EXHIBIT 1
[ASHANTI LOGO]
ANNUAL REPORT 2003
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CONTENTS
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Chairman's Statement 2
Highlights 3
Chief Executive's Review 4
Social Responsibility and Sustainability 6
Operations Review 8
Gold Production Summary 12
Ore Reserves and Mineral Resources 14
Financial Review 16
Glossary 19
Board of Directors 20
Report of the Directors 21
Corporate Governance 22
Directors' Responsibilities 24
Independent Auditors' Report 25
Group Profit and Loss Account 26
Group Balance Sheet 27
Group Cash Flow Statement 28
Reconciliation of Movements in
Group Shareholders' Funds 29
Company Balance Sheet 30
Notes to the Financial Statements 31
Hedging Appendix 48
Five Year Financial Summary 52
Shareholder Information 53
Officers 55
Forward Looking Statements 56
Corporate Information 57
1
ASHANTI GOLDFIELDS COMPANY LIMITED IS AN AFRICAN-BASED INTERNATIONAL GOLD MINING
AND EXPLORATION GROUP WITH SIX PRODUCING MINES IN FOUR AFRICAN COUNTRIES: GHANA,
GUINEA, TANZANIA AND ZIMBABWE.
THE MINES IN WHICH THE GROUP HAS INTERESTS HAVE 25.7 MILLION OUNCES OF GOLD ORE
RESERVES. ASHANTI HAS EXPLORATION PROJECTS IN EIGHT AFRICAN COUNTRIES AND IS
LISTED ON FOUR INTERNATIONAL STOCK EXCHANGES.
ASHANTI'S VISION
- - To be a premier precious metals mining company in Africa
OBJECTIVES
Ashanti's Objectives are to:
- - Consolidate our position as a premier African gold producer
- - Maintain or improve operational and financial track record
- - Maintain the best mining practices and the highest safety standards
- - Enhance shareholder value for the long term
- - Be a good corporate citizen
STRATEGY
Ashanti's Strategy seeks to:
- - Increase ore reserves
- - Maintain cash generation through strong operational performance
- - Maintain appropriate levels of protection and commitment levels in our
hedge book
- - Secure operational and financial gains by continually improving systems and
resources
- - Achieve NOSA integrated four or five star rating across the Group
- - Participate in the ongoing consolidation in the gold industry
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2 CHAIRMAN'S STATEMENT
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A revitalised gold market, continued enthusiasm for consolidation in the
industry and related developments formed the backdrop to the financial
performance of Ashanti in 2003.
During the year, Ashanti commenced formal merger talks with AngloGold Limited of
South Africa (`AngloGold'), an expansion programme was completed at
Iduapriem/Teberebie mine, and further plant expansion commenced at the Siguiri
mine. The Group's remarkable safety performance was also maintained throughout
the year.
Ashanti's financial position was improved by further reduction in the Group's
net debt. In view of the delay in effecting the rights issue due to the proposed
merger and the increased capital expenditure of the Siguiri Carbon-in-Pulp (CIP)
project, Ashanti has entered into additional financing arrangements with
AngloGold, details of which are included in the financial review.
STOCK MARKET PERFORMANCE
The year was the most active in the Company's stock trading history. Volumes
traded in 2003 registered over an 80% increase in the previous years' figures.
The stock opened in January 2003 on the New York Stock Exchange at US$5.85 and
ended the year over 120% higher at US$13.04. The gold price over the same period
rose from US$344 per ounce to over US$400 per ounce.
EARNINGS AND DIVIDEND
Group earnings before exceptional items were US$54.8 million, a decrease of
US$24.9 million on 2002 earnings, arising mainly from operational difficulties
which were duly reported in our quarterly reports.
At year end, the Group's gross debt stood at US$242.3 million, a reduction of
over US$450 million from its high point during 2000 of US$693.7 million.
The Board is unable to recommend the payment of a dividend this year because of
the significant negative reserves position at 31 December 2003.
GOLD INDUSTRY
The gold price experienced its best year since 1996 as it surpassed the US$400
mark at the end of the year. Gold traded from US$344 per ounce at the end of
2002 and US$416 per ounce at the end of 2003.
INVESTOR RELATIONS
Ashanti's stock performance in the year benefited significantly from the formal
announcement of merger negotiations with AngloGold and subsequent developments.
The share price rose to US$14.08, the highest price since 1999. In 2003, Ashanti
continued to enjoy support from its two major shareholders, Lonmin Plc and the
Government of Ghana who have agreed to vote in favour of the Scheme of
Arrangement relating to the merger proposal.
BOARD OF DIRECTORS
Mrs Eleanor Darkwa Ofori Atta and Mr Trevor Stanley Schultz retired from the
Board with effect from 31 December 2003, having attained their normal retirement
ages. Mrs Ofori Atta and Mr Schultz were appointed to the Board in March 1994
and October 1996 respectively. We thank them for their service and wish them
well in the future.
EMPLOYEES AND THE COMMUNITY
Ashanti's employees continue to be one of its most valuable assets. Their hard
work, understanding and dedication have ensured the achievement of Ashanti's
corporate objectives in critical areas like production, finance and safety,
inspite of the challenging environment in which they have had to operate. The
Board takes this opportunity to acknowledge their invaluable role in the Group's
overall performance.
During 2003 our partnership with the communities within which we operate was
actively pursued. Various development projects were undertaken in this area,
details of which are set out in a separate section of this report.
FUTURE
Your Board remains committed to the proposed merger with AngloGold and
anticipates it to be concluded in April 2004. The merger should create one of
the world's largest gold mining companies with better prospects.
As this may be the last time your Board will report to you as a separate
corporate entity, I take this opportunity to thank my colleagues and all
stakeholders for their support and cooperation during my tenure as Chairman and
wish all those who have helped bring Ashanti thus far a prosperous future.
/s/ M E Beckett
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M E BECKETT CHAIRMAN
HIGHLIGHTS 3
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SALIENT FEATURES
- - Annual earnings before and after exceptional items were US$54.8 million
(2002: US$79.7 million) and US$49.2 million (2002: US$56.2 million)
respectively
- - Group meets its annual production target of 1.6 million ounces
- - Geita and Iduapriem mines each achieved record production
- - Total cash operating costs per ounce increase by 11.5% from US$199 to
US$222
- - Safety record improved further to 0.30 injuries per 200,000 hours worked
- - Exploration at Obuasi, Geita and Siguiri continues to yield encouraging
results
- - Proposed merger with AngloGold expected to complete in April 2004
HIGHLIGHTS 2003 2002
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FINANCIAL (US$)
Total turnover 564.9m 552.2m
Earnings before exceptional items 54.8m 79.7m*
Earnings after exceptional items 49.2m 56.2m
Earnings per share before exceptional items 0.43 0.67*
Earnings per share after exceptional items 0.38 0.47
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GOLD PRODUCTION (ounces)
Obuasi 513,163 537,219
Bibiani 212,716 242,432
Iduapriem/Teberebie 243,533 185,199
Siguiri 252,795 269,292
Freda-Rebecca 51,091 98,255
Geita (group share) 330,523 289,522
TOTAL 1,603,821 1,621,919
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TOTAL PRODUCTION COSTS BEFORE EXCEPTIONAL ITEMS (US$ per ounce)
Cash operating costs 222 199
Royalties 11 9
Depreciation and amortisation 49 54
TOTAL 282 262
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ORE RESERVES AND MINERAL RESOURCES (million ounces)**
Proved and Probable Ore Reserves 25.7 27.8
Measured, Indicated and Inferred
Mineral Resources 64.2 54.0
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*Earnings before exceptional items in 2002 excludes refinancing and
restructuring costs of US$23.5 million
**Represents 100% of the mines' Ore Reserves and Mineral Resources
4 CHIEF EXECUTIVE'S REVIEW
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OVERVIEW
At the start of 2003 we announced that Ashanti would be facing a challenging
year at its operations regarding production and cash operating costs. We
targeted production at approximately 1.6 million ounces and estimated that cash
operating costs were expected to increase by approximately 10%. Ashanti achieved
the 1.6 million ounces production target but the increase in cash operating
costs of 11.5% was higher than our expectations.
SAFETY, HEALTH AND ENVIRONMENT
In 2002 we reported a strong safety performance with Lost Time Injury Frequency
Rate (LTIFR) of 0.37 injuries per 200,000 hours worked (2001: 0.58 injuries per
200,000 hours worked). Given the high emphasis that Ashanti places on the safety
and health of its employees, I am pleased to announce that we have further
improved upon our 2002 performance and achieved a LTIFR of 0.30 injuries per
200,000 hours worked in 2003.
OPERATIONS
With the resolution of the plant expansion difficulties at Iduapriem and the
progress achieved at the Nyankanga pit cut back at Geita, Ashanti increased
production during the second half of the year. Total production of 1.604 million
ounces was marginally lower than the 1.622 million ounces produced in 2002. Both
Iduapriem and Geita mines achieved record annual production of 243,533 ounces
(2002: 185,199 ounces) and 661,045 ounces (2002: 579,043 ounces) respectively.
The Obuasi and Siguiri mines on the other hand performed below expectations due
to lower grades and metallurgical recovery. Operating difficulties continued to
impact adversely on Freda-Rebecca's production.
Total cash operating costs for 2003 at US$222 per ounce were 11.5% higher than
the US$199 per ounce recorded in 2002 due to rising fuel prices, increases in
power costs and wages, rising costs of reagents and the appreciation in
currencies of countries from which we source our major imports.
FINANCIAL PERFORMANCE
The above operating results together with the lower release of deferred hedging
income reduced Ashanti's earnings before exceptional items to US$54.8 million
(2002: US$79.7 million). Earnings per share before and after exceptional items
for the year were US$0.43 (2002: US$0.67) and US$0.38 (2002: US$0.47)
respectively. Earnings after net exceptional charges of US$5.6 million (2002:
US$23.5 million) were US$49.2 million (2002: US$56.2 million).
During the year, the Ashanti hedge porfolio was restructured further and the
Group's net debt level as at 31 December 2003 was reduced to US$169.5 million
(2002: US$215.6 million) following the repayment of shareholder loans of US$30.0
million from the Geita mine and the Group's debt repayments.
EXPLORATION
On the exploration front, Ashanti continued to achieve further encouraging
results from our focused mine site exploration.
At Obuasi, we have opened up a number of drilling sites at the 50 level in order
to gain access for further deep drilling. During the year, we continued to
obtain high grade intercepts along the Obuasi trend.
At Geita, our objective of increasing the resource base was successful with the
mine's total Mineral Resources increasing by 2.3 million ounces to 18.6 million
ounces (50% attributable to Ashanti).
At Siguiri, we are encouraged by the delineation of new saprolite resources
which will be processed more efficiently through the new CIP plant, when
completed.
THE PROPOSED MERGER
On 16 May 2003, AngloGold and Ashanti confirmed that they were in discussions
regarding a proposed merger of the two companies. On 4 August 2003 the companies
announced that terms had been agreed for a recommended merger at an exchange
ratio of 0.26 AngloGold shares for every Ashanti share, and that they had
entered into a transaction agreement governing the terms of the proposed merger.
On the same date, AngloGold entered into the Lonmin Support Deed, pursuant to
which Lonmin agreed, amongst other things, to vote its Ashanti shares in favour
of the merger.
Following the announcement of these agreements, Ashanti received a merger
proposal from Randgold Resources Limited ("Randgold"). After further discussions
with AngloGold and detailed, careful consideration of the Randgold proposal, and
following an increase by AngloGold in the offer consideration to
CHIEF EXECUTIVE'S REVIEW 5
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0.29 AngloGold shares for every Ashanti share, the Ashanti Board announced on 14
October 2003 that it was recommending an improved final merger offer from
AngloGold. Following receipt of a revised proposal from Randgold on 24 October
2003, the Board announced on 27 October 2003 that it had unanimously resolved to
continue to recommend AngloGold's improved final merger offer. The merger is to
be effected by means of a Ghanaian Scheme of Arrangement under section 231 of
the Companies Code, which requires the approval of Ashanti shareholders and
confirmation of the High Court of Ghana.
On 28 October 2003, the Government announced its support for the merger and the
principal terms of a stability undertaking which the Government intended to
enter into with AngloGold. On 12 December 2003, AngloGold and the Government
entered into the Government Support Deed, pursuant to which the Government
agreed, among other things, to vote its Ashanti shares in favour of the merger.
The Stability Agreement requires the approval of the Parliament of Ghana and is
currently being considered by the Members of Parliament.
On 12 January 2004, the US Securities and Exchange Commission confirmed the
availability of an exemption pursuant to section 3 (a) (10) of the US Securities
Act 1933 (as amended) from the registration requirements under that Act. The EU
Commission granted its clearance to the merger on 29 January 2004. AngloGold has
also obtained the necessary South African Reserve Bank approval for the merger.
Certain other regulatory consents are in the process of being obtained.
In the absence of any unforeseen delays, it is expected that the merger will be
completed in April 2004.
COMMUNITY RELATIONS
Ashanti's commitment to the development of communities in and around the sites
of our operations is well known and recognised. Benefits include the provision
of employment, infrastructure, health care, education and micro-finance. In
addition agriculture, sports and recreation are actively promoted in the
communities. Our proposed merger partner, AngloGold, shares the same commitment
in this area and has an excellent track record in community relations. Once the
merger goes ahead, the enlarged entity will continue to take these initiatives
to even higher levels.
EMPLOYEES
The proposed merger with AngloGold is a reflection of the potential of our
dedicated and hard-working employees. Ideem it a privilege to have worked with
our employees to record their list of achievements and assure them that the
proposed merger will present them with even more interesting opportunities to
employ the considerable experience and the skills we have developed over the
years, to make for an even better future.
OUTLOOK FOR 2004
The Group expects to achieve in 2004 production broadly in line with the
performance recorded in 2003 and cash operating costs in line with inflation.
CONCLUSION
I have presented this year's report with positive memories of our Company's
history from its inception as a single mine company in 1897 to its present stage
of being on the threshold of becoming an integral part of a larger entity, which
will be one of the world's largest gold mining companies.
This could not have been achieved without the unflinching support of all our
stakeholders. Indeed you stood by us through happy, exciting and challenging
times. On behalf of the entire Ashanti team, I take this opportunity to express
our deep sense of gratitude and reassure you all that the objectives which
attracted you to Ashanti will be pursued further in the next phase of Ashanti's
life.
/s/ S E Jonah
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S E JONAH CHIEF EXECUTIVE & GROUP MANAGING DIRECTOR
6 SOCIAL RESPONSIBILITY AND SUSTAINABILITY
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While aiming at maximising shareholder value, Ashanti promotes measures, which
are designed to impact positively on the communities in which we operate. We
recognise that Ashanti's sustained growth and enduring success in these areas
can best be realised through mutually beneficial partnership with these
communities, although the socio-economic pressures which such communities face,
are often challenging.
We recognise that, just as sustainability requires corporate entities to be
environmentally responsible, it also requires social awareness. This is achieved
in a manner which ensures that the needs and aspirations of all our many
shareholders and stakeholders are integrated into our corporate drive as
emphasised in the Global Concept of the United Nations to which Ashanti is a
signatory.
HEALTH
With a budget of about US$1.6 million last year, the 180-bed Arthur Cade
Hospital at Obuasi continues to treat both employees and non-employees from the
environs and even beyond. Out of the more than 170,000 patients treated in the
hospital annually, 35% of the patients come from the outlying communities
Laboratory and ambulance services are also provided for the private and
government hospitals/clinics in the Adansi West and East Districts.
The Company is also financing the construction of a modern eye clinic at the
Bryant Mission Hospital at Brahabebome, near Obuasi for the community as well as
Ashanti employees.
There are active education programmes at all our mines In the Geita mine, for
example, the operation has partnered the Africa Medical Research Foundation, an
international non-governmental organisation (NGO) with a good record, to
providing health and counselling services to those in the Geita community.
Operating on an initial budget of US$300,000, for a three-year period, which
ended in 2003, the Geita mine Community Health Project introduced a sustainable
programme of health promotion, disease prevention, and improved treatment with a
particular focus on HIV and other sexually transmitted diseases, tuberculosis
and malaria.
The project provided free and anonymous HIV testing and counselling. The aim was
to promote safer sexual behaviour and the impact of the project so far has been
impressive. Increasingly, large numbers of people are attending counselling
sessions, getting tested for HIV, and getting trained as peer counsellors to
assist victims in their respective communities.
In Ghana, the Iduapriem mine, in collaboration with Ghana Aids Commission, is
setting up a Voluntary Counselling and Testing Centre at Tarkwa to offer free
services for its employees and the general public
The centre is expected to be operational by the second quarter of 2004.
The Freda-Rebecca mine in Bindura, Zimbabwe, working hand in hand with Zimbabwe
AIDS Prevention Support Network (ZAPSO), successfully trained more than 200 peer
educators, compared with 70 employees, which were trained in 2002. The
activities of these peer educators have heightened awareness of HIV/AIDS on the
mine and in the communities.
Freda-Rebecca is also assisting employees living with HIV with inputs to set up
their own farms to produce vegetables and poultry birds to supplement their
nutritional requirements. About 40 employees benefited from the scheme last
year.
EDUCATION
Ashanti recognises the importance of educating the rural youth. Over the years,
school enrolment levels have risen markedly in the communities in which we
operate. The Company has achieved this by financing and often constructing
school and classroom blocks. In 2003, the Iduapriem and Bibiani mines financed
the construction of fully furnished Early Childhood Development Centres at
Adieyie and Bibiani Old Town.
In Tanzania, the Geita mine assisted in the construction of community schools in
Nyakabale, Nyamalembo, Kamena, Bukwimba, Katoro and Kamhanga and they continue
to benefit substantially from the mine's education budget.
These schools are in addition to those, which are built on mine properties for
the children and dependents of our employees. Admission to these schools is
highly sought, since standards are high. Furthermore, the Company offers
scholarships to about 1,500 children annually who gain admission to second and
third-cycle institutions.
The Company has sponsored a number of senior managers for education programmes
overseas, enabling them to earn second and in some cases, third degrees. Most
recently, an on-the-job programme was set up in collaboration with Henley
College of the United Kingdom. This has allowed the Company to graduate larger
numbers of our young professionals through the Advanced Management, and/or MBA
programmes.
Following the decomissioning of the Ayanfuri mine, the Group donated the entire
physical structures, made up of several housing units to the Upper Denkyira
District Council, for its proposed Teacher Training College.
The Company has also initiated various training programmes, mostly at Obuasi.
These include the Apprenticeship Training Programme, the Graduate Apprenticeship
Programme, and the Practical Attachment Programme. The programmes range from
three months to two years in duration and in 2003 alone some 500
SOCIAL RESPONSIBILITY AND SUSTAINABILITY 7
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locals, as compared to 400 in 2002, benefited. Initially, these were meant
exclusively for members of staff who wanted to develop their skills, but
recently promising school leavers and graduates from the country's tertiary
schools have also benefited from the scheme.
Ashanti also provides virtually free education in the communities at Obuasi,
Bibiani and Siguiri for employees' children and scholarship is provided annually
to wards of employees in senior secondary schools, polytechnics and
universities.
INFRASTRUCTURE
One important feature of Ashanti's contribution to a community is its commitment
to the development of the infrastructure in the areas we operate and include
water, electricity where previously none existed. Ashanti also extends
telephone/Internet technology, which is an essential tool for our own
communication to the communities. Roads, and other facilities are often
provided.
Among the highlights in community activities for instance, Obuasi provides
electricity to Sansu and Anyinam, and most recently more than a dozen villages,
which are all located in the Amansie and Adansi districts have benefited from
Ashanti's rural electrification assistance programme. Freda-Rebecca in Zimbabwe
donated sewage ponds to the Bindura municipality. Last year, Bibiani completed
the construction of a new access road from Mpasetia to Seseko;
Iduapriem/Teberebie completed over 12 kilometres of roads in the surrounding
villages, and Geita completed the construction of the 67 kilometre Geita-Ilogi
road at a cost of US$2 million.
Ashanti continues to provide potable water facilities in Adieyie, Abompuniso and
Wangarakrom in Wassa West District in Ghana and Kitania, Baleto, Boucharia and
Fatoya in Siguiri in North East Guinea.
The Geita mine in Tanzania constructed a 22 kilometre water pipeline from Lake
Victoria to the mine site at a cost of US$2.5 million in 2000. This potable
water supply has to date been extended to communities along the pipeline route
and has eliminated the perennial water shortages during the dry season. The free
supply of water has also ensured year-round cultivation of crops and livestock
rearing and curtailed water-borne diseases.
MICRO-FINANCE & ENTREPRENEURSHIP
We have initiated micro-finance schemes at Siguiri and Geita, and have
contributed approximately US$160,000 to them. At Siguiri, we are working with
the Canadian NGO, Adventist Relief Agency (ADRA) to administer and disburse
these funds in the villages around the mine.
The bulk of beneficiaries in Geita are mainly former small-scale miners, shop
owners, traders, auto/bicycle mechanics and subsistence farmers.
Typical recipients in Siguiri have been women's groups, agricultural groups, and
cattle-raising groups. By our estimate, these funds have reached more than 1,500
individuals, with almost 100% repayment rates. The fund receives interest on
loans and this is ploughed back for future disbursement.
The Geita Mine is working with two NGOs, Poverty Africa, and Equal Opportunities
for all Funds, on a similar basis, and so far, has provided loans to 100 groups,
made up of almost 1,500 individuals, not only in the Geita Township but in the
entire district as a whole. Poverty Africa provided the beneficiaries with seed
money, management and entrepreneurial skills before loan disbursements were made
to the groups.
AGRICULTURE
The development of agriculture in our communities is critical, as this is the
most suitable and sustainable industry in the communities in which we mine,
given the fact that over 90% of the people in the communities we operate are
farmers. At the Freda-Rebecca mine, we continue to spend money to provide at no
cost to interested employees, plots of land and tillage to grow their own food
for consumption. About 200 households are currently participating in this
programme.
The Freda-Rebecca mine procures inputs such as fertilisers and seedlings, and
sells them on credit to employees and their families, and in 2003 some
US$100,000 was spent on this project.
At Bibiani, Ashanti has created facilities to train local youth, mostly school
leavers, in piggery, crop, cattle and poultry farming. Beneficiaries are given
basic inputs and soft loans to set up their own farms after six months training.
Bibiani has provided irrigation facilities to these farmers to ensure year round
farming. Over 450 young people have participated in this scheme since its
inception in 2000.
SPORTS & RECREATION
Sports and recreation are additional areas where we have invested substantially.
Ashanti is an active sponsor of sports at the community and national levels.
Obuasi and Bibiani have strong football teams, which play in the premier and
first divisions in Ghana respectively, while Siguiri and Freda-Rebecca football
teams are active at the district levels.
The Company's modern stadium at Obuasi has often been used to host regional,
district and community, as well as national sporting events. The Company's
Soccer Academy continued to train talented youth for first and second division
teams. The Academy has on occasion served as the venue for camping national
footballers and other sportsmen and it is also the home of the Company-owned
professional football team, Goldfields Football Club. The club, which has
previously represented Ghana in an African clubs tournament, remains one of the
main contenders in the Ghana professional league.
8 OPERATIONS REVIEW
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OVERVIEW
The Group produced 1.604 million ounces (2002: 1.622 million ounces) to meet its
annual gold production target, despite the operational challenges it faced at
several mines during 2003. Geita and Iduapriem achieved record levels of
production following commissioning of the plant capacity upgrade projects at
both mines. At the end of the year, construction of the flash
flotation/concentrate regrind project to improve metallurgical recovery from the
more refractory ore types at Bibiani was also completed. The project is expected
to be commissioned in the first quarter of 2004. At Siguiri, the construction of
the CIP project progressed with commissioning currently scheduled for the fourth
quarter of 2004/first quarter of 2005.
The principal operational challenges were the leaching kinetics at Siguiri,
underground grade control and equipment availability problems at Obuasi, the
difficulties tying in the Carbon-in-Leach (CIL) plant expansion at Iduapriem and
the increasingly difficult operating environment at the Freda-Rebecca mine. The
total Proved and Probable Ore Reserves at our mines decreased, after production
depletion, from 27.8 million ounces in 2002 to 25.7 million ounces in 2003.
OBUASI
Obuasi produced a total of 513,163 ounces (2002: 537,219 ounces). Production
came from the Sulphide Treatment Plant (STP) for underground ore, the tailings
re-treatment plant and the Oxide Treatment Plant (OTP) which processed open pit
ore from a number of small low grade deposits and transition ores previously
mined and stock piled. Cash operating costs of US$217 per ounce compared with
US$198 per ounce in 2002. The higher cost resulted from the spread of the fixed
costs over a lower number of ounces produced, higher tonnage of material
processed at lower grade and increases in fuel, power and labour charges.
UNDERGROUND MINING
Underground mining operations produced 2,334,000 tonnes, 4% lower than the
2,423,000 tonnes hoisted in 2002. The grade for the year at 7.04 g/t was 6%
lower than the 7.48 g/t achieved in 2002 as a result of production from lower
grade bulk mining blocks and grade control difficulties. The reduction in
tonnage produced was due to low availability experienced on the loaders and
electro-hydraulic drill rigs in the second half of the year.
Underground projects in 2003 focused on development and civils work on the skip
loading and discharge excavations, installation of the equipping stage and
equipping of the head gear section of the Brown Sub-Vertical Shaft (BSVS).
