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ANG
ANANO
Anglogold - Report to shareholders for the quarter and nine months ended 30
September 2006
ANGLOGOLD ASHANTI LIMITED
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
Share codes:
ISIN: ZAE000043485
Report to shareholders for the quarter and nine months ended 30 September
2006
* Gold production level with previous quarter at 1.4Moz
* Further reduction of hedge delta achieved, with price received 6% below
spot in line with both previous quarter and market guidance
* Total cash costs of $311/oz, 2% higher due to lower grades, higher power
costs in South Africa and Ghana and the annual wage increase in South Africa
* Adjusted headline earnings steady at $141m, an 131% increase to $367m in
adjusted headline earnings for first nine months of 2006
Quarter Nine months
ended ended ended ended
Sept Jun Sept Sept
2006 2006 2006 2005
SA rand / Metric
Operating
review
Gold
Produced - kg / oz (000) 43,864 44,024 129,556 145,323
Price
received
(1) - R/kg / $/oz 134,176 125,409 122,595 86,613
Total cash
costs - R/kg / $/oz 71,495 63,276 65,267 57,177
Total
production
costs - R/kg / $/oz 95,267 85,168 87,594 74,456
Financial
review
Gross
profit
(loss) - R / $ million 1,981 (594) 1,069 1,429
Gross
profit
adjusted
for the
effect of
unrealised
non-hedge
derivatives
(2) - R / $ million 2,020 1,988 5,257 2,119
Profit
(loss)
attributable
to equity
shareholders- R / $ million 1,470 (1,047) (651) 201
Headline
earnings
(loss)(3) - R / $ million 1,471 (1,086) (683) 374
Headline
earnings
before
unrealised
non-hedge
derivatives
, fair value
adjustments
on convertible
bond and
interest
rate swaps
(4) - R / $ million 1,011 911 2,453 1,015
Capital
expenditure - R / $ million 1,542 1,168 3,671 3,317
Earnings
(loss) per
ordinary
share -
cents/share
Basic 533 (383) (240) 76
Diluted 533 (383) (240) 76
Headline(3) 534 (398) (251) 141
Headline
earnings
before
unrealised
non-hedge
derivatives
, fair value
adjustments
on convertible
bond and
interest
rate
swaps(4) - cents/share 367 334 903 384
Dividends - cents/share 210 170
Quarter Nine months
ended ended ended ended
Sept Jun Sept Sept
2006 2006 2006 2005
US dollar / Imperial
Operating review
Gold
Produced - kg / oz (000) 1,410 1,415 4,165 4,672
Price received (1) - R/kg / $/oz 584 600 576 427
Total cash costs - R/kg / $/oz 311 305 308 282
Total production
costs - R/kg / $/oz 414 410 413 367
Financial review
Gross profit (loss) - R / $ million 349 25 312 240
Gross profit
adjusted for the
effect
of unrealised
non-hedge
derivatives (2) - R / $ million 283 305 791 334
Profit (loss)
attributable to
equity
shareholders - R / $ million 268 (54) 28 45
Headline earnings
(loss)(3) - R / $ million 268 (60) 24 74
Headline earnings
before unrealised
non-hedge
derivatives, fair
value
adjustments on
convertible bond
and interest rate
swaps (4) - R / $ million 141 140 367 159
Capital expenditure - R / $ million 220 181 557 525
Earnings (loss) per
ordinary share -
cents/share
Basic 97 (20) 10 17
Diluted 97 (20) 10 17
Headline3 97 (22) 9 28
Headline earnings
before unrealised
non-hedge
derivatives, fair
value
adjustments on
convertible bond
and interest rate
swaps(4) - cents/share 51 51 135 60
Dividends - cents/share 29 26
Notes: 1. Price received includes realised non-hedge derivatives.
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 30 September 2006
Price received(1) Production Total cash costs
% % %
$/oz Variance oz (000) Variance $/oz Variance
(4) (4) (4)
Mponeng 597 (8) 155 (1) 217 (5)
Great
Noligwa 599 (9) 151 (1) 271 (2)
TauTona 598 (8) 129 8 243 (9)
Sunrise
Dam 794 22 108 (4) 346 27
Kopanang 598 (9) 111 (3) 284 (4)
AngloGold
Ashanti
Brasil
Mineracao 592 (5) 67 18 207 9
Morila(5) 622 (2) 50 (7) 278 12
Cerro
Vanguar-
dia (5) 489 (5) 55 (14) 213 13
Sadiola 625 - 46 (12) 278 9
Yatela (5) 620 (1) 34 (15) 234 1
Cripple
Creek &
Victor 379 32 69 6 243 -
Savuka 599 (7) 26 24 294 (18)
Serra
Grande
(5) 541 8 24 - 194 (6)
Navachab 627 (2) 23 5 255 (9)
Tau Lekoa 599 (8) 44 7 417 (7)
Iduapriem
(5) 507 1 44 7 338 (17)
Geita 619 (4) 73 3 540 7
Obuasi 474 (1) 94 (3) 388 (4)
Siguiri
(5) 502 (3) 62 5 435 8
Moab
Khotsong 595 (9) 11 - 669 -
Bibiani 622 (1) 8 (11) 704 71
Other 26 (16)
AngloGold
Ashanti 584 (3) 1,410 - 311 2
Gross profit (loss)
adjusted for the
effect of unrealised
non-hedge
Cash gross profit (2) derivatives(3)
% %
$m $m
Variance Variance
(4) (4)
Mponeng 58 (11) 44 (12)
Great Noligwa 49 (13) 39 (13)
TauTona 45 - 31 (3)
Sunrise Dam 44 (4) 35 (5)
Kopanang 34 (15) 29 (15)
AngloGold Ashanti
Brasil Mineracao 26 8 23 10
Morila(5) 18 (5) 14 (7)
Cerro Vanguardia (5) 17 (29) 10 (44)
Sadiola 17 (6) 14 -
Yatela (5) 13 (13) 8 (33)
Cripple Creek & Victor 11 10 3 160
Savuka 8 33 7 40
Serra Grande (5) 8 - 7 17
Navachab 8 - 6 -
Tau Lekoa 7 (13) 3 50
Iduapriem (5) 7 40 3 -
Geita 5 (50) (7) (333)
Obuasi 4 (43) (12) (33)
Siguiri (5) 4 (56) (3) (250)
Moab Khotsong (1) - (5) -
Bibiani (1) (150) (2) (300)
Other 45 67 36 71
AngloGold Ashanti 426 (6) 283 (7)
1 Price received includes realised non-hedge derivatives.
2 Cash gross profit is gross profit (loss) adjusted for the effect of
unrealised non-hedge derivatives plus amortisation of tangible and
intangible assets, less non- cash revenues.
3 Refer to note B of "Non-GAAP disclosure" for the definition.
4 Variance September 2006 quarter on June 2006 quarter - increase
(decrease).
5 Attributable.
Rounding of figures may result in computational discrepancies.
Financial and operating review
OPERATIONAL OVERVIEW FOR THE QUARTER
Steady production, slightly higher total cash costs, a received price of
$584/oz and the sale of uranium to the newly-listed Nufcor Uranium Limited
resulted in a financial performance in line with that of the previous
quarter.
Adjusted headline earnings, at $141m, contributed to year- to-date adjusted
headline earnings of $367m, a 131% increase over that of the first nine
months of 2005.
Operationally, production of 1.4Moz was in line with guidance and level with
that of the previous quarter. Total cash costs, however, rose 2%
quarter-on-quarter to $311/oz, due primarily to annual South African wage
increases and higher power costs in both South Africa and Ghana.
Despite the higher impact of increased wages and power rates, which pushed
the region"s total cash costs 6% higher to R62,837/kg, the South African
assets nevertheless posted generally solid results, with production better or
maintained quarter-on- quarter at four of the seven operations. TauTona had a
particularly strong quarter, with production up 8% to 4,000kg (129,000oz),
offsetting the effects of the annual wage increase and resulting in total
cash costs of R55,777/kg, in line with those of the previous quarter. Tau
Lekoa and Savuka, which have this quarter emerged from transition periods,
reported production increases of 5% and 24%, respectively, while production
was marginally down at Great Noligwa and 3% lower at Kopanang due to grade
declines.
On 23 October 2006, subsequent to the third quarter-end, two seismic events
took place at TauTona within 25 minutes. Five employees lost their lives.
Management is dismayed and saddened by this tragic accident and offers its
deepest condolences to the workers" families and friends. The company also
salutes the efforts of the rescue and recovery team, which worked tirelessly
in the most extreme conditions. The AngloGold Ashanti management team has
committed itself to taking every action to return the company to the
improving safety trend of recent years.
Of the other African assets, two of the three Ghanaian operations reported
strong results, with total cash costs 17% lower at Iduapriem and 4% lower at
Obuasi, despite the cost implications of the country-wide power shortage
reported in August. Navachab, in Namibia, also had a good quarter, posting a
5% production improvement and a 9% decrease in total cash costs, while all
three of the Malian operations reported grade- related production declines
and associated total cash cost increases. In Tanzania, Geita reported
production of 73,000oz, a 3% improvement quarter-on-quarter, along with a 7%
increase in total cash costs related to the anticipated lower grades
forecasted last quarter.
Regarding the international assets, the Brazilian operations posted generally
strong results, with production up 18% at AngloGold Ashanti Brasil Mineracao
and steady quarter-on-quarter at Serra Grande. At Cerro Vanguardia in
Argentina and Sunrise Dam in Australia, lower grades resulted in production
decreases of 14% and 4% and total cash cost increases of 13% and 25%,
respectively. At Cripple Creek & Victor, in the United States, production was
6% better in the third quarter due to improved solution flows on the leach
pad and consequently, increased recoverable ounces. Total cash costs were in
line with those of the previous quarter at $243/oz.
