Edgar Filing: ANGLOGOLD ASHANTI LTD

AngloGold Ashanti Ltd. IAR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated March 29, 2019

Commission File Number 1-14846

AngloGold Ashanti Limited

(Name of registrant)

76 Rahima Moosa Street

Newtown, 2001

(P.O. Box 62117, Marshalltown, 2107)

South Africa

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.

Form 20-F X

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):

Yes

No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):

Yes

No X

Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.

Yes

No X

Enclosure: Press release

ANGLOGOLD ASHANTI LIMITED – INTEGRATED REPORT FOR THE

YEAR ENDED DECEMBER 31, 2018

2018

SUITE OF REPORTS

I N T E G R AT E D

R E P O RT

VISION

To be the leading
mining company.

Safety

is our

first value.

We treat each

other with

dignity

and respect.

We are

accountable

for our actions
and undertake

to deliver on our

commitments.

We want the

communities and

societies

in which we

operate to be better

off for AngloGold

Ashanti having

been there.

We value

diversity.

We respect the

environment.

OUR VALUES

Our business values and beliefs guide our be haviour, in order that we make a positive impact.
These behaviours and beliefs link our business activities to our social performance.

To create value for our shareholders, our employees and our
business and social partners through safely and responsibly
exploring, mining and marketing our products. Our primary
focus is gold, but we will pursue value-creating opportunities
in other minerals where we can leverage our existing assets,
skills and experience to enhance the delivery of value.

AngloGold Ashanti
Limited (AngloGold
Ashanti) is an
independent, global
mining company
with operations
and projects on
four continents.
AngloGold Ashanti
is the third largest
gold producer in
the world in terms
of production

MISSION

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

INTEGRATED REPORT

2018

CONTENTS

The structure of our integrated report reflects our value creation
story and how we delivered on our strategic objectives in 2018,
considering the world in which we operate, the resource inputs
required and used, and the governance framework we have in place
to guide and oversee sustained value creation.

<IR>

About
our reports

PAGE 2

Directors’ statement
of responsibility,
commitment and
assurance

PAGE 4

Who we are –
corporate profile

Key features of
the year

Chairman’s letter

Our strategy and
investment case

SECTION 1

ABOUT ANGLOGOLD
ASHANTI

CEO’s review and
outlook

Our business model –
creating value

How we share value

Our external operating
environment

Stakeholder
engagement and
material issues

Managing our risks and
opportunities

SECTION 2

DELIVERING ON OUR STRATEGY

Audit and Risk
Committee:
chairman’s letter

142

Corporate governance

144

Board

150

Executive management

152

Remuneration and
Human Resources
Committee: chairman’s
letter

153

Remuneration report

155

SECTION 3

LEADERSHIP AND
ACCOUNTABILITY

Forward-looking
statements

184

Administration and
corporate information

185

SECTION 4

CORPORATE
INFORMATION

CFO’s review

Ensure financial flexibility
and optimise overhead
costs and capital
expenditure

Financial review –

five-year statistics

Improve portfolio quality
and maintain long-term
optionality

Regional reviews

Five-year statistics by
operation

Mineral Resource and
Ore Reserve – summary

110

Exploration – planning
for the future

118

Focus on people, safety
and sustainability

125

People are our business

126

Managing our
sustainability and ESG
impacts

133

INTEGRATED REPORT 2018

our corporate structure, we report fully on all

operations managed by AngloGold Ashanti.

Those operations in which we have an

ownership interest but do not manage –

Kibali and Morila – are partially reported.

There were no significant changes to the

scope, boundary or measurement methods

used in this report. Restatements of

comparatives, if any, are indicated.

Information relating to joint ventures and

other interests is provided if deemed material.

Production, costs and capital expenditure data

is attributable, unless otherwise indicated.

Employee data and average workforce data

are reported for AngloGold Ashanti with joint

ventures reported as attributable. Employee

data includes both permanent employees

and contractors.

While this report presents an integrated

overview of the Company in terms of the

capitals used and impacted, more detailed

coverage of our sustainable development

performance is presented in the Sustainable

Development Report 2018.

Any significant, material event that occurs

between the end of the financial year and the

date on which this report is approved

is included.

ABOUT OUR REPORT

Scope, boundary and reporting principles

SUSTAINABLE
DEVELOPMENT GOALS

This 2018 integrated report documents

AngloGold Ashanti’s operational and financial

performance incorporating our performance in

relation to the environment and society,

and how this is guided and underpinned by

our governance framework for the year from

1 January to 31 December 2018.

Structured according to our strategic

objectives, this report aims to provide a

concise, comprehensive review, highlighting

successes, challenges and progress in

delivering on our strategy, given our external

operating context, the ensuing material

opportunities and risks, stakeholders’

concerns and the outlook for the future and

the long-term sustainability of the business.

In addition to the King IV Report on Corporate

Governance for South Africa, 2016 (King IV),

this integrated report also complies with the

International Integrated Reporting Council’s

(IIRC’s) framework on integrated reporting,

the South African Companies Act, No.71

of 2008 (as amended) and the JSE Listings

Requirements.

This is a group level report covering the

entire Company, including its joint ventures

and investments. While performance and

targets are reported regionally, in line with

Materiality and target audience

While information presented in this report is aimed primarily at current and potential

investors and financiers, to enable them to assess our ability to create value and the

future viability of our business, this report will also be relevant to other stakeholders –

various levels of government, regulators, NGOs, among others – who have an interest in

our performance and outlook.

The material risks and issues reported are those considered most likely to affect the

sustainability of our business in the short, medium and long term. In identifying these,

as well as any opportunities, we have taken into account our operating context and

stakeholder feedback during the year. Our most material stakeholder issues are

discussed more fully in the <SDR>.

Your feedback is important to us. Should you have any queries, please

address these to our company secretary/investor relations at

companysecretary@anglogoldashanti.com.

The 17 SDGs, developed to

support the United Nations

2030 Agenda, are aimed

overall at ending poverty

and inequality, protecting the

planet, and ensuring peace

and prosperity for all.

In this integrated report, we acknowledge the United

Nations’ Sustainable Development Goals (SDGs). Our

sustainable development strategy and its aims, which

support our overall business strategy, are aligned with

the SDGs. The SDGs also speak to our environment,

social and governance (ESG) impacts. More detailed

information on our contribution towards achieving the

SDGs can be found in the <SDR>

See page

INTEGRATED REPORT 2018

ABOUT OUR REPORT CONTINUED

Integrated Report

•

The primary document in our

suite of reports

•

Provides a comprehensive

overview of our performance

in relation to our strategic

objectives and the outlook

for the Company

•

Both financial and non-

financial performance are

reviewed

•

Complies with the IIRC

framework, King IV and the

JSE Listings Requirements

Notice of Annual General

Meeting and Summarised

Financial Information (Notice

of Meeting)

•

Notice of forthcoming annual

general meeting

•

Description of resolutions to

be voted on

•

Remuneration policy and

implementation report

•

Summarised financial

information

Sustainable Development

Report

•

Describes commitment to

sustainable development

•

Provides detail on socio-

economic and environmental

performance in relation to

material issues

•

Complies with GRI

Standards and is aligned

with the UN Global Compact

and UN Sustainable

Development Goals (SDGs)

•

Independently assured

Mineral Resource and Ore

Reserve Report

•

Detailed breakdown of our

Mineral Resource and Ore

Reserve – at group and

operational level

•

Complies with SAMREC and

JORC, as well as Section

12.11 of the JSE Listings

Requirements

•

Signed off by Competent

Person

Annual Financial Statements

•

Prepared in accordance with
the International Financial
Reporting Standards (IFRS),
the requirements of the
South African Companies
Act, No 71 of 2008, as
amended, the JSE Listings
Requirements and King IV

•

Audited in accordance with
International Standards on
Auditing

•

Includes the Directors’ report

Our dedicated annual reporting

website, hosts PDFs of the

full suite of reports to facilitate

ease of access by and

communication with

stakeholders.

AngloGold Ashanti’s 2018 suite of reports comprises:

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<NOM>

<SDR>

<R&R>

<AFS>

<WWW>

Scan to visit the
mobile website

www.aga-reports.com
Houses the full suite of

2018 reports together with

supplementary information

Compiled for each operation, these include relevant operational and sustainable development information

OPERATIONAL PROFILES <OP>

INTEGRATED REPORT 2018

The board and executive management

consider the matters discussed in this report

to be those that most influence our ability to

successfully achieve our strategic objectives,

create value and manage the risks we face,

and believe that this report fairly records our

performance in the past year and our outlook.

The board confirms AngloGold Ashanti’s

commitment to ethical leadership,

governance, and our corporate citizenship

and assurance responsibilities, which are

reflected throughout this report, in line with

King IV, Principle 5.

The board, assisted by the Audit and Risk

and the Social, Ethics and Sustainability

Committees, is ultimately responsible for

confirming the integrity and completeness

of this and the entire suite of 2018 reports.

Having applied its collective mind to the

preparation, information and presentation

of this report, the board declared that all

material issues have been addressed and that

this report presents a fair and balanced view

of the Company’s integrated performance for

the year ended 31 December 2018.

DIRECTORS’ STATEMENT OF RESPONSIBILITY, COMMITMENT AND ASSURANCE

Approvals and assurance

The information contained in this report has been subject to either an internal

or an external audit. The group’s annual financial statements were subject to an

external audit and signed off by Ernst & Young (EY). Internal audit and approval

processes, including, among others, management assurance and internal audit

reviews of information and data published, are conducted regularly. In addition,

our operations are subjected to risk-based, integrated, combined assurance

reviews focusing on commercial, safety and sustainability aspects of the

business. The outcomes of these reviews and external assurances, as well as of

any independent technical reviews, provide reasonable assurance to allow the

board, on the recommendation of the Audit and Risk Committee, to determine

the effectiveness of our internal control systems and procedures.

This report was approved by the board of directors on 19 March 2019.

Chairman

Sipho M Pityana

Chief Executive Officer

Kelvin Dushnisky

Chief Financial Officer

Christine Ramon

Chairman: Audit and

Risk Committee

Rhidwaan Gasant

Chairman: Social, Ethics

and Sustainability Committee

Nozipho January-Bardill

Independent non-executive directors

Alan Ferguson

Albert Garner

Dave Hodgson

Michael Kirkwood

Maria Richter

Rodney Ruston

Jochen Tilk

I N T E G R AT E D R E P O RT 2 0 1 8

ABOUT

ANGLOGOLD

ASHANTI

SECTION 1

Introducing AngloGold Ashanti, explaining who we are,
our strategy and investment case

I N T E G R AT E D R E P O RT

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

INTEGRATED REPORT 2018

Production

Productivity

All-in sustaining cost

Improved safety performance

3.4Moz

13.31oz

down 7%

AIFR

down 36%

per total employee costed

year-on-year

SECTION HIGHLIGHTS

AMERICAS

1 Argentina
Cerro Vanguardia (92.5%)

2 Brazil
Serra Grande
AGA Mineração

3 Colombia
Gramalote (51%)
La Colosa
Quebradona (94.876%)

SOUTH AFRICA

9 South Africa

Mponeng (West Wits)

Surface Operations

Vaal River

Kopanang

(4)

Moab Khotsong

(4)

AUSTRALASIA

10 Australia

Sunrise Dam

Tropicana (70%)

CONTINENTAL AFRICA

4 Guinea

Siguiri (85%)

5 Mali

Morila (40%)

(1)

Sadiola (41%)

Yatela

(2)

6 Ghana
Iduapriem
Obuasi

(3)

7 DRC

Kibali (45%)

(1)

8 Tanzania
Geita

(1)

Morila and Kibali are managed and

operated by Barrick Gold Corporation (Barrick)
following its merger with Randgold

Resources Limited.

(2)

Yatela is being sold.

(3)

Obuasi – the redevelopment project

began in early 2019.

(4)

The Vaal River operations, Kopanang

and Moab Khotsong, were sold on
28 February 2018.

Argentina

Colombia

DRC

Tanzania

Australia

Ghana

Mali

South Africa

Brazil

Guinea

LEGEND

Operations Projects

Asset sale being considered

Greenfields exploration

Note: Brownfields exploration is conducted
at all operations

WHO WE ARE – CORPORATE PROFILE

AngloGold Ashanti, an
independent, global gold mining
company with a diverse, high-
quality portfolio of operations
and projects, is headquartered in
Johannesburg, South Africa.

Measured by production, AngloGold

Ashanti is the third-largest gold mining

company in the world.

Our portfolio of assets

As at 31 December 2018, our portfolio of

14 operations in nine countries included

long-life, relatively low-cost operating

assets with differing ore body types,

located in key gold-producing regions

around the world. These operating assets

were supported by three greenfields

projects in a tenth country and a focused

global exploration programme.

Our operations and greenfields projects

are grouped into the following regions:

Continental Africa, Americas, Australasia

and South Africa.

Our footprint

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

WHO WE ARE – CORPORATE PROFILE CONTINUED

Our business

Our business activities span the full spectrum

of the mining value chain – from exploration

through mining to the production of refined

gold and its sale. Our activities also include

mitigating our impact on the communities and

environments in which we operate.

To maintain and strengthen our social

capital, we aim to create sustainable value

for shareholders, employees, and social and

business partners through safe and responsible

mining and discipline in the allocation of capital.

Over the past five years, AngloGold Ashanti

has transformed itself by increasing efficiencies

and competitiveness, focusing on safety and

sustainability performance, improving margins,

containing operating and overhead costs, and

generating positive cash flows, in line with our

strategic objectives.

Our organisational and management structures

align with global best practice in corporate

governance. By using our human capital

efficiently, enabling functions cover planning

and technical, strategy, sustainability, finance,

human resources, legal and compliance,

and stakeholder relations. The planning and

technical functions focus on identifying and

managing opportunities, maintaining long-term

optionality, and ensuring the optimal use of our

intellectual capital through a range of activities

that include brownfields and greenfields

exploration as well as innovative research

focused on mining excellence.

Our exploration programme is aimed at

establishing an organic growth pipeline to

enable us to generate significant value over

time. Greenfields and brownfields exploration

is conducted in both established and new

gold-producing regions, through managed and

non-managed joint ventures, strategic alliances

and wholly-owned ground holdings.

Our world-class greenfields discoveries include

La Colosa, Gramalote and Quebradona

(Nuevo Chaquiro) in Colombia.

CORPORATE STATUS UPDATE

•

Restructuring of South Africa

region continued. Sales of Moab

Khotsong and Kopanang were

successfully concluded on

28 February 2018

•

Following ratification by the

Ghana parliament of agreements

reached with government during

the second half of 2018, the

redevelopment of Obuasi began

in January 2019

•

Closure is on track at Yatela and

its sale is pending, subject to

fulfillment of conditions precedent

•

All other assets are operational

•

Disclosure refers to continuing

operations

Our product

Once mined, gold ore is processed into doré

(unrefined gold bars) on site and dispatched

to precious metals refineries for refining to a

purity of at least 99.5%, in accordance with

the London Bullion Market Association’s

standards of ‘good delivery’. The refined gold

bars are then sold directly to bullion banks.

While gold is our principal product, several

by-products also make up a small proportion

of our manufactured capital output. By-

products are silver in Argentina and sulphuric

acid in Brazil. In compliance with all applicable

legislation, great care is taken to ensure the

safe production, transportation and storage of

sulphuric acid, which is a hazardous material.

Following the sale of the Vaal River operations,

effective 28 February 2018, which included the

uranium producing unit, AngloGold Ashanti no

longer produces uranium.

Argentina – Cerro Vanguardia

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

Shareholders and their shareholdings

AngloGold Ashanti has a diverse spread of shareholders that includes some of the world’s largest

financial institutions.

Our listings

The primary listing of the Company’s ordinary shares is on the JSE in South Africa. Its ordinary

shares are also listed on the New York Stock Exchange (NYSE) in the form of American

Depositary Shares (ADSs), on the Australian Securities Exchange (ASX) in the form of Depositary

Interests (CDIs) and on the Ghana Stock Exchange as ordinary shares and as Ghanaian

Depositary Shares (GhDSs).

At 31 December 2018, AngloGold Ashanti had 412,769,980 ordinary shares in issue and a

market capitalisation of $5.2bn (2017: $4.2bn). Post year-end, at 19 March 2019, the date on

which this report was approved by the board, the Company’s market capitalisation was $5.5bn.

Our top 10 shareholders

The top 10 shareholders together own 46.37% of the ordinary shares in issue. Three shareholders

had holdings exceeding 5% of the total ordinary issued share capital.

As at 31 December 2018, the top 10 shareholders in AngloGold Ashanti were:

Rank

Shareholder

No. of shares

% of issued

share capital

VanEck Global (New York)

52,402,004

12.70

BlackRock Investment Management – Index (San Francisco)

32,926,713

7.98

Public Investment Corporation (Pretoria)

25,395,823

6.15

Dimensional Fund Advisors (London)

18,303,651

4.43

Vanguard Group (Philadelphia)

14,533,792

3.52

Paulson & Co (New York)

12,782,400

3.10

Old Mutual Investment Group (Cape Town)

11,092,906

2.69

Investec Asset Management (Cape Town)

9,210,706

2.23

Fidelity Management & Research (Boston)

8,069,081

1.95

GIC (Singapore)

6,678,002

1.62

The Bank of New York Mellon holds 183,174,711 shares, equivalent to 44% (2017: 159,347,405 shares;

39% holding), through various custodians in respect of AngloGold Ashanti’s ADS programme on

the NYSE.

Shareholders – geographic distribution

(as at 31 December 2018)

United States

South Africa

United Kingdom

Rest of Europe

Asia

Ghana

Rest of the world

Shareholder spread as at 31 December 2018:

Class of shareholder

Number of

shares held

% of total

shares in issue

Number of

shareholders

% of total

shareholders

Public shareholders

412,447,978

99.92

11,333

99.92

Non-public: Directors

148,352

0.04

0.07

Strategic holdings

(government of Ghana)

173,650

0.04

0.01

Total

412,769,980

100.00

11,342

100.00

Stock exchange data

High

(R or $/share)

Low

(R or $/share)

Average

(R or $/share)

Volume

traded

(000)

Ave monthly

volume traded

(000)

JSE

2018

184.00

100.21

123.46

834,000

1,789

2017

183.50

116.65

141.55

461,832

1,818

NYSE

2018

12.70

7.16

9.35

2,580

3,700

2017

13.52

8.94

10.59

2,520

3,036

Source: Bloomberg

WHO WE ARE – CORPORATE PROFILE CONTINUED

Australasia – Tropicana

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

KEY FEATURES OF THE YEAR

Reportable environmental incidents

2018

2017

2016

2015

2014

2013

2012

88% decline over six years

Creating value for shareholders by
delivering on our strategy – Our
key features demonstrate solid
performance in 2018, our focus
on safety and environmental
stewardship with improved
integration of environmental, social
and governance (ESG) factors into
our business.

We have delivered consistently
on targets, improved our cost
management and balance sheet
flexibility through enforced capital
discipline, which has underpinned
improved free cash flow generation.

We also improved our portfolio
quality by delivering on selffunded
growth projects and
maintained optionality with our
exploration pipeline contributing
to the replacement of our
Ore Reserve.

per million hours worked

All injury frequency rate down 36%

Fatalities 3 (2017: 7)

4.81

(2017: 3)

All-in sustaining cost

(2017: $1,054/oz)

Production (2017: 3.8Moz)

Impacted by asset sales in South Africa

Maiden copper Ore Reserve of

2.8Mlbs

declared

Gold Ore Reserve

$976/oz

3.4Moz

44.1Moz

REPORTABLE
ENVIRONMENTAL
INCIDENTS

INTEGRATED REPORT

2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

Dear Stakeholders,

I am in the fortunate position to
report on another positive year
for AngloGold Ashanti, as the
Company continued to deliver
on its commitments, while
improving its financial, social
and operational performance.

CHAIRMAN’S LETTER

Sipho M. Pityana

Chairman

We remain committed to continuously improving our

performance, not only the area of safety, but also in

the broader areas of governance, the stewardship

of the environment and the promise to conduct our

business in an ethical and sustainable way.

I am in the fortunate position to report on

another positive year for AngloGold Ashanti,

as the Company continued to deliver on its

commitments, while improving its financial,

social and operational performance.

I am also delighted to welcome our new CEO

Kelvin Dushnisky, who has an excellent track

record in the mining industry, most recently

at Barrick Gold. As was announced in June

2018, once again, we extend our gratitude on

behalf of all stakeholders to Srinivasan “Venkat”

Venkatakrishnan, who resigned as CEO at the

end of August 2018, for his years of dedication

and the invaluable work done in laying the

excellent foundation from which we are able to

continue building this Company.

For all our achievements in 2018, it is

heartbreaking to reflect upon the deaths of

three employees as a result of accidents in the

workplace during the year: at Cuiabá, in Brazil,

Heber de Oliveira Temoteo; and in South Africa,

Sikheto Mathebula at Moab Khotsong and Palo

James Machini at Mponeng. These tragedies

bring safety into even sharper focus as we

continue the work to eliminate all injuries and

accidents across our mines.

Elsewhere in this report it is clear that we have,

nonetheless, made significant and important

strides in making our workplaces safer, with

fatality rates reaching unprecedented low

levels and all injury frequency rates at their

lowest levels in the Company’s long history. We

remain committed to continuously improving

our performance, not only the area of safety,

but also in the broader areas of governance,

the stewardship of the environment and the

promise to conduct our business in an ethical

and sustainable way.

In our quest for zero harm we continuously

review, update and at times renew our systems

and processes as we learn from events both

internal and external to our Company. The

tragic failure of the Brumadinho tailings dam

wall in Brazil, where more than 160 people

died after a tailings storage facility collapsed,

is such an event. We have, particularly in light

of these developments, already reviewed both

the integrity of our facilities and the systems,

processes we use to manage them, but we

will closely monitor the investigation outcomes

to determine if there are any other actions we

need to take to achieve the highest standards

of governance in the management oversight of

our tailings facilities. Our hearts go out to those

impacted by this tragic event.

Politics of polarisation

It is true that the political landscape the world

over – and especially in many jurisdictions

where mining takes place – remains complex.

This means that securing and maintaining

our social licence to operate is an ongoing

process as we balance the requirements and

demands of a wide range of stakeholders.

AngloGold Ashanti will continue to nurture

strong relationships with these stakeholders in

the jurisdictions in which it operates.

In Europe, the UK continues the difficult process

of leaving the European Union, while across

the European continent political views appear

to be increasingly polarised. The uncertainty

around Brexit is likely to drag on the performance

of the UK economy. In the US, politicians are

already jockeying for position ahead of the 2020

Presidential race, with the early signs pointing to

a similarly divided environment. These turbulent

political environments are not isolated to the

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

developed world and are symptomatic of the

shifting political sands across many operating

jurisdictions. Navigating them successfully

requires patience, careful stakeholder

management, delivery on our commitments and

close adherence to our values.

In South Africa, the uncertainty over a previous

version of the Mining Charter was mitigated

when a revised document, which governs the

rules around transformation in the mining sector,

was released in September 2018. Although a

great improvement on the previous iteration,

additional engagements between the industry

and the Department of Mineral Resources will

be required to ensure some lingering challenges

are resolved. The engagement between the

industry and the current administration has

proved constructive, and I have no doubt that

a workable solution to these outstanding issues

will be found.

In the DRC, a new Mining Code passed in March

2018

resulted in uncertainty with respect to

how the new law will be harmonised with the

guarantee of stability which was contained in the

previous legislation. Barrick Gold Corporation,

our operating partner in the Kibali joint venture,

remains in close dialogue with the government

in order to gain greater clarity on these issues.

On the positive side of the ledger, we reached

an agreement governing the remittance of

outstanding value-added tax balances in

October 2018, giving weight to the government’s

efforts to create an environment welcoming to

foreign investment. This was further cemented

by the handover of power at the end of the

year, following the election of Félix Tshisekedi as

President of the DRC. The poll that marks the

first peaceful and democratic political transition,

ushers in a new administration which will need

to attract significant investment across a range

of industries, to advance the country’s significant

development needs.

In order to attract the large, long-term capital

investment that mining demands, host

governments must ensure good governance,

regulatory clarity and certainty, and fair and

stable financial arrangements. These are

important to generating not only the confidence,

but also the returns which are necessary for

ongoing reinvestment.

We are keenly aware that we must fulfill our

side of the bargain, too. To that end, we will

continue the work to build strong relationships

with our employees and our host governments,

and also with the local communities in which we

operate. This involves being a good, tax-paying

corporate citizen, while also listening to the

needs and aspirations of communities as we

design the sustainability projects that are meant

to remain active after our operations have

ceased. This is an area in which our industry

could generally improve as we try to turn the

perception of mining from one of an industry

preoccupied with extraction, to one that is truly

an engine of development.

In South Africa, President Cyril Ramaphosa

has made it clear that he wants to create an

environment conducive to investment. We

applaud that ambition but realise that in the run-

up to the general election in May 2019, business

will find itself at the mercy of political volatility

that often manifests itself in myriad ways. This

is again time for calm heads. We must insist on

ethical leadership and behaviour and clarity of

economic strategy and direction as we navigate

the inevitable choppiness that the first half of

2019 is likely to bring.

This same clear-headed approach is needed

to stabilise Eskom, South Africa’s monopoly

energy parastatal. Large-scale corruption,

mismanagement and looting of the utility

in recent years have left it on the brink of

bankruptcy, and the country in a perilous state.

It is overstaffed, inefficient and buckling under

the weight of an over-leveraged balance sheet.

Its refinancing and performance loom over the

wider economy leading to credit ratings agencies

threatening potentially ruinous downgrades that

would increase the cost of both government and

private sector borrowing.

In the wider economic context, lack of certainty

on the supply and future price of electricity will

impact not only economic growth in the short

term, but the large investments required to

power South Africa’s growth in the long term.

The impact on dangerously low employment

levels across all sectors could be calamitous.

There is no doubt that the Eskom monopoly in

electrical energy supply no longer serves the

long-term needs of our economy.

On a positive note, South Africa’s ercely

independent judiciary, civil society and media

have held the line after years of pressure, and

together have ensured that those responsible

for the most egregious graft and misconduct are

now being called to account.