SURFACE MINING
Surface mining operations continued with the development and extraction of the
Kunka and Adubrem deposits and completion of the Homase open pit, followed by
the commencement of backfilling and land rehabilitation operations.
PROCESSING
A total of 5,218,000 tonnes were processed compared with 4,627,000 tonnes in
2002. The increase resulted from greater use of the OTP which was used to batch
process ores from the Homase, Kunka and Adubrem pits as well as transitional
material from the previous open pit operations which was stockpiled at the Alata
dump and greater throughput at the Tailings Treatment Plant (TTP).
At STP, a total of 2,330,000 tonnes of ore at a grade of 7.00 g/t and a
metallurgical recovery of 83.4% was processed as compared to 2,352,000 tonnes at
a grade of 7.35 g/t and a metallurgical recovery of 84.8% in 2002. Gold
production in 2003 was 437,085 ounces compared with 471,359 ounces in 2002, the
reduction being due to the lower feed grade and tonnage. Plant throughput in the
first half of the year was impacted by high maintenance downtime on the SAG mill
due to a worn out pinion and gearbox. In the second half, the low underground
ore supply was the constraining factor.
OTP was operated on a batch basis throughout the year and processed a total of
903,000 tonnes of ore grading 1.87 g/t to produce 32,295 ounces (2002: 435,000
tonnes at 2.06 g/t to produce 23,390 ounces). As a result of the refractory
nature of the transitional material processed at OTP, metallurgical recovery
reduced to 59.5% from the 81.2% achieved in 2002.
Throughput at the TTP was 1,985,000 tonnes at 2.20 g/t as compared to 1,840,000
tonnes at 2.29 g/t in 2002. Recovery at 31.2% was the same as that achieved in
2002. As a result of the increased throughput, production in 2003 increased to
43,783 ounces from the 42,275 ounces achieved in 2002.
EXPLORATION
Above 50 level, the 2003 exploration effort was largely directed at infill and
perimeter definition drilling of the mature exploration blocks at George
Cappendell Shaft (GCS), Sansu and BSVS areas. Better intersections from these
areas included 16.2 g/t over 4.1 metres, 15.1 g/t over 5.2 metres and 20.6 g/t
over 22.9 metres at GCS; 15.9 g/t over 6.0 metres, 11.9 g/t over 4.0 metres and
33.9 g/t over 15.3 metres, whilst 11.5 g/t over 8.2 metres, 11.2 g/t over 27.3
metres and 7.5 g/t over 15.4 metres were obtained from the 41 level BSVS area.
In 2004, priority will be given to extending the main levels above 50 level
southwards to provide new drill sites to test extensions of the known
mineralised corridors. In the north of the mine, exploratory drilling on the
Ashanti Spur intersected 98 g/t over 4.7 metres and 20 g/t over 3.1 metres
around the 10 level horizon.
The deep level exploration development effort was directed at the establishment
of new sites to the north of the presently drilled areas to allow diamond
drilling to test the extension of high grade ore shoots in the Kwesi Mensah
Shaft (KMS) and Adansi sections of the mine and to target the northward
extension of the mineralisation delineated from the 50S 131 south crosscut. Good
progress was made on 50 level with a new by-pass tunnel developed between the
KMS and Adansi shafts. This tunnel will eventually provide the access further
north to the 50N 87E & W crosscuts for drilling to probe the various oreshoots
between Adansi and Outen. The 50N 19E crosscut and drill chamber were developed
and drilling commenced whilst the 50N 39W crosscut was developed and excavation
of the drill chamber is in progress. Accesses will be established at 50S 116E,
104E, 102E & W, 86E and 87W crosscuts respectively as a priority. Better results
from drill intersections from the 50 level deeps project area included 41.9 g/t
over 3.1 metres, 26.9 g/t over 6.6 metres, 30.1 g/t over 11 metres, 32.4 g/t
over 5.8 metres and 16.1 g/t over 3 metres.
Preparations are being made to commence deeper drilling in 2004 from the 50S 42
crosscut, initially targeting mineralisation down to a depth of 2,500 metres and
ultimately to 3,000 metres.
OPERATIONS REVIEW 9
[ASHANTI LOGO]
OBUASI DEEPS
In 2003, a decision was made to commit a higher level of funding and to
accelerate the development and exploration activities required to expand and
improve the confidence level in the Mineral Resources that will be included in
the feasibility study for the Obuasi Deeps project. Engineering studies on
ventilation requirements, alternative mining methods and the infrastructure
options for the project were progressed and schedules and capital and operating
cost estimates updated to reflect more detailed levels of engineering.
IDUAPRIEM (80% EQUITY)/TEBEREBIE (90% EQUITY)
Gold production by Iduapriem/Teberebie for 2003 was 243,533 ounces compared to
the 185,199 ounces recorded in 2002. The higher gold production was due to the
increased mill throughput resulting from the upgrade of the processing plant.
Cash operating costs increased to US$240 per ounce from US$232 per ounce in
2002, due to high run-on-mine (ROM) rehandle costs and increases in labour,
power, fuel and reagents.
At 4,335,000 tonnes, the ore mined in 2003 was slightly lower than the 4,393,000
tonnes produced in the previous year, whilst the mined grade at 1.75 g/t was
higher than the 1.66 g/t achieved in 2002. Waste mined was 16,872,000 tonnes,
compared to 15,019,000 tonnes in 2002.
Gold production from the CIL plant increased to 219,695 ounces from 147,726
ounces produced in 2002 due to the higher throughput, grade and metallurgical
recovery. Recovery was affected in the first half of the year by circuit
instability during the prolonged commissioning difficulties. However, by the end
of the third quarter, the plant had been optimised for its new configuration and
was operating in a stable condition at a capacity of 4.0 million tonnes per
annum.
Mill throughput, feed grade and metallurgical recovery in 2003 were 3,754,000
tonnes, 2.00 g/t and 91.0% respectively as compared to the 2,625,000 tonnes,
1.96 g/t and 89.3% achieved in the previous year.
Heap leach production for the year was 23,838 ounces compared to 37,473 ounces
in 2002. A total of 1,431,000 tonnes at 1.38 g/t were processed at the Teberebie
heap leach plant compared to 1,127,000 tonnes at 1.13 g/t in 2002. Despite the
increase in stacked gold from 40,943 ounces in 2002 to 63,489 ounces in 2003,
heap leach production decreased reflecting the lower metallurgical recovery,
37.5% in 2003 versus 91.3% in 2002, achieved from the harder, less porous ores
being mined and stacked on the leach pads.
BIBIANI
Bibiani produced 212,716 ounces at a cash operating cost of US$216 per ounce
during 2003 as compared to the 242,432 ounces at US$180 per ounce the previous
year. The anticipated lower grade and the higher tonnage of refractory type ore
arising from the pit explain the lower gold production which contributed to the
higher cash operating cost per ounce produced.
Ore mined during the year amounted to 3,108,000 tonnes at a grade of 3.09 g/t
compared to 2,608,000 tonnes at 3.53 g/t the previous year. In November 2003 a
major slip occurred on the west wall immediately to the north of where the
previous slip in October 2002 occurred. Consequently, mining operations in the
main pit was suspended while an optimal method for the recovery of ore remaining
in the pit was undertaken. Work commenced on development of the Russell, Walsh
and Strauss satellite pits which are to be mined during 2004 using internal
resources.
Milled throughput for the year was 2,591,000 tonnes at a feed grade of 3.29 g/t
compared to 2,566,000 tonnes at 3.72 g/t achieved in 2002. The lower than plan
throughput was due to maintenance problems on the ROM/crushing section of the
plant and intermittent power outages during the rainy season. Due to the mining
and processing of more refractory type ore throughout the year, metallurgical
recovery decreased to 77.6% from the 79.0% achieved in 2002.
The underground trackless decline was advanced by a distance of approximately
1,200 metres from the portal to just below the base of the main pit. The ramp
intersected 6.0 metres at 7.5 g/t and two recent surface exploration holes
drilled to the south of the ramp returned 12.5 g/t over 4.3 metres and 10.5 g/t
over 4.0 metres. The old 5 level workings are being rehabilitated to allow for
geological mapping and sampling of the mineralised zones to commence in the
first quarter of 2004.
Mining operations continued at Mpasetia throughout the year and is expected to
extend into 2004 following the discovery of additional resources and revaluation
of the deposit using a higher gold price.
SIGUIRI - GUINEA (85% EQUITY)
In 2003, Siguiri produced a total of 252,795 ounces at a cash operating cost of
US$279 per ounce compared with the 269,292 ounces at US$230 per ounce achieved
in 2002. Production and costs were impacted by lower than expected metallurgical
recovery rates from the ore stacked during the year, higher mined and processed
tonnages as well as increases in power, fuel, labour and reagent costs.
A total of 9,608,000 tonnes of ore and 8,154,000 tonnes of waste were mined
compared with the 9,464,000 tonnes and 8,404,000 tonnes respectively in 2002,
whilst the mined grade decreased from 1.19 g/t to 1.15 g/t. The heap leach plant
processed a total of 9,754,000 tonnes at 1.12 g/t compared with 9,462,000 tonnes
at 1.16 g/t in the previous year.
Metallurgical recovery for the year decreased to 72.0% from the 76.3% realised
in 2002 as a result of solution dilution from late rains and slow solution
recovery rates following the recommencement of third layer stacking in the
fourth quarter.
During 2003, the construction work on the CIP project was temporarily suspended
following irreconcilable differences with the contractor. In the third quarter,
the feasibility study was revised and a new contractor engaged. The project
recommenced in the 4th quarter of 2003 at a revised capital cost currently
estimated to be in the region of US$75-US$80 million, with the commissioning
expected to be in the fourth quarter of 2004/first quarter of 2005.
Following a geological mapping review, exploration drilling was targeted at a
new shear corridor striking approximately North-South through the Kosise and
Soloni pits. Drill results along the zone linking the pits have demonstrated the
continuity of mineralisation along the strike and resulted in an increase in
Mineral Resources in this area. Further drilling is programmed to test the
extensions of this corridor to the north and south in 2004.
10 OPERATIONS REVIEW
[ASHANTI LOGO]
FREDA-REBECCA - ZIMBABWE
Full year production in 2003 was 51,091 ounces at a cash operating cost of
US$268 per ounce compared to the 98,255 ounces at US$214 per ounce achieved in
2002. The decline in production was due to a low availability of drill rigs and
drilled reserves occasioned by a challenging environment. The higher cash
operating costs reflect the lower gold production from the operation.
Underground ore production of 630,000 tonnes at a grade of 2.39 g/t in 2003 was
42% lower than the 1,077,000 tonnes at 2.99 g/t achieved in 2002. The decrease
in grade was expected following the depletion of the higher-grade reserves in
blocks 7A and 10 in 2002. Production was impacted by poor equipment availability
and difficulties in obtaining foreign exchange to import spares and essential
equipment.
A total of 1,197,000 tonnes at 1.75 g/t was processed in 2003 compared with
1,155,000 tonnes at 3.22 g/t in 2002. Plant recovery in 2003 was 85.9% compared
to 82.2% in the previous year as a result of the lower feed grades and inability
to maintain stable circuit conditions in the processing plant because of the
irregular supply of ore and fluctuation in feed grade. In order to maximise gold
production, the ore supply from the underground and open pit operations was
supplemented with material from the low grade stockpile.
In September, the mine was re-engineered around a plan to rehabilitate the
mining fleet and re-build the developed and drilled ore reserves to adequate
levels to support a stand alone 80,000 tonnes per month underground operation
producing around 60,000 ounces per annum. Orders for the spares and equipment
were put in place and the rehabilitation process got underway in December 2003.
It is expected that the mine should achieve its target rate of 80,000 tonnes of
ore per month at the end of the second quarter of 2004. In parallel with the
rehabilitation, exploratory drilling is being undertaken on the adjacent
satellite deposits at Promoter, Phoenix Prince and PEN-Kimberly prospects.
GEITA (50% JOINT VENTURE) - TANZANIA
Geita mine produced a record 661,045 ounces (50% Ashanti) at a cash operating
cost of US$170 per ounce in 2003, compared to 579,043 ounces at US$163 per ounce
in 2002. The upgrade to the crushing and leach tank sections of the processing
plant was successfully commissioned in the first quarter of 2003 and the
capacity of the plant was increased from 4,000,000 tonnes per annum to 5,600,000
tonnes per annum.
In the first three quarters of the year good progress was made on the waste
stripping backlog which resulted from the redesign and deepening of the
Nyankanga pit in 2002. This allowed access to larger tonnages of higher-grade
ore in August 2003. Gold production in the fourth quarter increased to a record
233,714 ounces at a cash operating ost of US$126 per ounce compared with the
122,742 ounces at US$202 per ounce achieved in the same period the previous
year.
In 2003, a total of 5,685,000 tonnes of ore grading 3.22 g/t were mined at a
strip ratio of 9.5:1. This compares to 5,399,000 million tonnes at 3.52 g/t at a
strip ratio of 7.4:1 achieved in 2002. Waste mined for the year was 54,232,000
tonnes, a 37% increase on the 39,729,00 tonnes excavated in 2002.
During the year, a total of 5,704,000 tonnes were processed at a grade of 3.90
g/t and a metallurgical recovery of 92.4% compared to the 4,979,000 tonnes at
3.92 g/t processed in 2002 and a recovery of 92.3%.
EXPLORATION
Ashanti's exploration effort continued to focus on and around its existing
mining operations.
In summary at the year end 2003, the Proved and Probable Ore Reserves of
Ashanti's operations (including 100% of Geita) were 25.7 million ounces
contained in 247.7 million tonnes of ore grading at an average of 3.23 g/t.
Ashanti's equity position on these reserves amounts to 20.7 million ounces
(2002: 22.0 million ounces).
The Measured and Indicated Mineral Resources of Ashanti's operations at year end
2003, were 45.7 million ounces contained in 428.2 million tonnes of material
grading at an average of 3.32 g/t. Ashanti's equity position in these Mineral
Resources amounts to 37.2 million ounces (2002: 37.8 million ounces).
The Inferred Mineral Resources of Ashanti's operations at year end 2003, were
18.5 million ounces (2002: 7.7 million ounces) contained in 119.9 million tonnes
of ore grading 4.80 g/t. Ashanti's equity position on these Inferred Mineral
Resources amounts to 16.3 million ounces (2002: 5.7 million ounces)
The most significant changes in the Company's Ore Reserves and Mineral
Resources, which are summarised on pages 14 and 15, relative to the position as
of 31 December 2002 are:
- - The decrease in Obuasi underground Ore Reserves is due to higher mining
depletion than additions.
- - The decrease in Geita's Ore Reserves after allowing for mining depletion
and additions is due largely to the redesign of the Nyankanga pit to take
account of the limitations involved in the river diversion.
- - The disposal of the Youga property.
- - The Inferred Mineral Resources increased significantly due to the increases
associated with the inclusion of the Inferred Mineral Resources underground
at Obuasi between the 50 level and 78 level horizons as well as increases
at Geita and Siguiri due to positive exploration results.
The Ore Reserves were calculated on the basis of a gold price of US$350 per
ounce. Ashanti is reporting Inferred Mineral Resources in its annual statement
for the first time to be in line with the reporting practice adopted by other
major gold producers.
OPERATIONS REVIEW 11
[ASHANTI LOGO]
EAST AFRICA
TANZANIA - At Geita, the exploration objective during 2003 was to increase
Mineral Resources by delineating the strike and depth extent of the known
deposits, especially along the Nyankanga-Lone Cone-Geita Hill mineralised trend.
This was achieved with total Mineral Resources including Inferred increasing by
14% to 18.6 million ounces. The 5.3 kilometre long mineralised trend from
Nyankanga to Geita Hill now has a total Mineral Resource of 13.4 million ounces.
Over 57,000 metres of drilling was undertaken during the year, targeting mainly
the western strike extent of Nyankanga and the strike and depth extent of Geita
Hill.
During the fourth quarter, drilling at Geita Hill intersected broader and higher
grade mineralisation at depth. Better drilling results included:
GHDD0142 - 36 metres @ 3.6 g/t from 141 metres and 12 metres @ 5.1 g/t from 198
metres
GHDD0181 - 44 metres @ 3.6 g/t from 139 metres incl. 18 metres @ 6.7 g/t from
142 metres GHDD0135 - 10 metres @ 18.64 g/t from 188.5 metres and 5.5 metres @
6.46 g/t from 200.5 metres
GHDD0138 - 14 metres @ 7.45g/t from 221 metres and 5.5 metres @ 23.1g/t from 254
metres.
Results from this deeper drilling indicate that the mineralisation consists of a
series of higher grade, plunging shoots that should have the effect of deepening
the current pits as well as opening up the potential for future underground
mining at Geita Hill.
At 31 December 2003, Measured, Indicated and Inferred Resources at Geita
totalled 167.4 million tonnes grading 3.5g/t, equivalent to 18.6 million ounces.
The main exploration objective for 2004 is to convert this large resource base
into reserves.
Elsewhere in Tanzania, Ashanti continued its regional assessment of the Lake
Victoria Goldfields. During the year, Ashanti finalised a royalty option
agreement with Tan Range on nine prospecting licences covering 1,095 square
kilometres southwest of the Ushirombo belt in the Lake Victoria Goldfields of
Tanzania. Exploration will commence once permitting has been completed.
WEST AFRICA
GUINEA - Resource definition drilling was completed on the new Sorofe and
Kalamagna deposits that resulted in Measured and Indicated Mineral Resources of
300,000 ounces being delineated on these two deposits. During the fourth
quarter, a new area of bedrock mineralisation was discovered at Kosise North,
associated with structures linking the Kosise and Soloni pits. By year end,
total Mineral Resources including Inferred of 370,000 ounces had been outlined.
Drilling is continuing to fully delineate this new deposit.
At year-end, Measured, Indicated and Inferred Mineral Resources at Siguiri
totalled 113.7 million tonnes grading 1.16 g/t, equivalent to 4.3 million
ounces.
GHANA - Exploration continued on the Subriso concession, 50 kilometres north of
Bibiani where shallow gold mineralisation over a strike length of 700 metres had
been intersected on the Pokukrom prospect. Additional deeper follow-up drilling
will be undertaken in 2004.
MALI - Exploration continued during the year on a number of exploration
properties in the prospective southeast part of the country. No significant
mineralisation was located.
SIERRA LEONE - A number of properties were investigated during the second half
of the year but none were worthy of further follow-up.
COTE D'IVOIRE - The uncertain environment precluded exploration being undertaken
during the year.
CENTRAL AFRICA
DEMOCRATIC REPUBLIC OF CONGO - The stationing of United Nations (MONUC) troops
at Bunia in Ituri Province during the second half of the year was a positive
step towards peace and stability in the area covered by Ashanti Kilo's
Concession 40 in the Kilo-Moto gold mining district of northeastern D.R.Congo.
Of the total reported historical gold production from the Kilo and Moto
greenstone belts of 9.4 million ounces, 5.7 million ounces has come from the
Kilo greenstone belt within Concession 40. At year end, personnel returned to
the Mongbwalu mine site within Concession 40 with a view to commencing
exploration activities. Office and accommodation buildings are being renovated
prior to the initiation of exploration activities, currently scheduled for the
second quarter of 2004.
SOUTH AFRICA - During the fourth quarter, Tameng Mining & Exploration (Pty)
Limited in which Ashanti has a 40% equity interest, was awarded the prospecting
licence to commence exploration activities for Platinum Group Metals (PGM) on
the farm M'phatlele's Location 457KS in the northeastern limb of the Bushveld
Igneous Complex. The sub-outcrop of the Merensky and UG2 Reefs which are the
principal mineralised horizons for PGMs in the Bushveld Complex, have been
mapped on M'phatlele's Location over a strike length of 8 kilometres.
