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ANG
ANANO
ANG - AngloGold - Report To Shareholders For The Quarter Ended 31 March 2007
Group Results For The Quarter
ANGLOGOLD ASHANTI LIMITED
(Registration number 1944/017354/06)
(Incorporated in the Republic of South Africa)
("AngloGold")
ISIN: ZAE000043485 & JSE Share code: ANG
JSE: ANG
LSE: AGD
NYSE: AU
ASX: AGG
GhSE (Shares): AGA
GhSE (GhDS): AAD
Euronext Paris: VA
Euronext Brussels: ANG
Report to shareholders
for the quarter ended 31 March 2007
Group results for the quarter ....
Adjusted headline earnings were $97m compared with $46m in the previous
quarter, which was affected by once-off accounting adjustments.
Gold production was 1.33Moz and total cash costs were $332/oz, due to fewer
production shifts following the year-end break and lower by-product credits.
Price received increased 4% to $602/oz. Hedge delta reduced by 570,000 ounces
despite a 4% increase in the closing spot price for the quarter.
Quarter
ended ended
March Dec
2007 2006
SA rand / Metric
Operating review
Gold
Produced - kg / oz (000) 41,239 45,697
Price received 1 - R/kg / $/oz 139,953 135,628
Total cash costs - R/kg / $/oz 76,991 72,422
Total production costs - R/kg / $/oz 99,905 98,145
Financial review
Gross profit (loss) - R / $ million 808 1,639
Gross profit adjusted for the loss on
unrealised non-hedge derivatives
and other commodity contracts 2 - R / $ million 1,836 1,959
Profit (loss) attributable to equity
shareholders - R / $ million (133) 69
Headline (loss) earnings 3 - R / $ million (112) (150)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - R / $ million 699 343
Capital expenditure - R / $ million 1,417 1,861
Earnings (loss) per ordinary share - cents/share
Basic (47) 25
Diluted (47) 25
Headline 2 (40) (54)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - cents/share 249 124
Dividends - cents/share
Year
ended ended
March Dec
2006 2006
SA rand / Metric
Operating review
Gold
Produced - kg / oz (000) 41,667 175,253
Price received 1 - R/kg / $/oz 107,903 126,038
Total cash costs - R/kg / $/oz 61,023 67,133
Total production costs - R/kg / $/oz 82,287 90,345
Financial review
Gross profit (loss) - R / $ million (327) 2,700
Gross profit adjusted for the loss on
unrealised non-hedge derivatives
and other commodity contracts 2 - R / $ million 1,240 7,207
Profit (loss) attributable to equity
shareholders - R / $ million (1,079) (587)
Headline (loss) earnings 3 - R / $ million (1,072) (838)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - R / $ million 525 2,790
Capital expenditure - R / $ million 961 5,533
Earnings (loss) per ordinary share - cents/share
Basic (407) (215)
Diluted (407) (215)
Headline 2 (404) (307)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - cents/share 198 1,023
Dividends - cents/share 450
Quarter
ended ended
March Dec
2007 2006
US dollar / Imperial
Operating review
Gold
Produced - kg / oz (000) 1,326 1,469
Price received 1 - R/kg / $/oz 602 578
Total cash costs - R/kg / $/oz 332 309
Total production costs - R/kg / $/oz 430 419
Financial review
Gross profit (loss) - R / $ million 150 133
Gross profit adjusted for the loss on
unrealised non-hedge derivatives
and other commodity contracts 2 - R / $ million 253 269
Profit (loss) attributable to equity
shareholders - R / $ million 21 (72)
Headline (loss) earnings 3 - R / $ million 24 (103)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - R / $ million 97 46
Capital expenditure - R / $ million 196 260
Earnings (loss) per ordinary share - cents/share
Basic 7 (26)
Diluted 7 (26)
Headline 2 9 (37)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - cents/share 34 17
Dividends - cents/share
Year
ended ended
March Dec
2006 2006
US dollar / Imperial
Operating review
Gold
Produced - kg / oz (000) 1,340 5,635
Price received 1 - R/kg / $/oz 545 577
Total cash costs - R/kg / $/oz 309 308
Total production costs - R/kg / $/oz 417 414
Financial review
Gross profit (loss) - R / $ million (63) 443
Gross profit adjusted for the loss on
unrealised non-hedge derivatives
and other commodity contracts 2 - R / $ million 201 1,058
Profit (loss) attributable to equity
shareholders - R / $ million (186) (44)
Headline (loss) earnings 3 - R / $ million (185) (80)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - R / $ million 85 413
Capital expenditure - R / $ million 156 817
Earnings (loss) per ordinary share - cents/share
Basic (70) (16)
Diluted (70) (16)
Headline 2 (70) (29)
Headline earnings adjusted for the
loss on unrealised non-hedge
derivatives and other commodity
contracts and fair value adjustments
on convertible bond 4 - cents/share 32 151
Dividends - cents/share 62
Notes: 1. Refer to note D of "Non-GAAP disclosure" for the definition.
2. Refer to note B of "Non-GAAP disclosure" for the definition.
3. Refer to note 8 of "Notes" for the definition.
4. Refer to note A of "Non-GAAP disclosure" for the definition.
$ represents US dollar, unless otherwise stated.
Rounding of figures may result in computational discrepancies.
Operations at a glance
for the quarter ended 31 March 2007
Production Total cash costs
% %
oz (000) Variance 3 $/oz Variance 3
Mponeng 143 (3) 256 4
Sunrise Dam 148 (3) 299 2
TauTona 96 (17) 279 1
Great Noligwa 124 (17) 362 56
Kopanang 96 (19) 298 14
AngloGold Ashanti Brasil
Mineracao 66 (4) 207 8
Cripple Creek & Victor 64 (26) 242 (7)
Cerro Vanguardia4 52 21 188 (45)
Obuasi 101 3 397 (9)
Yatela 4 35 3 223 -
Siguiri 4 73 (5) 424 11
Morila 4 41 (15) 358 13
Serra Grande4 24 - 233 13
Geita 78 (3) 434 (26)
Tau Lekoa 43 (4) 431 16
Sadiola4 31 (38) 427 54
Savuka 18 (14) 355 5
Iduapriem4 27 (31) 449 23
Navachab 20 - 368 21
Moab Khotsong 14 8 577 16
Other 33 (3) - -
AngloGold Ashanti 1,326 (10) 332 7
Gross profit adjusted
for the loss on
unrealised non-hedge
derivatives and other
Cash gross profit1 commodity contracts 2
% %
$m Variance 3 $m Variance 3
Mponeng 49 2 39 30
Sunrise Dam 43 (20) 32 (26)
TauTona 31 (3) 20 -
Great Noligwa 30 (39) 19 (46)
Kopanang 29 (17) 22 (19)
AngloGold Ashanti Brasil
Mineracao 25 (31) 21 (34)
Cripple Creek & Victor 23 (26) 15 (35)
Cerro Vanguardia4 20 150 14 1,500
Obuasi 20 350 5 123
Yatela 4 14 (18) 12 (14)
Siguiri 4 12 50 5 267
Morila 4 11 (35) 8 (38)
Serra Grande4 10 (9) 8 -
Geita 9 (18) (1) -
Tau Lekoa 7 (13) 1 133
Sadiola4 7 (56) 6 (50)
Savuka 5 (17) 3 (40)
Iduapriem4 5 - 3 50
Navachab 5 (17) 4 -
Moab Khotsong - - (4) 33
Other 31 (23) 23 (28)
AngloGold Ashanti 386 (11) 253 (6)
NOTE: As highlighted in the last quarterly report, in order to simplify the
reporting effect of the gold hedges on the received price, AngloGold Ashanti
group financials now show an average received gold price, which is similar
across all of its mines. The price received column from this table has
therefore been re moved.
1 Refer to note F of "Non-GAAP disclosure" for the definition.
2 Refer to note B of "Non-GAAP disclosure" for the definition.
3 Variance March 2007 quarter on December 2006 quarter - increase (decrease).
4 Attributable.
Rounding of figures may result in computational discrepancies.
Financial and operating review
OVERVIEW FOR THE QUARTER
Adjusted headline earnings were $97m compared with $46m in the previous
quarter, which was affected by once-off accounting adjustments.
During the quarter the company continued to deliver into hedge commitments.
Notwithstanding a spot gold price that at quarter-end was $27/oz higher than
the previous quarter`s close, the hedge delta decreased by 570,000 ounces, to
9.59Moz. The received gold price, at $602/oz, while 4% up on that of the prior
quarter was 7.4% less than the ruling spot price for the period and well within
the guidance provided to the market.
Operationally, production was lower by 10% although in line with company
forecasts at 1.3Moz, while total cash costs, at $332/oz, were 7% higher
quarter-on-quarter, primarily as a result of the lower gold production that is
customary due to holiday closures in the first quarter and a reduction in
by-product revenue from uranium in South Africa and sulphuric acid in Brazil.
With the exception of an improved performance from Moab Khotsong, which posted
a 7% production increase due to better yields, production across the South
African assets was down this quarter, due in large part to the scheduled
year-end break and associated fewer production shifts, as well as seismicity
concerns at TauTona and reduced face advance at Great Noligwa. Total cash
costs, at R72,979/kg, were consequently 16% higher, with Great Noligwa and Moab
Khotsong posting respective increases of 55% and 15%, after corrosion in the
South Vaal uranium treatment plant, which is being upgraded, led to reduced
uranium production and therefore a by-product loss at these operations.
Of the other African operations, Obuasi in Ghana and Yatela in Mali both posted
production improvements of 3%, with total cash costs declining 9% at Obuasi and
remaining steady at Yatela. The other Malian operations had more difficult
quarters, with production 15% lower at Morila due to a grade decline and 38%
lower at Sadiola due to both recovery problems and fewer milling shifts. Geita,
in Tanzania, also posted a marginal production decrease to 78,000oz, although
total cash costs improved 26% after expenditure on equipment rebuilds and
contractor services was reduced. Production at Siguiri in Guinea returned to
more normal levels of 73,000oz after an exceptional fourth quarter 2006, while
Navachab in Namibia reported steady production but lower grades, resulting in a
21% increase in total cash costs.
Regarding the international operations, Cerro Vanguardia in Argentina posted a
particularly strong operational improvement, where production was 21% higher in
line with the mining plan and total cash costs consequently declined 45%.
