counterparts’ performance. The Company has not obtained collateral or other security to support the financial instruments subject to non-performance risk, but the credit standing of counterparts was monitored on a regular basis throughout the year. The Company spreads its business over a number of financial and banking institutions to minimize the risk of potential non-performance risk. Furthermore, the approval process of counterparts and the limits applied to each counterpart were monitored by the board of directors. Where possible, ISDA netting agreements were put into place by management.
The combined maximum credit risk exposure at balance sheet date amounts to $198 million (2010: $177 million). Credit risk exposure netted by open derivative positions with counterparts was $nil million (2010: $1 million). No set-off is applied to balance sheet amounts due to the different maturity profiles of assets and liabilities.
The fair value of derivative assets and liabilities reflects non-performance risk relating to the counterparts and the Company, respectively, as at December 31, 2011 and 2010.
F - 63
FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) | ||
Fair value of financial instruments
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. The estimated fair values of the Company’s financial instruments, as measured at December 31, 2011 and 2010, are as follows (assets (liabilities)):
| December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||||
| Carrying | Carrying | |||||||||||||||||||||||||||||||
| amount | Fair value | amount | Fair value | 00000000 | 00000000 | 00000000 | 00000000 | |||||||||||||||||||||||||
| $ | $ | $ | $ | December 31, 2011 | December 31, 2010 | |||||||||||||||||||||||||||
| Carrying amount $ | Fair value $ | Carrying amount $ | Fair value $ | |||||||||||||||||||||||||||||
| Cash and cash equivalents | 575 | 575 | 1,100 | 1,100 | 1,112 | 1,112 | 575 | 575 | ||||||||||||||||||||||||
| Restricted cash | 43 | 43 | 65 | 65 | 58 | 58 | 43 | 43 | ||||||||||||||||||||||||
| Short-term debt | (135 | ) | (135 | ) | (1,292 | ) | (1,292 | ) | (30) | (30) | (133) | (133) | ||||||||||||||||||||
Short-term debt at fair value | (2) | (2) | (2) | (2) | ||||||||||||||||||||||||||||
| Long-term debt | (1,730 | ) | (2,059 | ) | (667 | ) | (889 | ) | (1,715) | (1,857) | (1,730) | (2,059) | ||||||||||||||||||||
| Long-term debt at fair value | (872 | ) | (872 | ) | — | — | (758) | (758) | (872) | (872) | ||||||||||||||||||||||
| Derivatives | (175 | ) | (175 | ) | (2,366 | ) | (2,366 | ) | (93) | (93) | (175) | (175) | ||||||||||||||||||||
| Marketable equity securities — available for sale | 124 | 124 | 111 | 111 | ||||||||||||||||||||||||||||
| Marketable debt securities — held to maturity | 13 | 14 | 10 | 10 | ||||||||||||||||||||||||||||
| Non-marketable assets — held to maturity | 2 | 2 | 2 | 2 | ||||||||||||||||||||||||||||
| Non-marketable debt securities — held to maturity | 89 | 89 | 48 | 48 | ||||||||||||||||||||||||||||
Marketable equity securities - available for sale | 82 | 82 | 124 | 124 | ||||||||||||||||||||||||||||
Marketable debt securities - held to maturity | 8 | 11 | 13 | 14 | ||||||||||||||||||||||||||||
Non-marketable assets - held to maturity | 2 | 2 | 2 | 2 | ||||||||||||||||||||||||||||
Non-marketable debt securities - held to maturity | 85 | 85 | 89 | 89 | ||||||||||||||||||||||||||||
F-64The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash restricted for use, cash and cash equivalents and short-term debt
The carrying amounts approximate fair value because of the short-term duration of these instruments.
Long-term debt
The mandatory convertible bonds are carried at fair value. The fair value of the convertible and rated bonds are shown at their quoted market value. Other long-term debt re-prices on a short-term floating rate basis, and accordingly the carrying amount approximates fair value.
Derivatives
The fair value of volatility-based instruments (i.e. options) are estimated based on market prices, volatilities, credit risk and interest rates for the periods under review.
Investments
Marketable equity securities classified as available-for-sale are carried at fair value. Marketable debt securities classified as held to maturity are measured at amortized cost. Non-marketable assets classified as held to maturity are measured at amortized cost. The fair value of marketable debt securities and non-marketable assets has been calculated using market interest rates. Investments in non-marketable debt securities classified as held to maturity are measured at amortized cost. The cost method investment is carried at cost. There is no active market for the investment and the fair value cannot be reliably measured.
F - 64
FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) | ||
The following is the fair value of the derivative (liabilities)/assets split by accounting designation:
| December 31, 2010 | ||||||||||||||||
| Assets | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Hedge | Non-hedge | |||||||||||||||
| Balance Sheet location | accounted | accounted | Total | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Warrants on shares | Current assets — derivatives | — | 1 | 1 | ||||||||||||
| Total derivatives | — | 1 | 1 | |||||||||||||
|
| |||||||||||||||||||||||||
| December 31, 2011 | ||||||||||||||||||||||||||
Assets
| ||||||||||||||||||||||||||
| Balance Sheet location | Non-hedge accounted | Total | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
Warrants on shares | Current assets - derivatives | - | - | |||||||||||||||||||||||
| ||||||||||||||||||||||||||
Total derivatives | - | - | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
| December 31, 2011 | ||||||||||||||||||||||||||
Liabilities
| ||||||||||||||||||||||||||
| Balance Sheet location | Non-hedge accounted | Total | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
Option component of convertible bonds | Non-current liabilities - derivatives | (92) | (92) | |||||||||||||||||||||||
Embedded derivatives | Non-current liabilities - derivatives | (1) | (1) | |||||||||||||||||||||||
| ||||||||||||||||||||||||||
Total derivatives | (93) | (93) | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||||||
Assets
| ||||||||||||||||||||||||||
| Balance Sheet location | Non-hedge accounted | Total | ||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
Warrants on shares | Current assets - derivatives | 1 | 1 | |||||||||||||||||||||||
| ||||||||||||||||||||||||||
Total derivatives | 1 | 1 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| December 31, 2010 | ||||||||||||||||||||||||||
| Liabilities |
| |||||||||||||||||||||||||
| Cash flow |
December 31, 2010 | |||||||||||||||||||||||||
| Hedge | Non-hedge | Liabilities | ||||||||||||||||||||||||
| Balance Sheet location | accounted | accounted | Total | Balance Sheet location | Non-hedge accounted | Total | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||||
| ||||||||||||||||||||||||||
| Option component of convertible bonds | Non-current liabilities — derivatives | — | (176 | ) | (176 | ) | Non-current liabilities - derivatives | (176) | (176) | |||||||||||||||||
| ||||||||||||||||||||||||||
| Total derivatives | — | (176 | ) | (176 | ) | (176) | (176) | |||||||||||||||||||
| ||||||||||||||||||||||||||
F-65
F - 65
FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Non-hedge derivative (gain)/loss recognized
| ||||||||||||
| Year ended December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
|
| |||||||||||
$ | $ | $ | ||||||||||
| ||||||||||||
Realized(1) | ||||||||||||
Forward sales type agreements - commodity | - | 377 | 535 | |||||||||
Option contracts - commodity | - | 2,573 | 144 | |||||||||
Forward sales agreements - currency | - | 13 | (107) | |||||||||
Option contracts - currency | - | (3) | (12) | |||||||||
Interest rate swaps - Gold | - | 15 | (16) | |||||||||
|
| |||||||||||
| - | 2,975 | (2) | 544 | (3) | ||||||||
Unrealized (1) | ||||||||||||
Forward sales type agreements - commodity | - | (265) | 188 | |||||||||
Option contracts - commodity | - | (1,999) | 648 | |||||||||
Forward sales agreements - currency | - | - | 15 | |||||||||
Option contracts - currency | - | - | 3 | |||||||||
Interest rate swaps - Gold | - | (13) | 25 | |||||||||
Option component of convertible bonds | (84) | 1 | 33 | |||||||||
Embedded derivatives | 1 | (1) | 1 | |||||||||
Warrants on shares | - | 5 | (5) | |||||||||
|
| |||||||||||
| (83) | (2,272) | 908 | ||||||||||
|
| |||||||||||
Non-hedge derivatives (gain)/loss | (83) | 703 | 1,452 | |||||||||
|
| |||||||||||
| December 31, 2009 | ||||||||||||||||
| Assets | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Hedge | Non-hedge | |||||||||||||||
| Balance Sheet location | accounted | accounted | Total | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Forward sales type agreements — commodity | Current assets — derivatives | — | 283 | 283 | ||||||||||||
| Option contracts — commodity | Current assets — derivatives | — | 47 | 47 | ||||||||||||
| Total hedging contracts | — | 330 | 330 | |||||||||||||
| Warrants on shares | Non-current assets — derivatives | — | 5 | 5 | ||||||||||||
| Total derivatives | — | 335 | 335 | |||||||||||||
| December 31, 2009 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Hedge | Non-hedge | |||||||||||||||
| Balance Sheet location | accounted | accounted | Total | |||||||||||||
| $ | $ | $ | ||||||||||||||
| Forward sales type agreements — commodity | Current liabilities — derivatives | (37 | ) | (441 | ) | (478 | ) | |||||||||
| Option contracts — commodity | Current liabilities — derivatives | — | (2,034 | ) | (2,034 | ) | ||||||||||
| Interest rate swaps — Gold | Current liabilities — derivatives | — | (13 | ) | (13 | ) | ||||||||||
| Total hedging contracts | (37 | ) | (2,488 | ) | (2,525 | ) | ||||||||||
| Embedded derivatives | Non-current liabilities — derivatives | — | (1 | ) | (1 | ) | ||||||||||
| Option component of convertible bonds | Non-current liabilities — derivatives | — | (175 | ) | (175 | ) | ||||||||||
| Total derivatives | (37 | ) | (2,664 | ) | (2,701 | ) | ||||||||||
| (1) | Realized and unrealized gains and losses on non-hedge derivatives are included in “Non-hedge derivative (gain)/loss and movement on bonds” in the |
F-66
| (2) | ||||||||
Includes $2,698 million loss related to the final tranche of the accelerated hedge |
| (3) | Includes $797 million loss related to the accelerated hedge buy-back in 2009. |
F - 66
Non-hedge derivative gain/(loss) recognizedNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| 23. | FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Other comprehensive income
Year ended December 31, 2011 | ||||||||||||||||||||
| Cash flow hedges, before taxation | Cash flow hedges removed from equity, before taxation | Hedge ineffectiveness, before taxation | ||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
recognized in accumulated other comprehensive income portion) | Location of (gain)/loss | Amount of (gain)/loss | Location of (gain)/loss recognized in income (ineffective portion) | Amount of (gain)/loss recognized in income (ineffective portion) | ||||||||||||||||
Forward sales type agreements - | Non-hedge derivatives (gain)/ | |||||||||||||||||||
commodity | - | Product sales | - | loss and movement on bonds | - | |||||||||||||||
| - | - | - | ||||||||||||||||||
Other comprehensive income
Year ended December 31, 2010 | |||||||||||||||
hedges, before taxation | Cash flow hedges removed from equity, before taxation | Hedge ineffectiveness, before taxation | |||||||||||||
| $ | |||||||||||||||
| $ | $ | ||||||||||||||
| Gain/(loss) recognized in accumulated other comprehensive income (effective portion) | Location of (gain)/loss | Amount of (gain)/loss | Location of (gain)/loss recognized in income (ineffective portion) | Amount of (gain)/loss recognized in income (ineffective portion) | |||||||||||
Forward sales type agreements - | Non-hedge derivatives (gain)/ | ||||||||||||||
commodity | - | Product sales | 52 | loss and movement on bonds | - | ||||||||||
| - | 52 | - | |||||||||||||
F - 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 23. | FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Other comprehensive income
| ||||||||||||||||
| Accumulated other comprehensive income as of January 1, 2011 | Changes in fair value recognized in 2011 | Reclassification adjustments |
Accumulated other | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| ||||||||||||||||
Derivatives designated as | ||||||||||||||||
Capital expenditure | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
Before tax totals | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
After tax totals | (2) | - | - | (2) | ||||||||||||
|
| |||||||||||||||
| ||||||||||||||||
| Accumulated other comprehensive income as of January 1, 2010 | Changes in fair value recognized in 2010 | Reclassification adjustments |
Accumulated other | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| ||||||||||||||||
Derivatives designated as | ||||||||||||||||
Gold sales | (52) | - | 52 | - | ||||||||||||
Capital expenditure | (3) | - | - | (3) | ||||||||||||
|
| |||||||||||||||
Before tax totals | (55) | - | 52 | (3) | ||||||||||||
|
| |||||||||||||||
After tax totals | (22) | - | 20 | (2) | ||||||||||||
|
| |||||||||||||||
Maturity profile of derivatives, at carrying value
| ||||||||||||||||
Total $ |
2011 Assets $ | Liabilities $ | ||||||||||||||
| ||||||||||||||||
Amounts to mature within twelve months of balance sheet date | - | - | - | |||||||||||||
Amounts maturing between one and two years | - | - | - | |||||||||||||
Amounts maturing between two and five years | (92) | - | (92) | |||||||||||||
Amounts to mature thereafter | (1) | - | (1) | |||||||||||||
|
| |||||||||||||||
Total | (93) | - | (93) | |||||||||||||
|
| |||||||||||||||
| ||||||||||||||||
Total $ |
2010 Assets $ | Liabilities $ | ||||||||||||||
| ||||||||||||||||
Amounts to mature within twelve months of balance sheet date | 1 | 1 | - | |||||||||||||
Amounts maturing between one and two years | - | - | - | |||||||||||||
Amounts maturing between two and five years | (176) | - | (176) | |||||||||||||
Amounts to mature thereafter | - | - | - | |||||||||||||
|
| |||||||||||||||
Total | (175) | 1 | (176) | |||||||||||||
|
| |||||||||||||||
F - 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 23. | FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Sensitivity analysis
Derivatives
The Company monitors the sensitivity of the convertible bonds to changes in its share price.
The following table discloses the approximate sensitivity, in US dollars, of the convertible bonds to the Company’s share price at December 31, 2011 (actual changes in the timing and amount of the following variables may differ from the assumed changes below).
| ||||||||||||
| 2011 | ||||||||||||
|
| |||||||||||
Change in factor (+) | Non-hedge accounted | Total change in fair value | ||||||||||
| $ | $ | |||||||||||
| ||||||||||||
Convertible bonds | ||||||||||||
AngloGold Ashanti Limited share price ($) | Spot (+$3) | (23) | (23) | |||||||||
| ||||||||||||
| 2011 | ||||||||||||
|
| |||||||||||
Change in factor (-) | Non-hedge accounted | Total change in fair value | ||||||||||
| $ | $ | |||||||||||
| ||||||||||||
Convertible bonds | ||||||||||||
AngloGold Ashanti Limited share price ($) | Spot (-$3) | 21 | 21 | |||||||||
| ||||||||||||
F - 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 23. | FINANCIAL RISK MANAGEMENT ACTIVITIES(continued) |
Mandatory convertible bonds
The mandatory convertible bond valuation is primarily linked to the AngloGold Ashanti Limited share price traded on the New York Stock Exchange (NYSE) and fluctuates with reference to the NYSE share price and market interest rates. An increase or decrease of $3 in the AngloGold Ashanti Limited share price will generally impact the value of the mandatory convertible bond liability in a stable interest environment by approximately $39 million.
Foreign exchange risk
Foreign exchange risk arises on financial instruments that are denominated in a foreign currency.
The following table discloses the approximate foreign exchange risk sensitivities of debt at December 31, 2011 (actual changes in the timing and amount of the following variables may differ from the assumed changes below).
| 2011 | ||||||||||||
Change in | Change in total $ | |||||||||||
Debt | ||||||||||||
ZAR denominated (R/$) | Spot (+R1) | (4) | ||||||||||
BRL denominated (BRL/$) | Spot (+BRL0.25) | (1) | ||||||||||
NAD denominated (NAD/$) | Spot (+NAD1) | (3) | ||||||||||
Change in | Change in total $ | |||||||||||
Debt | ||||||||||||
ZAR denominated (R/$) | ||||||||||||
| Spot (-R1) | 5 | |||||||||||
BRL denominated (BRL/$) | ||||||||||||
| 1 | ||||||||||||
NAD denominated (NAD/$) | Spot (-NAD1) | |||||||||||
| 4 | ||||||||||||
| 24. | ||
ADDITIONAL CASH FLOW INFORMATION |
F-67
| ||||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||||
| ||||||||||||||
Reported in the consolidated statements of cash flows: | ||||||||||||||
Interest paid | 144 | 115 | 111 | |||||||||||
Taxation paid | 477 | 188 | 147 | |||||||||||
Non-cash investing and financing items not reported in the consolidated statements of cash flows: | ||||||||||||||
Non cash movements included in Property, plant & equipment | 389 | 302 | 426 | |||||||||||
Exercise of share options | 51 | 43 | 20 | |||||||||||
Non-cash operating items not reported in the consolidated statements of cash flows: | ||||||||||||||
Foreign exchange gain(1) | 11 | 2 | 103 | |||||||||||
(1) |
Foreign exchange gain included in Interest, dividends and other amounts to: | 2 | 3 | 112 | ||||||||||
F - 70
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS |
The provision for pension and post-retirement medical funding represents the provision for health care and pension benefits for employees, retired employees and their dependants.
Defined benefit plans
The retirement schemes as at December 31, 2011, 2010 and 2009, consist of the following which reflects the following provision values:
| Year ended December 31, 2009 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| hedges, before | Cash flow hedges removed from | |||||||||||||||
| tax | equity,before tax | Hedge ineffectiveness, before tax | ||||||||||||||
| $ | $ | $ | ||||||||||||||
| Amount of | ||||||||||||||||
| Gain/(loss) | Location of | (gain)/loss | ||||||||||||||
| recognized in | (gain)/loss | reclassified from | Amount of | |||||||||||||
| accumulated | reclassified from | accumulated other | (gain)/loss | |||||||||||||
| other | accumulated other | comprehensive | recognized | |||||||||||||
| comprehensive | comprehensive | income into | Location of (gain)/loss | in income | ||||||||||||
| income (effective | income into income | income (effective | recognized in income | (ineffective | ||||||||||||
| portion) | (effective portion) | portion) | (ineffective portion) | portion) | ||||||||||||
| Forward sales type agreements — commodity | Non-hedge derivatives gain/(loss) and movement on bonds | |||||||||||||||
| (16 | ) | Product sales | 137 | 5 | ||||||||||||
| Forward sales agreements - currency | Non-hedge derivatives gain/(loss) and movement on bonds | |||||||||||||||
| (1 | ) | Depreciation | — | — | ||||||||||||
| (17 | ) | 137 | 5 | |||||||||||||
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||||
| ||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||
| ||||||||||||
AngloGold Ashanti Pension Fund liability/(asset) | 23 | - | (5) | |||||||||
Post-retirement medical scheme for AngloGold Ashanti South Africa employees | 159 | 179 | 149 | |||||||||
Other defined benefit plans | 12 | 12 | 10 | |||||||||
|
| |||||||||||
Sub total | 194 | 191 | 154 | |||||||||
Transferred to other non-current assets. See Note 15. | ||||||||||||
AngloGold Ashanti Pension Fund | - | - | 5 | |||||||||
Post-retirement medical scheme for Rand Refinery employees | 2 | 3 | 2 | |||||||||
Ashanti retired staff pension plan | 1 | - | - | |||||||||
Short-term portion transferred to other current liabilities. See Note 17. | (12) | (14) | (14) | |||||||||
|
| |||||||||||
Total provision classified as a non-current liability | 185 | 180 | 147 | |||||||||
|
| |||||||||||
F-68South Africa defined benefit pension fund
The plan is evaluated by independent actuaries on an annual basis as at December 31. The valuation as at December 31, 2011 was completed at the beginning of 2012. The most recent statutory valuation effective December 31, 2008 was completed in March 2010. The next statutory valuation will have an effective date no later than December 31, 2011.