SUMMARY OF PRODUCTION AND CASH OPERATING COSTS PER OUNCE
FREDA- TOTAL/
OBUASI IDUAPRIEM BIBIANI SIGUIRI REBECCA GEITA AVERAGE
- -------------------------------------------------------------------------------------------------------------
TWELVE MONTHS TO 31 DEC 2003
Production (ounces) 513,163 243,533 212,716 252,795 51,091 330,523 1,603,821
Cost per ounce (US$) 217 240 216 279 268 170 222
- -------------------------------------------------------------------------------------------------------------
TWELVE MONTHS TO 31 DEC 2002
Production (ounces) 537,219 185,199 242,432 269,292 98,255 289,522 1,621,919
Cost per ounce (US$) 198 232 180 230 214 163 199
- -------------------------------------------------------------------------------------------------------------
12 GOLD PRODUCTION SUMMARY
[ASHANTI LOGO]
12 MONTHS TO 12 months to
31 DEC 2003 31 Dec 2002
- ----------------------------------------------------------------------------
OBUASI
UNDERGROUND MINING
Ore production ('000 tonnes) 2,334 2,423
Ore grade (g/t) 7.04 7.48
- ----------------------------------------------------------------------------
SURFACE MINING
Ore production ('000 tonnes) 476 368
Ore grade (g/t) 2.31 2.71
Waste mined ('000 tonnes) 1,677 2,165
Strip ratio 3.5 5.8
- ----------------------------------------------------------------------------
SULPHIDE TREATMENT PLANT
Ore processed ('000 tonnes) 2,330 2,352
Head grade (g/t) 7.00 7.35
Recovery (%) 83.4 84.8
Gold produced (ounces) 437,085 471,359
- ----------------------------------------------------------------------------
POMPORA TREATMENT PLANT
Ore processed ('000 tonnes) - -
Head grade (g/t) - -
Recovery (%) - -
Gold produced (ounces) - 195
- ----------------------------------------------------------------------------
OXIDE TREATMENT PLANT
Ore processed ('000 tonnes) 903 435
Head grade (g/t) 1.87 2.06
Recovery (%) 59.5 81.2
Gold produced (ounces) 32,295 23,390
- ----------------------------------------------------------------------------
TAILINGS TREATMENT PLANT
Ore processed ('000 tonnes) 1,985 1,840
Head grade (g/t) 2.20 2.29
Recovery (%) 31.2 31.2
Gold produced (ounces) 43,783 42,275
- ----------------------------------------------------------------------------
OBUASI TOTAL PROCESSED
Ore processed ('000 tonnes) 5,218 4,627
Head grade (g/t) 4.28 4.84
Recovery (%) 71.5 74.8
Total Gold produced (ounces) 513,163 537,219
- ----------------------------------------------------------------------------
DISTRIBUTION OF OBUASI PRODUCTION (OUNCES)
Underground 435,439 471,554
Surface 33,941 23,390
Tailings 43,783 42,275
Total 513,163 537,219
- ----------------------------------------------------------------------------
IDUAPRIEM
MINING
Ore production ('000 tonnes) 4,335 4,393
Ore grade (g/t) 1.75 1.66
Waste mined ('000 tonnes) 16,872 15,019
Strip ratio 3.9 3.4
- ----------------------------------------------------------------------------
CIL PLANT
Ore production ('000 tonnes) 3,754 2,625
Head grade (g/t) 2.00 1.96
Recovery (%) 91.0 89.3
Gold produced (ounces) 219,695 147,726
- ----------------------------------------------------------------------------
HEAP LEACH
Ore stacked ('000 tonnes) 1,431 1,127
Head grade (g/t) 1.38 1.13
Recovery (%) 37.5 91.3
Gold produced (ounces) 23,838 37,473
IDUAPRIEM TOTAL (ounces) 243,533 185,199
- ----------------------------------------------------------------------------
GOLD PRODUCTION SUMMARY 13
[ASHANTI LOGO]
12 MONTHS TO 12 months to
31 DEC 2003 31 Dec 2002
- ----------------------------------------------------------------------------
BIBIANI
MINING
Ore production ('000 tonnes) 3,108 2,608
Ore grade (g/t) 3.09 3.53
Waste mined ('000 tonnes) 5,482 11,054
Strip ratio 1.8 4.2
- ----------------------------------------------------------------------------
CIL PLANT
Ore processed ('000 tonnes) 2,591 2,566
Head grade (g/t) 3.29 3.72
Recovery (%) 77.6 79.0
Gold produced (ounces) 212,716 242,432
- ----------------------------------------------------------------------------
SIGUIRI
MINING
Ore production ('000 tonnes) 9,608 9,464
Ore grade (g/t) 1.15 1.19
Waste mined ('000 tonnes) 8,154 8,404
Strip ratio 0.8 0.9
- ----------------------------------------------------------------------------
HEAP LEACH
Ore stacked ('000 tonnes) 9,754 9,462
Head Grade (g/t) 1.12 1.16
Recovery (%) 72.0 76.3
Gold produced (ounces) 252,795 269,292
- ----------------------------------------------------------------------------
FREDA-REBECCA
UNDERGROUND MINING
Ore production ('000 tonnes) 630 1,077
Ore grade (g/t) 2.39 2.99
- ----------------------------------------------------------------------------
SURFACE MINING
Ore production ('000 tonnes) 75 110
Ore grade (g/t) 2.33 2.26
- ----------------------------------------------------------------------------
PROCESSING
Ore processed ('000 tonnes) 1,197 1,155
Head grade (g/t) 1.75 3.22
Recovery (%) 85.9 82.2
Gold produced (ounces) 51,091 98,255
- ----------------------------------------------------------------------------
GEITA JV (ASHANTI 50%)
MINING
Ore production ('000 tonnes) 5,685 5,399
Ore grade (g/t) 3.22 3.52
Waste mined ('000 tonnes) 54,232 39,729
Strip Ratio 9.5 7.4
- ----------------------------------------------------------------------------
CIL PLANT
Ore processed ('000 tonnes) 5,704 4,979
Head grade (g/t) 3.90 3.92
Recovery (%) 92.4 92.3
Gold Produced (ounces) 661,045 579,043
Ashanti's share (ounces) 330,523 289,522
- ----------------------------------------------------------------------------
GROUP SUMMARY (OUNCES)
Managed gold production (ounces) 1,273,298 1,332,397
Geita JV 50% (ounces) 330,523 289,522
Sub-total (ounces) 1,603,821 1,621,919
Less minority interests (ounces) 74,449 68,174
- ----------------------------------------------------------------------------
GROUP ATTRIBUTABLE TOTAL (OUNCES) 1,529,372 1,553,745
- ----------------------------------------------------------------------------
[ASHANTI LOGO]
14 ORE RESERVES AND MINERAL RESOURCES
MEASURED, INDICATED AND INFERRED MINERAL RESOURCES AS AT 31 DECEMBER 2003
MEASURED INDICATED SUB-TOTAL INFERRED TOTAL
TONNES GRADE TONNES GRADE TONNES GRADE OUNCES TONNES GRADE OUNCES TONNES
LOCATION (MILLION) (g/t) (MILLION) (g/t) (MILLION) (g/t) (MILLION) (MILLION) (g/t) (MILLION) (MILLION)
- -------------------------------------------------------------------------------------------------------------------------
OBUASI
Underground 20.6 11.20 35.4 9.70 56.0 10.25 18.5 30.3 12.20 11.9 86.3
Surface 14.3 3.04 - - 14.3 3.04 1.4 - - - 14.3
Tailings 12.7 1.91 3.8 1.97 16.5 1.92 1.0 - - - 16.5
- -------------------------------------------------------------------------------------------------------------------------
Sub-total 47.6 6.27 39.2 8.95 86.8 7.48 20.9 30.3 12.20 11.9 117.1
- -------------------------------------------------------------------------------------------------------------------------
BIBIANI
Underground - - 2.2 5.43 2.2 5.43 0.4 3.1 6.10 0.6 5.3
Surface 2.6 1.89 1.6 2.74 4.2 2.17 0.3 - - - 4.2
Tailings 4.4 1.07 15.4 0.58 19.8 0.69 0.4 - - - 19.8
- -------------------------------------------------------------------------------------------------------------------------
Sub-total 7.0 1.36 19.2 1.32 26.2 1.33 1.1 3.1 6.10 0.6 29.3
- -------------------------------------------------------------------------------------------------------------------------
OTHER LOCATIONS
Teberebie (90%)/
Iduapriem (80%) 55.7 1.67 30.2 1.65 85.9 1.66 4.6 19.1 1.48 0.9 105.0
Siguiri (85%) 31.6 1.10 54.6 1.11 86.2 1.11 3.1 27.5 1.33 1.2 113.7
Freda-Rebecca 12.0 2.53 3.6 2.44 15.6 2.51 1.3 - - - 15.6
Geita (50%) 40.9 3.13 86.6 3.80 127.5 3.59 14.7 39.9 3.03 3.9 167.4
- -------------------------------------------------------------------------------------------------------------------------
Sub-total 140.2 2.04 175.0 2.56 315.2 2.34 23.7 86.5 2.15 6.0 401.7
- -------------------------------------------------------------------------------------------------------------------------
TOTAL 194.8 3.05 233.4 3.53 428.2 3.32 45.7 119.9 4.80 18.5 548.1
- -------------------------------------------------------------------------------------------------------------------------
2002 Total 188.5 3.30 217.7 3.80 406.2 3.57 46.4 82.4 2.90 7.7 488.6
- -------------------------------------------------------------------------------------------------------------------------
GOLD EQUITY
GRADE OUNCES OUNCES
LOCATION (g/t) (MILLION) (MILLION)
- ----------------------------------------------
OBUASI
Underground 10.96 30.4 30.4
Surface 3.04 1.4 1.4
Tailings 1.92 1.0 1.0
- ----------------------------------------------
Sub-total 8.71 32.8 32.8
- ----------------------------------------------
BIBIANI
Underground 5.82 1.0 1.0
Surface 2.17 0.3 0.3
Tailings 0.69 0.4 0.4
- ----------------------------------------------
Sub-total 1.84 1.7 1.7
- ----------------------------------------------
OTHER LOCATIONS
Teberebie (90%)/
Iduapriem (80%) 1.63 5.5 4.7
Siguiri (85%) 1.19 4.3 3.7
Freda-Rebecca 2.51 1.3 1.3
Geita (50%) 3.45 18.6 9.3
- ----------------------------------------------
Sub-total 2.30 29.7 19.0
- ----------------------------------------------
TOTAL 3.64 64.2 53.5
- ----------------------------------------------
2002 Total 3.44 54.0 43.5
- ----------------------------------------------
PROVED AND PROBABLE ORE RESERVES AS AT 31 DECEMBER 2003
PROVED PROBABLE TOTAL GOLD EQUITY
TONNES GRADE TONNES GRADE TONNES GRADE OUNCES OUNCES
LOCATION (MILLION) (g/t) (MILLION) (g/t) (MILLION) (g/t) (MILLION) (MILLION)
- ------------------------------------------------------------------------------------------------------------------------
OBUASI
Underground 4.2 7.50 33.5 8.40 37.7 8.30 10.1 10.1
Surface 2.6 2.71 - - 2.6 2.71 0.2 0.2
Tailings 12.7 1.90 3.8 2.00 16.4 1.90 1.0 1.0
- -----------------------------------------------------------------------------------------------------------------------
Sub Total 19.5 3.22 37.3 7.75 56.8 6.19 11.3 11.3
- -----------------------------------------------------------------------------------------------------------------------
BIBIANI
Underground - - 1.2 4.6 1.2 4.57 0.2 0.2
Surface 2.6 1.89 1.3 2.9 3.9 2.22 0.3 0.3
Tailings 4.4 1.07 0.4 1.0 4.8 1.06 0.1 0.1
- -----------------------------------------------------------------------------------------------------------------------
Sub Total 7.0 1.36 2.9 3.4 9.9 1.94 0.6 0.6
- -----------------------------------------------------------------------------------------------------------------------
OTHER LOCATIONS
Teberebie (90%)/Iduapriem (80%) 43.0 1.60 11.6 1.70 54.6 1.65 2.9 2.6
Siguiri (85%) 12.4 1.22 39.3 1.15 51.7 1.17 1.9 1.6
Freda-Rebecca 3.1 2.50 1.0 2.47 4.1 2.50 0.3 0.3
Geita (50%) 28.4 3.30 42.2 4.17 70.6 3.82 8.7 4.3
- -----------------------------------------------------------------------------------------------------------------------
Sub Total 86.9 2.13 94.1 2.59 181.0 2.38 13.8 8.8
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 113.4 2.27 134.3 4.01 247.7 3.23 25.7 20.7
- -----------------------------------------------------------------------------------------------------------------------
2002 Total 115.1 2.40 141.5 4.10 256.6 3.40 27.8 22.0
- -----------------------------------------------------------------------------------------------------------------------
15
[ASHANTI LOGO]
ORE RESERVES AND MINERAL RESOURCES
RECONCILIATION FOR THE YEAR ENDING 31 DECEMBER 2003
MEASURED, INDICATED AND INFERRED MINERAL RESOURCES PROVED AND PROBABLE ORE RESERVES
(OUNCES MILLION) (OUNCES MILLION)
LOCATION OPENING ADDITIONS DEPLETION CLOSING OPENING ADDITIONS DEPLETION CLOSING
- ----------------------------------------------------------------------------------------------------------------------------------
Obuasi 24.0 10.9 2.1 32.8 11.9 0.4 1.0 11.3
Iduapriem (80%)/Teberebie (90%) 5.3 0.5 0.3 5.5 2.7 0.5 0.3 2.9
Bibiani 1.7 0.3 0.3 1.7 0.8 0.1 0.3 0.6
Siguiri (85%) 4.0 0.7 0.4 4.3 2.1 0.2 0.4 1.9
Freda-Rebecca 1.5 - 0.2 1.3 0.4 - 0.1 0.3
Geita (50%) 16.3 3.0 0.7 18.6 9.4 - 0.7 8.7
Youga (45%) 1.2 - 1.2 - 0.5 - 0.5 -
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 54.0 15.4 5.2 64.2 27.8 1.2 3.3 25.7
- ----------------------------------------------------------------------------------------------------------------------------------
Notes on the Ore Reserves and Mineral Resources Statement
1. This Ore Reserve and Mineral Resource statement is classified according to
the Australasian Code for the Reporting of Identified Mineral Resources and
Ore Reserves issued by the Joint Committee for the Australasian Institute
of Geoscientists and the Australian Mining Industry Council (JORC).
2. All Identified Mineral Resources are reported as in situ or contained
resources utilising JORC guidelines and are inclusive of the stated Ore
Reserve.
3. The Proved and Probable Ore Reserves contained within the Identified
Mineral Resources has been estimated using guidelines of the JORC code and
are reported as recoverable ore reserves to which appropriate factors have
been applied to allow for mining loss and dilution.
4. For economic studies and the determination of cut-off grades, a gold price
of US$350 per ounce was assumed.
5. At a gold price of US$325 per ounce, it is estimated that the ore reserves
will decrease by approximately 5 per cent and at a gold price of US$375 per
ounce, it is estimated that the ore reserves will increase by approximately
4 per cent.
6. The Ore Reserves and Mineral Resources reported represent 100 per cent of
the Ore Reserves and Mineral Resources at the respective properties and no
allowance has been made for minority interests. Ashanti's percentage
interest is shown in brackets for properties where Ashanti has less than
100 per cent ownership.
7. Inferred Mineral Resources for 2003 are reported in the statement for the
first time together with the 2002 comparatives.
8. The Youga project was sold during the year.
9. The competent persons who have overseen the estimation of the Ore Reserves
and Identified Mineral Resources are listed as follows:
MINE RESOURCES RESERVES
- ---- --------- --------
Obuasi J Amanor, MSc J Chamberland, BSc
(Mineral Expl), BSc, (Mining Engineering),
BSc (Hons) (Geology), MAusIMM,
MAusIMM, FGhIG, 23 years experience
32 years experience
Iduapriem K Osei, BSc (Geological E Boakye, PhD
Engineering), (Applied Science),
MAusIMM, BSc (Mining Eng.),
13 years experience 22 years experience
Bibiani E Acheampong MSc S Ndede, MSc,
(Mineral Resources), BSc (Mining Eng.),
BSc (Geological Eng.), MAusIMM,
MAusIMM, 15 years Experience
13 years experience A. Amoah, MBA,
Dip (Mining Eng.)
MAusIMM,
15 years experience
Siguiri A Pardey, BSc A Pardey, BSc
(Geology), MAusIMM, (Geology), MAusIMM,
10 years experience 10 years experience
Freda- S Hlabangana, BSc, G. Chitumbura, BSc
Rebecca BSc Hons (Geology) (Mining Engineering)
MAusIMM, MAusIMM,
17 years experience 8 years experience
Geita R Adofo, MSc D Purdey, BEng
(Mineral Expl.), (Mining), MAusIMM,
BSc (Geol. Eng.), 8 years experience
MAusIMM
10 years experience
10. Data may not compute exactly due to rounding.
16 FINANCIAL REVIEW
[ASHANTI LOGO]
EARNINGS
Ashanti's 2003 earnings before exceptional items were US$24.9 million lower at
US$54.8 million (2002: US$79.7 million). The reduction in earnings is primarily
due to the following factors, partially mitigated by higher spot prices:
- - 18,098 ounces reduction in production as compared to 2002
- - 11.5% increase in annual cash operating cost per ounce
- - US$21.4 million reduction in the release of deferred hedging income.
Earnings after net exceptional charges of US$5.6 million were US$49.2 million
(2002: US$56.2 million).
Earnings per share before and after exceptional items for the year were US$0.43
(2002: US$0.67) and US$0.38 (2002: US$0.47) respectively.
REVENUE
Higher spot prices enabled Ashanti to achieve total revenue of US$564.9 million
(2002: US$552.2 million) despite the anticipated fall in the release of deferred
hedging income and marginally lower production. The average gold price realised
during the year was higher at US$352 per ounce (2002: US$340 per ounce).
Spot revenue amounted to US$586.8 million (2002: US$506.4 million). Hedging
income was negative US$21.9 million (2002: positive US$45.8 million) due both to
higher spot prices and a reduction in deferred hedging income released. Cash
paid during 2003 on close-outs of maturing hedge contracts amounted to US$34.8
million (2002: cash received US$11.5 million) and US$12.9 million (2002: US$34.3
million) was released from previously closed-out hedging contracts (deferred
hedging income).
As at 31 December 2003 the deferred hedging income balance stood at US$11.3
million, which will be credited to the profit and loss account during 2004.
HEDGING
During the year, high spot levels, gold volatility and low lease rate levels
allowed Ashanti to effect the following restructurings:
- - 660,000 ounces of bought call options with strike prices greater than
US$430 per ounce were re-struck lower to 232,652 ounces of bought call
options with strike prices of US$320 per ounce and US$330 per ounce;
- - 401,000 ounces of sold call options were re-struck lower to match 682,300
ounces of bought put options, thereby converting the put and call options
into forward sales. Value generated through this restructure was used to
purchase a further 232,666 ounces of call options with a strike of US$330
per ounce;
- - Notional lease rate exposure was reduced by 1.08 million ounces to 1.68
million ounces as at year end. Value generated from this restructure was
used to purchase 176,063 ounces of put options with an average strike of
US$358, with maturities ranging from 2004 to 2012.
As a result of these restructures and maturing contracts from the hedge book, as
at 31 December 2003, Ashanti's hedge book had 4.4 million ounces of protection
and 5.8 million ounces of commitments. Lease rate notional ounces stood at 1.68
million ounces with a maximum of 1.27 million ounces floating at any one time.
As at 31 December 2003, over the life of its hedge book, Ashanti had
approximately 45% and 35% of its forecast production committed and protected
respectively, (excluding production for Geita for the period 2004-2007 of the
project financing). There were no significant changes to the Geita hedge book,
apart from maturing contracts.
As at 31 December 2003, Ashanti's hedge book had a negative mark-to-market of
US$532.1 million based on a spot price of US$417 per ounce (2002: US$150.0
million negative based on a spot price of US$345 per ounce). As at 31 December
2003, Ashanti's share of the Geita hedge book had a negative mark-to-market of
US$77.4 million (2002: negative US$44.3 million). The increase in the negative
mark-to-market for both Ashanti and Geita was due to the increase in the spot
price. Neither the Ashanti nor the Geita hedge books are subject to margin
calls.
The table below summarises the changes to the Ashanti hedge book during the
year:
31 DECEMBER 31 DECEMBER REDUCTION
2002 2003 ACHIEVED
OZ M OZ M OZ M
- ---------------------------------------------------------------------
Protection 5.0 4.4 0.6
(Average price: (Average price:
US$358/oz) US$362/oz)
- ---------------------------------------------------------------------
Commitments 6.5 5.8 0.7
(Average price: (Average price:
US$346/oz) US$360/oz)
- ---------------------------------------------------------------------
Lease rates 2.8 1.7 1.1
- ---------------------------------------------------------------------
Mark-to-market US$150.0m US$532.1m
Negative Negative
- ---------------------------------------------------------------------
Spot price US$345/oz US$417/oz
- ---------------------------------------------------------------------
Details of the Ashanti and Geita hedge portfolios are set out on pages 48 to 51.
FINANCIAL REVIEW 17
[ASHANTI LOGO]
CASH OPERATING COSTS
In the first quarter of 2003, Ashanti announced that its annual cash operating
costs were expected to increase by approximately 10% in 2003 as compared to the
US$199 per ounce recorded in 2002.
Cash operating costs for 2003 were 11.5% higher at US$222 per ounce due to
rising fuel prices, increases in power costs and wages, rising costs of reagents
and the appreciation in currencies of countries from which we source our major
imports.
EXPLORATION AND CORPORATE ADMINISTRATION
Exploration expenditure written off during the year was US$4.5 million (2002:
US$3.8 million). Corporate administration expenditure for the year was higher at
US$22.0 million as compared to US$16.5 million in 2002.
DEPRECIATION
Total depreciation and amortisation charges before exceptional items were
US$79.8 million, lower than the US$88.4 million recorded in 2002 primarily due
to the increase in reserves at the end of 2002.
TOTAL COSTS
Total costs before exceptional items, but including depreciation and
amortisation, amounted to US$487.9 million (2002: US$457.7 million). Total costs
per ounce increased by US$22 per ounce, from US$282 per ounce in 2002 to US$304
per ounce in 2003 mainly due to the increase in cash operating costs referred to
above.
EXCEPTIONAL ITEMS
Exceptional items, which have been identified separately in the profit and loss
account, comprised the following:
Exceptional gains:
- - Ashanti sold its interest in the Mampon property near Obuasi to Bogoso Gold
Limited and Golden Star Resources Limited for a cash consideration of
US$9.5 million and realised a further US$0.5 million from the debenture
held in Birim Goldfields. These resulted in a gain before taxes of US$8.3
million.
- - The investment held in the joint venture in respect of the Youga property
in Burkina Faso was sold for US$3.3 million resulting in a gain of US$2.7
million.
- - Ashanti received insurance proceeds of US$3.0 million for the Company's
damaged aircraft, which has since been scrapped. This resulted in an
exceptional gain of US$2.0 million.
- - The Company re-negotiated the terms of the Kimin loans. In consideration
for Ashanti extending the terms of the guarantee currently in place in
favour of the lender, it secured a reduction in the amounts owed from
US$7.7 million to US$5.0 million. This reduction of US$2.7 million has been
recognised as an exceptional gain within interest payable.
Exceptional charges:
- - During the fourth quarter, 358 workers at the Obuasi mine were made
redundant at a cost of US$5.4 million.
- - Having reviewed the challenging environment in which the Freda-Rebecca mine
operates, Ashanti has recognised an impairment charge of US$15.1 million.
FINANCING COSTS
Total interest charges before exceptional items fell by 25% from US$22.6 million
in 2002 to US$16.9 million due to reduced debt levels principally following the
refinancing which was implemented in 2002 and lower borrowing costs.
TAXATION
Taxation charge for the year before exceptional items was US$4.1 million. This
comprised of a tax credit for the Group of US$0.5 million and a tax charge of
US$4.6 million in respect of the Geita joint venture. An exceptional taxation
charge of US$0.8 million was recognised on the sale of the Mampon property.
DIVIDENDS
The Group and the Company had significant negative profit and loss account
reserves at 31 December 2003.
The Ghana Companies Code, 1963, prohibits the payment of dividends where there
are no positive balances in distributable reserves. In the light of the above,
no dividend is proposed for 2003.
CASHFLOW
Net cash inflow from operations was US$86.3 million (2002: US$95.2 million).
In December 2003, Geita made a US$30.0 million distribution to the joint venture
partners after making an accelerated debt repayment of US$15.0 million to its
project finance banks. With the agreement of AngloGold, this US$30.0 million
distribution was paid in full to Ashanti. AngloGold also agreed to provide an
additional US$14.1 million to Ashanti, by purchasing at face value the residual
inter-company loans, provided by the Ashanti Group in respect of the Geita joint
venture. In consideration for the above, Ashanti will not participate in future
distributions of Geita, until such time as the equivalent amounts owed to
AngloGold have been repaid in full.
Other principal items in the cashflow statement include net interest paid of
US$8.3 million (2002: US$18.8 million), capital expenditure of US$83.0 million
(2002: US$64.5 million), proceeds from the sale of the Mampon and Youga
properties of US$13.3 million, proceeds from the exercise of warrants of US$10.8
million (2002: US$41.8 million) and repayment of borrowings of US$19.4 million
(2002: US$61.0 million)
As at 31 December 2003, stated capital stood at 131.0 million shares and 2.3
million warrants remained outstanding.
18 FINANCIAL REVIEW
[ASHANTI LOGO]
CAPITAL EXPENDITURE
Ashanti's capital investment in its operations increased from US$64.5 million in
2002 to US$83.0 million in 2003. The principal expenditure in 2003 included:
- - US$37.6 million in respect of the underground development and plant at the
Obuasi mine
- - US$12.5 million on the Iduapriem/Teberebie mine, primarily in respect of
the completion of CIL plant expansion
- - US$24.6 million on the existing heap leach operations and the new CIP
project at the Siguiri mine
- - US$6.4 million on the Bibiani mine, primarily in respect of the underground
development.
BORROWINGS
During the year, the Group reduced its gross debt level by US$14.6 million, from
US$256.9 million to US$242.3 million. This reduction is after consolidating
interest accrued of US$7.2 million into the Iduapriem/Teberebie project finance
loans.
The Group's gross debt analysis as at 31 December 2003, was as follows:
US$
MILLION
- --------------------------------------------------------------
US$200 million Revolving Credit Facility ("RCF") 139.0
Iduapriem/Teberebie project finance loans 24.3
Other loans and overdrafts 7.5
Less: deferred loan fees (3.5)
- -------------------------------------------------------------
167.3
Mandatorily Exchangeable Notes ("MENs") 75.0
- -------------------------------------------------------------
Ashanti Group's gross debt as at
31 December 2003 242.3
- -------------------------------------------------------------
The above schedule excludes Ashanti's 50% share of the Geita project finance
loan which fell from US$102.8 million (Ashanti's share US$51.4 million) as at 31
December 2002 to US$66.2 million (Ashanti's share US$33.1 million) following
Geita's strong performance during the second half of the year.
The Group's net debt level as at 31 December 2003 was also lower at US$169.5
million (2002: US$215.6 million) following the distribution of US$30.0 million
received from Geita and the Group's debt repayments.
As at 31 December 2003, Ashanti had headroom of US$21.0 million under its US$200
million Revolving Credit Facility.
LIQUIDITY AND GOING CONCERN
In June 2002, Ashanti issued US$75 million of Mandatorily Exchangeable Notes
("MENs"). The MENs will mandatorily exchange into ordinary shares of Ashanti
when Ashanti effects a rights issue. Ashanti agreed with its banks and the
holders of the MENs to complete the rights issue prior to 28 December 2003. It
was intended that as a part of the rights issue Ashanti would raise additional
funds to fund completion of the Siguiri CIP project.
During the course of 2003, Ashanti entered into merger discussions with
AngloGold and subsequently entered into a transaction agreement to effect a
merger ("the Merger") of Ashanti and AngloGold. As a consequence of entering
into the transaction agreement, Ashanti had to delay completing the rights
issue. Since the MENs will become repayable on the Merger being completed,
Ashanti has secured agreement of its banks and the holders of the MENs to delay
the timeframe for completion of the rights issue until 28 December 2004.
Given the delay in the rights issue, the postponement/ cancellation of the
Siguiri CIP project was considered. However, following discussions with
AngloGold, Ashanti decided to continue with the Siguiri CIP project,
notwithstanding the substantial increase in the anticipated capital cost of this
project. The increased capital expenditure required for this project, together
with the reduced cash inflows received by the Ashanti Group due to poorer
operating performance in 2003 as compared to 2002, has led to Ashanti seeking
alternative sources of financing to fund its cash requirements until the
consummation of the Merger.
With the agreement of AngloGold, a US$30.0 million distribution paid by the
Geita mine on 31 December 2003 has been paid in full to Ashanti. AngloGold has
also agreed to provide an additional US$14.1 million to Ashanti by purchasing at
face value the residual inter-company loan provided by the Ashanti Group in
respect of the Geita joint venture. In addition, AngloGold has agreed to provide
an unsecured loan facility of up to US$20.0 million to Ashanti. These
arrangements are not conditional on the Merger completing.
The Ashanti Board considers that these arrangements, together with the undrawn
amounts under its revolving credit facility, are sufficient to enable it to meet
its cash requirements in the period prior to the Merger becoming effective,
currently anticipated to be around April 2004. If the Merger is not completed,
or if there is a substantial delay in completing the Merger, Ashanti will need
to proceed with its rights issue or review alternative forms of financing. If
the Merger is not completed and alternative forms of financing cannot be
implemented, then there will be uncertainty as to whether the Ashanti Group will
be able to continue as a going concern.
Having taken into account the progress which AngloGold and Ashanti have achieved
in relation to the Merger, the financial support being provided by AngloGold and
other relevant factors, the Directors of Ashanti have formed the judgement that,
at the time of approving these financial statements, it is appropriate to use
the going concern basis in preparing these financial statements.
GLOSSARY OF TERMS 19
[ASHANTI LOGO]
ADIT A tunnel driven horizontally into a mountainside providing access to an ore
deposit.
BIOX(R) Gencor's registered name for its bio-oxidation leaching process.
BIO-OXIDATION The use of bacterial activity to oxidise sulphide minerals.
CARBON-IN-LEACH (CIL) PROCESS A modification of CIP whereby carbon is added
directly into the slurry during leaching as opposed to CIP where carbon is added
after leaching is complete.
CARBON-IN-PULP (CIP) PROCESS A process used to recover dissolved gold from a
cyanide leach slurry. Coarse activated carbon particles are moved counter-
current to the slurry, absorbing the gold as it passes through the circuit.
Loaded carbon is removed from the slurry by screening. The gold is recovered
from the loaded carbon by stripping in a caustic cyanide solution followed by
electrolysis or by zinc precipitation.