Greenfields exploration activities were undertaken in Australia, Colombia,
the DRC, China, Laos, the Philippines and Russia during the third quarter,
with 35,252m of diamond and reverse circulation drilling completed on four of
the company"s priority greenfields targets: Tropicana in Australia, Quinchia
and Gramalote in Colombia, and Adidi/Kanga in the DRC. Year-to-date global
greenfields exploration drilling has now reached 75,722m. In September,
AngloGold Ashanti announced the signing of a strategic alliance with
Polymetal to explore, acquire, and develop gold mining opportunities within
the Russian Federation. This alliance will initially focus on four projects
located in the Chita and Krasnoyarsk regions of eastern Russia.
Looking ahead, production for the fourth quarter is estimated to be around
1.48Moz at an average total cash cost of $308/oz, assuming the following
exchange rates: R7.50/$, A$/$0.75, BRL2.20/$ and Argentinean peso 3.08/$.
Capital expenditure is estimated at $334m and will be managed in line with
profitability and cash flow.
Earnings for the fourth quarter are expected to be significantly distorted
due to certain accounting adjustments, which are likely to include, amongst
others, increases in the company"s current and deferred tax provisions due to
higher gold prices and changes to effective tax rates, the proposed Employee
Share Ownership Plan, and the potential vesting of certain share-based
awards.
NON-OPERATIONAL OVERVIEW FOR THE QUARTER
In early October, AngloGold Ashanti announced the proposed launch of an
employee share ownership plan (ESOP) and a black economic empowerment (BEE)
transaction, both of which are subject to an AngloGold Ashanti shareholder
vote, to be held on 11 December 2006. The proposed plan will issue 960,000
ordinary shares to nearly 31,000 South African employees or 30 shares per
individual worker.
In addition, each worker will be allotted 90 "loan shares" issued at a 10%
discount to market value calculated using a 30-day average share price.
These shares will vest in five equal tranches over the next eight years. The
BEE scheme will allow Izingwe Holdings, a private South African investment
company, to acquire approximately 1.4m "loan shares" under similar terms as
the ESOP.
In South Africa, the recent Treasury announcement of a revised draft royalty
bill proposed a rate on refined gold of 1.5%. This represents a considerably
lower royalty than was proposed in the initial draft, and the company
welcomes the less severe impact it will have on AngloGold Ashanti and the
South African gold industry.
After serving more than 40 years for AngloGold and, prior to that, for Anglo
American, company secretary Chris Bull will retire at the end of November
2006. He is succeeded by Lynda Eatwell, who has been the assistant company
secretary for AngloGold Ashanti for the last six years.
Exploration
Total exploration expenditure amounted to $26m ($16m expensed, $10m
capitalised) during the third quarter, compared with $27m ($18m expensed, $9m
capitalised) in the second quarter of 2006.
BROWNFIELDS EXPLORATION
In Australia, at the Boddington mine, five diamond drill rigs have been
employed on drill programmes to convert Inferred Resource to Indicated
Resource, mostly in the Wandoo South pit where, historically, broad zones of
mineralisation were intersected.
At Siguiri, in Guinea, drilling focused on following up known mineralisation
at Kintinian, Eureka North, Kozan North and Sintroko West. Reverse
circulation (RC) drilling of selected portions of the spent heap leach also
commenced with the intention of defining a Mineral Resource.
At Geita, in Tanzania, results from 19 RC and 14 diamond holes indicate
significant mineralisation in the Ridge 8 - Star & Comet gap. A Mineral
Resource is expected to be generated. At Area 3 South, follow-up drilling on
a geochemical anomaly returned good results in a zone extending from 12m to
98m below surface.
At Morila in Mali, after a two month hiatus to interpret drill results, the
wide-spaced drill programme has recommenced and has defined sub- economic
mineralisation in the vicinity of the open- pit.
At the Tamabli South anomaly at Sadiola, infill drilling confirmed low grade,
but potentially economic mineralisation.
At Navachab in Namibia, 1,000m of follow-up RC drilling at the Gecko central
and north prospects has returned positive results.
Surface drilling continued at Obuasi, in Ghana, with UDSDD 2 reaching a depth
of 1,080m and UDSDD 3 intersecting reef between 1,697m and 1,766m.
In Argentina, at Cerro Vanguardia, two new veins have been confirmed by
resource reconnaissance drilling. At Corrego do Sitio, in Brazil, a new
deposit(Paiol) is being delineated after an initial three intersections
returned encouraging results.
At Cripple Creek & Victor in the United States, drill results in the Life of
Mine Extension Project have been encouraging and additional modelling will be
completed early in the fourth quarter. Development drilling continues in the
South Cresson Deposit to define final pit depths and high wall designs.
GREENFIELDS EXPLORATION
Greenfields exploration activities continued during the third quarter in
Australia, Colombia, the DRC, China, the Philippines, Laos and Russia.
In Australia, drilling continued at the Tropicana joint venture on both the
Tropicana and Havana zones. Significant new intercepts obtained from drilling
at the Tropicana zone, which is currently focused on identifying extensions
to the known mineralisation and to better-defining the orientation and extent
of the high grade shoots, included 39m at 3.0g/t (including 15m at 6g/t), 36m
at 3.5g/t (including 12m at 8.7g/t) and 41m at 3.7g/t (including 11m at
11.5g/t).
Mineralisation at Havana has now been identified over a strike length of
2.1km and is still open to the north, south, and down-dip.
Drilling focused on completing the 200m x 100m programme and on infilling to
100m x 100m has resulted in the following encouraging intercepts:
10m at 5.3g/t and 25m at 2.5g/t (including 13m at 3.5g/t).
Regional exploration programmes continued in Colombia. First phase drilling
at the bulk- tonnage Quinchia and Gramalote targets in central Colombia was
completed with promising initial results. At Quinchia, a total of 19 holes
have been drilled, targeting both porphyry gold/copper and Breccia gold
systems. Best drill results include 265m at 0.8g/t and 242m at 0.85g/t. At
Gramalote, a granite-hosted gold system, a total of seven holes have been
drilled. Best drill results include 255m at 1.16g/t and 275m at 1.2g/t.
Further metallurgical test work on mineralisation at Quinchia is scheduled
for the fourth quarter, as is second phase drill- testing at Gramalote.
In the DRC, exploration at Mongbwalu relied on two dedicated diamond drill
rigs focusing on infill drilling in the Adidi/D7 Kanga block. Significant new
intercepts include 0.63m at 240g/t, 5.48m at 2.46g/t, and 10.07m at 1.54g/t.
A third RC drill rig is expected to arrive on site by the beginning of
November and Resource delineation drilling will continue throughout the rest
of the year.
In China, a co-operative joint venture with local partners was signed during
the third quarter at the Yili-Yunlong prospect in Xinjiang, which has
potential for both epithermal gold and porphyry gold and copper systems.
Exploration of this project is intended to form part of the AngloGold Ashanti
2007 greenfields programme. The 2006 drill programme at Dynasty Gold"s Red
Valley project in Qinghai was completed in September. Results are pending.
In the Philippines, AngloGold Ashanti elected to exercise its right to
proceed to a joint venture with Red 5 Limited on the Outer Siana area, which
surrounds but does not include Red 5"s proposed Siana pit. AngloGold Ashanti
and Red 5 have also entered into a joint venture to explore Mapawa, located
20km north of Siana. Commencement of detailed exploration at Mapawa will
begin once approval from the Mines and Geosciences Bureau has been obtained.
In Laos, regional reconnaissance stream sampling and mapping programmes in
several areas under the joint venture with Oxiana Limited were undertaken
before activities were restricted by the wet season. Anomalous stream
sediment gold has been outlined in two of these areas and promising geology,
alteration and trace element geochemistry has been defined in another area. A
technical review has identified a number of priority intrusive related gold
targets to be advanced in the fourth quarter.
In late September, the company announced the signing of a strategic alliance
with Polymetal to explore, acquire, and develop gold mining opportunities
within the Russian Federation. The alliance will initially focus on two
projects contributed by Polymetal and located in the Chita region, as well as
two assets in Krasnoyarsk that are being acquired by AngloGold Ashanti from
Trans-Siberian Gold (in which AngloGold Ashanti retains a 29.8% stake and to
which it continues to provide technical services).
Review of the gold market
Over the third quarter of 2006, spot gold traded in a range of $90, from a
low of $574/oz to a high of $664/oz. Although the gold price has since
declined, the third quarter range was encouraging, as it represents lower
volatility than was experienced in the first half of the year when spot
prices surged from around $550/oz to a 25-year high of $732/oz.
The average price for the quarter of $621/oz represents a decline of just
over $7/oz or 1.17% from that of the second quarter, resulting in a year-to-
date average of $601/oz. In spite of the lower dollar gold price, the rand
gold price strengthened nearly 10% quarter-on-quarter to an average price of
R142,472/kg due to an 11% weakening of the rand against the dollar. The year-
to-date rand gold price average stands at R127,687/kg.
PHYSICAL MARKET
While gold price volatility has continued to generally dampen demand in the
more price sensitive regions such as the Middle East and India, the retracing
of the price back to the $600/oz level and below in the second half of the
third quarter did encourage physical buying in these markets during the
period.
In India, this was reflected in buyer concern that the market could have
reached at least a temporary low, leading merchants to secure gold supplies
in advance of Diwali, the Indian festival of lights and the accompanying
wedding season. Middle Eastern consumption also improved, notwithstanding
depressed confidence in the region following the Israel-Lebanon conflict
earlier in the quarter. In Turkey, which fabricates gold jewellery for both
developed and emerging markets, this was evidenced by significantly higher
gold imports in September, which represented a 47% increase on imports for
the previous month.
In spite of the region"s increased demand in the second half of the quarter
and the associated potential for a year-end recovery, Indian and Middle
Eastern 2006 consumption figures are expected to be lower than those of last
year.