The broader market

The consensus emerging from the World

Economic Forum meeting in Davos in January

2019 was that the world economy will likely

remain under threat from the polarised political

environment characterising many large

economies, as well as the economic nationalism

that is threatening a more open marketplace.

That view alone appeared to gain some

purchase in the latter part of 2018 and into the

new year, as the dollar weakened, and general

uncertainty hit equity markets in the US and

Europe. Gold was a clear beneficiary, climbing

the wall of concern to levels around $1,300/oz

in February of 2019. The volatility in the bullion

market makes the direction hard to determine

in the near-term, but the long-term trajectory

CHAIRMAN’S LETTER CONTINUED

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

looks increasingly positive given the multitude of

factors that threaten to derail developed market

growth and the upward trajectory of US interest

rates. Even if that bullish scenario for gold were

to play out, our focus on cost discipline and

tight capital allocation will remain absolute.

This prudence is demonstrated by plans to

further reduce leverage to 1.0 times net debt to

adjusted EBITDA through the cycle, providing

additional flexibility on our balance sheet.

A cash dividend of the equivalent of $0.07 per

share has been declared by the board, which

is in accordance with our dividend policy to

pay 10% of free cash flow pre-growth capital.

In addition, the board exercised its discretion

by adding back the South Africa region

restructuring costs of $61 million to free cash

flow in determining the dividend. This was

consistent with the discretion that the board

applied last year.

Structure

You will read also in the CEO’s letter, and

elsewhere in this report, about changes to the

Company structure and management with

the retirement of a number of key executive

committee members. I thank them for their

dedicated service to the Company.

While we bid farewell to Charles Carter, David

Noko and Chris Sheppard – all seasoned

executives who are retiring – we welcome

an excellent crop of new leaders in Sicelo

Ntuli (Chief Operating Officer: Africa), Pierre

Chenard (Executive Vice President: Strategy

and Business Development), and Stewart Bailey

(Executive Vice President: Corporate Affairs).

We will now have two divisions, International

– covering our operations and projects in

the Americas and Australia – and an Africa

division, which will incorporate our operations

across the continent, including South Africa. I

am confident the new structure will provide a

platform for improved focus, that will bring with

it the gains in productivity and efficiency which

will lead to a stronger balance sheet, as we

execute on the strategy outlined in the CEO’s

review and outlook.

We have two board members – Michael

Kirkwood and David Hodgson - who are due

to retire at the forthcoming Annual General

Meeting (AGM), in accordance with board

policies and guidelines. On behalf of the board,

I’d like to thank them both for their tremendous

contribution and diligence in fulfilling their

responsibilities.

We are pleased to welcome the newly

appointed independent non-executive

directors – Alan Ferguson and Jochen Tilk –

who joined the Company’s board of directors

with effect from 1 October 2018 and 1 January

2019, respectively. The board will nominate the

two new directors for election by shareholders

at the May 2019 AGM. They bring with them

the depth and breadth of financial, technical

and corporate experience, set out in the

<NOM>

. Also see their CVs on the Company’s

website

Strategic follow-through

As we look to 2019, we will work to ensure

continued follow-through on our strategic

objectives and our ongoing work to realise the

value that we are confident exists in this Company.

That requires, among other factors, continued

diligence in extracting – in a safe and sustainable

way – as much benefit from the natural resources

we mine as possible, while demonstrating

the equitable sharing of these benefits with

all stakeholders. As ever, we also continue to

evaluate a range of initiatives that can unlock value

and complement those already ongoing.

In closing, I’d like to thank our CEO, Kelvin

Dushnisky, his executive management team,

and everyone throughout the organisation,

whose commitment to AngloGold Ashanti’s

values make for an efficient, safe and

operationally sound company. I would also like

to extend my gratitude to my colleagues on

the board who go beyond the call of duty in

fulfilling their tasks. Further, the group’s total

commitment to transparency in its business,

disdain for corruption and desire to do the

right thing whatever the circumstances,

underscores its standing as a sustainable miner.

This approach ensures AngloGold Ashanti will

continue to play its part in building a better

society, while also providing continued growth

and opportunity for stakeholders.

Sipho M. Pityana

Chairman

19 March 2019

CHAIRMAN’S LETTER CONTINUED

https://www.anglogoldashanti.com/company/
leadership/#Board.

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

ANGLOGOLD ASHANTI’S INVESTMENT CASE:

People are the foundation of our business. Our business must operate according to
our values if it is to remain sustainable in the long term.

We must ensure our balance sheet always remains able to meet our core funding needs.

All spending decisions must be thoroughly scrutinised to ensure they are optimally
structured and necessary to ful l our core business objective.

We have a portfolio of assets that must be actively managed to improve the overall mix
of our production base as we strive for a competitive valuation as a business.

While we are focused on ensuring the most efficient day-to-day operation of our business,
we must keep a close eye on creating a competitive pipeline of long-term opportunities.

These focus areas drive our plans for inward investment, to deliver better quality

production aimed at increasing margins, extending mine lives and shaping the portfolio in the

longer term.

AngloGold Ashanti's core strategic focus is to generate sustainable
cash flow improvements and shareholder returns by focusing on five
key areas, namely:

Ongoing portfolio improvements and

rationalisation, extensive and proven

world-class exploration programme

to maintain high-quality portfolio of

long-life assets with a track record of

disciplined capital allocation and

project delivery

Transparent, decisive

management team,

focused on minimising

risk and improving

shareholder returns

Prioritising margins over

volume; and improving

cost management

Clear and predictable

strategic approach with

a decisive response to a

lower gold price

Balance sheet flexibility;

appropriate liquidity, and

maturities while within set

covenant ratio

Well-developed

engagement model

ensures strong

stakeholder relationships

and maintains licence to

operate

OUR STRATEGY AND INVESTMENT CASE

Focusing on the strategic areas of the Company

INTEGRATED REPORT 2018

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

I N T E G R AT E D R E P O RT

SECTION 2 / DELIVERING ON OUR STRATEGY

DELIVERING ON

OUR STRATEGY

SECTION 2

Explaining what we do - how we
create value, how we share value and
how we have performed in delivering
on our strategy and strategic
objectives - given our external
operating environment and the
consequent risks and opportunities

3.4Moz

$773/oz

14%

ZAR 95 cents

Production at the top end of guidance, lower

year-on-year due to asset sales

Total cash costs at the lower end of guidance

of between $770 to $830/oz

the South Africa region’s contribution to

group production

Dividend declared, given strong

cash flow performance

INTEGRATED REPORT 2018

Maintain long-term optionality

Focus on people, safety,
and sustainability

Ensure financial

flexibility

Optimise overhead, costs
and capital expenditure

Improve portfolio quality

Strategic objectives

IN THIS SECTION

SECTION 1 / ABOUT ANGLOGOLD ASHANTI

CEO’s REVIEW AND OUTLOOK

Kelvin Dushnisky

Chief Executive Officer

Fellow Shareholders,

Last year at AngloGold Ashanti,
we continued to consolidate our
position as a disciplined gold
company with strengthening
fundamentals.

All part of a roadmap to

lead us to our ultimate goal:

ZERO HARM

Importantly, we met or improved

upon each element of our operating,

cost, and capital guidance for the

year, demonstrating reliability and

consistency, crucial ingredients to

an improving valuation over the

long term. We also provided clarity

in the strategic direction of the

Company and the steps that will be

taken to advance it.

We remained active managers of the portfolio,

with the sale of the deep underground Moab

Khotsong and Kopanang mines concluded at

the end of February, reducing the contribution

from South Africa to around 14%. The

remaining South African portfolio – comprising

the underground Mponeng mine and Surface

Operations – was further restructured to match

the off-mine cost structures to the smaller

production footprint, improving the longer-term

sustainability of the business.

Redevelopment of the Obuasi gold mine

started during 2019, as we began to

recapitalise this important ore body to

bring it back into production as a modern,

mechanised operation. The project, estimated

at between $495m to $545m, came with

the close cooperation of the government

of Ghana, demonstrated by a suite of

agreements guaranteeing fiscal stability

and security. We share the government’s

ambition for the mine to be an important

vehicle for development in the region and have

committed to fostering growth in local content

through procurement and employment at all

levels. This is rightly an important element in

maintaining and strengthening our licence to

operate in the region.

If our Reserve is the cornerstone of a

sustainable operating base, then a strong

and flexible balance sheet is the bedrock

of the financial health of the business. Our

investments to improve margins and extend

the lives of key assets were manifested in both

a wider all-in sustaining cost margin at 23%,

and a net increase in reserves at the end of the

year. Net debt was 17% lower at 31 December

2018, aided by a lift in free cash flow

generation to $67m even after all restructuring

costs were accounted for.

While these operating and financial

fundamentals have improved, so too has our

overall sustainability performance. Before

getting to the safety and environmental

performance during the year, it’s important

to remember three of our colleagues who

died in workplace accidents: Heber de

Oliveira Temoteo at the Cuiabá mine, Sikheto

Mathebula at Moab Khotsong mine and Palo

James Machini at the Mponeng mine. These

deaths are reminders to us that the work of

eliminating accidents from our workplaces is

an ongoing effort that will require vigilance,

resources, initiative, teamwork and adherence

to our safety strategy and protocols. All part

of a roadmap to lead us to our ultimate goal:

zero harm.

Our operating teams continue to do important

work to realise safety improvements. The

group all injury frequency rate (AIFR) has

improved for eight consecutive quarters, and

the 2018 annual AIFR performance improved

by 36% compared to 2017. This was the best

performance in the Company’s history.

We are clear that our social licence to operate

– which is the explicit and tacit consent from a

range of stakeholders to conduct our business

– depends on us never becoming complacent

with respect to our performance on the full

ambit of sustainability activities.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

CEO’s REVIEW AND OUTLOOK CONTINUED

Portfolio strength

AngloGold Ashanti also has a strong portfolio

and a well-developed project pipeline, both

with options that will allow us to extend mine

lives, improve margins and sustain growth.

An appropriately geared balance sheet is

fundamental to maintaining strict capital

allocation and ensures we will not be forced

into measures to check falling production or

spiralling costs. This strengthens the business

as discretionary free cash flow is used to

further improve leverage.

In short, you have a business that for 10

years has not issued additional equity, but

has managed to build two new mines; service

what at times was an onerous debt load;

deleverage; invest in its capital needs; fund a

global exploration programme; and return a

dividend to shareholders.

Despite a sharp focus on optimising all

expenditures in recent years on projects –

particularly non-operating spending – the

Company has maintained a truly world-class

suite of exploration assets. I have found

these to be largely under-appreciated by the

market. This provides a good opportunity for

us to daylight nascent value in the business.

These hidden exploration gems include an

exciting asset package in southern Nevada

that continues to go from strength to strength

with every new drill hole. This land package,

known as the Silicon Project, is close to the

Motherlode property of Corvus Gold, a junior

exploration company in which we are the

largest shareholder at 19.8%.

Elsewhere in the US, our generative

exploration teams are doing the groundwork

necessary to test their thesis that a significant

gold deposit is to be found in Northern

Minnesota’s Iron Range. This is the same long-

range, science-based initiative that yielded our

early exploration success in Colombia, which

has since recorded mineral inventory (+60Moz

gold equivalent), and in Western Australia,

where we found, built, and now operate the

impressive Tropicana gold mine.

Colombia is a rich terrain for exploration, and

one in which our first-mover advantage has

given us an excellent foothold. The two most

important projects in our Colombian portfolio

are the Gramalote gold deposit, a joint venture

with B2Gold, and the Quebradona copper/

gold deposit, both in the mining-friendly

Colombian department of Antioquia. We are

at various stages of feasibility study for both

and will devote our focus to them after selling

off the bulk of our non-core tenements in the

country in early March 2019.

Australia is another exciting area for our

geologists, who are working to prove that

major undiscovered potential exists at the

Mount Clarke regional tenement package in

North Queensland.

Elsewhere in the portfolio, our brownfield

drilling programmes, closely integrated with

our ‘Operational Excellence’ initiative, continue

to find new ounces around our current

operating footprint, not only helping us extend

lives at our key mines, but to do so profitably.

Strategy going forward

After completing my first six months as

CEO, and working closely with the senior

management team, we have made the

following decisions as key elements of our plan

to better focus the business and unlock its

significant value.

The balance sheet is the foundation of any

durable and successful business. Excellent

work has been done to transform what was

a heavily geared balance sheet into one that

can comfortably handle significant downside in

the gold price and/or unforeseen operational

disruption. There is significant liquidity, no

immediate debt maturities, and our planning for

this year targets funding all expenditures and

investments from internal sources (i.e. cash-flow

breakeven) at a $1,200/oz gold price.

For a gold-producing company, which produces

a single commodity in an increasingly complex

global operating environment, lower debt

means lower risk and added strategic flexibility.

Over time, these benefits that come with lower

balance sheet leverage will help specifically

improve both credit and equity ratings, thereby

lowering the cost of capital. Therefore, I believe

we would benefit from lowering our current

target of a 1.5 times net debt to adjusted

EBITDA ratio, through the cycle. From this

point on we will target an average ratio of 1.0

times net debt to adjusted EBITDA, through

the cycle; a level that, at our current planning

assumptions, we can reach and hold even as

we invest inward, pay a dividend and service

our debt obligations.

Portfolio rationalisation

From my perspective, the portfolio of 14

assets feels somewhat ‘heavy’. Given the

growing complexity of operating large,

commercial-scale operations anywhere in

the world, my preference is for more focused

management oversight of operating hubs.

With this in mind, in November, we announced

a process to dispose of our interest in the

Sadiola gold mine in Mali and have now also

opted to start a similar process to divest

ourselves of the Cerro Vanguardia mine in

Argentina. As with Mali, Argentina has been a

good jurisdiction for this company for almost

two decades, but with competing demands for

limited capital, we believe another owner will

likely be in a better position to extend the life

of this asset benefitting the local, regional and

national economies. Be assured, we are not

forced sellers and will look to achieve fair value

for these assets. If we do not manage to sell

these, we will keep them and maximise their

efficiencies. As I mentioned, the bulk of the

restructuring in South Africa is now behind us,

leaving a single underground mine (Mponeng)

and a surface business. The latter is made

up principally of the surface rock dump

processing unit, which is near the end of its

life, and the cash generative, long-term Mine

Waste Solutions dump-retreatment operation.

Mponeng is ramping up production from the
‘Below 120 Level’ project, which gives it a
lifespan of around eight years. To extend that
further, this mine will require additional capital
investment starting in about two years and

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

CEO’s REVIEW AND OUTLOOK CONTINUED

running for several more, which will extend

life for decades. The investment in extending

life at Mponeng beyond eight years will have

to compete for scarce capital with a host of

other projects in the portfolio, which at current

planning assumptions are more attractive

given higher returns and quicker payback

periods. We must make that decision inside

of 18 months.

Focus on advancing projects

Once this rationalisation of the portfolio

is complete, we will have a leaner, more

efficient portfolio that will benefit from greater

management focus. It is upon this foundation

that we will bring our Obuasi mine into

production, continue to invest in a series of

affordable, high-return and quick payback

brownfields improvements, and advance our

two key projects in Colombia – Gramalote

and Quebradona – up the value curve. In

each case we will aim to bring ounces into

production that improve our average margin.

Our strong organic pipeline, in turn, means

we are not forced to undertake expensive and

complex M&A to shore up production. We will

continue to favour inward investment in our

drive to unlock latent value from the business.

We will also take a pragmatic view of funding

our pipeline, with no reservations around

employing the partnership model which

has worked so well at Tropicana, Kibali and

Sadiola. In each case of funding needs being

analysed, the sole driver in our decision

making will be how best to create value for our

shareholders without placing undue financial

risk on the Company. In every discussion we

are clear that our equity remains a treasured

asset – albeit undervalued – and one that

should be protected.

Management

We have exciting projects in front of us as

we bring Obuasi into production, advance

two Colombian projects to feasibility, and put

pressure on some relatively high-cost assets in

Australia and Brazil to improve performance.

I have made some organisational and

management changes to accommodate this.

These appointments were implemented in

February 2019, in parallel with the scheduled

retirements of Chris Sheppard, David Noko

and Charles Carter. These outgoing executives

were emblematic of the exceptional quality of

leadership inside the organisation – we thank

them for their service and dedication to

the Company.

The first of these restructuring decisions is to

recon gure the operating accountability into two

divisions - International, including our operations

and projects in the Americas and Australia,

and Africa (now including South Africa). The

changes to the operating structure provide

greater focus on the portfolio: its increasing

complexity; rising global political risk; Obuasi

coming into operation; and long dated projects

in Colombia now moving to feasibility.

Ludwig Eybers will remain Chief Operating

Officer: International, with responsibility for

unlocking the potential that exists within our

Brazil and Australia assets, advance our

Colombia options up the value curve, and

ensuring that our global exploration programme

continues to deliver strong outcomes.

The Africa portfolio, which will now include

the rationalised South Africa footprint, will be

overseen by Sicelo Ntuli now Chief Operating

Officer: Africa, formerly Senior Vice President:

Continental Africa. Sicelo has done excellent

work in driving the turnaround of Iduapriem

in Ghana during several years running that

operation. He also held line responsibility for the

Continental Africa region, which has delivered

consistently strong operating performances.

Moses Madondo, who did exceptional work

as Senior Vice President: Vaal River, before the

sale of those assets last year, has assumed

responsibility for our South Africa portfolio, as

Senior Vice President: South Africa.

Pierre Chenard, formerly Senior Vice

President of Business Development of Rio

Tinto Alcan Inc., and its General Counsel,

was appointed to the role of Executive Vice

President: Business Development & Strategy.

Pierre, who has held senior roles in the North

American gold sector with Cambior, Hope

Bay and latterly as a director on the board of

Osisko Gold Royalties Ltd., brings a wealth of

experience across a number of jurisdictions.

Stewart Bailey, formerly Senior Vice

President of Investor Relations & Group

Communications, is now Executive Vice

President: Corporate Affairs, a portfolio that

will continue to include Investor Relations and

group communications but will be broadened

to also cover the ambit of sustainability policy

and oversight. His in-depth knowledge of the

Company and many of its stakeholders, close

cooperation with the sustainability team over

several years and ongoing work in integrating

environmental, social and governance

reporting into the broader business, provide a

strong foundation for this role.

In closing, I’d like to thank my predecessor,

Srinivasan Venkatakrishnan, for his support

during my transition into this role and for

leaving behind an organisation steeped in a

set of strong values. To our Chairman, Sipho

Pityana, and the board of directors, your

counsel and support, for which I am grateful,

have been similarly invaluable in the past

months, as we’five charted the course forward

for the Company.

And to the executive leadership and the team

at AngloGold Ashanti, I thank you for the warm

welcome and your ongoing efforts. While we

have a strong foundation from which to grow,

there is a tremendous amount of work ahead

of us as we do what is necessary to unlock

value across the business.

Sincerely,

Kelvin Dushnisky

CEO

19 March 2019

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

CEO’s REVIEW AND OUTLOOK CONTINUED

2019 OUTLOOK

Guidance

Notes

Production

3.25Moz - 3.45Moz

Production will be back weighted, with a stronger second half expected for Geita, Siguiri and Brazil

Costs

All-in sustaining costs

$935 - 995/oz

Total cash costs

$730 - 780/oz

Overheads

Corporate costs

$75 - 85m

Expensed exploration and study costs

$130 - 140m

Including equity-accounted joint ventures

Capital expenditure

Total

$910 - 990m

Sustaining capital expenditure

$520 - 560m

Non-sustaining capital expenditure

$390 - 430m

Expenditure related to Obuasi, Siguiri, Tropicana, Quebradona and Mponeng

Depreciation and amortisation

$680m

Depreciation and amortisation – included in
equity-accounted earnings

$160m

Earnings of associates and joint ventures

Interest and finance costs – income statement

$130m

Other operating expenses

$85m

Primarily related to the costs of care and maintenance for Obuasi and South African region

Economic assumptions are as follows: ZAR 14.00/$, $/A $0.75, BRL3.65/$, AP40.00/$; Brent $74/barrel.

Both production and cost estimates assume neither operational or labour interruptions, or power disruptions,
no further changes to asset portfolio and/or operating mines and have not been reviewed by our external
auditors. Other unknown or unpredictable factors could also have material adverse effects on our future results
and no assurance can be given that any expectations expressed by AngloGold Ashanti will prove to have been
correct. Accordingly, actual results could differ from guidance and any deviation may be significant. Please
refer to the Risk Factors section in AngloGold Ashanti’s annual report on Form 20-F, led with the United
States Securities and Exchange Commission (SEC).

Sensitivities

(Based on a gold price of $1,200/oz and the same assumptions used for guidance)

All-in sustaining

cost ($/oz)

Cash from operating activities

before taxes for 2019 ($m)

10% change in the oil price

10% change in the local currency

148

5% change in the gold price

193

50,000oz change in production

Australia – Sunrise Dam

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

OUR BUSINESS MODEL

CAPITAL INPUTS

CREATING

VALUE

STRATEGY AND

STRATEGIC

OBJECTIVES

Exploration and mine

development

Rehabilitation

and closure

Mining,

processing

and refining

SHARING VALUE
CREATED

Shareholders,
investors and

financiers

Employees

Communities, suppliers and
service providers

Governments

Understanding the world in which we operate, how

it impacts us, stakeholder expectations and how we

impact others, is essential to delivery on our strategy

and value creation. This understanding enables effective

planning to mitigate risks, act on opportunities and

achieve our strategic objectives, while our governance

processes and practices guide all that we do.

Identifying and prioritising

risks and opportunities

Strategic planning

and allocating

resources

Understanding our impact

and stakeholders

Analysing

our operating

environment

Generating revenue,

financial management

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

OUR BUSINESS MODEL CONTINUED

CAPITAL RESOURCES

Delivery on our strategy and creating value requires optimising and balancing the use of the five capital resource inputs required in the conduct of our business,
while simultaneously enhancing outcomes and minimising our impacts.

Natural capital

Our business depends on having economically viable gold deposits

to exploit and mine safely and productively. We consume land,

water, energy, among others, in the course of our operations and

our activities impact the environment.

Financial capital

Access to capital to fund exploration for, and

the acquisition and development of gold-

bearing deposits. It also sustains, maintains

and grows the business. Value created is often

measured in financial terms.

Manufactured capital

Mining infrastructure: process plants, machinery,

equipment and technology, including information

technology, are all necessary to our business.

These must be maintained and operated

effectively and efficiently by employees with

the necessary skills.

Social and

relationship capital

Securing our regulatory and social licences

to operate depends on developing and

maintaining open, honest and respectful

engagement with all stakeholders, which

requires skillful management and balancing of

stakeholder expectations

Human and intellectual capital

People are vital to our business. A skilled, motivated, healthy

and safe workforce is essential to delivery on our strategy. Many

employees are based in host communities which maybe impacted

by operational and organisational changes.