CASH OPERATING COST A measure of the average cost of producing an ounce of gold,
calculated by dividing the total cash operating costs in a period by the total
gold production over the same period.
CONTAINED OUNCES Represents ounces in the ground without reduction due to mining
loss or dilution.
CYANIDE LEACHING The extraction of a precious metal from an ore by its
dissolution in a cyanide solution.
DECLINE An inclined underground access way.
DIAMOND DRILLING OR CORE DRILLING A drilling method, where the rock is cut with
a diamond bit, usually to extract cores.
DILUTION Waste which is commingled with ore in the mining process.
FEASIBILITY STUDY A detailed technical and economic analysis of the viability of
a project covering all aspects from geology, environmental and legal matters to
mining, processing and operations.
FLOTATION A recovery process by which valuable minerals are separated from waste
to produce a concentrate. Selected minerals are induced to become attached to
air bubbles and to float.
FORWARD SALES The sale of a commodity for delivery at a specified future date
and price, usually at a premium to the spot price.
GEOCHEMICAL SAMPLING Samples of soils, stream sediments or rock chips taken to
ensure the quantities of trace and minor elements.
GRADE The relative quality or percentage of ore metal content.
HEAP LEACHING A low-cost technique for extracting metals from ore by percolating
leaching solutions through heaps of ore placed on impervious pads. Generally
used on low-grade ores.
INDICATED MINERAL RESOURCE That part of a Mineral Resource which has been
explored, sampled and tested through appropriate techniques at locations which
are too widely or inappropriately spaced to confirm geological and/or grade
continuity but which are spaced closely enough for continuity to be assumed, and
from which data have been collected to allow tonnage, densities, shape, physical
characteristics, grade and mineral content to be estimated with a reasonable
level of confidence.
INFERRED MINERAL RESOURCE That part of a Mineral Resource inferred from
geological evidence and assumed but not verified geological and/or grade
continuity, where information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes is limited
or of uncertain quality and reliability and on the basis of which tonnage, grade
and mineral content can be estimated with a low level of confidence.
MEASURED MINERAL RESOURCE That part of a Mineral Resource which has been
explored, sampled and tested through appropriate techniques at locations such as
outcrops, trenches, pits, workings and drill holes which are spaced closely
enough to confirm geological and/or grade continuity, and from which detailed
reliable data have been collected to allow tonnage, densities, shape, physical
characteristics, grade and mineral content to be estimated with a high level of
confidence.
MILLING/MILL The comminution of the ore, although the term has come to cover the
broad range of machinery inside the treatment plant where the gold is separated
from the ore.
MINERALISED ZONE Any mass of host rock in which minerals, at least one of which
has commercial value occur.
MTPA Million tonnes per annum.
NOSA National Occupational Safety Association of South Africa.
ORE Material that contains one or more minerals, at least one of which has
commercial value and which can be recovered at a profit.
OPEN PIT/OPEN CUT Surface mining in which the ore is extracted from a pit. The
geometry of the pit may vary with the characteristics of the orebody.
OREBODY A continuous well defined mass of material of sufficient ore content to
make extraction economically feasible.
OXIDE That portion of a mineral deposit within which sulphide minerals have been
oxidised, usually by surface weathering processes.
PRE-STRIPPING Removal of overburden in advance of beginning operations to remove
ore in an open pit operation.
PROBABLE ORE RESERVE That mineable part of a Measured and/or Indicated Mineral
Resource, inclusive of diluting materials and allowing for losses which may
occur when the material is mined, on which appropriate assessments have been
carried out, including consideration of and modification by realistically
assumed mining, metallurgical, economic, marketing, legal, environmental, social
and governmental factors, to demonstrate at the time of reporting that
extraction could reasonably be justified.
PROSPECT A mineral deposit with insufficient data available on the
mineralisation to determine if it is economically recoverable, but warranting
further investigation.
PROSPECTING LICENCE An area for which permission to explore has been granted.
PROVED ORE RESERVE That mineable part of a Measured Mineral Resource, inclusive
of diluting materials and allowing for losses which may occur when the material
is mined, on which appropriate assessments have been carried out, including
consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and
governmental factors, to demonstrate at the time of reporting that extraction
could reasonably be justified.
RECLAMATION The process by which lands disturbed as a result of mining activity
are reclaimed back to a beneficial land use.
RECOVERABLE OUNCES Represents ounces in the ground factored for mining loss and
dilution.
RECOVERY A term used to indicate the proportion of valuable material obtained
during the mining or processing of an ore. The recovery is generally expressed
as a percentage of the material recovered compared to the total material
present.
REVERSE CIRCULATION DRILLING A drilling method employing double walled drill
rods. The drilling fluid (usually air or water) is pushed down the annulus
between the rods. The cuttings are blown up the middle.
SPOT PRICE The current price of a metal for immediate delivery.
STOPE The underground excavation from which ore is extracted.
STRIKE LENGTH Horizontal distance along the direction that a structural surface
takes as it intersects the horizontal.
STRIPPING The process of removing overburden to expose ore.
STRIP RATIO The ratio of overburden and segregable waste to ore in an open pit
operation.
SULPHIDE A mineral characterised by the linkages of sulphur with a metal or
semi-metal, iron sulphide. Also a zone in which sulphide minerals occur.
TAILINGS The waste material from ore after the economically recoverable metals
or minerals have been extracted. Changes in the metal prices and improvements in
technology can sometimes make the tailings economic to reprocess at a later
date.
TRENCHING Making elongated open-air excavations for the purposes of mapping and
sampling.
WASTE Rock lacking sufficient grade and/or other characteristics of ore to be
economic.
Metric Conversion
1 tonne = 1 t = 1.10231 tons
1 gramme = 1 g = 0.03215 ounces
1 gramme per tonne = 1 g/t = 0.02917 ounces per ton
1 hectare = 1 ha = 2.47105 acres
1 kilometre = 1 km = 0.621371 miles
1 metre = 1 m = 3.28084 feet
All tons are short tons of 2,000 pounds.
All ounces are troy ounces: 29.166 troy ounces equal one ton.
20 ASHANTI'S BOARD OF DIRECTORS
[ASHANTI LOGO]
MICHAEL ERNEST BECKETT (1,2)
Chairman of the Board and Chairman of Audit and Finance Committee, Non-Executive
Director
Age 67. British. Appointed in March 1994. He is Chairman of Clarkson Plc and
Watts Blake Bearne and Company Plc and a director of other public companies.
Former managing director of Consolidated Gold Fields, and a director of Gold
Fields of South Africa and Renison Gold Fields in Australia.
THEOPHILUS ERNEST ANIN (1,2,3)
Non-Executive Director
Age 71. Ghanaian. Appointed to the Board in July 2001. A professional banker and
solicitor with over 30 years' experience in banking, financial management, and
consulting in the public and private sectors. A director of the Bank of Ghana
Board.
MERENE MAMAA BOTSIO-PHILLIPS
General Counsel
Age 46. Ghanaian. Appointed in October 1996. Director of The Air Transport
Licensing Authority of Ghana. Formerly a director and Company Secretary of Ghana
Airways Limited.
THE RT. HON. THE BARONESS CHALKER OF WALLASEY PC (3)
Chairman of the Corporate Governance Committee (CGC),
Non-Executive Director
Age 62. British. She was appointed to the Board in March 2000. Baroness Chalker
is an advisory director of Unilever Plc & NV, non-executive director and
President of Southern Africa Business Initiative, President and Chairman of the
Boards of Management of the British Executive Service Overseas and the London
School of Hygiene and Tropical Medicine, non-executive director of La Farge et
Cie France and a director of other public companies.
DR CHESTER A CROCKER (1,2,3)
Chairman of the Management, Development and Remuneration Committee,
Non-Executive Director
Age 62. American. Appointed in February 2000. Professor of Strategic Studies at
Georgetown University's School of Foreign Service. Chairman of the Board of
United States Institute of Peace and an advisor on strategy and negotiations to
a number of US and European companies. Former US Assistant Secretary of State
for African Affairs.
THOMAS RICHARD GIBIAN (1,2)
Non-Executive Director
Age 50. American. Appointed to the Board in March 2000. Mr Gibian is Managing
Director of Emerging Markets Partnership and Chief Operating Officer of AIG,
African Infrastructure Fund. He is also a director of Inter Wave Communications.
GORDON EDWARD HASLAM
Non-Executive Director
Age 59. British. Appointed to the Board in May 2002. Director and Chief
Executive of Lonmin Plc and a director of other public companies.
SAM ESSON JONAH (4)
Chief Executive and Group Managing Director; Chairman of the Risk Management
Committee.
Age 54. Ghanaian. Appointed in May 1982. Director of Lonmin Plc, Commonwealth
Africa Investment Fund Limited and also Chancellor of the University of Cape
Coast, Ghana. Member of the UN Global Compact on Governance. Member of the
International Investment Advisory Council to the President of South Africa and a
similar body in Ghana. Chairman of Sierra Rutile Limited, in Sierra Leone.
DR MICHAEL PETER MARTINEAU (2)
Non-Executive Director
Age 59. British. Appointed in February 2000. He is the Executive Deputy Chairman
of Eurasia Mining Plc. Former director of several mining and exploration
companies in Africa, Australia, Canada, and the United Kingdom including Cluff
Resources Plc and SAMAX Resources Limited.
NICHOLAS JEREMY MORRELL (2)
Non-Executive Director
Age 56. British. Appointed to the Board in February 1997. Former director and
Chief Executive of Lonmin Plc.
SRINIVASAN VENKATAKRISHNAN (VENKAT) (4)
Chief Financial Officer
Age 38. British. Mr Venkatakrishnan is the Chief Financial Officer. He joined
the Board in July 2000 from Deloitte & Touche in the United Kingdom, where he
was employed as a director in the Re-organisation Services Division.
Secretary
Ernest Abankroh, 43, Ghanaian. He was appointed Group Company Secretary in May
1999, having previously served as Assistant Company Secretary from December 1996
and in other roles within our accounts department. He holds a Bachelor of
Commerce honours degree and a Diploma in Education from the University of Cape
Coast in Ghana and is a Fellow of the Institute of Chartered Secretaries and
Administrators (UK).
(1) AUDIT AND FINANCE COMMITTEE MEMBER
(2) MANAGEMENT DEVELOPMENT AND REMUNERATION COMMITTEE MEMBER
(3) CORPORATE GOVERNANCE COMMITTEE MEMBER
(4) RISK MANAGEMENT COMMITTEE MEMBER
REPORT OF THE DIRECTORS 21
[ASHANTI LOGO]
The directors present below their report and the audited financial statements
for the year ended 31 December 2003.
PRINCIPAL ACTIVITIES
The principal activities of the Group are the exploration, development and
mining of gold. The progress of the business during the year and likely future
developments are reported in the Chairman's Statement, the Chief Executive's
Review, the Operations Review, and Financial Review.
RESULTS AND DIVIDENDS
The financial results for the year are set out on page 26. The Board does not
recommend paying a dividend for the year ended 31 December 2003.
PROPOSED MERGER WITH ANGLOGOLD LIMITED
During 2003, Ashanti entered into merger discussions with AngloGold and
subsequently entered into a transaction agreement to effect a merger of Ashanti
and AngloGold. The Board remains committed to the merger proposals which in our
opinion is in the best interests of Ashanti's stakeholders including
shareholders, employees and the people of Ghana. A chronology of events
regarding the proposed merger arrangement is set out in the Chief Executive's
Review.
DIRECTORS
Details of the directors of the Company at the date of this report are given on
page 20. All the directors shown served throughout the year.
Mr T S Schultz and Mrs E D Ofori Atta retired from the Board with effect from 31
December 2003. Mrs M. Botsio-Phillips, previously substitute director for Mrs
Ofori Atta, was consequently appointed to revert to her substantive director
position with effect from 1 January 2004.
DIRECTORS' INTERESTS
The interests of the directors holding office at the end of the year in the
ordinary shares of the Company are shown in note 22 to the financial statements.
None of the directors had any interests in the shares of any of the Company's
subsidiaries at any time during the year. None of the directors had a material
interest in any contract of significance with the Group during the year, other
than Mr S E Jonah, who has entered into a service agreement dated 28 February
2003 with Ashanti Capital Limited following termination of the Technical
Services Agreement dated 14 March 1994 (as amended) between the Company and
Lonmin Plc.
EMPLOYEES AND EMPLOYMENT POLICIES
Ashanti continues to develop its employment policies to suit developments of the
times. Employee relations are placed high on the Company's activities which
ensures employee commitment. The Company strives to constantly ensure regular
communication and consultation with employees through personal contact, known as
"free speak" sessions, at the locations and via the Company's Intranet.
Published quarterlies and annual reports are released promptly to all locations
within the Group for communication to employees. Communications on employee
share schemes are carried out as appropriate. Set out in note 21 to the accounts
on page 44 are details of the employee share and other schemes currently in
place. The Company practices an open door policy across the Group and has
afforded worker/staff representatives a seat on divisional boards that are the
highest decision making machinery at the local mine level under the federalist
management philosophy. Ashanti has a policy of non discrimination in race,
colour, religion or disability.
The Group respects and values its employees as individuals and places emphasis
on policies which benefit both the Group and its employees. The Group is
committed to providing equal advancement opportunities, safe, clean working
conditions and remuneration in the upper range of the industry. It recognises
the merit of all employees, yet it endeavours to attract and retain the best
people by rewarding superior performance and giving them opportunities to expand
their skills, develop their potential and apply their creativity.
SHARE CAPITAL
Details of the changes in the Company's share capital during the year, including
treasury shares and the number of ordinary shares reserved for issue at the year
end, are shown in note 21 to the financial statements.
DONATIONS
Charitable donations for the year amounted to US$0.4 million. No donations were
made for political purposes.
SUBSTANTIAL SHAREHOLDERS
Details of the Company's 20 largest shareholders as at 23 January 2004, the last
practicable date, are shown on page 53.
GOING CONCERN
A full statement on going concern is set out in note 1 on page 31.
AUDITORS
Deloitte & Touche have agreed to continue as the Group's auditors. A resolution
to authorise the directors to determine their remuneration will be proposed at
the Annual General Meeting.
ANNUAL GENERAL MEETING
The Board is recommending to shareholders the proposed merger of the Company and
AngloGold Limited. If it is approved at a meeting of the shareholders and all
the necessary conditions are satisfied for the merger to become effective, then
an Annual General Meeting of the Company will only be required as a private
company.
If an annual general meeting for Ashanti as a public listed company becomes
necessary, an appropriate notice will be given for the meeting.
CORPORATE GOVERNANCE
A statement on corporate governance under the Combined Code on Corporate
Governance is set out on page 22.
Ashanti is aware of the increasing demand for listed companies to demonstrate
best practice in governance to which the Group remains committed, and will work
towards complying with the relevant regulations in jurisdictions in which it is
listed.
The Company is a member of the Global Compact of the United Nations Organisation
(UNO) which is seeking wide participation from a diverse group of business and
other organisations to promote and uphold core values in the areas of human
rights, labour standards and environmental practices. Full details of the
principles are set out on page 23.
By order of the Board
/s/ M E Beckett /s/ Sam E Jonah
M E BECKETT SAM E JONAH
CHAIRMAN CHIEF EXECUTIVE &
GROUP MANAGING DIRECTOR
10 February 2004
22 CORPORATE GOVERNANCE
[ASHANTI LOGO]
The Combined Code detailing the Principles of Good Corporate Governance and Code
of Best Practice was published in June 1998.
STATEMENT OF COMPLIANCE WITH THE PROVISIONS OF THE COMBINED CODE
All companies listed on the London Stock Exchange, other than overseas companies
such as the Company, are required to report on their compliance with the
Combined Code on Corporate Governance (the "Code"), which forms part of the
Listing Rules of the Financial Services Authority. Notwithstanding this
dispensation, the Board reports that the Company, in applying the principles of
good governance, has complied throughout the year with the provisions of
Section 1 of the Code, except for paragraphs A.2.1, A.3.2, A.6.2 and B.1.6,
B.1.7, B.3.1, B.3.2, B.3.3 and B.3.5 where the requirements differ from general
practice in Ghana.
STATEMENT OF APPLIANCE OF THE PRINCIPLES OF THE COMBINED CODE
The Board of directors, which currently comprises three executive and eight
non-executive directors, meets formally at least five times a year.
There is a clear separation between the roles of the Chairman and the Chief
Executive. The Chairman is responsible for the effectiveness of the Board, the
balance of membership and for ensuring that all directors' views are heard. The
Chief Executive is responsible for the day-to-day operation of the business and
for developing future strategies. In this, he is assisted by his fellow
executive directors and the other senior managers who, together, form the Chief
Executive's Committee as detailed on page 55.
Biographical details of the Board of directors are set out on page 20 and a
brief description of the roles and functions of the principal board committees
are given below. The Board's primary role in seeking to maximise shareholder
value, is to determine the Group's long-term direction and strategy and to
monitor the management of the business to ensure that agreed performance targets
are achieved. The Board is guided mainly by matters that it has specifically
reserved for its decision. These include major acquisitions and disposals, the
approval of financial statements, authority levels for expenditure, succession
plans for executives and key staff incentivisation. The Board pays particular
attention to key areas of risk including safety, health and environment.
The strong representation of non-executive directors on the Board, who are drawn
from a wide variety of backgrounds, brings a broad diversity of experience to
the business.
BOARD PRACTICES AND COMMITTEES
Certain aspects of the Board's role are carried out through committees, namely
Audit & Finance Committee, Management Development & Remuneration Committee,
Corporate Governance Committee and Risk Management Committee. Each of the
Committees meets formally at least four times a year. The respective charter of
these committees is outlined opposite.
AUDIT & FINANCE COMMITTEE
The Audit and Finance Committee reviews and reports to the Board on the
compliance, integrity and major judgmental aspects of the Group's published
financial statements, the scope and quality of the internal and external audit
and the adequacy of the Group's internal controls.
MANAGEMENT DEVELOPMENT AND REMUNERATION COMMITTEE
The Management Development and Remuneration Committee is responsible for the
appointment of directors, the determination of the level and structure of
executive directors' remuneration and the review of their performance and
service agreements. It then makes recommendations to the Board on these matters
in accordance with its terms of reference and reviews and approves succession
programmes with respect to top management.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee is responsible for the non-financial aspects
of the Group's safety, health and environmental issues and makes
recommendations, as appropriate, to the Board.
The Committee is also responsible for monitoring general conduct of directors in
line with best practice and screens individuals proposed for appointment to the
Board.
RISK MANAGEMENT COMMITTEE
The Risk Management Committee reviews and monitors execution of risk management
policies of the Group with particular focus on financial risks, including
hedging, and where necessary makes recommendations to the Board.
RELATIONS WITH SHAREHOLDERS
Regular meetings are held with institutional shareholders, fund managers and
brokers' analysts, which also include visits to the Company's operations, with a
view to ensuring that the plans and objectives of the Company are fully
understood.
Shareholders' interests and the Group's assets are safeguarded by a system of
internal control overseen by the Audit & Finance Committee.
The controls and procedures include the following:
ORGANISATIONAL STRUCTURE
The Group operates through a clearly defined organisational structure. The Board
of directors, which meets regularly, is responsible for overall strategy, while
the Chief Executive and Group Managing Director, assisted by the Chief
Executive's Committee, has day to day operational responsibility. The Board is
also responsible for monitoring the Group's performance which is measured
against approved budgets and prior year's performance.
FINANCIAL REPORTING
Budgets are prepared annually for financial performance, operating costs and
capital expenditure. Financial information is produced monthly and monitored
against budgets. Variances are considered by the relevant management and
appropriate action taken. Financial information is reviewed in relation to
CORPORATE GOVERNANCE 23
[ASHANTI LOGO]
comprehensive information regarding production, primarily quantities and grades.
Unaudited Accounts are published every quarter together with a report on
production performance.
APPROVAL PROCEDURES
Systems are in place to ensure that transactions in respect of major areas of
risk are subject to approval procedures. These include approval of Group budget
by the Board, significant expenditure at the mines by the respective divisional
Boards and approval of Hedging Policy by the Board, upon recommendation from the
Risk Management Committee.
CONTROLS OVER HEDGING TRANSACTIONS
The Group has a Board approved hedge policy. The Group carries out its hedging
activities in accordance with the guidelines stated in the policy, which are
overseen by the Risk Management Committee.
INTERNAL CONTROL
The directors continued throughout the year with an ongoing process for
identifying, evaluating and managing the significant risks faced by the Group
progressively throughout the latter part of the year. This process is regularly
reviewed by the Board and accords with the Turnbull guidance on internal
control.
Information on the Group's significant risks, together with the relevant control
and monitoring procedures, is reviewed for completeness and accuracy by the
Group's management committees. The information is presented to the Board for
directors to assess the effectiveness of the system on internal control. In
addition, the committees of the Board monitor the Group's significant risks on
an ongoing basis.
Assurance functions including internal auditors, health and safety auditor and
environmental auditors, perform reviews of control activities and provide
regular written and oral reports to the Board, Audit & Finance and Risk
Management and Corporate Governance committees. The managing directors of
business units complete an internal control report which seeks to confirm that
internal controls are operating effectively at an operational level. The results
of this process are reviewed by the Group Risk Management Committee and Audit &
Finance Committee and are then presented to the Board as a further part of the
Group's internal controls. The whole risk management process, including the
progress on embedding, is reviewed and strengthened as appropriate in order to
assist the need for continuous improvement.
The Board is responsible for the effectiveness of the Group's system of internal
control and for the review of its effectiveness. Such a system is designed to
manage rather than to eliminate the risk of failure to achieve the Group's
objectives and can only provide reasonable but not absolute assurance against
misstatement or loss.
GLOBAL COMPACT
Ashanti has embraced and resolved to enact the Global Compact sponsored by the
UNO whose nine principles on governance have been upheld by Ashanti. They are:
1. to support and respect the protection of international human rights within
their sphere of influence;
2. to make sure our company is not complicit in human rights abuses;
3. to uphold freedom of association and the effective recognition of the right
to collective bargaining;
4. to uphold the elimination of all forms of forced and compulsory labour;
5. to uphold the effective abolition of child labour;
6. to uphold the elimination of discrimination in respect of employment and
occupation;
7. to support a precautionary approach to environmental challenges;
8. to undertake initiatives to promote greater environmental responsibility;
and
9. to encourage the development and diffusion of environmentally friendly
technologies.
Ashanti was the first Company in Ghana to join the Global Compact and takes a
leading role in progressing with the advancement of the principles in Ghana by
working closely with the local office of the United Nations Development
Programme.
24 DIRECTORS' RESPONSIBILITIES
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DIRECTORS' RESPONSIBILITIES
The Ghana Companies Code, 1963 (Act 179) ("the Companies Code") requires that
for each financial period the directors must prepare financial statements which
give a true and fair view of the state of affairs of the Company and the Group
as at the end of the financial year and of the profit or loss of the Group for
that period. In preparing those financial statements, the directors are required
to:
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - state whether applicable accounting standards have been followed; and
- - prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping accounting records which disclose with
reasonable accuracy at any time the financial position of the Company and the
Group and to enable them to ensure that the financial statements comply with the
Companies Code. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The above statement should be read in conjunction with the statement of the
auditors' responsibilities set out on page 25.
INDEPENDENT AUDITORS' REPORT 25
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INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF ASHANTI GOLDFIELDS COMPANY LIMITED
We have audited the financial statements of Ashanti Goldfields Company Limited
for the year ended 31 December 2003 which comprise the Group profit and loss
account, the Group and Company balance sheets, the Group cash flow statement,
the reconciliation of movements in Group shareholders' funds and the related
notes 1 to 28. These financial statements have been prepared under the
accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with section 133 of the Ghana Companies Code, 1963 (Act 179). Our audit work has
been undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditors' report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described in the statement of directors' responsibilities, the Company's
directors are responsible for the preparation of the financial statements in
accordance with applicable Ghanaian law. The financial statements are prepared
in accordance with applicable United Kingdom accounting standards. Our
responsibility is to audit the financial statements in accordance with relevant
Ghanaian legal and regulatory requirements, the Listing Rules of the United
Kingdom Financial Services Authority and United Kingdom auditing standards.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Ghana Companies
Code, 1963 (Act 179). We also report whether, in our opinion, the financial
statements are in agreement with the books and the books have been properly
kept, and if, in our opinion, the directors' report is not consistent with the
financial statements and if we have not obtained the information and
explanations we require for our audit.
We review whether the corporate governance statement reflects the Company's
compliance with the seven provisions of the Combined Code specified for our
review by the Listing Rules of the United Kingdom Financial Services Authority
and we report if it does not. We are not required to consider whether the
Board's statements on internal control cover all risks and controls, or form an
opinion on the effectiveness of the Group's corporate governance procedures or
its risk and control procedures.
We read the directors' report and the other information contained in the Annual
Report for the above year as described in the contents section and consider the
implications for our report if we become aware of any apparent misstatement or
material inconsistencies with the financial statements.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with United Kingdom auditing standards
issued by the United Kingdom Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the circumstances of the Company and the Group, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
GOING CONCERN
In forming our opinion, we have considered the adequacy of the disclosures made
in note 1 to the accounts, concerning uncertainty over the Group's sources of
financing. In view of the significance of this uncertainty, we consider it
should be drawn to your attention, but our opinion is not qualified in this
respect.