In China, physical gold demand continues to show resilience to price
volatility and remained solid through the third quarter. Consumption patterns
in this country appear impervious to the price shocks that have stifled other
developing markets, and the China Gold Association has forecast that gold
consumption is likely to grow by around 5% year-on-year.
In the USA, the retail trade appears to have become more accepting of a
higher raw material price and is accordingly making adjustments on quotations
of finished products. This marks a departure from behaviour seen earlier in
the year, when retailers shifted to lighter jewellery pieces in an effort to
maintain consumer price levels. The new acceptance of a higher gold price,
coupled with US consumers" record spend on gold jewellery purchases, should
result in inventory re- stocking in anticipation of the Christmas season.
INVESTMENT MARKET
September also saw the end of the second year of the second Central Bank Gold
Agreement (CBGA). By late August, central bank sales were approximately 107t
less than the 500t per annum quota, suggesting that gold"s recent weakness is
driven by fundamentals.
While central bank disclosure for the period has not yet been released, the
potential CBGA shortfall can be interpreted as a bullish statement for gold;
indeed, the expectation amongst most market analysts is that the CBGA
signatories are unlikely to fulfil their full quota for the remaining three
years of the second agreement.
Exchange traded gold holdings held up well during the third quarter.
According to the Commodities Future Trading Commission, hedge and managed
future funds cut their net long futures and options positions by some 3Moz
in September, where, by contrast, stocks held by funds in the exchange
traded franchise fell by only 200,000oz from an August peak of 15.6Moz.
CURRENCIES
The US dollar enjoyed a relatively quiet quarter, trading in a range of
$/1.24 to $/1.30. In contrast, the rand continued the weakening
pattern against most currencies, which began in the second quarter.
Despite a 50 basis point interest rate increase by the South African
Reserve Bank and expectations of further rate hikes, the rand continued to
weaken on continued concern over poor trade account deficits and a widening
current account balance, combined with some worry surrounding political
developments in the country. From opening levels of R7.15/$ and R9.15/,
the currency closed the quarter at R7.76/$ and R9.85/. Quarter-on-quarter,
the average rand dollar rate weakened by 11% from R6.46/$ to R7.15/$.
The Brazilian real and the Australian dollar also had relatively quiet
quarters, trading in ranges of BRL2.12/$ to BRL2.24/$, and A$/$0.74 to
A$/$0.77, respectively. Continued positive investor interest and sentiment
is likely to result in the real maintaining most of the gains that it has
seen this year. The strength of the Australian dollar, however, is thought
to be more dependent on commodity prices, and would therefore be expected to
weaken should these fail to maintain the higher levels experienced in the
first half of 2006.
HEDGING
As at 30 September, the net delta hedge position of AngloGold Ashanti was
9.50Moz or 296t, valued at the spot gold price at the quarter-end of
$601.50/oz, nearly $19/oz lower than that of the previous quarter. This net
delta position reflects a decrease of some 0.6Moz or 20t quarter-on- quarter,
a decline due to the lower third quarter- end gold price combined with
decreases related to maturing hedge contracts, buybacks and other delta-
reducing strategies as part of a broader hedge reduction strategy.
The marked-to-market value of the hedge position as at 30 September 2006 was
a negative $2.78bn (at 30 June 2006: negative $3.17bn). The decrease in the
marked-to-market position was primarily due to the lower gold price of
$601.50/oz and the lower prevailing exchange rates, interest rates and
volatilities prevailing at quarter-end, combined with the impacts of the
changed hedge position quarter-on-quarter. Had the spot price of gold at the
end of June remained unchanged from the price of $620/oz at the end of the
previous quarter, the hedge would have reduced to 9.878Moz or 307t, with a
marked-to-market value of negative $2.96bn.
The price received by the company for the quarter was $584/oz, compared to an
average spot price for the period of $621/oz.
The company continues to actively manage its hedge position in a value
accretive manner. As a result of this strategy there is currently a net long
dollar gold position of 26,558kg at an average of $650/oz for 2006.
Continuing this practice, these long positions will be integrated into the
hedge book and used to reduce hedging commitments in future periods.
Hedge position
As at 30 September 2006, the group had outstanding the following
forward-pricing commitments against future production. The total net delta
tonnage of the hedge of the company on this date was 9.50Moz or 296t (at 30
June 2006:10.14Moz or 315t).
The marked-to-market value of all hedge transactions making up the hedge
positions was a negative $2.777bn (negative R21.56bn) as at 30 September 2006
(as at 30 June 2006: negative $3.167bn or R22.45bn). This value at 30
September 2006 was based on a gold price of $601.50/oz, exchange rates of
R7.76/$ and A$/$0.7440 and the prevailing market interest rates and
volatilities at that date.
As at 27 October 2006, the marked-to-market value of the hedge book was a
negative $2.644bn (negative R19.88bn), based on a gold price of $593.40/oz
and exchange rates of R7.52/$ and A$/$0.7630 and the prevailing market
interest rates and volatilities at the time.
These marked-to-market valuations are not predictive of the future value of
the hedge position, nor of future impact on the revenue of the company. The
valuation represents the cost of buying all hedge contracts at the time of
valuation, at market prices and rates available at the time.
Year 2006 2007 2008 2009
DOLLAR
GOLD
Forward
contracts Amount (kg) *26,558 19,622 25,306 21,738
US$/oz $650 $301 $331 $316
Put
options
purchased Amount (kg) 4,226 1,455
US$/oz $535 $292
Put
options
sold Amount (kg) 22,236 14,127 3,344 3,748
US$/oz $596 $612 $565 $530
Call
options
purchased Amount (kg) 7,266 10,519 4,637
US$/oz $460 $383 $456
Call
options
sold Amount (kg) 34,288 42,074 40,618 36,731
US$/oz $576 $447 $443 $454
RAND GOLD
Forward
contracts Amount (kg) 1,592 2,138 933
Rand per kg R93,107 R91,322 R116,335
Put
options
purchased Amount (kg)
Rand per kg
Put
options
sold Amount (kg) 933
Rand per kg R146,511
Call
options
purchased Amount (kg)
Rand per kg
Call
options
sold Amount (kg) 311 2,986
Rand per kg R108,123 R202,054
A DOLLAR
GOLD
Forward
contracts Amount (kg) 8,398 6,843 2,177 3,390
A$ per oz A$819 A$631 A$658 A$650
Put
options
purchased Amount (kg) 4,354
A$ per oz A$801
Put
options
sold Amount (kg) 3,732
A$ per oz A$779
Call
options
purchased Amount (kg) 3,732 3,110 1,244
A$ per oz A$668 A$680 A$694
Call
options
sold Amount (kg) 4,354
A$ per oz A$832
Delta (kg) *14,245 44,836 55,347 57,902
** Total
net
gold:
Delta (oz) *457,987 1,441,509 1,779,445 1,861,590
Year 2010 2011-2015 Total
DOLLAR GOLD
Forward contracts Amount (kg) 14,462 37,239 91,808
US$/oz $347 $411 $263
Put options purchased Amount (kg) 5,681
US$/oz $472
Put options sold Amount (kg) 1,882 7,527 52,864
US$/oz $410 $435 $564
Call options
purchased Amount (kg) 22,422
US$/oz $423
Call options sold Amount (kg) 31,040 82,040 266,790
US$/oz $452 $525 $489
RAND GOLD
Forward contracts Amount (kg) 4,663
Rand per kg R96,937
Put options
purchased Amount (kg)
Rand per kg
Put options sold Amount (kg) 933
Rand per kg R146,511
Call options
purchased Amount (kg)
Rand per kg
Call options sold Amount (kg) 2,986 2,986 9,269
Rand per kg R216,522 R230,990 R212,885
A DOLLAR GOLD
Forward contracts Amount (kg) 3,110 23,919
A$ per oz A$683 A$709
Put options
purchased Amount (kg) 4,354
A$ per oz A$801
Put options sold Amount (kg) 3,732
A$ per oz A$779
Call options
purchased Amount (kg) 3,110 11,197
A$ per oz A$712 A$686
Call options sold Amount (kg) 4,354
A$ per oz A$832
Delta (kg) 43,937 107,788 295,565
** Total net gold:
Delta (oz) 1,412,605 3,465,460 9,502,622
* Long position.
** 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 30 September 2006.
Rounding of figures may result in computational discrepancies.