All South African pension funds are governed by the Pension Funds Act of 1956 as amended.
F - 71
| Other comprehensive income | |||||||||||||||||
| Accumulated other | Accumulated other | ||||||||||||||||
| comprehensive income | Changes in fair | comprehensive income | |||||||||||||||
| as of January 1, | value recognized | Reclassification | as of December 31, | ||||||||||||||
| 2010 | in 2010 | adjustments | 2010 | ||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Derivatives designated as | |||||||||||||||||
| Gold sales | (52 | ) | — | 52 | — | ||||||||||||
| Capital expenditure | (3 | ) | — | — | (3 | ) | |||||||||||
| Before tax totals | (55 | ) | — | 52 | (3 | )(1) | |||||||||||
| After tax totals | (22 | ) | — | 20 | (2 | ) | |||||||||||
| Accumulated other | ||||||||||||||||
| Accumulated other | Changes in fair | comprehensive income | ||||||||||||||
| comprehensive income | value recognized | Reclassification | as of December 31, | |||||||||||||
| as of January 1, 2009 | in 2009 | adjustments | 2009 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Derivatives designated as | ||||||||||||||||
| Gold sales | (178 | ) | (16 | ) | 142 | (52 | ) | |||||||||
| Capital expenditure | (2 | ) | (2 | ) | 1 | (3 | ) | |||||||||
| Before tax totals | (180 | ) | (18 | ) | 143 | (55 | )(1) | |||||||||
| After tax totals | (112 | ) | (13 | ) | 103 | (22 | ) | |||||||||
| 2010 | ||||||||||||
| Total | Assets | Liabilities | ||||||||||
| $ | $ | $ | ||||||||||
| Amounts to mature within twelve months of balance sheet date | 1 | 1 | — | |||||||||
| Amounts maturing between one and two years | — | — | — | |||||||||
| Amounts maturing between two and five years | (176 | ) | — | (176 | ) | |||||||
| Total | (175 | ) | 1 | (176 | ) | |||||||
| Total | Assets | Liabilities | ||||||||||
| $ | $ | $ | ||||||||||
| Amounts to mature within twelve months of balance sheet date | (2,195 | ) | 330 | (2,525 | ) | |||||||
| Amounts maturing between one and two years | 5 | 5 | — | |||||||||
| Amounts maturing between two and five years | (175 | ) | — | (175 | ) | |||||||
| Amounts to mature thereafter | (1 | ) | — | (1 | ) | |||||||
| Total | (2,366 | ) | 335 | (2,701 | ) | |||||||
F-69
| 2010 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Change in | hedge | Non-hedge | Total change in | |||||||||||||
| underlying | accounted | accounted | fair value | |||||||||||||
| factor (+) | $ | $ | $ | |||||||||||||
Convertible bonds | ||||||||||||||||
| AngloGold Ashanti Limited share price (US$) | Spot (+$1) | — | (10 | ) | (10 | ) | ||||||||||
Warrants on shares | ||||||||||||||||
| B2Gold Corporation share price (C$) | Spot (+C$0.25) | — | 1 | 1 | ||||||||||||
| 2010 | ||||||||||||||||
| Cash flow | ||||||||||||||||
| Change in | hedge | Non-hedge | Total change in | |||||||||||||
| underlying | accounted | accounted | fair value | |||||||||||||
| factor (-) | $ | $ | $ | |||||||||||||
Convertible bonds | ||||||||||||||||
| AngloGold Ashanti Limited share price (US$) | Spot (-$1) | — | 9 | 9 | ||||||||||||
Warrants on shares | ||||||||||||||||
| B2Gold Corporation share price (C$) | Spot (-C$0.25) | — | — | — | ||||||||||||
F-70
| 25. |
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Reported in the consolidated statements of cash flows: | ||||||||||||
| Interest paid | 115 | 111 | 93 | |||||||||
| Taxation paid | 188 | 147 | 125 | |||||||||
| Non-cash investing and financing items not reported in the consolidated statements of cash flows: | ||||||||||||
| Shares issued as part of Golden Cycle Gold Corporation acquisition | — | — | 118 | |||||||||
| Shares issued to acquire São Bento Gold Company Limited | — | — | 70 | |||||||||
| Exercise of share entitlements | 43 | 20 | 16 | |||||||||
| Non-cash operating items not reported in the consolidated statements of cash flows: | ||||||||||||
Foreign exchange transaction gain(1) | 2 | 103 | 7 | |||||||||
(1) Foreign exchange transaction gain included in Interest, dividends and other amounts to: | 3 | 112 | 4 | |||||||||
F-71
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| AngloGold Ashanti Pension Fund (asset)/liability | — | (5 | ) | 11 | ||||||||
| Post-retirement medical scheme for AngloGold Ashanti South Africa employees | 179 | 149 | 115 | |||||||||
| Other defined benefit plans | 12 | 10 | 11 | |||||||||
Sub total | 191 | 154 | 137 | |||||||||
| Transferred to other non-current assets. Refer to Note 16. | ||||||||||||
| AngloGold Ashanti Pension Fund | — | 5 | — | |||||||||
| Post-retirement medical scheme for Rand Refinery employees | 3 | 2 | 2 | |||||||||
| Short-term portion transferred to other current liabilities. Refer to Note 18. | (14 | ) | (14 | ) | (13 | ) | ||||||
Total provision classified as a non-current liability | 180 | 147 | 126 | |||||||||
F-72
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) | ||
Information with respect to the defined benefit fund, which includes benefits for AngloGold Ashanti employees, for the year ended December 31, is set forth in the table below:
| Pension benefits | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Change in benefit obligation | ||||||||||||
| Benefit obligation at January 1, | 269 | 199 | 257 | |||||||||
| Service cost | 7 | 6 | 6 | |||||||||
| Interest cost | 25 | 16 | 17 | |||||||||
| Plan participants’ contributions | 2 | 2 | 2 | |||||||||
| Actuarial loss/(gain) | 21 | (2 | ) | 16 | ||||||||
| Benefits paid | (28 | ) | (8 | ) | (24 | ) | ||||||
| Translation | 38 | 56 | (75 | ) | ||||||||
| Benefit obligation at December 31, | 334 | 269 | 199 | |||||||||
Change in plan assets | ||||||||||||
| Fair value of plan assets at January 1, | 274 | 188 | 293 | |||||||||
| Actual return on plan assets | 40 | 32 | (7 | ) | ||||||||
| Company contributions | 8 | 5 | 5 | |||||||||
| Plan participants’ contributions | 2 | 2 | 2 | |||||||||
| Benefits paid | (28 | ) | (8 | ) | (24 | ) | ||||||
| Translation | 38 | 55 | (81 | ) | ||||||||
| Fair value of plan assets at December 31, | 334 | 274 | 188 | |||||||||
| Funded/(Unfunded) status at end of year | — | 5 | (11 | ) | ||||||||
| Net amount recognized | — | 5 | (11 | ) | ||||||||
Components of net periodic benefit cost | ||||||||||||
| Service cost | 7 | 6 | 6 | |||||||||
| Interest cost | 25 | 16 | 17 | |||||||||
| Actuarial gains and losses | 10 | (14 | ) | 49 | ||||||||
| Expected return on assets | (29 | ) | (20 | ) | (26 | ) | ||||||
| Net periodic benefit cost | 13 | (12 | ) | 46 | ||||||||
| Accumulated benefit obligation at December 31, | 290 | 230 | 170 | |||||||||
Assumptions | ||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31, | ||||||||||||
| Discount rate | 8.50 | % | 9.25 | % | 7.25 | % | ||||||
| Rate of compensation increase | 7.25 | % | 7.50 | % | 5.25 | % | ||||||
Weighted-average assumptions used to determine the net periodic benefit cost for the years ended December 31, | ||||||||||||
| Discount rate | 8.50 | % | 9.25 | % | 7.25 | % | ||||||
| Expected long-term return on plan assets | 9.99 | % | 10.63 | % | 9.28 | % | ||||||
Rate of compensation increase(1) | 7.25 | % | 7.50 | % | 5.25 | % | ||||||
| Pension increase | 4.73 | % | 4.95 | % | 3.60 | % | ||||||
(1)Short-term compensation rate increase | 7.50 | % | 7.00 | % | 10.00 | % | ||||||
Long-term compensation rate increase | 7.25 | % | 7.50 | % | 5.25 | % | ||||||
| 000,000,000 | 000,000,000 | 000,000,000 | 000,000,000 | |||||||||||
| ||||||||||||||
| Pension benefits | ||||||||||||||
| 2011 | 2010 | 2009 | ||||||||||||
| $ | $ | $ | ||||||||||||
| ||||||||||||||
Change in benefit obligation | ||||||||||||||
Benefit obligation at January 1, | 334 | 269 | 199 | |||||||||||
Service cost | 7 | 7 | 6 | |||||||||||
Interest cost | 25 | 25 | 16 | |||||||||||
Plan participants’ contributions | 2 | 2 | 2 | |||||||||||
Actuarial loss/(gain) | 22 | 21 | (2) | |||||||||||
Benefits paid | (19) | (28) | (8) | |||||||||||
Translation | (64) | 38 | 56 | |||||||||||
|
| |||||||||||||
Benefit obligation at December 31, | 307 | 334 | 269 | |||||||||||
|
| |||||||||||||
Change in plan assets | ||||||||||||||
Fair value of plan assets at January 1, | 334 | 274 | 188 | |||||||||||
Actual return on plan assets | 24 | 40 | 32 | |||||||||||
Company contributions | 7 | 8 | 5 | |||||||||||
Plan participants’ contributions | 2 | 2 | 2 | |||||||||||
Benefits paid | (19) | (28) | (8) | |||||||||||
Translation | (64) | 38 | 55 | |||||||||||
|
| |||||||||||||
Fair value of plan assets at December 31, | 284 | 334 | 274 | |||||||||||
|
| |||||||||||||
(Unfunded)/funded status at end of year | (23) | - | 5 | |||||||||||
|
| |||||||||||||
Net amount recognized | (23) | - | 5 | |||||||||||
|
| |||||||||||||
Components of net periodic benefit cost | ||||||||||||||
Service cost | 7 | 7 | 6 | |||||||||||
Interest cost | 25 | 25 | 16 | |||||||||||
Actuarial loss/(gain) | 28 | 10 | (14) | |||||||||||
Expected return on assets | (30) | (29) | (20) | |||||||||||
|
| |||||||||||||
Net periodic benefit cost | 30 | 13 | (12) | |||||||||||
|
| |||||||||||||
Accumulated benefit obligation at December 31, | 269 | 290 | 230 | |||||||||||
Assumptions | ||||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31, | ||||||||||||||
Discount rate | 8.75% | 8.50% | 9.25% | |||||||||||
Rate of compensation increase | 8.00% | 7.25% | 7.50% | |||||||||||
Weighted-average assumptions used to determine the net periodic benefit cost for the years ended December 31, | ||||||||||||||
Discount rate | 8.75% | 8.50% | 9.25% | |||||||||||
Expected long-term return on plan assets | 11.20% | 9.99% | 10.63% | |||||||||||
Rate of compensation increase(1) | 8.00% | 7.25% | 7.50% | |||||||||||
Pension increase | 5.40% | 4.73% | 4.95% | |||||||||||
| ||||||||||||||
(1) | Short-term compensation rate increase | 7.50% | 7.50% | 7.00% | ||||||||||
Long-term compensation rate increase | 8.00% | 7.25% | 7.50% | |||||||||||
F-73
F - 72
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) | ||
The expected long-term return on plan assets is determined using the after tax return of RSA Government long bond yields as a guide.
| Pension benefits | ||||||||
| 2010 | 2009 | |||||||
| % | % | |||||||
Plan assets | ||||||||
| AngloGold Ashanti’s pension plan asset allocations at December 31, 2010 and 2009, by asset category are as follows: | ||||||||
Asset category | ||||||||
| Equity securities | 60 | % | 60 | % | ||||
| Debt securities | 36 | % | 32 | % | ||||
| Other | 4 | % | 8 | % | ||||
| 100 | % | 100 | % | |||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Domestic equity security | 150 | 150 | ||||||||||||||
| Foreign equity securities | 50 | 50 | ||||||||||||||
| Domestic fixed interest bonds | 95 | 95 | ||||||||||||||
| Foreign fixed interest bonds | 13 | 13 | ||||||||||||||
| Real estate investment trust | 4 | 4 | ||||||||||||||
| Cash | 11 | 11 | ||||||||||||||
| Unlisted specialized credit | 11 | 11 | ||||||||||||||
| 000,000,000,000 | 000,000,000,000 | |||||||
| ||||||||
| Pension benefits | ||||||||
|
| |||||||
2011 % | 2010 % | |||||||
| ||||||||
Plan assets | ||||||||
AngloGold Ashanti’s pension plan asset allocations at December 31, 2011 and 2010, by asset category are as follows: | ||||||||
Asset category | ||||||||
Equity securities | 56% | 60% | ||||||
Debt securities | 37% | 36% | ||||||
Other | 7% | 4% | ||||||
|
| |||||||
| 100% | 100% | |||||||
|
| |||||||
F-74Fair value of plan assets
The following table sets out the Company’s plan assets measured at fair value, by level within the hierarchy as at December 31, 2011 (in US Dollars, millions):
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | |||||||||||
| ||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| ||||||||||||||
Domestic equity security | 106 | 106 | ||||||||||||
Foreign equity securities | 54 | 54 | ||||||||||||
Domestic fixed interest bonds | 81 | 81 | ||||||||||||
Foreign fixed interest bonds | 14 | 14 | ||||||||||||
Real estate investment trust | 3 | 3 | ||||||||||||
Cash | 16 | 16 | ||||||||||||
Unlisted specialized credit | 10 | 10 | ||||||||||||
| ||||||||||||||
The following table sets out the Company’s plan assets measured at fair value, by level within the hierarchy as at December 31, 2010 (in US Dollars, millions):
| 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | 000,000,000,000 | |||||||||||
| ||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| ||||||||||||||
Domestic equity security | 150 | 150 | ||||||||||||
Foreign equity securities | 50 | 50 | ||||||||||||
Domestic fixed interest bonds | 95 | 95 | ||||||||||||
Foreign fixed interest bonds | 13 | 13 | ||||||||||||
Real estate investment trust | 4 | 4 | ||||||||||||
Cash | 11 | 11 | ||||||||||||
Unlisted specialized credit | 11 | 11 | ||||||||||||
| ||||||||||||||
Fair value of level 1 plan assets is based on quoted market prices.
Fair value of level 2 plan assets is based on market interest rates (for fixed rate investments) accrued interest and credit risk ratings.
F - 73
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) |
Investment policy
The Trustees have adopted a long-term horizon in formulating the Fund’s investment strategy, which is consistent with the term of the Fund’s liabilities. The investment strategy aims to provide a reasonable return relative to inflation across a range of market conditions.
The Trustees have adopted different strategic asset allocations for the assets backing pensioner and active member liabilities. The strategic asset allocation defines what proportion of the Fund’s assets should be invested in each major asset class. The Trustees have then selected specialist investment managers to manage the assets in each asset class according to specific performance mandates instituted by the Trustees.
The Trustees have also put in place a detailed Statement of Investment Principles that sets out the Fund’s overall investment philosophy and strategy.
Fund returns are calculated on a monthly basis, and the performance of the managers and Fund as a whole is formally reviewed by the Fund’s Investment Sub-Committee at least every six months.
| 000,000,000 | 000,000,000 | 000,000,000 | 000,000,000 | 000,000,000 | 000,000,000 | |||||||||||||||||||
| ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
No. of shares | Percentage of total assets | Fair value $ | No. of shares | Percentage of total assets | Fair value $ | |||||||||||||||||||
| ||||||||||||||||||||||||
Related parties | ||||||||||||||||||||||||
Investments held in related parties are summarized as follows: | ||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||
AngloGold Ashanti Limited | 100,079 | 1.5% | 4 | 119,758 | 1.8% | 6 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Other investments exceeding 5% of total plan assets | ||||||||||||||||||||||||
Bonds | ||||||||||||||||||||||||
IFM Corporate Bond Unit Trust | 287,226,346 | 12.7% | 36 | 267,975,059 | 12.2% | 41 | ||||||||||||||||||
Allan Gray Orbis Global Equity Fund | 242,110 | 9.5% | 27 | 243,210 | 9.0% | 30 | ||||||||||||||||||
Stonehage Contrarius Global Equity Fund | 1,251,535 | 9.1% | 26 | - | - | - | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
| 89 | 71 | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Cash flows | ||||
Contributions | ||||
Expected Company contribution to its pension plan in 2012 | ||||
Estimated future benefit payments
The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:
| 2010 | 2009 | |||||||||||||||||||||||
| No. of | Percentage of | Fair Value | No. of | Percentage of | Fair Value | |||||||||||||||||||
| Shares | total assets | $ | Shares | total assets | $ | |||||||||||||||||||
Related parties | ||||||||||||||||||||||||
| Investments held in related parties are summarized as follows: | ||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||
| AngloGold Ashanti Limited | 119,758 | 1.8 | % | 6 | 296,410 | 4.5 | % | 12 | ||||||||||||||||
Other investments exceeding 5% of total plan assets | ||||||||||||||||||||||||
Equities | ||||||||||||||||||||||||
| Sasol Limited | — | — | — | 424,680 | 6.2 | % | 17 | |||||||||||||||||
| SABMiller Plc | — | — | — | 759,600 | 8.0 | % | 22 | |||||||||||||||||
Bonds | ||||||||||||||||||||||||
| IFM Corporate Bond Unit Trust | 267,975,059 | 12.2 | % | 41 | 158,630,977 | 7.3 | % | 20 | ||||||||||||||||
| Allan Gray Orbis Global Equity Fund | 243,210 | 9.0 | % | 30 | 312,715 | 13.0 | % | 36 | ||||||||||||||||
| 71 | 95 | |||||||||||||||||||||||
| $ | ||||
Contributions | ||||
| Expected Company contribution to its pension plan in 2011 | 7 | |||
Estimated future benefit payments | ||||
| The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid: | ||||
| 2011 | 25 | |||
| 2012 | 25 | |||
| 2013 | 25 | |||
| 2014 | 26 | |||
| 2015 | 26 | |||
| 2016 — 2020 | 133 | |||
2012 | 20 | |||
2013 | 20 | |||
2014 | 21 | |||
2015 | 21 | |||
2016 | 21 | |||
2017 – 2021 | 115 |
F-75
F - 74
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) |
South Africa post-retirement medical benefits
The provision for post-retirement medical funding represents the provision for health care benefits for employees and retired employees and their registered dependants. The post-retirement benefit costs are assessed in accordance with the advice of independent professionally qualified actuaries. The actuarial method used is the projected unit credit funding method. This scheme is unfunded. The last actuarial valuation was performed at December 31, 2011.