OPINION
In our opinion the financial statements are in agreement with the books and the
books have been properly kept. In our opinion, the financial statements give a
true and fair view of the state of the affairs of the Company and the Group as
at 31 December 2003 and of the profit of the Group for the year then ended and
have been properly prepared in accordance with the Ghana Companies Code, 1963
(Act 179).
DELOITTE & TOUCHE
Chartered Accountants
Accra, Ghana
10 February 2004
26 GROUP PROFIT AND LOSS ACCOUNT
[ASHANTI LOGO]
For the year ended 31 December
2003 2002
GROUP
BEFORE AFTER INTEREST Interest
EXCEPTIONAL EXCEPTIONAL EXCEPTIONAL IN JOINT in joint
ITEMS ITEMS ITEMS VENTURE TOTAL Group venture Total
Note US$M US$M US$M US$M US$M US$m US$m US$m
- --------------------------------------------------------------------------------------------------------------------------------
TURNOVER 2 456.9 - 456.9 108.0 564.9 467.5 84.7 552.2
-------- ------- -------- ------ ------ ------ ------- ------
Cash operating costs 4 (300.0) - (300.0) (56.3) (356.3) (275.9) (47.2) (323.1)
Other costs (30.3) (5.4) (35.7) (3.9) (39.6) (26.8) (4.8) (31.6)
Royalties (14.0) - (14.0) (3.6) (17.6) (11.9) (2.7) (14.6)
Depreciation and amortisation (66.9) (15.1) (82.0) (12.9) (94.9) (75.1) (13.3) (88.4)
Refinancing and restructuring costs - - - - - (23.5) (8.8) (32.3)
-------- ------- -------- ------ ------ ------ ------- ------
TOTAL COSTS 5 (411.2) (20.5) (431.7) (76.7) (508.4) (413.2) (76.8) (490.0)
-------- ------- -------- ------ ------ ------ ------- ------
Other income - - - - - 12.1 - 12.1
OPERATING PROFIT 4 45.7 (20.5) 25.2 31.3 56.5 66.4 7.9 74.3
------ ------ ------- ------
Share of operating profit of
joint venture 31.3 - 31.3 7.9
-------- ------- -------- ------
TOTAL OPERATING PROFIT 4 77.0 (20.5) 56.5 74.3
PROFIT ON SALE OF INVESTMENTS - 8.3 8.3 -
PROFIT ON SALE OF FIXED ASSETS - 4.7 4.7 -
-------- ------- -------- ------
PROFIT BEFORE INTEREST AND TAXATION 77.0 (7.5) 69.5 74.3
Net interest payable: group 7 (12.4) 2.7 (9.7) (17.5)
joint venture 7 (4.5) - (4.5) (5.1)
-------- ------- -------- ------
PROFIT BEFORE TAXATION 60.1 (4.8) 55.3 51.7
Tax: group 8 0.5 (0.8) (0.3) (3.0)
joint venture 8 (4.6) - (4.6) 6.7
-------- ------- -------- ------
PROFIT AFTER TAXATION 56.0 (5.6) 50.4 55.4
MINORITY INTEREST (1.2) - (1.2) 0.8
-------- ------- -------- ------
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 54.8 (5.6) 49.2 56.2
DIVIDENDS 9 - - - -
-------- ------- -------- ------
RETAINED PROFIT FOR THE YEAR 54.8 (5.6) 49.2 56.2
======== ======= ======== ======
BASIC EARNINGS PER SHARE (US$) 10 0.43 (0.5) 0.38 0.47
DILUTED EARNINGS PER SHARE (US$) 10 0.41 (0.4) 0.37 0.44
======== ======= ======== ======
GROUP BALANCE SHEET 27
[ASHANTI LOGO]
As at 31 December
2003 2002
INTEREST Interest
IN JOINT in joint
GROUP VENTURE TOTAL Group venture Total
Note US$M US$M US$M US$m US$m US$m
- ---------------------------------------------------------------------------------------------------------------
FIXED ASSETS
Intangible assets 11 15.4 50.9 66.3 17.3 54.8 72.1
Tangible assets 12 603.4 110.4 713.8 602.7 103.5 706.2
Investments
- Geita joint venture 13 113.4 (113.4) - 91.2 (91.2) -
- Loans to joint venture and other
investments 13 1.1 - 1.1 32.6 - 32.6
------ ------ ------ ------
733.3 781.2 743.8 810.9
------ ------ ------ ------
CURRENT ASSETS
Stocks 14 68.4 13.6 82.0 76.6 11.2 87.8
Debtors due within one year 15 39.2 14.7 53.9 14.0 21.2 35.2
Debtors due after more than one year 15 - - - 8.8 - 8.8
Cash 16 72.8 3.6 76.4 41.3 14.4 55.7
------ ------- ------ ------ ------- ------
180.4 31.9 212.3 140.7 46.8 187.5
------ ------- ------ ------ ------- ------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors 17 (131.3) (17.5) (148.8) (131.1) (19.7) (150.8)
Borrowings 18 (24.9) (10.8) (35.7) (2.7) (10.8) (13.5)
------ ------- ------ ------ ------- ------
(156.2) (28.3) (184.5) (133.8) (30.5) (164.3)
------ ------- ------ ------ ------- ------
NET CURRENT ASSETS 24.2 3.6 27.8 6.9 16.3 23.2
TOTAL ASSETS LESS CURRENT LIABILITIES 757.5 809.0 750.7 834.1
CREDITORS: AMOUNTS FALLING DUE OVER ONE YEAR
Creditors 17 (3.6) (24.9) (28.5) (24.0) (39.9) (63.9)
Borrowings 18 (217.4) (22.3) (239.7) (254.2) (40.6) (294.8)
PROVISIONS FOR LIABILITIES AND CHARGES 20 (27.8) (4.3) (32.1) (25.0) (2.9) (27.9)
------ ------- ------ ------ ------- ------
508.7 508.7 447.5 447.5
====== ====== ====== ======
CAPITAL AND RESERVES
Stated capital 21 599.0 588.2
Reserves 23 (92.7) (141.9)
------ ------
EQUITY SHAREHOLDERS' FUNDS 506.3 446.3
Equity minority interests 2.4 1.2
------ ------
508.7 447.5
====== ======
The financial statements were approved by the Board of directors on 10 February
2004 and signed on its behalf by:
/s/ S E Jonah /s/ S Venkatakrishnan
S E Jonah S Venkatakrishnan
Director Director
28 GROUP CASH FLOW STATEMENT
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For the year ended 31 December
2003 2002
NOTE US$M US$m
- ----------------------------------------------------------------------------------------------
CASH INFLOW FROM OPERATING ACTIVITIES 24 86.3 95.2
- ----------------------------------------------------------------------------------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 0.8 0.8
Interest paid (9.1) (19.6)
- ----------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (8.3) (18.8)
- ----------------------------------------------------------------------------------------------
TAXATION
Tax paid (1.2) (2.0)
- ----------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (83.0) (64.5)
Proceeds from sale of fixed assets 3.0 -
Proceeds from sale of investments 13.3 -
Loans repaid by joint venture 30.0 -
- ----------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (36.7) (64.5)
- ----------------------------------------------------------------------------------------------
CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 40.1 9.9
MANAGEMENT OF LIQUID RESOURCES 3.1 6.0
- ----------------------------------------------------------------------------------------------
CASH INFLOW BEFORE FINANCING 43.2 15.9
FINANCING
Issue of ordinary shares 10.8 41.8
Decrease in debt (19.4) (61.0)
- ----------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM FINANCING 25 (8.6) (19.2)
- ----------------------------------------------------------------------------------------------
INCREASE/(DECREASE) IN CASH 34.6 (3.3)
==============================================================================================
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash 34.6 (3.3)
Decrease in liquid resources (3.1) (6.0)
- ----------------------------------------------------------------------------------------------
31.5 (9.3)
Cash outflow from decrease in debt 19.4 61.0
Other (4.8) 3.4
- ----------------------------------------------------------------------------------------------
MOVEMENT IN NET DEBT 46.1 55.1
Net debt at 1 January (215.6) (270.7)
- ----------------------------------------------------------------------------------------------
NET DEBT AT 31 DECEMBER 26 (169.5) (215.6)
==============================================================================================
RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS 29
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For the year ended 31 December
2003 2002
US$M US$m
- ------------------------------------------------------------------------
Profit for the year 49.2 56.2
Dividend - -
- ------------------------------------------------------------------------
49.2 56.2
New share capital issued 10.8 43.0
- ------------------------------------------------------------------------
NET ADDITIONS TO SHAREHOLDERS' FUNDS 60.0 99.2
Opening shareholders' funds 446.3 347.1
- ------------------------------------------------------------------------
CLOSING SHAREHOLDERS' FUNDS 506.3 446.3
- ------------------------------------------------------------------------
There are no recognised gains and losses other than as disclosed in the Group
Profit and Loss Account.
30 COMPANY BALANCE SHEET
[ASHANTI LOGO]
As at 31 December
2003 2002
Note US$M US$m
- ---------------------------------------------------------------------------------------------
FIXED ASSETS
Tangible assets 12 474.9 472.5
Investments 13 246.3 261.6
- ---------------------------------------------------------------------------------------------
721.2 734.1
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS
Stocks 14 43.5 44.9
Debtors 15 242.1 183.9
Cash 16 17.9 19.5
- ---------------------------------------------------------------------------------------------
303.5 248.3
- ---------------------------------------------------------------------------------------------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors 17 (88.1) (67.5)
Borrowings 18 (0.7) (1.7)
- ---------------------------------------------------------------------------------------------
(88.8) (69.2)
- ---------------------------------------------------------------------------------------------
NET CURRENT ASSETS 214.7 179.1
TOTAL ASSETS LESS CURRENT LIABILITIES 935.9 913.2
CREDITORS: AMOUNTS FALLING DUE OVER ONE YEAR
Creditors 17 (691.9) (700.6)
Borrowings 18 (1.4) (4.6)
PROVISIONS FOR LIABILITIES AND CHARGES 20 (9.7) (11.2)
- ---------------------------------------------------------------------------------------------
232.9 196.8
=============================================================================================
CAPITAL AND RESERVES
Stated capital 21 599.0 588.2
Reserves 23 (366.1) (391.4)
- ---------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 232.9 196.8
=============================================================================================
The financial statements were approved by the Board of directors on 10 February
2004 and signed on its behalf by:
/s/ S E Jonah /s/ S Venkatakrishnan
S E Jonah S Venkatakrishnan
Director Director
NOTES TO THE FINANCIAL STATEMENTS 31
[ASHANTI LOGO]
1 ACCOUNTING POLICIES
The principal accounting policies adopted by the Group and used in the
preparation of these financial statements are set out below. The accounting
policies used in preparing the financial statements are consistent with
those used by the Group in its financial statements for the year ended 31
December 2002.
GOING CONCERN
In June 2002, Ashanti issued US$75 million of Mandatorily Exchangeable
Notes ("MENs"). The MENs will mandatorily exchange into ordinary shares of
Ashanti when Ashanti effects a rights issue. Ashanti agreed with its banks
and the holders of the MENs to complete the rights issue prior to 28
December 2003. It was intended that as a part of the rights issue Ashanti
would raise additional funds to fund completion of the Siguiri CIP project.
During the course of the 2003, Ashanti entered into merger discussions with
AngloGold and subsequently entered into a transaction agreement to effect a
merger ("the Merger") of Ashanti and AngloGold. As a consequence of
entering into the transaction agreement, Ashanti had to delay completing
the rights issue. Since the MENs will become repayable on the Merger being
completed, Ashanti has secured agreement of its banks and the holders of
the MENs to delay the timeframe for completion of the rights issue until 28
December 2004.
Given the delay in the rights issue, the postponement/cancellation of the
Siguiri CIP project was considered. However, following discussions with
AngloGold, Ashanti decided to continue with the Siguiri CIP project,
notwithstanding the substantial increase in the anticipated capital cost of
this project. The increased capital expenditure required for this project,
together with the reduced cash inflows received by the Ashanti Group due to
poorer operating performance in 2003 compared to 2002, has led to Ashanti
seeking alternative sources of financing to fund its cash requirements
until the consummation of the Merger.
With the agreement of AngloGold, a US$30 million distribution paid by the
Geita mine on 31 December 2003 has been paid in full to Ashanti. AngloGold
has also agreed to provide an additional US$14.1 million to Ashanti by
purchasing at face value the residual inter-company loan provided by the
Ashanti Group in respect of the Geita joint venture. In addition, AngloGold
has agreed to provide an unsecured loan facility of up to US$20 million to
Ashanti. These arrangements are not conditional on the Merger completing.
The Ashanti Board considers that these arrangements, together with the
undrawn amounts under its revolving credit facility, are sufficient to
enable it to meet its cash requirements in the period prior to the Merger
becoming effective, currently anticipated to be around April 2004. If the
Merger is not completed, or if there is a substantial delay in completing
the Merger, Ashanti will need to proceed with its rights issue or review
alternative forms of financing. If the Merger is not completed and
alternative forms of financing cannot be implemented, then there will be
uncertainty as to whether the Ashanti Group will be able to continue as a
going concern.
Having taken into account the progress which AngloGold and Ashanti have
achieved in relation to the Merger, the financial support being provided by
AngloGold and other relevant factors, the Directors of Ashanti have formed
the judgement that, at the time of approving these financial statements, it
is appropriate to use the going concern basis in preparing these financial
statements.
The financial statements do not include any adjustments that might result
should the Group be unable to continue as a going concern.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom Accounting
Standards.
Because the Group earns all its revenue in US dollars and the majority of
its transactions are in US dollars, or based on them, the Group's
functional and reporting currency is US dollars.
BASIS OF CONSOLIDATION
The Group financial statements comprise a consolidation of the results,
assets and liabilities of the Company, its subsidiary undertakings and
joint ventures. The results and cash flows of subsidiaries acquired or
disposed of in the year are included in the consolidated profit and loss
account and the consolidated cash flow statement from the date of
acquisition or up to the date of disposal.
GOODWILL
Goodwill, arising from the purchase of subsidiary undertakings and
interests in associates and joint ventures represents the excess of the
fair value of the purchase consideration over the fair value of the net
assets acquired. Goodwill in accordance with FRS 10 is capitalised and
amortised over the life of the underlying mine assets. Prior to 1 January
1998, goodwill was charged to reserves in the year of acquisition.
On the subsequent disposal or termination of a previously acquired
business, the profit or loss on disposal or termination is calculated after
charging or crediting the amount of any goodwill previously charged to
reserves or capitalised and not yet charged to the profit and loss account.
JOINT VENTURES
A joint venture is an entity in which the Group holds a long-term interest
and which is jointly controlled by the Group and one or more venturers
under a contractual arrangement. The results of joint ventures are
accounted for using the gross equity method of accounting.
TRANSACTIONS IN OTHER CURRENCIES
Monetary assets and liabilities denominated in currencies other than the US
dollar are translated at the rates of exchange ruling at the year end.
Transactions denominated in currencies other than US dollars are translated
at the rates ruling at the dates of the transactions. All translation
differences are taken to the profit and loss account.
REVENUE RECOGNITION
Sale of bullion is recognised when dore is produced in the gold room. The
proceeds from sales of bullion produced prior to the year end but which
have not been received are included as `gold in transit' within cash
balances.
32 NOTES TO THE FINANCIAL STATEMENTS
[ASHANTI LOGO]
EXPLORATION COSTS
Exploration costs incurred prior to the establishment of a commercially mineable
deposit are charged against profits.
TANGIBLE FIXED ASSETS
Tangible fixed assets are recorded at cost less accumulated depreciation.
Repairs and maintenance expenditures are charged against profits as incurred.
Major improvements and replacements that extend the useful life of an asset are
capitalised.
Once it has been established that a commercially mineable deposit exists, mine
development costs, including interest costs, are capitalised as tangible fixed
assets. Mine development costs consist of those expenditures necessary to gain
access to ore bodies prior to production and to extend production in an existing
ore body, including costs of removing overburden, constructing underground shaft
stations, and extending tunnels.
Tangible fixed assets are depreciated as follows:
Development costs, plant and equipment and processing plants are depreciated
over the life of the mine using the unit of production method based on proved
and probable reserves, or on a straight-line basis over their estimated useful
lives if shorter. Buildings are depreciated on a straight-line basis. Following
are the estimated useful lives of assets that are depreciated using the
straight-line basis:
Externally purchased software 3 years
Vehicles 5 years
Plant and equipment 5 to 15 years
Buildings up to 30 years
Estimated useful lives are reviewed on an annual basis in conjunction with the
life-of-mine plans. Tangible fixed assets are reviewed for impairment if events
or changes in circumstances indicate that the carrying amount may not be
recoverable. At such time, in accordance with FRS 11, Impairment of fixed and
assets and goodwill ("FRS 11") the net present value of the expected future cash
flows attributable to the asset or its disposal value, if higher, is compared to
the carrying value and an impairment charge is recorded if necessary.
STOCKS
Stocks are valued at the lower of cost and net realisable value (which includes
an appropriate proportion of production overheads).
INTEREST AND FINANCE COSTS
Interest is capitalised in respect of mine developments as part of tangible
fixed assets from the time that it has been determined that a commercially
minable deposit exists up to the commencement of production. All other interest
costs are charged against profits as incurred.
Front-end fees, commitment fees and other costs associated with the initial loan
are deferred and amortised over the life of the loan to give a constant rate of
return on the outstanding loan balance.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses derivative instruments to hedge its exposures to fluctuations in
gold prices. In order to protect against the impact of falling gold prices, the
Group enters into hedging transactions which provide a minimum price for
production and allow the Group to take advantage of increases in gold prices.
Instruments are accounted for as a hedge when they have been entered into to
manage gold prices and are within limits established by the Board of Directors.
Hedging transactions are used as part of the Group's protection and commitment
programme. Protected ounces represent future sales of gold for which the future
price of gold has been fixed. Committed ounces represent future obligations of
the Group to deliver gold at an agreed upon maximum price.
Receipts and payments on interest rate instruments are recognised on an accruals
basis over the life of the instrument. Gains or losses on other hedging
contracts, including premiums receivable and payable on options, are recognised
in the profit and loss account as designated production is delivered. In the
case of earlier settlement of hedge contracts, gains or losses are deferred and
brought into income at the originally designated delivery date.
DEFERRED TAXATION
The Group provides for deferred tax assets and liabilities arising from timing
differences between the recognition of gains and losses in the financial
statements and their recognition for tax purposes. Deferred tax assets are
recognised only to the extent that it is more likely than not that they will be
recovered. Deferred tax assets and liabilities are not discounted.
ENVIRONMENTAL AND SITE RESTORATION OBLIGATIONS
The expected costs of any committed decommissioning or other site restoration
programmes incurred during the construction phase, discounted at the weighted
average cost of capital, are provided for and capitalised at the beginning of
each project and amortised over the life of the mine using the units of
production method. Additional provisions are recorded during the production
phase as environmental liabilities arise with a corresponding charge to
operating results. Such costs are estimated based on studies performed by
independent environmental specialists and represent management's best current
estimate of amounts that are expected to be incurred when the remediation work
is performed within current laws and regulations or the terms of respective
mining licenses.
PRE-STRIPPING AND STRIPPING COSTS
Pre-stripping costs are the costs of removing overburden to expose ore after it
has been determined that a commercially minable deposit exists. These costs are
capitalised as tangible fixed assets and, upon commencement of production,
depreciated using the unit of production method based on proved and probable
reserves.
Stripping costs incurred during the production phase to remove additional waste
are deferred and charged to operating costs on the basis of the average life of
mine stripping ratio.
INVESTMENTS
In the Company balance sheet, investments in subsidiary undertakings are stated
at cost less provision for any impairment.
LEASED ASSETS
Assets acquired under finance leases are capitalised and the outstanding future
lease obligations are shown in borrowings. Operating lease rentals are charged
to the profit and loss account in equal amounts over the period of the lease.
33
NOTES TO THE FINANCIAL STATEMENTS [ASHANTI LOGO]
2 TURNOVER
2003 2002
US$m US$m
- -------------------------------------------------------------------------------
GROUP
Bullion revenue 464.8 416.3
Cash (paid)/realised on maturing hedging contracts (20.8) 16.9
Deferred hedging income 12.9 34.3
- -------------------------------------------------------------------------------
456.9 467.5
JOINT VENTURE
Bullion revenue 122.0 90.1
Cash paid on maturing hedging contracts (14.0) (5.4)
- -------------------------------------------------------------------------------
TOTAL 564.9 552.2
===============================================================================
3 EXCEPTIONAL ITEMS BEFORE TAXATION
2003 2002
US$m US$m
- -------------------------------------------------------------------------------
Profit on sale of investments (note a.) 8.3 -
Profit on sale of fixed assets (note b.) 4.7 -
Interest payable (note c.) 2.7 -
Other costs (note d.) (5.4) -
Depreciation and amortisation (note e.) (15.1) -
Refinancing and restructuring costs (note f.) - (23.5)
Share of operating loss of joint venture (note g.) - (8.8)
Other income (note g.) - 8.8
- -------------------------------------------------------------------------------
(4.8) (23.5)
===============================================================================
a. Ashanti sold its interest in the Mampon property near Obuasi to Bogoso Gold
Limited and Golden Star Resources Limited for a cash consideration of
US$9.5 million and realised a further US$0.5 million from the debenture
held in Birim Goldfields. These resulted in a gain before taxes of US$8.3
million.
b. The investment held in the joint venture in respect of the Youga property
in Burkina Faso was sold for US$3.3 million resulting in a gain of US$2.7
million. Ashanti received insurance proceeds of US$3.0 million for the
Company's damaged aircraft, which has since been scrapped. This resulted in
a gain of US$2.0 million.
c. The Company re-negotiated the terms of the Kimin loans. In consideration
for Ashanti extending the terms of the guarantee currently in place in
favour of the lender, it secured a reduction in the amounts owed from
US$7.7 million to US$5.0 million. This reduction of US$2.7 million has been
recognised as an exceptional gain within interest payable.
d. During the fourth quarter, 358 workers at the Obuasi mine were made
redundant at a cost of US$5.4 million.
e. Having reviewed the challenging environment in which the Freda-Rebecca mine
operates, Ashanti has recognised an impairment charge of US$15.1 million.
f. Costs incurred in refinancing the Group's debt during 2002.
g. As provided for in the sale and purchase agreement entered into in 2000 in
respect of the Geita mine, AngloGold transferred the neighbouring Ridge 8
property to Geita during 2002. The consideration of US$17.6 million will be
left outstanding until the project finance loans are fully repaid by Geita.
AngloGold has transferred to Ashanti for no consideration, its 50% share of
the receivable which resulted in an exceptional gain of US$8.8 million. In
line with Ashanti's accounting policy on exploration costs, the cost of
this property was expensed.
[ASHANTI LOGO]
34 NOTES TO THE FINANCIAL STATEMENTS
4 OPERATING PROFIT ANALYSIS BY BUSINESS AREA BEFORE EXCEPTIONAL ITEMS
12 months to 31 December 2003
FREDA- HEDGING
OBUASI IDUAPRIEM BIBIANI SIGUIRI REBECCA INCOME
- --------------------------------------------------------------------------------------------------
Production ozs 513,163 243,533 212,716 252,795 51,091 -
- -------------------------------------------------------------------------------------------------
US$million
Revenue - spot 187.1 89.8 77.6 91.7 18.6 -
- hedging - - - - - (7.9)
- -------------------------------------------------------------------------------------------------
187.1 89.8 77.6 91.7 18.6 (7.9)
Cash operating costs (111.2) (58.5) (46.0) (70.6) (13.7) -
Other costs - (1.2) (0.3) (2.3) - -
Royalties (6.0) (2.7) (2.3) (3.0) - -
- -------------------------------------------------------------------------------------------------
EBITDA* 69.9 27.4 29.0 15.8 4.9 (7.9)
Depreciation and amortisation (30.8) (6.0) (11.2) (12.6) (5.6) -
- -------------------------------------------------------------------------------------------------
OPERATING PROFIT/(LOSS)
2003 39.1 21.4 17.8 3.2 (0.7) (7.9)
2002 22.9 4.6 18.2 (3.4) 6.0 51.2
=================================================================================================
EXPLOR- CORP.
ATION ADMIN. GROUP GEITA TOTAL
- ------------------------------------------------------------------------------------
Production ozs - - 1,273,298 330,523 1,603,821
- ------------------------------------------------------------------------------------
US$million
Revenue - spot - - 464.8 122.0 586.8
- hedging - - (7.9) (14.0) (21.9)
- ------------------------------------------------------------------------------------
- - 456.9 108.0 564.9
Cash operating costs - - (300.0) (56.3) (356.3)
Other costs (4.5) (22.0) (30.3) (3.9) (34.2)
Royalties - - (14.0) (3.6) (17.6)
- ------------------------------------------------------------------------------------
EBITDA* (4.5) (22.0) 112.6 44.2 156.8
Depreciation and amortisation - (0.7) (66.9) (12.9) (79.8)
- ------------------------------------------------------------------------------------
OPERATING PROFIT/(LOSS)
2003 (4.5) (22.7) 45.7 31.3 77.0
2002 (3.9) (14.5) 81.1 16.7 97.8
====================================================================================
*EBITDA - Earnings before interest, tax, depreciation and amortisation.
Costs include audit fees of US$0.6 million (2002: US$0.5 million).