Related core strategic focus area

•

Maintain long-term optionality

•

Focus on people, safety and sustainability

•

Improve portfolio quality

•

Maintain long-term optionality

•

Optimise overhead, costs and capital expenditure

•

Focus on people, safety and sustainability

•

Optimise overhead, costs and capital expenditure

•

Ensure financial flexibility

•

Optimise overhead, costs and capital expenditure

•

Improve portfolio quality

Related core strategic focus area

•

Focus on people, safety and sustainability

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

For further information, see:

Managing our sustainability

and ESG impacts and

<SDR>

For further information, see:

Mineral Resource and Ore

Reserve – summary, Exploration

– planning for the future and

Managing our sustainability and

ESG impacts

For further information, see:

People are our business and

Managing our sustainability and

ESG impacts

For further information, see:

Regional reviews

For further information, see:

CFO’s review, Financial review

and

<AFS>

OUR BUSINESS MODEL CONTINUED

SDGs AND THE CAPITALS

NATURAL CAPITAL

FINANCIAL CAPITAL

MANUFACTURED CAPITAL

SOCIAL AND RELATIONSHIP CAPITAL

HUMAN AND INTELLECTUAL CAPITAL

NO POVERTY

ZERO HUNGER

QUALITY EDUCATION

CLEAN WATER AND
SANITATION

DECENT WORK AND
ECONOMIC GROWTH

PEACE, JUSTICE AND STRONG
INSTITUTIONS

GENDER EQUALITY

INDUSTRY, INNOVATION,
INFRASTRUCTURE

REDUCE INEQUALITIES

RESPONSIBLE CONSUMPTION,
PRODUCTION

SUSTAINABLE CITIES AND
COMMUNITIES

CLIMATE ACTION

LIFE ON LAND

PARTNERSHIPS FOR THE
GOALS

GOOD HEALTH AND
WELL-BEING

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

OUR BUSINESS MODEL CONTINUED

Exploration and mine

development

Generating revenue,

financial

management

Rehabilitation

and closure

Mining, processing

and refining

Establish and maintain a competitive
pipeline of viable projects, and
develop and equip long-term
operations with the required
infrastructure. Exploration is a
cornerstone of the business

Develop and maintain mining and
processing infrastructure in good
operating order and their adequate
resourcing to ensure cost efficient
safe operations and that the
workforce has the requisite skills,
expertise and training

Sales of gold and by-products
produced generate revenue, in turn
a function of prevailing prices and
exchange rates. Robust financial
management and allocation of revenue
and expenditure ensure positive
sustainable cash flows and returns

Develop and maintain effective, honest
and transparent relationships with
stakeholders to ensure regulatory and
social licence to operate, to minimise
our environmental impact and to
manage closure in line with socio-
economic principles

CAPITAL INPUT

ACTIVITY

RELATED
STRATEGIC
OBJECTIVE

FINANCIAL

CAPITAL

FINANCIAL

CAPITAL

FINANCIAL

CAPITAL

FINANCIAL

CAPITAL

SOCIAL

CAPITAL

SOCIAL

CAPITAL

SOCIAL

CAPITAL

MANUFACTURING

CAPITAL

MANUFACTURING

CAPITAL

MANUFACTURING

CAPITAL

MANUFACTURING

CAPITAL

HUMAN

CAPITAL

HUMAN

CAPITAL

HUMAN

CAPITAL

HUMAN

CAPITAL

NATURAL

CAPITAL

NATURAL

CAPITAL

NATURAL

CAPITAL

Maintain long-term optionality

Focus on people, safety,
and sustainability

Ensure financial

flexibility

Optimise overhead, costs
and capital expenditure

Improve the quality
of the portfolio

WHAT WE DO – OUR MINING PROCESS

We explore, develop, mine and process ore to produce gold. In so doing, we consciously integrate the environmental, social and governance (ESG) factors, from the exploration
stage to beyond closure so as to maintain our social licence to operate.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Exploration and mine

development

Marketing and sale

of gold produced

Rehabilitation

and closure

Mining, processing

and refining

ACTIONS
TAKEN
IN
2018

IMPACTS
AND
OUTCOMES

•

Continued focus on exploration

programmes with new greenfields sites

explored in Colombia, the United States

and Australia; while target generation is

underway in Brazil and Guinea

•

Advancement of two projects in

Colombia – maiden Ore Reserve

declared at Quebradona

•

Following ratification of agreements by

parliament, the final go-ahead was given

for the redevelopment of Obuasi

•

identified Ore Reserve replacement

opportunity in Kibali’s KZ trend and

around KCD

•

4.3Moz total group Ore Reserve

•

Redevelopment of Obuasi will support

local recruitment, transfer of skills,

establishment of local underground

mining joint venture – first production

expected in December 2019

•

Similarly, in Colombia, development

of projects will benefit communities

and government. Will be a focus on

environmental stewardship

•

Emphasis on Operational Excellence
for innovative control and management
of costs, to improve operational
efficiencies and productivity

•

Restructuring in South Africa region,
included asset sales and closure,
downscaling and introduction of a new
shift arrangement at Mponeng

•

Driving zero harm

•

Infrastructure investment in the
Australasia region

•

In Continental Africa, life extension
projects and initiatives to improve
operating efficiencies included those at
Geita, Iduapriem, Siguiri and Kibali

•

Produced 3.4Moz of gold

•

South Africa region now more focused,

sustainable; generated positive free

cash flow in second half of the year with

improved safety and productivity

at Mponeng

•

Improved group safety performance

•

Reduced costs with the all-in sustaining

cost per ounce down by 7% and

improved margins

•

A new five-year revolving credit facility

agreement signed to consolidate and

replace two of the existing facilities

•

Short-term rand gold hedge set up to

further protect the South Africa region’s

cash flow from exchange rate volatility

•

Improved free cash flow and
earnings overall

•

Improved liquidity and financial flexibility

•

Net debt reduced by 17% and net debt
to adjusted EBITDA ratio at 1.12 times

•

Dividend declared

•

Extensive stakeholder engagement in:

•

Colombia – project development

•

Ghana – redevelopment of Obuasi

•

South Africa – wage negotiations and

the sale, downscaling and closure of

operations

•

Tanzania – payments to government

•

DRC – agreement reached on tax

remittances

•

Earned social licence to operate

in Ghana – proceeding with

implementation of the Obuasi

redevelopment plan which will

ultimately add value and contribute to

value creation, delivery on strategic

objectives, and to local communities

OUR BUSINESS MODEL CONTINUED

Economic value generated ($m)

2018

2017

Sales of gold and by-products

3,943

4,510

Interest received

Royalties received

(Loss) / profit from sales of assets

(20)

Income from investments

Total

4,045

4,558

What we do

continued

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

HOW WE SHARE VALUE

Related capitals

2018

2017

Suppliers – includes procurement of
goods and services, operating costs,
rehabilitation and exploration

1,676

1,839

Employees – includes salaries and
wages paid and investment in training
and development

713

1,002

Government – includes current
tax, royalties, tax paid on behalf of
employees and production, property
and other taxes

714

659

Providers of capital – includes finance
costs, unwinding of obligations and
dividends paid

202

208

Community – includes region-
specific socio-economic development
programmes in relation to our social
licence to operate

Total

3,326

3,735

Related SDGs

$713m

(17% of value generated)

$1,676m

(41% of value generated)

$714m

(18% of value generated)

$202m

(5% of value generated)

$21m

(1% of value generated)

Economic value distributed – 82% of value generated

Aligning with the SDGs

NO POVERTY

QUALITY EDUCATION

CLEAN WATER AND
SANITATION

DECENT WORK AND
ECONOMIC GROWTH

PEACE, JUSTICE AND STRONG
INSTITUTIONS

GENDER EQUALITY

REDUCE INEQUALITIES

RESPONSIBLE CONSUMPTION,
PRODUCTION

SUSTAINABLE CITIES AND
COMMUNITIES

PARTNERSHIPS FOR THE GOALS

GOOD HEALTH AND
WELL-BEING

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Various external factors in the

world in which we operate have

the potential to affect our ability

to deliver on our strategy and

create value in the short, medium

or long term. They can influence

our operational and financial

performance, our ability to maintain

our regulatory and social licence to

operate and even the sustainability

of our business.

Gold market

The 2018 year, and in particular the last quarter,

was challenging for equity markets in general.

Investors have had to contend with rising US

central bank interest rates, a sharp slowdown

in business confidence in the Eurozone,

weaker Chinese growth, and rising geopolitical

concerns (including Brexit, Italian politics and

the ongoing trade conflict between the US and

China). On the up side, government bonds

lived up to their traditional role as a defensive

investment in a well-balanced portfolio.

Regarding the gold market, annual jewellery

demand for the year barely changed, ending

the year at 2,200 tonnes. The 3% year-on-

year drop in fourth quarter jewellery demand

to 636.2 tonnes reversed third quarter gains.

China was the main engine of growth in 2018,

despite the slowdown in the fourth quarter. The

slowdown was mainly attributable to the trade

war with the US and slowing economic growth

rate which weighed on gold demand. Economic

hardship, relatively weak currencies and the

after-effects of tax changes affected Turkey and

Middle Eastern markets to varying degrees,

with Iran and Turkey hit particularly hard.

Inflows into global gold-backed exchange

traded funds (ETFs) and similar products

totalled 69 tonnes in 2018, 67% lower than

the 206.4 tonne inflow in 2017. Sizable annual

flows into European-listed funds at over

96.8 tonnes drove growth in the sector, while

North American funds – which experienced

heavy outflows for part of the year – reversed

in fourth quarter. Global inflows amounting

to 112.4 tonnes during the fourth quarter

reversed the 104 tonnes of outflows from the

third quarter. Growth in fourth quarter was

split almost equally between US-listed and

European-listed funds, with inflows of

57.1 tonnes and 59.1 tonnes respectively.

For the first time since 2012, the value of total

gold-backed ETF holdings ended the year at

$100.6 billion.

The official gold coin market saw annual

demand surge 26% to 236 tonnes, the

second highest level on record – the previous

high was 270.9 tonnes in 2013. Gold coin

demand ourished in a few countries, most

notably Iran and South Africa, where retail

investor concerns around stock market

volatility, currency weakness and geopolitical

uncertainty were common themes. Gold bar

sales were steady at 781.6 tonnes in 2018 and

have been remarkably stable over the past

five years with annual demand anchored

between a 2014 low of 780 tonnes and a

high of 797 tonnes in 2016.

Central bank net purchases reached

651.5 tonnes in 2018, 74% higher year-on-

year. This is the highest level of annual net

purchases since the suspension of dollar

convertibility into gold in 1971 and the second

highest annual total on record. Central

banks now hold nearly 34,000 tonnes of

gold. Heightened geopolitical and economic

uncertainty throughout the year increasingly

drove central banks to diversify their reserves

and re-focus their attention on investing in safe

and liquid assets.

Over the year, global gold mine production rose

by just over 2% to 3,346.9 tonnes in 2018.

Although this growth has slowed in recent

years, this is now the tenth successive year

of annual growth. Gold production in 2018

exceeded the previous high level of annual mine

output on record of 3,268.7 tonnes in 2017.

Net producer de-hedging totalled 29.4 tonnes

for the year, following on from 27.9 tonnes of

net de-hedging in 2017. At the end of 2018,

the global hedge book stood at an estimated

195 tonnes, 13% lower year-on-year,

continuing the general downward trend.

The average gold price for the year was

$1,268/oz, marginally higher than the $1,251/oz

recorded in 2017. AngloGold Ashanti achieved

an average price of $1,261/oz for gold sold for

the year.

Credit rating

AngloGold Ashanti’s rating from S&P Global

(S&P) remained at BB+ with a stable outlook,

and from Moody’s Investor Services (Moody’s)

at Baa3 with a positive outlook. Ratings firm

S&P announced on 24 November 2018 that

it had left South Africa’s sovereign rating

unchanged at sub-investment grade, holding

South Africa’s long-term foreign-currency

rating at BB, while the long-term local-

currency rating stayed at BB+. Fitch Ratings

agency announced on 6 December 2018

that it had retained South Africa’s sovereign

rating at BB+ with a stable outlook. Moody’s,

the only ratings agency that rates South

Africa’s sovereign debt maintained its rating at

investment grade Baa3.

Silicosis litigation

On 3 March 2011, in Mankayi vs. AngloGold

Ashanti, the Constitutional Court of

South Africa held that section 35(1) of the

Compensation for Occupational Injuries and

Diseases Act, No. 130 of 1993 does not cover

an “employee” who qualifies for compensation

in respect of “compensable diseases” under

the Occupational Diseases in Mines and

Works Act, No 78 of 1973 (ODMWA). This

judgement allows such qualifying employee to

pursue a civil claim for damages against the

employer. Following the Constitutional Court

decision, AngloGold Ashanti has become

subject to numerous claims relating to silicosis

and other Occupational Lung Diseases (OLD),

including class actions and individual claims.

OUR EXTERNAL OPERATING ENVIRONMENT

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

OUR EXTERNAL OPERATING ENVIRONMENT CONTINUED

In November 2014, Anglo American South

Africa, AngloGold Ashanti, Gold Fields Limited,

Harmony Gold Mining Company Limited and

Sibanye Gold Limited formed an industry

working group on OLD (OLD Working Group)

to address issues relating to compensation

and medical care for occupational lung

disease in the gold mining industry in South

Africa. The working group now also includes

African Rainbow Minerals (ARM).

AngloGold Ashanti, along with other mining

companies including Anglo American South

Africa, ARM, Gold Fields Limited, Harmony

Gold Mining Company Limited, DRDGOLD

Limited, Randgold and Exploration Company

Limited, and Sibanye Gold Limited, were

served with a consolidated class action

application on 21 August 2013. On 13 May

2016, the South Gauteng High Court of

South Africa ruled in favour of the applicants

and found that there were sufficient common

issues to certify two industry-wide classes: a

Silicosis Class and a Tuberculosis Class. On

3 June 2016, AngloGold Ashanti, together with

certain of the other mining companies, led

an application with the High Court for leave to

appeal to the Supreme Court of Appeal (SCA).

On 13 September 2016, the SCA granted the

mining companies leave to appeal the entire

High Court ruling to the SCA. On 10 January

2018, in response to a postponement request

from all parties involved in the appeal due to

the advanced stage of settlement negotiations,

the Registrar of the SCA postponed the

hearing date until further notice. Settlement

of the consolidated class action litigation was

reached on 3 May 2018, after three years

of extensive negotiations between the OLD

Working Group companies and the lawyers

of the claimants. On 13 December 2018, the

High Court issued a Court order setting out the

process of how members of the settling classes

and any interested parties can object to the

proposed settlement. In the coming months, the

High Court is scheduled to hold a hearing during

which the Court will consider arguments by the

parties to the settlement as well as arguments

by other interested parties who are granted leave

by the Court to participate, including parties

filing objections to the proposed settlement.

The purpose of this second hearing is to

determine the fairness and reasonableness of

the settlement.

If the settlement is approved by the Court

and all its other conditions are met, a trust

(Tshiamiso Trust) will be established and

will exist for a minimum of 13 years. Eligible

claimants will be able to seek specified

payment from the Tshiamiso Trust and the

amount of monetary compensation will vary

depending on the nature and degree of the

disease. As of 31 December 2018, AngloGold

Ashanti has recorded a provision of $63 million

to cover the estimated settlement costs and

related expenditure of the silicosis litigation.

Regulatory and operating
environment

The regulatory environment with the various

changes, uncertainty and challenges it brings

AngloGold Ashanti across the portfolio,

is mostly influenced by local conditions

and differing laws and regulations in the

jurisdictions where we operate. The effects

of the regulations are also dependent on the

issues each of the jurisdictions focus on. In

addition, operations face unique uncertainties

and challenges, such as artisanal small-

scale mining (ASM) and/or illegal mining.

AngloGold Ashanti’s operations and projects

affected by ASM are in South Africa, Tanzania,

Ghana, Mali, Guinea and Colombia. Efforts

to strengthen local economic development

to reduce dependence on illegal mining

are discussed under the material issue on

“Contributing to self-sustaining communities”

in the

<SDR>

Regulatory and political issues

During 2018, political and regulatory

uncertainty and risk remained one of the most

significant material issues facing AngloGold

Ashanti. Some of these regulatory changes

include the addition of social considerations

and requirements into the licensing process.

Increasing community activism as well as

declining government coffers contribute to

escalating tension in an environment where

stakeholders are demanding a greater share of

the benefits derived from resources.

In South Africa, the revised Mining Charter

was gazetted, along with the withdrawal of

the Mineral and Petroleum Resources Act

Amendment Bill. This was broadly welcomed

by the industry and its stakeholders, although

certain elements of the revised Mining Charter

remain a concern. The consultative and

reconciliatory approach by the new Minister of

Mineral Resources is anticipated to contribute

towards improving sentiment in the South

African mining industry.

The Carbon Tax will be implemented in June

2019. There is, however, less clarity on the

draft National Climate Change Bill. A number

of concerns have been raised by industry,

including areas of incongruence with the Paris

Agreement on Climate Change and the intent to

introduce criminal sanction for failure to meet a

carbon budget. Further discussions on this are

anticipated over the course of 2019. In South

Africa, our electricity consumption remains

the major source of greenhouse gas (GHG)

emissions, because we use the national energy

supplier, Eskom, which is dependent on coal for

power generation.

www.silicosissettlement.co.za

www.oldcollab.co.za

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

OUR EXTERNAL OPERATING ENVIRONMENT CONTINUED

Overall, the Company’s greenhouse gas

emissions intensity declined by 30% for the year.

During 2018, in the Continental Africa region,

there was regulatory uncertainty in Tanzania,

Guinea, Mali and the DRC. In Tanzania,

AngloGold Ashanti continues to focus on

pursuing collaborative dialogue with the

government of Tanzania. The arbitration

proceedings that began in July 2017 have

been suspended until July 2019. In Guinea,

the socio-economic challenges of poverty and

unemployment were reflected in the frequent

community grievances related to demands

for employment, electricity and land access.

The local community demanded access to the

Company’s inactive pits, which lead to various

incidents, including invasion of the marginal

stockpile. These incidents were managed

without any significant conflict taking place.

In Mali, presidential and parliamentary

elections during the year heightened in-country

political tensions and instability. In addition,

community discontent continued to escalate

due to concerns and uncertainty around the

future of the Sadiola and Yatela operations. In

this regard, an agreement between AngloGold

Ashanti and employees at these operations

was successfully concluded and implemented

to phase retrenchments as necessitated by

restricted and suspended mining operations.

The agreement, effective from 31 May 2018,

focused on providing an additional social

package, among others, so helping to soften

the impact of the retrenchments.

Ghana – Obuasi

www.anglogoldashanti.com

In the DRC, the government announced a new

mining code that purports to make several

changes to the operating environment for the

DRC’s extractive industries, including those

in its mining, and oil and gas sectors. These

changes may impact the protections enjoyed

by AngloGold Ashanti’s joint venture in the

country. The joint venture is operated and

jointly owned by Barrick Gold Corporation

(previously Randgold Resources (45%)).

The other owners are AngloGold Ashanti

(45%) and Société Minière de Kilo-Moto SA

(SOKIMO) (10%). Engagement continues

between mining industry representatives in

the DRC and the country’s Ministry of Mines,

ahead of the publication of the regulations

that will govern implementation of the new

code. This engagement aims to address

concerns about the revised mining code and

in particular the protection to be afforded

to title holders who benefit from a 10-year

stability agreement under the 2002 Mining

Code. Industry representatives account for

more than 85% of the DRC’s copper, cobalt

and gold production and its most significant

development projects. The representatives

have submitted a formal proposal to the

Ministry of Mines that is designed to address

concerns on the regulatory changes. Among

other things, industry proposes linking a sliding

scale of royalty rates to the prices of key

commodities, which industry representatives

believe would be a more effective mechanism

than the windfall tax introduced in the new

code. At current prices, this proposal would

immediately give the government a higher

share of revenues than provided for in the new

code. It also deals with stability arrangements,

state guarantees and mining conventions.

See the press release of 29 March 2018, titled

“Mining industry submits code proposal to DRC

Government” on www.anglogoldashanti.com

In the Americas, Colombia continued the

peace process after decades of conflict. In

Brazil, a country facing political change after

the presidential elections in 2018, uncertainties

arose around how potential policy changes

might affect the mining industry. There was

also a nationwide truck drivers’ strike which

impacted our operations somewhat.

Water management challenges

Excess ssure water from the operations

of Blyvooruitzicht Gold Mining Company

Limited (in provisional liquidation) in West Wits

remains a potential threat to our Mponeng

mine, for maintaining process water balance

and the mine’s ability to absorb a large

amount of rainfall. Throughout the year,

Covalent Water Company, a wholly owned

subsidiary of AngloGold Ashanti, managed to

pump and discharge extraneous water from

Blyvooruitzicht shafts, while the West Wits

operations absorbed some of the acidic water

from Blyvooruitzicht Mine 5 Shaft. To eliminate

the risk, Covalent Water Company have begun

evaluating options to intercept and process

the acidic water. Covalent Water Company

operates the Blyvooruitzicht 4 and 6 shafts in

terms of a registered servitude.

In Ghana, for the Sansu community in the

vicinity of the Obuasi mine, the issue of

possible contamination of ground water

resources was one of the focus areas during

the year. In dealing with this, the Company

commissioned two independent consultants

– the Council for Scientific and Industrial

Research and Envaserv Research – to

independently test the ground water and

investigate any possible mine pollution. The

consultants representing the community and

the mine respectively, concluded assessments

in the second half of 2018. The findings of

both studies were consistent, demonstrating

no evidence of mine pollution on the ground

water. Any abnormalities that were detected

related to natural geological factors. The

process to engage communities on the

findings commenced at the end of the year,

and it is planned that the Obuasi mine will offer

guidance to the community in responding to

its water quality challenges.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES

Our approach

Stakeholder engagement underpins

the value creation process and is

vital to the successful conduct of

our business. Our stakeholders are

those groups of people who may

be affected by AngloGold Ashanti’s

decisions and/or activities, and who

can in turn influence our activities.

Our stakeholder engagement is informed

by our operating environment and our

activities. The feedback obtained from

stakeholder engagement feeds into the

processes to determine our material issues

and our business risks and opportunities.

Engagements are driven by the need for us

to determine and understand stakeholders’

perspectives, views and expectations, and

aim to establish and maintain mutually-

bene cial relationships with all stakeholders.

This is especially important in relation to our

host communities, one of several important

stakeholder groupings with which we engage.

Building and nurturing our stakeholder

relations is integral to securing and protecting

our licence to operate, to addressing our

material issues, and to enhancing shareholder

value as we execute our strategy.

We engage directly and indirectly with our

various stakeholders. Such engagement

is regular, transparent, and aligned with

our values. Engagement is an inclusive,

continuous two-way process. It is important

that we understand stakeholders’ needs and

expectations in order to better manage them;

and we in turn provide and share information

about AngloGold Ashanti, on our objectives,

policies and standards, and our financial,

operating and sustainability performance.

Oversight and accountability

Engagement is conducted in line with the King

IV principles. Our stakeholder engagement

process continues throughout the life cycle

of an operation, from exploration through to

closure. Our approach is to mindfully partner

with our stakeholders to assess, manage and

mitigate ethical and regulatory risks.

The board is accountable for stakeholder

engagement through each of the board

committees, and maintains oversight of material

issues concerning stakeholders through the

Social, Ethics and Sustainability Committee.

Given the diverse footprint of our business,

there is a correspondingly diverse set of

stakeholders, each operating within a unique

social, economic, political and regulatory

context. Engagement takes place either at

group level, for an overview of the business

as a whole, or at an operating level, with

stakeholders who need to understand

operational impact and stakeholder influence

on the business. In all our interactions with

stakeholders we demonstrate our adherence

to our corporate values.

We strive to conduct all stakeholder

engagements in dynamic, honest, transparent

and inclusive ways. Given the wide range

of stakeholders, we adopt a multi-pronged

approach, including:

•

visiting communities and government bodies

in and around the areas in which we operate

•

meeting providers of capital and financiers

•

co-ordinating community focus groups in

the regions where we have operations

Identifying our material issues

We are guided by the International Integrated Reporting Council and its related framework,

King IV, the GRI standards G4 guidelines and the Accountability AA1000 Stakeholder

Engagement Standard, to identify major issues of material concern that affect the Company.

As in the previous year, our internal review process involved:

•

A review of the previous year’s material issues

•

Identification of emerging issues

•

Prioritising material issues, based on, among others, their relation to our strategy,

operations and their potential impact on the business and our social licence to operate

Our stakeholders

Our major stakeholder groups are:

•

Employees

•

Investment community

•

Governments and regulators

•

Communities

•

Suppliers and industry partners

•

Media

•

undertaking community grievance procedures

•

seeking employee views by means of our

group-wide engagement survey and “town

hall” meetings

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Our material issues

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES CONTINUED

Contributing to
self-sustaining

communities

Artisanal and

small scale

mining (legal

and illegal)

Responsible

environmental

stewardship

Employee

and community

health

Employee,

community and

asset security

Talent

management

and skills

development

Employee

safety

Respecting

human rights

Integrated

closure

management

Navigating

regulatory and

political uncertainty

and risk

For 2018, the following were identified as our top 10 material issues:

Engaging with employees –

mitigating safety risk, employee
wellness and ensuring stable
labour relations

AngloGold Ashanti’s approach to employee

engagement is aimed at promoting good

labour relations, increasing productivity

and maintaining a focus on our strategic

objectives. The wellbeing of all our employees

and their safety is the foundation of who

we are and how we conduct ourselves. Our

company value – Safety is our first value –

captures the importance of safety, which

remains our top priority.

We ensure that employee engagement is

professional and respectful and in line with the

laws and regulations that govern the mining

sector in our various operational jurisdictions.

Stakeholders and their related material issues

Stakeholder

Related material issue

Employees

Investment community

Governments and regulators

Communities

Industry partners and suppliers

Media

Furthermore, good labour relations encourage

a collaborative approach to problem-solving

in the workplace. Our engagement, using

a variety of approaches, emphasises and

reinforces the importance of being safe

in the workplace, and of complying with

safety procedures and standards. It also

encompasses wellness, employee security,

and performance against our strategic

objectives, as we work to create value for

our stakeholders.

AngloGold Ashanti employees have a right

to freedom of association and to collective

bargaining. This is embedded within the

Company and is embraced and viewed by

management as central to effective labour

relations at all operations, where the country’s

regulations allow.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Key employee engagements in 2018:

•

South Africa region: engagement was

aimed at informing relevant stakeholders

about the restructuring process which

is aimed at protecting the longer-term

sustainability of the business and limit

job losses. The process was completed

reaching a balance between preserving

local jobs while we focused on creating a

smaller, more profitable production base.

These engagements helped to mitigate

forced retrenchments, limiting the 2,000

retrenchments initially anticipated to 72.

This was achieved by offering voluntary

severance packages, and preserving jobs

when selling some of the mines and the

non-core assets, such as healthcare facilities

and rail networks in the Vaal River area.

Additionally, during the year we concluded

wage negotiations and signed a three-

year wage agreement with all employee

representatives – the unions. The wage

negotiations were concluded amicably

without any strikes or disruptions to work

and we managed to agree on a new shift

arrangement. This shift arrangement

was implemented in November 2018.

For further information,

see <Regional

reviews>

•

Continental Africa region: we successfully

finalised wage negotiations at Siguiri in

Guinea. We also concluded a compressed

working week agreement with the union for

implementation at Geita in Tanzania

•

There were no unresolved labour issues

in 2018

•

Employee survey – we conduct this survey

every two years to understand employees’

perceptions and views of the Company.

The next survey is planned to be conducted

during 2019. For more detail on this, see

Engaging with the investment
community – managing

expectations, particularly against
strategic objectives

Our investment community is geographically

diverse and includes financiers and bond

holders, analysts and the providers of

capital – our shareholders and prospective

investors. We conduct our engagement with

the investment community regularly, in person

and by email, at our interim and annual results

presentations, via conference calls, site visits,

investor conferences and at one-on-one

meetings. We engage in a transparent manner,

in compliance with JSE Listings Requirements

and with the regulations of the various other

exchanges on which we are listed, including

the NYSE.

Engagement here includes reporting, which

we do periodically or as and when there are

new developments, either within the Company

or in the markets which impact the Company.

We report on our operational, financial and

sustainability performance, our delivery

on our strategic objectives, as well as on

material matters that may have an impact our

performance, such as regulatory and political

risk, corporate activity by way of acquisitions

or sales, other corporate transactions, labour

unrest, and community matters, among others.

We believe that open and transparent

engagement can enhance the valuation and

company credit ratings thus improving our

access to capital. These engagements are

necessarily proactive and inform investors

on new developments, and more importantly

they inform investor sentiment. In addition

to reporting on our performance, not limited

to these topics of engagement during the

year were:

•

Safety – improved safety performance

•

South Africa region restructuring –

finalisation of asset sales, operational

turnaround, and outsourcing of non-

core assets

•

Asset sale proposals in Mali and Argentina

and sale of greenfields tenements in

Colombia

•

Management and director changes –

appointment of new CEO and non-executive

directors

•

Silicosis update – issued notice on the

court’s approval of the settlement agreement

on silicosis and tuberculosis

•

Obuasi – start of mine redevelopment,

signing of the five-year joint venture contract

for underground development with Ghana’s

local mining and engineering sector, and the

first blast

•

Balance sheet – in October 2018, a new

five-year $1.4bn multi-currency revolving

credit facility was agreed with our banking

syndicate (see the <CFO’s review> for

further detail on this and its effect on our

liquidity position)

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES CONTINUED

Brazil – Lamego

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

•

Progress at our low-capital, high-return

projects – Siguiri, Iduapriem, Geita, Kibali,

Tropicana, and Sunrise Dam

•

Exploration – progress made at our

Colombia projects and registration of

maiden Ore Reserve for the

Quebradona project

In addition, we proactively engage with

shareholders leading up to the annual general

meeting to ensure understanding of the

resolutions put out in the notice of meeting.