Year 2006 2007 2008
2009
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg) 10,886 43,545 43,545
$ per oz $6.11 $6.40 $6.66
Put options sold Amount(kg) 10,886 43,545 43,545
$ per oz $5.02 $4.93 $5.19
Call options purchased Amount (kg)
$ per oz
Call options sold Amount (kg) 10,886 43,545 43,545
$ per oz $7.11 $7.40 $7.64
Year 2010 2011-2015 Total
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg) 97,976
$ per oz $6.48
Put options sold Amount(kg) 97,976
$ per oz $5.05
Call options purchased Amount (kg)
$ per oz
Call options sold Amount (kg) 97,976
$ per oz $7.48
The following table indicates the group"s currency hedge position at
30 September 2006
Year 2006 2007 2008 2009
RAND DOLLAR (000)
Forward contracts Amount ($)
US$/R
Put options purchased Amount ($) 40,000
US$/R R7.14
Put options sold Amount ($) 40,000
US$/R R6.87
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) 45,000
US$/R R7.55
A DOLLAR (000)
Forward contracts Amount ($) 42,798 50,000 20,000
A$/US$ A$0.75 A$0.76 A$0.73
Put options purchased Amount ($) 20,000
A$/US$ A$0.73
Put options sold Amount ($) 20,000
A$/US$ A$0.76
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 20,000
A$/US$ A$0.71
BRAZILIAN REAL (000)
Forward contracts Amount ($) 10,000 4,000
US$/BRL BRL2.86 BRL3.31
Put options purchased Amount ($)
US$/BRL
Put options sold Amount ($)
US$/BRL
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 5,000
US$/BRL BRL3.42
Year 2010 2011-2015 Total
RAND DOLLAR (000)
Forward contracts Amount ($)
US$/R
Put options purchased Amount ($) 40,000
US$/R R7.14
Put options sold Amount ($) 40,000
US$/R R6.87
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) 45,000
US$/R R7.55
A DOLLAR (000)
Forward contracts Amount ($) 112,798
A$/US$ A$0.75
Put options purchased Amount ($) 20,000
A$/US$ A$0.73
Put options sold Amount ($) 20,000
A$/US$ A$0.76
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 20,000
A$/US$ A$0.71
BRAZILIAN REAL (000)
Forward contracts Amount ($) 14,000
US$/BRL BRL2.99
Put options purchased Amount ($)
US$/BRL
Put options sold Amount ($)
US$/BRL
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 5,000
US$/BRL BRL3.42
Derivative analysis by accounting designation as at 30 September 2006
Cash flow
Normal sale hedge Non-hedge Total
exempted accounted accounted
US Dollars (millions)
Commodity option
contracts (488) (9) (1,006) (1,504)
Foreign exchange option
contracts - - (11) (11)
Forward sale commodity
contracts (1,035) (405) 172 (1,268)
Forward foreign
exchange contracts - 5 (2) 3
Interest rate swaps (37) - 39 2
Total hedging contracts (1,559) (410) (808) (2,777)
Option component of
convertible bonds - - (44) (44)
Total derivatives (1,559) (410) (852) (2,821)
Rounding of figures may result in computational discrepancies.
Group income statement
Quarter Quarter Quarter
ended ended ended
September June September
2006 2006 2005
SA Rand million Notes Unaudited Unaudited Unaudited
Revenue 2 5,707 4,966 4,332
Gold income 5,459 4,798 4,151
Cost of sales 3 (3,987) (3,546) (3,748)
Non-hedge derivative gain
(loss) 510 (1,847) (161)
Gross profit (loss) 1,981 (594) 243
Corporate administration
and other expenses (126) (140) (109)
Market development costs (26) (24) (21)
Exploration costs (112) (116) (81)
Other net operating expenses 4 (34) (39) (43)
Operating special items 5 (56) 14 (38)
Operating profit (loss) 1,628 (900) (49)
Interest receivable 60 59 34
Exchange gain (loss) 6 (7) 3
Fair value adjustment on
option component of
convertible bond 421 158 (135)
Finance costs (157) (209) (166)
Fair value loss on interest
rate swaps - - -
Share of associates" loss (4) (1) (6)
Profit (loss) before
taxation 1,955 (900) (319)
Taxation 6 (430) (86) (10)
Profit (loss) after
taxation from continuing
operations 1,524 (986) (329)
Loss for the period
from discontinued operations 7 (1) (4) (42)
Profit (loss) for the period 1,523 (989) (372)
Allocated as follows:
Equity shareholders of
parent 1,470 (1,047) (415)
Minority interest 54 58 43
1,523 (989) (372)
Basic earnings (loss)
per ordinary share (cents)
Profit (loss) from
continuing operations (a) 533 (382) (141)
Loss from discontinued
operations (a) - (1) (16)
Profit (loss) 533 (383) (157)
Diluted earnings (loss)
per ordinary share (cents)
Profit (loss) from
continuing operation (b) 533 (382) (140)
Loss from discontinued
operations (b) - (1) (16)
Profit (loss) 533 (383) (156)
Dividends (c)
- Rm
- cents per share
Nine months Nine months
ended ended
September September
2006 2005
SA Rand million Unaudited Unaudited
Revenue 15,129 12,911
Gold income 14,503 12,413
Cost of sales (10,997) (10,784)
Non-hedge derivative gain (loss) (2,437) (201)
Gross profit (loss) 1,069 1,429
Corporate administration and other expenses (393) (310)
Market development costs (75) (63)
Exploration costs (301) (219)
Other net operating expenses (103) (95)
Operating special items (32) (82)
Operating profit (loss) 165 659
Interest receivable 149 127
Exchange gain (loss) (5) 6
Fair value adjustment on
option component of convertible bond 347 59
Finance costs (576) (474)
Fair value loss on interest rate swaps - (5)
Share of associates" loss (8) (3)
Profit (loss) before taxation 71 370
Taxation (559) 111
Profit (loss) after
taxation from continuing operations (488) 481
Loss for the period
from discontinued operations (12) (163)
Profit (loss) for the period (499) 318
Allocated as follows:
Equity shareholders of parent (651) 201
Minority interest 152 117
(499) 318
Basic earnings (loss)
per ordinary share (cents)
Profit (loss) from
continuing operations (a) (236) 138
Loss from discontinued operations (a) (4) (62)
Profit (loss) (240) 76
Diluted earnings (loss)
per ordinary share (cents)
Profit (loss) from
continuing operation (b) (236) 137
Loss from discontinued operations (b) (4) (61)
Profit (loss) (240) 76
Dividends (c)
- Rm 578 450
- cents per share 210 170
a Calculated on the basic weighted average number of ordinary shares.
b Calculated on the diluted weighted average number of ordinary shares.
c Dividends are translated at actual rates on date of payment.
Rounding of figures may results in computational discrepancies.
Group income statement
Quarter Quarter Quarter
ended ended ended
September June September
2006 2006 2005
US Dollar million Notes Unaudited Unaudited Unaudited
Revenue 2 798 766 666
Gold income 763 740 638
Cost of sales 3 (557) (547) (576)
Non-hedge derivative gain
(loss) 143 (169) (33)
Gross profit (loss) 349 25 29
Corporate administration
and other expenses (18) (22) (17)
Market development costs (4) (4) (3)
Exploration costs (16) (18) (12)
Other net operating expenses 4 (5) (7) (7)
Operating special items 5 (7) 2 (7)
Operating profit (loss) 300 (22) (17)
Interest receivable 8 9 5
Exchange gain (loss) 1 (1) -
Fair value adjustment on
option component of
convertible bond 58 25 (21)
Finance costs (22) (32) (26)
Fair value loss on interest
rate swaps - - -
Share of associates" loss - - -
Profit (loss) before
taxation 344 (22) (58)
Taxation 6 (69) (23) (2)
Profit (loss) after
taxation from continuing
operations 276 (45) (60)
Loss for the period
from discontinued operations 7 - (1) (7)
Profit (loss) for the period 276 (45) (67)
Allocated as follows:
Equity shareholders of
parent 268 (54) (73)
Minority interest 8 9 7
276 (45) (67)
Basic earnings (loss) per
ordinary share (cents)
Profit (loss) from
continuing operations (a) 97 (20) (25)
Loss from discontinued
operations (a) - - (3)
Profit (loss) 97 (20) (28)
Diluted earnings (loss) per
ordinary share (cents)
Profit (loss) from
continuing operations (b) 97 (20) (25)
Loss from discontinued
operations (b) - - (3)
Profit (loss) 97 (20) (28)
Dividends (c)
- $m
- cents per share
Nine months Nine months
ended ended
September September
2006 2005
US Dollar million Unaudited Unaudited
Revenue 2,288 2,042
Gold income 2,193 1,964
Cost of sales (1,667) (1,709)
Non-hedge derivative gain (loss) (214) (15)
Gross profit (loss) 312 240
Corporate administration and other expenses (60) (49)
Market development costs (12) (10)
Exploration costs (45) (35)
Other net operating expenses (16) (14)
Operating special items (3) (14)
Operating profit (loss) 176 118
Interest receivable 22 20
Exchange gain (loss) (1) 1
Fair value adjustment on
option component of convertible bond 44 11
Finance costs (89) (75)
Fair value loss on interest rate swaps - (1)
Share of associates" loss (1) (1)
Profit (loss) before taxation 152 74
Taxation (98) 17
Profit (loss) after
taxation from continuing operations 53 90
Loss for the period
from discontinued operations (2) (27)
Profit (loss) for the period 52 63
Allocated as follows:
Equity shareholders of parent 28 45
Minority interest 23 18
52 63
Basic earnings (loss) per ordinary share (cents)
Profit (loss) from continuing operations (a) 11 27
Loss from discontinued operations (a) (1) (10)
Profit (loss) 10 17
Diluted earnings (loss) per ordinary share
(cents)
Profit (loss) from continuing operations (b) 11 27
Loss from discontinued operations (b) (1) (10)
Profit (loss) 10 17
Dividends (c)
- $m 81 69
- cents per share 29 26
a Calculated on the basic weighted average number of ordinary shares.
b Calculated on the diluted weighted average number of ordinary shares.
c 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 As at
September June September December
2006 2006 2005 2005
SA Rand million Notes Unaudited Unaudited Unaudited Audited
ASSETS
Non-current assets
Tangible assets 44,432 41,214 37,164 37,464
Intangible assets 3,137 2,873 2,602 2,533
Investments in associates 327 312 238 223
Other investments 846 662 582 645
Inventories 1,991 1,673 767 1,182
Derivatives 48 73 311 243
Trade and other receivables 120 164 142 124
Deferred taxation 419 368 233 279
Other non-current assets 95 95 126 101
51,415 47,434 42,164 42,794
Current assets
Inventories 3,592 3,181 2,623 2,436
Trade and other receivables 1,822 1,645 1,502 1,589
Derivatives 5,548 5,941 3,162 4,280
Current portion of
other non-current assets 5 11 3 43
Cash restricted for use 46 21 86 52
Cash and cash equivalents 2,871 2,450 1,469 1,328
13,884 13,250 8,845 9,728
Non-current assets held
for sale 225 100 100 100
14,109 13,350 8,946 9,828
TOTAL ASSETS 65,524 60,784 51,110 52,622
EQUITY AND LIABILITIES
Share capital and premium 10 22,077 22,065 19,023 19,047
Retained earnings and
other reserves 11 123 (3,057) (360) (2,463)
Shareholders" equity 22,200 19,008 18,663 16,584
Minority interests 12 478 419 375 374
Total equity 22,678 19,427 19,038 16,958
Non-current liabilities
Borrowings 10,497 9,375 10,889 10,825
Environmental
rehabilitation and other
provisions 2,671 2,579 1,804 2,265
Provision for pension and
post-retirement benefits 1,267 1,263 1,017 1,249
Trade, other payables and
deferred income 104 109 90 87
Derivatives 2,592 3,484 2,096 2,460
Deferred taxation 7,653 7,239 7,954 7,353
24,785 24,049 23,850 24,239
Current liabilities
Trade, other payables and
deferred income 3,351 3,011 2,709 2,711
Current portion of
borrowings 290 465 991 1,190
Derivatives 12,794 12,723 4,218 6,814
Taxation 1,532 1,110 304 710
17,967 17,309 8,222 11,425
Non-current liabilities
held for sale 95 - - -
18,061 17,309 8,222 11,425
Total liabilities 42,846 41,357 32,072 35,664
TOTAL EQUITY AND
LIABILITIES 65,524 60,784 51,110 52,622
Net asset value - cents
per share 8,239 7,060 7,191 6,401
Rounding of figures may results in computational discrepancies.
