Edgar Filing: ANGLOGOLD ASHANTI LTD

Document

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 - ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018

ANGLOGOLD ASHANTI LIMITED

ANNUAL

FINANCIAL

STATEMENTS

2018

Registration No: 1944/017354/06

AUDIT AND RISK COMMITTEE - CHAIRMAN’S LETTER

It is my pleasure to present, on behalf of the Audit and Risk Committee, an overview of the activities this committee performed during the 2018 financial year. This report is presented in accordance with the Company’s Memorandum of Incorporation (MOI), the requirements of the Companies Act, No. 71 of 2008, as amended, (the Companies Act), Principle 8 and Principle 15 and the recommended practices contained in the fourth King Report on Governance for South Africa (King IV), as well as the Audit and Risk Committee’s formally approved charter, which is in line with the JSE Listings Requirements and is reviewed and approved by the board on an annual basis.

ROLE AND FOCUS

The Audit and Risk Committee is an independent statutory committee and all members were appointed by the AngloGold Ashanti shareholders at the Annual General Meeting (AGM) held on 16 May 2018, except Alan Ferguson who was appointed to the Audit and Risk Committee by the Board, on recommendation from the Nominations Committee, subsequent to the AGM. The Audit and Risk Committee has decision-making authority with regards to its statutory duties and is accountable in this regard to both the shareholders and the board of AngloGold Ashanti.

It is the Audit and Risk Committee’s principal regulatory duty to oversee the integrity of the group’s internal control environment and to ensure that financial statements comply with International Financial Reporting Standards (IFRS) and fairly present the financial position of the group and company and the results of their operations.

Management has established and maintains internal controls and procedures, which are reviewed by the Audit and Risk Committee and reported on through regular reports to the board. These internal controls and procedures are designed to identify and manage, rather than eliminate, the risk of control malfunction and aim to provide reasonable but not absolute assurance that these risks are well managed and that material misstatements and/or loss will not materialise.

The Board assumes ultimate responsibility for the functions performed by the Audit and Risk Committee, relating to the safeguarding of assets, accounting systems and practices, internal control processes and preparation of financial statements in compliance with all applicable legal and regulatory requirements and accounting standards.

COMPOSITION AND DUTIES

The Audit and Risk Committee comprises five independent non-executive directors who collectively possess the skills and knowledge to oversee and assess the strategies and processes developed and implemented by management to manage the business within a diverse and continually evolving business environment. I was again elected as chairman of the Audit and Risk Committee and fulfilled this role during the 2018 financial year.

The Audit and Risk Committee’s duties as required by section 94(2) of the Companies Act, King IV, JSE Listings Requirements and board-approved terms of reference is set out in the Audit and Risk Committees' annual work plan. These duties were discharged as follows:

PROCEEDINGS AND PERFORMANCE REVIEW

During 2018, the Audit and Risk Committee formally met 5 times and meetings were attended by all members of the committee.



R Gasant - Chairman - BCompt (Hons), CA (SA), ACIMA, Executive Development Programme	5/5
MJ Kirkwood - AB, Economics & Industrial Engineering	5/5
R Ruston - MBA Business, BE (Mining)	5/5
M Richter - BA, Juris Doctor	5/5
A Garner - BSE, Aerospace and Mechanical Sciences - resigned from the Committee in May 2018	3/3
S Zilwa - BCompt (Hons), CA (SA), Advanced Diploma in Financial Planning, Advanced Taxation Certificate, Advanced Diploma in Banking - resigned with effect from 15 May 2018	3/3
A Ferguson - BS Accountancy and Business Economics (University of Southampton); ACA (Institute of Chartered Accountants of Scotland) - joined from the November 2018 Audit and Risk Committee meeting	1/1

The Chief Executive Officer, Chief Financial Officer, Senior Vice President: Group Finance, Group General Counsel and Company Secretary, Senior Vice President: Group Internal Audit, Group Tax Manager, Group Risk Manager, Chief Information Officer, Group Compliance Officer, the External Auditors, as well as other assurance providers are invited to attend committee meetings in an ex officio capacity and provide responses to questions raised by committee members during meetings. The full Audit and Risk Committee meets separately during closed sessions with management, internal audit and external audit at every scheduled quarterly meeting.

The Audit and Risk Committee was subjected to an internal self-assessment during 2018 to assess its effectiveness. The results of the assessment were discussed, actions taken and processes put in place to address areas identified for improvement.