12 months to 31 December 2002
FREDA- HEDGING EXPLOR-
OBUASI IDUAPRIEM BIBIANI SIGUIRI REBECCA INCOME ATION
- ------------------------------------------------------------------------------------------------------------------------
Production ozs 537,219 185,199 242,432 269,292 98,255 - -
- -----------------------------------------------------------------------------------------------------------------------
US$million
Revenue - spot 167.8 57.8 76.1 83.9 30.7 - -
- hedging - - - - - 51.2 -
- -----------------------------------------------------------------------------------------------------------------------
167.8 57.8 76.1 83.9 30.7 51.2 -
Cash operating costs (106.4) (43.0) (43.6) (61.9) (21.0) - -
Other costs (0.5) (0.9) (0.3) (4.8) - - (3.8)
Royalties (5.0) (1.7) (2.3) (2.9) - - -
Other income - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------
EBITDA* 55.9 12.2 29.9 14.3 9.7 51.2 (3.8)
Depreciation and amortisation (33.0) (7.6) (11.7) (17.7) (3.7) - (0.1)
- -----------------------------------------------------------------------------------------------------------------------
Operating profit/(loss)
2002 22.9 4.6 18.2 (3.4) 6.0 51.2 (3.9)
2001 0.3 4.4 7.5 (6.8) 7.3 96.0 (8.4)
======================================================================================================================
CORP. GEITA
ADMIN. GROUP (50%) TOTAL
- ----------------------------------------------------------------------------------
Production ozs - 1,332,397 289,522 1,621,919
- ----------------------------------------------------------------------------------
US$million
Revenue - spot - 416.3 90.1 506.4
- hedging - 51.2 (5.4) 45.8
- ----------------------------------------------------------------------------------
- 467.5 84.7 552.2
Cash operating costs - (275.9) (47.2) (323.1)
Other costs (16.5) (26.8) (4.8) (31.6)
Royalties - (11.9) (2.7) (14.6)
Other income 3.3 3.3 - 3.3
- ----------------------------------------------------------------------------------
EBITDA* (13.2) 156.2 30.0 186.2
Depreciation and amortisation (1.3) (75.1) (13.3) (88.4)
- ----------------------------------------------------------------------------------
Operating profit/(loss)
2002 (14.5) 81.1 16.7 97.8
2001 (22.4) 76.6 20.2 96.8
==================================================================================
5 RECONCILIATION OF TOTAL COSTS
2003 2002
US$M US$m
- --------------------------------------------------------
CASH OPERATING COSTS
Obuasi 111.2 106.4
Iduapriem 58.5 43.0
Bibiani 46.0 43.6
Siguiri 70.6 61.9
Freda-Rebecca 13.7 21.0
Geita (50%) 56.3 47.2
- --------------------------------------------------------
TOTAL CASH OPERATING COSTS 356.3 323.1
Corporate administration costs 22.0 16.5
Exploration costs 4.5 3.8
Other costs 7.7 11.3
Royalties 17.6 14.6
Depreciation and amortisation 79.8 88.4
Exceptional costs 20.5 32.3
- --------------------------------------------------------
TOTAL COSTS 508.4 490.0
========================================================
35
NOTES TO THE FINANCIAL STATEMENTS [ASHANTI LOGO]
6 EMPLOYEES
2003 2002
- ---------------------------------------------------------------------------------------------------
THE AVERAGE NUMBER OF EMPLOYEES OF THE GROUP DURING THE YEAR WAS AS FOLLOWS: NO. No.
Underground mining 4,384 4,602
Surface mining 678 447
Processing 1,878 1,978
Administration 2,564 2,914
- ---------------------------------------------------------------------------------------------------
9,504 9,941
===================================================================================================
Remuneration paid to directors of the Company (excluding amounts paid to
Lonmin Plc in respect of Technical Services and the services of Mr S E
Jonah) amounted to US$2.7 million (2002: US$2.9 million).
7 NET INTEREST PAYABLE
2003 2002
US$m US$m
- --------------------------------------------------------------------------------------------
Enlarged Revolving Credit Facility 8.0 5.0
Mandatorily Exchangeable Notes 2.2 1.4
Revolving Credit Facility - 3.3
Exchangeable Notes - 6.3
Other loans and finance charges 3.8 3.3
- --------------------------------------------------------------------------------------------
14.0 19.3
Interest receivable (1.6) (1.8)
- --------------------------------------------------------------------------------------------
12.4 17.5
Share of interest payable by joint venture 4.5 5.1
- --------------------------------------------------------------------------------------------
16.9 22.6
Exceptional gain on re-negotiation of the Kimin loans (note 3c) (2.7) -
- --------------------------------------------------------------------------------------------
14.2 22.6
============================================================================================
8 TAXATION
2003 2002
US$m US$m
- ------------------------------------------------------------------------------------
CORPORATE TAX - Current year - group 0.3 0.2
- joint venture 1.7 0.1
- Prior years - group (0.8) (8.5)
- joint venture - 0.2
DEFERRED TAX - group - 11.3
- joint venture 2.9 (7.0)
- ------------------------------------------------------------------------------------
TAX CHARGE/(CREDIT) ON PROFIT ON ORDINARY ACTIVITIES 4.1 (3.7)
Tax on exceptional items 0.8 -
- ------------------------------------------------------------------------------------
4.9 (3.7)
====================================================================================
Deferred tax assets as at 31 December 2003 relating to tax losses have been
recognised only to the extent that the latest forecasts indicate that they
will be utilised against taxable profits within the immediate future. The
total amount of deferred tax assets in respect of tax losses not recognised
as at 31 December 2003 amounted to US$30.8 million (2002: US$37.2 million).
No deferred tax is recognised on the unremitted earnings of overseas
subsidiaries and joint ventures.
Tax reconciliation
The standard rate of tax for the year, based on the Ghanaian tax rate for
listed companies is 30%. The difference from the standard tax charge to
actual tax charge for 2003 and 2002 is set out in the following
reconciliation.
2003 2002
US$m US$m
- ----------------------------------------------------------------------------------------------
Profit before tax 55.3 51.7
Tax on profit on ordinary activities at standard rate 16.6 15.5
- ----------------------------------------------------------------------------------------------
Factors affecting charge for the year
Capital allowances for the period in excess of depreciation (2.4) (1.9)
Other short term timing differences 2.2 0.3
Tax losses utilised in the year (17.4) (3.7)
Profits arising in foreign jurisdictions with different tax rates 2.3 (12.9)
Group goodwill amortisation and other consolidation adjustments 2.0 3.6
Capital allowance uplifts (1.3) (1.0)
Other permanent differences - 0.4
- ----------------------------------------------------------------------------------------------
TOTAL ACTUAL CURRENT YEAR CORPORATE TAX CHARGE 2.0 0.3
==============================================================================================
[ASHANTI LOGO]
36 NOTES TO THE FINANCIAL STATEMENTS
9 DIVIDEND
No dividends were paid or proposed for the year (2002: Nil).
10 EARNINGS PER SHARE
The calculation of earnings per share is based on earnings after tax and
minority interests and the weighted average number of shares outstanding
during the year of 128.5 million (2002: 119.1 million). Earnings per share
has been shown before and after exceptional items in order to show the
impact of the exceptional items on the underlying results of the business.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The Company has three categories of
dilutive potential ordinary shares being, warrants (under the agreement
with the Company's hedge counterparties), share options (under the Senior
Management Share Option Scheme) where the exercise price is less than the
average price of the Company's ordinary shares during the period and
employee share incentive plans where shares are issued free to senior
management provided certain criteria are met.
2003 2002
- -------------------------------------------------------------------------------------------------------
BEFORE EXCEPTIONAL ITEMS
BASIC AND DILUTED EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS (US$M) 54.8 79.7
Weighted average number of ordinary shares (millions) 128.5 119.1
Dilutive warrants (millions) 2.3 5.3
Dilutive share options (millions) 2.1 1.6
Dilutive employee share incentive plans (millions) 0.8 0.6
- -------------------------------------------------------------------------------------------------------
ADJUSTED WEIGHTED NUMBER OF ORDINARY SHARES (MILLIONS) 133.7 126.6
=======================================================================================================
BASIC EARNINGS PER SHARE (US$) 0.43 0.67
DILUTED EARNINGS PER SHARE (US$) 0.41 0.63
AFTER EXCEPTIONAL ITEMS
BASIC AND DILUTED EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS (US$M) 49.2 56.2
Weighted average number of ordinary shares (millions) 128.5 119.1
Dilutive warrants (millions) 2.3 5.3
Dilutive share options (millions) 2.1 1.6
Dilutive employee share incentive plans (millions) 0.8 0.6
- -------------------------------------------------------------------------------------------------------
ADJUSTED WEIGHTED NUMBER OF ORDINARY SHARES (MILLIONS) 133.7 126.6
=======================================================================================================
BASIC EARNINGS PER SHARE (US$) 0.38 0.47
=======================================================================================================
DILUTED EARNINGS PER SHARE (US$) 0.37 0.44
- -------------------------------------------------------------------------------------------------------
11 INTANGIBLE ASSETS
GOODWILL
GROUP US$M
- -----------------------------------
COST
At 1 January 2003 22.1
Additions 0.7
Reductions (1.1)
- -----------------------------------
AT 31 DECEMBER 2003 21.7
===================================
AMORTISATION
At 1 January 2003 4.8
Charge for the year 1.5
===================================
AT 31 DECEMBER 2003 6.3
===================================
NET BOOK VALUE
AT 31 DECEMBER 2003 15.4
At 31 December 2002 17.3
===================================
The additional goodwill relates to contingent consideration of US$0.7
million which became payable in respect of the acquisition of Pioneer
Goldfields Limited (Teberebie mine) in 2000 following increases in the gold
price. The reduction in goodwill is in respect of a re-negotiation of the
amount of deferred consideration due in respect of Teberebie.
37
[ASHANTI LOGO]
NOTES TO THE FINANCIAL STATEMENTS
12. TANGIBLE ASSETS
MINE SHAFTS, ASSETS IN THE
DEVELOPMENT AND PLANT AND PROCESSING COURSE OF
PRE-PRODUCTION EQUIPMENT PLANTS BUILDINGS CONSTRUCTION TOTAL
US$M US$M US$M US$M US$M US$M
- ----------------------------------------------------------------------------------------------------------
GROUP
COST
At 1 January 2003 841.5 550.6 437.7 104.0 12.8 1,946.6
Additions 26.5 13.0 5.3 0.3 39.3 84.4
Disposals (1.7) (12.9) - - - (14.6)
Transfers 2.8 1.0 11.9 - (15.7) -
- ----------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 869.1 551.7 454.9 104.3 36.4 2,016.4
==========================================================================================================
DEPRECIATION
At 1 January 2003 610.0 391.2 280.3 62.4 - 1,343.9
Charges 17.3 22.4 21.8 3.9 - 65.4
Provision for impairment - 1.2 8.0 5.9 - 15.1
Disposals (0.5) (10.9) - - - (11.4)
- ----------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 626.8 403.9 310.1 72.2 - 1,413.0
==========================================================================================================
NET BOOK VALUE
AT 31 DECEMBER 2003 242.3 147.8 144.8 32.1 36.4 603.4
At 31 December 2002 231.5 159.4 157.4 41.6 12.8 602.7
- ----------------------------------------------------------------------------------------------------------
COMPANY
COST
At 1 January 2003 589.8 435.5 350.0 90.4 1.1 1,466.8
Additions 20.8 11.3 5.0 0.3 7.6 45.0
Disposals (0.9) (9.9) - - - (10.8)
- ----------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 609.7 436.9 355.0 90.7 8.7 1,501.0
==========================================================================================================
DEPRECIATION
At 1 January 2003 408.8 296.5 231.8 57.2 - 994.3
Charges 12.2 17.7 8.2 3.0 - 41.1
Disposals (0.5) (8.8) - - - (9.3)
- ----------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 420.5 305.4 240.0 60.2 - 1,026.1
==========================================================================================================
NET BOOK VALUE
AT 31 DECEMBER 2003 189.2 131.5 115.0 30.5 8.7 474.9
At 31 December 2002 181.0 139.0 118.2 33.2 1.1 472.5
- ----------------------------------------------------------------------------------------------------------
The net book value of tangible assets in the Group and Company includes
US$2.1 million (2002: US$3.5 million) in respect of assets held under
finance leases included within buildings.
2003 2002
US$M US$m
- --------------------------------------------------------------
GROUP CAPITAL COMMITMENTS
Contracts placed but not provided for 49.3 13.1
- --------------------------------------------------------------
[ASHANTI LOGO]
38 NOTES TO THE FINANCIAL STATEMENTS
13 INVESTMENTS
GROUP
The Group's investment in joint ventures is in respect of its 50 per cent
interest in the Geita mine in Tanzania. This interest is accounted for
under the gross equity basis of accounting.
INVESTMENT LOANS TO
IN JOINT JOINT OTHER
VENTURES VENTURES INVESTMENTS TOTAL
US$M US$M US$M US$M
- ------------------------------------------------------------------------------------------------
COST
At 1 January 2003 91.2 31.1 1.5 123.8
Share of retained profit for the year 22.2 - - 22.2
Loans repaid by joint venture - (30.0) - (30.0)
Sale of investments - - (1.5) (1.5)
- ------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 113.4 1.1 - 114.5
================================================================================================
COMPANY
SUBSIDIARY JOINT OTHER
UNDERTAKINGS VENTURES INVESTMENTS TOTAL
US$M US$M US$M US$M
- ----------------------------------------------------------------------------------------
COST
At 1 January 2003 387.0 85.6 1.5 474.1
Disposals - - (1.5) (1.5)
- ----------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 387.0 85.6 - 472.6
========================================================================================
PROVISIONS
At 1 January 2003 212.5 - - 212.5
Provided in year 13.8 - - 13.8
- ----------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 226.3 - - 226.3
========================================================================================
NET BOOK VALUE
AT 31 DECEMBER 2003 160.7 85.6 - 246.3
At 31 December 2002 174.5 85.6 1.5 261.6
========================================================================================
The principal subsidiary and associated undertakings are:
CLASS OF GROUP INTEREST
COMPANY AND COUNTRY OF INCORPORATION PRINCIPAL ACTIVITIES SHARES HELD PER CENT
- -------------------------------------------------------------------------------------------------------------------
SUBSIDIARY COMPANIES
GHANA
Ashanti Goldfields (Bibiani) Limited Gold Mining Ordinary 100
No par value
Ghanaian-Australian Goldfields Limited Gold Mining Ordinary 80
No par value
Teberebie Goldfields Limited Gold Mining Ordinary 90
No par value
- --------------------------------------------------------------------------------------------------------------
GUINEA
Societe Ashanti Goldfields de Guinee S.A. Gold Mining Ordinary 85
- --------------------------------------------------------------------------------------------------------------
ZIMBABWE
Ashanti Goldfields Zimbabwe Limited Gold Mining Ordinary 100
- --------------------------------------------------------------------------------------------------------------
ISLE OF MAN
Ashanti Treasury Services Limited Treasury Ordinary 100
Geita Treasury Services Limited Treasury Ordinary 100
- --------------------------------------------------------------------------------------------------------------
CAYMAN ISLANDS
Ashanti Capital Limited Financing Ordinary 100
Ashanti Finance (Cayman) Limited Financing Ordinary 100
Ashanti Capital (Second) Limited Financing Ordinary 100
- --------------------------------------------------------------------------------------------------------------
UNITED KINGDOM
Ashanti Goldfields Services Limited Holding Company Ordinary 100
- --------------------------------------------------------------------------------------------------------------
ASSOCIATED COMPANIES
Geita Gold Mining Limited (Tanzania) Gold Mining Ordinary 50
Geita Management Company Limited (Isle of Man) Treasury Ordinary 50
- --------------------------------------------------------------------------------------------------------------
39
NOTES TO THE FINANCIAL STATEMENTS [ASHANTI LOGO]
14 STOCKS
GROUP COMPANY
2003 2002 2003 2002
US$M US$m US$M US$m
- ---------------------------------------------------------------------------------
Mine stores 44.3 51.1 29.2 30.3
Ore in stockpiles 17.0 20.1 8.6 11.1
Gold in process 7.1 5.4 5.7 3.5
- ---------------------------------------------------------------------------------
68.4 76.6 43.5 44.9
=================================================================================
15 DEBTORS
GROUP COMPANY
2003 2002 2003 2002
US$M US$m US$M US$m
- ------------------------------------------------------------------------------------------------------------
DUE WITHIN ONE YEAR:
Sundry debtors 33.2 10.3 17.5 1.3
Prepayments 6.0 3.7 2.8 1.3
Amounts due from subsidiary undertakings - - 221.8 181.3
- ------------------------------------------------------------------------------------------------------------
39.2 14.0 242.1 183.9
DUE AFTER MORE THAN ONE YEAR:
Sundry debtors - 8.8 - -
- ------------------------------------------------------------------------------------------------------------
39.2 22.8 242.1 183.9
============================================================================================================
16 CASH
GROUP COMPANY
2003 2002 2003 2002
US$M US$m US$M US$m
- ----------------------------------------------------------------------------------------
Cash at bank and in hand 52.6 17.1 8.1 3.9
Gold and cash in transit 20.2 24.2 9.8 15.6
- ----------------------------------------------------------------------------------------
72.8 41.3 17.9 19.5
========================================================================================
17 CREDITORS
GROUP COMPANY
2003 2002 2003 2002
US$M US$m US$M US$m
- -----------------------------------------------------------------------------------------------------------------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade creditors 36.2 45.2 17.7 18.8
Deferred purchase consideration 4.7 3.0 - -
Accruals and deferred income 90.4 82.9 70.4 48.7
- -----------------------------------------------------------------------------------------------------------------
131.3 131.1 88.1 67.5
=================================================================================================================
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR:
Deferred purchase consideration - 5.8 - -
Accruals and deferred income 3.6 18.2 - 9.0
Amounts due to subsidiary undertakings - - 691.9 691.6
- -----------------------------------------------------------------------------------------------------------------
3.6 24.0 691.9 700.6
=================================================================================================================
The total deferred purchase consideration of US$4.7 million is in respect
of the acquisition of Teberebie in 2000.
Accruals and deferred income of US$94 million includes US$11.3 million
(2002: US$27.8 million) in respect of deferred hedging income arising from
the early close out of hedging contracts.
40 NOTES TO THE FINANCIAL STATEMENTS
[ASHANTI LOGO]
18 BORROWINGS
GROUP COMPANY
2003 2002 2003 2002
US$M US$m US$M US$m
- ----------------------------------------------------------------------------------------------------------------
Mandatorily Exchangeable Notes (note a.) 75.0 75.0 - -
Enlarged Revolving Credit Facility (note b.) 135.5 144.5 - -
Project finance loans (note c.) 24.3 23.4 - -
Bank loans and overdrafts 5.4 8.2 - 0.5
Finance leases 2.1 3.5 2.1 3.5
Aviation loans - 2.3 - 2.3
- ----------------------------------------------------------------------------------------------------------------
242.3 256.9 2.1 6.3
================================================================================================================
Repayments falling due:
Between one year and two years 45.7 2.0 0.7 1.1
Between two and five years 91.4 136.3 0.7 2.6
After five years 80.3 115.9 - 0.9
- ----------------------------------------------------------------------------------------------------------------
After more than one year 217.4 254.2 1.4 4.6
Within one year 24.9 2.7 0.7 1.7
- ----------------------------------------------------------------------------------------------------------------
242.3 256.9 2.1 6.3
================================================================================================================
a. The US$75.0 million of Mandatorily Exchangeable Notes ("MENs") are
exchangeable into Ordinary Shares on either of the following events:
(i) the completion date of the first rights issue ("Rights Issue") by
the Company undertaken following the date of the MENs Deed Poll;
or
(ii) Ashanti serving a notice of exchange upon the holders of the MENs
at any time after the date falling 18 months after the issue of
the MENs.
The MENs are exchangeable into Ordinary Shares at an exchange price of
the lower of US$5.40 and the price at which the Company issues
Ordinary Shares pursuant to the Rights Issue.
The MENs (if not already exchanged) will be redeemable for cash on the
earlier of:
(i) a takeover offer for the Company, or a scheme of arrangement of
the Company, becoming effective; or
(ii) the date of maturity, being 30 June 2008.
Interest on the MENs is being accrued at the rate of the Enlarged RCF
but such interest only becomes payable if the MENs are redeemed for
cash following one of the two events above. Any interest accrued will
be deemed to be part of the consideration upon conversion of the MENs
into equity.
b. The Enlarged Revolving Credit Facility ("Enlarged RCF") is stated net
of deferred loan fees of US$3.5 million which is being amortised over
the term of the Loan. The Enlarged RCF will be repaid in eight
semi-annual instalments each of US$20 million starting 12 months after
the first drawdown with a further final instalment of US$40 million.
The term of the loan is five years from 28 June 2002.
The interest rate applicable to the Enlarged RCF increases over the
life of the loan. The interest rate is as follows:
(i) Years 1 and 2 - US dollar London Interbank Offer Rate (US LIBOR)
plus 1.75%; and
(ii) Years 3, 4 and 5 - US LIBOR plus 2.00%.
Financial covenants provide that the ratio of consolidated net debt to
consolidated EBITDA (based on the definitions in the Enlarged RCF) is
no greater than 2.50:1 for the 12-month period ended on 31 December
2002, decreasing incrementally to 1.50:1 for any 12-month period
ending after 30 June 2004 and that the ratio of consolidated EBITDA to
consolidated net interest payable (based on the definitions in the
Enlarged RCF) is not less than 4.50:1 for the 12-month period ended 31
December 2002, increasing incrementally to 6.00:1 for any 12-month
period ending after 30 June 2004.
Additionally, consolidated tangible net worth is not to be less than
US$415.0 million at any time, and consolidated net debt is not to
exceed 50% of the consolidated tangible net worth for the periods
ending on or before 30 June 2004 and for the relevant periods
thereafter shall not exceed 40% of the consolidated tangible net
worth. The Enlarged RCF also contains default provisions, including
cross-default provisions.
The lenders under the Enlarged RCF have security over all the hedging
contracts entered into by Ashanti Treasury Services Limited and Geita
Treasury Services Limited, gold refining and purchasing agreements,
insurance contracts, gold in transit and bank accounts. Security has
also been granted over substantially all the assets of the Company and
Ashanti Goldfields (Bibiani)Limited located in Ghana including the
mining leases relating to the Obuasi and Bibiani mines. Ashanti also
agreed to use its best endeavours to give security over its shares in
Cluff Resources Limited, which owns the Geita Mine. In addition,
Ashanti has effected a political risk insurance policy, or PRI, of up
to US$131.0 million in relation only to Ghana for the benefit of the
lenders who, prior to the closing of syndication, elected to take the
benefit of PRI.
The Group under its Enlarged RCF had undrawn committed borrowing
facilities of US$21.0 million as at 31 December 2003.
c. The project finance loans of US$24.3 million (2002: US$23.4 million)
are in respect of loans provided to subsidiaries Ghanaian-Australian
Goldfields Limited and Teberebie Goldfields Limited and are secured by
fixed and floating charges over their respective assets.
NOTES TO THE FINANCIAL STATEMENTS 41
[ASHANTI LOGO]
19 FINANCIAL INSTRUMENTS
Debtors and creditors arising directly from the Group's operations and gold
in transit are excluded from the following disclosures.
INTEREST RATE PROFILE OF FINANCIAL LIABILITIES
The interest rate profiles of the Group's financial liabilities at 31
December 2003 and 31 December 2002, which are predominately US dollar
denominated, were as follows:
Fixed rate borrowings
Weighted average
Floating rate Fixed rate Total gross Weighted average time for which
borrowings borrowings borrowings interest rate period fixed
US$m US$m US$m % Years
- -------------------------------------------------------------------------------------------------------------------
31 DECEMBER 2003 242.3 - 242.3 - -
- -------------------------------------------------------------------------------------------------------------------
31 December 2002 256.9 - 256.9 - -
===================================================================================================================
Interest on floating rate borrowings are determined primarily by reference
to US LIBOR.
INTEREST RATE PROFILE OF FINANCIAL ASSETS
The interest rate profiles of the Group's financial assets at 31 December
2003 and 31 December 2002, which are predominately US dollar denominated,
were as follows:
Fixed rate Floating rate Interest free Total
US$m US$m US$m US$m
- --------------------------------------------------------------------------------------------
31 DECEMBER 2003 - 49.1 3.5 52.6
- --------------------------------------------------------------------------------------------
31 December 2002 - 16.5 0.6 17.1
============================================================================================
The financial assets of the Group comprise cash at bank and in hand.
CURRENCY EXPOSURES
The Group had no significant currency exposures given that all revenues are
US dollar denominated as are the majority of its costs, monetary assets and
financial liabilities.
FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
The fair value of the Group's financial instruments is as follows:
2003 2002
BOOK VALUE FAIR VALUE Book Value Fair Value
US$M US$M US$m US$m
- ----------------------------------------------------------------------------------------------------------------------------
Financial instruments held or issued to
finance the Group's operations:
Long term borrowings 217.4 217.4 254.2 254.2
Short term borrowings 24.9 24.9 2.7 2.7
Cash 52.6 52.6 17.1 17.1
- ---------------------------------------------------------------------------------------------------------------------------
Derivative financial instruments to hedge
the Group's exposure to gold price risk:
Forwards - (400.8) - (56.0)
European Put options - 28.4 - 24.9
European Call options granted - (153.1) - (102.7)
Lease rate swaps - (6.6) - (16.2)
===========================================================================================================================
Fair value is the amount at which a financial instrument could be exchanged
in an arm's length transaction between informed and willing parties. The
following methods and assumptions were used by the Group in estimating its
fair value disclosure for financial instruments:
Cash and other equivalents - The estimated fair value of these financial
instruments approximates their carrying values due to their short
maturities.