See <NOM>

Engaging with governments and
regulators – mitigating regulatory

and political risk

We focus on maintaining good working

relations with governmental authorities,

appraising them of any new developments at

our operations and projects, discussing key

concerns within each operating jurisdiction.

Our aim is to encourage regulatory certainty

and create an environment conducive to the

investment and development necessary for

the long-term growth of the business and the

respective countries, while remaining law-

abiding citizens. Our responses in navigating

political and regulatory uncertainty are also

informed by our Code of Ethics. In engaging

with governments and regulators, our actions

generally fall into one of three categories:

•

Engaging proactively in policy development,

regulatory proposals and conflict resolution,

seeking mutually bene cial and sustainable

outcomes

•

Enhancing our internal systems and

activities to meet the requirements of

applicable regulatory changes

•

Disputing and seeking recourse where we

believe that we have been treated unfairly

and/or outside of accepted regulatory

prescripts

Conversely, governments engage with us as

a mining company to ensure that the benefits

of mining flow through to the state at national,

local and community levels. In addition to

job creation, taxes, royalties and investment,

the benefits of mining at a local level include

employment, skills development, local

procurement and infrastructure and service

development. They also engage with us to

ensure and monitor regulatory compliance.

During 2018, the following engagements took

place with governments and regulators:

South Africa: We engaged with the regulators

on the Reviewed Mining Charter and as

part of the Working Group on Occupational

Lung Disease which continues to engage the

Medical Bureau for Occupational Diseases

(MBOD) and Compensation Commissioner

for Occupational Diseases (CCOD), the

government departments responsible for

certifying and compensating mineworkers

with OLD. For more detail on these see

<Our

External Environment>

. We also engaged on

the restructuring of the South Africa operations

which included the sale of our Vaal River mines

as well as the sale and/or outsourcing of non-

core assets. These engagements were held

with local, provincial and national government.

•

Ghana: We engaged with the Government

of Ghana throughout the year and secured

the necessary agreements and permits to

enable us to begin the redevelopment of

Obuasi. The relevant fiscal and development

agreements, and environmental permits were

granted, and signed by the Government of

Ghana. All these agreements were ratified by

Ghana’s parliament in June 2018. For further

detail, see the <Regional Reviews>

•

Tanzania: Following legislative changes,

we continued to seek engagement with the

government of Tanzania to obtain clarity

regarding the new laws and regulations.

The changes apply to those companies

that have in place long-standing mine

development agreements. Arbitration

proceedings began in July 2017. AngloGold

Ashanti’s focus remains to pursue

collaborative dialogue with the government

of Tanzania. The arbitration proceedings

have been suspended until July 2019

•

DRC: We are working with our joint venture

partner – Randgold Resources, now

Barrick Gold Corporation – and peers in the

industry in that country to lobby against the

implementation of a proposed New Mining

Code. Meetings took place throughout

2018, between the then President, Joseph

Kabange Kabila, and mining industry

representatives. See <Our External

Environment>

for more on this.

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES CONTINUED

Australia – Tropicana

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

•

Australia: We engage with the Government

in Australia, with which we have a

collaborative working relationship. We are

currently planning a deep diamond drilling

programme where, one kilometre to the

south of Sunrise Dam, targets will be

tested with in a programme partially funded

by the Western Australian Government’s

Exploration Incentive Scheme

Engaging with communities –

managing expectations, upholding
human rights and ensuring security
of assets and the community

Our community engagement aims to establish

mutually bene cial partnerships with host

communities for shared value creation. We are

also driven by the need to maintain our

social licence to operate, which is core to

how we work with our host communities and

conduct business.

We are guided by our global Engagement

Management Standard that requires each

operation to prepare and implement a

community engagement strategy that is,

among others, forward-looking and identifies

potential areas of concern to stakeholders.

We have local economic development

programmes, run in partnership with local

governments and host communities. These

contribute to economic growth, stimulate

income-generating opportunities, create

employment, and aim to nurture sustainable

livelihoods beyond the life of mine.

Our proactive engagement is focused on

ensuring that we work with governments in

relation to their service delivery responsibilities

to communities and society at large. For more

information on our material issue, contributing

to self-sustaining communities, see the <SDR>.

The following community engagement took

place in 2018:

•

South Africa: the restructuring of our

South African operations and sale of certain

mines. In addition to the related employee

and government engagement discussed

previously, we also engaged with local

communities (NPOs, NGOs and youth),

small, medium and micro enterprises as

well as those local municipalities in host

communities affected and major labour-

sending areas. We continued with the

roll-out of agreed social and labour plan

programmes and related community

development projects.

•

Ghana: Post-year end in January 2019,

community and traditional leadership

attended the official launch of the

redevelopment of Obuasi. In line with our

commitments to the Government of Ghana

and the local community, we will focus

on and promote Ghanaian participation in

this redevelopment. This focus includes

the recruitment of Ghanaians which has

commenced, both locally and off-shore,

as many Ghanaians work globally. Where

we have imported specialist operational

managerial and technical skills, we have

identified Ghanaian successors who will be

developed throughout the project.

•

Australia: At Tropicana, we ran a unique

entry-level opportunity for indigenous

people in Western Australia’s goldfields

region during the year. Participants were

taken on a pre-employment mining

programme for traineeships in the mining

and geology departments. The programme

is carried out by a training provider and

indigenous mining contractor Carey Mining

in partnership with AngloGold Ashanti

Australia and the mining contractor

at Tropicana. It is intended that the

programme will run again in 2019. The

programme was commended in the

Western Australia Parliament by the

Minister for Regional Development.

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES CONTINUED

Colombia – Gramalote

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Engaging industry partners and
suppliers – working on long-term

partnerships, empowering the local
population

We collaborate with our peers in the sector

and industry bodies on engagement on

various matters with governments, labour and

other key stakeholders. This includes coming

up with solutions to either sector or industry

challenges, and on any new developments

to promote the future of the industry. These

industry partners include the World Gold

Council, the International Council on Mining

and Metals (ICMM), the Extractive Industries

Transparency Initiative (EITI), Business Unity

South Africa (BUSA), Business Leadership

South Africa (BLSA), This is Gold, the

Occupational Lung Disease (OLD) working

group, and the Minerals Council South Africa

(Minerals Council), previously the Chamber of

Mines of South Africa.

During the year engagement included:

•

Industry partners: We engage regularly

with the Minerals Council and Chamber

of Mines in the various regions in which

we operate. In South Africa, we focused

primarily on negotiations related to the

Reviewed Mining Charter, the gold sector

wage negotiations, which ended with the

signing of a three-year wage agreement,

and continued work on occupational lung

disease (for more details on this see <Our

external environment>

•

Working Group on Occupational Lung

Disease: Collaboration continued within the
Gold Working Group on OLD and with other
key stakeholders to agree a comprehensive
solution to silicosis litigation and related
statutory compensation. See also <Our

external environment>

for more information

on work done on this.

•

Suppliers: AngloGold Ashanti always
endeavours to have suppliers apply our
business ethics and values. Our supplier
Code of Conduct encourages all our
suppliers, including contractors, to align
their businesses with our internal policies
and codes of ethical behaviour, particularly
on human rights practices, labour relations
and employment practices, the environment,
our anti-bribery and corruption policies, and
safety procedures, policies and standards.
Our approach with suppliers involves
ensuring responsible environmental, social
and governance (ESG) practices are carried
out by those we associate and/or do
business with. Suppliers are assessed on
their governance conduct in addition
to their socio-economic behaviour. In 2018
we also rolled out the application of the
supplier assessment questionnaire which
covers safety, environment, human rights,
and governance, including anti-corruption
matters. We are currently in the process
of developing screening tools that can be
applied at site level to risk-rate existing
and potential suppliers for further due

diligence investigation.

In addition, we work closely with suppliers to

promote local procurement, transformation

and capacity building. For example, in the

redevelopment of Obuasi, in line with our

commitments to the Government in Ghana

and the community there, we awarded a

five-year mining contract to the Underground

Mining Alliance, a joint venture between

Australia’s AUMS and Ghana’s Rocksure. The

contract will employ and train approximately

550 Ghanaians.

Engaging with the media –

complements and supplements
engagement with many other
stakeholders

Our media engagement is transparent,

covers a range of matters, and facilitates

understanding of AngloGold Ashanti’s

activities, and promotes accurate reporting

and constructive relationships with other

stakeholders. Engagement with the media

augments and underpins communication with

other stakeholders such as communities,

investors and government, and other

interested stakeholders.

Successful media engagement is fundamental

to ensuring accurate representation and

understanding of the Company, management

of our reputation and our credibility, and

maintenance of our social licence to operate.

It can be used to address speculation and

misinformation in the public domain.

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES CONTINUED

South Africa – Mponeng

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

MANAGING OUR RISKS AND OPPORTUNITIES

Identifying and monitoring our risks and opportunities

•

Board through respective
committees (quarterly) and as part
of the board strategy sessions

•

Audit and Risk Committee
(quarterly)

•

Executive Committee
(monthly review)

•

Operations: mine sites, etc
(regularly/as required)

Risks and
opportunities are
identified with
input from
business units
with the Executive
Committee having
accountability.

Tanzania – Geita

AngloGold Ashanti’s risk management
process aims to strike a balance
between mitigating and minimising
our risks, and maximising the
potential reward. A structured internal
risk management process is in place
to identify risks, while simultaneously
taking into account the views and
interests of our stakeholders.

The Audit and Risk Committee, which

oversees risk management on behalf of

the board, receives regular risk-related

feedback from operational management. The

committee regularly reviews and assesses

all risk-related information and governance

structures, ensuring that the roles and

accountability for identifying, managing,

mitigating, reporting and escalating risks and

opportunities are clearly defined. The board

has ultimate responsibility for managing and

reducing risks and for realising value from

opportunities.

The risk management process supports

delivery of our strategic objectives and

provides a platform for identifying risks and

opportunities. We continuously adapt to

the ever-changing environment in which we

operate and ensure that AngloGold Ashanti is

positioned to alleviate and reduce risks and to

take advantage of opportunities identified so

as to enable sustained value creation.

Monitoring and reporting

Our risks and opportunities are identified, quanti ed and monitored

with input from senior management to ensure accountability.

They are reviewed quarterly, or more often as required, based

on developments in our operating environment. The relevant risk

owners are consulted to confirm status of risks and opportunities

in terms of severity and likelihood, to ensure alignment with regular

independent assessments.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

SEVERITY

LIKELIHOOD

Nature of risk

Operational

External

Strategic

Political

Operational
underperformance

Growth projects

Skills

Ore Reserve and

Mineral Resource

Commodity prices
and currencies

Cost competitiveness

Regulatory implications

of tailings dam failure

Divestment impediments

Local economic

development

Top group risks heat map

The top group risks are depicted in a ‘heat map’ below that plots the severity and likelihood of the

top risks.

Our top 10 risks 2018-2019

The risks tabulated below are the top ten risks for the AngloGold Ashanti group as at the end

of January 2019, ranked from highest to lowest in order of magnitude. The previously reported

ranking is in parentheses.

A summary and explanation of our top 10 risks is given in the table overleaf.

Rank:

(Previous)

Potential risk:

1 (1)

Elevated political and country risk profile in core production areas

2 (2)

Operational underperformance negatively impacting improved track record

3 (5)

Delivery of growth projects

4 (4)

Adverse gold and commodity prices and currency movements

5 (3)

Cost competitiveness

6 (7)

Inability to develop projects and bring Ore Reserve and Mineral Resource

to account

7 (9)

Critical skills and talent retention

8 (–)

Future regulatory implications for industry from the Vale tailings dam failure in Brazil

9 (–)

Failure to comply with local economic development requirements

10 (–)

Implications of industry consolidation impacting our divestment strategy

(–) indicates new group risk

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

Mali – Sadiola

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk oversight and responsibility by board committee

Risk

Nature of risk

Strategic objectives impacted

Responsible board committee

Elevated political and country risk profile

in core production areas

External

Social, Ethics and Sustainability Committee

Audit and Risk Committee

Operational underperformance

negatively impacting improved track record

Operational

Audit and Risk Committee

Delivery of growth projects

Strategic

Investment Committee

Adverse gold and commodity prices

and currency movements

External

Audit and Risk Committee

Investment Committee

Cost competitiveness

External

Audit and Risk Committee

Investment Committee

Inability to develop projects and bring

the Ore Reserve and Mineral Resource

to account

Strategic

Investment Committee

Critical skills and talent retention

Operational

Social, Ethics and Sustainability Committee

Remuneration Committee

Regulatory implications for industry of

the Vale tailings dam failure in Brazil

Operational

Social, Ethics and Sustainability Committee

Failure to comply with local economic

development requirements

External

Social, Ethics and Sustainability Committee

Implications of industry consolidation

impacting our divestment strategy

External

Investment Committee

Strategic objectives

Maintain long-term optionality

Focus on people, safety,
and sustainability

Ensure financial

flexibility

Optimise overhead, costs
and capital expenditure

Improve portfolio quality

Given its role to
support value creation,
the board has
ultimate responsibility
for oversight and
management of risks
and their impacts

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Mitigation of top ten group risks 2018-2019

Risk

Potential consequences

Mitigation developments and actions

1. Elevated political and

country risk profile in

core production areas

•

Regulatory uncertainty

•

Increased tax and royalties

•

Adverse impact on our business plans

•

Adverse impact of market capitalisation

•

Increased operational costs

•

Reduced cash flow

•

Reputational damage – continued scrutiny from

governments, international NGOs and communities

•

Political instability

•

Compromised employee safety and security

•

Ongoing stakeholder engagement with greater focus on government structures, local community and non-

governmental organisations (NGO)

•

Exploring opportunities for inclusive engagement and broader collaboration with NGOs (activists)

•

Continuous monitoring of legislative/political landscape conducted in anticipation of any negative impact

on business

•

Use of joint venture alliances, including host country partnerships, in line with host country regulatory requirements

Tanzania

•

In July 2017, the Government of Tanzania passed

into law a new legal framework for the country’s

extractive industries

•

Working capital lock-up as VAT is not being refunded

•

Applying arbitration proceedings under rules of the United Nations Commission on International Trade Law – a

precautionary measure to safeguard AngloGold Ashanti assets in Tanzania

•

Continued engagement with key stakeholders on our position, including government, business, media

and communities

•

Ensuring compliance with legislation in conjunction with the Mining Development Agreement (MDA)

South Africa

•

Regulatory uncertainty around the new 2018

Mining Charter

•

Potential protracted labour disputes

•

Widespread allegations of corruption in State

owned entities

•

Restructuring of the South African asset base was completed after a collaborative effort with key stakeholders

•

Full compliance with the Labour Relations Act and the Mineral and Petroleum Resources Development Act (MPRDA)

•

Security/operational readiness for any potential labour/community unrest

•

Working towards compliance with the new 2018 Mining Charter targets – required by 31 March 2020

•

The Minerals Council South Africa led an application for judicial review of certain clauses of the new 2018

Mining Charter

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk

Potential consequences

Mitigation developments and actions

1. Elevated political and

country risk profile in

core production areas

continued

DRC

•

Political instability

•

Regulatory uncertainty

•

Adoption of the 2018 Mining Law introduces several

amendments to the 2002 Mining Code which are

unfavourable to holders of existing mining titles and

which breach the stability guarantee

•

The elections have been relatively peaceful compared to the 2006 and 2011 elections which were

marred by violence.

•

Continuous engagement with government through the joint venture partner (Barrick) on fiscal stability

•

An alternative structure has been tabled to the government consisting of an article 220 decree, aimed at

preserving historic rights

•

VAT refund agreement signed with the DRC Tax Administration in 2018 permitting AngloGold Ashanti to offset the

amount of tax credits eligible for repayment against other payments to government

2. Operational

underperformance

negatively impacting

improved track record

•

Unsustainable, loss-making operations resulting in

reduced cash flow and decreased liquidity

•

Reduced earnings, uncertain delivery on targets and

disproportionate penalty on share price

•

Decline in investor confidence

•

Credit ratings impact

•

Restricted ability to invest in strategic growth and

development projects

•

Eskom power supply interruptions could potentially

aggravate operational underperformance in the South

Africa region

•

Further improvements in the delivery on business plans and operating margins

•

Drive Operational Excellence programmes to improve productivity, efficiency and improve costs structures towards

the targeted quantile in line with the Operational Excellence initiatives

South Africa

•

Proceeds from the sales of Kopanang and Moab Khotsong used to reduce debt to improve liquidity

•

TauTona and Savuka placed into orderly closure

•

New shift arrangements implemented at Mponeng to improve face time and associated production, safety

and cost efficiencies

•

Implementation of a safe production strategy continues to remove people from danger and to create more flexibility

in mining plans

•

Long-term research will be conducted under the auspices of the Mine Health and Safety Council to provide further

insights into and improve seismicity-related risks

•

Short-term rand gold hedge to protect cash flow in the South Africa region

•

Cost management efforts continue, aimed at ensuring structures are appropriately resized for the

smaller production base

•

AngloGold Ashanti’s representation on Eskom’s Energy Intensive User Group

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk

Potential consequences

Mitigation developments and actions

3. Delivery of growth

projects

Ghana – Obuasi

•

Inability to bring the Ore Reserve and Mineral Resource

to account

•

Adverse socio-economic stakeholder impact and

reputational damage

•

This is key growth project. It is critical that it is

delivered on time and on budget

•

Obuasi redevelopment project provides a potential tier one asset that has an all-in sustaining cost that is lower than

the average for the group

•

The investment development agreement (stability agreement); reclamation security agreement and security

agreement which maintains law and order, have been signed-off and ratified by the Ghana parliament

•

Underground mining contract awarded with first blast delivered in February 2019

•

Recruitment of key personnel well advanced and in line with the labour plan submitted to and approved by the

Minerals Commission

•

A local employment procedure in place to address employment concerns of host communities on the concession

•

First gold pour expected at the end of 2019

•

Obuasi has a large Ore Reserve and Mineral Resource and it is anticipated that these will be successfully developed

Colombia

•

Project delays will adversely impact investment or

project returns

•

Use of constitutional right to engage in popular

consultations to circumvent an array of public

and private projects/programmes is creating

investment uncertainty

Quebradona Project

•

Maiden Ore Reserve of 1.26Mt (2.8bn lb) of copper and 2.22Moz of gold declared

•

Progressing to feasibility study phase in 2019 and early 2020

Gramalote Project

•

Continue to advance Gramalote projects up the value curve

La Colosa

•

Declared force majeure at La Colosa depending on legal advice and assessment of scope, consequences and costs

of each option

•

Duration of care and maintenance or force majeure to be assessed – currently estimated at least three years

•

Following the outcome of a popular consultation vote, all voluntary social spend is to be terminated

South Africa – Mponeng

•

Failure to develop projects places the existing Ore

Reserve and our ability to turn our Ore Reserve and

Mineral Resource to account

•

Mponeng life-of-mine extension project has been delayed to 2021

•

Greater emphasis placed on off-mine overhead allocated cost component where further synergies need to be

achieved, focusing on non-labour elements to reduce infrastructure and footprint and thus Mponeng’s

overhead cost

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk

Potential consequences

Mitigation developments and actions

4. Adverse gold and

commodity prices, and

currency movements

•

Inadequate free cash flow/liquidity impacting our

credit ratings

•

Inability to develop strategic growth and development

projects to bring the Ore Reserve and Mineral Resource

to account

•

Lower market capitalisation

•

Need to recapitalise the company at distressed equity

prices and in poor market conditions

•

Credit ratings impact

•

A sustained period of significant gold price volatility

may adversely affect our ability to evaluate the feasibility

of undertaking new capital projects, the continuity of

existing operations and their ability to meet operational

targets, or to make other long-term strategic decisions

•

Streamlining the business by selling non-core assets to focus on core assets and enhance cost competitiveness

•

Maintain capital allocation discipline and efficiency improvements

•

Maintain focus on cost and capital discipline to deliver competitive all-in sustaining costs

•

Maintain long-term sustainability and optionality by ensuring our pipeline of opportunities is continuously replenished

•

Further reduce our annual interest bill

•

Further deleverage the balance sheet

•

Manage input costs to the extent possible

•

Focus on execution of Operational Excellence initiatives to counter inflation and improve margins

•

Entered short-term rand gold hedge to protect cash flow in the South Africa region

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

Colombia – La Colosa

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk

Potential consequences

Mitigation developments and actions

5. Cost competitiveness

•

Reduced profit margins owing to high cost

of production

•

Operational underperformance leading to failure to

achieve business plans, develop strategic growth and

development projects to bring the Ore Reserve and

Mineral Resource to account

•

Monitoring cost competitiveness is key to achieving

profit and cash flow targets to maintain our credit and

investment ratings

•

Organisational design that is fit for purpose in the

context of the desired business portfolio

•

Drive Operational Excellence programmes to improve productivity and efficiency

•

Exiting assets in Mali and Argentina with a view to focusing limited capital and resources on other parts of the

portfolio that generate or have the potential to generate higher returns

•

Redevelopment of Obuasi and other lower cost projects

•

Drive Colombian assets up the value curve

•

Exploration focus as a key source for new ounces

•

Increased management efforts to focus on capital optimisation, capital efficiency and allocation to these assets that

will generate maximum returns

6. Inability to develop

projects to bring the Ore

Reserve and Mineral

Resource to account

•

Ore Reserve write-down and possible decline in

market capitalisation

•

Impairments and lower future earnings per share

•

Reduced production profile and business plan

•

Loss of tenements

•

Premature mine closure or mothballing of operations

•

Focused project management to deliver projects on budget and schedule

•

Allocating capital and other resources to those assets that generate or have the potential to generate higher returns

•

Robust business planning, portfolio optimisation and considered feasibility studies to withstand potential risks

•

Focused exploration on Mineral Resources near existing assets

•

Focused greenfields exploration processes targeting new discoveries in Nevada, Minnesota and Australia (Butcher

Well joint venture)

7. Critical skills and talent

retention

•

Failure to execute and deliver on strategic objectives

•

Potential impact on productivity and safety levels

•

Increased labour costs

•

Depending on the skills or talent lost – potential impact

on market confidence

•

Insuf cient talent and succession planning

•

Higher cost of retention

•

Failure to meet localisation targets

•

Remuneration based on competitive, market-related salaries and benefits

•

Short- and long-term incentive schemes to provide financial and non-financial benefits

•

Global performance management system, aligning roles with strategic plans

•

Implementation of integrated talent management and succession planning process across the business, with an

increased coverage ratio for critical skills

•

Continue Chairman’s Young Leaders programme (emerging talent pool) to aid development of a healthy talent

pipeline for future leadership positions

•

Update CEO’s talent pool and succession/development plans

•

Increase training capacity for scarce artisan’s skills where required

•

In South Africa, the employee transition framework includes a retention strategy that involves a tailored approach

to ensure critical skills are available when needed

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Risk

Potential consequences

Mitigation developments and actions

8. Future regulatory

implications for the

industry from the Vale

tailings dam failure in

Brazil

•

Adverse socio-economic stakeholder impact and

reputational damage

•

Environmental licensing processes for mining companies

are expected to be extremely difficult, especially those

involving tailings storage facilities (TSFs)

•

Significant changes expected in federal and state

regulations, as well as much more intense regulatory

scrutiny and control of TSFs and cost increases

associated with inspecting, maintaining and

constructing TSFs

•

Significantly increased pressure from local communities

and elevated risk to the social licence to operate

•

Certain types of TSFs may be prohibited and this may

result in operational restrictions until alternative facilities

can be constructed

•

Tailings management framework, standards and guidelines in place to deal with TSF risks at operational, regional,

corporate and external review perspectives:

•

Operational level – responsible for management of day-to-day operation of TSF

•

Regional level – providing technical guidance to operations, conducting quarterly inspections and monitoring

implementation of recommendations

•

Corporate level – conducting TSF audits annually or bi-annually

•

Annual independent third-party reviews of TSFs

Brazil

•

Created a multidisciplinary group to manage the demands and alternatives studies

•

Technical study of LOM versus different scenarios of TSF/licences availabilities

•

Technical study of alternatives to minimise TSF usage or replace the current process in the short term

•

Increase communication with employees, communities and external media-on-demand

9. Failure to comply

with local economic

development

requirements

•

Adverse regulatory response

•

Suspension of licence due to non-compliance

•

Failure to achieve strategic growth business plan and

development projects to bring the Ore Reserve and

Mineral Resource to account

•

Developed local economic development and procurement framework and guidelines

•

Focus on sharing of economic benefits between the Company and other stakeholders in the country

•

Strategic contracts awarded to local suppliers in 2018

•

Strive to meet local content requirements throughout the portfolio

10. Implications of

industry consolidation

impacting our

divestment strategy

•

These developments may result in sales processes not

realising full value, sale process may be convoluted or

may not eventuate in a sale

•

Potential intention by industry peers to sell assets is

generating excess of gold assets available for sale

•

Merger activity within the gold mining industry points to

benefits of scale, liquidity, improved jurisdictional profile

on core assets creating top tier differentiation

•

Focused on organic opportunities to create value over acquisition options

•

Revised ranking for investment opportunities based on returns and affordability with respect to maintaining leverage

ratios at or around targeted levels as well as improving returns to shareholders

•

Focused exploration on ore sources near existing assets

•

Targeting new discoveries in Nevada and Minnesota in the United States and the Butcher Well joint

venture in Australia

•

Drive Colombian assets up the value curve

•

Identify suitable joint venture partnerships and alternative sources of funding

•

Asset sale processes have been accelerated

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

MANAGING OUR RISKS AND OPPORTUNITIES CONTINUED

Opportunities

We recognise that identifying and managing opportunities is an important component of risk

management. We identify suitable opportunities – endeavouring to exploit, harness and/or

maximise them – with the aim of creating value by mitigating our risks. This table lists our key

opportunities along with the strategy for each.