HIGHLIGHTS OF 2018

In addition to the execution of the Audit and Risk Committee’s statutory duties, set out below are some highlights from 2018:



Focus area	Actions
Financial reporting
Market updates, half-year and annual IFRS reports	Reviewed and recommended the trading and market updates, half-year and annual IFRS financial statements to the board for approval and subsequent submission to the JSE, SEC and other stock exchanges as applicable, after:
	-	ensuring that complex accounting areas complied with IFRS;
	-	carefully evaluating significant accounting judgements, including but not limited to environmental rehabilitation provisions, taxation provisions and the valuation of the portfolio of assets (including impairments) and estimates;
	-	discussing the accounting treatment of significant accounting and auditing matters as well as non-routine transactions with management and the external auditors including the accounting for the disposal of certain of the South African assets, the restructuring of some of the South African operations; and the provision for the silicosis class action;
	-	reviewing and assessing the disclosure of contingent liabilities, commitments and impact of outstanding litigation in the financial reports;
	-	reviewing, assessing and approving adjusted and unadjusted audit differences reported by the external auditors;
	-	reviewing and assessing management’s assessment of impairment indicators and identified impairments;
	-	reviewing the key audit matters communicated by the external auditors in their audit report in terms of International Standard on Auditing 701;
	-	reviewing the dividend proposal submitted by management for recommendation to the Board;
	-	reviewing and approving the filing of the Form 20-F with the SEC;
	-	reviewing the representation letter that management will be required to sign; and
	-	considering and approving management’s documented assessment of the company’s going concern status including key assumptions.
New accounting standards	The Audit and Risk Committee considers the significance of new standards and interpretations and amendments to standards in issue that are not yet adopted, but are likely to affect the financial reporting in future years. During 2018, the following were considered:
	-	IFRS 15 - Revenue recognition - the impact was limited to the recognition of by-product revenue in Revenue from product sales and this change in classification did not have an impact on previously reported Gross profit.
	-	IFRS 16 - Leases - with an effective date of 1 January 2019, is likely to affect future financial reporting and we are in the process of completing our assessment of the accounting impact and required disclosures of the potential consequences. We expect that IFRS 16 will result in an increase in assets and liabilities as fewer contracts will qualify as operating leases and thus will not be expensed as payments are made. We expect an increase in depreciation and finance cost expenses and also an increase in cash flow from operating activities as the lease payments will now be recorded as financing outflows in our cash flow statement. Management expects that the mining, drilling and energy contracts which are not finance leases under the current accounting standards, will have the most impact on adoption of IFRS 16.
Tax exposure
Tax, tax exposures, effective tax rate, tax related judgements	Reviewed and approved the group's tax strategy and tax management policy. Received the quarterly update on the management of the group’s tax exposures (including uncertain tax positions) with specific focus on:
	-	effective tax rates;
	-	impact that pending changes to legislation will have on fiscal duties; and pending litigation in terms of tax exposure and the appropriate accounting thereof.
Mineral Resources and Ore Reserve Report
Annual Mineral Resource and Ore Reserve Report	Reviewed and recommended for approval the annual Mineral Resource and Ore Reserve Report prepared in accordance with the minimum standards described by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition), and also conform to the standards set out in the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code, 2016), after:
	-	discussing the internal control environment associated with the mineral resource and ore reserve estimation process;
	-	receiving confirmation that the Competent Persons appointed approved the mineral resources and ore reserves; and
	-	reviewing and assessing for reasonableness the year-on-year reconciliation of the mineral resources and ore reserves