Derivative financial instruments - Market values have been used to
determine the fair value of lease rate swaps, call and put options,
convertible structures, and forward contracts based on estimated amounts
the Group would receive or have to pay to terminate the agreements, taking
into account the current interest rate environment or current rates for
similar options on forward contracts.
Long-term debt - The estimated fair values of the Group's long-term debt
are based on current interest rates available to the Group for debt
instruments with similar terms and remaining maturities.
42 NOTES TO THE FINANCIAL STATEMENTS
[ASHANTI LOGO]
19 FINANCIAL INSTRUMENTS (CONTINUED)
HEDGING
It is the Group's policy to hedge the risk of movements in the gold price
using several types of derivative financial instruments.
Gains and losses on instruments used for hedging the gold price are not
recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on the instruments used for hedging and the
movements therein, are as follows:
GAINS LOSSES NET GAINS
US$M US$M US$M
- --------------------------------------------------------------------------------------------------------------------------------
Unrecognised gains and losses on hedges at 1 January 2003 38.3 (10.5) 27.8
Gains arising in previous years recognised in the year (20.0) 5.3 (14.7)
- ------------------------------------------------------------------------------------------------------------------------------
Gains and losses arising before 1 January 2003 not recognised in the year 18.3 (5.2) 13.1
Gains and losses arising in the year and not recognised - (1.8) (1.8)
- ------------------------------------------------------------------------------------------------------------------------------
Unrecognised gains and losses on hedges at 31 December 2003 18.3 (7.0) 11.3
- ------------------------------------------------------------------------------------------------------------------------------
Gains and losses to be recognised within one year 18.3 (7.0) 11.3
Gains and losses to be recognised after one year - - -
==============================================================================================================================
20 PROVISIONS FOR LIABILITIES AND CHARGES
GROUP
DEFERRED SITE
TAX REHABILITATION TOTAL
US$M US$M US$M
- ----------------------------------------------------------------------------------
At 1 January 2003 4.4 20.6 25.0
Charge for the year - 5.6 5.6
Utilised during the year - (2.8) (2.8)
- ----------------------------------------------------------------------------------
AT 31 DECEMBER 2003 4.4 23.4 27.8
==================================================================================
The site rehabilitation provision is expected to be utilised over the next
20 years.
DEFERRED TAX
2003 2002
Restated
US$M US$M
- ------------------------------------------------------------------------------------------------------
Provision for deferred tax consists of the following amounts:
Arising on fixed assets 144.9 141.9
Other timing differences (5.1) (5.3)
Tax losses carried forward (135.4) (132.2)
- ------------------------------------------------------------------------------------------------------
4.4 4.4
======================================================================================================
COMPANY
DEFERRED SITE
TAX REHABILITATION TOTAL
US$M US$M US$M
- ---------------------------------------------------------------------------
At 1 January 2003 1.8 9.4 11.2
Charge for the year (1.8) 0.3 (1.5)
- ---------------------------------------------------------------------------
AT 31 DECEMBER 2003 - 9.7 9.7
===========================================================================
NOTES TO THE FINANCIAL STATEMENTS 43
[ASHANTI LOGO]
21 STATED CAPITAL
NUMBER OF SHARES
- ------------------------------------------------------------------------------------
AUTHORISED
200,000,000 ordinary shares of no par value 200,000,000
1 special rights redeemable preference share of no par value 1
- ----------------------------------------------------------------------------------
200,000,001
==================================================================================
ISSUED STATED CAPITAL
SHARES US$M
- -------------------------------------------------------------------------------------------------------------------------------
ALLOTTED AND FULLY PAID
AT 1 JANUARY 2003:
Ordinary shares of no par value in issue 126,893,915 588
Issue of shares at US$3.00 in respect of the exercise of the warrants 3,593,053 11
- -------------------------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003:
Ordinary shares of no par value in issue 130,486,968 599
Ordinary shares in treasury 556,987* -
1 special rights redeemable preference share of no par value 1 -
- -------------------------------------------------------------------------------------------------------------------------------
131,043,956 599
===============================================================================================================================
*The 556,987 ordinary shares held in treasury do not qualify for dividends
and do not have voting rights.
Based on the prices quoted on the New York Stock Exchange, the Company's
share price traded during the year between a high of US$14.20 and a low of
US$4.25. As at 31 December 2003, the Company's market capitalisation based
on a share price of US$13.04 on that date was US$1.70 billion.
The Government of Ghana holds the special rights redeemable preference
share of no par value (the "Golden Share"). The Golden Share is non-voting
but the holder is entitled to receive notice of and to attend and speak at
any general meeting of the members or at any separate meeting of the
holders of any class of shares. On winding up, the Golden Share has a
preferential right to return of capital, the value of which will be 1,000
cedis.
The Regulations of the Company provide that certain matters, principally
matters affecting the rights of the Golden Share, the winding up of the
Company or the disposal of a material part of the Group's assets, shall be
deemed to be a variation of the rights attaching to the Golden Share and
shall be effective only with the written consent of the holder of the
Golden Share.
All of the ordinary shares in issue rank pari passu in all respects.
On 30 April 2003, the Company in general meeting passed a special
resolution renewing an existing authority to make market purchases of its
own shares up to an aggregate of 12,600,000 ordinary shares at a price per
share (exclusive of expenses) of not more that 5 per cent above the average
of the middle market quotations for the shares taken from the Daily
Official List of the London Stock Exchange for the 5 business days
immediately before the date of purchase. However, the Company did not
utilise this authority. The authority for the Company to purchase its own
shares will expire, unless renewed, on 30 July 2004 or at the conclusion of
the Company's Annual General Meeting if held in 2004.
In November 1999, pursuant to an agreement with the Company's hedge
counterparties, a wholly-owned subsidiary, Ashanti Warrants Limited, issued
unlisted warrants to subscribe for Mandatorily Exchangeable Securities
under which the securityholders have the option of converting the
securities into ordinary shares at a conversion price of US$3 per share.
The warrants were issued in three equal tranches with expiry dates of 28
April 2004, 28 October 2004 and 28 April 2005.
As at 1 January 2003 there were 5,889,879 outstanding warrants. During
2003, a total of 3,593,053 warrants were exercised at US$3 leaving
2,296,826 warrants outstanding at 31 December 2003.
The conversion rights of the remaining warrants could give rise to the
issue of up to 2,296,826 ordinary shares.
In June 2002, the Group issued US$75.0 million of MENs which are
exchangeable into ordinary shares at an exchange price of the lower of
US$5.40 and the price at which Ashanti's ordinary shares will be issued
pursuant to the rights issue. At a price of US$5.40 this could give rise to
an issue of 13.9 million Ashanti ordinary shares. Pursuant to the
subscription agreements for the MENs, Ashanti was obliged to use its best
efforts to complete a rights issue by 28 December 2003. In light of the
proposed merger with AngloGold, Ashanti agreed with Lonmin and the
Government that the period to effect the rights issue would be extended to
28 December 2004. On implementation of the merger, the MENs will be
redeemed in accordance with their terms.
44 NOTES TO THE FINANCIAL STATEMENTS
[ASHANTI LOGO]
21 STATED CAPITAL (CONTINUED)
THE AGC SENIOR MANAGEMENT SHARE OPTION SCHEME
As at 31 December 2003, the total number of ordinary shares over which
executive directors, senior management and other officers held options was
as set out below:
OPTION NUMBER OF
PRICE ORDINARY SHARES
PERIOD OF EXERCISE CODE US$ OF NO PAR VALUE
- -------------------------------------------------------------------------------------------------------------------
13 July 2003-12 July 2010 A 1.66 40,000
28 August 2003-27 August 2010 B 2.55 50,000
3 May 2004-2 May 2011 (Replacement Options) C 2.29 1,445,844
3 May 2004-2 May 2011 D 2.29 906,290
22 August 2005-21 August 2012 E 4.88 599,560
- -----------------------------------------------------------------------------------------------------------------
3,041,694
=================================================================================================================
All options granted on 3 May 2001 were granted with exercise prices of
US$2.29. They ordinarily become exercisable on 3 May 2004 and lapse on 2
May 2011. Options granted on 22 August 2002 were granted with an exercise
price of US$4.88 and ordinarily become exerciseable on 22 August 2005 and
lapse on 21 August 2012. No options were granted in 2003.
An analysis of options held by directors as at 31 December 2003 using the
codes shown above is set out below:
B C D E Total
- ------------------------------------------------------------------------------------------------------
S E Jonah - 87,000 173,664 79,700 340,364
M Botsio-Phillips - 13,500 18,760 14,130 46,390
*E D Ofori Atta - 13,500 16,509 12,430 42,439
*T S Schultz - 38,415 55,229 39,000 132,644
S Venkatakrishnan 50,000 - 52,828 37,300 140,128
- ------------------------------------------------------------------------------------------------------
TOTAL 50,000 152,415 316,990 182,560 701,965
======================================================================================================
* Retired on 31 December 2003.
NOTES TO THE FINANCIAL STATEMENTS 45
[ASHANTI LOGO]
22 DIRECTORS' INTERESTS
The beneficial interests, including family interests, of the directors
holding office at the end of the year in ordinary shares of the Company are
set out below:
SHARES SHARES UNDER OPTION
1 JANUARY 31 DECEMBER 1 JANUARY 31 DECEMBER
2003 2003 2003 2003
- ---------------------------------------------------------------------------------------
M E Beckett 1,873 1,873 - -
S E Jonah 59,690 64,190 340,364 340,364
TE Anin 53 53 - -
M Botsio-Phillips 100 2,350 46,390 46,390
L Chalker - - - -
C A Crocker - - - -
TGibian 20,000 20,000 - -
G E Haslam - - - -
M P Martineau - - - -
N J Morrell - - - -
E D Ofori Atta* 553 2,803 42,439 42,439
T S Schultz* 31,245 20,463 132,644 132,644
S Venkatakrishnan - 2,250 140,128 140,128
- ---------------------------------------------------------------------------------------
AGC 1994 EMPLOYEE SHARE SCHEME
The shareholder-approved AGC 1994 Employee Share Scheme replaced the
Performance Share Plan in 2001.
Under the AGC 1994 Employee Share Scheme, executive directors and key
employees receive Ashanti's shares for free if specified challenging
internal and/or external performance conditions are achieved. For the
awards set out under Category 'A' below, these targets must be met over the
three year period following the making of the award. Provided those targets
are met, the shares are then transferred to participants free of charge at
the end of that period. In respect of awards set out under Category 'B'
below, such targets had to be met before the awards were made after which
the shares were awarded and are to be held in trust for three years from
the date of award, on expiry of which they will be transferred to
participants free of charge. On 22 August 2002, Ashanti issued 234,571 new
Ashanti ordinary shares under this scheme of which 129,871 ordinary shares
were awarded to executive directors.
As at 31 December 2003 the following awards had been made to the directors
holding office at the end of the year under the AGC 1994 Employee Share
Scheme.
SHARES AWARDED UNDER THE
AGC 1994 EMPLOYEE SHARE SCHEME
NAME CATEGORY 'A' CATEGORY 'B'
- ------------------------------------------------------
S E Jonah - 64,040
M Botsio-Phillips 12,000 9,036
E D Ofori Atta* 10,560 8,000
TS Schultz* 35,328 24,940
S Venkatakrishnan 33,792 23,855
- ---------------------------------------------------
TOTAL 91,680 129,871
===================================================
* Retired on 31 December 2003.
The final tranche of shares awarded under the Performance Share Plan in
July 2000 vested on 4 July 2003. Participants including directors holding
office earned 75% of awards and shares were transferred to them
accordingly.
Between 1 January 2004 and 10 February 2004, there were no changes in the
above directors' interests.
46 NOTES TO THE FINANCIAL STATEMENTS
[ASHANTI LOGO]
23 RESERVES
GROUP COMPANY
PROFIT AND SHARE DEALS PROFIT AND SHARE DEALS
LOSS ACCOUNT ACCOUNT TOTAL LOSS ACCOUNT ACCOUNT TOTAL
US$m US$m US$m US$m US$m US$m
- ------------------------------------------------------------------------------------------------------------
At 1 January 2003 (160.9) 19.0 (141.9) (410.4) 19.0 (391.4)
Retained profit for the year 49.2 -- 49.2 25.3 -- 25.3
- ------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 2003 (111.7) 19.0 (92.7) (385.1) 19.0 (366.1)
============================================================================================================
In accordance with the Ghana Companies Code 1963 (Act 179), all
transactions relating to the purchase and re-issue of the Company's own
shares are recorded in a non-distributable share deals account.
Group reserves is after goodwill written off in previous years of US$476
million (2002: US$476 million) arising on the acquisition of subsidiary
undertakings.
24 RECONCILIATION OF OPERATING PROFIT BEFORE EXCEPTIONAL OPERATING COSTS
TO OPERATING CASH FLOWS
2003 2002
US$M US$m
- --------------------------------------------------------------------------
Total operating profit before exceptional operating costs 77.0 97.8
Share of operating profit in joint venture (31.3) (16.7)
- --------------------------------------------------------------------------
OPERATING PROFIT EXCLUDING JOINT VENTURE 45.7 81.1
Depreciation and amortisation 66.9 75.1
Decrease/(increase) in stocks 8.2 (3.1)
(Increase)/decrease in debtors (16.1) 0.2
Decrease in creditors (3.6) (0.7)
Decrease in deferred hedging income (16.5) (37.8)
Increase in provisions 2.8 2.7
Outflows related to exceptional costs (1.1) (22.3)
- --------------------------------------------------------------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 86.3 95.2
==========================================================================
25 FINANCING
2003 2002
US$M US$m
- ---------------------------------------------------------------------------
Enlarged Revolving Credit Facility - drawdowns -- 190.0
- repayments (10.0) (41.0)
Mandatorily Exchangeable Notes - drawdown -- 75.0
Issue of ordinary shares 10.8 41.8
5 1/2% Exchangeable Notes - repayments -- (218.6)
Revolving Credit Facility - repayments -- (55.0)
Other - repayments (9.4) (11.4)
- ---------------------------------------------------------------------------
CASH OUTFLOW FROM FINANCING (8.6) (19.2)
===========================================================================
26 ANALYSIS OF NET DEBT
AT 1 JAN OTHER NON-CASH AT 31 DEC
2003 CASH FLOW MOVEMENTS 2003
US$m US$m US$m US$m
- --------------------------------------------------------------------------------------------------------------
Cash at bank 16.2 34.6 -- 50.8
Bank overdraft (0.6) -- -- (0.6)
- --------------------------------------------------------------------------------------------------------------
Cash 15.6 34.6 -- 50.2
Gold in transit and restricted cash (liquid resources) 25.1 (3.1) -- 22.0
Borrowings (256.3) 19.4 (4.8) (241.7)
- --------------------------------------------------------------------------------------------------------------
NET DEBT (215.6) 50.9 (4.8) (169.5)
==============================================================================================================
NOTES TO THE FINANCIAL STATEMENTS 47
[ASHANTI LOGO]
27 RELATED PARTY TRANSACTIONS
Ashanti's principal shareholder is Lonmin Plc ("Lonmin") which holds a
27.6% interest in the Company. On 3 March 2003, Ashanti announced that as
of 1 March 2003 it had terminated the Technical Services Agreement (the
"TSA") with Lonmin. Under the TSA, Lonmin had provided technical services
and the services of Mr S E Jonah to the Group for which it received US$0.2
million in 2003 (2002: US$0.8 million).
Another major shareholder is the Government of Ghana. The Group pays
royalties, corporate and other taxes and utility charges in the normal
course of business to the Government and associated authorities. Amounts
paid during the year totalled approximately US$38 million (2002: US$48
million).
In June 2002, Ashanti Capital (Second) Limited issued US$75 million of
mandatorily exchangeable notes ("MENs"). The MENs are held entirely by
Lonmin, with the Government of Ghana having an option over certain of the
MENs. Pursuant to the subscription agreements for the MENs, Ashanti was
obliged to use its best efforts to complete a rights issue by 28 December
2003. In light of the proposed merger with AngloGold, Ashanti agreed with
Lonmin and the Government that the period to effect the rights issue would
be extended to 28 December 2004. On implementation of the merger, the MENs
will be redeemed in accordance with their terms.
On 31 December 2003, Geita Gold Mining Limited made a distribution of US$30
million in partial repayment of outstanding shareholder loans. AngloGold
agreed that US$15 million of the distribution that would otherwise have
been payable to the AngloGold Group should instead be paid directly to the
Ashanti Group. Following this repayment, the total principal amount of
shareholder loans including accrued interest owed to the Ashanti Group was
US$14.1 million. On 3 February 2004, AngloGold Geita Holdings Limited, a
subsidiary of AngloGold, agreed to purchase this residual shareholder loan
at par.
On 3 February 2004, SMI Holdings Limited, a subsidiary at AngloGold, agreed
to provide an unsecured loan facility of up to US$20 million to Ashanti
Capital Limited, payable in two equal tranches. The first tranche can be
drawn down at any time with five days' notice. The second tranche can be
drawn down on five days' notice, subject to Ashanti providing evidence
that: (a) it has fully utilised the existing headroom under the Enlarged
RCF; and (b) all reasonable methods of raising finance by way of hedging
and/or derivative transactions have been exhausted (subject to remaining in
compliance with Ashanti's hedging policy and subject to the terms of the
transaction agreement with AngloGold). On payment of any amount in respect
of the second tranche, AngloGold is entitled to issue a notice specifying
that no further capital expenditure shall be incurred in connection with
the Siguiri project before the second tranche has been repaid in full, save
for amounts that become due and payable under the terms of agreements
entered into before the date of the notice. Interest is payable on the loan
at the rate (inclusive of PRI premium) applicable to the Enlarged RCF. In
certain circumstances, the Loan is subordinated to the terms of the
Enlarged RCF. Each tranche of the loan is repayable on the earlier of the
first anniversary of the date on which the first advance is made and 31
March 2005, subject to such subordination. AngloGold also agreed to provide
a guarantee to Ashanti of up to US$6 million in respect of certain plant
and machinery purchase agreements.
28 CONTINGENT LIABILITIES
US CLASS ACTIONS
The consolidated class action which was commenced in the year 2000, is
pending against the Company and one officer and director and one former
director under United States Federal Securities laws in the United States
District Court for the Eastern District of New York. The complaint alleges
non-disclosures and misstatements regarding Ashanti's hedging position and
hedging programme. The plaintiffs contend that the Company and the
individual defendants' actions violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated under that Act.
The plaintiffs seek unspecified damages, attorneys' and experts' fees and
other reliefs. The damages sought by the plaintiffs have not yet been
specified, as is common practice in US litigation at the current state of
proceedings.
The Company continues to vigorously defend the action. Depositions of key
witnesses have been taken. Certain pre-trial motions filed by both parties
have yet to be resolved by the trial court. Although the Company cannot
make any assurances regarding the ultimate result of the litigation at this
stage, based on its current knowledge, it believes that the outcome will
have no material adverse effect on the Company's financial position.
KIMIN - EMPLOYEE ACTIONS
A number of expatriate employees instituted an action against Kilo-Moto
Mining Corporation ("Kimin"), a subsidiary of the Company, and against the
Company in the Brussels Labour Court for arrears of salary, severance
payments and payment in lieu of holiday. Other claims have been made
against the Company and Kimin by other ex-employees, consultants and third
party creditors. The Company is currently evaluating these claims. Based on
information currently available, the Company believes that this potential
liability has been reasonably provided for in its financial statements.
SIGUIRI - TAX DEMANDS
The Government of the Republic of Guinea has demanded 22.6 billion Guinean
francs (approximately US$11.3 million) from Societe Ashanti Goldfields de
Guinee S.A. ("SAG") in respect of withholding and other taxes. SAG has a
Convention de Base with the Republic of Guinea which provides for
exemptions from these items and is therefore contesting this demand.
48 HEDGING APPENDIX
[ASHANTI LOGO]
The following table sets out Ashanti's hedge portfolio as at 31 December
2003:
2004 2005 2006 2007 2008 2009
- -------------------------------------------------------------------------------------------------------
Forward Sales (ounces) 655,764 677,246 566,250 507,450 400,450 413,450
(US$/ounce) 357 352 358 360 369 362
- -------------------------------------------------------------------------------------------------------
CALLS:
Sold (ounces) 496,180 470,478 182,006 173,826 218,410 70,970
(US$/ounce) 341 350 368 357 365 368
- -------------------------------------------------------------------------------------------------------
Bought (ounces) 101,880 134,000 49,432 64,396 -- --
(US$/ounce) 359 352 370 361 -- --
- -------------------------------------------------------------------------------------------------------
Subtotal (ounces) 394,300 336,478 132,574 109,430 218,410 70,970
- -------------------------------------------------------------------------------------------------------
SUMMARY:
PROTECTED (ounces) 655,764 677,246 566,250 507,450 400,450 413,450
- -------------------------------------------------------------------------------------------------------
COMMITTED (ounces) 1,050,064 1,013,724 698,824 616,880 618,860 484,420
- -------------------------------------------------------------------------------------------------------
Lease Rate Swap (ounces) 546,000 468,000 1,245,000 1,267,000 1,084,000 826,000
- -------------------------------------------------------------------------------------------------------
Total committed ounces
as a percentage of total
forecast production
(excluding Geita for the
period of the project
financing ie 2003 - 2007)
- -------------------------------------------------------------------------------------------------------
Deferred
Hedging Income (US$m) 11 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 TOTAL
- ------------------------------------------------------------------------------------------
Forward Sales (ounces) 383,450 324,250 292,500 214,500 4,435,310
(US$/ounce) 366 373 378 369 362
- ------------------------------------------------------------------------------------------
CALLS:
Sold (ounces) 28,250 28,250 -- -- 1,668,370
(US$/ounce) 350 350 -- -- 353
- ------------------------------------------------------------------------------------------
Bought (ounces) -- -- -- -- 349,708
(US$/ounce) -- -- -- -- 359
- ------------------------------------------------------------------------------------------
Subtotal (ounces) 28,250 28,250 -- -- 1,318,662
- ------------------------------------------------------------------------------------------
SUMMARY:
PROTECTED (ounces) 383,450 324,250 292,500 214,500 4,435,310
- ------------------------------------------------------------------------------------------
COMMITTED (ounces) 411,700 352,500 292,500 214,500 5,753,972
- ------------------------------------------------------------------------------------------
Lease Rate Swap (ounces) 568,000 310,000 130,000 -- --
- ------------------------------------------------------------------------------------------
Total committed ounces
as a percentage of total
forecast production
(excluding Geita for the
period of the project
financing ie 2003 - 2007) 45%
- ------------------------------------------------------------------------------------------
Deferred
Hedging Income (US$m) -- -- -- -- 11
- ------------------------------------------------------------------------------------------
DETAILS OF HEDGING CONTRACTS OUTSTANDING AT 31 DECEMBER 2003
FORWARD SALES:
A total of 4.44 million ounces have been sold forward at an average price
of US$362 per ounce.
CALL OPTIONS:
Ashanti has sold 1.67 million ounces of call options at an average strike
price of US$353 per ounce. As a partial offset, Ashanti has bought 0.35
million ounces of call options at an average strike price of US$359 per
ounce.
GOLD LEASE RATE SWAPS:
As of 31 December 2003, a maximum of 1.27 million ounces of Ashanti's
hedged production will be exposed to the floating 3 month lease rate at any
one time.
The lease rate swaps can be broken down into the following types (under all
of these contracts Ashanti receives a certain lease rate income, which can
be regarded as compensation for the lease rate exposure that Ashanti takes
on).
FIXED RATE VOLUME
DESCRIPTION (%) (OUNCES)
- -----------------------------------------------------------------------------------------------------------------------------
Ashanti pays a quarterly floating rate and receives a weighted average quarterly fixed rate of 1.80% 1.80 1,361,000
Ashanti pays a quarterly floating rate and receives a fixed amount of dollars at maturity.
The quarterly amount is rolled until maturity of each forward contract. The fixed amount for
each contract is calculated using the formula: Volume*YearsToMaturity*302*2.00%
The next rate set is in 2006. 2.00 320,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 1,681,000
- -----------------------------------------------------------------------------------------------------------------------------
HEDGING APPENDIX 49
[ASHANTI LOGO]
MARK-TO-MARKET VALUATIONS
On 31 December 2003, the portfolio had a negative mark-to-market value of
US$532.14 million. This valuation was based on a spot price of US$417 per ounce
and the then prevailing applicable US interest rates, gold forward rates,
volatilities and guidelines provided by the Risk Management Committee of the
Board. The delta at that time was 5.3 million ounces. This implies that a US$1
increase in the price of gold would have a US$5.3 million negative impact
(approximate) on the mark-to-market valuation of the hedge book. Movements in US
interest rates, gold lease rates, volatilities and time will also have a
sizeable impact on the mark-to-market. All these variables can change
significantly over short time periods and can consequently materially affect the
mark-to-market valuation.