Top group opportunities

Type

Opportunity

Related strategic action

Strategic

Obuasi

•

First gold by the end of 2019

•

Full scale production by 2020

•

Planning for local content and a smooth transition

Disciplined approach to growth

•

Continue with disciplined investment to ensure pipeline

of brownfields and greenfields expansions

•

Maintain diversified portfolio capable of withstanding

“single jurisdiction / operation” shocks

Greenfields exploration

•

Focused on ore sources near existing assets

•

Generative all-in costs per metre improved by 32%

over three-year average

•

Targeting new discoveries in Nevada and Minnesota in

the United States and in Australia (Butcher Well)

Brownfields exploration

•

Focus on Ore Reserve and Mineral Resource

replacement

•

Strong focus on sites with shorter Ore Reserve lives

•

Notable growth at Geita and Sunrise Dam

Stakeholder relations

•

Enhanced engagement model to build strong

stakeholder relationships

Colombia

•

Progress Quebradona and Gramalote projects up the

value curve

•

Advance engagements at La Colosa and lift

force majeure

•

Sell tenements outside of key projects to focus efforts

on key projects while retaining upside participation

Type

Opportunity

Related strategic action

Strategic
continued

Renewed optimism and potential

for mining regulatory certainty in

South Africa

•

Negotiate fair and sustainable wage agreement and

shift arrangements (South Africa)

•

Implement and influence Mining Charter

•

Advance Mponeng Phase 2 feasibility study

Business planning and portfolio

optimisation processes

•

Sound business planning with top-down goals

•

Portfolio optimisation and revise fit for

purposes structures

Streamlining the portfolio

•

Initiated processes to sell the Company’s interest in

Cerro Vanguardia in Argentina

•

Initiated processes to sell the Company’s interests in

Sadiola mine in Mali.

Operational

Improving production mix

•

Improved efficiencies and mine plan changes driven

through operational excellence initiatives

•

Inward investment into high-return projects

benefits from increase in

gold price enhanced by cost

reduction

•

Actively improve the quality of the portfolio

•

Focus on margins through initiatives to improve all-in

sustaining costs and all-in costs, through Operational

Excellence initiatives

•

Improve leverage to the gold price

Pursuing key growth

opportunities for our asset

portfolio

•

Focused brownfields exploration activities

•

Prefeasibility studies for life-of-mine extensions and

improved recoveries

South African business

transformation

•

Transformed loss-making portfolio into more focused,

profitable and sustainable business

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

CFO’s REVIEW

Christine Ramon

Chief Financial Officer

Maintaining a reliable track record of predictable,

rational behaviour as custodians of shareholder

capital is central to our approach.

Financial highlights of the year
under review include:

Key guidance metrics met or exceeded
for the sixth consecutive year

All-in sustaining costs (AISC) decreased

by 7% to $976/oz in 2018 from

$1,054/oz in 2017

Adjusted EBITDA of $1.48bn despite

asset sales and a at gold price

Headline earnings per share increased

to 53c in 2018, from 6c in 2017

Free cash flow improved significantly
to $67m from $1m in 2017

Dividend of ZAR 95 cents per share

(approximately 7 US cents per share)
declared

Net debt down 17% to $1.66bn in 2018

from $2bn in 2017 with the Net debt to
Adjusted EBITDA ratio lower at
1.12 times

Group performance

AngloGold Ashanti’s cash flows and earnings

showed steady growth over 2018, and for

the sixth consecutive year, production, capital

and all cost guidance metrics were met or

improved upon.

cash flows from the business continue to

improve. Adjusted EBITDA in 2018 remained

steady at $1,480m, versus $1,483m in 2017,

as a result of a at gold price and lower costs,

despite a 355,000oz drop in production

following the sale and orderly closure of Moab

Khotsong, Kopanang and TauTona in South

Africa. All-in sustaining costs (AISC) of $976/

oz in 2018, compared to $1,054/oz in 2017,

were below the low end of the guidance range,

progressing the shift towards the bottom end

of the industry cost curve.

The restructuring of the South African asset

base was completed after a collaborative effort

with key stakeholders. The redevelopment of

the Obuasi mine, a transformational

project for AngloGold Ashanti and Ghana,

also commenced.

In addition, the balance sheet was strengthened

after debt was further reduced and the US$1bn

and A$500m revolving credit facilities were

refinanced extending the maturity date by

five years. Furthermore, progress was made

on self-funded brownfields projects aimed at

sustainably improving mine lives and margins.

Exploration, which remains a cornerstone of

the business, delivered another strong result,

as the maiden Ore Reserve for the Quebradona

project in Colombia was registered. The efforts

of the exploration programme contributed to

the gold Ore Reserve of 4.3Moz and Mineral

Resource of 4.5Moz for the year ended

31 December 2018.

Strategic priorities

Maintaining a reliable track record of

predictable, rational behaviour as custodians

AngloGold Ashanti recorded another
solid performance in 2018, making
steady progress on strategic efforts
to improve the quality of its portfolio,
strengthen its balance sheet and
advance value-enhancing options in
its project pipeline.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

CFO’s REVIEW CONTINUED

of shareholder capital is central to our

approach. Capital allocation will remain

disciplined and focused on improving value

creation without placing financial or operating

risk on the business. This model does

not prioritise scale, but rather focuses on

margin and free cash flow improvement in a

sustainable manner to improve direct returns

to shareholders over time.

Given AngloGold Ashanti’s current valuation

and the suite of opportunities available

within its existing portfolio and project

pipeline. AngloGold Ashanti favours organic

opportunities to create value, over those

available through acquisition. Our equity

remains an important asset that should be

protected while efforts are undertaken to close

the considerable valuation gap that exists with

global industry peers. Within this framework,

we will target returns of at least 15% through

the cycle, using conservative discount rates

that account for specific jurisdictional and

operating risks.

Preserving the integrity of the balance sheet

is fundamental to the long-term health of the

business and enforces disciplined decision-

making in allocating capital. This means that the

Company will rank and prioritise its investments,

assessing them not only on their returns

but also on their affordability with respect

to maintaining leverage ratios at or around

targeted levels as well as improving returns to

its shareholders. Importantly, the Company will

weigh these competing priorities and consider

the full suite of financing opportunities available

when determining whether to proceed with an

investment, notably partnerships, asset sales

and project financing.

AngloGold Ashanti places a premium on

a clear and uncompromising method of

allocating capital. This means that certain

investments may not be made if the returns

they offer rank below other available

opportunities within the portfolio. For example,

given fiscal uncertainty related to the Sadiola

sulphide project, the Company and IAMGOLD

Corporation initiated a process last year to

identify third parties that may be interested in

acquiring their collective interest in Sadiola.

In addition, a process to divest the Cerro

Vanguardia mine in Argentina commenced

subsequent to year-end. As with Mali,

Argentina has been an excellent jurisdiction

for the Company for almost two decades but

with competing demands for limited capital,

another owner may be better placed to invest

in extending the life of these assets.

In South Africa, the difficult but necessary work

of restructuring the loss-making portfolio into

a smaller business was completed, recently

returning these assets to generating free cash

flow. To protect the cash flows of the South

African region from rand gold price risk for

2019, a short-term rand gold hedge was

entered into on a zero cost collar basis at a

oor of R545,000/kg and an average cap

of R725,500/kg for 300,000oz of our South

African gold production.

Margin improvement continues

We continue to focus our efforts on driving

operational excellence and cost efficiency

across our business, regardless of the gold

price environment in which we operate and

over which we have no control.

Our clear aim of improving margins by

focusing on the controllable factors in our

business, through Operational Excellence,

assisted us to achieve a healthy AISC margin

of 23%, a strong improvement on the prior

year margin of 16%.

Balance sheet strategy to enforce
capital discipline

Our balance sheet strategy continues to

enforce capital discipline, with net debt at

$1.659bn, the lowest level since 2012 and

17% lower than last year. Our net debt to

adjusted EBITDA ratio of 1.12 times reflects

ample headroom to our 3.5 times debt

covenant. Liquidity remains strong, providing

good flexibility in a volatile climate.

The refinancing of the $1bn and A$500m

revolving credit facilities into a $1.4bn single

All-in sustaining costs vs. gold price

($/oz)

* World Gold Council standard, excludes stockpiles write-off

1,300

1,100

900

700

2018

2017

2016

2015

2014

2013

AISC*

19%

margin

21%

margin

21%

margin

16%

margin

23%

margin

14%

margin

Average gold price

Restructuring

Reinvestment

Continuous improvement

I N T E G R AT E D R E P O RT

SECTION 2 / DELIVERING ON OUR STRATEGY

multicurrency facility was concluded in the

fourth quarter of 2018, resulting in the only

near-term maturity being the $700m bonds

maturing in April 2020. With the US dollar

facility undrawn and significant cash balances

at year-end, we have flexibility in deciding on

refinancing options for the bond.

For a gold-producing company such as

AngloGold Ashanti, which produces a single,

cyclical commodity in an increasingly

complex global operating environment, it

is our view that over time, lower levels of

debt will translate into lower risk and added

strategic flexibility.

Taking this into account, the Company is now

targeting a lower net debt to adjusted EBITDA

ratio of 1.0 times through the cycle, down from

the previous target of 1.5 times. We believe

CFO’s REVIEW CONTINUED

Net debt

($m)

1,000

2,000

3,000

4,000

2018

2017

2016

2015

2014

2013

2012

Self-funded development

of Tropicana, Kibali

-47%

Undrawn facilities*

(at 31 December 2018)

•

ZAR facilities R4.750bn

•

$ RCFs**

$1,457m

•

Cash

$329m

c.$2.12bn

* Total calculated with ZAR facility at R14.3473/$ (excluding
DMTNP), and A$ facility at 0.70492 to A$
** $1.4bn RCF includes a capped facility of A$500m

Net debt to adjusted EBITDA

(times)

2018

2017

2016

2015

2014

2013

Covenant 3.5 times

1.12 times

1.0 times

New target

through the cycle

* Last 12 months Net debt to adjusted EBITDA ratio

Free cash flow generation

(Adjusted FCF)

278

(4)

424

(2)

371

(1)

(361)

391

174

(3)

155

Pre-growth capex

Adjusted free cash flow generation

(1)

Adjusted for bond redemption premium of $61m on part settlement of $1.25bn high-yield bonds; for Obuasi redundancy costs of $210m

and 2014 Rand Refinery loan of $44m

(2)

Adjusted for bond redemption premium of $30m on settlement of remaining $1.25bn high-yield bonds

(3)

Adjusted for SA retrenchment costs paid of c.$49m

(4)

Adjusted for SA retrenchment costs paid of c.$61m

200

400

600

800

1,000

2018

2017

2016

2015

2014

2013

2012

(200)

(400)

(600)

(800)

(1,000)

(1,200)

821

(666)

(1,064)

142

202

308

128

703

249

169

116

124

150

this new target is achievable, even as we

invest inward, pay dividends to shareholders

subject to approval by the board of directors

and service debt obligations.

A lower net debt to adjusted EBITDA target

signals our intention to further deleverage the

balance sheet on a self-funded basis, whilst

keeping our capital allocation framework intact.

This means making wise capital investments

on both brownfields and greenfields projects,

whilst maintaining our current dividend policy.

We remain strongly levered both to the gold

price and currencies and we expect cash

flow generation across the business to

continue to benefit from prevailing market

conditions as well as from efficiency

improvements in our business.

Continued positive cash flow
momentum

We continue to follow a balanced approach,

i.e. positive free cash flow generation while

reinvesting in our portfolio.

Our dividend policy remains to pay out 10% of

free cash flow, before growth capital, subject

to the approval of the board. Our dividend

policy represents a key element of our capital

allocation policy, namely a dividend as a

‘royalty’ owed to shareholders from the surplus

cash generated by the business, before any

investment in growth is pursued.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Free cash flow before growth capital was

$217m (2017: $125m). The board has

exercised its discretion by adjusting the metric

of free cash flow before growth capital to

take into account the abnormal South African

retrenchment payments of $61m (2017: $49m)

and has approved a dividend of 95 ZAR cents

or approximately ~7 US cents per share (2017:

70 ZAR cents or 6 US cents per share).

The continuation of the dividend is a reflection

of our capital discipline and commitment to

improving shareholder returns on the back

of sustainable free cash flow generation.

Importantly, we will maintain adequate balance

sheet flexibility and utilise our cash flows and

available facilities to fund our ongoing capital

and operational requirements.

Delivery against 2018 financial
objectives

1. Maintain our focus on cost and capital

discipline to deliver competitive all-in
sustaining costs and all-in costs

The group continued yet again to focus on
sustainably reducing the cost associated
with producing gold. AISC for the year
ended at $976/oz, a 7% decrease from
2017 at $1,054/oz.

2. Continue to enhance margins and cash

flows through continuing focus on

operational efficiencies and productivity
through Operational Excellence

Our margins on total cash costs, AISC,
and All-in costs (AIC) were 39%, 23% and
15%, respectively. All margins reflected

increases from 2017 (total cash costs:
37%; AISC: 16%; and AIC: 10%); and were
positively affected by the reduced South
African footprint as well as the benefit of the
Operational Excellence initiatives of the last
couple of years.

3. Maintain the dividend underpinned by

sustainable cash generation

The Company declared a dividend of ZAR
95 cents per share (~7 US cents per share)
for the year under review. Free cash flow
before growth capital, remained sufficient to
maintain the declaration of a dividend since
the introduction of the new dividend policy
two years ago.

4. Seek resolutions for the Tanzanian and DRC

regulatory uncertainty

In Tanzania, AngloGold Ashanti’s focus
continues to be on pursuing a collaborative
dialogue with the government of Tanzania.
The arbitration proceedings which
commenced in July 2017 are currently
suspended until July 2019.

In the DRC, our joint venture partner at Kibali,
Barrick Gold Corporation (previously Randgold
Resources), continues its efforts of constructive
dialogue with the DRC government.

5. Progress the implementation of the

Obuasi project

Following receipt of all the requisite
Ghanaian Government approvals, including
parliamentary ratification, and environmental
approvals in June 2018, redevelopment of
the Obuasi high-grade ore body has started
in earnest.

Given the delayed receipt of permit
approvals in 2018, some capital expenditure
has been deferred from 2018 into 2019 and
from 2019 into 2020. The latest outlook on
the capital spend profile is expected to be
10%, 60%, and 30% in 2018, 2019 and
2020, respectively.

6. Execute on low-capital, high-return

brownfields projects, while continuing
to move long term projects up the
value curve

There are a number of capital projects that
we continued to focus on during the year,
including the Obuasi redevelopment project,
discussed in the previous section.

At Siguiri, the new Combination Plant
construction has been completed and
commissioning is expected at the end
of the first quarter of 2019. The plant will
allow for the treatment of harder rock at
the Siguiri mine. Additionally, a new power
plant intended to bridge the gap to meet
the mine’s additional power requirements
was completed and ready for commercial
operations at the end of the fourth quarter of
2018, as planned.

At Mponeng, during 2018, the raise boring
of the reef pass from 123 level to 126
level was completed and the construction
contractor was mobilised in December 2018
to construct the tip and control chute. The

process of installing additional support to

consolidate the hanging wall and side walls

of the pump chamber and substation will

follow in the second half of 2019. Alternative

CFO’s REVIEW CONTINUED

Australia – Tropicana

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

project design configurations are being

studied for Phase 2.

At Quebradona (94.9% AngloGold Ashanti

interest and 5.1% B2Gold interest), the

prefeasibility study was completed. A

maiden Ore Reserve of 1.26Mt of copper

and 2.22Moz of gold has been declared.

AngloGold Ashanti will proceed with the

feasibility study, the results of which will be

announced in 2020.

The Gramalote project is a joint venture

between AngloGold Ashanti (51%) and

B2Gold (49%), with AngloGold Ashanti as

the operator and manager of the project.

Following additional infill and resource

extension drilling, the Mineral Resource

model is being updated. The additional

drilling has indicated the potential for Mineral

Resource growth and potentially higher

grades through selectivity.

Final budgets, schedules and work plans

for advancing Gramalote will be developed

once the Mineral Resource model has been

finalised and the updated audited project

economics are available.

7. Maintain financial flexibility and further

reduction in finance costs

Our net debt to adjusted EBITDA ratio of

1.12 times reflects a significant decrease

compared to 2017 at 1.35 times. This

remains well within our debt covenant level

of 3.5 times. As indicated, the Company will

now focus at reducing this ratio to 1.0 times

through the cycle in order to improve

balance sheet flexibility.

Production, profitability and returns

Production for 2018 came in toward the top

end of guidance at 3.400Moz. Compared to

2017, production was 9% lower mainly due to

the sale and closure of assets in South Africa.

Production from retained operations for 2018,

excluding Moab Khotsong, Kopanang and

TauTona, was 3.349Moz at a total cash cost of

$765/oz, compared with 3.279Moz at a total

cash cost of $738/oz in 2017.

AISC for these retained operations were

$968/oz, compared with $1,017/oz in

the same period last year. AISC for the

International operations were $920/oz for

2018 compared to $972/oz for 2017. AISC for

the South African operations, including Moab

Khotsong, Kopanang and TauTona, were

$1,178/oz compared with $1,245/oz in 2017.

cash flows from operating activities for the year

ended 31 December 2018 decreased by 14% to

$857m compared to $997m in 2017, reflecting

working capital lockups of $131m and the

retrenchment costs related to the restructuring

the South African business unit. In 2018, the

Company generated $205m of operating

cash flow less capital expenditure compared

to $167m in 2017 reflecting a solid operating

performance and lower capital expenditures.

Free cash flow for the year, before taking

growth capital into account, was $217m

versus $125m a year earlier. Free cash flow

was negatively affected by delayed Kibali

loan repayments due to the presidential

elections in the DRC, which slowed down the

administrative processes. It is anticipated that

these loan repayments will resume during the

course of this year. Free cash flow excluding

abnormal costs such as the South Africa

region redundancies, financing costs and other

costs was $140m in 2018, compared to

$50m a year earlier.

In September 2018, the Government of

Argentina introduced the payment of export

duties on exported goods. In terms of

an existing tax stability agreement, Cerro

Vanguardia is entitled to a refund of these

export duties. At 31 December 2018, $14m

was reflected as receivable and impacted free

cash flow generated by the operation.

Total capital expenditure (including equity

accounted investments) decreased by 24%

to $721m in 2018, compared to $953m in

2017 and below the bottom end of the market

guidance of between $800m to $920m.

This included project capital expenditure of

$148m invested in growth projects at Obuasi,

Siguiri and Kibali in Continental Africa and

Mponeng in South Africa. Capital expenditures

were lower in South Africa due to the sale

of assets in the region early in the year.

Capital expenditures were also lower in the

CFO’s REVIEW CONTINUED

Democratic Republic of the Congo (DRC) at

Kibali as the project development phase is

coming to an end and the asset is ramping

up production.

On 14 February 2019, Sadiola Exploration

Limited (SADEX), the subsidiary jointly

held by AngloGold Ashanti and IAMGOLD

Corporation, entered into a share purchase

agreement with the Government of Mali,

whereby SADEX agreed to sell to the

Government of Mali its 80% participation in

Société d’Exploitation des Mines d’Or de

Yatela (Yatela), for a consideration of $1. The

transaction remains subject to the fulfillment

of a number of conditions precedent, among

which the adoption of two laws, confirming

the change of status of Yatela to a State Entity,

and also the creation of a dedicated state

agency, notably in charge of mine rehabilitation

and closure. As part of the transaction, and

upon its completion, SADEX will make a one-

time payment to the said state agency, in an

amount corresponding to the estimated costs

of completing the rehabilitation and closure

of the Yatela site, and also financing certain

outstanding social programmes.

Upon completion and this payment being

made, SADEX and its af liate companies

will be released of all obligations relating to

the Yatela project including those relating to

rehabilitation, mine closure and the financing of

social programmes.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Liquidity, cash flow and statement
of financial position

Headline earnings for the year ended

31 December 2018 were $220m, or 53 US

cents per share, compared with $27m, or

6 US cents per share, in 2017. Adjusted

earnings before interest, tax, depreciation and

amortisation (adjusted EBITDA) of $1,480m

in 2018 (compared to $1,483m in 2017)

was essentially at year-on-year. The ratio of

Net debt to adjusted EBITDA at the end of

December 2018 was 1.12 times compared

with 1.35 times at the end of December 2017.

Management has successfully maintained

financial flexibility by remaining at or below

its targeted leverage Net debt to Adjusted

EBITDA ratio of 1.5 times, and well below the

covenant ratio of 3.5 times, which applies

under our revolving credit agreements.

Net debt decreased by 17% to $1.659bn at

31 December 2018, from $2.001bn at the

31 December 2017. Financial flexibility was

further improved in October 2018, when a new

five-year $1.4bn multi-currency revolving credit

facility was agreed with our banking syndicate

replacing our existing $1bn US Dollar and

A$500m Australian Dollar facilities.

Strong liquidity is provided both by this new

revolving credit facility, which was fully undrawn

at the end of 2018, and $329m in cash. The

dividends declared for the year under review

of ~7 US cents per share, will result in an

estimated cash outflow in April 2019 of $28m.

A dividend of 6 US cents per share were

declared and paid in 2018. Our dividend policy

is based on 10% of free cash flow generation

pre-growth capital expenditure, subject to the

board’s discretion taking into consideration

prevailing market conditions, the strength

of our balance sheet and our future capital

commitments.

We remain subject to an uncertain tax

environment. Across the group, we are due

refunds for input tax and fuel duties for an

amount of $276m (2017: $252m; 2016:

$199m), including attributable amounts of

equity accounted joint ventures, which have

remained outstanding for periods longer than

those provided for in the respective statutes.

Considerable effort continues to be made to

reduce these outstanding amounts.

The normalised 2018 effective tax rate was

33% compared to 38% in 2017. Deferred tax

rate resets in South Africa; legislated tax rate

changes in Ghana and an expected tax holiday

in Guinea had an impact on the tax charge

for the current year, while the prior year was

influenced by losses incurred in South Africa,

mainly adjustments for silicosis, retrenchments,

and impairments; as well as net deferred tax

assets not raised on the remaining Vaal River

assets and liabilities not transferred to held

for sale. The prior year normalised effective tax

rate of 38% was influenced by losses incurred

in South Africa, mainly adjustments for silicosis,

retrenchments, and impairments; as well as net

deferred tax assets not raised on the remaining

Vaal River assets and liabilities not transferred to

held for sale. If the adverse effect of the South

African taxes is excluded, the normalised rate

for the group for 2017 was 30%.

Looking ahead to 2019

Key areas of focus for 2019 remain bringing

Obuasi into production, executing on a

series of affordable, high return brownfields

improvements and progressing two key

projects in Colombia up the value curve.

Operational Excellence initiatives remain at

the heart of our efforts to counter inflation and

improve margins.

Priorities for 2019 are:

•

Continued focus on sustainable free cash

flow generation

•

Improve margins

•

Maintain strict cost and capital discipline

•

Advance Obuasi to first production by the

end of 2019

•

Complete asset sale processes

•

Ongoing stakeholder engagement

•

Advance Colombian projects up the

value curve

Acknowledgement

I would like to express my appreciation to

our committed and diligent finance team

across the group who have proactively

addressed business challenges

associated with the developing market

nature of the jurisdictions that we operate

in. The overall reduction in group costs,

improvement in margins and strict

capital discipline is a reflection of the

success of their efforts. In addition, we

continue to maintain a high standard of

governance and compliance to internal

controls across the organisation. The

quality financial information prepared

for our stakeholders is testament to the

high calibre of our financial team whom

I applaud. Finally, I look forward to the

year ahead with enthusiasm as we focus

on our strategic objectives with the aim

of improving shareholder returns, on a

sustainable basis.