Group balance sheet
As at As at As at As at
September June September December
2006 2006 2005 2005
US Dollar
million Notes Unaudited Unaudited Unaudited Audited
ASSETS
Non-current
assets
Tangible assets 5,723 5,768 5,843 5,905
Intangible assets 404 402 409 399
Investments in
associates 42 44 37 35
Other
investments 109 93 91 102
Inventories 256 234 121 186
Derivatives 6 10 49 38
Trade and other
receivables 15 23 22 20
Deferred taxation 54 51 37 44
Other non-current
assets 12 13 20 16
6,622 6,639 6,629 6,745
Current assets
Inventories 463 445 412 384
Trade and other
receivables 235 230 236 250
Derivatives 714 832 497 675
Current portion of
other non-current
assets 1 2 - 7
Cash restricted for use 6 3 14 8
Cash and cash
equivalents 370 343 231 209
1,788 1,854 1,391 1,533
Non-current
assets held
for sale 29 14 16 16
1,817 1,868 1,406 1,549
TOTAL ASSETS 8,440 8,507 8,035 8,294
EQUITY AND
LIABILITIES
Share capital
and premium 10 2,844 3,088 2,991 3,002
Retained
earnings and
other reserves 11 16 (428) (57) (388)
Shareholders"
equity 2,859 2,660 2,934 2,614
Minority
interests 12 62 59 59 59
Total equity 2,921 2,719 2,993 2,673
Non-current
liabilities
Borrowings 1,352 1,312 1,712 1,706
Environmental
rehabilitation
and other
provisions 344 361 284 356
Provision for
pension and
post-retiremen
t benefits 163 177 160 197
Trade, other
payables and
deferred income 13 15 14 14
Derivatives 334 488 330 388
Deferred taxation 986 1,013 1,250 1,159
3,192 3,366 3,750 3,820
Current liabilities
Trade, other
payables and
deferred income 432 421 426 427
Current portion of
borrowings 37 65 156 188
Derivatives 1,648 1,781 663 1,074
Taxation 197 155 48 112
2,314 2,422 1,292 1,801
Non-current
liabilities
held for sale 12 - - -
2,326 2,422 1,292 1,801
Total
liabilities 5,519 5,788 5,042 5,621
TOTAL EQUITY AND
LIABILITIES 8,440 8,507 8,035 8,294
Net asset
value - cents
per share 1,061 988 1,130 1,009
Rounding of figures may results in computational discrepancies.
Group cash flow statement
Quarter Quarter Quarter Nine months Nine months
ended ended ended ended ended
September June September September September
2006 2006 2005 2006 2005
Unaudited Unaudited Unaudited Unaudited Unaudited
SA Rand million
Cash flow from
operating
activities
Receipts from
customers 5,681 4,983 4,498 15,322 13,112
Payments to
suppliers and
employees (3,131) (2,822) (3,313) (9,027) (9,914)
Cash generated from
operations 2,550 2,161 1,185 6,295 3,198
Cash (utilised)
generated
by discontinued
operations (16) 14 (51) (13) (164)
Environmental,
rehabilitation
and other
expenditure (49) (34) (27) (113) (55)
Termination of
employee benefit
plans - - (61) - (61)
Taxation paid (146) (178) (45) (415) (140)
Net cash inflow
from operating
activities 2,338 1,963 1,000 5,754 2,777
Cash flows from
investing activities
Capital expenditure (1,542) (1,168) (1,385) (3,671) (3,317)
Proceeds from
disposal
of tangible assets 6 54 22 71 25
Proceeds on disposal
of discontinued
assets 7 22 8 39 9
Other investments
acquired (406) (13) (4) (424) (18)
Associate loans and
acquisitions (3) (63) (1) (66) (92)
Proceeds from
disposal of
investments 410 19 1 447 1
Cash restricted for
use (20) - 105 10 79
Interest received 56 44 21 118 93
Loans advanced - - - (1) (43)
Repayment of loans
advanced 8 26 2 36 15
Utilised in hedge
restructure - - - - (415)
Net cash outflow
from investing
activities (1,485) (1,079) (1,231) (3,441) (3,663)
Cash flows from
financing activities
Proceeds from issue
of share capital 12 3,026 17 3,061 35
Share issue expenses - (32) - (32) -
Proceeds from
borrowings 496 81 926 906 4,039
Repayment of
borrowings (294) (2,973) (148) (3,636) (2,043)
Finance costs (169) (84) (137) (504) (425)
Dividends paid (606) (70) (507) (858) (1,026)
Net cash (outflow)
inflow
from financing
activities (560) (52) 151 (1,063) 581
Net increase
(decrease)
in cash and cash
equivalents 294 831 (80) 1,250 (304)
Translation 127 200 (95) 294 143
Cash and cash
equivalents
at beginning of
period 2,450 1,419 1,644 1,328 1,630
Net cash and cash
equivalents at end
of period 2,871 2,450 1,469 2,871 1,469
Cash generated from
operations
Profit (loss)
before taxation 1,955 (900) (319) 71 370
Adjusted for:
Movement on
non-hedge
derivatives 120 2,584 244 4,286 486
Amortisation of
tangible assets 1,034 951 784 2,844 2,303
Amortisation of
intangible assets 4 3 3 10 9
Deferred stripping (262) (126) (39) (494) (13)
Interest receivable (60) (59) (34) (149) (127)
Operating special
items 56 18 (17) 64 26
Finance costs 157 209 166 576 474
Fair value
adjustment on
option components
of convertible bond (421) (158) 135 (347) (59)
Other non-cash
movements 177 (107) 105 188 199
Movement in working
capital (210) (254) 157 (754) (471)
2,550 2,161 1,185 6,295 3,198
Movement in working
capital
(Increase) decrease
in inventories (841) (1,019) 6 (2,014) (900)
(Increase) decrease
in trade and other
receivables (200) 70 253 (211) (33)
Increase (decrease)
in trade and other
payables 831 695 (102) 1,471 462
(210) (254) 157 (754) (471)
Rounding of figures may results in computational discrepancies.
Group cash flow statement
Quarter Quarter Quarter Nine months Nine months
ended ended ended ended ended
September June September September September
2006 2006 2005 2006 2005
US Dollar million Unaudited Unaudited Unaudited Unaudited Unaudited
Cash flow from operating
activities
Receipts from customers 798 776 689 2,329 2,085
Payments to suppliers and
employees (444) (442) (509) (1,384)
(1,576)
Cash generated from
operations 354 334 180 945 509
Cash (utilised) generated
by discontinued operations (2) 2 (8) (2) (27)
Environmental,
rehabilitation
and other expenditure (7) (5) (4) (17) (8)
Termination of employee
benefit plans - - (10) - (10)
Taxation paid (20) (28) (7) (63) (22)
Net cash inflow from
operating activities 325 302 151 863 441
Cash flows from investing
activities
Capital expenditure (220) (181) (215) (557) (525)
Proceeds from disposal of
tangible assets 1 8 3 11 5
Proceeds on disposal of
discontinued assets 1 4 1 6 -
Other investments acquired(62) (2) - (64) -
Associate loans and
acquisitions - (10) - (10) (15)
Proceeds from disposal of
investments 62 3 - 68 -
Cash restricted for use (3) - 16 2 12
Interest received 7 7 3 17 15
Loans advanced - - - - (7)
Repayment of loans
advanced 1 4 - 5 2
Utilised in hedge
restructure - - - - (69)
Net cash outflow from
investing activities (213) (167) (192) (522) (582)
Cash flows from financing
activities
Proceeds from issue of
share capital 2 505 3 511 6
Share issue expenses - (5) - (5) -
Proceeds from borrowings 75 11 139 140 640
Repayment of borrowings (41) (493) (19) (594) (324)
Finance costs (24) (13) (21) (78) (67)
Dividends paid (85) (11) (77) (125) (165)
Net cash (outflow) inflow
from financing activities (73) (5) 25 (151) 90
Net increase (decrease) in
cash and cash equivalents 39 131 (16) 190 (51)
Translation (12) (18) 1 (30) (6)
Cash and cash equivalents
at beginning of period 343 230 246 209 289
Net cash and cash
equivalents at end of
period 370 343 231 370 231
Cash generated from
operations
Profit (loss) profit
before taxation 344 (22) (58) 152 74
Adjusted for:
Movement on non-hedge
derivatives (54) 281 46 493 64
Amortisation of tangible
assets 144 147 121 431 365
Amortisation of
intangible assets - - - 1 1
Deferred stripping (31) (15) (6) (64) (2)
Interest receivable (8) (9) (5) (22) (20)
Operating special items 7 2 (2) 7 5
Finance costs 22 32 26 89 75
Fair value adjustment on
option components
of convertible bond (58) (25) 21 (44) (11)
Other non-cash movements 26 (17) 15 27 30
Movement in working
capital (38) (40) 22 (125) (72)
354 334 180 945 509
Movement in working
capital
Increase in inventories (55) (60) (25) (155) (92)
(Increase) decrease
in trade and other
receivables (8) 47 26 19 30
Increase (decrease)
in trade and other
payables 25 (27) 21 12 (10)
(38) (40) 22 (125) (72)
Rounding of figures may results in computational discrepancies.