Focus area	Actions
Corporate governance
King IV	Monitored the integration of the recommended practices underpinning the 16 Principles of King IV applicable to AngloGold Ashanti ensuring that an ethical culture is created that supports the effective control of the organisation at all levels, measuring the performance of the organisation from an economical, societal and environmental perspective ensuring a legitimate and sustainable business.
Subsidiary Audit and Risk Committees	Monitored the proceedings of relevant statutory subsidiary Audit and Risk Committees during each of its meetings.
Risk Management	Reviewed and approved the risk management policies, standards and processes; received and considered reports from the Group Risk Manager in relation to the key strategic and operational risks facing the company; and received presentations on the following emerging risks and topics to obtain an in-depth analysis and understanding:
	-	“Political and country risk”;
	-	“DRC Country and Mine risk”; and
	-	“Asset integrity risk”.
IT Governance	The committee received and reviewed detailed reports from the Chief Information Officer on the group’s information and technology framework and had detailed discussions around cyber security including inherent risks and vulnerabilities within the current AngloGold Ashanti landscape. The Audit and Risk Committee considered the current action plans in place to manage the associated risk exposure. The Audit and Risk Committee also monitored the successful implementation of SAP at Obuasi - Ghana.
Combined Assurance	The Audit and Risk Committee closely monitored the actions implemented by management during 2018 to further enhance the AngloGold Ashanti combined assurance model and to ensure integration between the various in-house assurance providers. The aim of the combined assurance process is to enable an effective integrated internal control environment that supports the integrity of information used for internal decision-making by management, the Board and its committees as well as supporting the integrity of external reports.
	The Audit and Risk Committee considers the current model as effective and efficient in that it fully integrates with the risk management function. It will, however, continue to monitor it in light of the changing operational environment.
Sarbanes-Oxley Compliance (SOX)	The Audit and Risk Committee has overseen the SOX compliance efforts of management through receiving quarterly updates on controls associated with financial reporting and assessed the final conclusion reached by the Chief Executive Officer and Chief Financial Officer on the effectiveness of the internal controls over financial reporting.
Compliance	The Audit and Risk Committee continued to monitor the refinement of the global compliance governance framework that allows for a systematic risk-based approach for group, regions and operations to identify and monitor compliance to major laws, regulations, standards and codes. Received formal feedback from the Group Compliance Officer on the implementation of actions identified during the 2017 independent quality assurance review performed on the compliance function.
Litigation matters	The Audit and Risk Committee received and considered reports on significant litigation matters and assessed the possible impact thereof on the group financial results.

INTERNAL AUDIT

Group Internal Audit is a key independent assurance and consulting business partner within AngloGold Ashanti under the leadership of the Senior Vice President: Group Internal Audit who has direct access to the chairmen of both the Audit and Risk Committee and the Board. The Senior Vice President: Group Internal Audit who reports functionally to the Audit and Risk Committee and administratively to the Chief Financial Officer is not a member of the Executive Committee, but has a standing invitation to attend these meetings. As part of its mandated responsibilities, the Audit and Risk Committee has assessed the performance of the Senior Vice President: Group Internal Audit in terms of the annually reviewed and approved internal audit charter and is satisfied that the internal audit function is independent and appropriately resourced, and that the Senior Vice President: Group Internal Audit has fulfilled the obligations of the position by performing the following functions and reporting to the Audit and Risk Committee on:


•	evaluating ethical leadership and corporate citizenship within AngloGold Ashanti;


•	assessing the governance of risk within AngloGold Ashanti;


•	reviewing the governance of Information Technology within AngloGold Ashanti;


•	assessing compliance with laws, rules, codes and standards within AngloGold Ashanti;


•	evaluating the effectiveness of internal controls over financial reporting and internal controls in general;


•	reporting findings to management and the Audit and Risk Committee and monitoring the remediation of all significant deficiencies reported; and


•	implementing a Combined Assurance Framework for the group.

The Audit and Risk Committee considered the internal control heat-map for AngloGold Ashanti as presented by Group Internal Audit and monitored the implementation of significant audit recommendations through a formal tracking process. The Audit and Risk Committee also considered the outcome of the independent external quality assurance review conducted by Grant Thornton and noted that there were no significant areas of improvement identified.

As Chairman, I meet with the Senior Vice President: Group Internal Audit in private before each meeting and on an ad-hoc basis throughout the year.

The Audit and Risk Committee is of the opinion, having considered the written assurance statement provided by Group Internal Audit, that nothing has come to its attention indicating that the group’s system of internal financial controls is not effective and does not provide reasonable assurance that the financial records may be relied upon for the preparation of the annual financial statements.

EXTERNAL AUDIT

The audit cycle at AngloGold Ashanti is continuous as the External Auditor performs half yearly reviews on the results of the group. During August 2018, the annual integrated audit plan, the associated fees and the 2018 global engagement letter were tabled at the committee for consideration and approval.

As Chairman, I meet with the primary engagement team members in private before each scheduled meeting where I am also briefed on general matters relating to the accounting and auditing profession as it may impact on AngloGold Ashanti.

As part of its ongoing assessment of the independence and effectiveness of the external auditors, the Audit and Risk Committee has also considered during its evaluation of the independence of the Ernst & Young factors such as:


•	the tenure of service;


•	the quality of planning, delivery and execution of the audit;


•	quality and knowledge of the audit team, specifically the senior management team, including the lead engagement partner;


•	the results of the most recent IRBA and PCAOB regulator reviews and the responses of the firm on observations raised in these reports;


•	outcome of the quality assessment review performed during the first half of 2018; and


•	the robustness of the audit, including the audit team’s ability to challenge management as well as demonstrate professional scepticism and independence.