Production was steady at Serra Grande and marginally lower at AngloGold Ashanti
Brasil Mineracao in Brazil, while total cash costs at Sunrise Dam in Australia
were unchanged quarter-on- quarter in spite of a 3% production decline as a
consequence of a planned mill shut-down. Cripple Creek & Victor, in the US,
also reported excellent cost management, with total cash costs 7% lower despite
a 26% reduction in production, after ore was loaded at greater distance from
the leach pad liner.
This quarter unfortunately saw another poor safety performance. Fourteen
employees lost their lives at work, while the lost time injury frequency rate
deteriorated by 7.5% to 7.86 per million hours worked. In response to this
unacceptable outcome, a full safety review has yielded a range of new
outcome-based initiatives focused on key areas, which include a focus on
fatigue management, production flexibility, skills retention, culture surveys
and a renewed focus on fall of ground management. The example set by the CC&V
mine in Colorado, which has operated for over three years without a lost-time
injury, and with three other operations completing this quarter without a
lost-time injury, remains the benchmark to which all operations aspire.
Looking ahead, production for the second quarter is estimated to be 1.39Moz at
an average total cash cost of $325/oz, assuming the following exchange rates:
R7.30/$, A$/$0.80, BRL2.12/$ and Argentinean peso 3.13/$. Capital expenditure
is estimated at $319m and will be managed in line with profitability and cash
flow.
Following the partial slope failure at Geita`s Nyankanga pit in late January
2007, work continues on optimising the new mine plan, with the operation on
track to produce some 400,000 ounces of gold this year. The 2008 outlook for
Geita, along with all other operations, will be completed during the latter
part of the year.
For the full year, AngloGold Ashanti is targeting gold production of around
5.7Moz at a total cash cost of approximately $320/oz based on the following
exchange rates: R7.32/$, A$/$0.79, BRL2.12/$ and Argentinean peso 3.12/$. This
represents an increase of $11/oz from previous market guidance and is mainly
due to stronger local currency assumptions ($5/oz) and higher royalty
assumptions ($5/oz), both arising from an improved gold price outlook for
remainder of the year.
Exploration
Total exploration expenditure amounted to $33m ($24m expensed, $9m capitalised)
during the first quarter of 2007, compared to $32m ($16m expensed, $16m
capitalised) in the previous quarter.
BROWNFIELDS EXPLORATION
In South Africa, at Moab Khotsong, drilling of three surface boreholes intended
to further define the geological model of the mine continued, with boreholes
MZA9 and MGR7 each obtaining two further intersections of the Vaal Reef.
At Obuasi, in Ghana, surface borehole USDD3 was abandoned and USDD2 continued
drilling, reaching a depth of 1,837m. The first of four planned long inclined
boreholes, which will ultimately replace the surface boreholes and will explore
the depths of the Obuasi orebody, has reached a depth of 145m.
In Australia, at the Boddington mine, seven diamond drill rigs have been
employed in advancing resource conversion and near-mine extension exploration,
including the testing of a near-mine geophysical target. Approximately 28,418m
of new drilling in 34 holes has been completed.
At Siguiri, in Guinea, drilling continued at the Sintroko prospect, which is
situated some 8km south of the existing operation and where results to date are
encouraging. At the Kintinian prospect, situated 4km north of the mining
operation, extension drilling continued. Drilling of the spent heap leach pads
was completed during the quarter with a view to upgrading at least a portion of
these into an Ore Reserve.
At Block 2, located 20km northwest of the plant, exploration activities were
concentrated on drill testing four geochemical targets while diamond drilling
continued at the Foulata and Saraya targets to further define mineralisation
and structural controls. An airborne electromagnetic survey over all four
blocks is scheduled for the second quarter.
At Geita, in Tanzania, significant results have been obtained from holes
drilled in the Ridge 8 - Star & Comet Gap area, where the mineralisation
continues to be open ended down-dip, while extension drilling at Area 3 Central
and Area 3 West also returned encouraging results and suggests strike
extensions between these two orebodies are likely. Positive results were
received from down-dip extension drilling at the Matandani and Kululuma
orebodies, where verification of last year`s electromagnetic survey has
commenced and rotary air blast drilling of some anomalous areas is scheduled to
commence in the second quarter.
At Morila in Mali, the last three holes of the grant-wide exploration programme
were completed during the quarter, bringing the total to 92 holes. The
programme, which defined a low-grade, uneconomic north-west trending zone
associated with the main pit, has now entered an interpretive desktop phase.
At Sadiola, drilling has focused on upgrading selected portions of the hard
sulphides to an Indicated Mineral Resource. This Phase 8 drilling targeted the
high-grade portions of the main ore shoot as well as high-grade portions of the
footwall bands, which are currently classified as Inferred Mineral Resources.
This drilling is expected to be completed in the second quarter. Drilling of
lower-priority mineralisation associated with this project will then commence.
At Yatela, 15 holes were drilled to the north- west of the current pit limits
to investigate an area shown to be prospective for a minor pit extension.
Results proved to be encouraging and further follow-up drilling is currently
being planned for this area.
At Navachab, in Namibia, positive drilling results have been received from the
North Pit area (mineralisation in the vicinity of the main orebody) as well as
at the Gecko Central prospect. Stream sediment sampling will commence during
the second quarter to cover new target areas and complement previous sampling
completed both on and off the exploration lease area.
At Corrego do Sitio, in Brazil, new targets (Paraiso and Paiol) are being
defined by drilling.
At Cripple Creek & Victor in the United States, drilling in the Mine Life
Extension Project area continues at a spacing of 30m to 60m, as results have
thus far been encouraging. Drilling focused on the west side of the Altman
deposit as well as the Globe Hill deposit where metallurgical core was
collected. Development drilling continues in the South Cresson and Southwest
Cresson areas to define the final pit depths and refine the high wall designs.
GREENFIELDS EXPLORATION
Greenfields exploration activities continued in seven countries (Australia,
Colombia, the DRC, China, Laos, the Philippines, and Russia) during the first
quarter of 2007. A total of 43,255m of diamond and reverse circulation (RC)
drilling was completed, drill testing priority targets in Australia, the DRC,
and Colombia.
In Australia, encouraging drill results continue to be obtained at the
Tropicana JV Project (AngloGold Ashanti 70%, Independence Group 30%) from both
the Tropicana and Havana zones. Encouraging results (at more than 1g/t cut-off)
received during the quarter from the Tropicana zone included: 12m at 4.03g/t,
20m at 3.28g/t, 13m at 2.71g/t, 14m at 2.92g/t, and 13m at 2.91g/t.
Some exceptional drill results were also received from the southern high grade
zone at Havana. At more than 1g/t cut-off, better results included: 17m at
4.56g/t, 26m at 9.35g/t, 8m at 5.4g/t, 15m at 5.34g/t, 15m at 6.86g/t, 15m at
19.8g/t, 23m at 4.26g/t, 8m at 6.01g/t, 22m at 4.9g/t, 17m at 6.73g/t, 13m at
11.8g/t, 11m at 10.5g/t, and 10m at 16.7g/t. Mineralisation at Havana is still
open down-dip. Drilling to the south of Havana on broad-spaced sections of
200m x 100 metres has indicated that only weak mineralisation extends to the
south.
RC drilling was also completed at the recently- identified Hat Trick anomaly,
located 3km north of Tropicana, where assays are pending. Initial aircore
drilling was also completed on several prospects located within a 10km radius
of Tropicana and Havana. Some encouraging anomalies have been returned along
strike to Tropicana-Havana, with priority anomalies scheduled to be
drill-tested in the second quarter.
Regional exploration and target generation activities continued in Colombia
during the first quarter. Drilling also continued on the bulk-tonnage gold
target at Gramalote, and first-pass drilling of the new La Colosa gold-copper
porphyry prospect was initiated. Significant drill results received during the
first quarter from Gramalote included 204m at 1.06g/t (DDH 13), 124m at 0.57g/t
(DDH 14), 120m at 0.88g/t (DDH 16), 380m at 1.06g/t (DDH 19), 246m at 0.75g/t
(DDH 25) and 142m at 2.62g/t (DDH 27). Drill testing of the joint venture
prospects El Carmen and Nechi (with local partner Mineros) and San Martin de
Loba (with Bema Gold) are underway, with results pending.
Drilling continued in the Mongbwalu region of the north-eastern DRC with one
diamond rig and two newly-arrived RC rigs. Diamond drilling focused on defining
the resource potential of the mineralised mylonite zone immediately to the
south-east of the Nzebi mine, which is no longer in production. The two RC rigs
were dedicated to evaluating the shallow, open-pit resource potential of three
sectors - Adidi North, Sokomutu and Pluto. Best drill results obtained during
the quarter included: 5m at 9.10g/t (RA009) and 5m at 16.53g/t (RA005) from
Adidi North, 5.55m at 16.60g/t (DD217) and 2.75m at 18.28g/t (DD 209) at Nzebi,
and 5.53m at 8.59g/t (DD 134) in the Adidi mylonite at Pluto.
Regional target generation activities were also initiated in Concession 40. A
15,450 line kilometre airborne magnetic and radiometric survey was completed
over the central Mongbwalu area and data processing and interpretation are in
progress. Approximately 3,000 line kilometres of airborne time-domain
electromagnetic data was also collected during the quarter.
In Russia, Trans-Siberian Gold shareholders approved the sale of the Veduga and
Bogunay projects to AngloGold Ashanti. Both of these assets will now be
incorporated in the Polymetal strategic alliance.
In China, activities were focused on obtaining final approvals for the
co-operative joint ventures (CJVs) in Xinjiang and Gansu. Negotiations on a
third CJV, located in Sichuan province, were also advanced during the quarter.
Additionally, AngloGold Ashanti`s option to earn-in to Dynasty Gold`s interest
in the Red Valley CJV was exercised.
In the Philippines, work continued on finalising the Mapawa and Outer Siana
joint venture agreements with Red 5 Limited. Field mapping and rock chip
sampling was carried out in the southern portion of the Outer Siana area.
In Laos, regional reconnaissance sampling and mapping programmes were
undertaken in ten areas, which were defined from previous targeting exercises
in the Truongson and Luang Prabang Fold Belts under the joint venture with
Oxiana Limited. Anomalous stream sediment results were returned from three of
these areas, with a maximum value of 1.77g/t. A further area returned anomalous
rock chip values, with up to 15.6g/t. Follow up field work has commenced in the
anomalous areas.
Review of the gold market
As in the previous quarter, spot gold traded in a range of $87/oz during the
first quarter of 2007, although at the significantly higher price levels of
$602/oz to $689/oz versus $561/oz to $649/oz in the fourth quarter of 2006. The
spot price remained above the $640/oz level from the end of January through
most of the quarter, with only a slight dip in early March.