Information with respect to the defined benefit liability, which includes post-retirement medical benefits for AngloGold Ashanti South Africa employees, for the year ended December 31, is set forth in the table below:
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||||
| ||||||||||||
| Other benefits | ||||||||||||
|
| |||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||
| ||||||||||||
Change in benefit obligation | ||||||||||||
Benefit obligation at January 1, | 179 | 149 | 115 | |||||||||
Service cost | 1 | 1 | - | |||||||||
Interest cost | 13 | 13 | 9 | |||||||||
Benefits paid | (13) | (14) | (10) | |||||||||
Actuarial loss | 11 | 10 | 4 | |||||||||
Translation | (32) | 20 | 31 | |||||||||
|
| |||||||||||
Benefit obligation at December 31, | 159 | 179 | 149 | |||||||||
|
| |||||||||||
Unfunded status at end of year | (159) | (179) | (149) | |||||||||
|
| |||||||||||
Net amount recognized | (159) | (179) | (149) | |||||||||
|
| |||||||||||
Components of net periodic benefit cost | ||||||||||||
Service cost | 1 | 1 | - | |||||||||
Interest cost | 13 | 13 | 9 | |||||||||
Actuarial gains and losses | 11 | 10 | 4 | |||||||||
|
| |||||||||||
| 25 | 24 | 13 | ||||||||||
|
| |||||||||||
The assumptions used in calculating the above amounts are: | ||||||||||||
Discount rate | 8.75% | 8.50% | 9.25% | |||||||||
Expected increase in health care costs | 7.50% | 7.60% | 7.00% | |||||||||
Assumed health care cost trend rates at December 31, | ||||||||||||
Health care cost trend assumed for next year | 7.50% | 7.60% | 7.00% | |||||||||
Rate to which the cost trend is assumed to decline (ultimate trend rate) | 7.50% | 7.60% | 7.00% | |||||||||
| Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effect: | ||||||||||||
| 000,000,000 | 000,000,000 | |||||||
1-percentage point increase | 1-percentage point decrease | |||||||
|
| |||||||
Effect on total service and interest cost | 2 | (1) | ||||||
Effect on post-retirement benefit obligation | 17 | (14) | ||||||
| Cash flows | ||||
Contributions | ||||
Expected Company contributions to the post-retirement medical | ||||
Estimated future benefit payments
The following medical benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:
| Other benefits | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Change in benefit obligation | ||||||||||||
| Benefit obligation at January 1, | 149 | 115 | 168 | |||||||||
| Service cost | 1 | — | 1 | |||||||||
| Interest cost | 13 | 9 | 11 | |||||||||
| Benefits paid | (14 | ) | (10 | ) | (11 | ) | ||||||
| Actuarial loss/(gain) | 10 | 4 | (8 | ) | ||||||||
| Translation | 20 | 31 | (46 | ) | ||||||||
| Benefit obligation at December 31, | 179 | 149 | 115 | |||||||||
| Unfunded status at end of year | (179 | ) | (149 | ) | (115 | ) | ||||||
| Net amount recognized | (179 | ) | (149 | ) | (115 | ) | ||||||
Components of net periodic benefit cost | ||||||||||||
| Service cost | 1 | — | 1 | |||||||||
| Interest cost | 13 | 9 | 11 | |||||||||
| Actuarial gains and losses | 10 | 4 | (8 | ) | ||||||||
| 24 | 13 | 4 | ||||||||||
The assumptions used in calculating the above amounts are: | ||||||||||||
| Discount rate | 8.50 | % | 9.25 | % | 7.25 | % | ||||||
| Expected increase in health care costs | 7.60 | % | 7.00 | % | 5.50 | % | ||||||
| Assumed health care cost trend rates at December 31, | ||||||||||||
| Health care cost trend assumed for next year | 7.60 | % | 7.00 | % | 5.50 | % | ||||||
| Rate to which the cost trend is assumed to decline (ultimate trend rate) | 7.60 | % | 7.00 | % | 5.50 | % | ||||||
| Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one percentage-point change in assumed health care cost trend rates would have the following effect: | ||||||||||||
| 1-percentage point | 1-percentage point | |||||||
| increase | decrease | |||||||
| Effect on total service and interest cost | 2 | (2 | ) | |||||
| Effect on post-retirement benefit obligation | 22 | (19 | ) | |||||
| Cash flows | $ | |||
Contributions | ||||
| Expected Company contributions to the post-retirement medical plan in 2011 | 14 | |||
Estimated future benefit payments | ||||
| The following medical benefit payments, which reflect the expected future service, as appropriate, are expected to be paid: | ||||
| 2011 | 14 | |||
| 2012 | 16 | |||
| 2013 | 16 | |||
| 2014 | 16 | |||
| 2015 | 16 | |||
| 2016 — 2020 | 85 | |||
2012 | 12 | |||
2013 | 13 | |||
2014 | 14 | |||
2015 | 14 | |||
2016 | 14 | |||
2017 – 2021 | 74 |
F-76
F - 75
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) | ||
Other defined benefit plans
Other defined benefit plans include the Ashanti Retired Staff Pension Plan, the Obuasi Mines Staff Pension Scheme, the Post-retirement medical scheme for Rand Refinery employees, the Retiree Medical Plan for the United States of America employees, the Supplemental Employee Retirement Plan for North America (USA) Inc. employees and the Nuclear Fuels South Africa (“NUFCOR”) – Retiree Medical Plan for Nufcor South African employees.
Information in respect of other defined benefit plans for the years ended December 31, 2011, 2010 and 2009 have been aggregated in the tables of change in benefit obligations, change in plan assets and components of net periodic benefit cost as follows:
Aggregated information in respect of the other defined benefit plans, for the year ended December 31, is set forth in the table below:
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Change in benefit obligations | ||||||||||||
| Balance at January 1, | 18 | 17 | 18 | |||||||||
| Interest cost | 1 | — | — | |||||||||
| Actuarial loss | 5 | — | — | |||||||||
| Benefits paid | (2 | ) | (1 | ) | (1 | ) | ||||||
| Translation | — | 2 | — | |||||||||
| Balance at December 31, | 22 | 18 | 17 | |||||||||
Change in plan assets | ||||||||||||
| Fair value of plan assets at January 1, | 8 | 6 | 9 | |||||||||
| Actual return on plan assets | 2 | — | (1 | ) | ||||||||
| Benefits paid | (1 | ) | — | — | ||||||||
| Translation | 1 | 2 | (2 | ) | ||||||||
| Fair value of plan assets at December 31, | 10 | 8 | 6 | |||||||||
| Unfunded status at end of year | (12 | ) | (10 | ) | (11 | ) | ||||||
| Net amount recognized | (12 | ) | (10 | ) | (11 | ) | ||||||
Components of net periodic benefit cost | ||||||||||||
| Interest cost | 1 | — | — | |||||||||
| Actuarial gains and losses | (1 | ) | — | 1 | ||||||||
| — | — | 1 | ||||||||||
| Accumulated benefit obligation at December 31, | 12 | 10 | 10 | |||||||||
| $ | ||||
Estimated future benefit payments | ||||
| The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid: | ||||
| 2011 | 2 | |||
| 2012 | 2 | |||
| 2013 | 2 | |||
| 2014 | 2 | |||
| 2015 | 2 | |||
| 2016 — 2020 | 8 | |||
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||||
| ||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||
| ||||||||||||
Change in benefit obligations | ||||||||||||
Balance at January 1, | 22 | 18 | 17 | |||||||||
Interest cost | 1 | 1 | - | |||||||||
Actuarial loss | - | 5 | - | |||||||||
Benefits paid | (2) | (2) | (1) | |||||||||
Translation | - | - | 2 | |||||||||
|
| |||||||||||
Balance at December 31, | 21 | 22 | 18 | |||||||||
|
| |||||||||||
Change in plan assets | ||||||||||||
Fair value of plan assets at January 1, | 10 | 8 | 6 | |||||||||
Actual return on plan assets | 1 | 2 | - | |||||||||
Benefits paid | - | (1) | - | |||||||||
Translation | (2) | 1 | 2 | |||||||||
|
| |||||||||||
Fair value of plan assets at December 31, | 9 | 10 | 8 | |||||||||
|
| |||||||||||
Unfunded status at end of year | (12) | (12) | (10) | |||||||||
|
| |||||||||||
Net amount recognized | (12) | (12) | (10) | |||||||||
|
| |||||||||||
Components of net periodic benefit cost | ||||||||||||
Interest cost | 1 | 1 | - | |||||||||
Actuarial gain | (1) | (1) | - | |||||||||
|
| |||||||||||
| - | - | - | ||||||||||
|
| |||||||||||
Accumulated benefit obligation at December 31, | 12 | 12 | 10 | |||||||||
F-77Cash flows
The other retirement defined benefit plans are all closed to new members and current members are either retired or deferred members. The Company does not make a contribution to these plans.
Estimated future benefit payments
The following pension benefit payments, which reflect the expected future service, as appropriate, are expected to be paid:
| ||||
| $ | ||||
| ||||
2012 | 2 | |||
2013 | 2 | |||
2014 | 2 | |||
2015 | 2 | |||
2016 | 2 | |||
2017 – 2021 | 8 | |||
F - 76
PROVISION FOR PENSION AND OTHER POST-RETIREMENT MEDICAL BENEFITS(continued) | ||
Defined contribution funds
The following table sets forth the cost of providing retirement benefits.
| 000,000 | 000,000 | 000,000 | ||||||||||
| ||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||
| ||||||||||||
Australia (Sunrise Dam, Tropicana and Other) (1) | 5 | 4 | 4 | |||||||||
Namibia (Navachab) (2) | 2 | 1 | 1 | |||||||||
Tanzania (Geita) (3) | - | - | - | |||||||||
United States of America (Cripple Creek & Victor) (4) | 2 | 2 | 2 | |||||||||
Argentina and Brazil (AngloGold Ashanti Córrego do Sitío Mineração, Cerro Vanguardia and Serra Grande) (5) | 2 | 4 | 1 | |||||||||
Ghana and Guinea (Iduapriem, Obuasi and Siguiri) (6) | 5 | 5 | 4 | |||||||||
South Africa (Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka, TauTona, Corporate and Other) (7) | 48 | 48 | 41 | |||||||||
|
| |||||||||||
| 64 | 64 | 53 | ||||||||||
|
| |||||||||||
Contributions to the various retirement schemes are fully expensed during the year. | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Australia (Sunrise Dam) (1) | 4 | 4 | 3 | |||||||||
Namibia (Navachab) (2) | 1 | 1 | 1 | |||||||||
Tanzania (Geita) (3) | — | — | — | |||||||||
United States of America (Cripple Creek & Victor) (4) | 2 | 2 | 2 | |||||||||
Argentina and Brazil (AngloGold Ashanti Córrego do Sitío Mineração, Cerro Vanguardia and Serra Grande) (5) | 4 | 1 | 3 | |||||||||
Ghana and Guinea (Iduapriem, Obuasi and Siguiri) (6) | 5 | 4 | 4 | |||||||||
South Africa (Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka and TauTona) (7) | 48 | 41 | 36 | |||||||||
| 64 | 53 | 49 | ||||||||||
| (1) | Contributions are to various approved superannuation funds for the provision of benefits to employees and their dependants on retirement, disability or death. The fund is a multi-industry national fund with defined contribution arrangements. Contribution rates by the operation on behalf of employees varies, with minimum contributions meeting compliance requirements under the Superannuation Guarantee legislation. The contributions by the operation are legally enforceable to the extent required by the Superannuation Guarantee legislation and relevant employment agreements. |
| (2) | Navachab employees are members of a defined contribution provident fund. The fund is administered by the Old Mutual Life Assurance Company (Namibia) Limited. Both the Company and the employees contribute to this fund. |
| (3) | Geita does not have a retirement scheme for employees. Tanzanian nationals contribute to the National Social Security Fund |
| (4) | AngloGold Ashanti USA sponsors a 401(k) savings plan whereby employees may contribute up to 60 percent of their salary, of which up to 5 percent is matched at a rate of 150 percent by AngloGold Ashanti USA. |
| (5) | AngloGold Ashanti |
| (6) | The Company’s mines in Ghana and Guinea contribute to provident plans for their employees which are defined contribution plans. The funds are administered by Boards of Trustees and invested mainly in Ghana and Guinea government treasury instruments, fixed term deposits and other investments. |
| (7) | South Africa contributes to various industry-based pension and provident retirement plans which cover substantially all employees and are defined contribution plans. These plans are all funded and the assets of the schemes are held in administrated funds separately from the Company’s assets. |
F-78
F - 77
SEGMENT AND GEOGRAPHICAL INFORMATION | ||
The Company produces gold as its primary product and does not have distinct divisional segments in terms of principal business activity, but manages its business on the basis of different geographic segments. This information is consistent with the information used by the Company’s Chief Operating Decision Maker, defined as the Executive Management team, in evaluating operating performance of, and making resource allocation decisions among operations.