In addition, when considering the re-appointment of the External Auditor at the annual general meeting, the committee satisfied itself that the External Auditor is accredited on the JSE list of Auditors and Accounting Specialists, and that the individual auditor responsible for performing the functions of the auditor, does not appear on the JSE list of disqualified individual auditors, as set out in Section 22.

To further safeguard auditor independence, a formal policy on the approval of all non-audit related services has been approved and implemented. In terms of the policy the Audit and Risk Committee has established that the sum of the non- audit and tax fees in a year must not exceed 40% of the sum of the audit and audit related fees in the year. The Audit and Risk Committee received a quarterly update on the tax and non-audit fees as a percentage of the total audit and audit related fees and are comfortable that the external auditor’s independence had not been jeopardised.

During 2018, the external audit fees were made up of audit services ($5.96m), audit related services ($0.76m), non-audit fees ($0.02m) and tax services ($0.18m).

The Audit and Risk Committee did not note any significant findings and considers the service provided by the external auditors to have been independent, effective and robust.

TRANSFORMATION OF THE EXTERNAL AUDIT

In the spirit of AngloGold Ashanti’s commitment to transformation, the Audit and Risk Committee closely monitors and guides the transformation within the context of the external audit. The current auditors Ernst & Young are level 1 contributors and under the guidance of the Audit and Risk Committee, certain of the AngloGold Ashanti subsidiaries, such as Mine Waste Solutions acquired in July 2012 for $335m and the Rehabilitation Trust with a gross asset value of R1.3bn, are audited by Nexia SAB&T, a level 1 contributor. In addition, Nexia SAB&T performs certain audit work of the South African operations under the supervision of Ernst & Young.

FINANCE FUNCTION AND CHIEF FINANCIAL OFFICER

The Audit and Risk Committee received feedback on an internal assessment conducted on the skills, expertise and resourcing of the finance function and was satisfied with the overall adequacy and appropriateness of the function. The Audit and Risk Committee further reviewed the expertise and experience of the Chief Financial Officer, Christine Ramon, and was satisfied with the appropriateness thereof.

As Chairman, I meet with the senior finance team in private before each scheduled meeting where I am also briefed on general matters relating to the administration of the finance function, the effectiveness of the internal control environment associated with financial reporting as well as any transactions that may require additional consideration in terms of accounting.

WHISTLEBLOWING

The Audit and Risk Committee received quarterly updates on AngloGold Ashanti’s whistleblowing process. Where appropriate, the Audit and Risk Committee had directly overseen the investigation of whistle-blowing reports. Reports received and investigated did not reveal any malpractice relating to the accounting practices, internal financial controls, internal audit function or the content of the company’s and group’s financial statements.

During the year, 180 reports were received which is consistent with the number of reports received in 2017 (167). We have noted an increase in the number of reports from the Continental Africa Region however the committee views this as a positive reflection of a greater awareness and understanding of the benefits of the whistle-blowing process. As a committee, we are comfortable that each report received is taken seriously and thoroughly investigated.

TAX GOVERNANCE AND STRATEGY

The Audit and Risk Committee received and reviewed detailed reports from the Chief Financial Officer and Vice President: Global Taxation, jointly, on the group’s tax position, including uncertain tax positions, tax provisions, status of the group’s tax compliance globally and relevant global fiscal developments impacting the group.

The committee also approved the group’s tax strategy and tax management policy, which together, set out the group’s approach to tax in areas such as tax efficiency, tax risk management and tax governance and oversight, which is more fully explained in the Integrated Report.

LOOKING FORWARD

The Audit and Risk Committee realises that its work is increasingly broad and complex and that, as a committee, we are required to stay on top of developments impacting AngloGold Ashanti.

During 2019, the Audit and Risk Committee will continue to monitor:


•	the impact of the new leases accounting standard applicable from 1 January 2019 on the existing accounting policies and contracts in place; and


•	the progress made in terms of the XBRL tagging process for SEC and CIPC filing purposes.

In the spirit of continuous refinement and improvement of the group’s combined assurance model and changing operational risk profile, the Audit and Risk Committee will continue monitor the successful integration of the core technical engineering and mining disciplines into the combined assurance review process, where so dictated by risk, during 2019. The committee will also consider the group’s approach to Mandatory Audit Firm rotation that will be effective for the 2024 financial period.