The average spot price for the quarter of $650/oz represents an increase of 6%
over that of the previous quarter and a 17% increase over the average price in
the same quarter in 2006.
The rand gold price maintained its strength from 2006, with a first quarter
average of R150,686/kg. This marks a 5% increase on that of the previous
quarter and is some 15% higher than the 2006 average of R131,373/kg.
PHYSICAL MARKET
During the period under review, gold showed little sign of sustained recovery
in volume terms on the consumption side. Italian exports are expected to be
weak; with US consumption figures accordingly lower. Middle Eastern and Asian
consumers also appear to have been scared off by the gold price increase
towards the end of the first quarter, which has continued into the second.
European consumption, however, seemed to buck the general trend and remained
solid throughout the quarter. Despite the suppressive effect of a fairly
consistent rise in the gold price this quarter on consumption, the price
increase has, on a positive note, also meant a ratcheting up of the floor at
which gold consumers enter the market to sell scrap.
Looking at the remainder of 2007, gold demand is expected to strengthen as
consumers grow accustomed to higher price levels. Fabrication demand continues
to provide a firm base to the market and there have already been signs of a
recovery in jewellery demand when prices stabilise even in the mid-$600/oz
range. This seems due to the re-filling of a depleted supply pipeline,
especially after a somewhat stronger- than-expected fourth quarter, combined
with the continued benefits associated with robust economic growth in major
markets such as India and China. Net official selling is also anticipated to
stay subdued as sales in 2006 were well below the official quotas of the
Central Bank Gold Agreement (CBGA) rules, while scrap supply is forecast to
fall year-on-year as a major stock clear-out seems unlikely to be repeated.
In North America, Valentine`s Day showed strong growth with some retailers
reporting sales increases of over 20% compared to prior years.
In the USA, the largest department store retailer in gold reported sales
doubling on those of 2005, publicly stating that their unprecedented group
marketing initiative had significant consumer impact and was instrumental in
the growth of gold jewellery sales.
CENTRAL BANK SALES
Speculation that the CBGA signatories are unlikely to fulfil their sales quotas
for the remaining three years of the Agreement was further enhanced this
quarter by a report to the IMF proposing the sale of 400t in order to meet an
expected shortfall in IMF annual revenue. The report recommends that potential
sales not add to the announced volume of sales from official sources as
stipulated by the original CBGA, of which the IMF is a signatory, indicating
that the advisory group believes that the other signatories will continue to
sell under their limit, making the IMF sale a reasonable way to address its
expected revenue shortfall.
In the current CBGA year (September 2006 to September 2007), signatories have
sold approximately 6Moz, or 38% of the allowable annual total.
INVESTMENT MARKET
Exchange traded gold holdings grew by nearly 6% in the first quarter of 2007,
representing an increase of 36t. World-wide investment in ETFs reached $14bn by
the end of March, with two new ETF-like funds launched in India since the
beginning of the year. Investor interest in physical gold also remained strong,
exemplified by sales of the US Eagle and Buffalo coins by the US Mint
equivalent to 129,500oz, up 4% on the same period in 2006.
PRODUCER HEDGING
The 2006 trend of producer de-hedging continued in the first quarter of 2007,
with Gold Fields Limited buying back the 1.2Moz Western Areas gold hedge and
Lihir Gold Limited announcing both the closure of its 934,500oz hedge book and
the early repayment of an outstanding 480,000oz gold loan. While some new gold
hedging is being undertaken by producers in association with debt financing
obligations, it seems likely that producers will remain net de-hedgers in 2007,
which should at least be supportive of the gold price.
CURRENCIES AND GOLD
The rand depreciated nearly 4% over the quarter, opening at R7.00/$ and
finishing at R7.30/$, while trading for most of the quarter in a relatively
tight band of between R7.30/$ and R7.10/$. In early March, renewed fears of
slower global growth saw a high-yield and emerging market currencies sell- off,
causing the rand to trade to an intra-quarter high of R7.54/$. These fears
proved short-lived, however, and the rand returned to trading below the R7.20/$
level.
Against the Euro, the US dollar has begun to display sustained weakness,
trading below the Euro/$1.36 level. This dollar weakness seems likely to
persist as interest rate expectations between the two currencies narrow,
offering further support to the gold price.
Hedge position
As at 31 March 2007, the group had the following outstanding forward-pricing
commitments against future production. The total net delta tonnage of the hedge
on this date was 9.59Moz or 298t (at 31 December 2006: 10.16Moz or 316t).
The marked-to-market value of all hedge transactions making up the hedge
positions was a negative $3.027bn (negative R21.92bn) as at 31 March 2007 (at
31 December 2006: negative $2.903bn or R20.324bn). The value was based on a
gold price of $663.20/oz, (some $26.90/oz higher than that of the previous
quarter), exchange rates of R7.24/$ and A$/$0.8088 and the prevailing market
interest rates and volatilities at that date.
This net delta position reflects a decrease of 0.57Moz or 17.6t during the
quarter, as a result of delivering into maturing hedge positions and entering
into new long positions as a continuation of the hedge reduction strategy.
The company continues to actively manage its hedge position in a
value-accretive manner, whilst actively reducing the overall hedge delta. To
this end, further long positions were entered into during the quarter.
These positions as at 31 March were 24,078kg at $657/oz for 2007 and a further
6,758kg at $658/oz for 2008.
For the quarter, the company received a price of $602/oz, which is $48/oz less
than the average spot price of $650/oz. The deficit between the received price
and the spot price is likely to remain at 8% to 10% for the remainder of the
year, provided the gold price continues to trade between $600/oz and $700/oz.
As at 2 May 2007, the marked-to-market value of the hedge book was a negative
$3.063bn (negative R21.56bn), based on a gold price of $673.50/oz and exchange
rates of R7.038/$ and A$/$0.823 and the prevailing market interest rates and
volatilities at the time.
These marked-to-market valuations are in no way predictive of the future value
of the hedge position, nor of future impact on the revenue of the company. The
valuation represents the cost of buying all hedge contracts at the time of
valuation, at market prices and rates available at the time.
Year 2007 2008 2009
DOLLAR GOLD
Forward contracts Amount (kg) 14,433 22,817 21,738
US$/oz $309 $314 $316
*Forward contracts
(Long) Amount (kg) 24,078 6,758
US$/oz $657 $658
Put options purchased Amount (kg) 1,019
US$/oz $291
Put options sold Amount (kg) 25,925 11,555 3,748
US$/oz $644 $587 $530
Call options purchased Amount (kg) 12,127 8,568
US$/oz $408 $428
Call options sold Amount (kg) 44,575 49,575 43,636
US$/oz $517 $476 $484
RAND GOLD
Forward contracts Amount (kg) *350 933
Rand per kg R292,107 R116,335
Put options sold Amount (kg) 311
Rand per kg R154,645
Call options sold Amount (kg) 311 2,986
Rand per kg R158,503 R202,054
Year 2010 2011
DOLLAR GOLD
Forward contracts Amount (kg) 14,462 12,931
US$/oz $347 $397
*Forward contracts
(Long) Amount (kg)
US$/oz
Put options purchased Amount (kg)
US$/oz
Put options sold Amount (kg) 1,882 1,882
US$/oz $410 $420
Call options purchased Amount (kg)
US$/oz
Call options sold Amount (kg) 34,098 36,810
US$/oz $471 $495
RAND GOLD
Forward contracts Amount (kg)
Rand per kg
Put options sold Amount (kg)
Rand per kg
Call options sold Amount (kg) 2,986 2,986
Rand per kg R216,522 R230,990
Year 2012-2016 Total
DOLLAR GOLD
Forward contracts Amount (kg) 24,307 110,689
US$/oz $418 $351
*Forward contracts
(Long) Amount (kg) 30,836
US$/oz $657
Put options purchased Amount (kg) 1,019
US$/oz $291
Put options sold Amount (kg) 5,645 50,637
US$/oz $440 $582
Call options purchased Amount (kg) 20,696
US$/oz $416
Call options sold Amount (kg) 56,069 264,763
US$/oz $580 $508
RAND GOLD
Forward contracts Amount (kg) 583
Rand per kg R10,647
Put options sold Amount (kg) 311
Rand per kg R154,645
Call options sold Amount (kg) 9,269
Rand per kg R214,575
Rounding of figures may result in computational discrepancies.
Year 2007 2008 2009
A DOLLAR GOLD
Forward contracts Amount (kg) 9,953 2,177 3,390
A$ per oz AUD 676 AUD 656 AUD 650
Put options
purchased Amount (kg) 2,488
A$ per oz AUD 839
Put options sold Amount (kg) 4,354
A$ per oz AUD 809
Call options
purchased Amount (kg) 3,732 3,110 1,244
A$ per oz AUD 668 AUD 680 AUD 694
Call options sold Amount (kg) 4,354
A$ per oz AUD 849
Delta (kg) (14,213) (49,802) (65,339)
** Total net gold:
Delta (oz) (456,958) (1,601,169) (2,100,695)
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
32,659
Put options purchased Amount (kg) 43,545
$ per oz $7.40 $7.66
Put options sold Amount(kg) 32,659 43,545
$ per oz $5.93 $6.19
Call options purchased Amount (kg)
$ per oz
Call options sold Amount(kg) 32,659 43,545
$ per oz $8.40 $8.64
Year 2010 2011
A DOLLAR GOLD
Forward contracts Amount (kg) 3,110
A$ per oz AUD 683
Put options purchased Amount (kg)
A$ per oz
Put options sold Amount (kg)
A$ per oz
Call options purchased Amount (kg) 3,110
A$ per oz AUD 712
Call options sold Amount (kg)
A$ per oz
Delta (kg) (47,793) (48,019)
** Total net gold:
Delta (oz) (1,536,578) (1,543,844)
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg)
$ per oz
Put options sold Amount(kg)
$ per oz
Call options purchased Amount (kg)
$ per oz
Call options sold Amount(kg)
$ per oz
Year 2012-2016 Total
A DOLLAR GOLD
Forward contracts Amount (kg) 18,631
A$ per oz AUD 670
Put options purchased Amount (kg) 2,488
A$ per oz AUD 839
Put options sold Amount (kg) 4,354
A$ per oz AUD 809
Call options purchased Amount (kg) 11,197
A$ per oz AUD 686
Call options sold Amount (kg) 4,354
A$ per oz AUD 849
Delta (kg) (73,205) (298,371)
** Total net gold:
Delta (oz) (2,353,592) (9,592,837)
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg) 76,204
$ per oz $7.55
Put options sold Amount(kg) 76,204
$ per oz $6.08
Call options purchased Amount (kg)
$ per oz
Call options sold Amount(kg) 76,204
$ per oz $8.54
* Indicates a long position resulting from forward purchase contracts. The
group enters into forward purchase contracts as part of its strategy to
actively manage and reduce the size of the hedge book.