Statement of recognised income and expense
Nine months Year Nine months
ended ended ended
September December September
2006 2005 2005
Unaudited Audited Unaudited
SA Rand million
Actuarial gains and losses on
defined benefit retirement plans - (173) 42
Net loss on cash flow hedges
removed from equity and report in
income 874 391 42
Net loss on cash flow hedges (1,717) (1,281) (433)
Gain on available for sale
financial assets 147 17 20
Deferred taxation on items above 346 445 221
Net exchange translation
differences 4,366 1,534 1,693
Net income recognised directly in
equity 4,016 933 1,585
(Loss) profit for the period (499) (1,116) 318
3,517 (183) 1,903
Attributable to:
Equity shareholders of the parent 3,297 (355) 1,755
Minority interest 220 172 148
3,517 (183) 1,903
US Dollar million
Actuarial gains and losses on
defined benefit retirement plans - (27) 7
Net loss on cash flow hedges
removed from equity and reported
in income 155 18 6
Net loss on cash flow hedges (221) (202) (68)
Gain on available for sale
financial assets 16 2 3
Deferred taxation on items above 32 69 34
Net exchange translation
differences 493 293 277
Net income recognised directly in
equity 475 153 259
Profit (loss) for the period 52 (160) 63
Total recognised income and
expense for the period 527 (7) 322
Attributable to:
Equity shareholders of the parent 506 (28) 305
Minority interest 21 21 17
527 (7) 322
Rounding of figures may results in computational discrepancies.
Notes
for the quarter and nine months ended 30 September 2006
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 2005
and
revised International Financial Reporting Standards (IFRS) which are
effective
1 January 2006, 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 and nine months ended 30 September
2006.
Where the preparation or classification of an item has been amended,
comparative information has been reclassified to ensure comparability with
the
current period as disclosed in the previous annual report. Such amendments
have
been made to provide the users of the financial statements with additional
information.
2. Revenue
Quarter ended Nine months ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Gold income 5,459 4,798 4,151 14,503 12,413
By-products and other
revenue (note 3) 188 109 147 477 371
Interest receivable 60 59 34 149 127
5,707 4,966 4,332 15,129 12,911
Quarter ended Nine months ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Gold income 763 740 638 2,193 1,964
By-products and other revenue
(note 3) 26 17 23 73 59
Interest receivable 8 9 5 22 20
798 766 666 2,288 2,042
3. Cost of sales
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Cash operating costs 3,095 2,853 2,904 8,583 8,523
By-products and other
revenue (note 2) (188) (109) (147) (477) (371)
2,907 2,744 2,757 8,106 8,152
Other cash costs 167 137 104 422 296
Total cash costs 3,075 2,881 2,861 8,527 8,448
Retrenchment costs 14 13 60 38 106
Rehabilitation & other
non-cash costs 23 25 67 86 161
Production costs 3,111 2,919 2,988 8,652 8,714
Amortisation of tangible
assets 1,034 951 784 2,844 2,303
Amortisation of intangible
assets 4 3 3 10 9
Total production costs 4,148 3,873 3,775 11,506 11,027
Inventory change (161) (327) (28) (509) (243)
3,987 3,546 3,748 10,997 10,784
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Cash operating costs 432 441 446 1,303 1,352
By-products and other revenue
(note 2) (26) (17) (23) (73) (59)
406 424 423 1,230 1,293
Other cash costs 23 21 16 64 47
Total cash costs 429 445 439 1,293 1,340
Retrenchment costs 2 2 9 6 16
Rehabilitation & other non-cash
costs 3 4 10 13 26
Production costs 434 451 459 1,313 1,382
Amortisation of tangible assets 144 147 121 431 365
Amortisation of intangible assets - - - 1 1
Total production costs 579 599 580 1,745 1,748
Inventory change (22) (52) (4) (77) (40)
557 547 576 1,667 1,709
Rounding of figures may result in computational discrepancies.
4. Other net operating expenses
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Pension and medical defined
benefit
provisions (20) (19) (29) (58) (59)
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 (14) (18) (14) (41) (36)
Other - (2) - (4) -
(34) (39) (43) (103) (95)
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Pension and medical defined benefit
provisions (3) (4) (5) (9) (9)
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 (2) (3) (2) (6) (5)
Other - - - (1) -
(5) (7) (7) (16) (14)
5. Operating special items
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Contract termination fee at Geita - - (55) - (55)
Under provision of indirect taxes (1) (33) - (27) -
VAT not recoverable (58) - - (58) -
Impairment of tangible assets
(note 8) - - - (3) (45)
Profit on disposal of assets
(note 8) 3 47 17 56 18
(56) 14 (38) (32) (82)
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Contract termination fee at Geita - - (9) - (9)
Under provision of indirect taxes - (5) - (4) -
VAT not recoverable (8) - - (8) -
Impairment of tangible assets
(note 8) - - - - (7)
Profit on disposal of assets
(note 8) 1 7 2 8 2
(7) 2 (7) (3) (14)
6. Taxation
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Current tax
Normal taxation (520) (369) (37) (1,110) (64)
Disposal of tangible assets
(note 8) (3) (3) 1 (11) 1
(523) (372) (36) (1,121) (63)
Deferred taxation
Temporary differences 15 (140) (35) (144) (249)
Impairment of tangible assets
(note 8) - - - 1 16
Change in tax rate - - - - 393
Contract termination fee at
Geita - - 19 - 19
Unrealised non-hedge
derivatives 77 426 42 705 (5)
92 286 26 562 174
Total taxation (430) (86) (10) (559) 111
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Current tax
Normal taxation (72) (56) (6) (164) (12)
Disposal of tangible assets (note
8) (1) - - (2) 1
(73) (56) (6) (166) (11)
Deferred taxation
Temporary differences 1 (22) (5) (23) (36)
Impairment of tangible assets
(note 8) - - - - 2
Change in tax rate - - - - 60
Contract termination fee at Geita - - 3 - 3
Unrealised non-hedge derivatives 3 55 6 91 (1)
4 33 4 68 28
Total taxation (69) (23) (2) (98) 17
Rounding of figures may result in computational discrepancies.
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 Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
Gold income 3 10 4 19 99
Retrenchment, rehabilitation and
(6) (8) (13) (20) (410)
other costs
Gross (loss) profit (3) 2 (9) - (311)
Impairment loss reversed - - - - 115
(Loss) profit before taxation from
discontinued operations (3) 2 (9) - (196)
Taxation 2 (5) (34) (11) 34
Net loss attributable to
discontinued
operations (1) (4) (42) (12) (163)
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
Gold income 1 2 1 3 16
Retrenchment, rehabilitation and
(1) (1) (2) (3) (66)
other costs
Gross (loss) profit - - (1) - (49)
Impairment loss reversed - - - - 17
(Loss) profit before taxation from
discontinued operations - - (1) - (32)
Taxation - (1) (5) (2) 5
Net loss attributable to
discontinued
operations - (1) (7) (2) (27)
8. Headline earnings (loss)
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
SA Rand million
The profit (loss)
attributable to equity
shareholders has been
adjusted
by the following to arrive at
headline earnings (loss):
Profit (loss) attributable
to equity
shareholders 1,470 (1,047) (415) (651) 201
Impairment of tangible
assets (note 5) - - - 3 45
Profit on disposal of assets
(note 5) (3) (47) (17) (56) (18)
Taxation on items above -
current
portion (note 6) 3 3 (1) 11 (1)
Taxation on items above -
deferred
portion (note 6) - - - (1) (16)
Net loss from discontinued
operations
(note 7) 1 4 42 12 163
Headline earnings (loss) 1,471 (1,086) (390) (683) 374
Cents per share (1)
Headline earnings (loss) 534 (398) (147) (251) 141
Quarter ended Nine months
ended
Sept Jun Sept Sept Sept
2006 2006 2005 2006 2005
Unaudited
US Dollar million
The profit (loss) attributable to
equity
shareholders has been adjusted
by the following to arrive at
headline earnings (loss):
Profit (loss) attributable to
equity
shareholders 268 (54) (73) 28 45
Impairment of tangible assets
(note 5) - - - - 7
Profit on disposal of assets
(note 5) (1) (7) (2) (8) (2)
Taxation on items above - current
portion (note 6) 1 - - 2 (1)
Taxation on items above - deferred
portion (note 6) - - - - (2)
Net loss from discontinued
operations
(note 7) - 1 7 2 27
Headline earnings (loss) 268 (60) (69) 24 74
Cents per share (1)
Headline earnings (loss) 97 (22) (26) 9 28
(1) Calculated on the basic weighted average number of ordinary shares.
Rounding of figures may result in computational discrepancies.