STATEMENT OF INTERNAL CONTROL

The opinion of the Board on the effectiveness of the internal control environment is informed by the by the conclusion of the Audit and Risk Committee.

The Audit and Risk Committee assessed the results of the formal documented review conducted by Group Internal Audit and other identified assurance providers in terms of the evolving combined assurance model of the group’s system of internal controls and risk management, including the design, implementation and effectiveness of the internal financial controls. The assessment, when considered with information and explanations given by management and discussions with both the internal and external auditors on the results of their audits, led to the conclusion that nothing has come to the attention of the Board that caused it to believe that the company’s system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements.

ANNUAL FINANCIAL STATEMENTS

The Audit and Risk Committee has evaluated the consolidated and separate annual financial statements for the year ended 31 December 2018 and concluded that they comply, in all material aspects, with the requirements of the Companies Act, International Financial Reporting Standards, and JSE Listings Requirements. The Audit and Risk Committee therefore recommended the approval of the annual financial statements to the Board.

CONCLUSION

The Audit and Risk Committee is satisfied that it has considered and discharged its responsibilities in accordance with its mandate, statutory responsibilities and terms of reference during the year under review. In signing this report on behalf of the Audit and Risk Committee, I would like to thank my fellow committee members, the external auditors, internal auditors and management for their contributions to the committee during the year.

Rhidwaan Gasant

Chairman: Audit and Risk Committee

19 March 2019

CHIEF FINANCIAL OFFICER’S REVIEW

EXECUTIVE SUMMARY

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.

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 flat 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

MARKET OVERVIEW

Focusing on the gold market, annual jewellery demand barely changed at 2,200 tonnes, after a 3% year-on-year drop in fourth quarter demand reversed the gains of previous quarters. Demand in China supported the market, despite a slowdown specifically in the fourth quarter resulting from the trade war with the US and slowing economic growth rate weighed on demand. Economic hardship, relatively weak currencies and the after effects of tax-changes negatively impacted Turkey and Middle Eastern markets to varying degrees: Iran and Turkey were hit particularly hard.

Inflows into global gold-backed ETFs and similar products totalled 69 tonnes in 2018. This was 67% lower than the 206.4 tonnes of inflows in 2017. Sizable annual flows into European-listed funds (+96.8 tonnes) drove growth in the sector, while North American funds which experienced heavy outflows for part of the year, reversed in the fourth quarter. For the first time since 2012, the value of total gold-backed ETF holdings finished the year above US$100bn, at US$100.6bn.

The official 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. Coin demand flourished 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. Bar sales were steady at 781.6 tonnes and have been remarkably stable over the past five years with annual demand anchored between a low of 780 tonnes in 2014 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 (Bretton Woods), 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 the principal objective of investing in safe and liquid assets.

Gold mine production over the year rose fractionally, up 1% to 3,346.9 tonnes. Although slowing in recent years, this is now the tenth year of annual growth and the highest level of annual mine output on record (previous record in 2017). Net producer de-hedging was seen for a third consecutive quarter in the fourth quarter, with the global hedge book declining by a further 10 tonnes. On an annual basis, net producer de-hedging totalled 29.4 tonnes, 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 US$1,268/oz. AngloGold Ashanti achieved an average price of US$1,261/oz for gold sold during the year.

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 flat gold price and lower costs, despite a 355,000oz drop in production following the sale and closure of Moab Khotsong, Kopanang and TauTona mines 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 $1bn and A$500m revolving credit facilities were refinanced extending the maturity date by 5 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 resulted in added 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 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 (CVSA) in Argentina has 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 floor 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%.

We will continue to work towards widening these margins, by focusing on the controllable factors, including:


•	stringent cost management;


•	reinvestment in low capital, high return opportunities within our business; and


•	continuing to drive our Operational Excellence Programme, i.e. considering innovative ways to improve efficiencies and productivity in our operations.

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 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 this new target is achievable, even as we invest inward, pay dividends to shareholders subject to approval by the board of directors (Board) 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:


1.	Adjusted for bond redemption premium of $61m on part settlement of $1.25bn high-yield bonds; for Obuasi redundancy costs of $210m; and the 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 ~$49m.


4.	Adjusted for SA retrenchment costs paid of ~$61m.

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.

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) Resources, continues its efforts of constructive dialogue with the DRC government.