** The Delta of the hedge position indicated above is the equivalent gold
position that would have the same marked-to-market sensitivity for a
small change in the gold price. This is calculated using the Black-Scholes
option formula with the ruling market prices, interest rates and volatilities
as at 31 March 2007.
The following table indicates the group`s currency hedge position at 31 March
2007
Year 2007 2008 2009 2010
RAND DOLLAR (000)
Forward contracts Amount ($)
US$/R
Put options purchased Amount ($) $75,000
US$/R R7.40
Put options sold Amount ($) $80,000
US$/R R7.09
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) $125,000
US$/R R7.60
A DOLLAR (000)
Forward contracts Amount ($) 73,518 20,000
A$/US$ A$0.77 A$0.73
Put options purchased Amount ($) 50,000
A$/US$ A$0.77
Put options sold Amount ($) 50,000
A$/US$ A$0.80
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 50,000
A$/US$ A$0.75
BRAZILIAN REAL (000)
Forward contracts Amount ($) 12,000
US$/BRL BRL2.17
Put options purchased Amount ($) 6,000
US$/BRL BRL2.20
Put options sold Amount ($) (6,000)
US$/BRL BRL2.05
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 6,000
US$/BRL BRL2.23
Year 2011 2012-2016 Total
RAND DOLLAR (000)
Forward contracts Amount ($)
US$/R
Put options purchased Amount ($) $75,000
US$/R R7.40
Put options sold Amount ($) $80,000
US$/R R7.09
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) $125,000
US$/R R7.60
A DOLLAR (000)
Forward contracts Amount ($) 93,518
A$/US$ A$0.76
Put options purchased Amount ($) 50,000
A$/US$ A$0.77
Put options sold Amount ($) 50,000
A$/US$ A$0.80
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 50,000
A$/US$ A$0.75
BRAZILIAN REAL (000)
Forward contracts Amount ($) 12,000
US$/BRL BRL2.17
Put options purchased Amount ($) 6,000
US$/BRL BRL2.20
Put options sold Amount ($) 6,000
US$/BRL BRL2.05
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 6,000
US$/BRL BRL2.23
Rounding of figures may result in computational discrepancies.
Derivative analysis by accounting designation as at 31 March 2007
Cash flow
hedge
accounted
Normal sale US Dollars Non-hedge
exempted (millions) accounted Total
Commodity option
contracts (531) - (1,160) (1,691)
Foreign exchange
option contracts - - (11) (11)
Forward sale commodity
contracts (1,071) (378) 115 (1,334)
Forward foreign
exchange contracts - 2 4 6
Interest rate swaps (35) - 37 2
Total hedging contracts (1,637) (376) (1,014) (3,027)
Option component of
convertible bonds - - (53) (53)
Total derivatives (1,637) (376) (1,067) (3,080)
Rounding of figures may result in computational discrepancies.
Statement of recognised income and expense
Quarter Year Quarter
ended ended ended
March December March
2007 2006 2006
Unaudited Audited Unaudited
SA Rand million
Actuarial gain on pension and
post-retirement benefits - 283 -
Net loss on cash flow hedges
removed from equity and
reported in income 215 1,274 193
Net loss on cash flow hedges (304) (1,604) (745)
Gain on available-for-sale
financial assets 38 78 15
Deferred taxation on items
above 52 50 151
Net exchange translation
differences 971 2,292 (525)
Net income recognised
directly in equity 972 2,373 (911)
Loss for the year (77) (385) (1,039)
Total recognised income
(expense) for the period 895 1,988 (1,950)
Attributable to:
Equity shareholders 825 1,755 (1,978)
Minority interest 70 233 28
895 1,988 (1,950)
US Dollar million
Actuarial gain on pension and
post-retirement benefits - 42 -
Net loss on cash flow hedges
removed from equity and
reported in income 32 217 31
Net loss on cash flow hedges (42) (229) (121)
Gain on available-for-sale
financial assets 5 12 3
Deferred taxation on items
above 7 8 26
Net exchange translation
differences 96 281 (86)
Net income recognised
directly in equity 98 331 (147)
Profit (loss) for the year 29 (14) (180)
Total recognised income
(expense) for the period 127 317 (327)
Attributable to:
Equity shareholders 119 289 (333)
Minority interest 8 28 6
127 317 (327)
Rounding of figures may results in computational discrepancies.
Group income statement
Quarter Quarter
ended ended
March December
2007 2006
SA Rand million Notes Unaudited Unaudited
Revenue 2 5,668 5,975
Gold income 5,450 5,634
Cost of sales 3 (4,220) (4,477)
(Loss) profit on non-hedge derivatives
and other commodity contracts (422) 482
Gross profit (loss) 808 1,639
Corporate administration and other
expenses (203) (174)
Market development costs (23) (32)
Exploration costs (176) (116)
Other operating expenses 4 (47) (26)
Operating special items 5 14 (98)
Operating profit (loss) 373 1,193
Interest received 73 69
Exchange gain (loss) 3 (11)
Fair value adjustment on option component
of convertible bond 135 (210)
Finance costs and unwinding of obligations (200) (246)
Share of associates` (loss) profit (4) 2
Profit (loss) before taxation 380 797
Taxation 6 (451) (676)
(Loss) profit after taxation from
continuing operations (71) 120
Discontinued operations
Loss for the period from discontinued
operations 7 (6) (1)
(Loss) profit for the period (77) 119
Allocated as follows:
Equity shareholders (133) 69
Minority interest 56 50
(77) 119
Basic (loss) earnings per ordinary share
(cents)
(Loss) profit from continuing operations 1 (45) 25
Loss from discontinued operations 1 (2) -
(Loss) profit (47) 25
Diluted (loss) earnings per ordinary
share (cents)
(Loss) profit from continuing operations 2 (45) 25
Loss from discontinued operations 2 (2) -
(Loss) profit (47) 25
Dividends
- Rm
- cents per Ordinary share
- cents per E Ordinary share
Quarter Year
ended ended
March December
2006 2006
SA Rand million Unaudited Audited
Revenue 4,456 21,104
Gold income 4,246 20,137
Cost of sales (3,472) (15,482)
(Loss) profit on non-hedge derivatives and other
commodity contracts (1,100) (1,955)
Gross profit (loss) (327) 2,700
Corporate administration and other expenses (127) (567)
Market development costs (26) (108)
Exploration costs (73) (417)
Other operating expenses (30) (129)
Operating special items 11 (130)
Operating profit (loss) (572) 1,349
Interest received 30 218
Exchange gain (loss) (4) (17)
Fair value adjustment on option component of
convertible bond (233) 137
Finance costs and unwinding of obligations (210) (822)
Share of associates` (loss) profit (4) (6)
Profit (loss) before taxation (993) 859
Taxation (40) (1,232)
(Loss) profit after taxation from continuing
operations (1,032) (373)
Discontinued operations
Loss for the period from discontinued operations (7) (12)
(Loss) profit for the period (1,039) (385)
Allocated as follows:
Equity shareholders (1,079) (587)
Minority interest 40 202
(1,039) (385)
Basic (loss) earnings per ordinary share (cents)
(Loss) profit from continuing operations 1 (404) (211)
Loss from discontinued operations 1 (3) (4)
(Loss) profit (407) (215)
Diluted (loss) earnings per ordinary share (cents)
(Loss) profit from continuing operations 2 (404) (211)
Loss from discontinued operations 2 (3) (4)
(Loss) profit (407) (215)
Dividends
- Rm 1,246
- cents per Ordinary share 450
- cents per E Ordinary share 120
1 Calculated on the basic weighted average number of ordinary shares.
2 Calculated on the diluted weighted average number of ordinary shares.
Rounding of figures may results in computational discrepancies.
Group income statement
Quarter Quarter
ended ended
March December
2007 2006
US Dollar million Notes Unaudited Unaudited
Revenue 2 784 818
Gold income 754 770
Cost of sales 3 (584) (612)
(Loss) on non-hedge derivatives and other
commodity contracts (19) (25)
Gross profit (loss) 150 133
Corporate administration and other
expenses (28) (24)
Market development costs (3) (4)
Exploration costs (24) (16)
Other operating expenses 4 (7) (4)
Operating special items 5 2 (14)
Operating profit (loss) 90 71
Interest received 10 10
Exchange gain (loss) - (2)
Fair value adjustment on option component
of convertible bond 19 (28)
Finance costs and unwinding of obligations (28) (34)
Share of associates` loss (1) -
Profit (loss) before taxation 91 17
Taxation 6 (62) (82)
Profit (loss) after taxation from
continuing operations 29 (65)
Discontinued operations
Loss for the period from discontinued
operations 7 (1) -
Profit (loss) for the period 29 (65)
Allocated as follows:
Equity shareholders 21 (72)
Minority interest 8 7
29 (65)
Basic earnings (loss) per ordinary share
(cents)
Profit (loss) from continuing operations 1 7 (26)
Loss from discontinued operations 1 - -
Profit (loss) 7 (26)
Diluted earnings (loss) per ordinary
share (cents)
Profit (loss) from continuing operations 2 7 (26)
Loss from discontinued operations 2 - -
Profit (loss) 7 (26)
Dividends 3
- $m
- cents per Ordinary share
- cents per E Ordinary share
Quarter Year
ended ended
March December
2006 2006
US Dollar million Unaudited Audited
Revenue 724 3,106
Gold income 690 2,964
Cost of sales (565) (2,282)
(Loss) on non-hedge derivatives and other commodity
contracts (188) (239)
Gross profit (loss) (63) 443
Corporate administration and other expenses (21) (84)
Market development costs (4) (16)
Exploration costs (12) (61)
Other operating expenses (4) (18)
Operating special items 2 (18)
Operating profit (loss) (103) 246
Interest received 5 32
Exchange gain (loss) (1) (2)
Fair value adjustment on option component of
convertible bond (39) 16
Finance costs and unwinding of obligations (34) (123)
Share of associates` loss (1) (1)
Profit (loss) before taxation (172) 168
Taxation (7) (180)
Profit (loss) after taxation from continuing
operations (179) (12)
Discontinued operations
Loss for the period from discontinued operations (1) (2)
Profit (loss) for the period (180) (14)
Allocated as follows:
Equity shareholders (186) (44)
Minority interest 6 30
(180) (14)
Basic earnings (loss) per ordinary share (cents)
Profit (loss) from continuing operations 1 (70) (15)
Loss from discontinued operations 1 - (1)
Profit (loss) (70) (16)
Diluted earnings (loss) per ordinary share (cents)
Profit (loss) from continuing operations 2 (70) (15)
Loss from discontinued operations 2 - (1)
Profit (loss) (70) (16)
Dividends 3
- $m 171
- cents per Ordinary share 62
- cents per E Ordinary share 16
1 Calculated on the basic weighted average number of ordinary shares.
2 Calculated on the diluted weighted average number of ordinary shares.
3 Dividends are translated at actual rates on date of payment.
Rounding of figures may results in computational discrepancies.