Warm regards

Christine Ramon

Chief Financial Officer

19 March 2019

CFO’s REVIEW CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

I N T E G R AT E D R E P O RT

SECTION 2 / DELIVERING ON OUR STRATEGY

Ensure financial flexibility and

optimise overhead, costs and

capital expenditure

SECTION 2: DELIVERING ON OUR STRATEGY

Delivering on the following
strategic objectives

INTEGRATED REPORT 2018

Adjusted EBITDA of

Free cash flow improves significantly to

Net debt

Enforced

$1.48bn

$67m

down 17%

capital discipline

Ensure financial

flexibility

Optimise overhead, costs
and capital expenditure

Disciplined capital allocation with
a focus on sustained margin and
free cash flow improvements will
lead to long-term value creation

IN THIS SECTION

SECTION 2 / DELIVERING ON OUR STRATEGY

Five-year summaries

Summarised group financial results – income statement

US dollar million

2018

2017

2016

2015

2014

Revenue from product sales

(1)

3,943

4,510

4,223

4,143

5,082

Cost of sales

(1)

(3,173)

(3,736)

(3,401)

(3,422)

(4,102)

Gain (loss) on non-hedge derivatives and other commodity contracts

(7)

Gross profit

772

784

841

714

993

Corporate administration, marketing and other expenses

(76)

(64)

(61)

(78)

(92)

Exploration and evaluation costs

(102)

(114)

(133)

(132)

(142)

Other operating expenses

(97)

(88)

(110)

(96)

(28)

Special items

(170)

(438)

(42)

(71)

(260)

Operating profit

327

495

337

471

Dividends received

–

Interest received

Other losses

(9)

(11)

(88)

(17)

(7)

Finance costs and unwinding of obligations

(178)

(169)

(180)

(245)

(276)

Fair value adjustments

(3)

–

(17)

Share of equity-accounted investments' profit (loss)

122

(25)

Profit (loss) before taxation

278

(63)

269

257

170

Taxation

(128)

(108)

(189)

(211)

(225)

Profit (loss) after taxation from continuing operations

150

(171)

(55)

Discontinued operations

(Loss) profit from discontinued operations

–

(116)

Profit (loss) for the year

150

(171)

(70)

(39)

Allocated as follows:

Equity shareholders

- Continuing operations

133

(191)

(74)

- Discontinued operations

–

(116)

Non-controlling interests

150

(171)

(70)

(39)

(1)

Years 2014 to 2017 restated for IFRS 15

FINANCIAL REVIEW

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Summarised group financial results – statement of financial position

US dollar million

2018

2017

2016

2015

2014

Assets

Tangible and intangible assets

3,504

3,880

4,256

4,219

5,088

Investments

1,675

1,645

1,578

1,557

1,553

Inventories

758

783

756

736

1,524

Cash and cash equivalents

329

205

215

484

468

Other assets

377

706

348

288

501

Total assets

6,643

7,219

7,153

7,284

9,134

Equity and liabilities

Total equity

2,694

2,704

2,754

2,467

2,871

Borrowings

2,050

2,268

2,178

2,737

3,721

Provisions

927

1,064

995

954

1,199

Deferred taxation

315

363

496

514

567

Other liabilities

657

820

730

612

776

Total equity and liabilities

6,643

7,219

7,153

7,284

9,134

FINANCIAL REVIEW CONTINUED

Guinea – Siguiri

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Summarised group financial results – statement of cash flows

US dollar million

2018

2017

2016

2015

2014

cash flows from operating activities

Cash generated from operations

932

1,151

1,302

1,250

1,343

Dividends received from joint ventures

–

Net taxation paid

(166)

(160)

(153)

(163)

(153)

Net cash inflow from operating activities from continuing operations

857

997

1,186

1,144

1,190

Net cash (outflow) inflow from discontinued operations

–

(5)

Net cash inflow from operating activities

857

997

1,186

1,139

1,220

cash flows from investing activities

Capital expenditure

(652)

(830)

(711)

(667)

(849)

Net (payments) proceeds from acquisition and disposal of subsidiaries, associates and joint ventures

(8)

(27)

(1)

(12)

Net proceeds (payments) from disposal and acquisition of investments, associate loans, and acquisition and

disposal of tangible assets

315

(12)

810

(11)

Interest received

(Increase) decrease in cash restricted for use

(4)

(8)

(17)

Other

–

Net cash (outflow) inflow from investing activities from continuing operations

(335)

(862)

(702)

139

(773)

Cash outflows from discontinued operations

–

(59)

(170)

Net cash (outflow) inflow from investing activities

(335)

(862)

(702)

(943)

cash flows from financing activities

Net (repayments) proceeds from borrowings

(214)

(546)

(867)

(144)

Finance costs paid

(130)

(138)

(172)

(251)

(246)

Dividends paid

(39)

(58)

(15)

(5)

(17)

Other

(10)

–

(30)

(61)

(9)

Net cash outflow from financing activities from continuing operations

(393)

(148)

(763)

(1,184)

(416)

Cash outflows from discontinued operations

–

(2)

(5)

Net outflow from financing activities

(393)

(148)

(763)

(1,186)

(421)

Net increase (decrease) in cash and cash equivalents

129

(13)

(279)

(144)

Translation

(5)

(17)

(16)

Cash and cash equivalents at beginning of year

205

215

484

468

628

Cash and cash equivalents at end of year

329

205

215

484

468

FINANCIAL REVIEW CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Ratios and statistics

2018

2017

2016

2015

2014

Operating review – gold

Production from continuing operations

000oz

3,400

3,755

3,628

3,830

4,225

Production from continuing and discontinued operations

000oz

3,400

3,755

3,628

3,947

4,436

Gold sold from continuing operations

000oz

3,412

3,772

3,590

3,850

4,248

Gold sold from continuing and discontinued operations

000oz

3,412

3,772

3,590

3,965

4,458

Continuing operations

Closing spot price at year-end

$/oz

1,268

1,258

1,247

1,160

1,266

Average gold price received

$/oz

1,261

1,251

1,243

1,150

1,256

Total cash costs

$/oz

773

792

744

712

785

All-in sustaining costs

(1)

$/oz

976

1,054

986

910

1,020

All-in costs

(1)

$/oz

1,068

1,126

1,071

1,001

1,114

Earnings

Gross profit

772

784

841

714

993

Gross margin

Adjusted EBITDA

(2)

1,480

1,483

1,548

1,472

1,616

Adjusted EBITDA margin

Interest cover

times

Asset and debt management

Net debt to adjusted EBITDA

(2)

times

1.1

1.3

1.2

1.5

1.9

Continuing and discontinued operations

profit (loss) attributable to equity shareholders

133

(191)

(85)

(58)

profit (loss) attributable to equity shareholders

US cents

(46)

(21)

(14)

Headline earnings (loss)

220

111

(73)

(79)

Headline earnings (loss)

US cents

(18)

(19)

Adjusted headline earnings (loss)

214

143

(1)

Adjusted headline earnings (loss)

US cents

(0)

Capital expenditure

(3)

721

953

811

857

1,209

Net cash inflow from operating activities

857

997

1,186

1,139

1,220

Free cash inflow (outflow)

278

141

(112)

FINANCIAL REVIEW CONTINUED

See footnotes overleaf

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Ratios and statistics continued

2018

2017

2016

2015

2014

Asset and debt management

Equity

2,694

2,704

2,754

2,467

2,871

Net capital employed

4,657

5,031

5,101

5,190

6,640

Net debt

1,659

2,001

1,916

2,190

3,133

Net asset value - per share

US cents

653

659

675

609

711

Market capitalisation

5,180

4,178

4,290

2,877

3,515

Return on net capital employed

Net debt to equity

109

Other

Weighted average number of shares

million

417

415

413

410

408

Issued shares at year-end

million

413

410

408

405

404

Exchange rates

Rand/dollar average

13.25

13.30

14.68

12.77

10.83

Rand/dollar closing

14.35

12.36

13.73

15.46

11.57

Australian dollar/dollar average

1.34

1.30

1.35

1.33

1.11

Australian dollar/dollar closing

1.42

1.28

1.39

1.37

1.22

Brazilian real/dollar average

3.66

3.19

3.48

3.33

2.35

Brazilian real/dollar closing

3.87

3.31

3.26

3.90

2.66

Argentinean peso/dollar average

28.14

16.57

14.78

9.26

8.12

Argentinean peso/dollar closing

37.81

18.65

15.89

12.96

8.55

(1)

World Gold Council standard, excludes stockpiles written off.

(2)

The Adjusted EBITDA calculation is based on the formula included in the revolving credit agreements for compliance with the debt covenant formula.

(3)

Includes attributable share of equity-accounted investments.

FINANCIAL REVIEW CONTINUED

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

ECONOMIC VALUE-ADDED STATEMENT

For the year ended 31 December 2018

2018

2017

EMPLOYEES

713

1,002

Salaries and wages

698

966

Training and development

GOVERNMENT

714

659

Current tax

(4)

242

176

Royalties

(5)

148

114

Employee taxes

(5)

234

268

Production, property and other taxes

(5)

101

COMMUNITY

(3)

Social licence to operate

Region specific economic development

plans

SUPPLIERS and SERVICES

1,676

1,839

Production costs

Corporate expenditure and

other overheads

Rehabilitation expenditure

Exploration and evaluation

Audit, governance and assurance

PROVIDERS OF CAPITAL

202

208

Finance cost and unwinding of obligations

178

169

Dividends

TOTAL DISTRIBUTION

3,326

3,735

2018

2017

TOTAL INCOME

4,045

4,558

Gold sales and by products

(1)

3,943

4,510

Interest received

Royalties received

(Loss) / profit from sale of assets

(20)

Income from investments

2018

2017

VALUE RETAINED

719

823

(1)

Gold income decreased by 13%
mainly due to the sale of assets
in the South Africa region (Moab
Khotsong and Kopanang mines)

(2) Economic distribution providing

human, financial, social, natural
and manufactured capital, guided
by business objectives and
material issues identified through
the operating process to ensure
sustainable long-term value retention
for stakeholders, underpinned by
our key behavioural programme
operational excellence, implemented
at every step of the business from
exploration through the entire chain
to divestment / disposal.

(3) Community and social investments

exclude expenditure by equity-
accounted joint ventures.

(4) Current taxation includes normal

taxation and witholding taxation on
dividends paid per jurisdiction in
which the group operates.

(5) Employee, production, property and

other taxes and royalties reported
on a cash basis.

Across the group, we are due for
refunds of input tax and fuel duties
amounting to $276m (2017: $252m),
including attributable amounts for
equity-accounted joint ventures,
which have remained outstanding for
periods longer than those provided
for in the respective statutes

INPUTS – ECONOMIC VALUE DISTRIBUTED 2018 = 82%

OUTPUT – ECONOMIC VALUE GENERATED (100%)

ECONOMIC VALUE RETAINED 2018 = 18%

SUPPORTING
BUSINESS
OBJECTIVES
AND
MATERIAL
ISSUES

Gold revenue by region – 2018

•

Continental Africa

•

Americas

•

Australasia

•

South Africa

780

1,021

602

1,983

Taxation by country ($m)

(4)

2018

2017

South Africa

(1)

Argentina

Australia

Brazil

Ghana

Guinea

United States of America

(16)

Tanzania

Other

(2)

% Value retained per year

Breakdown of contribution – 2018

•

Employees

•

Government

•

Community

•

Supplier

•

Capital providers

MANAGING
COMMUNITY
EXPECTATIONS AND
DEMONSTRATING
CONTRIBUTION

OPTIMISE OVER-
HEAD, COSTS
AND CAPITAL
EXPENDITURE

NAVIGATING
REGULATORY AND
POLITICAL RISK

FOCUS ON PEOPLE,
SAFETY AND
SUSTAINABILITY

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

An over view of our performance, a
summary of our Mineral Resource and
Ore Reserve portfolio and initiatives
to enhance and improve the quality
of our portfolio and ensure long-term
optionality.

South Africa

restructured –

now cash positive

Self-funded, value

enhancing projects

making good progress

Obuasi

redevelopment

begins

Maiden Ore Reserve

declared at

Quebradona

IN THIS SECTION

Improve portfolio quality and

maintain long-term optionality

SECTION 2: DELIVERING ON OUR STRATEGY

I N T E G R AT E D R E P O RT

SECTION 2 / DELIVERING ON OUR STRATEGY

INTEGRATED REPORT 2018

Delivering on the following
strategic objectives

Maintain long-term optionality

Improve portfolio quality

Though the mine was placed on limited

operations towards the end of 2014, and

on care and maintenance from 2016, a

decision was made to redevelop the mine

in 2018. The redevelopment project has

since commenced. The redevelopment

decision was reached after the completion

of a study, signing of the necessary

agreements with government and the

issuance of the necessary environmental

permits for the project. It is envisaged that

the redevelopment will deliver a modern,

mechanised underground mining operation.

Democratic Republic of the Congo

Kibali, one of the largest mines of its kind in

Africa, is situated adjacent to the town of Doko

and 210km from Arua on the Ugandan border.

Kibali is co-owned by AngloGold Ashanti (45%),

Barrick Gold Corporation (Barrick) (45%) following

its merger with Randgold Resources Limited,

and Société Minière de Kilo-Moto (SOKIMO)

(10%), a state-owned gold mining company.

The metallurgical plant comprises a twin-circuit

sulphide and oxide plant with conventional

carbon-in-leach (CIL), including gravity recovery.

Barrick manages the mine now which comprises

both open pit and underground operations.

Tanzania

Geita, one of our flagship mines, is located in

north-western Tanzania, in the Lake Victoria

goldfields of the Mwanza region, about 120km

from Mwanza and 4km west of the town of

Geita. The Geita gold deposit is mined as a

multiple open-pit and underground operation,

REGIONAL REVIEWS

Continental Africa

AngloGold Ashanti has seven mines
in the Continental Africa region, six
of which are currently in operation.
Of these six, AngloGold Ashanti
manages four.

Obuasi in Ghana was not operational in 2018,

having been on care and maintenance

since 2016. The mine’s redevelopment has

begun and the first face blast took place on

11 February 2019.

In Mali, a share purchase agreement was entered

into with the government of Mali on 14 February

2019 in respect of Yatela which is in closure – see

details under Yatela below. Additionally a sale

process has been initiated for Sadiola.

Ghana

Iduapriem, which comprises the Iduapriem

and Teberebie properties in a 110km

concession, is located in the western region

of Ghana, some 70km north of the coastal

city of Takoradi and about 10km south-west

of the Tarkwa mine. Iduapriem is an open-

pit mine with two circuits each comprising

two-stage milling – a gravity circuit and

a carbon-in-leach (CIL) plant. The gravity

circuit recovers about 30% of the gold and

the remainder is recovered by the 418ktpm

capacity CIL plant.

Obuasi, which has been primarily an

underground operation, mining to a

depth of 1,500m, is in the Ashanti region,

approximately 60km south of Kumasi.

DRC

Tanzania

Ghana

Mali

Guinea

LEGEND

Guinea / Siguiri (85%)

Mali / Morila (40%) / Sadiola (41%) / Yatela

Ghana / Iduapriem / Obuasi

DRC / Kibali (45%)

Tanzania / Geita

2,000km

Operations

Yatela is undergoing closure and a sale process has
been initiated for Sadiola.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

with the underground operation having begun

in 2016. The mine will continue to operate as

a mixed open-pit and underground operation

until the entire economic open-pit Mineral

Resource is exhausted. The mine is currently

serviced by a CIL processing plant with an

annual capacity of 5.1Mt.

Republic of Guinea

Siguiri is a multiple open-pit oxide gold mine

in the relatively remote district of Siguiri,

around 850km north-east of the country’s

capital, Conakry. The gold processing plant

treats about 981ktpm. A combination plant

conversion project began during 2017. This

conversion will allow the mine to treat six

million tonnes of sulphide ore and six million

tonnes of oxide ore. Commissioning is

currently underway with the first material fed

through the plant on 1 March 2019. AngloGold

Ashanti holds an 85% interest in Siguiri,

with the remaining 15% held in trust for the

nation by the government of Guinea. Siguiri is

contractor-mined using conventional open-

pit techniques. The area has significant gold

prospectivity and exploration potential.

Mali

Morila is a joint venture between AngloGold

Ashanti and Barrick, in which each has a 40%

interest. The remaining 20% is held by the

government of Mali. Barrick now manages the

mine. Morila is situated 280km south-east of

Bamako, the country’s capital. The mine had

completed mining in 2009 and transitioned to

a tailings storage treatment operation at the

end of 2016. Although the mine has been a

tailings treatment operation, after the discovery

more recently of additional economic ore,

limited mining operations have resumed. The

higher-grade ore being mined will partly replace

the tailings storage treatment. The plant, which

incorporates a conventional carbon-in-leach

(CIL) process with an upfront gravity section to

extract the free gold, has an annual throughput

capacity of 5.5Mt.

Sadiola is a joint venture between AngloGold

Ashanti (41%) and IAMGOLD (41%). The

government of Mali owns the remaining 18%.

The Sadiola mine is situated in south-western

Mali, 77km south-southwest of the regional

capital Kayes. On-site surface infrastructure

includes a 4.9Mt per annum CIL gold plant,

where the ore is eluted and smelted. The mine,

which began operating in 1996, ceased mining

during the year and transitioned to a stockpile

treatment plan. To ensure the Sadiola sulphide

project generates good returns, an agreement

with the government of Mali on the terms for

investment in the Sadiola sulphide project is

needed, to also prevent the mine from being

placed on suspended exploitation. While

this agreement has not yet been reached,

AngloGold Ashanti and IAMGOLD, who

collectively own an 82% interest in Sadiola,

have initiated a process to identify third parties

that may be interested in acquiring their

collective interests in Sadiola. The process

is at a very preliminary stage and there is no

certainty of its outcome.

Yatela

On 14 February 2019, Sadiola Exploration

Limited (SADEX), the subsidiary jointly held by

AngloGold Ashanti and IAMGOLD Corporation,

entered into a share purchase agreement

with the government of Mali, whereby

SADEX agreed to sell to the government its

80% participation in Société d’Exploitation

des Mines d’Or de Yatela (Yatela), for a

REGIONAL REVIEWS CONTINUED

Continental Africa

Contribution to regional production

•

Tanzania

DRC

Ghana

•

Guinea

•

Mali

Contribution to group production

•

Continental Africa 45

•

Rest of AngloGold

Ashanti

Mali – Sadiola

consideration of $1. The transaction remains

subject to the fulfillment of several conditions

precedent, including the adoption of two

laws, confirming the change of status of

Yatela to a State Entity, and the creation of a

dedicated state agency, notably in charge of

mine rehabilitation and closure. As part of the

transaction, and upon its completion, SADEX

will make a one-time payment to the said

state agency, of an amount corresponding

to the estimated costs of completing the

rehabilitation and closure of the Yatela site,

and also financing certain outstanding social

programmes. Upon completion and this

payment being made, SADEX and its af liate

companies will be released of all obligations

relating to the Yatela project, including those

relating to rehabilitation, mine closure and the

financing of social programmes.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

Key statistics

Units

2018

2017

2016

Operational performance

Tonnes treated/milled

27.3

28.0

27.6

Pay limit

oz/t

0.040

0.035

g/t

1.373

1.367

1.199

Recovered grade

oz/t

0.050

0.047

0.043

g/t

1.72

1.61

1.49

Gold production (attributable)

000oz

1,512

1,453

1,321

Total cash costs

$/oz

773

720

717

Total production costs

$/oz

1,028

1,012

1,005

All-in sustaining costs

(1)

$/oz

904

953

904

Capital expenditure

(2)

313

409

291

Productivity

oz/TEC

20.70

23.01

20.70

Safety

Number of fatalities

AIFR

per million hours worked

0.49

0.39

0.51

People

Average no. of employees: total

14,833

13,593

12,691

– Permanent employees

5,697

5,467

5,331

– Contractors

9,136

8,126

7,360

Training and development expenditure

Production

(000oz)

2014

2015

2016

2017

2018

1,597

1,435

1,321

1,453

1,512

Productivity

(oz/TEC)

2014

2015

2016

2017

2018

14.36

20.61

20.70

23.01

20.70

See footnotes overleaf

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

Units

2018

2017

2016

Environment

Total water consumption

15,575

16,651

11,911

Total water use per tonne treated

kL/t

0.592

0.614

0.428

Total energy usage

9.32

9.17

8.46

Total energy usage per tonne treated

GJ/t

0.35

0.34

0.30

Total GHG emissions

000t CO

676

666

682

Total GHG emissions per tonne treated

t CO

e/t

0.026

0.025

Cyanide used

8,185

7,274

7,693

No. of reportable environmental incidents

Total rehabilitation liabilities:

378

431

430

– restoration

235

253

262

– decommissioning

143

178

168

Community and government

Community expenditure

Total payments to government

352

331

260

– Dividends

– Taxation

117

114

– Withholding tax (royalties, etc.)

135

– Other indirect taxes and duties

– Employee taxes and other contributions

– Property tax

– Other (includes skills development)

(1)

Excludes stockpile write-offs.

(2)

Includes attributable share of equity-accounted investments.

Key statistics

(continued)

AIFR

(per million hours worked)

2014

2015

2016

2017

2018

1.56

0.50

0.51

0.39

0.49

2014

2015

2016

2017

2018

783

Total cash costs

All-in sustaining costs

968

678
815

717
904

953

904

720

773

Total cash costs and all-in sustaining costs

($/oz)

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

Operating performance

The Continental Africa region produced

1,512,000oz of gold at a total cash cost of

$773/oz in 2018, compared to 1,453,000oz

at a total cash cost of $720/oz in 2017. The

region delivered a solid performance with 4%

improvement in production boosted by higher

tonnes treated particularly from underground

mining at Kibali and Geita and improved

underground grade from Geita.

Geita built on its solid performance the

previous year, delivering 564,000oz of gold,

an increase of 5% compared to 2017. The

increase was due to a range of operational

improvements which assisted in accessing

higher-grade ore particularly in the fourth

quarter of 2018. These improvements included

advance grade control and underground

mining efficiencies. This was driven by a 5%

year-on-year increase in recovered grade as

a result of the higher-grade underground ore

mined at Nyankanga and Star & Comet.

At Siguiri, production was negatively impacted

by a 16% decrease in recovered grade,

owing to the treatment of lower-grade oxide

material and an 11% decrease in tonnes

due to delays in the commissioning of the

CIL combination plant. The leach circuit

was converted during the year to a hybrid

CIL circuit as part of the combination plant

project. As a result, production decreased

year-on-year, exacerbated by depleted high-

grade oxide deposits. The marginal delay

in the commissioning of the ball mill in the

combination plant and three-stage crushing

plant resulted in the limited treatment of

available higher-grade harder ore with the

plant feed being supplemented by lower-grade

oxide ore. The required new power plant was

successfully commissioned during the year.

Iduapriem’s production increased 11% year-

on-year to 254,000oz, the mine’s highest

production since its acquisition in 2004.

The production increase was driven by the

6% increase in tonnage treated and a 5%

improvement in recovered grades, a result of

improved grinding and plant efficiency. These

improvements resulted from the mining of

deeper, higher-grade areas in the Teberebie

pit. The increase in tonnes treated was

derived on the back of Operational Excellence

initiatives which led to improved plant utilisation

and throughput rates. Total tonnes mined

increased 8% year-on-year to 38Mt, the highest

tonnage ever mined at Iduapriem. This helped

in meeting the grade improvement targets

and the continuation of the extensive waste-

stripping programme at Blocks 7 and 8, which

will provide the foundation for sustainable

production over the future life-of-mine.

At Kibali, production increased 35% year-

on-year to 363,000oz, another significant

improvement. The higher production was

on the back of higher throughput, a result of

improved plant availability that led to above

design capacity throughput, and a 6%

increase in plant recovery.

This helped to further improve the recovery

factor/rate since commissioning. Production

was aided by an increase in tonnes mined and

an 8% increase in tonnage treated, a result of

improved plant performance, as well as 26%

increase in recovered grade as higher-grade

underground mining displaced lower-grade

open-pit ore. This was on the back of the

successful commissioning of the underground

materials handling system at the end of 2017.

At Sadiola, production declined due to a 9%

drop in the recovered grade owing to the limited

availability of oxide ore with the in-situ oxide ore

depleted as mining had ceased by the end of

March 2018. The mine had begun transitioning

to its stockpile treatment plan at the beginning

of the year, partly compensated for by a

3% increase in tonnes treated as a result of

newly-installed variable speed drives in the mill.

Production for the rest of the year was from a

blend of the remaining full grade and marginal

ore stockpiles. Plant operations were efficient

and consistently exceeded planned throughput,

with a 3% increase in tonnes treated compared

to the previous year. This helped to partly offset

the lower feed grade and provided flexibility

to maintain a steady production and revenue

profile for the year.

At Morila, production continued to increase

due to the 19% improvement in recovered

grade as mining resumed during the year with

the treatment of higher-grade ore, partially

offset by a decrease in throughput due to the

treatment of harder ore, blended with tailings

mineralised waste ore. Plant throughput

was 11% down year-on-year, impacted by

unplanned downtime and the replacement

of the ball mill. The mine is expected to

continue treatment of mineralised waste ore,

augmented by higher-grade ore from targeted

mining areas, for the next two years, after

which the mine will transition to full closure.

Costs

All-in sustaining costs (AISC) were $904/oz for

2018, compared with $953/oz for the previous

year, a 5% year-on-year improvement

despite inflationary pressures. The notable

reduction in AISC reflected the various cost

efficiency initiatives implemented through the

Operational Excellence programme which

focuses on sustainable costs improvements.

Costs for the region were also assisted

by lower underground costs at Geita as

underground operations stabilised during the

year, the 45% reduction in sustaining capital

expenditure, and higher production from

Kibali, Geita and Iduapriem.

The Operational Excellence programme is a

group-wide efficiency-driven initiative, focused

on optimising mine plans, systems and costs

management. Additionally, this has translated

into a review of asset potential and the further

entrenchment of capital discipline. Various

enhancement projects are tracked through a

project management system, as we strive to

meaningfully move down the cost curve. This

has been a necessary step change, driven by

actively working to prioritise sustainable cash

flow improvements at every level of the business.

Through this process, we have drastically

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

improved mine planning and forecasting, with the

results reflected in improved consistency in our

reported cost performance.

Capital expenditure

Capital expenditure for the region increased

in line with planned inward company

investments in growth projects, particularly

at Siguiri and Obuasi during 2018. Ore

Reserve development projects continued at

Geita for the Star & Comet and Nyankanga

underground operations, together with waste-

stripping projects at Iduapriem. These projects

provide access to the ore bodies identified

for future gold extraction. The balance of

the capital spend was used for capitalised

exploration and stay-in-business projects to

improve asset reliability across our mines to

ensure safe, risk-free mining and production.

During the year, the region continued to drive

continuous cost improvements through the

Operational Excellence programme which

is now well entrenched across all sites and

disciplines in the region, also reflected in the

all-in sustaining cost reduction. The focus

remains on delivering systemic and sustainable

operational improvements in the management

of the region’s stay-in-business projects.

At Kibali, the Azambi hydropower plant was

commissioned during the third quarter in

2018 and fully integrated into the energy grid

in September, providing affordable power to

the mine. The cyanide tailings storage facility

First Lift Project, involving the wall lift on the

tailing storage facility, was completed in the

last quarter of the year with project handover

completed on 31 October 2018. Other notable

projects at Kibali included the transition

to owner mining which was successfully

completed on 1 July 2018.

Growth and improvement

Construction of the Siguiri combination

plant was successfully completed in March

2019, and commissioning of the different

sections of the plant is underway. The CIL

circuit was commissioned in July 2018 and

first gold from it was poured in August 2018.

The 30MW power plant was commissioned

in October 2018. It is now fully operational

providing reliable, low-cost power to the

Siguiri mine. The crushing and milling circuits

for the treatment of the hard sulphide ore

are currently being commissioned and full

ramp-up is expected in the first half of 2019.

The focus for the year will be to stabilise plant

throughput and operating stability as the new

plant is commissioned.

Exploration drilling continued at Saraya and

Foulata to support a prefeasibility study for

the Block 2 permit area. This study is due

to be completed during 2019 and is aimed

at improving the mine’s ounce profile from

2020 onwards and potentially extending

the life of the mine. The current option on

the Siguiri Block 2 considers the trucking of

oxide material to the existing process plant to

displace marginal ore. The evaluation of this

has been completed. The requisite permitting

and feasibility study are scheduled for the

Obuasi redevelopment project

During 2018, Obuasi remained in the
care and maintenance phase whilst the
redevelopment project for recommencing
operations continued. Following receipt
of all the requisite Ghanaian Government
approvals, including parliamentary
ratification, and environmental approvals in
June 2018, redevelopment of the Obuasi
high-grade ore body has started in earnest.
Establishment of the project and operating
teams have progressed well and all key
roles have been lled. Detailed design has
continued, focusing on the processing plant
and underground infrastructure. Critical long-
lead items have been ordered. Demolition
of redundant processing plant structures
has begun. Refurbishment planning was
completed, and works are set to commence
by end of March 2019. The housing
refurbishment programme has also begun
and the expansion of the mining contractor’s
camp is well advanced.