9. Shares
Quarter ended
Sept Jun Sept
2006 2006 2005
Authorised:
Ordinary shares of 25 SA
cents each 400,000,000 400,000,000 400,000,000
A redeemable preference
shares of 50 SA cents each 2,000,000 2,000,000 2,000,000
B redeemable preference
shares of 1 SA cent each 5,000,000 5,000,000 5,000,000
Issued and fully-paid:
Ordinary shares in issue 275,258,118 275,168,569 264,749,794
A redeemable preference shares 2,000,000 2,000,000 2,000,000
B redeemable preference shares 778,896 778,896 778,896
Weighted average number of
ordinary shares for the
period
Basic ordinary shares 275,671,212 273,028,361 264,642,218
Diluted number of ordinary
shares 275,795,886 273,450,168 265,224,451
Nine months ended
Sept Sept
2006 2005
Authorised:
Ordinary shares of 25 SA cents each 400,000,000 400,000,000
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 275,258,118 264,749,794
A redeemable preference shares 2,000,000 2,000,000
B redeemable preference shares 778,896 778,896
Weighted average number of ordinary
shares for the period
Basic ordinary shares 271,588,698 264,562,882
Diluted number of ordinary shares 271,171,372 265,146,330
During the quarter, 89,549 ordinary shares were allotted in terms of the
AngloGold Share Incentive Scheme. The basic weighted number of ordinary
shares
include time-related options as at 30 September 2006 as follows:
for the quarter - 446,062 options; and
for the nine months - 445,519 options.
All the preference shares are held by a wholly-owned subsidiary company.
10. Share capital and premium
As at
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
SA Rand million
Balance at beginning of period 19,047 19,047 18,987 18,987
Ordinary shares issued 3,030 3,018 35 60
Translation - - - -
Balance at end of period 22,077 22,065 19,023 19,047
As at
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
US Dollar million
Balance at beginning of period 3,002 3,002 3,364 3,364
Ordinary shares issued 506 504 6 9
Translation (664) (418) (379) (371)
Balance at end of period 2,844 3,088 2,991 3,002
Rounding of figures may result in computational discrepancies.
11. Retained earnings and other reserves
Foreign
Retained Non- currency
Earnings distributable translation
reserves reserve
SA Rand million
Balance at December 2004 3,379 138 (3,552)
Actuarial gains and losses
recognised - - -
Deferred taxation recognised
directly in equity - - -
Profit attributable to equity
shareholders 201 - -
Dividends (926) - -
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 - - -
Share-based payment expense - - -
Translation - - 1,808
Balance at September 2005 2,654 138 (1,744)
Balance at December 2005 1,191 138 (1,910)
Loss attributable to equity
shareholders (651) - -
Dividends (742) - -
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 - - -
Share-based payment expense - - -
Translation - - 4,472
Balance at September 2006 (202) 138 2,562
US Dollar million
Balance at December 2004 286 24 (317)
Actuarial gains and losses
recognised - - -
Deferred taxation recognised
directly in equity - - -
Profit attributable to equity
shareholders 45 - -
Dividends (150) - -
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 - - -
Share-based payment expense - - -
Translation - (2) 278
Balance at September 2005 181 22 (39)
Balance at December 2005 (46) 22 (67)
Profit attributable to equity
shareholders 28 - -
Dividends (107) - -
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 - - -
Share-based payment expense - - -
Translation - (3) 495
Balance at September 2006 (125) 19 428
Other
Actuarial Comprehen- Total
gains sive
(losses) income
SA Rand million
Balance at December 2004 (122) (1,040) (1,197)
Actuarial gains and losses recognised 42 - 42
Deferred taxation recognised directly
in equity (14) - (14)
Profit attributable to equity
shareholders - - 201
Dividends - - (926)
Net loss on cash flow hedges removed
from
equity and reported in income - 39 39
Net loss on cash flow hedges - (430) (430)
Deferred taxation on cash flow hedges - 235 235
Gain on available for sale financial
assets - 20 20
Share-based payment expense - 8 8
Translation (2) (144) (1,662)
Balance at September 2005 (96) (1,312) (360)
Balance at December 2005 (227) (1,655) (2,463)
Loss attributable to equity
shareholders - - (651)
Dividends - - (742)
Net loss on cash flow hedges removed
from
equity and reported in income - 867 867
Net loss on cash flow hedges - (1,708) (1,708)
Deferred taxation on cash flow hedges - 346 346
Gain on available for sale financial
assets - 147 147
Share-based payment expense - 31 31
Translation 1 (177) 4,296
Balance at September 2006 (226) (2,149) 123
US Dollar million
Balance at December 2004 (22) (184) (213)
Actuarial gains and losses recognised 7 - 7
Deferred taxation recognised directly
in equity (2) - (2)
Profit attributable to equity
shareholders - - 45
Dividends - - (150)
Net loss on cash flow hedges removed
from
equity and reported in income - 6 6
Net loss on cash flow hedges - (68) (68)
Deferred taxation on cash flow hedges - 36 36
Gain on available for sale financial
assets - 3 3
Share-based payment expense - 1 1
Translation 2 - 278
Balance at September 2005 (15) (206) (57)
Balance at December 2005 (36) (261) (388)
Profit attributable to equity
shareholders - - 28
Dividends - - (107)
Net loss on cash flow hedges removed
from equity and reported in income - 154 154
Net loss on cash flow hedges - (220) (220)
Deferred taxation on cash flow hedges - 32 32
Gain on available for sale financial
assets - 16 16
Share-based payment expense - 5 5
Translation 7 (3) 496
Balance at September 2006 (29) (277) 16
Rounding of figures may result in computational discrepancies.
12. Minority interests
As at
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
SA Rand million
Balance at beginning of year 374 374 327 327
Attributable profit 152 98 117 146
Dividends paid (116) (88) (100) (125)
Net loss on cash flow hedges
removed from
equity and reported in income 7 5 3 4
Net loss on cash flow hedges (9) (12) (3) (9)
Translation 70 42 31 31
Balance at end of period 478 419 375 374
As at
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
US Dollar million
Balance at beginning of year 59 59 58 58
Attributable profit 23 16 18 23
Dividends paid (18) (14) (16) (20)
Net loss on cash flow hedges
removed from
equity and reported in income 1 1 - 1
Net loss on cash flow hedges (1) (2) - (2)
Translation (2) (1) (1) (1)
Balance at end of period 62 59 59 59
13. Exchange rates
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Unaudited Unaudited Audited
Rand/US dollar average
for the period 6.59 6.31 6.31 6.37
Rand/US dollar average
for the quarter 7.15 6.46 6.51 6.53
Rand/US dollar closing 7.76 7.15 6.36 6.35
BRL/US dollar average for
the period 2.17 2.25 2.30 2.29
BRL/US dollar average for
the quarter 2.17 2.18 2.34 2.25
BRL/US dollar closing 2.17 2.16 2.22 2.35
Rand/Australian dollar
average for the period 4.93 4.69 4.85 4.85
Rand/Australian dollar
average for the quarter 5.41 4.83 4.95 4.86
Rand/Australian dollar
closing 5.82 5.31 4.85 4.65
14. Capital commitments
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
SA Rand million
Orders placed and outstanding on
capital contracts
at the prevailing rate of exchange2,910 2,726 1,753 1,182
Sept Jun Sept Dec
2006 2006 2005 2005
Unaudited Audited
US Dollar million
Orders placed and outstanding on
capital contracts
at the prevailing rate of exchange 375 382 276 186
Liquidity and capital resources:
To service the above capital commitments and other operational requirements,
the group is dependant upon cash generated from the South African operations,
borrowing facilities and cash distributions from offshore operations.
Cash generated from the South African operations fund to a large extent the
capital expenditure to maintain and expand those operations in South Africa.
Consequently other funding requirements are serviced from borrowing
facilities and offshore distributions which are subject to market and other
risks. The credit facilities and other financing arrangements contain
financial covenants and other similar undertakings.
The distributions from offshore operations are subject to foreign investment
and exchange control laws and regulations and the quantity of foreign
exchange available in offshore countries. In addition offshore distributions
from joint venture partners are subject to consent and co-operation from
those joint venture partners.
The group"s current covenant performance, cash and liquidity funds from the
various resources available are within the required limits which will meet
its obligations and capital commitments.
Rounding of figures may result in computational discrepancies.
15. Contingent liabilities
AngloGold Ashanti"s contingent liabilities at 30 September 2006 are detailed
below:
Water pumping cost - South Africa - Representatives of the three mining
companies, along with their respective legal teams, have been finalising
settlement and other related agreements over the last few months. The three
mining companies are Simmer and Jack Mines Limited, Harmony Gold Mining
Company Limited and AngloGold Ashanti Limited.
Following on the government"s request that the New Water Company be a section
21 company, AngloGold Ashanti is in the process of replacing the signed
Settlement and Shareholders" Agreements with a new Settlement Agreement,
Members" Agreement, and Loan Agreement and is attending to fulfil the
conditions precedent included in these new agreements, namely:
The unconditional conclusion of a Purchase Agreement between the New Water
Company and the provisional liquidators of Stilfontein Gold Mining
Company
for the purchase of the Margaret and Scott Shafts;
The Department of Water Affairs and Forestry (DWAF) must issue all
licences
necessary for the New Water Company to conduct its business; and
The DWAF confirms in writing that in respect of the dewatering of Margaret
Shaft only the Water Resource Management charge will be applicable to the
abstraction of such water and that no other water tariff will be imposed
unless it is established that the abstraction of water has an effect on
the yield of the Vaal River, a Vaal River Tariff may also come into effect.
The agreements will not be binding on the mining companies unless all of the
above conditions precedent are met by the due date, which may be extended by
agreement between the parties.
Similarly to the signed Settlement Agreement, the new draft Settlement
Agreement describes the formation of a "New Water Company", which will take
over the running of the Margaret and Scott Shafts from the Stilfontein Gold
Mining Company. The new company will be responsible for the operation of the
shafts and the operation of all pumping equipment at the Margaret Shaft in
order to transfer all fissure water to surface on a daily basis. The Scott
Shaft is required for ventilation purposes. The funding required from each of
the mining companies will be set out in the Loan Agreement, which is
currently being drafted. Each of the three companies has in principle agreed
to provide one-third of the start up capital required on loan account to the
New Water Company. Each mining company will contribute a maximum of R18m
capital in the aggregate over a three-year period. Any additional working or
other capital costs required by the New Water Company will be borrowed or
otherwise obtained from outside sources.