Group balance sheet
As at As at As at
March December March
2007 2006 2006
SA Rand million Notes Unaudited Audited Unaudited
ASSETS
Non-current assets
Tangible assets 44,282 42,382 36,927
Intangible assets 3,073 2,909 2,419
Investments in associates 371 300 214
Other investments 926 884 647
Inventories 2,167 2,006 1,272
Trade and other receivables 475 405 126
Derivatives 22 45 171
Deferred taxation 444 432 321
Other non-current assets 340 313 136
52,100 49,676 42,233
Current assets
Inventories 3,529 3,424 2,472
Trade and other receivables 1,550 1,300 1,670
Derivatives 4,651 4,546 4,876
Current portion of other
non-current assets 5 5 6
Cash restricted for use 272 75 21
Cash and cash equivalents 2,908 3,467 1,419
12,915 12,817 10,464
Non-current assets held for
sale 113 123 100
13,029 12,940 10,56
TOTAL ASSETS 65,129 62,616 52,797
EQUITY AND LIABILITIES
Share capital and premium 10 22,196 22,083 19,070
Retained earnings and other
reserves 11 (970) (1,188) (4,681)
Shareholders` equity 21,227 20,895 14,389
Minority interests 12 481 436 384
Total equity 21,708 21,331 14,773
Non-current liabilities
Borrowings 9,010 9,963 10,798
Environmental rehabilitation
and other provisions 2,927 2,785 2,271
Provision for pension and
post-retirement benefits 1,193 1,181 1,252
Trade, other payables and
deferred income 138 150 80
Derivatives 1,827 1,984 2,928
Deferred taxation 7,832 7,722 6,866
22,927 23,785 24,195
Current liabilities
Current portion of borrowings 1,714 413 871
Trade, other payables and
deferred income 3,934 3,701 2,874
Derivatives 13,384 12,152 9,212
Taxation 1,462 1,234 872
20,494 17,500 13,829
Total liabilities 43,421 41,285 38,024
TOTAL EQUITY AND LIABILITIES 65,129 62,616 52,797
Net asset value - cents per
share 7,730 7,607 5,572
Rounding of figures may results in computational discrepancies.
Group balance sheet
As at As at As at
March December March
2007 2006 2006
US Dollar million Notes Unaudited Audited Unaudited
ASSETS
Non-current assets
Tangible assets 6,069 6,054 5,986
Intangible assets 421 415 392
Investments in associates 51 43 35
Other investments 127 126 105
Inventories 297 287 206
Trade and other receivables 65 58 20
Derivatives 3 6 28
Deferred taxation 61 62 52
Other non-current assets 47 44 22
7,141 7,095 6,846
Current assets
Inventories 484 489 401
Trade and other receivables 212 185 271
Derivatives 638 649 790
Current portion of other
non-current assets 1 1 1
Cash restricted for use 37 11 3
Cash and cash equivalents 399 495 230
1,770 1,830 1,697
Non-current assets held for
sale 16 18 16
1,786 1,848 1,713
TOTAL ASSETS 8,927 8,943 8,559
EQUITY AND LIABILITIES
Share capital and premium 10 3,042 3,154 3,091
Retained earnings and other
reserves 11 (133) (169) (758)
Shareholders` equity 2,909 2,985 2,333
Minority interests 12 66 62 62
Total equity 2,975 3,047 2,395
Non-current liabilities
Borrowings 1,235 1,423 1,750
Environmental rehabilitation
and other provisions 401 398 368
Provision for pension and
post-retirement benefits 164 169 203
Trade, other payables and
deferred income 19 21 13
Derivatives 250 283 475
Deferred taxation 1,074 1,103 1,113
3,142 3,397 3,922
Current liabilities
Current portion of borrowings 235 59 141
Trade, other payables and
deferred income 539 528 466
Derivatives 1,834 1,736 1,493
Taxation 200 176 141
2,809 2,499 2,242
Total liabilities 5,951 5,896 6,164
TOTAL EQUITY AND LIABILITIES 8,927 8,943 8,559
Net asset value - cents per
share 1,059 1,087 903
Rounding of figures may results in computational discrepancies.
Group cash flow statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2007 2006 2006 2006
SA Rand million Unaudited Unaudited Unaudited Audited
Cash flow from operating
activities
Receipts from customers 5,431 5,906 4,800 21,237
Payments to suppliers
and employees (3,339) (3,289) (3,246) (12,438)
Cash generated from
operations 2,092 2,617 1,554 8,799
Cash (utilised)
generated by
discontinued operations (10) 7 (11) (6)
Taxation paid (332) (553) (90) (968)
Net cash inflow from
operating activities 1,750 2,071 1,453 7,825
Cash flows from
investing activities
Capital expenditure (1,417) (1,861) (961) (5,533)
Proceeds from disposal
of tangible assets 17 322 11 393
Proceeds from disposal
of assets of
discontinued operations 2 23 10 63
Other investments
acquired (40) (47) (5) (471)
Associate loans and
acquisitions (63) 4 - (63)
Proceeds from disposal
of investments 21 2 17 449
Cash restricted for use (189) (29) 30 (19)
Interest received 60 55 18 173
Loans advanced (26) (5) - (5)
Repayment of loans
advanced 1 2 2 38
Net cash outflow from
investing activities (1,634) (1,533) (877) (4,975)
Cash flows from
financing activities
Proceeds from issue of
share capital 104 7 23 3,068
Share issue expenses - - - (32)
Proceeds from borrowings 185 619 329 1,525
Repayment of borrowings (143) (321) (369) (3,957)
Finance costs (212) (82) (251) (586)
Dividends paid (694) (55) (183) (913)
Net cash (outflow)
inflow from financing
activities (760) 168 (451) (895)
Net (decrease) increase
in cash and cash
equivalents (643) 706 125 1,955
Translation 84 (109) (33) 184
Cash and cash
equivalents at beginning
of period 3,467 2,871 1,328 1,328
Net cash and cash
equivalents at end of
period 2,908 3,467 1,419 3,467
Cash generated from
operations
Profit (loss) before
taxation 380 797 (993) 859
Adjusted for:
Movement on non-hedge
derivatives and other
commodity contracts 958 304 1,582 4,590
Amortisation of tangible
assets 948 1,215 859 4,059
Finance costs and
unwinding of obligations 200 246 210 822
Deferred stripping (100) (34) (107) (528)
Interest receivable (73) (69) (30) (218)
Operating special items (14) 98 (11) 161
Amortisation of
intangible assets 4 4 3 13
Fair value adjustment on
option components of
convertible bond (135) 210 233 (137)
Environmental,
rehabilitation and other
expenditure (14) (133) (69) (160)
Other non-cash movements 146 109 156 213
Movements in working
capital (208) (130) (280) (875)
2,092 2,617 1,554 8,799
Movements in working
capital
(Increase) decrease in
inventories (302) 156 (145) (1,852)
(Increase) decrease in
trade and other
receivables (251) 181 (80) (27)
Increase (decrease) in
trade and other payables 345 (467) (55) 1,004
(208) (130) (280) (875)
Rounding of figures may results in computational discrepancies.
Group cash flow statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2007 2006 2006 2006
US Dollar million Unaudited Unaudited Unaudited Audited
Cash flow from
operating
activities
Receipts from
customers 753 804 777 3,134
Payments to
suppliers and
employees (465) (450) (524) (1,853)
Cash generated from
operations 288 354 253 1,281
Cash (utilised)
generated by
discontinued
operations (1) 1 (2) (1)
Taxation paid (46) (80) (15) (143)
Net cash inflow
from operating
activities 240 275 236 1,137
Cash flows from
investing
activities
Capital expenditure (196) (260) (156) (817)
Proceeds from
disposal of
tangible assets 2 46 2 57
Proceeds from
disposal of assets
of discontinued
operations - 3 2 9
Other investments
acquired (5) (8) (1) (71)
Associate loans and
acquisitions (9) 1 - (9)
Proceeds from
disposal of
investments 3 - 3 66
Cash restricted for use (26) (5) 5 (3)
Interest received 8 7 3 25
Loans advanced (4) (1) - (1)
Repayment of loans
advanced - - - 6
Net cash outflow
from investing
activities (226) (216) (143) (738)
Cash flows from
financing
activities
Proceeds from issue
of share capital 14 1 4 512
Share issue expenses - - - (5)
Proceeds from
borrowings 26 86 54 226
Repayment of
borrowings (20) (29) (60) (623)
Finance costs (29) (10) (41) (88)
Dividends paid (94) (8) (29) (132)
Net cash (outflow)
inflow from
financing
activities (103) 40 (73) (110)
Net (decrease)
increase in cash
and cash
equivalents (89) 99 20 289
Translation (8) 26 1 (3)
Cash and cash
equivalents at
beginning of period 495 370 209 209
Net cash and cash
equivalents at end
of period 399 495 230 495
Cash generated from
operations
Profit (loss)
profit before
taxation 91 17 (172) 168
Adjusted for:
Movement on
non-hedge
derivatives and
other commodity
contracts 93 134 266 627
Amortisation of
tangible assets 131 167 141 597
Finance costs and
unwinding of
obligations 28 34 34 123
Deferred stripping (14) (12) (17) (75)
Interest receivable (10) (10) (5) (32)
Operating special
items (2) 14 (2) 22
Amortisation of
intangible assets - - - 2
Fair value
adjustment on
option components
of convertible bond (19) 28 39 (16)
Environmental,
rehabilitation and
other expenditure (2) (18) (10) (22)
Other non-cash
movements 23 16 26 27
Movements in
working capital (31) (16) (47) (140)
288 354 253 1,281
Movements in
working capital
Increase in
inventories (10) (57) (41) (211)
(Increase) decrease
in trade and other
receivables (27) 1 (20) 19
Increase (decrease)
in trade and other
payables 6 40 14 52
(31) (16) (47) (140)
Rounding of figures may results in computational discrepancies.