| Year ended December 31 | 000,000,000 | 000,000,000 | 000,000,000 | |||||||||||||||||||||
| 2010 | 2009 | 2008 |
| |||||||||||||||||||||
| Business segment data | $ | $ | $ | Year ended December 31 | ||||||||||||||||||||
|
| |||||||||||||||||||||||
2011 $ | 2010 $ | 2009 $ | ||||||||||||||||||||||
| ||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
| Revenues from product sales: | ||||||||||||||||||||||||
| South Africa | 875 | 1,374 | 986 | 2,561 | 875 | 1,374 | ||||||||||||||||||
| Continental Africa | 1,038 | 1,242 | 905 | 2,529 | 1,038 | 1,242 | ||||||||||||||||||
| Australasia | 206 | 291 | 214 | 385 | 206 | 291 | ||||||||||||||||||
| Americas | 571 | 692 | 493 | 1,487 | 571 | 692 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| 2,690 | 3,599 | 2,598 | 6,962 | 2,690 | 3,599 | |||||||||||||||||||
| Less: Equity method investments included above | (331 | ) | (358 | ) | (186 | ) | (392) | (331) | (358) | |||||||||||||||
| Plus: Loss on realized non-hedge derivatives included above | 2,975 | 543 | 1,243 | - | 2,975 | 543 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| Total revenues from product sales | 5,334 | 3,784 | 3,655 | 6,570 | 5,334 | 3,784 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Depreciation and amortization expense | ||||||||||||||||||||||||
| South Africa | 357 | 281 | 256 | 360 | 357 | 281 | ||||||||||||||||||
| Continental Africa | 185 | 207 | 251 | 223 | 185 | 207 | ||||||||||||||||||
| Australasia | 35 | 38 | 47 | 42 | 35 | 38 | ||||||||||||||||||
| Americas | 152 | 111 | 107 | 173 | 152 | 111 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| 729 | 637 | 661 | 798 | 729 | 637 | |||||||||||||||||||
| Less: Equity method investments included above | (9 | ) | (22 | ) | (46 | ) | (9) | (9) | (22) | |||||||||||||||
|
| |||||||||||||||||||||||
| Total depreciation and amortization expense | 720 | 615 | 615 | 789 | 720 | 615 | ||||||||||||||||||
|
| |||||||||||||||||||||||
F-79
F - 78
SEGMENT AND GEOGRAPHICAL INFORMATION(continued) |
| 000,000,000 | 000,000,000 | 000,000,000 | ||||||||||||||||||||||
| ||||||||||||||||||||||||
| Business segment data | Year ended December 31 | Year ended December 31 | ||||||||||||||||||||||
| 2010 | 2009 | 2008 |
|
| ||||||||||||||||||||
| $ | $ | $ | 2011 $ | 2010 $ | 2009 $ | |||||||||||||||||||
| ||||||||||||||||||||||||
Segment income/(loss) | ||||||||||||||||||||||||
| South Africa | 675 | 574 | 480 | 1,021 | 675 | 574 | ||||||||||||||||||
| Continental Africa | 493 | 199 | (579 | ) | 941 | 493 | 199 | |||||||||||||||||
| Australasia | 158 | (15 | ) | (22 | ) | 38 | 158 | (15) | ||||||||||||||||
| Americas | 508 | 335 | 240 | 751 | 508 | 335 | ||||||||||||||||||
| Other, including Corporate and Non-gold producing subsidiaries | (179 | ) | (133 | ) | (89 | ) | (192) | (179) | (133) | |||||||||||||||
|
| |||||||||||||||||||||||
| Total segment income | 1,655 | 960 | 30 | 2,559 | 1,655 | 960 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| The following are included in segment income/(loss): | ||||||||||||||||||||||||
Interest revenue | ||||||||||||||||||||||||
| South Africa | 27 | 30 | 48 | 28 | 27 | 30 | ||||||||||||||||||
| Continental Africa | 3 | 3 | 4 | 14 | 3 | 3 | ||||||||||||||||||
| Australasia | 2 | 12 | 3 | 4 | 2 | 12 | ||||||||||||||||||
| Americas | 10 | 8 | 8 | 4 | 10 | 8 | ||||||||||||||||||
| Other, including Corporate and Non-gold producing subsidiaries | 1 | 1 | 3 | 2 | 1 | 1 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| Total interest revenue | 43 | 54 | 66 | 52 | 43 | 54 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||
| South Africa | 7 | 4 | 17 | 5 | 7 | 4 | ||||||||||||||||||
| Continental Africa | 7 | 4 | 1 | 1 | 7 | 4 | ||||||||||||||||||
| Australasia | 1 | 2 | 5 | - | 1 | 2 | ||||||||||||||||||
| Americas | 3 | 12 | 10 | 3 | 3 | 12 | ||||||||||||||||||
| Other, including Corporate and Non-gold producing subsidiaries | 133 | 101 | 39 | 169 | 133 | 101 | ||||||||||||||||||
|
| |||||||||||||||||||||||
| Total interest expense | 151 | 123 | 72 | 178 | 151 | 123 | ||||||||||||||||||
|
| |||||||||||||||||||||||
Equity income/(loss) in associates | ||||||||||||||||||||||||
Equity (loss)/income in associates | ||||||||||||||||||||||||
| South Africa | (1 | ) | (2 | ) | 2 | (2) | (1) | (2) | ||||||||||||||||
| Continental Africa | 69 | 102 | (139 | ) | 89 | 69 | 102 | |||||||||||||||||
| Other, including Corporate and Non-gold producing subsidiaries | (28 | ) | (12 | ) | (12 | ) | (28) | (28) | (12) | |||||||||||||||
|
| |||||||||||||||||||||||
| Total equity income/(loss) in associates | 40 | 88 | (149 | ) | ||||||||||||||||||||
Total equity income in associates | 59 | 40 | 88 | |||||||||||||||||||||
|
| |||||||||||||||||||||||
Reconciliation of segment income to Net income/(loss) - attributable to AngloGold Ashanti | ||||||||||||||||||||||||
| Segment total | 1,655 | 960 | 30 | 2,559 | 1,655 | 960 | ||||||||||||||||||
| Exploration costs | (206 | ) | (150 | ) | (126 | ) | (279) | (206) | (150) | |||||||||||||||
| General and administrative expenses | (228 | ) | (158 | ) | (136 | ) | (287) | (228) | (158) | |||||||||||||||
| Market development costs | (14 | ) | (10 | ) | (13 | ) | (9) | (14) | (10) | |||||||||||||||
| Non-hedge derivative loss | (786 | ) | (1,452 | ) | (258 | ) | ||||||||||||||||||
| Other operating items | — | — | (19 | ) | ||||||||||||||||||||
Non-hedge derivative gain/(loss) and movement on bonds | 196 | (786) | (1,452) | |||||||||||||||||||||
| Taxation (expense)/benefit | (255 | ) | 33 | (22 | ) | (705) | (255) | 33 | ||||||||||||||||
| Discontinued operations | — | — | 23 | |||||||||||||||||||||
| Noncontrolling interests | (54 | ) | (48 | ) | (42 | ) | (50) | (54) | (48) | |||||||||||||||
|
| |||||||||||||||||||||||
| Net income/(loss) — attributable to AngloGold Ashanti | 112 | (825 | ) | (563 | ) | |||||||||||||||||||
Net income/(loss) - attributable to AngloGold Ashanti | 1,425 | 112 | (825) | |||||||||||||||||||||
|
| |||||||||||||||||||||||
F-80
F - 79
SEGMENT AND GEOGRAPHICAL INFORMATION(continued) |
| Business segment data | Year ended December 31 | |||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
Segment assets | ||||||||||||
South Africa(1) | 3,370 | 3,354 | 2,497 | |||||||||
Continental Africa(2) | 4,093 | 4,055 | 3,582 | |||||||||
Australasia(3) | 534 | 496 | 1,279 | |||||||||
| Americas | 2,170 | 2,012 | 1,717 | |||||||||
| Other, including Corporate, and Non-gold producing subsidiaries | 221 | 745 | 376 | |||||||||
| Total segment assets | 10,388 | 10,662 | 9,451 | |||||||||
ISS International Limited | 15 | — | — | |||||||||
Rand Refinery Limited | 1 | 1 | 1 | |||||||||
Tau Lekoa | — | 73 | — |
Expenditure for additions to long-lived assets | ||||||||||||
| South Africa | 430 | 395 | 347 | |||||||||
| Continental Africa | 232 | 196 | 260 | |||||||||
| Australasia | 40 | 177 | 439 | |||||||||
| Americas | 309 | 257 | 191 | |||||||||
| Other, including Corporate and Non-gold producing subsidiaries | 4 | 2 | 2 | |||||||||
| 1,015 | 1,027 | 1,239 | ||||||||||
| Less: Equity method investments included above | (42 | ) | (8 | ) | (7 | ) | ||||||
| Total expenditure for additions to long-lived assets | 973 | 1,019 | 1,232 | |||||||||
Geographical area data | ||||||||||||
Total revenues | ||||||||||||
| South Africa | 899 | 1,395 | 1,041 | |||||||||
| Continental Africa | 1,043 | 1,243 | 902 | |||||||||
| Australasia | 208 | 308 | 217 | |||||||||
| Americas | 573 | 691 | 508 | |||||||||
| Other, including Corporate and Non-gold producing subsidiaries | 37 | 129 | — | |||||||||
| 2,760 | 3,766 | 2,668 | ||||||||||
| Less: Equity method investments included above | (333 | ) | (355 | ) | (181 | ) | ||||||
| Plus: Loss on realized non-hedge derivatives included above | 2,975 | 543 | 1,243 | |||||||||
| Total revenues | 5,402 | 3,954 | 3,730 | |||||||||
Long-lived assets by area | ||||||||||||
| South Africa | 2,701 | 2,393 | 1,832 | |||||||||
Continental Africa(1) | 3,437 | 3,405 | 2,954 | |||||||||
| Australasia | 373 | 342 | 294 | |||||||||
| Americas | 1,808 | 1,678 | 1,399 | |||||||||
| Other, including Corporate and Non-gold producing subsidiaries | 72 | 86 | 59 | |||||||||
| Total long-lived assets | 8,391 | 7,904 | 6,538 | |||||||||
F-81
| ||||||||
| Business segment data | Year ended December 31 | |||||||
| ||||||||
2011 $ | 2010 $ | 2009 $ | ||||||
| ||||||||
Segment assets | ||||||||
South Africa(1) | 2,974 | 3,370 | 3,354 | |||||
Continental Africa | 4,365 | 4,093 | 4,055 | |||||
Australasia | 714 | 534 | 496 | |||||
Americas | 2,527 | 2,170 | 2,012 | |||||
Other, including Corporate, and Non-gold producing subsidiaries | 605 | 221 | 745 | |||||
| ||||||||
Total segment assets | 11,185 | 10,388 | 10,662 | |||||
| ||||||||
(1) | Includes the following which have been classified as assets held for sale: | |||||||
Rand Refinery Limited | 1 | 1 | 1 | |||||
ISS International Limited | - | 15 | - | |||||
Tau Lekoa | - | - | 73 | |||||
ISS International Limited was classified as held for sale in 2010. The sale was concluded effective February 28, 2011. | ||||||||
Expenditure for additions to long-lived assets | ||||||||
South Africa | 549 | 430 | 395 | |||||
Continental Africa | 418 | 232 | 196 | |||||
Australasia | 102 | 40 | 177 | |||||
Americas | 452 | 309 | 257 | |||||
Other, including Corporate and Non-gold producing subsidiaries | 6 | 4 | 2 | |||||
| ||||||||
| 1,527 | 1,015 | 1,027 | ||||||
Less: Equity method investments included above | (88) | (42) | (8) | |||||
| ||||||||
Total expenditure for additions to long-lived assets | 1,439 | 973 | 1,019 | |||||
| ||||||||
Geographical area data | ||||||||
Total revenues | ||||||||
South Africa | 2,596 | 899 | 1,395 | |||||
Continental Africa | 2,529 | 1,043 | 1,243 | |||||
Australasia | 389 | 208 | 308 | |||||
Americas | 1,499 | 573 | 691 | |||||
Other, including Corporate and Non-gold producing subsidiaries | 17 | 37 | 129 | |||||
| ||||||||
| 7,030 | 2,760 | 3,766 | ||||||
Less: Equity method investments included above | (388) | (333) | (355) | |||||
Plus: Loss on realized non-hedge derivatives included above | - | 2,975 | 543 | |||||
| ||||||||
Total revenues | 6,642 | 5,402 | 3,954 | |||||
| ||||||||
Long-lived assets by area | ||||||||
South Africa | 2,360 | 2,701 | 2,393 | |||||
Continental Africa | 3,544 | 3,437 | 3,405 | |||||
Australasia | 441 | 373 | 342 | |||||
Americas | 2,088 | 1,808 | 1,678 | |||||
Other, including Corporate and Non-gold producing subsidiaries | 121 | 72 | 86 | |||||
| ||||||||
Total long-lived assets | 8,554 | 8,391 | 7,904 | |||||
| ||||||||
F - 80
SEGMENT AND GEOGRAPHICAL INFORMATION(continued) |
| ||||||
| Business segment data | Year ended December 31 | |||||
| ||||||
2011 $ | 2010 $ | 2009 $ | ||||
| ||||||
Entity-wide disclosures | ||||||
Revenues(1) | ||||||
South Africa | 2,561 | 2,207 | 1,665 | |||
Ghana | 802 | 566 | 513 | |||
Tanzania | 753 | |||||
Brazil | 767 | 599 | 437 | |||
| Year ended December 31 | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| Business segment data | $ | $ | $ | |||||||||
Entity-wide disclosures | ||||||||||||
Revenues(1) | ||||||||||||
| South Africa | 2,207 | 1,665 | 1,466 | |||||||||
| Ghana | 566 | 513 | 511 | |||||||||
| Brazil | 599 | 437 | ||||||||||
| (1) | Material revenues are attributed to countries based on location of production. |
Long-lived assets(2) | ||||||||||||||||||
| South Africa | 2,458 | 2,176 | 1,668 | 2,151 | 2,458 | 2,176 | ||||||||||||
| Ghana | 1,924 | 1,887 | 1,863 | 2,034 | 1,924 | 1,887 | ||||||||||||
| Tanzania | 584 | |||||||||||||||||
| United States of America | 719 | 671 | 810 | 719 | 671 | |||||||||||||
| Brazil | 768 | 689 | 598 | 950 | 768 | 689 | ||||||||||||
| (2) | Material long-lived assets excluding goodwill and other intangibles, financial instruments and deferred taxation assets. |
F-82
F - 81
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS | ||
Employee share incentive scheme
At a general meeting held on June 4, 1998, shareholders approved the introduction of the AngloGold Limited Share Incentive Scheme (“Share Incentive Scheme”) for the purpose of providing an incentive to executive directors and senior employees of the Company and its subsidiaries to identify themselves more closely with the fortunes of the Company and also to promote the retention of such employees by giving them an opportunity to acquire shares in the Company. Employees participate in the scheme to the extent that they are granted options and accept them.
At a general meeting held on April 30, 2002, it was approved that the rules of the Share Incentive Scheme be amended to provide for the exercise of options to be based on conditions, related to the performance of the Company, as determined by the directors and which will be objective and specified. An employee would only be able to exercise his options after the date upon which he has received written notification from the directors that the previously specified performance conditions have been fulfilled or waived. The options granted prior to May 1, 2002 remained subject to the conditions under which they were granted. Although there are no automatically convertible unsecured debentures currently in issue under the rules of the Share Incentive Scheme, consequential amendments were approved to the rules of the scheme which effectively made the conversion of debentures subject to the same terms as the exercise of options.
At the annual general meeting held on May 7, 2010, shareholders authorized that 17,000,000 shares may be allocated for the purposes of the scheme. The maximum aggregate number of shares which may be acquired by any one participant in the scheme is 5 percent of the shares attributable to the scheme or 850,000 ordinary shares per employee could be issued in aggregate (2010: 850,000).
Ordinary shares issued in terms of the Share Incentive Scheme shall, subject to the provisions of the Share Incentive Scheme, rankpari passu with issued shares in all respects, including participation in dividends.
Non-executive directors are not eligible for participation in the Share Incentive Scheme.
Total plan employee costs
On December 31, 2011, the Company had six stock based compensation plans which are described below.
Total compensation cost charged against income for these plans were as follows:
2011 $ | 2010 $ | 2009 $ | ||||||||||
Compensation cost recognized | 54 | (1) | 59 | 41 | ||||||||
| (1) | ||
Excludes $7 million relating to the | ||
| 2010 | 2009 | 2008 | ||||||||||
| $ | $ | $ | ||||||||||
| Compensation cost recognized | 59 | 41 | 40 | |||||||||
At the year end, the unallocated balance of shares subject to the Share Incentive Scheme amounted to 11,398,904 (2009: 5,501,005)10,075,485 (2010: 11,398,904).
F-83
F - 82
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) | ||
Options
An option may only be granted to an employee to purchase a certain number of shares, specified by the directors, at the option price payable in accordance with the rules of the Share Incentive Scheme.
The Share Incentive Scheme provides for the granting of options based on two separate criteria:
Time related options |
Time related options may be exercised over a five year period from date of grant, and may be exercised in tranches of 20 percent each in years 2, 3 and 4 and 40 percent in year five.
No further options will be granted under this plan which terminated on February 1, 2012, being the date on which the last options granted under this plan could have been, exercised or expired.
A summary of time related options showing movement from the beginning of the year to the end of the year, is presented below:
Options (000) | Weighted- average exercise price R | |||||
Outstanding at January 1, 2011 | 1 | 194 | ||||
Exercised | (1 | ) | 194 | |||
Outstanding at December 31, 2011 | - | - | ||||
Exercisable at December 31, 2011 | - | - | ||||
| Weighted- | ||||||||
| average | ||||||||
| Options | exercise price | |||||||
| (000) | R | |||||||
| Outstanding at January 1, 2010 | 28 | 146 | ||||||
| Exercised | (27 | ) | 145 | |||||
| Outstanding at December 31, 2010 | 1 | 194 | ||||||
| Exercisable at December 31, 2010 | 1 | 194 | ||||||
A summary of the salient features of the time related options is presented below:
| 2011 | 2010 | 2009 | ||||||||||
Total intrinsic value of options outstanding at period end (R millions) | - | - | (1) | 5 | ||||||||
Intrinsic value of options exercised (R millions) | - | (1) | 5 | 15 | ||||||||
Weighted average remaining contractual term (years) | - | 1 | 1 | |||||||||
| 2010 | 2009 | 2008 | ||||||||||
| Total intrinsic value of options outstanding at period end (R millions) | — | (1) | 5 | 13 | ||||||||
| Intrinsic value of options exercised (R millions) | 5 | 15 | 15 | |||||||||
| Weighted average remaining contractual term (years) | 1 | 1 | 2 | |||||||||
| (1) | Less than R1 million. |
F-84There was no income statement charge for 2011, 2010 and 2009, as the total compensation cost was expensed up to date of vesting in 2007.
F - 83
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
Performance related options |
Performance related options granted vest in full, three years after date of grant, provided that the conditions on which the options were granted, namely related to the performance of the Company (growth in an adjusted earnings per share) as determined by the directors, are met. If the performance conditions are not met at the end of the first three year period, then performance is re-tested each year over the ten year life of the option on a rolling three year basis. Options are normally exercisable, subject to satisfaction of the performance conditions, between three and ten years from date of grant.
The performance related options’ compensation expense is fixed at grant date and recorded when it is probable that the performance criteria will be met.
No further performance related options will be granted and all options granted hereunder will terminate on November 1, 2014, being the date on which the last options granted under these criteria may be exercised or will expire.
A summary of performance related options showing movement from the beginning of the year to the end of the year, is presented below:
| Weighted- | ||||||||
| average | ||||||||
| exercise | ||||||||
| Options | price | |||||||
| (000) | R | |||||||
| Outstanding at January 1, 2010 | 640 | 241 | ||||||
| Exercised | (244 | ) | 240 | |||||
| Forfeited (terminations) | (4 | ) | 288 | |||||
| Outstanding at December 31, 2010 | 392 | 242 | ||||||
| Exercisable at December 31, 2010 | 392 | 242 | ||||||
| 2010 | 2009 | 2008 | ||||||||||
| Total intrinsic value of options outstanding at period end (R millions) | 33 | 42 | 18 | |||||||||
| Intrinsic value of options exercised (R millions) | 17 | 49 | 3 | |||||||||
| Weighted average remaining contractual term (years) | 3 | 4 | 5 | |||||||||
| ||||||
| Options (000) | Weighted- average exercise price R | |||||
Outstanding at January 1, 2011 | 392 | 242 | ||||
Exercised | (221) | 249 | ||||
Forfeited (terminations) | - | - | ||||
Outstanding at December 31, 2011 | 171 | 232 | ||||
Exercisable at December 31, 2011 | 171 | 232 | ||||
F-85A summary of the salient features of the performance related options is presented below:
| 2011 | 2010 | 2009 | ||||||
Total intrinsic value of options outstanding at period end (R millions) | 19 | 33 | 42 | |||||
Intrinsic value of options exercised (R millions) | 17 | 17 | 49 | |||||
Weighted average remaining contractual term (years) | 2 | 3 | 4 | |||||
All options which have not been exercised within ten years from the date on which they were granted automatically expire.
There was no income statement charge for 2011, 2010 and 2009, as the total compensation cost was expensed up to date of vesting in 2007.
During 2011, a total of 221,429 common shares were issued under the share incentive scheme in terms of time-based and performance awards.
As at December 31, 2011, there was no unrecognized compensation cost related to unvested stock options.
F - 84
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) | ||
The weighted average of all options outstanding as at December 31, 2011, is as follows:
| Range of exercise | Quantity of options | Weighted average | Weighted average | |||||||||||||
| prices | within range | exercise price | contractual life | |||||||||||||
| R | (000) | R | Years | |||||||||||||
| 144 — 211 | 62 | 194 | 2.8 | |||||||||||||
| 212 — 300 | 331 | 251 | 1.3 | |||||||||||||
| 393 | (1) | 242 | 1.4 | |||||||||||||
| Award date (unvested awards and awards vested during the year) | 2010 | 2009 | 2008 | 2007 | ||||||||||||
| Calculated fair value (R per share) | 280.90 | 293.99 | 267.05 | 322.00 | ||||||||||||
| Vesting date (100%) | — | — | — | January 1, 2010 | ||||||||||||
| Vesting date (40%) | February 24, 2011 | February 18, 2010 | January 1, 2009 | — | ||||||||||||
| Vesting date (60%) | February 24, 2012 | February 18, 2011 | January 1, 2010 | — | ||||||||||||
| Vesting date (conditional 20%) | February 24, 2013 | February 18, 2012 | January 1, 2011 | — | ||||||||||||
| Expiry date | February 23, 2020 | February 17, 2019 | December 31, 2017 | December 31, 2016 | ||||||||||||
Range of exercise prices R | Quantity of options (000) | Weighted average exercise price R | Weighted average contractual life Years | |||||||||||||
| 144 – 211 | 28 | 194 | 2.0 | |||||||||||||
| 212 – 300 | 143 | 243 | 1.5 | |||||||||||||
| 171 | (1) | 235 | 1.6 | |||||||||||||
F-86(1)Represents performance related options outstanding.
No options expired during the year ended December 31, 2011.
Since December 31, 2011 to and including March 31, 2012, 9,847 options (granted in respect of performance related options) have been exercised.
Bonus Share Plan (“BSP”) and Long-Term Incentive Plan (“LTIP”)
At the annual general meeting held on April 29, 2005, shareholders approved the introduction of the BSP and LTIP and the discontinuation of the previous share incentive scheme. Options granted under the previous share incentive scheme will remain subject to the conditions under which they were originally granted.
Bonus Share Plan (“BSP”)
The BSP is intended to provide effective incentives to eligible employees. An eligible employee is one who devotes substantially the whole of his working time to the business of the Company, any subsidiary of the Company or a company under the control of AngloGold Ashanti. An award in terms of the BSP may be made at any date at the discretion of the board, the only vesting condition being three years’ service for awards granted prior to 2008. For all BSP awards granted from 2008, 40 percent will vest after one year and the remaining 60 percent will vest after two years. An additional 20 percent of the original award will be granted to employees if the full award remains unexercised after three years. The board is required to determine a BSP award value and this will be converted to a share amount based on the closing price of the Company shares on the JSE on the last business day prior to the date of grant.
During 2011 a total of 466,849 common shares were issued in terms of the BSP rules.