The underground mining fleet has been
delivered and commissioned and the
underground mining contractor has
commenced mobilisation. Operational
readiness activities, including the design of
the mine operating systems, has progressed
to plan. The project is being developed in
two phases, the first is to achieve production
at 2,000tpd with the second aiming to
achieve production of 4,000tpd by the
end of 2020. The first blast took place in
February 2019.

In order to ensure meaningful Ghanaian

participation in the project, a key

commitment made by AngloGold Ashanti

at the outset of Obuasi’s redevelopment,

the mining contract was awarded to a

joint venture Underground Mining Alliance

Limited (UMA) formed by Ghana’s Rocksure

International (Rocksure) (30%) and Australia’s

African Underground Mining Services

(AUMS) (70%), which will also help facilitate

the transfer of underground mining expertise

to Accra-based Rocksure.

To facilitate the JV and effect operating cost

and import duty savings, AngloGold Ashanti

(Ghana) Limited purchased the mining fleet

at a cost of approximately $46m.

As announced in November 2018, this

mining fleet purchase increases the initial

project capital expenditure range from $450

to $500m to $495 to $545m. However,

at the same time, this purchase reduces

the contract rates over the period of the

contract and is estimated to improve AISC

by approximately $25/oz. Given the delayed

receipt of permit approvals in 2018, some

capital expenditure has been deferred from

2018 into 2019 and from 2019 into 2020.

The latest outlook on the capital spend

profile is expected to be 10%, 60%, and

30% in 2018, 2019 and 2020, respectively.

The first gold pour is still planned for the end

of 2019, with the first face blast having taken

place in February 2019.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

latter part of 2019.

Development of Geita’s Star & Comet and

Nyankanga underground sections continued

during the year. Approximately 4,130m of

development was completed to access

new areas for stope mining and further

exploration. Open pit mining at Nyankanga

and Geita Hill continued with Geita Hill

reaching the end of its economic life and

Nyankanga scheduled to be completed in

the first half of 2019. Surface exploration

continued at Selous, a satellite pit 2.4km from

Star & Comet expected to supplement the

underground operation in the near term.

Other notable projects at Geita were

completion of the 40MW power plant and

the purchase of underground mining plant

and equipment. The power plant was

commissioned in August and is currently

in full operation, providing reliable, low-

cost power to the mining operations. The

purchase of the underground mining plant

and equipment is in line with the strategy to

transition to owner mining at Star & Comet,

planned for the first half of 2019, with the

full change over for the rest of the mine’s

sections expected to follow in coming years.

At Iduapriem, waste stripping at Teberebie

Cut 1 continued during the year and is

expected to be completed in the first half in

2019 when full grade mining should begin.

Once completed, waste stripping will provide

access to the ore body until 2021. Brownfields

drilling continued at the Ajopa pit and open pit

mining will continue into 2019 to supplement

ore from the larger Teberebie pit. Iduapriem’s

plant expansion concept study has been

completed on the plant de-bottlenecking. The

next focus area will then be to find a solution

for an additional tailings storage facility.

At Kibali, an aggressive exploration programme

continued with a notable success being

declaration of the maiden Mineral Resource of

0.96Moz for Kalimva and Ikamva that supports

a prefeasibility study for future mining.

There was no capital expenditure at Sadiola

and the sulphide project was suspended

pending further negotiations with the

government of Mali. As stated above, the

parties have now initiated a sale process, albeit

at a very preliminary stage. Open pit mining

was completed during the year and treatment

of stockpile material has begun. The mine is

expected to embark on a phase of suspended

exploitation towards the latter part of 2019.

Ghana – Obuasi underground

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

Sustainability performance

Safety

There were no fatalities in the Continental Africa

region during the year, maintaining a 38-month

fatality-free period since October 2015. The

region recorded another best-in-class safety

performance during 2018 but achieved an all

injury frequency rate (AIFR) of 0.49 (2017: 0.39)

per million hours worked. The AIFR increased

year-on-year due to the increase in injuries

experienced during the year, caused mainly by

mobile and other machinery.

During the year, an internal ‘Safety Culture’

survey was conducted throughout the

region. The survey was targeted at a

10% sample of the workforce, in line with

practice. Responses from approximately

15% of the sample indicated that a strong

‘Safety Culture’ is evident at all operations.

Most employees consider their respective

operation to be a ‘safe place to work’ and

trust management in safety-related initiatives

and communication. The survey indicated

that employees feel engaged and participate

in safety efforts at operations. Improvement

areas were identified and actions to address

these have been developed.

Environment

One reportable environmental incident was

reported in the region during 2018, occurring

on 18 November within the processing plant

area at Siguiri. The incident was caused by an

over flow of tailings slurry from the processing

plant containing elevated levels of cyanide.

This caused the death of four birds in a

stagnant tailings pool within the plant area and

the death of a cow outside the plant fence

adjacent to the pool.

Remedial actions were immediately put

in place to deal with the incident. The

tailings over flow was stopped, the pool was

detoxi ed, the tails were pumped back into the

plant, contaminated soil was removed and the

faulty equipment replaced.

There was no risk to community health as

the spillage was contained in an area that

is inaccessible by the community. Nor was

there a risk to employee health as the cyanide

concentrations were within normal operating

limits and all plant employees are trained to

handle cyanide.

Siguiri was granted an environmental certificate

for the Silakoro pit project in March 2018. This

high-grade pit is located approximately 1.5km

to the east of the existing processing plant.

In June 2018, the Ghana Environmental

Protection Agency (EPA) approved two

crucial environmental permits for Obuasi

mine, for the redevelopment project as well

as for the tailings and water infrastructure

project. Obuasi also received an additional

environmental permit for the expansion of the

40-man camp residential area in September

2018 to complement the project.

All managed mine sites in the region –

Sadiola, Siguiri, Iduapriem and Geita – were

successfully audited and certified to the

ISO 14001:2015 standard during the year.

Obuasi’s certification remained suspended

for the year as the mine was on care and

maintenance for 2018.

Security and human rights

No significant incidents were reported during

the year, and no human rights violations were

recorded. However, proactive management of

artisanal small-scale mining, illegal mining and

general criminality remains a priority for the

security department.

A marked reduction in injuries to community

members was recorded, from 18 injuries in

2017 to six injuries in 2018. These injuries

occurred when miners illegally invaded our

tenements. All injured people were treated on

the scene by the mine’s medical emergency

personnel before being taken to hospital for

further treatment where necessary.

Security adopted an integrated approach,

working with other sustainability disciplines,

to enable effective management of the

multifaceted challenges facing the operations.

Implementation of the five-point security plan

actively includes community involvement,

focusing on regenerating and sustaining

relationships with communities, public security,

pertinent governmental agencies and security at

sites, and is aimed ultimately at removing people

from risk. The Voluntary Principles on Security

and Human Rights (VPSHR) remain the key

driver of our security management practices.

The Human Rights Working Group

representatives at corporate, regional

and operational levels continued with

implementation of the Human Rights

Framework across the Continental Africa

region. The focus for 2018 remained on

training and awareness, and ensuring the

availability of adequate grievance mechanisms

for all stakeholders and that human rights due

diligence is included across our supply chain.

Online human rights training was undertaken

at all management levels and 47% have

successfully completed training.

Employees and labour relations

The labour relations climate remained peaceful

and stable during the year, despite some

labour stoppages challenges. A three-day joint

capacity-building workshop on how to build

peaceful and sustainable working relationships

was organised for the mine negotiating team

(general management representatives and

union leadership). This capacity-building forum

resulted in the development of an agreed

internal mediation framework that provides a

mechanism for resolving disputes and restricts

recourse to a third party.

In terms of training and development, efforts

are underway by management to address

compliance matters relating to protected

jobs and expatriate employment legislation,

and to continue promoting employment

opportunities for local nationals and co-

ordinated succession plans for identified local

national employees.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Continental Africa

In Siguiri, the 2018 wage negotiations were

successfully conducted and finalised within

10 days in a spirit of mutual understanding

and trust with the agreed outcome remaining

within mandate.

In Mali, the mine labour relations climate

continued to be influenced by the uncertainty

relating to the Sadiola sulphides project.

Negotiations relating to the phased

retrenchments necessitated by restricted

and suspended mining operations were

successfully concluded and implemented.

These were effective from 31 May 2018. The

final agreement focused mainly on providing an

additional social package, thereby helping to

soften the social impact of the retrenchments.

This agreement nullified any wage increases for

2018 and 2019. At Yatela, the retrenchment

process, as approved by the labour inspector in

2017, was concluded.

In Ghana, following commitment to develop

a salary adjustment framework in 2017,

Iduapriem successfully concluded a two-year

salary adjustment framework with the Ghana

Mineworkers Union in mid-2018. The industrial

climate was very peaceful, and no adverse

labour incidents were recorded during the year.

In Tanzania, towards the end of 2017, Geita

management and the union concluded a

compressed working week agreement for

implementation in 2018.

This agreement was concluded alongside a

full review of the two-year collective bargaining

agreement. The next full review of the bargaining

agreement is planned for October 2019.

Community development

In Tanzania, community development is one of

the material issues to which we are committed.

Our support at Geita was guided by the

community investment procedure. In July 2017,

the parliament of Tanzania amended the Mining

Act, 2010, and introduced section 105 which

describes the procedure for mineral right holders

to prepare and execute their corporate social

responsibility (CSR) plans.

At Siguiri, AngloGold Ashanti promotes local

economic development through the Siguiri

economic development programme (SEDP).

The SEDP comprises agricultural, skills and

enterprise development projects aimed at

developing small businesses and employment

opportunities for local communities. Current

projects include horticulture, a cashew

plantation, rice-paddy farming and fish farming

as well as education-related and healthcare

projects. More information on community

development work can be found in the Siguiri

<OP>

At Obuasi, the AngloGold Ashanti Obuasi

Mine Community Trust Fund endeavours to

provide potable drinking water for communities

within its operational area. The fund provided

three mechanised boreholes for the three

communities and a senior high school at

a cost of $40,000. This project aims to

increase access to drinking water, reduce

the incidence of water-related diseases

from unsafe drinking water sources within

host communities and improve contact time

between students and teachers in class. The

project received supervisory support from

the Works Department of Obuasi Municipal

Assembly, the Municipal Education Directorate

and the school authorities. The boreholes are

projected to benefit a population of about

11,000. Additionally in Obuasi, we also have

school development programmes and provide

healthcare assistance.

In Ghana, at Iduapriem during 2018, the

mine initiated and implemented various

developmental interventions in host

communities to advance the Company’s

participation and contribution to sustainable

long-term socio-economic development.

Tanzania – Geita

2015

2016

2017

2018

Continental Africa region: number of new
cases of malaria

2,244

1,413

1,683

1,164

New cases of malaria down by

2018: 1,164 (2017: 1,683)

31%

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

One of the key programmes to support

communities in the region is the malaria

programme. A report from the outpatient

department of Iduapriem’s Sam Jonah

Hospital indicated that malaria incidence

among employees, registered dependants

and contractors increased from about 250

confirmed cases in 2015, to 500 in 2016

and declined to 319 cases in 2018. This

contributed to a doubling of absenteeism on

the mine from 63 to 116 days. In the mine’s

host communities, available statistics show

a high incidence of malaria and its effect on

community health and people’s quality of life.

According to a community baseline survey

conducted by the Khana group in 2016,

malaria constitutes about 58% of household

illnesses in host communities.

With the theme “End malaria for good in our

communities,” Iduapriem launched its malaria

control programme in 2017. The overall goal is

to contribute to a reduced malaria burden on

the mine and in host communities by 75% by

2020 through integrated interventions including

the distribution of long-lasting insecticidal nets,

community sensitisation and training.

The programme covers employees,

contractors, host communities and three senior

high schools. In all, 6,947 insecticide-treated

nets were distributed in 2018. An estimated

15,000 people within the Tarkwa-Nsuaem

municipality benefit from this programme.

Only one occupational disease was diagnosed

in the region. This was a noise-induced

hearing loss case at Iduapriem in Ghana. The

employee was provided with the necessary

medical support and compensated in line

with national labour regulations. No other

occupational diseases were reported in the

region in 2018.

In 2018, the region continued to focus on

consolidation and customisation of the health

strategy developed and reported on in 2017

and its associated three-year plan, to regional

and operational priorities. This included

alignments with the company-wide approach

and health management objectives as well

as increased efforts towards a risk-based

approach. The objectives of the strategy

were incorporated in operational health team

plans to assist teams to be more proactive

and focus preventative strategies at both

occupational and community level, and to

ensure availability and development of the

required skills for priority risks.

Continental Africa has made significant strides

in strengthening the preventative approach

to workplace health risk, by identifying and

assigning a regional occupational hygienist

to oversee systems and ensure capacity

development in occupational hygiene

among nationals across the region. Six

employees were identified and trained for

formal certification in, firstly, the intermediate

certificate and then in the advanced certificate

in occupational hygiene. This distance learning

initiative is being conducted in collaboration

with the University of the Witwatersrand in

South Africa. The first three candidates have

completed their intermediate certification and

will progress to the advanced level training in

2019. Further efforts are underway to identify

more candidates for this training. This is

expected to not only improve capacity but

to enhance focus on preventative workplace

strategies so as to alleviate the current

dependence on expatriates for occupational

hygiene roles in the region.

The positive impacts of the community-based

malaria programme continued to be seen at

Geita with the recording of a significantly low

incidence of malaria of 0.17% for employees

and contractors affected by malaria in 2018.

This community-based malaria control

programme extends to Geita Town, where

around 90% of employees, contractors and

families reside. The programme is based

on a private-public partnership model with

government authorities, NGOs and academic

institutions to ensure sustainability and

alignment with national priorities.

The same model is used in Ghana, where

malaria control activities continued in

partnership with the Global Fund and the

National Department of Health. AngloGold

Ashanti was once again identified by the

Ghana National Health department as a

principal recipient of indoor residual spraying

activities for malaria control. AngloGold Ashanti

Ghana was awarded $16 million to conduct

malaria control activities in 14 districts,

including Obuasi in the Ashanti region, and 45

prisons nationally for the period 2018 to 2020.

In 2018, the programme is estimated to

have covered about one million structures,

protecting just over 1.2 million people and

creating just over 1,300 job opportunities in

the communities involved.

Sadiola and Siguiri also continued with

malaria control efforts, using spraying

activities to target surrounding villages.

While there was a 46% improvement in the

incidence of malaria from 2017 to 2018

among employees and contractors in Siguiri,

significant challenges remain in reaching

those areas where most of the employees

and their families reside. At Iduapriem, malaria

incidence among employees and contractors

continued to improve with the continued use

of insecticide-treated nets at the workplace

and within communities.

While the Ebola outbreak in the DRC did

not affect any AngloGold Ashanti managed

operations in 2018, Ebola continues to pose

a risk in the country. All our mine sites have

intensified their surveillance and preventative

control efforts to mitigate this potential risk.

REGIONAL REVIEWS CONTINUED

Continental Africa

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Americas

The Americas region comprises three
operations, featuring both open pit and
underground mining – one in Argentina
and two in Brazil. In addition, a
brownfields project in Brazil and an
active exploration programme are
underway in Colombia.

Argentina

Cerro Vanguardia, in which AngloGold

Ashanti has a 92.5% stake, is the Company’s

sole operation in Argentina. Fomicruz, a state

company, owns the remaining 7.5%. Located

to the northwest of Puerto San Julián, in the

province of Santa Cruz, Cerro Vanguardia

operates multiple small open pits with high

stripping ratios and multiple narrow-vein

underground mines. The metallurgical plant,

which includes a cyanide recovery facility, has

a daily capacity of 3,000t.

Brazil

AngloGold Ashanti Córrego do Sítio

Mineração (AGA Mineração), which is wholly

owned, comprises two operational units

located in the state of Minas Gerais, close to

the city of Belo Horizonte:

•

The Cuiabá complex comprises the Cuiabá

and Lamego underground mines, and the

Cuiabá and Queiroz plants. Cuiabá has

been in operation for over 30 years while

Lamego has been in operation for nine

years. The Cuiabá mine has changed from

cut-and- fill to sub-level stoping, increasing

Contribution to regional production

•

Argentina

•

Brazil

Contribution to group production

•

Americas

•

Rest of AngloGold

Ashanti

LEGEND

Argentina

Cerro Vanguardia (92.5%)

Brazil

Serra Grande

AGA Mineração

Colombia

Gramalote (51%)

La Colosa

Quebradona (94.876%)

the contribution from narrow-vein ore bodies

to the mine’s total production and improving

rock-engineering controls (support, design

and monitoring). Ore from the Cuiabá and

Lamego mines is processed at the Cuiabá

gold plant. The concentrate produced

is transported by aerial ropeway to the

Queiroz plant for processing and refining.

Total annual capacity of the complete

Cuiabá circuit is 1.75Mt. The Queiroz

hydrometallurgical plant also produces

around 200,000t of sulphuric acid as a by-

product, which is sold commercially in local

Brazilian markets.

•

Córrego do Sítio, in operation since

1989, consists of one open-pit mine and

one underground mine. The oxide ore

mined is treated by heap leach and a

pressure leaching plant treats sulphide

ore. The sub-level stoping mining method

is used underground. The distance from

the main underground mine (Mina I) to

the metallurgical plant is around 15km.

Combined annual plant capacity is 1.6Mt.

Gold production from both Cuiabá and

Córrego do Sítio is refined at the Queiroz plant

141km from the Cuiabá gold plant.

Serra Grande, which is wholly owned, is

located in central Brazil, in the state of Goiás,

about 5km from the city of Crixás. It comprises

three mechanised underground mines: Mina III,

Mina Nova and Mina Palmeiras, and an open

pit. One dedicated metallurgical plant, with an

annual capacity of 1.5Mt, treats all ore mined.

400km

Project

Operations

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Key statistics

Units

2018

2017

2016

Operational performance

Tonnes treated/milled

6.8

7.5

7.0

Pay limit

oz/t

0.121

0.104

0.100

g/t

4.142

3.576

3.421

Recovered grade

oz/t

0.103

0.102

0.106

g/t

3.55

3.49

3.64

Gold production (attributable)

000oz

776

840

820

Silver production (attributable)

Moz

5.9

5.8

4.7

Total cash costs

$/oz

624

638

578

Total production costs

$/oz

875

973

909

All-in sustaining costs

(1)

$/oz

855

943

875

Capital expenditure (100% basis)

176

234

225

Productivity

oz/TEC

12.86

13.34

13.98

Safety

Number of fatalities

AIFR

per million hours worked

3.97

3.29

3.96

People

Average no. of employees: total

(2)

7,973

8,511

8,126

– Permanent employees

5,755

5,888

5,653

– Contractors

2,218

2,623

2,473

Training and development expenditure (excluding Colombia)

2014

2015

2016

2017

2018

Production (including discontinued operations)

(attributable) (000oz)

996

948

820

840

776

Productivity

(oz/TEC)

2014

2015

2016

2017

2018

14.38

15.05

13.98

13.34

12.86

REGIONAL REVIEWS CONTINUED

Americas

See footnotes overleaf

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Units

2018

2017

2016

Environment (excludes Colombia)

Total water consumption

7,813

8,283

8,067

Total water use per tonne treated

kL/t

1,114

1.071

1.115

Energy usage

4.13

4.23

3.94

Total energy usage per tonne treated

GJ/t

0.59

0.55

0.54

Total greenhouse gas (GHG) emissions

000t CO

168

182

180

Total GHG emissions per tonne treated

t CO

e/t

0.024

0.025

Cyanide used

2,305

2,704

2,333

No. of reportable environmental incidents

Total rehabilitation liabilities (includes Colombia):

138

147

149

– restoration

102

106

108

– decommissioning

Community and government (includes Colombia)

Community expenditure

Total payments to government

234

297

237

– Dividends

– Taxation

116

– Withholding tax (royalties, etc.)

– Other indirect taxes and duties

– Employee taxes and other contributions

– Property tax

– Other

(1)

Excludes stockpile write-offs.

(2)

100% basis and excluding Colombia and Denver regional office.

Key statistics

(continued)

AIFR

(per million hours worked)

2014

2015

2016

2017

2018

3.79

5.61

3.96

3.29

3.97

2014

2015

2016

2017

2018

Total cash costs and all-in sustaining costs

($/oz)

676

Total cash costs

All-in sustaining costs

974

576
792

578
875

943

855

638

624

REGIONAL REVIEWS CONTINUED

Americas

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Americas

Operating performance

The Americas region produced 776,000oz at a

total cash cost of $624/oz for the year ended

31 December 2018, compared to 840,000oz

at a total cash cost of $638/oz for the previous

year. The region’s production decreased due

to the lower contribution from Brazil, where

production was negatively impacted by delays

in development and infrastructure constraints

at the Cuiabá complex. This was exacerbated

by lower grades in the sulphide operation

and excessive rainfall at the Córrego do Sítio

complex, while Serra Grande experienced

delays in receiving environmental deforestation

and waste dump permits.

Full-year production at AGA Mineração in 2018

was impacted by the Cuiabá complex delays

in development and infrastructure constraints.

The Cuiabá complex was impacted by

geotechnical factors at the access ramp to the

high-grade ore body. During the last quarter of

the year, operating performance improved as

measures were taken to improve mine quality

by improving stope availability, drilling and mine

recoveries while ensuring compliance to plan.

At Córrego do Sítio, lower grades at the

sulphide operation and excessive rainfall

contributed to lower production. Production

was also impacted by lower volumes placed

on the heap leach, model changes and

production stoppages due to the national

driver strikes.

At Serra Grande, 2018 production was lower

as less ore was mined following receipt of

environmental deforestation and waste dump

permits later than expected. All permits had

been received by year end.

In Argentina, at Cerro Vanguardia, full-year

output was maintained at the same level as

2017, producing 282,000oz at a total cash

cost of $476/oz compared to 283,000oz

at a total cash cost of $522/oz in 2017.

Production was maintained, despite the lower

underground grade, mainly because of the

higher volumes mined and treated.

Costs

The all-in sustaining cost (AISC) was $855/oz in

2018, compared to $943/oz in 2017. Reduced

costs were mainly due to lower sustaining

capital expenditure, driven by a greater focus on

capital management, and benefits derived from

Operational Excellence initiatives.

In Brazil, the all-in sustaining cost declined

year-on-year despite lower production

volumes and inflationary pressures, which

adversely impacted total cash costs. The

6% improvement in AISC was boosted by

good results from the Operational Excellence

initiatives and a favourable exchange rate.

In Argentina, total cash costs fell mainly as a

result of the weaker exchange rate following

the devaluation of the Argentine peso against

the US dollar as well as improved efficiencies.

These positive effects were partially weakened

by rapidly rising inflation, which ended the

year at 47%, mostly related to salary

increments. Lower tonnes mined led to

unfavourable stockpile movements. A lower

average silver price for the year and lower

volumes sold also affected costs negatively.

Several Operational Excellence initiatives were

identified and implemented in the region during

2018. In Brazil as part of the Operational

Excellence programme, all sites conducted

a full review of operations to improve

efficiencies and reduce costs. Labour Reform,

an engagement process with stakeholders,

created an opportunity to implement a fourth

working shift at all mines in Brazil.

Combined with initiatives to optimise the

work hand-over at shift change, productivity

gains were generated on blasting cycles and

development of main ramps and galleries.

Operational Excellence initiatives also

enhanced metallurgical performance and

helped streamline capital expenditure.

The Operational Excellence initiatives at
Cerro Vanguardia included underground
development optimisation, cost reduction in
material and services contracts, workforce
recruitment freeze, nitrate and occulant
optimisation, cost reductions in mine
drilling steel and cyclone pumps liners, and
overhead restructuring.

In September 2018, the government of
Argentina introduced the payment of export
duties on exported goods. In terms of
an existing tax stability agreement, Cerro
Vanguardia is entitled to a refund of these
export duties should the payments result in a
higher total tax burden compared to the tax

imposed by the tax stability agreement.

Brazil – Serra Grande

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Americas

Capital expenditure

In Brazil, good capital discipline was

maintained with stay-in-business capital

expenditure proactively managed lower year-

on-year, supported by the more favourable

exchange rate of the Brazilian real versus

the US dollar. The Brazilian operations

maintained their focus on Mineral Resource

and Ore Reserve conversions with the main

investment at all operations going into Ore

Reserve development, to improve confidence

levels and mine flexibility, in order to increase

stope access.

Capital expenditure in Argentina was lower

in 2018 than the previous year, mainly due

to reduced Ore Reserve development from

underground optimisation and the tailings dam

investment made during 2017, which was not

necessary in 2018. The lower level of capital

expenditure was also partly attributable to the

weakness in the Argentine peso against the

US dollar in 2018.

Growth and improvement

Going forward, Brazil plans to increase gold

production. Productivity is expected to improve

with maximisation of the assets as a result of

the Operational Excellence initiatives underway,

particularly in the areas of exploration, Ore

Reserve development, mining and metallurgy.

Significant cost reductions contributed to

returning the Mineral Resource and Ore

Reserve to plan. During the development phase

at Serra Grande, while building confidence

levels, conversion drilling works delivered results

that were 55% better than planned (at 12,722m

against 8,217m). In 2019, the Cuiabá complex

is expected to improve production by accessing

and mining the high-grade Serrotinho ore body.

At Córrego do Sítio (CdS), higher development

rates and production from underground mining,

along with a new pushback at the open pit,

are expected to lead to increased production.

Drilling campaigns aimed at confirming ore

sources are currently underway. Drill results

will help support an improving production case

in the medium term and extend the operating

lives of the new open pit (CdS III) and of new

underground mines at Mina II and the São

Bento Deep ore bodies in the long term.