Notes for the quarter ended 31 March 2007
1. Basis of preparation
The financial statements in this quarterly report have been prepared in
accordance with the historic cost convention except for certain financial
instruments which are stated at fair value. The group`s accounting policies
used in the preparation of these financial statements are consistent with those
used in the annual financial statements for the year ended 31 December 2006 and
revised International Financial Reporting Standards (IFRS) which are effective
1 January 2007, where applicable.
The financial statements of AngloGold Ashanti Limited have been prepared in
compliance with IAS34, JSE Listings Requirements and in the manner required by
the South African Companies Act, 1973 for the preparation of financial
information of the group for the quarter ended 31 March 2007.
2. Revenue
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
Revenue consists
of the following
principal categories:
Gold income 5,450 5,634 4,246 20,137
By-products
(note 3) 145 272 181 749
Interest received 73 69 30 218
5,668 5,975 4,456 21,104
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
Revenue consists
of the following
principal categories:
Gold income 754 770 690 2,964
By-products
(note 3) 20 38 29 110
Interest
received 10 10 5 32
784 818 724 3,106
3. Cost of sales
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
Cash operating
costs (3,195) (3,403) (2,644) (11,994)
By-products (note 2) 145 272 181 749
(3,050) (3,131) (2,463) (11,245)
Other cash costs (177) (172) (118) (594)
Total cash costs (3,227) (3,303) (2,581) (11,839)
Retrenchment costs (7) (114) (12) (152)
Rehabilitation and
other non-cash costs (20) 122 (38) 35
Production costs (3,254) (3,295) (2,631) (11,956)
Amortisation of
tangible assets (948) (1,215) (859) (4,059)
Amortisation of
intangible assets (4) (4) (3) (13)
Total production
costs (4,206) (4,514) (3,493) (16,028)
Inventory change (14) 37 21 546
(4,220) (4,477) (3,472) (15,482)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
Cash operating
costs (442) (466) (430) (1,770)
By-products (note 2) 20 38 29 110
(422) (428) (401) (1,660)
Other cash costs (25) (24) (19) (86)
Total cash costs (447) (452) (420) (1,746)
Retrenchment costs (1) (16) (2) (22)
Rehabilitation
and other non-cash
costs (3) 17 (6) 3
Production costs (451) (451) (428) (1,765)
Amortisation of
tangible assets (131) (167) (141) (597)
Amortisation of
intangible assets - - - (2)
Total production
costs (582) (618) (569) (2,364)
Inventory change (2) 6 4 82
(584) (612) (565) (2,282)
Rounding of figures may result in computational discrepancies.
4. Other operating expenses
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
Pension and medical
defined benefit
provisions (25) 1 (21) (57)
Claims filed by
former employees in
respect of
loss of employment,
work-related accident
injuries and diseases,
governmental fiscal
claims and costs of old
tailings operations (21) (30) (8) (67)
Miscellaneous (1) 3 (1) (5)
(47) (26) (30) (129)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
Pension and
medical defined
benefit provisions (4) - (3) (8)
Claims filed by
former employees in
respect of loss of
employment, work-
related accident
injuries and diseases,
governmental
fiscal claims
and costs of old
tailings operations (3) (4) (1) (9)
Miscellaneous - - - (1)
(7) (4) (4) (18)
5. Operating special items
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
(Under) over
provision of
indirect taxes - (118) 7 (202)
Performance related
option expense - (129) - (129)
Cost of E-shares
issued to
Izingwe (Pty) Ltd,
a Black Economic
Empowerment company - (131) - (131)
Impairment of
tangible assets (1) (41) (2) (44)
Profit on disposal
of assets and
recovery of loan 15 321 6 376
14 (98) 11 (130)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
(Under) over
provision of
indirect taxes - (16) 1 (28)
Performance
related option
expense - (19) - (19)
Cost of E-shares
issued to
Izingwe (Pty)
Ltd, a Black Economic
Empowerment company - (19) - (19)
Impairment of
tangible assets - (6) - (6)
Profit on disposal
of assets and
recovery of loan 2 46 1 54
2 (14) 2 (18)
Rounding of figures may result in computational discrepancies.
6. Taxation
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
Current tax
Normal taxation (445) (261) (222) (1,370)
Disposal of
tangible assets
(note 8) (4) (2) (4) (13)
Under provision
prior year (1) (75) (49) - (49)
(524) (312) (226) (1,432)
Deferred taxation
Temporary
differences (5) (73) (15) (215)
Unrealised non-hedge
derivatives and
other commodity
contracts 82 37 202 742
Impairment and
disposal of
tangible assets
(note 8) (4) (57) - (56)
Change in estimated
deferred
taxation - (271) - (271)
73 (364) 187 200
Total taxation (451) (676) (40) (1,232)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
Current tax
Normal taxation (60) (37) (36) (201)
Disposal of
tangible assets
(note 8) (1) - (1) (2)
Under provision
prior year (1) (11) (7) - (7)
(72) (44) (37) (210)
Deferred taxation
Temporary
differences - (7) (3) (30)
Unrealised
non-hedge
derivatives and
other commodity
contracts 11 15 33 106
Impairment and
disposal of
tangible assets
(note 8) (1) (8) - (8)
Change in
estimated
deferred
taxation - (38) - (38)
10 (38) 30 30
Total taxation (62) (82) (7) (180)
(1) The prior year under provision of $11m (R75m) mainly relates to an
adjustment in respect of World Gold Council levies relating to our non-South
African operations.
7. Discontinued operations
The Ergo surface dump reclamation, which forms part of the South African
operations, has been discontinued as the operation has reached the end of its
useful life. The results of Ergo are presented below:
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
Gold income 2 6 6 26
Cost of Sales (5) (19) (5) (39)
Gross (loss) profit (3) (13) 1 (13)
Taxation (3) 12 (8) 1
Loss from
discontinued
operations (6) (1) (7) (12)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
Gold income - 1 1 4
Cost of Sales (1) (3) (1) (6)
Gross (loss)
profit (1) (2) - (2)
Taxation - 2 (1) -
Loss from
discontinued
operations (1) - (1) (2)
Rounding of figures may result in computational discrepancies.
8. Headline (loss) earnings
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
SA Rand million
The (loss) profit
attributable to
equity shareholders has
been adjusted by the
following to arrive at
headline (loss)
earnings:
(Loss) profit
attributable to
equity shareholders (133) 69 (1,079) (587)
Impairment of
tangible assets
(note 5) 1 41 2 44
(Profit) loss on
disposal of
assets 6 (321) (6) (376)
Taxation on items
above -
current portion (note 6) 4 2 4 13
Taxation on items
above -
deferred portion (note 6) 4 57 - 56
Net loss from
discontinued
operations (note 7) 6 1 7 12
Headline (loss)
earnings (112) (150) (1,072) (838)
Cents per share (1)
Headline (loss)
earnings (40) (54) (404) (307)
Quarter ended Year ended
March Dec March Dec
2007 2006 2006 2006
Unaudited Unaudited Unaudited Audited
US Dollar million
The (loss)
profit attributable
to equity shareholders
has been adjusted
by the following to
arrive at headline
(loss) earnings:
(Loss) profit
attributable to
equity shareholders 21 (72) (186) (44)
Impairment of
tangible assets
(note 5) - 6 - 6
(Profit) loss
on disposal of
assets 1 (46) (1) (54)
Taxation on
items above -
current
portion (note 6) 1 - 1 2
Taxation on
items above -
deferred
portion (note 6) 1 8 - 8
Net loss from
discontinued
operations (note 7) 1 - 1 2
Headline
(loss) earnings 24 (103) (185) (80)
Cents per share (1)
Headline (loss)
earnings 9 (37) (70) (29)
(1) Calculated on the basic weighted average number of ordinary shares.
9. Shares
Quarter ended
March Dec
2007 2006
Authorised:
Ordinary shares of 25 SA cents each 400,000,000 400,000,000
E ordinary shares of 25 SA cents each 4,280,000 4,280,000
A redeemable preference shares of 50 SA cents
each 2,000,000 2,000,000
B redeemable preference shares of 1 SA cent
each 5,000,000 5,000,000
Issued and fully-paid:
Ordinary shares in issue 276,688,382 276,236,153
E ordinary shares in issue 4,149,230 4,185,770
Total ordinary shares: 280,837,612 280,421,923
A redeemable preference shares 2,000,000 2,000,000
B redeemable preference shares 778,896 778,896
In calculating the diluted number of ordinary
shares outstanding for
the year, the following were taken into
consideration:
Ordinary shares 276,426,639 275,598,456
E Ordinary shares 4,167,212 773,762
Fully vested options 600,219 304,280
Weighted average number of shares 281,194,070 276,676,498
Dilutive potential of share options 641,741 -
Diluted number of ordinary shares (1) 281,835,811 276,676,498
Year ended
March Dec
2006 2006
Authorised:
Ordinary shares of 25 SA cents each 400,000,000 400,000,000
E ordinary shares of 25 SA cents each - 4,280,000
A redeemable preference shares of 50 SA cents
each 2,000,000 2,000,000
B redeemable preference shares of 1 SA cent
each 5,000,000 5,000,000
Issued and fully-paid:
Ordinary shares in issue 265,117,213 276,236,153
E ordinary shares in issue - 4,185,770
Total ordinary shares: 265,117,213 280,421,923
A redeemable preference shares 2,000,000 2,000,000
B redeemable preference shares 778,896 778,896
In calculating the diluted number of ordinary
shares outstanding for
the year, the following were taken into
consideration:
Ordinary shares 264,581,077 272,214,937
E Ordinary shares - 194,954
Fully vested options 483,291 398,326
Weighted average number of shares 265,064,368 272,808,217
Dilutive potential of share options 509,716 -
Diluted number of ordinary shares (1) 265,574,084 272,808,217
(1) The Basic and diluted number of ordinary shares are the same for
December 2006 quarter and the year ended 2006 as the effects of shares for
performance related options are anti-dilutive.
Rounding of figures may result in computational discrepancies.