Stilfontein has been placed in provisional liquidation on the application of
a creditor, Mining Reclamation Services (Pty) Limited. The Master of the High
Court has appointed four liquidators. The State (DWAF, Department of Minerals
and Energy (DME) and Department of Environmental Affairs and Tourism (DEAT))
has indicated that it regards the environmental legislation as paramount and
that the liquidators must comply with all directives. The Purchase Agreement,
if signed, will allow the mining companies to purchase the Margaret and Scott
Shafts from Stilfontein. A Court Order may be necessary in due course - the
liquidators have indicated, in any event, that given the uncertainty of the
position in regard to the conflict between Environmental Law and Insolvency
Law, they may require a court sanction whatever arrangement is concluded.
AngloGold Ashanti is in the process of attempting to have the costs of the
Margaret and Scott Shafts set off against the amount that Stilfontein owes
the three mining companies for contributing Stilfontein"s portion of the
pumping costs in terms of the 1 November 2005 directive. These costs could be
considered administrative costs in the liquidation.
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.
Retrenchment costs - South Africa - Following the decision to discontinue
operations at Ergo in 2005, employees surplus to requirements have had their
service contracts terminated and retrenchment packages settled. Ergo
continues to retain various staff members to complete the discontinuance and
the attendant environmental obligations which are expected to be completed by
2012.
The retained employees may resign, be transferred within the Group, attain
retirement age or be retrenched as their current position is made redundant.
AngloGold Ashanti is currently unable to determine the effect, if any, of any
potential retrenchment costs.
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 ($13m). The
suretyship agreements have a termination notice period of 90 days.
Sales tax on gold deliveries - Brazil - Mineracao Serra Grande S.A., the
operator of the Crixas mine in Brazil, has received assessments from the
State of Goias Tax Inspection related to payments of sales taxes on gold
deliveries for export. The Serra Grande operation is co-owned with Kinross
Gold Corporation. The company manages the operation and its attributable
share of the assessment is approximately $29m. The company believes the
assessments are in violation of Federal legislation on sales taxes and that
there is a remote chance of success for the State of Goias. The assessment
has been appealed.
Litigation with mining contractor - Ghana - A group of employees of Mining
and
Building Contractors (MBC), the Obuasi underground developer, are claiming
to
be employees of the group. If successful, there is a risk of some employees
claiming rights to share options.
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 for the
company,
amounts to an attributable $35m at 30 September 2006 (30 June 2006:
attributable $30m). The last audited value added tax return was for the
period ended 31 March 2006 and at that date an attributable $25m was still
outstanding and an attributable $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 for the company, amount
to an attributable $12m at 30 September 2006 (30 June 2006: attributable
$14m). Fuel duties 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 $7m which is
still outstanding, whilst an attributable $5m 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.
The government of Mali is a shareholder in all the Malian entities and has
provided a repayment plan for the amounts due.
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, for the
company amounts to $14m at 30 September 2006 (30 June 2006: $12m). The
last
audited value added tax return was for the period ended 31 March 2006 and
at
that date $10m was still outstanding and $4m 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.
Reimbursable fuel duties from the Tanzanian government, for the company
amount to $11m at 30 September 2006 (30 June 2006: $11m). 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 $8m have been lodged with the Customs
and
Excise authorities, which is still outstanding, whilst claims for refund
of
$3m 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.
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 14 July 2006, AngloGold Ashanti announced the signing of a Heads of
Agreement with Antofagasta PLC to jointly explore a highly prospective belt
in Southern Colombia for new gold and copper deposits. AngloGold Ashanti will
include all of its mineral applications, contracts and third party contracts
within the area of interest in the new joint venture, while Antofagasta will
commit to fund a minimum of $1m of exploration within 12 months of the
signing of the agreement, with an option to invest an additional $7m within
four years in order to earn-in to 50% of the joint venture. Both AngloGold
Ashanti and Antofagasta will have the right to increase their interests by
20% in copper-dominant and gold-dominant properties subject to certain
conditions.
On 4 August 2006, AngloGold Ashanti announced the appointment to its board or
Mr J H Mensah, a member of the Ghanaian Parliament with extensive experience
in international and local economic management and Prof. L W Nkuhlu, a
respected South African academic, professional and business leader. Messrs P
L Zim and his alternate, Mr D D Barber announced their resignation from the
board. The above appointments and resignations were effective from 4 August
2006.
On 23 August 2006, AngloGold Ashanti announced that it had entered into an
agreement with Central African Gold plc (CAG) to sell its entire business
undertaking, related to the Bibiani mine and Bibiani North prospecting permit
and to transfer all assets, including all of Bibiani"s employees, fixed
mining and non-mining assets, inventory, trade debtors and intellectual
property as well as the Bibiani lease and the Bibiani North prospecting
licence, and procure the cessation and delegation of all contracts related to
Bibiani to CAG for a cash consideration of $40m.
On 30 August 2006, AngloGold Ashanti announced that it had granted the right
to executive directors to acquire AngloGold Ashanti ordinary shares in terms
of the AngloGold Share Incentive Scheme"s Long-term Incentive Plan (LTIP),
pursuant to which, a total of 57,150 awards were granted to four executive
directors. All awards granted in terms of the LTIP vest three years from date
of grant, subject to the achievement of the performance conditions under
which the awards were made.
On 30 August 2006, AngloGold Ashanti announced that it had been advised by
the Volta River Authority (VRA) of potential power shortage at its Ghanaian
operations due to water shortages impacting the VRA"s power generating
facilities. This announcement was followed by an update on 6 September 2006
in which AngloGold Ashanti advised that the company was in discussions with
the VRA, the Chamber of Mines in Ghana and the government of Ghana on
activities designed to minimise the impact of the power shortages on the
economy and the mining industry and to provide for a sustainable solution in
the future. At the same time, AngloGold Ashanti provided guidance to
investors as to the impact on production which the power shortages had at its
Ghanaian operations.
On 21 September 2006, AngloGold Ashanti announced that it had entered into a
50:50 strategic alliance with Russian gold and silver producer, OAO
Inter-Regional Research and Production Association Polymetal (Polymetal) in
terms of which, Polymetal and AngloGold Ashanti would cooperate in
exploration, acquisition and development of gold mining opportunities within
the Russian Federation.
On 2 October 2006, AngloGold Ashanti announced the imminent finalisation of
an employee share ownership plan with the National Union of Mineworkers,
Solidarity, United Association and Izingwe Holdings (Proprietary) Limited
("empowerment transaction"). The empowerment transaction is subject to,
amongst other things, shareholders approval and a circular giving notice of a
general meeting of shareholders to be held on 11 December 2006 will be posted
to shareholders on or about 13 November 2006.
20. Recent developments
On 11 October 2006, a revised draft Mineral and Petroleum Royalty Bill was
released by the South African Treasury Department. The draft Mineral and
Petroleum Royalty Bill originally released in March 2003, proposed a royalty
payment of 3% of gross revenue per year, payable quarterly, in the case of
gold. The revised draft imposes a royalty on the extraction and transfers of
South Africa"s mineral resources at a proposed rate of 1.5% on refined gold
(produced to at least 99.5% purity), payable twice a year on a six-monthly
basis. Royalties paid will be tax deductible. The revised draft Mineral and
Petroleum Royalty Bill is open for comment until 31 January 2007. If passed
by Parliament, the Act would be in effect for all mineral resources extracted
and transferred on or after 1 May 2009.
21. Dividend
Interim dividend No. 100 of 210 South African cents or 16.32 UK pence or
2,845.50 cedis per share was paid to registered shareholders on 25 August
2006, while a dividend of 8.0766 Australian cents per CHESS Depositary
Interest (CDI) was paid on the same day. On 28 August 2006, a dividend of
28.455 cedis per Ghanaian Depositary Share (GhDS) was paid to holders
thereof. Each CDI represents one-fifth of an ordinary share, and 100 GhDSs
represent one ordinary share. A dividend was paid to holders of American
Depositary Receipts (ADRs) on 5 September 2006 at a rate of 29.407 US cents
per American Depositary Share (ADS). Each ADS represents one ordinary share.
22. 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
27 October 2006
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
Offices
Registered and Corporate
Managing Secretary: Ms Y Z Simelane
Company Secretary: C R Bull
11 Diagonal Street
Johannesburg 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 WA 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 SW1A 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
Dr S E Jonah KBE +
R Medori
(Alternate: P G Whitcutt)
J H Mensah +
W A Nairn (Alternate: A H Calver *)
S R Thompson *
Prof W L Nkuhlu
A J Trahar
* British # American + Ghanaian
French ! Brazilian
Contacts
South Africa
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
United States of America
Andrea Maxey
Telephone: (800) 417 9255 (toll free in
USA and Canada) or +1 212 750 7999
Fax: +1 212 750 5626
E-mail: amaxey@AngloGoldAshanti.com
General E-mail enquiries
investors@AngloGoldAshanti.com
AngloGold Ashanti website
http://www.AngloGoldAshanti.com
JSE Sponsor: UBS
Auditors: Ernst & Young
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 +9 610 382 7836 outside USA)
E-mail: shareowners@bankofny.com
Website: http://www.stockbny.com
Global BuyDIRECT SM
BoNY maintains a direct share purchase
and dividend reinvestment plan for
ANGLOGOLD ASHANTI.
Telephone: +1-888-BNY-ADRS
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: 30/10/2006 08:01:50 AM Produced by the JSE SENS Department
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