The approximate breakdown by type of the mark-to-market valuation at 31 December
2003, was as follows:
US$M
- --------------------------------------------
Forward contracts (400.82)
European Call options (net sold) (124.76)
Lease rate swaps (6.56)
- --------------------------------------------
(532.14)
- --------------------------------------------
HEDGE BOOK SENSITIVITIES
All of the projections set out below are forward looking statements and have
been prepared for illustrative purposes only, based on the assumptions and
sensitivities set out below and the hedge book as at 31 December 2003.
Accordingly, the actual realised prices, cash flows, mark-to-market values and
portfolio sensitivities could differ materially from those set out below as a
result of a number of factors including active management of the hedge book.
MARK-TO-MARKET PROJECTIONS
The following table shows projected mark-to-markets of the portfolio for
specified dates at specified spot gold prices. These mark-to-markets are
calculated using mid-rates and no volatility skew for options is assumed. Note
also that there is one lease rate swap that is not paid out immediately but is
paid out in line with forward sales - for this a fixing rate of 2 per cent is
assumed. All amounts are in US$ millions.
SPOT US$300/OZ US$325/OZ US$350/OZ US$375/OZ US$400/OZ US$425/OZ US$450/OZ
- -------------------------------------------------------------------------------------------------
Dec 04 103.78 4.43 (97.86) (202.94) (310.36) (419.53) (529.92)
Dec 05 106.61 26.57 (55.17) (138.59) (223.48) (309.54) (396.49)
Dec 06 104.59 39.42 (27.22) (95.29) (164.57) (234.81) (305.76)
Dec 07 97.52 45.89 (6.94) (61.08) (116.42) (172.70) (229.62)
Dec 08 86.13 45.24 3.93 (37.87) (80.14) (122.78) (165.65)
Dec 09 71.32 40.68 9.82 (21.26) (52.53) (83.91) (115.38)
Dec 10 53.07 31.99 10.78 (10.58) (32.03) (53.56) (75.12)
Dec 11 33.43 20.52 7.61 (5.30) (18.21) (31.12) (44.03)
Dec 12 13.06 7.51 1.97 (3.58) (9.13) (14.67) (20.22)
Dec 13 -- -- -- -- -- -- --
50 HEDGING APPENDIX
[ASHANTI LOGO]
PORTFOLIO SENSITIVITIES
The following table shows the sensitivity of the portfolio to certain
market rate movements as at 31 December 2003. A description of each
sensitivity is given below.
Delta (5.33) (Ounces million)
Gold Rho 14.0 (US$ million)
US Rho (15.2) (US$ million)
Gold Vega (1.85) (US$ million)
Theta (per day) 0.14 (US$ million)
Delta The delta shows the gold ounces that Ashanti would have to buy
to neutralise the Hedge Book position. The delta could also be
interpreted as the change in mark-to-market for a US$1 move in
the spot gold price, i.e. a US$1 increase in spot would reduce
the mark-to-market by US$5.33 million.
Gold Rho The gold rho figure shows the change in mark-to-market for a
25 basis point parallel shift in the gold interest rate curve,
i.e. a 0.25 per cent rise in gold interest rate across the
gold curve would increase the mark-to-market by US$14.0
million.
US Rho The US rho figure shows the change in the mark-to-market for a
25 basis point parallel shift in US interest rates, i.e. a
0.25 per cent rise in US interest rates across the US interest
rate curve would decrease the mark-to-market by US$15.2
million.
Gold Vega The Gold vega figure shows the change in mark-to-market for a
1 per cent parallel shift in the gold volatility curve, i.e. a
1 per cent rise in the gold volatility curve would decrease
the mark-to-market by US$1.85 million.
Theta The theta figure shows the change in mark-to-market owing to
the passing of one day, with everything else remaining
constant, i.e. if all market parameters stay the same, the
mark-to-market would increase by US$0.14 million for the next
day.
CASH FLOW PROJECTIONS
The following table shows a breakdown of the cash flows that would be
received or paid under specified spot and lease rate assumptions. The
specified lease rates are used for all rate-sets, i.e. three month. The
specified spot price is used to cash-settle all contracts. All amounts are
in US$ millions.
SPOT US$300/OZ US$325/OZ US$350/OZ
LEASE RATE 1% 2% 3% 1% 2% 3% 1% 2% 3%
- ---------------------------------------------------------------------------------------------
2004 38.11 36.87 35.62 20.54 19.19 17.84 1.53 0.07 (1.38)
2005 36.32 34.75 33.18 19.49 17.79 16.08 (0.70) (2.53) (4.36)
2006 33.73 32.18 30.64 19.64 17.96 16.29 5.49 3.69 1.88
2007 32.81 29.74 26.66 20.28 16.96 13.63 7.21 3.63 0.05
2008 30.05 26.56 23.07 20.20 16.42 12.64 9.65 5.58 1.50
2009 27.41 24.33 21.25 17.19 13.85 10.52 6.97 3.37 (0.22)
2010 26.42 23.84 21.26 16.89 14.09 11.29 7.36 4.35 1.33
2011 24.38 22.28 20.18 16.27 14.00 11.72 8.16 5.71 3.26
2012 22.85 21.14 19.43 15.48 13.63 11.77 8.11 6.11 4.12
2013 14.61 13.08 11.54 9.15 7.48 5.82 3.69 1.89 0.10
- ---------------------------------------------------------------------------------------------
TOTAL 286.69 264.77 242.83 175.13 151.37 127.60 57.47 31.87 6.28
- ---------------------------------------------------------------------------------------------
HEDGING APPENDIX 51
[ASHANTI LOGO]
GEITA HEDGING
The table below shows Ashanti's portion of hedging commitments for Geita as at
31 December 2003. This represents half of Geita's hedge commitments.
2004 2005 2006 2007 TOTAL
- -------------------------------------------------------------------------------
Forward Sales (ounces) 195,299 174,828 94,576 120,938 585,641
(US$/ounce) 289 294 296 298 293
- -------------------------------------------------------------------------------
PUTS:
Bought (ounces) 25,586 24,350 18,115 23,390 91,441
(US$/ounce) 291 291 291 292 291
- -------------------------------------------------------------------------------
SUMMARY:
PROTECTED (ounces) 220,885 199,178 112,691 144,328 677,082
- -------------------------------------------------------------------------------
COMMITTED (ounces) 195,299 174,828 94,576 120,938 585,641
- -------------------------------------------------------------------------------
Lease Rate Swap (ounces) 116,774 76,301 41,420 -- --
- -------------------------------------------------------------------------------
MARK-TO-MARKET VALUATION
On 31 December 2003, the Geita portfolio had a negative mark-to-market value of
US$154.90 million, (Ashanti's portion: negative US$77.45 million). This
valuation was based on a spot price of US$417 per ounce and the then prevailing
US interest rates, gold forward rates, volatilities and guidelines provided by
the Risk Management Committee of the Board.
SPOT US$375/OZ US$400/OZ US$425/OZ US$450/OZ
LEASE RATE 1% 2% 3% 1% 2% 3% 1% 2% 3% 1% 2% 3%
- --------------------------------------------------------------------------------------------------------------------------------
(25.84) (27.40) (28.95) (52.31) (53.97) (55.64) (78.48) (80.25) (82.02) (104.66) (106.53) (108.40)
(23.25) (25.22) (27.18) (48.35) (50.44) (52.54) (73.59) (75.82) (78.04) (98.84) (101.19) (103.55)
(9.60) (11.54) (13.47) (26.93) (29.00) (31.06) (44.34) (46.53) (48.72) (61.74) (64.06) (66.38)
(6.92) (10.76) (14.60) (22.29) (26.39) (30.48) (37.55) (41.90) (46.25) (52.81) (57.42) (62.03)
(2.01) (6.37) (10.74) (16.92) (21.57) (26.23) (32.22) (37.17) (42.12) (47.53) (52.77) (58.01)
(3.96) (7.81) (11.66) (15.74) (19.85) (23.96) (27.74) (32.10) (36.47) (39.73) (44.36) (48.98)
(2.88) (6.11) (9.34) (13.11) (16.56) (20.00) (23.35) (27.01) (30.67) (33.59) (37.46) (41.34)
(0.66) (3.28) (5.90) (9.48) (12.27) (15.07) (18.29) (21.26) (24.23) (27.11) (30.26) (33.40)
0.74 (1.40) (3.54) (6.63) (8.92) (11.20) (14.01) (16.43) (18.86) (21.38) (23.95) (26.51)
(1.78) (3.70) (5.62) (7.24) (9.29) (11.34) (12.71) (14.89) (17.06) (18.17) (20.48) (22.79)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL (76.16) (103.59) (131.00) (219.00) (248.26) (277.52) (362.28) (393.36) (424.44) (505.56) (538.48) (571.39)
- --------------------------------------------------------------------------------------------------------------------------------
52 FIVE YEAR FINANCIAL SUMMARY
[ASHANTI LOGO]
Year to Year to Year to Year to YEAR TO
31 Dec 1999 31 Dec 2000 31 Dec 2001 31 Dec 2002 31 DEC 2003
US$m US$m US$m US$m US$M
- ----------------------------------------------------------------------------------------------------------------------------------
PROFIT AND LOSS
TOTAL TURNOVER 582.1 582.2 554.4 552.2 564.9
TOTAL COSTS BEFORE EXCEPTIONAL ITEMS (485.8) (493.1) (457.6) (466.5) (487.9)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 96.3 89.1 76.6 81.1 45.7
SHARE OF OPERATING PROFIT OF JOINT VENTURE
BEFORE EXCEPTIONAL ITEMS -- -- 20.2 16.7 31.3
PROFIT BEFORE TAXATION AND
EXCEPTIONAL ITEMS 66.4 37.8 67.4 75.2 60.1
EXCEPTIONAL ITEMS (250.0) (168.6) -- (23.5) (5.6)
Taxation (2.7) (8.8) (9.6) 3.7 (4.1)
PROFIT/(LOSS) AFTER TAXATION AND
EXCEPTIONAL ITEMS (186.3) (139.6) 57.8 55.4 50.4
PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS (183.9) (141.1) 59.9 56.2 49.2
Dividend -- -- -- -- --
RETAINED PROFIT/(LOSS) FOR THE YEAR (183.9) (141.1) 59.9 56.2 49.2
- ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS (US$) 0.59 0.27 0.53 0.67 0.43
==================================================================================================================================
31 Dec 1999 31 Dec 2000 31 Dec 2001 31 Dec 2002 31 DEC 2003
US$m US$m US$m US$m US$M
- -----------------------------------------------------------------------------------------------------------------
BALANCE SHEET
FIXED ASSETS 1,139.5 769.2 746.0 743.8 733.3
CURRENT ASSETS 197.9 167.0 151.7 140.7 180.4
CREDITORS:
AMOUNTS DUE WITHIN ONE YEAR (341.0) (176.2) (180.3) (133.8) (156.2)
NET CURRENT ASSETS/(LIABILITIES) (143.1) (9.2) (28.6) 6.9 24.2
TOTAL ASSETS LESS CURRENT LIABILITIES 996.4 760.0 717.4 750.7 757.5
CREDITORS:
AMOUNTS DUE OVER ONE YEAR (578.6) (456.7) (350.4) (278.2) (221.0)
CAPITAL AND RESERVES
Stated capital 544.3 544.3 545.2 588.2 599.0
Reserves (153.1) (269.6) (198.1) (141.9) (92.7)
- -----------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' FUNDS 391.2 274.7 347.1 446.3 506.3
=================================================================================================================
SHAREHOLDER INFORMATION 53
[ASHANTI LOGO]
SHAREHOLDER PROFILE
as at 23 January 2004
NUMBER OF PERCENTAGE OF TOTAL NUMBER PERCENTAGE OF
CATEGORY SHAREHOLDERS SHAREHOLDERS OF SHARES ISSUED SHARES
- ---------------------------------------------------------------------------------------------
Private individuals 27,659 97.20 1,678,817 1.28
Pension funds 28 0.10 271,826 0.21
Insurance companies 11 0.04 11,055 0.01
Private/investment trusts 69 0.24 847,765 0.65
Other corporate holders 688 2.42 127,677,505 97.85
- ------------------------------------------------------------------------------------------
TOTAL 28,455 100.00 130,486,968* 100.00
==========================================================================================
SIZE OF HOLDING
- ------------------------------------------------------------------------------------------
1 - 100 26,219 92.14 373,058 0.29
101 - 500 1,669 5.87 340,698 0.26
501 - 1,000 278 0.98 191,281 0.15
1,001 - 5,000 223 0.78 453,311 0.35
5,001 - 10,000 25 0.09 189,745 0.15
10,001 and over 41 0.14 128,938,875 98.80
- ------------------------------------------------------------------------------------------
TOTAL 28,455 100.00 130,486,968* 100.00
==========================================================================================
*Excluding 556,987 ordinary shares held in Treasury
TWENTY LARGEST SHAREHOLDERS
as at 23 January 2004
(representing 98.5 per cent of the issued ordinary shares of 130,486,968)
NUMBER OF
NAME OF COMPANY/INDIVIDUAL SHARES HELD
- -------------------------------------------------------------
1. BNY (Nominees) Limited* 66,071,300
2. Lonmin Plc 36,000,000
3. Government of Ghana 21,978,104
4. Libyan Arab African Investment Co. Ltd. 1,601,309
5. Vidacos Nominees Limited 1,107,895
6. AGC Share Scheme Trustee Limited 743,360
7. Band & Co 200,000
8. SSNIT 178,876
9. HSBC Bank, USA 140,820
10.Temple Asset (Private) Limited 136,185
11.NYNominees Limited 99,056
12.Gold Coast Securities Limited 87,171
13.Sam Esson Jonah 64,190
14.Bard Nominees (PVT)Limited 58,769
15.EBG Stockbrokers/Adansi Development Fund 53,485
16.HSBC Global Custody Nominee (UK) Limited 30,679
17.Ashanti Goldfields Employees Provident Fund 27,650
18.GP2 Nominees - P/L 24,690
19.Henricus John Mary Wientjes 21,390
20.Productive Nominees Limited 20,000
- -------------------------------------------------------------
128,644,929
=============================================================
*Depositary for Global Depositary Receipts
54 SHAREHOLDER INFORMATION
[ASHANTI LOGO]
LISTING OF ORDINARY SHARES
The Company's ordinary shares are listed on the following international stock
exchanges and trade under the symbols shown:
Ghana AGC
London ASN
New York ASL (CUSIP # 043743202)
Zimbabwe -
The Company's shares are also traded on the London and New York stock exchanges
by way of a sponsored Global Depositary Receipt (GDR) facility with The Bank of
New York as Depositary. The ratio of GDRs to ordinary shares is 1:1. The
securities are also traded as ordinary shares on the Ghana and London stock
exchanges.
On the Zimbabwe Stock Exchange, the Company's securities are also traded by way
of a sponsored Zimbabwe Depositary Receipt (ZDR) facility with Temple Assets
Executor and Trust Company (Private) Limited as Depositary and are also traded
as ordinary shares. The ratio of ZDRs to ordinary shares is 100:1.
ASHANTI DEPOSITARY INTERESTS
Ashanti operates a scheme under which holders of Ashanti shares on its
International Register are allowed to settle dealings on the London Stock
Exchange using the CREST System (the paperless settlement system in the UK
allowing securities to be transferred from one person's CREST account to another
without the need to use share certificates or written instruments of transfer).
Against the deposit of each Ashanti share, Ashanti's International Branch
Registrars, Capita IRGPlc issues a depositary interest (an Ashanti Depositary
Interest).
DIVIDEND PAYMENTS
The Company's ordinary dividends, if any, are declared and paid in US dollars to
shareholders on the International Register unless they elect to receive them in
pounds sterling.
Shareholders on the Ghana Register receive their dividends in Cedis unless they
are non-resident and elect to receive them in US dollars or pounds sterling.
Shareholders on the Zimbabwe Register receive their dividends in Zimbabwe
dollars.
DIVIDEND MANDATES
Shareholders who wish to have their dividends paid directly into a bank or
building society account should contact their Registrars for a dividend mandate
form.
SHARE DIVIDEND PLAN
Shareholders are normally offered the opportunity under the Ashanti Share
Dividend Plan to reinvest their cash dividends in the Company's shares. To date,
the Ashanti Share Dividend Plan has not been offered to shareholders on the
Zimbabwe Register because they would be disadvantaged by the significant share
price differential between the London and Zimbabwe stock exchanges. The Company
is monitoring the share price differential and will offer a share alternative
once the differential is considered to be immaterial.
SHAREHOLDER ENQUIRIES:
INTERNATIONAL REGISTRARS'
UK TRANSFER OFFICE
IRG Plc
Bourne House,
34 Beckenham Road, Beckenham,
Kent BR3 4TU
Telephone: (+44-20) 8639 2000
Fax: (+44-20) 8639 3430
GHANA REGISTRARS
NTHC Limited
Registrar/Custodial Unit
Martco House
Off Kwame Nkrumah Avenue
P O Box KIA 9563 Airport
Accra, Ghana
Telephone: (+233-21) 235817
Fax: (+233-21) 240243
ZIMBABWE REGISTRARS
Syfrets Corporate and
Merchant Bank
1st Floor
99 Jason Moyo Avenue
P O Box 2540
Harare, Zimbabwe
Telephone: (+263-4) 736011
Fax: (+263-4) 736022
GDR HOLDER ENQUIRIES:
The Bank of New York
ADR Department
101 Barclay Street, 22nd Floor
New York, NY 10286
Telephone: (+1-212) 815 5133
Fax: (+1-212) 571 3050
OFFICERS 55
[ASHANTI LOGO]
CORPORATE OFFICE
S E Jonah *
Chief Executive and Group Managing Director
Mrs M Botsio-Phillips *
General Counsel
D M A Owiredu *
Acting Chief Operating Officer and Managing Director of Obuasi
S Venkatakrishnan *
Chief Financial Officer
E Abankroh *
Company Secretary
J K Anaman *
Managing Director, Public Affairs
M Arnesen
Managing Director, International Treasury
K Awotwi *
Managing Director,
Strategic Planning & New Business Development
A Darko *
Managing Director,
Information Systems & Telecoms
G Potter *
Managing Director, Metallurgy and Supplies
K Akosah-Bempah*
Special Assistant to the Chief Executive
K Antwi-Boasiako
Group Human Resources Coordinator
E Dwomoh-Appiah
General Manager, Properties
A de Freitas Group Mining Engineer
E Harlley *
Group Manager, Internal Audit
G Townsend
Group Financial Controller
K Tshribi
General Manager, Legal
ASHANTI ZIMBABWE
I Munikwa
General Manager
N A Armar
Finance Director
BIBIANI MINE
B Horochuk
Managing Director
IDUAPRIEM MINE
D Renner
Managing Director
OBUASI MINE
K Addo-Kuffour
Financial Controller
J A Amanor
Senior Manager, Geology
Mrs E Kwami
General Manager, Human Resources
S Oti-Attakorah
General Manager, Processing
A Kessie
General Manager, Operations Review
S Oti-Brako
General Manager, Mining
SIGUIRI, GUINEA
R Erickson
Directeur General and Managing Director,
Societe Ashanti Goldfields de Guinee
B Aheto
Mine Manager, Siguiri
GEITA, TANZANIA
P Turner
Managing Director
P Louw
Finance Director
ASHANTI EXPLORATION
P N Cowley *
Managing Director
*Member of the Chief Executive's Committee
56 FORWARD LOOKING STATEMENTS
[ASHANTI LOGO]
This report contains a number of statements relating to plans, forecasts
and future results of Ashanti Goldfields Company Limited ("Ashanti") that
are considered "forward looking statements" as defined in the Private
Securities Litigation Reform Act 1995 of the United States of America
including but not limited to those related to future working capital,
future production levels, operating costs and plans for diversification and
the proposed merger with AngloGold Limited. Ashanti may also make written
or oral forward-looking statements in its presentations, periodic reports
and filings with the various regulatory authorities, in its annual report
to shareholders, in its offering circulars and prospectuses, in press
releases and other written materials and in oral statements made by its
officers, directors or employees to third parties. These forward looking
statements include statements about Ashanti's beliefs, hopes, projections
and expectations, and may include statements regarding future plans,
objectives or goals, anticipated production or construction commencement
dates, construction completion dates, working capital, expected costs,
production output, the anticipated productive life of mines, projected
cashflows, debt levels, and marked-to-market values of and cashflows from
the hedgebook.
Such statements are based on current plans, information, intentions,
estimates and projections and certain external factors which may be beyond
the control of Ashanti and, therefore, undue reliance should not be placed
on them. These statements are subject to risks and uncertainties that could
cause actual occurrences to differ materially from the forward looking
statements, such as the risks that Ashanti may not be able to achieve the
levels of production and operating costs it has projected. Additional risk
factors affecting Ashanti are set out in Ashanti's filing with the US
Securities and Exchange Commission.
Ashanti can give no assurances that such results, including the actual
production or commencement dates, construction completion dates, costs or
production output or anticipated life of the projects and mines, projected
cashflows, debt levels, and marked-to-market values of and cashflows from
the hedgebook, will not differ materially from the forward looking
statements contained in this report. Such forward looking statements are
not guarantees of future performance and involve known and unknown risks,
uncertainties and other factors collectively referred to as "Risk Factors",
many of which are beyond the control of Ashanti, which may cause actual
results to differ materially from those expressed in the statements
contained in this report. These Risk Factors include leverage, gold price
volatility, changes in interest rates, hedging operations, reserves
estimates, exploration and development, mining, yearly output, power
supply, Ghanaian political risks, environmental regulation, labour
relations, general political risks, control by principal shareholders,
Ghanaian statutory provisions, dividend flows and litigation. For example,
future revenues from projects or mines described herein will be based in
part upon the market price of gold, which may vary significantly from
current levels. Such variations, if materially adverse, may impact the
timing or feasibility of the developments of a particular project or the
expansion of specified mines.
Other factors that may affect the actual construction or production
commencement dates, costs or production output and anticipated lives of
mines include the ability to produce profitably and transport gold
extracted therefrom to applicable markets, the impact of foreign currency
exchange rates, the impact of any increase in the costs of inputs, and
activities by governmental authorities where such projects or mines are
being explored or developed, including increases in taxes, changes in
environmental and other regulations and political uncertainty. Likewise the
cashflows from and marked-to-market values of the hedgebook can be affected
by, inter alia, gold price volatility, US interest rates, gold lease rates
and active management of the hedgebook.
Forward looking statements speak only as of the date they are made, and
except as required by law, or unless required to do so by the Listing Rules
of the UK Listing Authority, Ashanti undertakes no obligation to update
publicly any of them in light of new information or future events.
CORPORATE INFORMATION 57
[ASHANTI LOGO]
ASHANTI GOLDFIELDS COMPANY LIMITED
Registered in Ghana No. 7094 ARBN 074 370 862
REGISTERED OFFICE
Gold House
Patrice Lumumba Road
PO Box 2665
Accra, Ghana
Telephones: (+233-21) 772190
(+233-21) 772235
(+233-21) 778160
(+233-21) 778167
(+233-21) 761311
(Satellite) 874 1562524
Fax: (+233-21) 775947
(Satellite) 874 1562525
Website www.ashantigold.com
Ernest Abankroh
Company Secretary
Telephone: (+233-21) 774977
Fax: (+233-21) 778155
E-Mail Address ernest.abankroh@ashantigold.com
LONDON OFFICE
3rd Floor, Roman House
Wood Street
London EC2Y 5BA
United Kingdom
Telephone: (+44-20) 7256 9938
Fax: (+44-20) 7256 9939
INVESTOR RELATIONS
CORPORATE OFFICE
James Anaman
Managing Director, Public Affairs
Telephones: (+233-21) 778178
(+233-21) 772190
Fax: (+233-21) 778156
E-Mail Address james.anaman@ashantigold.com
LONDON OFFICE
Corinne Gaisie
UK Representative
Telephone: (+44-20) 7256 9938
Fax: (+44-20) 7256 9939
E-Mail Address corinne.gaisie@ashanti.co.uk
THE GLOBAL CONSULTING GROUP
Allan Jordan (New York)
Telephone: (+1-646) 284 9452
Fax: (+1-646) 284 9494
E-Mail Address ajordan@hfgcg.com
BIBIANI MINE
PO Box 98, Bibiani, Ghana
Telephone: (+233-51) 20118
Satellite Fax: 873 761314865
FREDA-REBECCA MINE
PO Box 70, Bindura, Zimbabwe
Telephone: (+263-71) 7300/1
Fax: (+263-71) 6919
GEITA MINE
PO Box 532
Geita, Tanzania
Telephone: (+255-28) 2520 500
Fax: (+255-28) 2520 502
IDUAPRIEM MINE
PO Box 283, Tarkwa, Ghana
Telephone: (+233-362) 505
(Satellite) 873 1627111
Fax: (+233-362) 479
(Satellite) 873 1627112
OBUASI MINE
PO Box 10, Obuasi, Ghana
Telephones: (+233-582) 494-8
(+233-582) 475
Fax: (+233-582) 268
SIGUIRI MINE
c/o Societe Ashanti Goldfields de Guinee
KM4, Cameroun B.P. 1006
Conakry, Guinee
Telephone: (+1-301) 916 53 87
Satellite 873 761333884
873 685-51881
Fax: (+1-301) 916 53 79
Satellite 873 76333885
ASHANTI EXPLORATION
4, Nortei Ababio Street
Roman Ridge
PO Box 2665, Accra, Ghana
Telephones: (+233-21) 774377
(+233-21) 767335/6
Fax: (+233-21) 778739