10. Ordinary share capital and premium
As at
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
SA Rand million
Balance at beginning of period 23,045 19,362 19,360
Ordinary shares issued 109 3,330 23
E ordinary shares (cancelled)
issued (4) 353 -
Translation - - -
Sub-total 23,150 23,045 19,382
Redeemable preference shares
held
within the group (312) (312) (312)
Ordinary shares held within the
group (293) (297) -
E Ordinary shares held within
the group (349) (353) -
Balance at end of period 22,196 22,083 19,070
As at
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
US Dollar million
Balance at beginning of period 3,292 3,055 3,055
Ordinary shares issued 15 550 4
E ordinary shares (cancelled)
issued (1) 50 -
Translation (133) (363) 83
Sub-total 3,173 3,292 3,142
Redeemable preference shares
held
within the group (43) (45) (51)
Ordinary shares held within
the group (40) (43) -
E Ordinary shares held within
the group (48) (50) -
Balance at end of period 3,042 3,154 3,091
11. Retained earnings and other reserves
Foreign
Non- currency
Retained distributable translation
Earnings reserves reserve
SA Rand million
Balance at December 2005 1,115 138 (1,910)
Loss attributable to equity
shareholders (1,079)
Dividends (164)
Net loss on cash flow hedges
removed from
equity and reported in income
Net loss on cash flow hedges
Deferred taxation on cash
flow hedges
Gain on available-for-sale
financial assets
Translation (553)
Balance at March 2006 (129) 138 (2,464)
Balance at December 2006 (214) 138 436
Loss attributable to equity
shareholders (133)
Dividends (668)
Net loss on cash flow hedges
removed from
equity and reported in income
Net loss on cash flow hedges
Deferred taxation on cash
flow hedges
Gain on available for sale
financial assets
Deferred taxation on
available-for-sale
financial assets
Share-based payment for
share awards
Translation 1,053
Balance at March 2007 (1,017) 138 1,489
Other
Comprehen-
Actuarial sive
gains (losses) income Total
SA Rand million
Balance at December 2005 (227) (1,655) (2,539)
Loss attributable to equity
shareholders (1,079)
Dividends (164)
Net loss on cash flow hedges
removed from
equity and reported in income 191 191
Net loss on cash flow hedges (738) (738)
Deferred taxation on cash flow
hedges 151 151
Gain on available-for-sale
financial assets 15 15
Translation 36 (517)
Balance at March 2006 (227) (2,000) (4,681)
Balance at December 2006 (45) (1,503) (1,188)
Loss attributable to equity
shareholders (133)
Dividends (668)
Net loss on cash flow hedges
removed from
equity and reported in income 211 211
Net loss on cash flow hedges (301) (301)
Deferred taxation on cash flow
hedges 64 64
Gain on available for sale
financial assets 38 38
Deferred taxation on
available-for-sale
financial assets (12) (12)
Share-based payment for share
awards 61 61
Translation (93) 960
Balance at March 2007 (45) (1,535) (970)
Rounding of figures may result in computational discrepancies.
Foreign
Non- currency
Retained distributable translation
Earnings reserves reserve
US Dollar million
Balance at December 2005 (58) 22 (66)
Loss attributable to
equity shareholders (186)
Dividends (26)
Net loss on cash flow
hedges removed from equity
and reported in income
Net loss on cash flow
hedges
Deferred taxation on cash
flow hedges
Gain on available-for-sale
financial assets
Translation (93)
Balance at March 2006 (270) 22 (149)
Balance at December 2006 (209) 20 241
Profit attributable to
equity shareholders 21
Dividends (90)
Net loss on cash flow
hedges removed from equity
and reported in income
Net loss on cash flow
hedges
Deferred taxation on cash
flow hedges
Gain on available-for-sale
financial assets
Deferred taxation on
available-for-sale
financial
assets
Share-based payment for
share awards
Translation (1) 102
Balance at March 2007 (279) 19 343
Other
Actuarial Comprehen-
gains sive
(losses) income Total
US Dollar million
Balance at December 2005 (36) (261) (399)
Loss attributable to equity
shareholders (186)
Dividends (26)
Net loss on cash flow hedges
removed from equity
and reported in income 31 31
Net loss on cash flow hedges (120) (120)
Deferred taxation on cash flow
hedges 26 26
Gain on available-for-sale
financial assets 3 3
Translation (1) (3) (87)
Balance at March 2006 (37) (324) (758)
Balance at December 2006 (6) (215) (169)
Profit attributable to equity
shareholders 21
Dividends (90)
Net loss on cash flow hedges
removed from equity
and reported in income 31 31
Net loss on cash flow hedges (41) (41)
Deferred taxation on cash flow
hedges 9 9
Gain on available-for-sale
financial assets 5 5
Deferred taxation on
available-for-sale financial
assets (2) (2)
Share-based payment for share
awards 7 7
Translation - (4) 97
Balance at March 2007 (6) (210) (133)
12. Minority interests
As at
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
SA Rand million
Balance at beginning of period 436 374 374
Profit for the period 56 202 40
Dividends paid (25) (171) (18)
Net loss on cash flow hedges
removed from
equity and reported in income 4 10 2
Net loss on cash flow hedges (3) (12) (7)
Translation 13 33 (7)
Balance at end of period 481 436 384
As at
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
US Dollar million
Balance at beginning of period 62 59 59
Profit for the period 8 30 6
Dividends paid (4) (25) (3)
Net loss on cash flow hedges
removed from
equity and reported in income 1 2 -
Net loss on cash flow hedges (1) (2) (1)
Translation - (2) 1
Balance at end of period 66 62 62
13. Exchange rates
March Dec March
2007 2006 2006
Unaudited Unaudited Unaudited
Rand/US dollar average for the
year to date 7.22 6.77 6.15
Rand/US dollar average for the quarter 7.22 7.31 6.15
Rand/US dollar closing 7.30 7.00 6.17
Rand/Australian dollar average for
the year to date 5.68 5.10 4.55
Rand/Australian dollar average for
the quarter 5.68 5.63 4.55
Rand/Australian dollar closing 5.90 5.53 4.39
BRL/US dollar average for the
year to date 2.11 2.18 2.19
BRL/US dollar average for the quarter 2.11 2.15 2.19
BRL/US dollar closing 2.15 2.14 2.17
Rounding of figures may result in computational discrepancies.
14. Capital commitments
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
SA Rand million
Orders placed and outstanding
on capital contracts at
the prevailing rate of exchange 2,966 2,475 2,101
March Dec March
2007 2006 2006
Unaudited Audited Unaudited
US Dollar million
Orders placed and outstanding
on capital contracts at
the prevailing rate of exchange 407 354 341
Liquidity and capital resources:
To service the above capital commitments and other operational requirements,
the group is dependent on existing cash resources, cash generated from
operations and borrowing facilities.
Cash generated from operations is subject to operational, market and other
risks. Distributions from operations may be subject to foreign investment and
exchange control laws and regulations and the quantity of foreign exchange
available in offshore countries. In addition distributions from joint ventures
are subject to the relevant board approval.
The credit facilities and other financing arrangements contain financial
covenants and other similar undertakings. To the extent that external
borrowings are required, the groups covenant performance indicates that
existing financing facilities will be available to meet the above commitments.
To the extent that any of financing facilities mature in the near future, the
group believes that these facilities can be refinanced on similar terms to
those currently in place.
15. Contingent liabilities
AngloGold Ashanti`s contingent liabilities at 31 March 2007 are detailed below:
Water pumping cost - South Africa - The group is involved in a legal dispute
regarding the responsibility for water pumping of the Margaret shaft, which
belongs to Stilfontein. Following an attempt by DRDGold to liquidate its North
West operations and avoid incurring pumping cost, AngloGold Ashanti Limited
launched an urgent application against DRDGold and government departments
requesting the court to order the continued pumping of water at the Stilfontein
Mines. The cessation of water pumping is likely to cause flooding in various
Vaal River operations. The Department of Water Affairs and Forestry responded
by issuing directives to the mining companies directing that they share the
costs of pumping at the Margaret Shaft.
The three mining companies, Simmer and Jack Mines, Harmony Gold Mining Company
and AngloGold Ashanti, are finalising an arrangement in which responsibility
for the water pumping will be transferred to an independent newly formed
company. The group responsibility will be limited to providing one-third of the
start-up capital on loan account and the three mining companies will be members
of the newly formed company.
Should the proposed arrangement not be acceptable to the courts and/or the
regulatory authorities the proposal may have to be amended. Due to this
uncertainty, no estimate is made of any potential liabilities.
Groundwater pollution - South Africa - AngloGold Ashanti has identified a
number of groundwater pollution sites at its current operations in South
Africa, and has investigated a number of different technologies and
methodologies that could possibly be used to remediate the pollution plumes.
The viability of the suggested remediation techniques in the local geological
formation in South Africa is however unknown. No sites have been remediated and
present research and development work is focused on several pilot projects to
find a solution that will in fact yield satisfactory results in South African
conditions. Subject to the technology being developed as a remediation
technique, no reliable estimate can be made for the obligation.
Provision of surety - South Africa - AngloGold Ashanti has provided sureties in
favour of a lender on a Gold loan facility with its affiliate Oro Africa (Pty)
Ltd and one of its subsidiaries to a maximum value of R100m ($14m). The
suretyship agreements have a termination notice period of 90 days.
Sales tax on gold deliveries - Brazil - Mineracao Serra Grande S.A.(MSG),
the operator of the Crixas mine in Brazil, has received two tax assessments
from the State of Goias related to payments of sales taxes on gold
deliveries for export: one for the period between February 2004 and June
2005 and the other for the period between July 2005 and May 2006. The tax
authorities maintain that whenever a taxpayer export gold mined in the state
of Goias, through a branch located in a different Brazilian State, it must
obtain an authorisation from the Goias State Treasury by means of a
Special Regime Agreement (Termo de Acordo re Regime Especial - TARE).
The Serra Grande operation is co-owned with Kinross Gold Corporation. The
company manages the operation and its attributable share of the first
assessment is approximately $29m. In May 2006 MSG signed the TARE, which
authorised the remittance of gold to the company`s branch in Minas Gerais
specifically for export purposes.
In November 2006 the administrative council`s second chamber ruled in favour of
Serra Grande and fully cancelled the tax liability related to the first period.
The State of Goias may still appeal to the full board of the State of Goias
tax administrative council. The second assessment was issued by the State of
Goias in October 2006 on the same grounds as the first one, and the
attributable share of the assessment is approximately $18m.
The company believes both assessments are in violation of Federal legislation
on sales taxes.