The Cuiabá complex is expected to normalise

access to high-grade areas, creating positive

conditions so as to adhere to production and

development plans to provide flexibility and

improve confidence levels. Córrego do Sítio will

focus on bringing the new open-pit pushback

into production.

Serra Grande has brought the Ingá ore body

into production while work continues on

exploring the potential of the Mangaba and

Corpo IV ore bodies. The Palmeiras South

mineral rights purchase negotiation was

concluded in 2018, creating access to the new

ore bodies.

Also at Serra Grande, the Santos Reis

community resettlement activities have begun,

which we plan to conclude during 2019, to be

able to work on the expansion of the open pit

for increased production. Additionally, with the

purchase negotiations concluded in December

2018, exploration work is expected to begin

during the first half of the 2019 year in the high-

potential Palmeiras South area.

AGA Mineração is expected to deliver improved

grades in 2019, which should result in higher

production, and Ore Reserve conversion is a

clear near-term focus.

Production from the Serra Grande crown pillar

is expected to lead to higher grades towards

the end of the year but at lower throughput.

The Palmeiras South licence is targeted for

mid-2019.

In Argentina, Cerro Vanguardia has been in

operation for 20 years. Going forward, grades

from open pit mines are expected to be below

the current levels, with a resultant decrease

in production. Lower production will impact

the all-in sustaining cost which is expected to

average around $1,000/oz over the remaining

life of mine. Further cost-saving initiatives and

operational improvements are being analysed

in order to maintain cost reductions to mitigate

the lower production impact in 2019. Fleet

replacement is planned for 2019, which will

be made up of five trucks and one loader,

to replace the current old 773-truck fleet.

Once these are in commission, use of the

new vehicles is expected to bring additional

savings given lower maintenance and better

operational efficiencies.

Colombia – Gramalote

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Americas

Sustainability performance

Safety and health

A new methodology for health, safety and

environment management, based on a

risk-assessment approach, was introduced

for strategic projects during 2018 in the

region. Branded as PGR-SMART, the new

methodology is being implemented at all

business units, with training at all sites. It has

been designed with an accompanying road

map to monitor adherence and opportunities

for improvement. Learning and change

management were addressed through various

initiatives such as the safety-maturity level

research conducted by Du Pont at Cuiabá and

the Risk Management Training for Leadership,

which applies the Queensland University’s

G-Mirm model. For contractor management,

the new standard is implemented with training

at all operations and top risk contractors are

audited using the standard (before hiring and

contract signing).

Environment

No environmental incidents were reported

in 2018 (2017: 0). In Brazil, all licences critical

to the operations were obtained despite the

country having been through elections.

On 7 February 2019, regulatory authorities

in Brazil’s Minas Gerais state required the

demobilisation at all tailings storage facilities

(TSFs) constructed using the upstream design

method. AngloGold Ashanti does not have any

upstream TSFs in this state, but it does have one

centreline facility at the Córrego do Sítio operation.

While the design of the Córrego do Sítio TSF

has been confirmed as a centreline facility

by the regulators, as a precautionary step,

operations here were temporarily suspended

following the unfortunate accident at Vale’s iron

ore mine in Minas Gerais in January 2019. We

are in discussions with regulators in this regard

and look forward to resuming operations at the

TSF as soon as the regulators are satisfied that

the design of the facility is suitable.

AngloGold Ashanti has a clear framework that

sets principles, standards and guidelines for

the construction, management and oversight of

its TSFs. It is our obligation to ensure that our

TSFs are stable, non-polluting and contained.

We are guided in this by international practice,

and conduct regular, detailed inspections by

internal specialists and independent third-

party experts. Monitoring and preventive

maintenance is ongoing. Since implementation

of legislation in 2015, AngloGold Ashanti has

been reinforcing its tailings dam management

programme plan in Brazil. Activities in 2018

included dam break simulations and other

systems at all business units.

The Córrego do Sítio TSF supports production

of about 95,000oz a year. The balance

of 35,000oz of Córrego do Sítio’s annual

production comes from its heap leach pad,

which is not affected by the TSF suspension.

In the meantime, scheduled maintenance was

conducted and mining at the site continues

as we stockpile ore ahead of the plant, given

that the Córrego do Sítio plant has processing

headroom above what is normally mined.

Communitiy development

During the year, we continued to maintain

constructive community relations, which

reflects the community’s goodwill and our good

relations with this key stakeholder. We continue

to focus on community engagements as a key

strategic objective to maintain and strengthen

our social licence at all our operations. In

Brazil, social investment in communities

prioritises projects focused on culture, social

development, health, income generation

for sustainable solutions. Major projects

implemented in 2018 included:

•

Sustainable Partnerships Programme

(public call for projects): Social projects

supported by the Company are selected

by a committee, comprising AngloGold

Ashanti, specialists in social projects and

representatives of communities, in line with

open and transparent management of social

investments. In 2018, in support of this

programme, an investment of more than

BRL1.2m was made in 25 projects

•

Tax incentives: In Brazil, specific laws

allow the Company to invest a portion of

income tax paid in projects approved by

the federal government in areas such as

culture, sport, children and youth, elderly

and disabled people, as well as health

(particularly oncology). AngloGold Ashanti

invested around BRL6m in such initiatives in

2018, for the benefit of cities surrounding its

operations

•

Volunteerism: Established in 2004, the

Holding Hands Programme has, to date,

benefited more than 30,000 people

through more than 140 activities (3,600

voluntary participators). The programme

aims to encourage employees to become

involved in and to contribute to social

causes within local municipalities where the

Company operates

•

Good Neighbourhood Programme: The

purpose of the initiative is to strengthen

AngloGold Ashanti’s relationship and

dialogue with communities in Brazil,

including regular meetings and publication of

a printed newspaper. A toll-free hotline also

receives grievances and complaints

IN MEMORIAM

Regrettably, there was a fatal

accident at Cuiabá in Brazil when

Mr Heber de Oliveira Temoteo was

fatally injured following an electricity-

related incident in January 2018.

Our sincere condolences go to the

families, colleagues, friends and

communities of the deceased.

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Australasia

Western

Australia

Darwin

Brisbane

Sydney

Melbourne

Adelaide

Perth

Kalgoorlie

Canberra

Western

Australia

Darwin

Brisbane

Sydney

Melbourne

ourne

Adelaide

Perth

Kalgoorlie

Canberra

LEGEND

Sunrise Dam

Tropicana (70%)

AngloGold Ashanti’s operations in the
Australia region, Sunrise Dam and
Tropicana, are located in the north-
eastern goldfields of the state of
Western Australia.

Sunrise Dam, wholly-owned by AngloGold

Ashanti, is located 220km north-east of

Kalgoorlie and 55km south of Laverton. Gold

production started at Sunrise Dam in 1997.

Underground mining, carried out by a contract

mining company, is now the primary source of

ore for the operation, following the cessation

of mining in the open pit in 2014. The

owner-managed processing plant comprises

conventional gravity and carbon-in-leach

(CIL) circuits, with a flotation and fine grind

circuit commissioned in mid-2018 to improve

metallurgical recovery.

Tropicana, a joint venture between

AngloGold Ashanti (70% and manager) and

Independence Group NL (30%), is located

200km east of Sunrise Dam and 330km east-

northeast of Kalgoorlie. The operation poured

first gold in September 2013. Tropicana

is a large open pit operation with mining

carried out by a contract mining company.

The processing plant is owner-managed

comprising conventional CIL technology and

high-pressure grinding rolls for energy-efficient

comminution. A second ball mill was added

to the grinding circuit in 2018 to optimise the

circuit, improve metallurgical recovery and

match mine output.

Contribution to regional production

•

Sunrise Dam

•

Tropicana

Contribution to group production

•

Australasia

•

Rest of AngloGold

Ashanti

Australia – Sunrise Dam

1,000km

Operation

I N T E G R AT E D R E P O RT 2 0 1 8

SECTION 2 / DELIVERING ON OUR STRATEGY

Key statistics

Units

2018

2017

2016

Operational performance

Tonnes treated/milled

9.5

9.4

8.9

Pay limit

oz/t

0.07

0.06

g/t

2.10

1.84

1.86

Recovered grade

oz/t

0.065

0.061

0.058

g/t

2.01

1.89

1.82

Gold production (attributable)

000oz

625

559

520

Total cash costs

$/oz

762

743

793

Total production costs

$/oz

1,010

991

1,056

All-in sustaining costs

(1)

$/oz

1,038

1,062

1,067

Capital expenditure (attributable)

156

153

109

Productivity

oz/TEC

49.55

47.87

46.81

Safety

Number of fatalities

AIFR

per million hours worked

9.14

8.53

9.49

People

Average no. of employees: total

1,051

974

925

– Permanent employees

238

226

211

– Contractors

813

748

714

Training and development expenditure

2014

2015

2016

2017

2018

Production

(000oz)

620

560

520

559

625

2014

2015

2016

2017

2018

Productivity

(oz/TEC)

62.00

55.84

46.81

47.87

49.55

REGIONAL REVIEWS CONTINUED

Australasia

See footnotes overleaf

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

REGIONAL REVIEWS CONTINUED

Australasia

Units

2018

2017

2016

Environment

Total water consumption

7,734

6,783

7,577

Total water use per tonne treated

kL/t

0.653

0.581

0.691

Total energy usage

6.72

6.32

5.62

Total energy usage per tonne treated

GJ/t

0.57

0.54

0.51

Total GHG emissions

000t CO

395

372

336

Total GHG emissions per tonne treated

t CO

e/t

0.033

0.032

0.031

Cyanide used

4,119

4,011

4,696

No. of reportable environmental incidents

Total rehabilitation liabilities:

– restoration

– decommissioning

Community and government

Community expenditure

0.7

0.6

Total payments to government

– Taxation

– Withholding tax (royalties, etc.)

– Employee taxes and other contributions

(1)

Excludes stockpile write-offs.

Key statistics

(continued)

2014

2015

2016

2017

2018

AIFR

(per million hours worked)

10.73

8.56

9.49

8.53

9.14

2014

2015

2016

2017

2018

Total cash costs and all-in sustaining costs

($/oz)

804

Total cash costs

All-in sustaining costs

986

702
875

793
1,067

1,062

1,038

743

762

INTEGRATED REPORT

2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Operating performance

The region delivered a strong performance in

2018 producing 625,000oz, a 12% year-on-

year increase in production, due to higher mill

feed grades and higher mill throughput

at Tropicana.

At Sunrise Dam, the focus continued to be

on lifting the mined grade while maintaining

an underground ore production rate of

approximately 3Mtpa. Underground ore

is the primary source of mill feed which is

blended with low grade stockpiled ore to fill

the 3.8Mtpa capacity processing plant. Higher

mined grades in the first and fourth quarters

contributed to a 21% increase in year-on-year

production, offsetting delays in metallurgical

recovery improvements that were anticipated

from the Recovery Enhancement Project

(REP). A structured optimisation programme

in the processing plant was delivering positive

results by year end and, along with a higher

proportion of Vogue ore in the feed blend, is

expected to increase recovery rates to REP

feasibility study levels in 2019.

Production at Tropicana in 2018 increased

by 5% due to higher mill feed grades and

higher mill throughput. The second 6MW ball

mill was commissioned ahead of schedule in

November with full ramp-up achieved within

a week. The additional ball mill is expected to

lift annual throughput to 8.2Mtpa and, through

a reduction in grind size, to improve baseline

metallurgical gold recovery by up to 3% to

approximately 92%. The Long Island mining

sequence was further optimised during 2018,

with mining rates stabilising at approximately

95Mtpa. Grade streaming continued in 2018

with preferential processing of higher grade

ore while low-to-medium grade ore was

stockpiled. Mining during 2018 focused on the

Havana South, Havana 3 and Tropicana 2 pits.

It is anticipated that mining of the Tropicana pit

will be completed in the first half in 2019, while

mining will begin in the Boston Shaker open pit

cutback 4 during the second half of the year.

Costs

All-in sustaining costs at $1,038/oz for the

region were slightly lower than the previous year,

largely due to higher production and a weaker

Australian dollar, which offset higher mining

costs. Several once-off capital projects were

completed in 2018 with capital expenditure at

Sunrise Dam, including construction of the REP,

a multi-year extension of the tailings storage

facility (TSF) and installation and commissioning

of two 2MW primary ventilation fans, which

were all completed by year end. Once-off

capital expenditure at Tropicana included the

construction and commissioning of the 6MW

ball mill.

Growth and improvement

Late in 2018, the Tropicana joint venture

partners committed to conducting a

feasibility study into the development of

an underground mine beneath the Boston

Shaker pit after a prefeasibility study

confirmed that underground mining was

technically and financially viable. Approval

is expected in the first half of 2019 with

development of a portal likely to start in

mid-2019. Infill drilling was carried out during

2018 to convert the Inferred Mineral Resource

to an Indicated Mineral Resource, enabling

a maiden underground Ore Reserve to be

declared. Boston Shaker mineralisation

remains open along strike and at depth.

In 2019, the focus at Sunrise Dam will remain

on targeting higher grade sections of the

underground stopes, while maintaining the

underground production rate at approximately

240,000 – 250,000 tonnes a month. The

Vogue ore body will become the primary

ore source in 2019, expected to account

for approximately two thirds of underground

ore production. The site is evaluating paste

fill options to support production from wider

sections of the large Vogue ore body.

The completion of capital projects, including

the ventilation upgrades, during 2018 will

contribute to improving the effective use of

mining equipment and the reliability of the

mine. The underground mine management

system (UMMS) is expected to be

commissioned during 2019, enabling real-time

analysis of the mobile fleet to identify specific

Operational Excellence projects that improve

efficiency by optimising the effective time and

performance quality metrics of the mining

equipment. The UMMS will also enable remote

surface control of services such as ventilation,

power and dewatering.

REGIONAL REVIEWS CONTINUED

Australasia

Australia – Tropicana

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

The Sunrise Dam mineralised system

remains open in all directions and at depth.

During 2019, targets 1km to the south of

the mine will be tested with deep diamond

drilling in a programme partially funded

by the Western Australian Government’s

Exploration Incentive Scheme.

During 2018, AngloGold Ashanti earned

a 51% interest in the Butcher Well/Lake

Carey exploration joint venture tenements,

where there is potential for the discovery of

an additional Ore Reserve for processing at

Sunrise Dam, possibly displacing low-grade

stockpiles currently being blended with

underground ore.

AngloGold Ashanti Australia has the right to

earn up to 70% interest from Saracen Mineral

Holdings Ltd by spending up to A$25m

on exploration in the tenements, which are

located approximately 22km from Sunrise

Dam. These tenements are part of the Butcher

Well/Lake Carey exploration joint venture.

Sustainability performance

Safety and health

There were no fatalities in the region during

the year, maintaining the mines’ fatality-free

performances since their inception. The all

injury frequency rate was 9.14 (2017:8.53)

per million hours worked. The deterioration

was due to an increase in soft tissue injuries

which are treated with on-sight physiotherapy

following early detection. The incidence of

more severe injuries remains low.

The Company’s safety programmes,

including safety leadership, hazard and risk

management and incident investigation,

continued to be held for managers and

supervisors, with these competencies being

embedded into day-to-day leadership

and supervision in the region. The general

Company safety training programme targets

and schedules were met and exceeded

in 2018.

Bow tie risk assessments were completed for

fatigue, fitness for work, mental health and

diesel emissions during 2018. Annual health

risk assessments and health and hygiene

management plans were completed for both

operations.

Workplace health and safety (WHS) legislation

in Western Australia is undergoing significant

reform. The WHS Bill in draft at the end

of 2018 will be based on the content and

structure of the national model WHS Act and

is anticipated to be debated in Parliament in

2019. There will be a set of general regulations

and mining specific regulations. The act

and regulations are currently scheduled for

adoption as a total package in early 2020.

In 2017, Sunrise Dam volunteered and was

selected as the research site for the Western

Australian regulator and mining industry-

funded study on nano-diesel particulates to

better understand the potential health impact,

as well as the potential impact of deeper

underground mining. During 2018, research

teams from Curtin University, the University

of Western Australia and the ChemCentre

undertook analysis and final report preparation.

The report is expected to be released in 2019.

The project to research and trial fatigue

monitoring tools continued at Tropicana

during the year. Several CAT trucks were

tted with Caterpillar driver safety systems

(camera recognition) to monitor operators,

with information sent to a central control.

Capital has been approved to fit the rest of

the open-pit mining truck fleet and some other

heavy mobile equipment with this technology

in 2019.

Sunrise Dam was the first mine in Australia, and

the first AngloGold Ashanti mine, to achieve

ISO 45001:2018 certification, the leading

certification standard for occupational health

and safety (previously known as OHSAS

18001). The new ISO 45001 standard uses

a high-level structure consistent with other

ISO management system standards such as

ISO 9001 and ISO 14001, both of which have

undergone updates in the past couple of years.

Employees and labour relations

The Australasia region’s tailored Fairness@

AGAA programme, which uses the Company’s

values as a guide to leadership behaviour,

continued to be rolled out for new employees

and employees of major contractors. This

programme incorporates hands-on exercises

and real-life case studies to help participants

REGIONAL REVIEWS CONTINUED

Australasia

Australia – Sunrise Dam

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

understand unlawful discrimination,

harassment and workplace bullying. These

concepts are explained in terms of current

legislation as well as the Australasia region’s

fairness in employment policy and grievance

process. The programme is aligned with

best practice in relation to Australian equal

employment opportunity legislation.

Complementing this training is the two-day

Supervision@AGAA programme for new

managers. These programmes form part

of a comprehensive framework focused on

leadership and accountability.

We continue to support the Women in Mining

of Western Australia mentoring programme,

with employees participating both as mentors

and mentees. Woman account for 19% of the

workforce in the region.

Community development

We are actively involved in communities

across the Western Australian goldfields, from

Laverton to Kalgoorlie-Boulder and beyond,

including remote Aboriginal communities

such as Tjuntjuntjara. The Company supports

education, youth, community development

and health programmes and local training,

along with offering employment and business

participation opportunities.

Environment

Environmental management and compliance

The region completed 2018 with no

environmental incidents. Both Sunrise Dam and

Tropicana achieved environmental certification

under the new ISO 14001:2015, following

audits conducted by Bureau Veritas in 2018.

Both mines have maintained certification

under the International Cyanide Management

Code. The Department of Mines conducted an

environmental compliance inspection at Sunrise

Dam in 2018 nding that the site was compliant

with its environmental commitments.

In 2018, both sites made submissions for

approval of key environmental amendments

to increase operational flexibility. Tropicana

applied for amendments to its three existing

approvals in preparation for the proposed

Boston Shaker underground mining project.

These submissions sought variations under

the National Environment Protection and

Biodiversity Conservation Act, a Section

45c application under the Western Australia

Environment Protection Act to adjust the site’s

Prescribed Premises Licence and a Mining

Proposal Application to authorise underground

mining and backfilling of open pits.

Climate change

Sunrise Dam and Tropicana fulfilled the 2018

reporting obligations under the annual National

Greenhouse and Energy Reporting scheme

(NGER), which forms part of a single national

framework for reporting and disseminating

company information about greenhouse

gas emissions, energy production, energy

consumption and other information specified

under NGER legislation.

Water

All groundwater monitoring at Sunrise Dam

has been undertaken in accordance with

AS/NZS 5667. The groundwater monitoring

programme primarily focuses on achieving

the requirements of the Environmental

Protection Act licence and the site’s licences

to take water. Additional monitoring for

site operational requirements and ad-hoc

environmental monitoring is also undertaken

as required. Results from groundwater

monitoring across Sunrise Dam remained

within historic ranges.

REGIONAL REVIEWS CONTINUED

Australasia

Australia – Sunrise Dam

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

At Tropicana, the risk caused by hypersaline
water mounding below the TSF continues to
be monitored and, during 2018, additional
recovery bores were drilled and equipped
to increase recovery rates and control rising
water levels. A water balance model is being
developed to more accurately model the
dynamics of the system.

The Kamikaze borefield at Tropicana was
expanded during the year and additional
bores will be installed in 2019 following
studies which determined that the aquifer
was more substantial than originally
modelled. There would be significant
benefits to the operation should higher
volumes of lower salinity water be drawn
from the more proximate Kamikaze
borefield. The improved water quality
results in lower reagent consumption and

lower operating costs.

Biodiversity

The Great Victoria Desert Biodiversity Trust

(GVDBT) continued to make progress with

the adaptive management partnership (AMP),

which represents a co-ordinated approach

to implementing adaptive management in

the Great Victoria Desert, combining the

philosophies and tools of landscape-scale

management and collective action. The AMP

will provide an ‘umbrella’ to co-ordinate

activities, integrate science and action,

and provide a monitoring and evaluation

framework. Several funded projects in the

Great Victoria Desert continued in 2018.

The independent GVDBT was created by the

Tropicana joint venture as part of its offset strategy

for the mine under the Federal Environmental

Protection and Conservation Act 1999.

Integrated closure planning

The Australian government’s Senate

inquiry into the Rehabilitation of Mining and

Resources Projects in relation to Australia’s

Commonwealth responsibilities was released

on 28 November 2018. The report does not

contain anything specific that would have

direct impact on the Australian operations.

Tropicana’s mine closure plan, submitted

to the regulator in 2017, was approved in

October 2018. The site is required to submit

its next update in 2022. Sunrise Dam’s closure

plan was updated and submitted to the

regulator for approval in 2018.

REGIONAL REVIEWS CONTINUED

Australasia

Both mines reported below
their respective emissions
baselines and received
a “ not in an excess
emissions position ”
judgement from the Clean
Energy Regulator.

Australia – Tropicana

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Durban

Lesotho

Swaziland

Bloemfontein

Pretoria

Carletonville

Klerksdorp

East London

Port Elizabeth

Cape Town

North West

Gauteng

Durban

Lessotho

Swaziland

Bloemfon

ntein

retoria

re o

Pret

reto

Carletonville

Klerksdorp

East London

Port Elizabeth

Cape Town

North West

Gautten

te g

Gau ng

Our South Africa region has

undergone extensive restructuring to

ensure its long-term sustainability

Following this restructuring and the sale of

assets, AngloGold Ashanti’s South African

operations currently are:

West Wits

•

Mponeng, the world’s deepest gold mine

and our flagship South African operation

is in the West Wits mining district south-

west of Johannesburg, on the border

between Gauteng and North West Province.

Mponeng exploits the Ventersdorp Contact

Reef (VCR) via a twin-shaft system at depths

of between 2,800m and 3,400m below

surface. Ore is treated and smelted at the

mine’s gold plant.

Surface Operations

•

Surface Operations encompasses those

surface facilities in the West Wits area

and in the former Vaal River area, which

process and extract gold from marginal

ore dumps and tailings storage facilities.

Surface Operations also includes Mine

Waste Solutions (MWS), which operates

independently, processing slurry material

reclaimed hydraulically from various tailings

storage facilities. Back fill is produced as a

by-product, for use as mining support in

mined out areas underground.

Contribution to regional production

(excluding technology)

•

West Wits

•

Vaal River*

•

Surface Operations

* For the first two months of the year

Contribution to group production

•

South Africa

•

Rest of AngloGold

Ashanti

Restructuring of the
South Africa region

The sales of the Kopanang and Moab

Khotsong mines, in two separate

transactions, were concluded on

28 February 2018. Following these

sales, which included the Nuclear Fuels

Corporation of South Africa (Nufcor),

uranium is no longer produced. TauTona

(including its Savuka section) in the West

Wits area had been placed on orderly

closure following the cessation of mining

in September 2017.

MAP LEGEND

West Wits / Mponeng

Surface Operations / Mine Waste Solutions and other surface treatment facilities

in the West Wits and Vaal River areas

Vaal River

/ Kopanang and Moab Khotsong were sold on 28 February 2018

REGIONAL REVIEWS CONTINUED

South Africa

400km

Operation

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Key statistics

Units

2018

2017

2016

Operational performance

Tonnes treated/milled

34.9

38.9

39.6

Pay limit

(1)

oz/t

0.44

0.43

0.37

g/t

16.11

15.97

13.81

Recovered grade

(1)

oz/t

0.219

0.202

0.219

g/t

6.82

6.93

7.51

Gold production

000oz

487

903

967

Total cash costs

$/oz

1,033

1,085

896

Total production costs

$/oz

1,187

1,247

1,089

All-in sustaining costs

(2)

$/oz

1,178

1,245

1,081

Capital expenditure

150

182

Productivity

oz/TEC

4.45

3.57

3.56

Safety

Number of fatalities

AIFR

per million hours worked

10.25

12.68

12.02

People

Average no. of employees: total

18,803

26,245

28,507

– Permanent employees

17,049

22,738

25,205

– Contractors

1,754

3,507

3,302

Training and development expenditure

See footnotes overleaf

2014

2015

2016

2017

2018

Production

(000oz)

1,223

1,004

967

903

487

2014

2015

2016

2017

2018

Productivity

(oz/TEC)

4.40

3.74

3.56

3.57

4.45

REGIONAL REVIEWS CONTINUED

South Africa

INTEGRATED REPORT 2018

SECTION 2 / DELIVERING ON OUR STRATEGY

Units

2018

2017

2016

Environment

Total water consumption

14,770

20,503

23,161

Total water use per tonne treated

kL/t

0.423

0.527

0.586

Total energy usage

4.13

10.05

10.54

Total energy usage per tonne treated

GJ/t

0.15

0.26

0.27

Total GHG emissions

000t CO

1,332

2,733

2,864

Total GHG emissions per tonne treated

t CO

e/t

0.038

0.070

0.073

Cyanide used

11,842

10,122

9,672

No. of reportable environmental incidents

Total rehabilitation liabilities:

119

– restoration

– decommissioning

101

Community and government

Community expenditure

(3)

Payments to government

118

106

– Taxation

–

– Withholding tax (royalties, etc.)

– Employee taxes and other contributions

105

– Property tax

– Other (includes skills development)

(1)

Refers to underground operations only.

(2)

Excludes stockpile write-offs.

(3)

Includes corporate social investment expenditure.

Key statistics

(continued)

2014

2015

2016

2017

2018

AIFR

(per million hours worked)

11.85

10.81

12.02

12.68

10.25

2014

2015

2016

2017

2018

Total cash costs and all-in sustaining costs

($/oz)

849

Total cash costs