For awards made, the following information is presented:
| Award date (unvested awards and awards vested during the year) | 2011 | 2010 | 2009 | 2008 | ||||||||
| Calculated fair value (R per share) | 340.00 | 280.90 | 293.99 | 267.05 | ||||||||
| Vesting date (40%) | February 21, 2012 | February 24, 2011 | February 18, 2010 | January 1, 2009 | ||||||||
| Vesting date (60%) | February 21, 2013 | February 24, 2012 | February 18, 2011 | January 1, 2010 | ||||||||
| Vesting date (conditional 20%) | February 21, 2014 | February 24, 2013 | February 18, 2012 | January 1, 2011 | ||||||||
| Expiry date | February 20, 2021 | February 23, 2020 | February 17, 2019 | December 31, 2017 | ||||||||
F - 85
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
A summary of time related equity settled compensation scheme showing movement from the beginning of the year to the end of the year, is presented below:
| Awards (000) | ||||
Outstanding at January 1, | 1,552 | |||
Granted | 821 | |||
Exercised | ||||
Forfeited (terminations) | ||||
Outstanding at December 31, | 1,825 | |||
Exercisable at December 31, | 681 | |||
BSP awards are issued with no exercise price.
A summary of the salient features of the BSP is presented below:
| 2011 | 2010 | 2009 | ||||||||||
| Total intrinsic value of awards outstanding at period end (R millions) | 627 | 508 | 397 | |||||||||
Intrinsic value of awards exercised (R millions) | 153 | 146 | 75 | |||||||||
Weighted average remaining contractual term (years) | 6 | 7 | 7 | |||||||||
Long-Term Incentive Plan (“LTIP”)
The LTIP is an equity settled share-based payment arrangement, intended to provide effective incentives for executives to earn shares in the Company based on the achievement of stretched Company performance conditions. Participation in the LTIP will be offered to executive directors, executive officers/management and selected members of senior management. An award in terms of the LTIP may be granted at any date during the year that the board of the Company determine and may even occur more than once a year. The board is required to determine an LTIP award value and this will be converted to a share amount based on the closing price of the Company shares on the JSE on the last business day prior to the date of grant.
The main performance conditions in terms of the LTIP issued in 2008, 2009, 2010 and 2011 are:
| Ÿ |
| 2010 | 2009 | 2008 | ||||||||||
| Total intrinsic value of awards outstanding at period end (R millions) | 508 | 397 | 238 | |||||||||
| Intrinsic value of awards exercised (R millions) | 146 | 75 | 28 | |||||||||
| Weighted average remaining contractual term (years) | 7 | 7 | 8 | |||||||||
up to 30 percent of an award will be determined by the performance of total shareholder returns compared with that of a group of comparative gold-producing companies; | |||
up to 30 percent of an award will be determined by real growth (above US inflation) in adjusted earnings per share over the performance period; | |||
up to 40 percent of an award will be dependent on the achievement of strategic performance measures which will be set by the Remuneration Committee; and | |||
three-year’s service is required. |
F-87During 2011, a total of 201,315 common shares were issued in terms of the LTIP rules.
F - 86
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
For awards made, the following information is presented:
| Award date (unvested awards and awards vested during the year) | 2011 | 2010 | 2009 | 2008 | ||||
| Calculated fair value (Rand per share) | 340.00 | 280.90 | 293.99 | 267.05 | ||||
| Vesting date | February 21, 2014 | February 24, 2013 | February 18, 2012 | January 1, 2011 | ||||
| Expiry date | February 20, 2021 | February 23, 2020 | February 17, 2019 | December 31, 2017 |
A summary of time and performance related equity settled compensation scheme showing movement from the beginning of the year to the end of the year, is presented below:
| Award date (unvested awards and awards vested during the year) | 2010 | 2009 | 2008 | 2007 | ||||||||||||
| Calculated fair value (Rand per share) | 280.90 | 293.99 | 267.05 | 322.00 | ||||||||||||
| Vesting date | February 24, 2013 | February 18, 2012 | January 1, 2011 | January 1, 2010 | ||||||||||||
| Expiry date | February 23, 2020 | February 17, 2019 | December 31, 2017 | December 31, 2016 | ||||||||||||
Awards | ||||
(000) | ||||
| Outstanding at January 1, | 1,600 | |||
| Granted | 686 | |||
| Exercised | ||||
| Forfeited (terminations) | ||||
Outstanding at December 31, | 1,982 | |||
Exercisable at December 31, | 242 | |||
LTIP awards are issued with no exercise price. | ||
A summary of the salient features of the LTIP is presented below:
| 2010 | 2009 | 2008 | 2011 | 2010 | 2009 | |||||||||||||
| Total intrinsic value of awards outstanding at period end (R millions) | 522 | 387 | 250 | 681 | 522 | 387 | ||||||||||||
| Intrinsic value of awards exercised (R millions) | 26 | 22 | 11 | 66 | 26 | 22 | ||||||||||||
| Weighted average remaining contractual term (years) | 7 | 7 | 8 | 6 | 7 | 7 | ||||||||||||
| ||||||||||||||||||
| Compensation expense related to BSP and LTIP awards recognized ($ millions) | 45 | 27 | 20 | 42 | 45 | 27 | ||||||||||||
| As at December 31, the unrecognized compensation cost related to unvested awards of the BSP and LTIP plans amounted to ($ millions) | 23 | 18 | 12 | 27 | 23 | 18 | ||||||||||||
Unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately (years) | 2 | 2 | 2 | 2 | 2 | 2 | ||||||||||||
F-88
F - 87
ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) | ||
Employee Share Ownership Plan (“ESOP”)
On December 12, 2006, AngloGold Ashanti announced the finalization of the Bokamoso Employee Share Ownership Plan (Bokamoso ESOP) for employees of the South African operations. The Bokamoso ESOP creates an opportunity for AngloGold Ashanti and the unions to ensure a closer alignment of the interest between South African based employees and the Company. Participation is restricted to those employees not eligible for participation in any other South African share incentive plan.
In order to facilitate these transactions the Company established a trust to acquire and administer the ESOP shares. AngloGold Ashanti allotted and issued free ordinary shares to the trust and also created, allotted and issued E ordinary shares to the trust for the benefit of employees. The Company also undertook an empowerment transaction with a Black Economic Empowerment investment vehicle, Izingwe Holdings (Proprietary) Limited (“Izingwe”) during 2006 and created, allotted and issued E ordinary shares to Izingwe. The key terms of the E ordinary share are:
AngloGold Ashanti will have the right to cancel the E ordinary shares, or a portion of them, in accordance with the ESOP and Izingwe cancellation formula, respectively; | |||
the E ordinary shares will not be listed; | |||
the E ordinary shares which are not cancelled will be converted into ordinary shares; and | |||
the E ordinary shares will each be entitled to receive a cash dividend equal to one-half of the dividend per ordinary share declared by the Company from time to time and a further one-half is included in the calculation of the strike |
On April 14, 2011, AngloGold Ashanti Limited, NUM, Solidarity, UASA, Izingwe and the Bokamoso ESOP Board of Trustees announced the restructuring of the empowerment transactions concluded between the Company and the unions, and the Company and Izingwe respectively in 2006.
This restructuring was motivated by the fact that share price performance since the onset of the 2008 global financial crisis led to a situation where the first two tranches of E ordinary shares vested and lapsed at no additional value to Bokamoso ESOP beneficiaries and Izingwe.
In order to remedy this situation in a manner that would ensure an element of value accruing to participants, though at a reasonable incremental cost to AngloGold Ashanti Limited shareholders, the scheme was restructured as follows:
| Ÿ | ||
| 2010 | 2009 | 2008 | ||||||||||
| Total intrinsic value of awards outstanding at period end (R millions) | 142 | 204 | 216 | |||||||||
| Intrinsic value of awards exercised (R millions) | 72 | 58 | 14 | |||||||||
| Weighted average remaining contractual term (years) | 1 | 2 | 3 | |||||||||
F-89
all lapsed E ordinary | ||
| 2008 | 2007 | 2006 | ||||||||||
| Risk-free interest rate | 7.00 | % | 7.00 | % | 7.00 | % | ||||||
| Dividend yield | 1.39 | % | 2.06 | % | 2.30 | % | ||||||
| Volatility factor of market share price | 35.00 | % | 33.00 | % | 36.00 | % | ||||||
| Weighted- | ||||||||
| average | ||||||||
| Options | exercise price | |||||||
| (000) | R | |||||||
| Outstanding at January 1, 2010 | 2,395 | 347 | ||||||
| Reallocated | 69 | 361 | ||||||
| Forfeited (terminations) | (69 | ) | 354 | |||||
| Cancelled | (709 | ) | 354 | |||||
| Outstanding at December 31, 2010 | 1,686 | 366 | ||||||
| Exercisable at December 31, 2010 | — | — | ||||||
| 2010 | 2009 | 2008 | ||||||||||
Total intrinsic value of awards outstanding at period end (R millions) (1) | — | — | — | |||||||||
Intrinsic value of awards exercised (R millions) (2) | — | — | — | |||||||||
Weighted average remaining contractual term (years) | 1 | 2 | 3 | |||||||||
Compensation expense related to the ESOP scheme recognized ($ millions) | 12 | 12 | 14 | |||||||||
As at December 31, the unrecognized compensation cost related to unvested awards of the ESOP scheme amounted to ($ millions) | 8 | 16 | 14 | |||||||||
| Unrecognized compensation cost is expected to be recognized over the remaining scheme term of (years) | 3 | 4 | 5 | |||||||||
F-90
| 2010 | 2009 | |||||||
| $ | $ | |||||||
| Compensation expense related to Ghana ESOP scheme recognized ($ millions) | 2 | 2 | ||||||
| The liability recognized in the consolidated balance sheet in respect of unexercised rights was as follows | 2 | 1 | ||||||
F-91
F-92
| 2010 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Sales and other income | 2,348 | (2 | ) | 3,233 | (177 | ) | 5,402 | |||||||||||||
| Product sales | 2,207 | — | 3,127 | — | 5,334 | |||||||||||||||
| Interest, dividends and other | 141 | (2 | ) | 106 | (177 | ) | 68 | |||||||||||||
Costs and expenses | 4,130 | 1,120 | 2,818 | (3,047 | ) | 5,021 | ||||||||||||||
| Production costs | 1,091 | — | 1,565 | — | 2,656 | |||||||||||||||
| Exploration costs | 14 | 12 | 180 | — | 206 | |||||||||||||||
| Related party transactions | (15 | ) | — | — | — | (15 | ) | |||||||||||||
| General and administrative expenses | 164 | 6 | 44 | 14 | 228 | |||||||||||||||
| Royalties paid | 38 | — | 104 | — | 142 | |||||||||||||||
| Market development costs | 7 | — | 7 | — | 14 | |||||||||||||||
| Depreciation, depletion and amortization | 352 | — | 368 | — | 720 | |||||||||||||||
| Impairment of assets | 73 | — | 18 | — | 91 | |||||||||||||||
| Interest expense | 7 | 69 | 75 | — | 151 | |||||||||||||||
| Accretion expense | 10 | — | 12 | — | 22 | |||||||||||||||
| Employment severance costs | 19 | — | 4 | — | 23 | |||||||||||||||
| Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 2,041 | 1,033 | (16 | ) | (3,061 | ) | (3 | ) | ||||||||||||
| Non-hedge derivative loss, movement on bonds and other commodity contracts | 329 | — | 457 | — | 786 | |||||||||||||||
(Loss)/income before income tax provision | (1,782 | ) | (1,122 | ) | 415 | 2,870 | 381 | |||||||||||||
| Taxation expense | (1 | ) | (1 | ) | (253 | ) | — | (255 | ) | |||||||||||
| Equity income/(loss) in associates | 63 | (23 | ) | — | — | 40 | ||||||||||||||
| Equity income/(loss) in subsidiaries | 1,907 | 373 | — | (2,280 | ) | — | ||||||||||||||
Income/(loss) from continuing operations | 187 | (773 | ) | 162 | 590 | 166 | ||||||||||||||
| Discontinued operations | — | — | — | — | — | |||||||||||||||
Income/(loss) after discontinued operations | 187 | (773 | ) | 162 | 590 | 166 | ||||||||||||||
| Preferred stock dividends | (75 | ) | — | (76 | ) | 151 | — | |||||||||||||
Net income/(loss) | 112 | (773 | ) | 86 | 741 | 166 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | — | — | (54 | ) | — | (54 | ) | |||||||||||||
Net income/(loss) attributable to AngloGold Ashanti | 112 | (773 | ) | 32 | 741 | 112 | ||||||||||||||
F-93
| 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Sales and other income | 1,775 | (38 | ) | 2,273 | (56 | ) | 3,954 | |||||||||||||
| Product sales | 1,665 | — | 2,119 | — | 3,784 | |||||||||||||||
| Interest, dividends and other | 110 | (38 | ) | 154 | (56 | ) | 170 | |||||||||||||
Costs and expenses | 2,073 | 625 | 2,777 | (623 | ) | 4,852 | ||||||||||||||
| Production costs | 862 | — | 1,367 | — | 2,229 | |||||||||||||||
| Exploration costs | 6 | 14 | 130 | — | 150 | |||||||||||||||
| Related party transactions | (18 | ) | — | — | — | (18 | ) | |||||||||||||
| General and administrative expenses/(recoveries) | 96 | (121 | ) | 149 | 34 | 158 | ||||||||||||||
| Royalties paid | — | — | 84 | — | 84 | |||||||||||||||
| Market development costs | 5 | — | 5 | — | 10 | |||||||||||||||
| Depreciation, depletion and amortization | 277 | — | 338 | — | 615 | |||||||||||||||
| Impairment of assets | 4 | — | 4 | — | 8 | |||||||||||||||
| Interest expense | 4 | 67 | 52 | — | 123 | |||||||||||||||
| Accretion expense | 6 | — | 11 | — | 17 | |||||||||||||||
| Employment severance costs | 10 | — | 4 | — | 14 | |||||||||||||||
| Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 12 | 665 | (10 | ) | (657 | ) | 10 | |||||||||||||
| Non-hedge derivative loss, movement on bonds and other commodity contracts | 809 | — | 643 | — | 1,452 | |||||||||||||||
(Loss)/income before income tax provision | (298 | ) | (663 | ) | (504 | ) | 567 | (898 | ) | |||||||||||
| Taxation benefit/(expense) | 112 | (2 | ) | (77 | ) | — | 33 | |||||||||||||
| Equity income/(loss) in associates | 98 | (10 | ) | — | — | 88 | ||||||||||||||
| Equity (loss)/income in subsidiaries | (673 | ) | (383 | ) | — | 1,056 | — | |||||||||||||
(Loss)/income from continuing operations | (761 | ) | (1,058 | ) | (581 | ) | 1,623 | (777 | ) | |||||||||||
| Discontinued operations | — | — | — | — | — | |||||||||||||||
(Loss)/income after discontinued operations | (761 | ) | (1,058 | ) | (581 | ) | 1,623 | (777 | ) | |||||||||||
| Preferred stock dividends | (64 | ) | — | (65 | ) | 129 | — | |||||||||||||
Net (loss)/income | (825 | ) | (1,058 | ) | (646 | ) | 1,752 | (777 | ) | |||||||||||
| Less: Net income attributable to noncontrolling interests | — | — | (48 | ) | — | (48 | ) | |||||||||||||
Net (loss)/income — attributable to AngloGold Ashanti | (825 | ) | (1,058 | ) | (694 | ) | 1,752 | (825 | ) | |||||||||||
F-94
| 2008 | 2008 | 2008 | 2008 | 2008 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Sales and other income | 1,562 | 2 | 2,260 | (94 | ) | 3,730 | ||||||||||||||
| Product sales | 1,466 | — | 2,189 | — | 3,655 | |||||||||||||||
| Interest, dividends and other | 96 | 2 | 71 | (94 | ) | 75 | ||||||||||||||
Costs and expenses | 1,284 | 1,697 | 2,820 | (1,698 | ) | 4,103 | ||||||||||||||
| Production costs | 796 | 1 | 1,362 | — | 2,159 | |||||||||||||||
| Exploration costs | 5 | — | 123 | (2 | ) | 126 | ||||||||||||||
| Related party transactions | (10 | ) | — | — | — | (10 | ) | |||||||||||||
| General and administrative expenses/(recoveries) | 147 | 78 | 69 | (158 | ) | 136 | ||||||||||||||
| Royalties paid | — | — | 78 | — | 78 | |||||||||||||||
| Market development costs | 7 | — | 6 | — | 13 | |||||||||||||||
| Depreciation, depletion and amortization | 253 | — | 362 | — | 615 | |||||||||||||||
| Impairment of assets | 16 | — | 654 | — | 670 | |||||||||||||||
| Interest expense | 17 | 39 | 16 | — | 72 | |||||||||||||||
| Accretion expense | 9 | — | 13 | — | 22 | |||||||||||||||
| Employment severance costs | 9 | — | — | — | 9 | |||||||||||||||
| (Profit)/loss on sale of assets, realization of loans, indirect taxes and other | (31 | ) | 1,579 | (74 | ) | (1,538 | ) | (64 | ) | |||||||||||
| Non-hedge derivative loss, movement on bonds and other commodity contracts | 66 | — | 211 | — | 277 | |||||||||||||||
Income/(loss) before income tax provision | 278 | (1,695 | ) | (560 | ) | 1,604 | (373 | ) | ||||||||||||
| Taxation (expense)/benefit | (55 | ) | (4 | ) | 37 | — | (22 | ) | ||||||||||||
| Equity loss in associates | (141 | ) | (8 | ) | — | — | (149 | ) | ||||||||||||
| Equity (loss)/income in subsidiaries | (623 | ) | (623 | ) | — | 1,246 | — | |||||||||||||
(Loss)/income from continuing operations | (541 | ) | (2,330 | ) | (523 | ) | 2,850 | (544 | ) | |||||||||||
| Discontinued operations | 23 | — | — | — | 23 | |||||||||||||||
(Loss)/income after discontinued operations | (518 | ) | (2,330 | ) | (523 | ) | 2,850 | (521 | ) | |||||||||||
| Preferred stock dividends | (45 | ) | — | (46 | ) | 91 | — | |||||||||||||
Net (loss)/income | (563 | ) | (2,330 | ) | (569 | ) | 2,941 | (521 | ) | |||||||||||
| Less: Net income attributable to noncontrolling interests | — | — | (42 | ) | — | (42 | ) | |||||||||||||
Net (loss)/income — attributable to AngloGold Ashanti | (563 | ) | (2,330 | ) | (611 | ) | 2,941 | (563 | ) | |||||||||||
F-95
| 2010 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets | 1,169 | 2,265 | 3,869 | (5,306 | ) | 1,997 | ||||||||||||||
| Cash and cash equivalents | 152 | 114 | 309 | — | 575 | |||||||||||||||
| Restricted cash | 1 | — | 9 | — | 10 | |||||||||||||||
| Receivables, inter-group balances and other current assets | 1,016 | 2,151 | 3,551 | (5,306 | ) | 1,412 | ||||||||||||||