VAT Disputes - Brazil - MSG received a tax assessment in October 2003 from the
State of Minas Gerais related to sales taxes on gold allegedly returned from
the branch in Minas Gerais to the company head office in the State of Goias.
The tax administrators rejected the company`s appeal against the assessment.
The company is now dismissing the case at the judicial sphere. The company`s
attributable share of the assessment is approximately $6m.
VAT Dispute - Brazil - Morro Velho is involved in a dispute with tax
authorities. As a result of an erroneous duplication of a shipping invoice
between two states in Brazil, tax authorities are claiming that VAT is payable
on the second invoice. The amount involved is approximately $5m.
Social security payments - Brazil - AngloGold Ashanti Brasil Mineracao is
being accused of failing to pay certain required payments towards the social
security system in Brazil during the period 1997 to 2004. There is doubt if
amounts are actually due and payable under applicable law. The amount involved
is approximately $2m
Capital cost of water pipelines - Namibia - A potential liability of
approximately $1m exists at Navachab in Namibia to pay the outstanding capital
cost of the water pipeline in the event of mine closure prior to 2019.
16. Concentration of risk
There is a concentration of risk in respect of reimbursable value added tax and
fuel duties from the Malian government:
Reimbursable value added tax due from the Malian government amounts to an
attributable $37m at 31 March 2007 (31 December 2006: attributable $34m). The
last audited value added tax return was for the period ended 31 December 2006
and at the balance sheet date an attributable $27m was still outstanding and
$10m is still subject to audit. The accounting processes for the unaudited
amount are in accordance with the processes advised by the Malian government in
terms of the previous audits.
Reimbursable fuel duties from the Malian government amounts to an
attributable $10m at 31 March 2007 (31 December 2006: attributable $11m). Fuel
duty refund claims are required to be submitted before 31 January of the
following year and are subject to authorisation by firstly the Department of
Mining and secondly the Custom and Excise authorities. The Customs and Excise
authorities have approved an attributable $3m, which is still outstanding,
whilst an attributable $7m is still subject to authorisation. The accounting
processes for the unauthorised amount are in accordance with the processes
advised by the Malian government in terms of the previous authorisations. As
from February 2006 all fuel duties have been exonerated.
The government of Mali is a shareholder in all the Malian entities and protocol
agreements governing repayments of certain of these amounts have been signed.
All payments as scheduled in terms of the protocol agreements have been
recovered up to March 2007. The amounts outstanding have been discounted to
their present value at a rate of 5%.
There is a concentration of risk in respect of reimbursable value added tax and
fuel duties from the Tanzanian government:
Reimbursable value added tax due from the Tanzanian government amounts to
$15m at 31 March 2007 (31 December 2006: $14m). The last audited value added
tax return was for the period ended 30 November 2006 and at the balance sheet
date $14m was still outstanding and $1m is still subject to audit. The
accounting processes for the unaudited amount are in accordance with the
processes advised by the Tanzanian government in terms of the previous audits.
The outstanding amounts have been discounted to their present value at a rate
of 5%.
Reimbursable fuel duties from the Tanzanian government amounts to $22m at
31 March 2007 (31 December 2006: $18m). Fuel duty claims are required to be
submitted after consumption of the related fuel and are subject to
authorisation by the Customs and Excise authorities. Claims for refund of fuel
duties amounting to $13m have been lodged with the Customs and Excise
authorities, which are still outstanding, whilst claims for refund of $9m have
not yet been submitted. The accounting processes for the unauthorised amount
are in accordance with the processes advised by the Tanzanian government in
terms of the previous authorisations. The outstanding amounts have been
discounted to their present value at a rate of 5%.
17. Attributable interest
Although AngloGold Ashanti holds a 66.7% interest in Cripple Creek & Victor
Gold Mining Company Limited, it is currently entitled to receive 100% of the
cash flows from the operation until the loan, extended to the joint venture by
AngloGold Ashanti USA Inc., is repaid.
18. Borrowings
AngloGold Ashanti`s borrowings are interest bearing.
19. Announcements
On 13 February 2007, the AngloGold Ashanti board approved a project to develop
the Mponeng mine below the 120 level, adding some 2.5Moz of gold and 8 years to
the mine`s life, at a capital cost of $252m. Production is due to commence in
2013.
On 5 February 2007, AngloGold Ashanti informed the market that a partial slope
failure occurred in an intermediate footwall of the Nyankanga pit at Geita Gold
Mine on Saturday, 3 February 2007. The pit had been monitored by slope
stability radar and was safely evacuated in advance of the failure. No injury
to employees or contractors occurred and there was no damage to equipment.
20. Dividend
Final dividend No. 101 of 240 South African cents or 16.859 UK pence or
3,041.21 cedis per share was paid to registered shareholders on 16 March 2007,
while a dividend of 8.4144 Australian cents per CHESS Depositary Interest (CDI)
was paid on the same day. On 19 March 2007, a dividend of 30.41 cedis per
Ghanaian Depositary Share (GhDS) was paid to holders thereof. Each CDI
represents one-fifth of an ordinary share, and 100 GhDSs represents one
ordinary share. A dividend was paid to holders of American Depositary Receipts
(ADRs) on 26 March 2007 at a rate of 32.384 US cents per American Depositary
Share (ADS). Each ADS represents one ordinary share.
21. Detailed report
This report contains a summary of the results of AngloGold Ashanti`s
operations. A detailed report appears on the internet and is obtainable in
printed format from the investor relations contacts, whose details, along with
the website address, appear at the end of this report.
By order of the Board
R P EDEY R M GODSELL
Chairman Chief Executive Officer
2 May 2007
Administrative information
ANGLOGOLD ASHANTI LIMITED
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
Share codes:
ISIN: ZAE000043485
JSE: ANG
LSE: AGD
NYSE: AU
ASX: AGG
GhSE (Shares): AGA
GhSE (GhDS): AAD
Euronext Paris: VA
Euronext Brussels: ANG
JSE Sponsor: UBS
Auditors: Ernst & Young
Offices
Registered and Corporate
76 Jeppe Street
Newtown 2001
(PO Box 62117, Marshalltown 2107)
South Africa
Telephone: +27 11 637 6000
Fax: +27 11 637 6624
Australia
Level 13, St Martins Tower
44 St George`s Terrace
Perth, WA 6000
(PO Box Z5046, Perth W A 6831)
Australia
Telephone: +61 8 9425 4602
Fax: +61 8 9425 4662
Ghana
Gold House
Patrice Lumumba Road
(P O Box 2665)
Accra
Ghana
Telephone: +233 21 772190
Fax: +233 21 778155
United Kingdom Secretaries
St James`s Corporate Services Limited
6 St James`s Place
London SW 1A 1NP
England
Telephone: +44 20 7499 3916
Fax: +44 20 7491 1989
E-mail: jane.kirton@corpserv.co.uk
Directors
Executive
R M Godsell (Chief Executive Officer)
R Carvalho Silva !
N F Nicolau
S Venkatakrishnan *
Non-Executive
R P Edey * (Chairman)
Dr T J Motlatsi (Deputy Chairman)
F B Arisman #
R E Bannerman ?
Mrs E le R Bradley
C B Brayshaw
R Medori
(Alternate: P G Whitcutt)
J H Mensah
W A Nairn (Alternate: A H Calver *)
Prof W L Nkuhlu
S M Pityana
S R Thompson *
A J Trahar
* British # American ? Ghanaian
French ! Brazilian
Officers
Managing Secretary: Ms Y Z Simelane
Company Secretary: Ms L Eatwell
Contacts
Charles Carter
Telephone: +27 11 637 6385
Fax: +27 11 637 6400
E-mail: cecarter@AngloGoldAshanti.com
Michael Clements
Telephone: +27 11 637 6647
Fax: +27 11 637 6400
E-mail:
mclements@AngloGoldAshanti.com
General E-mail enquiries
investors@AngloGoldAshanti.com
AngloGold Ashanti website
http://www.AngloGoldAshanti.com
Share Registrars
South Africa
Computershare Investor Services 2004
(Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
South Africa
Telephone: 0861 100 950 (in SA)
Fax: +27 11 688 5218
web.queries@computershare.co.za
United Kingdom
Computershare Investor Services PLC
P O Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
England
Telephone: +44 870 889 3177
Fax: +44 870 703 6119
Australia
Computershare Investor Services Pty
Limited
Level 2, 45 St George`s Terrace
Perth, WA 6000
(GPO Box D182 Perth, WA 6840)
Australia
Telephone: +61 8 9323 2000
Telephone: 1300 55 7010 (in Australia)
Fax: +61 8 9323 2033
Ghana
NTHC Limited
Martco House
Off Kwame Nkrumah Avenue
POBox K1A 9563 Airport
Accra
Ghana
Telephone: +233 21 238492-3
Fax: +233 21 229975
ADR Depositary
The Bank of New York ("BoNY")
Investor Services, P O Box 11258
Church Street Station
New York, NY 10286-1258
United States of America
Telephone: +1 888 269 2377 (Toll free
in USA) or +1 212 815 3700 outside
USA)
E-mail: shareowners@bankofny.com
Website: http://www.stockbny.com
Global BuyDIRECTSM
BoNY maintains a direct share purchase
and dividend reinvestment plan for
ANGLOGOLD ASHANTI.
Telephone: +1-888-BNY-ADRS
PRINTED BY INCE (PTY) LIMITED
Certain statements contained in this document, including, without limitation,
those concerning the economic outlook for the gold mining industry,
expectations regarding gold prices and production, the completion and
commencement of commercial operations of certain of AngloGold Ashanti`s
exploration and production projects, and its liquidity and capital resources
and expenditure, contain certain forward-looking statements regarding AngloGold
Ashanti`s operations, economic performance and financial condition. Although
AngloGold Ashanti believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Accordingly, results could differ
materially from those set out in the forward-looking statements as a result of,
among other factors, changes in economic and market conditions, success of
business and operating initiatives, changes in the regulatory environment and
other government actions, fluctuations in gold prices and exchange rates, and
business and operational risk management. AngloGold Ashanti undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of the annual
report on Form 20-F or to reflect the occurrence of unanticipated events. All
subsequent written or oral forward-looking statements attributable to AngloGold
Ashanti or any person acting on its behalf are qualified by the cautionary
statements herein. For a discussion on such risk factors, refer to AngloGold
Ashanti`s annual report on Form 20-F for the year ended 31 December 2005 dated
17 March 2006, which was filed with the Securities and Exchange Commission
(SEC) on 20 March 2006.
Date: 04/05/2007 07:45:01 Produced by the JSE SENS Department.
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