Property, plant and equipment, net | 2,197 | — | 3,729 | — | 5,926 | |||||||||||||||
Acquired properties, net | 217 | — | 619 | — | 836 | |||||||||||||||
Goodwill | — | — | 197 | (17 | ) | 180 | ||||||||||||||
Other intangibles, net | — | — | 17 | — | 17 | |||||||||||||||
Other long-term inventory | — | — | 27 | — | 27 | |||||||||||||||
Materials on the leach pad | — | — | 331 | — | 331 | |||||||||||||||
Other long-term assets and deferred taxation assets | 3,328 | 736 | 914 | (3,904 | ) | 1,074 | ||||||||||||||
Total assets | 6,911 | 3,001 | 9,703 | (9,227 | ) | 10,388 | ||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities including inter-group balances | 1,293 | 1,587 | 6,116 | (7,992 | ) | 1,004 | ||||||||||||||
Other non-current liabilities | 52 | — | 71 | (54 | ) | 69 | ||||||||||||||
Long-term debt | 39 | 1,044 | 1,519 | — | 2,602 | |||||||||||||||
Derivatives | — | — | 176 | — | 176 | |||||||||||||||
Deferred taxation liabilities | 720 | — | 471 | 9 | 1,200 | |||||||||||||||
Provision for environmental rehabilitation | 176 | — | 354 | — | 530 | |||||||||||||||
Other accrued liabilities | — | — | 38 | — | 38 | |||||||||||||||
Provision for pension and other post-retirement medical benefits | 165 | — | 15 | — | 180 | |||||||||||||||
Commitments and contingencies | — | — | — | — | — | |||||||||||||||
Equity | 4,466 | 370 | 943 | (1,190 | ) | 4,589 | ||||||||||||||
| Stock issued | 13 | 4,587 | 897 | (5,484 | ) | 13 | ||||||||||||||
| Additional paid in capital | 8,670 | 363 | 219 | (582 | ) | 8,670 | ||||||||||||||
| Accumulated deficit | (3,869 | ) | (4,580 | ) | (4,350 | ) | 8,930 | (3,869 | ) | |||||||||||
| Accumulated other comprehensive income and reserves | (348 | ) | — | 4,055 | (4,055 | ) | (348 | ) | ||||||||||||
| Total AngloGold Ashanti stockholders’ equity | 4,466 | 370 | 821 | (1,191 | ) | 4,466 | ||||||||||||||
| Noncontrolling interests | — | — | 122 | 1 | 123 | |||||||||||||||
Total liabilities and equity | 6,911 | 3,001 | 9,703 | (9,227 | ) | 10,388 | ||||||||||||||
F-96
| 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets | 1,650 | 2,558 | 3,332 | (4,782 | ) | 2,758 | ||||||||||||||
| Cash and cash equivalents | 231 | 578 | 291 | — | 1,100 | |||||||||||||||
| Restricted cash | 1 | — | 11 | — | 12 | |||||||||||||||
| Receivables, inter-group balances and other current assets | 1,418 | 1,980 | 3,030 | (4,782 | ) | 1,646 | ||||||||||||||
Property, plant and equipment, net | 1,932 | — | 3,522 | — | 5,454 | |||||||||||||||
Acquired properties, net | 205 | — | 626 | — | 831 | |||||||||||||||
Goodwill | — | — | 425 | (263 | ) | 162 | ||||||||||||||
Other intangibles, net | — | — | 18 | — | 18 | |||||||||||||||
Derivatives | — | — | 5 | — | 5 | |||||||||||||||
Other long-term inventory | — | — | 26 | — | 26 | |||||||||||||||
Materials on the leach pad | — | — | 324 | — | 324 | |||||||||||||||
Other long-term assets and deferred taxation assets | 2,689 | 31 | 1,160 | (2,796 | ) | 1,084 | ||||||||||||||
Total assets | 6,476 | 2,589 | 9,438 | (7,841 | ) | 10,662 | ||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities including inter-group balances | 2,058 | 1,824 | 6,686 | (6,093 | ) | 4,475 | ||||||||||||||
Other non-current liabilities | 149 | — | 84 | (70 | ) | 163 | ||||||||||||||
Long-term debt | 34 | — | 633 | — | 667 | |||||||||||||||
Derivatives | — | — | 176 | — | 176 | |||||||||||||||
Deferred taxation liabilities | 668 | — | 492 | 11 | 1,171 | |||||||||||||||
Provision for environmental rehabilitation | 115 | — | 270 | — | 385 | |||||||||||||||
Other accrued liabilities | — | — | 33 | — | 33 | |||||||||||||||
Provision for pension and other post-retirement medical benefits | 135 | — | 12 | — | 147 | |||||||||||||||
Commitments and contingencies | — | — | — | — | — | |||||||||||||||
Equity | 3,317 | 765 | 1,052 | (1,689 | ) | 3,445 | ||||||||||||||
| Stock issued | 12 | 4,859 | 1,080 | (5,939 | ) | 12 | ||||||||||||||
| Additional paid in capital | 7,836 | 363 | 698 | (1,061 | ) | 7,836 | ||||||||||||||
| Accumulated deficit | (3,914 | ) | (4,457 | ) | (3,397 | ) | 7,854 | (3,914 | ) | |||||||||||
| Accumulated other comprehensive income and reserves | (617 | ) | — | 2,544 | (2,544 | ) | (617 | ) | ||||||||||||
| Total AngloGold Ashanti stockholders’ equity | 3,317 | 765 | 925 | (1,690 | ) | 3,317 | ||||||||||||||
| Noncontrolling interests | — | — | 127 | 1 | 128 | |||||||||||||||
Total liabilities and equity | 6,476 | 2,589 | 9,438 | (7,841 | ) | 10,662 | ||||||||||||||
F-97
| 2010 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Net cash provided by/(used) in operating activities | 116 | (1,129 | ) | 2,202 | (151 | ) | 1,038 | |||||||||||||
| Net income/(loss) | 112 | (773 | ) | 86 | 741 | 166 | ||||||||||||||
| Reconciled to net cash provided by/(used) in operations: | ||||||||||||||||||||
| Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 2,071 | 1,033 | (21 | ) | (3,061 | ) | 22 | |||||||||||||
| Depreciation, depletion and amortization | 352 | — | 368 | — | 720 | |||||||||||||||
| Impairment of assets | 73 | — | 18 | — | 91 | |||||||||||||||
| Deferred taxation | 119 | — | 19 | — | 138 | |||||||||||||||
| Cash utilized for hedge book settlements | (993 | ) | — | (1,618 | ) | — | (2,611 | ) | ||||||||||||
| Other non cash items | (1,522 | ) | (1,973 | ) | 4,021 | 2,169 | 2,695 | |||||||||||||
| Net increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | 36 | — | 95 | — | 131 | |||||||||||||||
| Effect of changes in operating working capital items: | ||||||||||||||||||||
| Net movement in inter-group receivables and payables | 10 | 580 | (590 | ) | — | — | ||||||||||||||
| Receivables | (27 | ) | 3 | (129 | ) | — | (153 | ) | ||||||||||||
| Inventories | (11 | ) | — | (204 | ) | — | (215 | ) | ||||||||||||
| Accounts payable and other current liabilities | (104 | ) | 1 | 157 | — | 54 | ||||||||||||||
Net cash used in investing activities | (943 | ) | (42 | ) | (902 | ) | — | (1,887 | ) | |||||||||||
| Increase in non-current investments | — | (42 | ) | (116 | ) | — | (158 | ) | ||||||||||||
| Proceeds on disposal of associate | 1 | — | — | — | 1 | |||||||||||||||
| Net associates loans advanced | (3 | ) | — | — | — | (3 | ) | |||||||||||||
| Additions to property, plant and equipment | (424 | ) | — | (549 | ) | — | (973 | ) | ||||||||||||
| Proceeds on sale of mining assets | 60 | — | 9 | — | 69 | |||||||||||||||
| Proceeds on sale of investments | — | — | 142 | — | 142 | |||||||||||||||
| Cash effects from hedge restructuring | (577 | ) | — | (407 | ) | — | (984 | ) | ||||||||||||
| Net loans receivable advanced | — | — | (6 | ) | — | (6 | ) | |||||||||||||
| Change in restricted cash | — | — | 25 | — | 25 | |||||||||||||||
Net cash generated/(used) by financing activities | 729 | 707 | (1,357 | ) | 151 | 230 | ||||||||||||||
| Net changes in short-term debt | 126 | (1,000 | ) | (285 | ) | — | (1,159 | ) | ||||||||||||
| Issuance of stock | 798 | 310 | (310 | ) | — | 798 | ||||||||||||||
| Share issue expenses | (20 | ) | — | — | — | (20 | ) | |||||||||||||
| Net changes in long-term debt | — | 1,044 | 789 | — | 1,833 | |||||||||||||||
| Debt issue costs | — | (13 | ) | (26 | ) | — | (39 | ) | ||||||||||||
| Cash effects from hedge restructuring | (49 | ) | — | (1,017 | ) | — | (1,066 | ) | ||||||||||||
| Dividends (paid)/received | (126 | ) | 366 | (508 | ) | 151 | (117 | ) | ||||||||||||
Net decrease in cash and cash equivalents | (98 | ) | (464 | ) | (57 | ) | — | (619 | ) | |||||||||||
Effect of exchange rate changes on cash | 19 | — | 86 | — | 105 | |||||||||||||||
Cash and cash equivalents — January 1, | 231 | 578 | 291 | — | 1,100 | |||||||||||||||
Cash and cash equivalents — December 31, | 152 | 114 | 320 | — | 586 | |||||||||||||||
F-98
| 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Net cash provided by/(used) in operating activities | 326 | (481 | ) | 727 | (129 | ) | 443 | |||||||||||||
| Net (loss)/income | (825 | ) | (1,058 | ) | (646 | ) | 1,752 | (777 | ) | |||||||||||
| Reconciled to net cash provided by/(used) in operations: | ||||||||||||||||||||
| Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 12 | 665 | (2 | ) | (657 | ) | 18 | |||||||||||||
| Depreciation, depletion and amortization | 277 | — | 338 | — | 615 | |||||||||||||||
| Impairment of assets | 4 | — | 4 | — | 8 | |||||||||||||||
| Deferred taxation | (141 | ) | — | (58 | ) | — | (199 | ) | ||||||||||||
| Cash utilized for hedge book settlements | — | — | (797 | ) | — | (797 | ) | |||||||||||||
| Other non cash items | 946 | (1,685 | ) | 3,540 | (1,224 | ) | 1,577 | |||||||||||||
| Net (decrease)/increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | (3 | ) | — | 22 | — | 19 | ||||||||||||||
| Effect of changes in operating working capital items: | ||||||||||||||||||||
| Net movement in inter-group receivables and payables | 27 | 1,571 | (1,598 | ) | — | — | ||||||||||||||
| Receivables | (5 | ) | (3 | ) | (36 | ) | — | (44 | ) | |||||||||||
| Inventories | (23 | ) | — | (146 | ) | — | (169 | ) | ||||||||||||
| Accounts payable and other current liabilities | 57 | 29 | 106 | — | 192 | |||||||||||||||
Net cash (used)/generated in investing activities | (398 | ) | (344 | ) | 474 | — | (268 | ) | ||||||||||||
| Increase in non-current investments | — | (344 | ) | (99 | ) | — | (443 | ) | ||||||||||||
| Net associates loans advanced | (2 | ) | — | — | — | (2 | ) | |||||||||||||
| Additions to property, plant and equipment | (386 | ) | — | (633 | ) | — | (1,019 | ) | ||||||||||||
| Proceeds on sale of mining assets | — | — | 1,142 | — | 1,142 | |||||||||||||||
| Proceeds on sale of investments | — | — | 81 | — | 81 | |||||||||||||||
| Cash effects from hedge restructuring | (11 | ) | — | (7 | ) | — | (18 | ) | ||||||||||||
| Net loans receivable repaid | 1 | — | — | — | 1 | |||||||||||||||
| Change in restricted cash | — | — | (10 | ) | — | (10 | ) | |||||||||||||
Net cash generated/(used) by financing activities | 103 | 1,174 | (1,103 | ) | 129 | 303 | ||||||||||||||
| Net changes in short-term debt | — | (764 | ) | (89 | ) | — | (853 | ) | ||||||||||||
| Issuance of stock | 306 | 693 | (693 | ) | — | 306 | ||||||||||||||
| Share issue expenses | (11 | ) | — | — | — | (11 | ) | |||||||||||||
| Net changes in long-term debt | — | 674 | 222 | — | 896 | |||||||||||||||
| Debt issue costs | — | — | (14 | ) | — | (14 | ) | |||||||||||||
| Cash effects from hedge restructuring | (83 | ) | — | 118 | — | 35 | ||||||||||||||
| Dividends (paid)/received | (109 | ) | 571 | (647 | ) | 129 | (56 | ) | ||||||||||||
Net increase in cash and cash equivalents | 31 | 349 | 98 | — | 478 | |||||||||||||||
Effect of exchange rate changes on cash | 46 | — | 1 | — | 47 | |||||||||||||||
Cash and cash equivalents — January 1, | 154 | 229 | 192 | — | 575 | |||||||||||||||
Cash and cash equivalents — December 31, | 231 | 578 | 291 | — | 1,100 | |||||||||||||||
F-99
| 2008 | 2008 | 2008 | 2008 | 2008 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Cons adjustments | Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor | ||||||||||||||||||
| Subsidiaries”) | ||||||||||||||||||||
Net cash (used) in/provided by operating activities | (809 | ) | (927 | ) | 1,891 | (91 | ) | 64 | ||||||||||||
| Net (loss)/income | (563 | ) | (2,330 | ) | (569 | ) | 2,941 | (521 | ) | |||||||||||
| Reconciled to net cash (used) in/provided by operations: | ||||||||||||||||||||
| (Profit)/loss on sale of assets, realization of loans, indirect taxes and other | (31 | ) | 1,579 | (74 | ) | (1,538 | ) | (64 | ) | |||||||||||
| Depreciation, depletion and amortization | 253 | — | 362 | — | 615 | |||||||||||||||
| Impairment of assets | 16 | — | 654 | — | 670 | |||||||||||||||
| Deferred taxation | 40 | — | (112 | ) | — | (72 | ) | |||||||||||||
| Cash utilized for hedge book settlements | (517 | ) | — | (596 | ) | — | (1,113 | ) | ||||||||||||
| Other non cash items | (109 | ) | 53 | 2,315 | (1,494 | ) | 765 | |||||||||||||
| Net increase/(decrease) in provision for environmental rehabilitation, pension and | ||||||||||||||||||||
| other post-retirement medical benefits | 25 | — | (1 | ) | — | 24 | ||||||||||||||
| Effect of changes in operating working capital items: | ||||||||||||||||||||
| Net movement in inter-group receivables and payables | 10 | (212 | ) | 202 | — | — | ||||||||||||||
| Receivables | 6 | (21 | ) | 8 | — | (7 | ) | |||||||||||||
| Inventories | (1 | ) | — | (130 | ) | — | (131 | ) | ||||||||||||
| Accounts payable and other current liabilities | 63 | 4 | (168 | ) | — | (101 | ) | |||||||||||||
| Net cash (used) in/provided by continuing operations | (808 | ) | (927 | ) | 1,891 | (91 | ) | 65 | ||||||||||||
| Net cash used in discontinued operations | (1 | ) | — | — | — | (1 | ) | |||||||||||||
Net cash used in investing activities | (562 | ) | — | (1,031 | ) | — | (1,593 | ) | ||||||||||||
| Increase in non-current investments | — | — | (93 | ) | — | (93 | ) | |||||||||||||
| Proceeds on disposal of associate | 46 | — | 2 | — | 48 | |||||||||||||||
| Additions to property, plant and equipment | (340 | ) | — | (854 | ) | — | (1,194 | ) | ||||||||||||
| Proceeds on sale of mining assets | 1 | — | 38 | — | 39 | |||||||||||||||
| Proceed on sale of discontinued assets | 10 | — | — | — | 10 | |||||||||||||||
| Proceeds on sale of investments | — | — | 88 | — | 88 | |||||||||||||||
| Cash effects from hedge restructuring | (279 | ) | — | (206 | ) | — | (485 | ) | ||||||||||||
| Change in restricted cash | — | — | (6 | ) | — | (6 | ) | |||||||||||||
Net cash generated/(used) by financing activities | 1,392 | 1,116 | (884 | ) | 91 | 1,715 | ||||||||||||||
| Net changes in short-term debt | (242 | ) | — | 54 | — | (188 | ) | |||||||||||||
| Issuance of stock | 1,722 | 1,241 | (1,241 | ) | — | 1,722 | ||||||||||||||
| Share issue expenses | (54 | ) | — | — | — | (54 | ) | |||||||||||||
| Net changes in long-term debt | — | (216 | ) | 643 | — | 427 | ||||||||||||||
| Cash effects from hedge restructuring | 47 | — | (181 | ) | — | (134 | ) | |||||||||||||
| Dividends (paid)/received | (81 | ) | 91 | (159 | ) | 91 | (58 | ) | ||||||||||||
Net increase/(decrease) in cash and cash equivalents | 21 | 189 | (24 | ) | — | 186 | ||||||||||||||
Effect of exchange rate changes on cash | (55 | ) | — | (33 | ) | — | (88 | ) | ||||||||||||
Cash and cash equivalents — January 1, | 188 | 40 | 249 | — | 477 | |||||||||||||||
Cash and cash equivalents — December 31, | 154 | 229 | 192 | — | 575 | |||||||||||||||
F-100
the strike (base) price | |||
the notional interest charge | |||
as before, 50 percent of any dividends declared | |||
as before, the remaining 50 percent is paid directly to participants under the empowerment transaction; and | |||
the life span of the scheme |
The total incremental fair value of awards granted was R29.14 per share and will be included in earnings up to the vesting date in 2014. The Company recorded a charge of $12 million (2010: $nil million) to earnings during the year as a result of the restructuring.
F - 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 27. | ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
The award of free ordinary shares to employees
The fair value of each free ordinary share awarded in 2011 was R306.99 (2008: R188, 2007: R306 and 2006: R320). The fair value is equal to the market value at the date-of-grant. Dividends declared and paid to the trust will accrue and be paid to ESOP members, pro rata to the number of shares allocated to them. An equal number of shares vests from 2009, and each subsequent year up to expiry date of November 1, 2013.
A summary of time related equity settled compensation scheme showing movement from the beginning of the year to the end of the year, is presented below:
Awards (000) | ||
Outstanding at January 1, 2011 | 435 | |
Granted | 49 | |
Reallocated | 16 | |
Exercised | (157) | |
Forfeited (terminations) | (16) | |
Outstanding at December 31, 2011 | 327 | |
Exercisable at December 31, 2011 | - | |
A summary of the salient features of the award of free ordinary shares under ESOP to employees is presented below:
| 2011 | 2010 | 2009 | ||||||
Total intrinsic value of awards outstanding at period end (R millions) | 112 | 142 | 204 | |||||
Intrinsic value of awards exercised (R millions) | 51 | 72 | 58 | |||||
Weighted average remaining contractual term (years) | 1 | 1 | 2 | |||||
F - 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 27. | ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
The award of E ordinary shares to the employees:
Before the restructuring of the ESOP scheme during April 2011, the average fair value of the E ordinary shares awarded to employees in 2008 was R13 (2007: R79 and 2006: R105) per share. After the restructuring of the scheme the average fair value per share of the E Ordinary shares was R49.57. Dividends declared in respect of the E ordinary shares will firstly be allocated to cover administration expenses of the trust, whereafter it will accrue and be paid to ESOP members, pro rata to the number of shares allocated to them. At each anniversary over a six year period commencing on the third anniversary of the original 2006 award, the Company will cancel the relevant number of E ordinary shares as stipulated by a cancellation formula. Any E ordinary shares remaining in the tranche will be converted to ordinary shares for the benefit of the employees.
The value of each share granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option award and stock price volatility. These estimates involve inherent uncertainties and the application of management judgment. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those options expected to vest. As a result, if other assumptions had been used, the Company’s recorded compensation expense could have been different from that reported.
The Black-Scholes option-pricing model used the following assumptions, at grant date:
| 2011 | 2008 | 2007 | 2006 | |||||
Risk-free interest rate | 6.63% | 7.00% | 7.00% | 7.00% | ||||
Dividend yield | 0.99% | 1.39% | 2.06% | 2.30% | ||||
Volatility factor of market share price | 33.50% | 35.00% | 33.00% | 36.00% |
A summary of E ordinary shares, awarded to employees, showing movement from the beginning of the year to the end of the year, is presented below:
Options (000) | Weighted- average exercise price R | |||
Outstanding at January 1, 2011 | 1,686 | 366 | ||
Granted | 769 | 320 | ||
Reallocated | 62 | 333 | ||
Forfeited (terminations) | (62) | 333 | ||
Cancelled | (408) | 320 | ||
Converted | (514) | 315 | ||
| ||||
Outstanding at December 31, 2011 | 1,533 | 315 | ||
| ||||
Exercisable at December 31, 2011 | - | - | ||
| ||||
A summary of the salient features of the award of E ordinary shares to employees is presented below:
| 2011 | 2010 | 2009 | ||||||||||||
Total intrinsic value of awards outstanding at period end (R millions) (1) | 43 | - | - | |||||||||||
Intrinsic value of awards exercised (R millions) | 6 | - | (2 | ) | - | (2 | ) | |||||||
Weighted average remaining contractual term (years) | 1 | 1 | 2 | |||||||||||
| (1) | The options outstanding at December 31, 2010, and 2009 had no intrinsic value as the share price at year end was lower than the weighted average exercise price. |
| (2) | Less than R1 million. |
F - 90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 27. | ANGLOGOLD LIMITED SHARE INCENTIVE SCHEME AND PLANS(continued) |
| 2011 | 2010 | 2009 | ||||||||||
Compensation expense related to the ESOP scheme recognized ($ millions) | 12 | 12 | 12 | |||||||||
As at December 31, the unrecognized compensation cost related to unvested awards of the ESOP scheme amounted to ($ millions) | 9 | 8 | 16 | |||||||||
Unrecognized compensation cost is expected to be recognized over the remaining scheme term (years) | 3 | 3 | 4 | |||||||||
Weighted average exercise price is calculated as the initial grant price of R288 plus interest factor less dividend apportionment up to April 2011. After that date the exercise price is calculated at the restructured price of R320 less dividend apportionment.
Cash Settled Share Incentive Scheme
Ghana Employee Share Ownership Plan (“Ghana ESOP”)
A memorandum of understanding was signed with the Ghanaian employees on April 28, 2009 to introduce the Ghana ESOP under defined rules.
In terms of the rules of the scheme, every eligible employee is entitled to 20 AngloGold Ashanti Limited share appreciation rights (“phantom shares”), which will be paid out in four equal tranches, commencing May 2009 and ending in May 2012.
The value of the rights are equal to the value of AngloGold Ashanti Limited American Depositary receipts (“ADR’s”) as listed on the New York Stock Exchange, converted into Ghanaian Cedis at the prevailing US dollar exchange rate.
The share price on the day of issue as of April 29, 2009 was $32.15, whilst the share price used in the payment of the third tranche was $49.24 per share (second tranche in 2010: $39.50 per share, first tranche in 2009: $28.46 per share).
The award of share appreciation rights to employees
A summary of share appreciation rights showing movement from the beginning of the year to the end of the year, is presented below:
Number of (000) | ||
Outstanding at January 1, 2011 | 49 | |
Exercised | (24) | |
Forfeited (terminations) | (1) | |
Rights outstanding at December 31, 2011 | 24 | |
Rights exercisable at December 31, 2011 | - | |
| 2011 | 2010 | 2009 | ||||||||||
| $ | $ | $ | ||||||||||
Compensation expense related to Ghana ESOP scheme recognized ($ millions) | - | (1) | 2 | 2 | ||||||||
The liability recognized in the consolidated balance sheet in respect of unexercised rights was as follows | 1 | 2 | ||||||||||
| (1) | Less than $1 million. |
F - 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
AngloGold Ashanti Holdings plc (“IOMco”), a wholly-owned subsidiary of AngloGold Ashanti, has issued debt securities which are fully and unconditionally guaranteed by AngloGold Ashanti Limited (being the “Guarantor”). See Note 18 and Note 20. IOMco is an Isle of Man registered company that holds certain of AngloGold Ashanti’s operations and assets located outside South Africa (excluding certain operations and assets in the United States of America and Namibia). The following is condensed consolidating financial information for the Company as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009, with a separate column for each of AngloGold Ashanti Limited as Guarantor, IOMco as Issuer and the other subsidiaries of the Company combined (the “Non-Guarantor Subsidiaries”). For the purposes of the condensed consolidating financial information, the Company carries its investments under the equity method. The following supplemental condensed consolidating financial information should be read in conjunction with the Company’s consolidated financial statements.
F - 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of income
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
| ||||||||||||||||||||
| 2011 | 2011 | 2011 | 2011 | 2011 | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| AngloGold Ashanti | IOMco | Other subsidiaries | Consolidation
| Total | ||||||||||||||||
| ||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||
Sales and other income | 2,709 | 1 | 4,108 | (176) | 6,642 | |||||||||||||||
Product sales | 2,561 | - | 4,009 | - | 6,570 | |||||||||||||||
Interest, dividends and other | 148 | 1 | 99 | (176) | 72 | |||||||||||||||
Costs and expenses | 2,417 | 99 | 1,453 | 552 | 4,521 | |||||||||||||||
Production costs | 1,115 | - | 1,862 | - | 2,977 | |||||||||||||||
Exploration costs | 19 | 18 | 242 | - | 279 | |||||||||||||||
Related party transactions | (12) | - | - | - | (12) | |||||||||||||||
General and administrative expenses/(recoveries) | 249 | 27 | 32 | (21) | 287 | |||||||||||||||
Royalties paid | 73 | - | 120 | - | 193 | |||||||||||||||
Market development costs | 5 | - | 4 | - | 9 | |||||||||||||||
Depreciation, depletion and amortization | 354 | - | 435 | - | 789 | |||||||||||||||
Impairment of assets | 14 | - | 3 | - | 17 | |||||||||||||||
Interest expense | 5 | 69 | 104 | - | 178 | |||||||||||||||
Accretion expense | 12 | - | 16 | - | 28 | |||||||||||||||
Employment severance costs | 9 | - | 6 | - | 15 | |||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 574 | (15) | (1,175) | 573 | (43) | |||||||||||||||
Non-hedge derivative loss and movement on bonds | - | - | (196) | - | (196) | |||||||||||||||
Income/(loss) before income tax provision | 292 | (98) | 2,655 | (728) | 2,121 | |||||||||||||||
Taxation expense | (333) | (2) | (370) | - | (705) | |||||||||||||||
Equity income /(loss) in associates | 62 | (3) | - | - | 59 | |||||||||||||||
Equity income/(loss) in subsidiaries | 1,465 | 808 | - | (2,273) | - | |||||||||||||||
Income/(loss) from continuing operations | 1,486 | 705 | 2,285 | (3,001) | 1,475 | |||||||||||||||
Preferred stock dividends | (61) | - | (61) | 122 | - | |||||||||||||||
Net income/(loss) | 1,425 | 705 | 2,224 | (2,879) | 1,475 | |||||||||||||||
Less: Net income attributable to noncontrolling interests | - | - | (50) | - | (50) | |||||||||||||||
Net income/(loss) attributable to AngloGold Ashanti | 1,425 | 705 | 2,174 | (2,879) | 1,425 | |||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of income
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
| ||||||||||||||||||||
2010 $ AngloGold Ashanti | 2010 $ IOMco | 2010 $ Other subsidiaries | 2010 $ Consolidation
| 2010 $ Total | ||||||||||||||||
| ||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||
Sales and other income | 2,348 | (2) | 3,233 | (177) | 5,402 | |||||||||||||||
Product sales | 2,207 | - | 3,127 | - | 5,334 | |||||||||||||||
Interest, dividends and other | 141 | (2) | 106 | (177) | 68 | |||||||||||||||
Costs and expenses | 4,130 | 1,120 | 2,818 | (3,047) | 5,021 | |||||||||||||||
Production costs | 1,091 | - | 1,565 | - | 2,656 | |||||||||||||||
Exploration costs | 14 | 12 | 180 | - | 206 | |||||||||||||||
Related party transactions | (15) | - | - | - | (15) | |||||||||||||||
General and administrative expenses | 164 | 6 | 44 | 14 | 228 | |||||||||||||||
Royalties paid | 38 | - | 104 | - | 142 | |||||||||||||||
Market development costs | 7 | - | 7 | - | 14 | |||||||||||||||
Depreciation, depletion and amortization | 352 | - | 368 | - | 720 | |||||||||||||||
Impairment of assets | 73 | - | 18 | - | 91 | |||||||||||||||
Interest expense | 7 | 69 | 75 | - | 151 | |||||||||||||||
Accretion expense | 10 | - | 12 | - | 22 | |||||||||||||||
Employment severance costs | 19 | - | 4 | - | 23 | |||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 2,041 | 1,033 | (16) | (3,061) | (3) | |||||||||||||||
Non-hedge derivative loss and movement on bonds | 329 | - | 457 | - | 786 | |||||||||||||||
(Loss)/income before income tax provision | (1,782) | (1,122) | 415 | 2,870 | 381 | |||||||||||||||
Taxation expense | (1) | (1) | (253) | - | (255) | |||||||||||||||
Equity income/(loss) in associates | 63 | (23) | - | - | 40 | |||||||||||||||
Equity income/(loss) in subsidiaries | 1,907 | 373 | - | (2,280) | - | |||||||||||||||
Income/(loss) from continuing operations | 187 | (773) | 162 | 590 | 166 | |||||||||||||||
Preferred stock dividends | (75) | - | (76) | 151 | - | |||||||||||||||
Net income/(loss) | 112 | (773) | 86 | 741 | 166 | |||||||||||||||
Less: Net income attributable to noncontrolling interests | - | - | (54) | - | (54) | |||||||||||||||
Net income/(loss) attributable to AngloGold Ashanti | 112 | (773) | 32 | 741 | 112 | |||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of income
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
2009 $ | 2009 $ IOMco | 2009 $ Other subsidiaries | 2009 $ | 2009 $ | ||||||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||||||||||
Sales and other income | 1,775 | (38 | ) | 2,273 | (56 | ) | 3,954 | |||||||||||||||||||||
Product sales | 1,665 | - | 2,119 | - | 3,784 | |||||||||||||||||||||||
Interest, dividends and other | 110 | (38 | ) | 154 | (56 | ) | 170 | |||||||||||||||||||||
Costs and expenses | 2,073 | 625 | 2,777 | (623 | ) | 4,852 | ||||||||||||||||||||||
Production costs | 862 | - | 1,367 | - | 2,229 | |||||||||||||||||||||||
Exploration costs | 6 | 14 | 130 | - | 150 | |||||||||||||||||||||||
Related party transactions | (18 | ) | - | - | - | (18 | ) | |||||||||||||||||||||
General and administrative expenses/(recoveries) | 96 | (121 | ) | 149 | 34 | 158 | ||||||||||||||||||||||
Royalties paid | - | - | 84 | - | 84 | |||||||||||||||||||||||
Market development costs | 5 | - | 5 | - | 10 | |||||||||||||||||||||||
Depreciation, depletion and amortization | 277 | - | 338 | - | 615 | |||||||||||||||||||||||
Impairment of assets | 4 | - | 4 | - | 8 | |||||||||||||||||||||||
Interest expense | 4 | 67 | 52 | - | 123 | |||||||||||||||||||||||
Accretion expense | 6 | - | 11 | - | 17 | |||||||||||||||||||||||
Employment severance costs | 10 | - | 4 | - | 14 | |||||||||||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 12 | 665 | (10 | ) | (657 | ) | 10 | |||||||||||||||||||||
Non-hedge derivative loss and movement on bonds | 809 | - | 643 | - | 1,452 | |||||||||||||||||||||||
(Loss)/income before income tax provision | (298 | ) | (663 | ) | (504 | ) | 567 | (898 | ) | |||||||||||||||||||
Taxation benefit/(expense) | 112 | (2 | ) | (77 | ) | - | 33 | |||||||||||||||||||||
Equity income/(loss) in associates | 98 | (10 | ) | - | - | 88 | ||||||||||||||||||||||
Equity (loss)/income in subsidiaries | (673 | ) | (383 | ) | - | 1,056 | - | |||||||||||||||||||||
(Loss)/income from continuing operations | (761 | ) | (1,058 | ) | (581 | ) | 1,623 | (777 | ) | |||||||||||||||||||
Preferred stock dividends | (64 | ) | - | (65 | ) | 129 | - | |||||||||||||||||||||
Net (loss)/income | (825 | ) | (1,058 | ) | (646 | ) | 1,752 | (777 | ) | |||||||||||||||||||
Less: Net income attributable to noncontrolling interests | - | - | (48 | ) | - | (48 | ) | |||||||||||||||||||||
Net (loss)/income attributable to AngloGold Ashanti | (825 | ) | (1,058 | ) | (694 | ) | 1,752 | (825 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28 | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating balance sheets
AT DECEMBER 31,
(In millions)
2011 $ AngloGold Ashanti | 2011 $ IOMco | 2011 $ Other subsidiaries | 2011 $ | 2011 $ Total | ||||||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current Assets | 833 | 2,469 | 3,486 | (4,157 | ) | 2,631 | ||||||||||||||||||||||
Cash and cash equivalents | 388 | 458 | 266 | - | 1,112 | |||||||||||||||||||||||
Restricted cash | 1 | - | 34 | - | 35 | |||||||||||||||||||||||
Receivables, inter-group balances and other current assets | 444 | 2,011 | 3,186 | (4,157 | ) | 1,484 | ||||||||||||||||||||||
Property, plant and equipment, net | 1,940 | - | 4,183 | - | 6,123 | |||||||||||||||||||||||
Acquired properties, net | 167 | - | 612 | - | 779 | |||||||||||||||||||||||
Goodwill | - | - | 198 | (16 | ) | 182 | ||||||||||||||||||||||
Other intangibles, net | 9 | - | 22 | - | 31 | |||||||||||||||||||||||
Other long-term inventory | - | - | 31 | - | 31 | |||||||||||||||||||||||
Materials on the leach pad | - | - | 393 | - | 393 | |||||||||||||||||||||||
Other long-term assets and deferred taxation assets | 4,362 | 3,558 | 815 | (7,720 | ) | 1,015 | ||||||||||||||||||||||
Total assets | 7,311 | 6,027 | 9,740 | (11,893 | ) | 11,185 | ||||||||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
Current liabilities including inter-group balances | 889 | 1,550 | 2,992 | (4,512 | ) | 919 | ||||||||||||||||||||||
Other non-current liabilities | 49 | - | 46 | (32 | ) | 63 | ||||||||||||||||||||||
Long-term debt | 33 | 994 | 1,446 | - | 2,473 | |||||||||||||||||||||||
Derivatives | - | - | 93 | - | 93 | |||||||||||||||||||||||
Deferred taxation liabilities | 641 | - | 596 | 5 | 1,242 | |||||||||||||||||||||||
Provision for environmental rehabilitation | 147 | - | 506 | - | 653 | |||||||||||||||||||||||
Other accrued liabilities | - | - | 35 | - | 35 | |||||||||||||||||||||||
Provision for pension and other post-retirement medical benefits | 170 | - | 15 | - | 185 | |||||||||||||||||||||||
Commitments and contingencies | - | - | - | - | - | |||||||||||||||||||||||
Equity | 5,382 | 3,483 | 4,011 | (7,354 | ) | 5,522 | ||||||||||||||||||||||
Stock issued | 13 | 5,269 | 897 | (6,166 | ) | 13 | ||||||||||||||||||||||
Additional paid in capital | 8,740 | 435 | 219 | (654 | ) | 8,740 | ||||||||||||||||||||||
Accumulated deficit | (2,575 | ) | (2,220 | ) | (3,521 | ) | 5,741 | (2,575 | ) | |||||||||||||||||||
Accumulated other comprehensive income and reserves | (796 | ) | (1 | ) | 6,277 | (6,276 | ) | (796 | ) | |||||||||||||||||||
Total AngloGold Ashanti stockholders’ equity | 5,382 | 3,483 | 3,872 | (7,355 | ) | 5,382 | ||||||||||||||||||||||
Noncontrolling interests | - | - | 139 | 1 | 140 | |||||||||||||||||||||||
Total liabilities and equity | 7,311 | 6,027 | 9,740 | (11,893 | ) | 11,185 | ||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating balance sheets
AT DECEMBER 31,
(In millions)
| ||||||||||||||||||||||||||||
2010 $ AngloGold Ashanti | 2010 $ IOMco | 2010 $ Other subsidiaries | 2010 $ Consolidation adjustments | 2010 $ Total | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current Assets | 1,169 | 2,265 | 3,869 | (5,306) | 1,997 | |||||||||||||||||||||||
Cash and cash equivalents | 152 | 114 | 309 | - | 575 | |||||||||||||||||||||||
Restricted cash | 1 | - | 9 | - | 10 | |||||||||||||||||||||||
Receivables, inter-group balances and other current assets | 1,016 | 2,151 | 3,551 | (5,306) | 1,412 | |||||||||||||||||||||||
Property, plant and equipment, net | 2,197 | - | 3,729 | - | 5,926 | |||||||||||||||||||||||
Acquired properties, net | 217 | - | 619 | - | 836 | |||||||||||||||||||||||
Goodwill | - | - | 197 | (17) | 180 | |||||||||||||||||||||||
Other intangibles, net | - | - | 17 | - | 17 | |||||||||||||||||||||||
Other long-term inventory | - | - | 27 | - | 27 | |||||||||||||||||||||||
Materials on the leach pad | - | - | 331 | - | 331 | |||||||||||||||||||||||
Other long-term assets and deferred taxation assets | 3,328 | 736 | 914 | (3,904) | 1,074 | |||||||||||||||||||||||
Total assets | 6,911 | 3,001 | 9,703 | (9,227) | 10,388 | |||||||||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||
Current liabilities including inter-group balances | 1,293 | 1,587 | 6,116 | (7,992) | 1,004 | |||||||||||||||||||||||
Other non-current liabilities | 52 | - | 71 | (54) | 69 | |||||||||||||||||||||||
Long-term debt | 39 | 1,044 | 1,519 | - | 2,602 | |||||||||||||||||||||||
Derivatives | - | - | 176 | - | 176 | |||||||||||||||||||||||
Deferred taxation liabilities | 720 | - | 471 | 9 | 1,200 | |||||||||||||||||||||||
Provision for environmental rehabilitation | 176 | - | 354 | - | 530 | |||||||||||||||||||||||
Other accrued liabilities | - | - | 38 | - | 38 | |||||||||||||||||||||||
Provision for pension and other post-retirement medical benefits | 165 | - | 15 | - | 180 | |||||||||||||||||||||||
Commitments and contingencies | - | - | - | - | - | |||||||||||||||||||||||
Equity | 4,466 | 370 | 943 | (1,190) | 4,589 | |||||||||||||||||||||||
Stock issued | 13 | 4,587 | 897 | (5,484) | 13 | |||||||||||||||||||||||
Additional paid in capital | 8,670 | 363 | 219 | (582) | 8,670 | |||||||||||||||||||||||
Accumulated deficit | (3,869) | (4,580) | (4,350) | 8,930 | (3,869) | |||||||||||||||||||||||
Accumulated other comprehensive income and reserves | (348) | - | 4,055 | (4,055) | (348) | |||||||||||||||||||||||
Total AngloGold Ashanti stockholders’ equity | 4,466 | 370 | 821 | (1,191) | 4,466 | |||||||||||||||||||||||
Noncontrolling interests | - | - | 122 | 1 | 123 | |||||||||||||||||||||||
Total liabilities and equity | 6,911 | 3,001 | 9,703 | (9,227) | 10,388 | |||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of cash flows
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
| ||||||||||||||||||||
2011 $ AngloGold Ashanti | 2011 $ IOMco | 2011 $ Other subsidiaries | 2011 $ Consolidation adjustments | 2011 $ Total | ||||||||||||||||
| ||||||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||
Net cash provided by/(used) in operating activities | 1,158 | 11 | 1,503 | (122) | 2,550 | |||||||||||||||
Net income/(loss) | 1,425 | 705 | 2,224 | (2,879) | 1,475 | |||||||||||||||
Reconciled to net cash provided by/(used) in operations: | ||||||||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 577 | (15) | (1,108) | 573 | 27 | |||||||||||||||
Depreciation, depletion and amortization | 354 | - | 435 | - | 789 | |||||||||||||||
Impairment of assets | 14 | - | 3 | - | 17 | |||||||||||||||
Deferred taxation | 212 | - | 87 | - | 299 | |||||||||||||||
Other non cash items | (1,709) | (789) | 199 | 2,184 | (115) | |||||||||||||||
Net increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | 36 | - | 153 | - | 189 | |||||||||||||||
Effect of changes in operating working capital items: | ||||||||||||||||||||
Net movement in inter-group receivables and payables | 146 | 108 | (254) | - | - | |||||||||||||||
Receivables | 14 | - | (27) | - | (13) | |||||||||||||||
Inventories | 23 | - | (267) | - | (244) | |||||||||||||||
Accounts payable and other current liabilities | 66 | 2 | 58 | - | 126 | |||||||||||||||
Net cash used in investing activities | (552) | (103) | (948) | - | (1,603) | |||||||||||||||
Increase in non-current investments | (32) | (98) | (132) | - | (262) | |||||||||||||||
Net associates and equity accounted joint ventures loans advanced | - | (5) | (20) | - | (25) | |||||||||||||||
Additions to property, plant and equipment | (529) | - | (864) | - | (1,393) | |||||||||||||||
Expenditure on intangible assets | (10) | - | (6) | - | (16) | |||||||||||||||
Proceeds on sale of mining assets | 6 | - | 13 | - | 19 | |||||||||||||||
Proceeds on sale of investments | - | - | 91 | - | 91 | |||||||||||||||
Proceeds from disposal of subsidiary | 9 | - | - | - | 9 | |||||||||||||||
Net loans receivable repaid | 4 | - | - | - | 4 | |||||||||||||||
Cash of subsidiary disposed | - | - | (11) | - | (11) | |||||||||||||||
Change in restricted cash | - | - | (19) | - | (19) | |||||||||||||||
Net cash (used)/generated by financing activities | (282) | 436 | (595) | 122 | (319) | |||||||||||||||
Net changes in short-term debt | (99) | - | (10) | - | (109) | |||||||||||||||
Issuance of stock | 10 | 202 | (202) | - | 10 | |||||||||||||||
Share issue expenses | (1) | - | - | - | (1) | |||||||||||||||
Net changes in long-term debt | - | (50) | - | - | (50) | |||||||||||||||
Debt issue costs | - | - | - | - | - | |||||||||||||||
Cash effects from hedge restructuring | - | - | - | - | - | |||||||||||||||
Dividends (paid)/received | (192) | 284 | (383) | 122 | (169) | |||||||||||||||
| ||||||||||||||||||||
Net increase/(decrease) in cash and cash equivalents | 324 | 344 | (40) | - | 628 | |||||||||||||||
Effect of exchange rate changes on cash | (88) | - | (14) | - | (102) | |||||||||||||||
Cash and cash equivalents - January 1, | 152 | 114 | 320 | - | 586 | |||||||||||||||
| ||||||||||||||||||||
Cash and cash equivalents - December 31, | 388 | 458 | 266 | - | 1,112 | |||||||||||||||
| ||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of cash flows
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
2010 $ AngloGold Ashanti | 2010 $ IOMco | 2010 $ Other subsidiaries | 2010 $ | 2010 $ Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||
Net cash provided by/(used) in operating activities | 116 | (1,129 | ) | 2,202 | (151 | ) | 1,038 | |||||||||||||
Net income/(loss) | 112 | (773 | ) | 86 | 741 | 166 | ||||||||||||||
Reconciled to net cash provided by/(used) in operations: | ||||||||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 2,071 | 1,033 | (21 | ) | (3,061 | ) | 22 | |||||||||||||
Depreciation, depletion and amortization | 352 | - | 368 | - | 720 | |||||||||||||||
Impairment of assets | 73 | - | 18 | - | 91 | |||||||||||||||
Deferred taxation | 119 | - | 19 | - | 138 | |||||||||||||||
Cash utilized for hedge book settlements | (993 | ) | - | (1,618 | ) | - | (2,611 | ) | ||||||||||||
Other non cash items | (1,522 | ) | (1,973 | ) | 4,021 | 2,169 | 2,695 | |||||||||||||
Net increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | 36 | - | 95 | - | 131 | |||||||||||||||
Effect of changes in operating working capital items: | ||||||||||||||||||||
Net movement in inter-group receivables and payables | 10 | 580 | (590 | ) | - | - | ||||||||||||||
Receivables | (27 | ) | 3 | (129 | ) | - | (153 | ) | ||||||||||||
Inventories | (11 | ) | - | (204 | ) | - | (215 | ) | ||||||||||||
Accounts payable and other current liabilities | (104 | ) | 1 | 157 | - | 54 | ||||||||||||||
Net cash used in investing activities | (943 | ) | (42 | ) | (902 | ) | - | (1,887 | ) | |||||||||||
Increase in non-current investments | - | (42 | ) | (116 | ) | - | (158 | ) | ||||||||||||
Proceeds on disposal of associate | 1 | - | - | - | 1 | |||||||||||||||
Net associates and equity accounted joint ventures loans advanced | (3 | ) | - | - | - | (3 | ) | |||||||||||||
Additions to property, plant and equipment | (424 | ) | - | (549 | ) | - | (973 | ) | ||||||||||||
Proceeds on sale of mining assets | 60 | - | 9 | - | 69 | |||||||||||||||
Proceeds on sale of investments | - | - | 142 | - | 142 | |||||||||||||||
Cash effects from hedge restructuring | (577 | ) | - | (407 | ) | - | (984 | ) | ||||||||||||
Net loans receivable advanced | - | - | (6 | ) | - | (6 | ) | |||||||||||||
Change in restricted cash | - | - | 25 | - | 25 | |||||||||||||||
Net cash generated/(used) by financing activities | 729 | 707 | (1,357 | ) | 151 | 230 | ||||||||||||||
Net changes in short-term debt | 126 | (1,000 | ) | (285 | ) | - | (1,159 | )�� | ||||||||||||
Issuance of stock | 798 | 310 | (310 | ) | - | 798 | ||||||||||||||
Share issue expenses | (20 | ) | - | - | - | (20 | ) | |||||||||||||
Net changes in long-term debt | - | 1,044 | 789 | - | 1,833 | |||||||||||||||
Debt issue costs | - | (13 | ) | (26 | ) | - | (39 | ) | ||||||||||||
Cash effects from hedge restructuring | (49 | ) | - | (1,017 | ) | - | (1,066 | ) | ||||||||||||
Dividends (paid)/received | (126 | ) | 366 | (508 | ) | 151 | (117 | ) | ||||||||||||
Net decrease in cash and cash equivalents | (98 | ) | (464 | ) | (57 | ) | - | (619 | ) | |||||||||||
Effect of exchange rate changes on cash | 19 | - | 86 | - | 105 | |||||||||||||||
Cash and cash equivalents - January 1, | 231 | 578 | 291 | - | 1,100 | |||||||||||||||
Cash and cash equivalents - December 31, | 152 | 114 | 320 | - | 586 | |||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 28. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION(continued) |
ANGLOGOLD ASHANTI LIMITED
Condensed consolidating statements of cash flows
FOR THE YEAR ENDED DECEMBER 31,
(In millions)
2009 $ AngloGold Ashanti | 2009 $ IOMco | 2009 $ Other subsidiaries | 2009 $ | 2009 $ Total | ||||||||||||||||
| (the “Guarantor”) | (the “Issuer”) | (the “Non-Guarantor Subsidiaries”) | ||||||||||||||||||
Net cash provided by/(used) in operating activities | 326 | (481 | ) | 727 | (129 | ) | 443 | |||||||||||||
Net (loss)/income | (825 | ) | (1,058 | ) | (646 | ) | 1,752 | (777 | ) | |||||||||||
Reconciled to net cash provided by/(used) in by operations: | ||||||||||||||||||||
Loss/(profit) on sale of assets, realization of loans, indirect taxes and other | 12 | 665 | (2 | ) | (657 | ) | 18 | |||||||||||||
Depreciation, depletion and amortization | 277 | - | 338 | - | 615 | |||||||||||||||
Impairment of assets | 4 | - | 4 | - | 8 | |||||||||||||||
Deferred taxation | (141 | ) | - | (58 | ) | - | (199 | ) | ||||||||||||
Cash utilized for hedge book settlements | - | - | (797 | ) | - | (797 | ) | |||||||||||||
Other non cash items | 946 | (1,685 | ) | 3,540 | (1,224 | ) | 1,577 | |||||||||||||
Net (decrease)/increase in provision for environmental rehabilitation, pension and other post-retirement medical benefits | (3 | ) | - | 22 | - | 19 | ||||||||||||||
Effect of changes in operating working capital items: | ||||||||||||||||||||
Net movement in inter-group receivables and payables | 27 | 1,571 | (1,598 | ) | - | - | ||||||||||||||
Receivables | (5 | ) | (3 | ) | (36 | ) | - | (44 | ) | |||||||||||
Inventories | (23 | ) | - | (146 | ) | - | (169 | ) | ||||||||||||
Accounts payable and other current liabilities | 57 | 29 | 106 | - | 192 | |||||||||||||||
Net cash (used)/generated in investing activities | (398 | ) | (344 | ) | 474 | - | (268 | ) | ||||||||||||
Increase in non-current investments | - | (344 | ) | (99 | ) | - | (443 | ) | ||||||||||||
Net associates and equity accounted joint ventures loans advanced | (2 | ) | - | - | - | (2 | ) | |||||||||||||
Additions to property, plant and equipment | (386 | ) | - | (633 | ) | - | (1,019 | ) | ||||||||||||
Proceeds on sale of mining assets | - | - | 1,142 | - | 1,142 | |||||||||||||||
Proceeds on sale of investments | - | - | 81 | - | 81 | |||||||||||||||
Cash effects from hedge restructuring | (11 | ) | - | (7 | ) | - | (18 | ) | ||||||||||||
Net loans receivable repaid | 1 | - | - | - | 1 | |||||||||||||||
Change in restricted cash | - | - | (10 | ) | - | (10 | ) | |||||||||||||
Net cash generated/(used) by financing activities | 103 | 1,174 | (1,103 | ) | 129 | 303 | ||||||||||||||
Net changes in short-term debt | - | (764 | ) | (89 | ) | - | (853 | ) | ||||||||||||
Issuance of stock | 306 | 693 | (693 | ) | - | 306 | ||||||||||||||
Share issue expenses | (11 | ) | - | - | - | (11 | ) | |||||||||||||
Net changes in long-term debt | - | 674 | 222 | - | 896 | |||||||||||||||
Debt issue costs | - | - | (14 | ) | - | (14 | ) | |||||||||||||
Cash effects from hedge restructuring | (83 | ) | - | 118 | - | 35 | ||||||||||||||
Dividends (paid)/received | (109 | ) | 571 | (647 | ) | 129 | (56 | ) | ||||||||||||
Net increase in cash and cash equivalents | 31 | 349 | 98 | - | 478 | |||||||||||||||
Effect of exchange rate changes on cash | 46 | - | 1 | - | 47 | |||||||||||||||
Cash and cash equivalents - January 1, | 154 | 229 | 192 | - | 575 | |||||||||||||||
Cash and cash equivalents - December 31, | 231 | 578 | 291 | - | 1,100 | |||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F - 100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(continued)
| 29. | SUBSEQUENT EVENTS |
Disposal of AGA-Polymetal Strategic Alliance
On February 8, 2012, the transaction to dispose of the AGA-Polymetal Strategic Alliance consisting of AGA-Polymetal Strategic Alliance Management Company Holdings Limited, Amikan Holding Limited, AS APK Holdings Limited, Imitzoloto Holdings Limited and Yeniseiskaya Holdings Limited to Polyholding Limited was completed. The consideration received for the disposal was $20 million. These assets were fully impaired as at December 31, 2011.
Acquisition of First Uranium (Proprietary) Limited (South Africa)
On March 2, 2012, AngloGold Ashanti agreed to acquire First Uranium (Proprietary) Limited (South Africa) (“FUSA”), a wholly owned subsidiary of Toronto-based First Uranium Corporation (“FIUC”) and the owner of Mine Waste Solutions (“MWS”), a recently commissioned tailings retreatment operation located in South Africa’s Vaal River region and in the immediate proximity of AngloGold Ashanti’s own tailings facilities, for a cash consideration of $335 million. The transaction will be funded from cash reserves and debt facilities, is subject to various conditions and approvals.
Corporate taxation rate amendment
In Ghana, the Internal Revenue Amendment Act, 2012 received assent by the President on March 5, 2012 and was gazetted on March 9, 2012. The amendment increases the income tax rates for mining companies from the current 25 percent to 35 percent with effect from January 1, 2012. In terms of the stability agreement between AngloGold Ashanti and the government of Ghana which was ratified by Parliament on February 18, 2004 and amended in February 2007, the corporate tax rate during the duration of the agreement until April 26, 2019 for its Ghanaian operations, will be a maximum of 30 percent. The increase in the corporate tax rate to 30 percent (January 2012 to April 2019) and to 35 percent (beyond April 2019) is estimated to have an unfavorable impact on the taxation liability of the Ghanaian operations.
Pamodzi Gold (Orkney) (Proprietary) Limited claim
On March 16, 2012, Pamodzi Gold (Orkney) (Proprietary) Limited (“Pamodzi”) (in provisional liquidation) and four others issued summons against AngloGold Ashanti in the North Gauteng High Court, Pretoria, demanding the return of about R89.5 million (approximately $11.1 million) paid by Pamodzi to AngloGold Ashanti less than six months prior to the winding-up of Pamodzi. Plaintiffs further allege that AngloGold Ashanti took possession of some 26.9 kilograms of gold owned by Pamodzi in March 2009 and demand either that the gold be returned or that reimbursement be provided in the amount of R7.1 million (approximately $0.9 million).
F - 101
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that isit has duly caused and authorisedauthorized the undersigned to sign this annual report on its behalf.
ANGLOGOLD ASHANTI LIMITED
/S/ Srinivasan Venkatakrishnan | ||||
Name | : | Srinivasan Venkatakrishnan | ||
Title | ||||
: | ||||
Chief Financial Officer | ||||
E-1
Date | : | April 23, 2012 |
Exhibits to Form 20-F
Exhibit Number | Description | Remarks | ||
Exhibit | ||||
Memorandum and Articles of Association of AngloGold Limited as in effect on May 15, 2009 | Incorporated by reference to Exhibit 3.1 of AngloGold’s automatic shelf registration statement on Form F-3 filed with the Securities and Exchange Commission on August 31, 2009 | |||
Exhibit 19.4.1.1 | ||||
AngloGold Limited Share Incentive Scheme in effect April 4, 2003 | Incorporated by reference to Exhibit 19.4(c) of AngloGold’s annual report on Form 20-F filed with the Securities and Exchange Commission on June 28, 2002 | |||
Exhibit 19.4.1.2 | ||||
Bonus Share Plan in effect on May 6, 2008 | Incorporated by reference to Exhibit 19.4.1.2 of AngloGold’s annual report on Form 20-F filed with the Securities and Exchange Commission on May 19, 2008 | |||
Exhibit 19.4.1.3 | ||||
Long-Term Incentive Plan in effect April 29, 2005 | Incorporated by reference to Exhibit 19.4.1.3 of AngloGold Ashanti’s annual report on Form 20-F filed with the Securities and Exchange Commission on March 20, 2006 | |||
Exhibit 19.4.1.6 | ||||
Sale and Purchase Agreement dated January 27, 2009 among AngloGold Ashanti Australia Limited, AngloGold Ashanti Limited, Saddleback Investments | Incorporated by reference to Exhibit 19.4.1.6 of AngloGold’s annual report on Form 20-F filed with the Securities and Exchange Commission on May 5, 2009 | |||
Exhibit 19.6 | ||||
Statement regarding how loss/earnings per | See note | |||
Exhibit 19.8 | ||||
List of AngloGold Ashanti Limited subsidiaries | ||||
Exhibit 19.12.1 | ||||
Certification of Mark Cutifani, Chief Executive Officer of AngloGold Ashanti Limited, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
Exhibit 19.12.2 | ||||
Certification of Srinivasan Venkatakrishnan, Chief Financial Officer of AngloGold Ashanti Limited, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
Exhibit Number | Description | Remarks | ||
Exhibit 19.13 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
Exhibit 19.15.1 | ||||
Consents of Ernst & Young Inc., independent registered public accounting firm | ||||
E-2
Exhibit 19.15.2 | ||||
Consent of KPMG, independent registered public accounting firm | ||||
Exhibit 19.16 | ||||
Report on MSHA violations in terms of the Dodd-Frank Act | ||||
E-3