VAT receivables in Tanzania were largely steady, as we offset $33m in historical VAT. The recent VAT agreement in the DRC is another positive development, where the government has committed to a $60m cash refund to the Kibali joint venture in respect of historical amounts owing.

The joint venture received a VAT refund of $6m towards the end of the year, and the balance will be offset against all forms of future taxes owed. Any future buildup of VAT receivables will be curbed, once the President signs the agreement to exempt the joint venture from VAT for the purchase of local goods and services.


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 orebody has started in earnest.

Establishment of the project and operating teams have progressed well and all key roles have been filled. 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 commenced. Refurbishment planning was completed, and works are set to commence by end the of March 2019. The housing refurbishment programme has also commenced and the expansion of the mining contractor’s camp is well advanced.

The underground mining fleet has been delivered and commissioned. 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 first gold pour at the end of 2019. The second is to achieve production of 4,000tpd by the end of 2020. 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 joint venture and to optimise operating costs and import duties, AngloGold Ashanti (Ghana) Limited purchased the mining fleet at a cost of approximately $45m. 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.


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 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 has been declared of 1.26m tonnes of copper and 2.22Moz of gold. 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 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.

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 at marginally better interest rates.

REVIEW OF GROUP’S PROFITABILITY, LIQUIDITY AND STATEMENT OF FINANCIAL POSITION FOR 2018

The key financial and operational metrics for 2018, when compared to 2017 and 2016, are as follows:



		2018	2017	2016
Profitability and returns
Headline earnings	$m	220	27	111
	US cents per share	53	6	27
Profit (loss) attributable to equity shareholders	$m	133	(191)	63
Return on net capital employed⁽¹⁾	%	8	3	6
Dividends declared per ordinary share	SA cents per share	95	70	130
	US cents per share	~7	6	10
Liquidity, cash flow and net debt
Net debt at year end⁽¹⁾	$bn	1.7	2.0	1.9
Free cash flow⁽¹⁾	$m	67	1	278
Adjusted earnings before interest, tax, depreciation and amortisation (Adjusted EBITDA)⁽¹⁾⁽³⁾	$bn	1.5	1.5	1.5
Net debt to Adjusted EBITDA⁽¹⁾⁽³⁾	Times	1.12	1.35	1.24
Operational metrics
Gold produced	Moz	3.40	3.76	3.63
Average price received	$/oz	1,261	1,251	1,243
Total cash costs⁽¹⁾	$/oz	773	792	744
All-in sustaining costs⁽¹⁾⁽²⁾	$/oz	976	1,054	986
All-in costs⁽¹⁾⁽²⁾	$/oz	1,068	1,126	1,071
All-in sustaining cost margin⁽¹⁾⁽²⁾	%	23	16	21


⁽¹⁾	Non-GAAP measures


⁽²⁾	Excludes stockpile write-offs


⁽³⁾	The adjusted EBITDA calculation is based on the formula included in the Revolving Credit Facility Agreements for compliance with the debt covenant formula

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.

The Continental Africa region produced 1,512,000oz 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. AISC were $904/oz for the year ended 31 December 2018, compared to $953/oz for the year ended 31 December 2017. The region delivered a solid performance with production boosted by higher tonnes treated particularly from underground mining at Kibali and Geita and improved underground grade from Geita.

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 year ended 31 December 2017. AISC were $855/oz in 2018, compared to $943/oz achieved in 2017.

The Australia region produced 625,000oz at a total cash cost of $762/oz for the year ended 31 December 2018, compared to 559,000oz at a total cash cost of $743/oz for the year ended 31 December 2017. AISC were $1,038/oz in 2018, compared to $1,062/oz in 2017.

The South Africa region produced 487,000oz at a total cash cost of $1,033/oz for the year ended 31 December 2018, compared to 903,000oz at a total cash cost of $1,085/oz for the year ended 31 December 2017. The lower production reflects fewer mines in the region with only two months of contribution from Kopanang and Moab Khotsong, following their sale on 28 February 2018. TauTona ceased mining in September 2017 and has been placed in orderly closure. AISC for the South Africa region were $1,178/oz in 2018, compared to $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 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.

In Guinea at Siguiri, investment was made in the brownfields expansion project which was completed towards the end of 2018. The new combination plant is currently undergoing commissioning ahead of ramp-up to full production. In Australia, capital investments were made towards a new secondary ball mill at Tropicana and completion of the Recovery Enhancement Project at Sunrise Dam.

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 USD 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 affiliate 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.

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 flat 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 was 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%.

More detailed notes and analyses of the group’s income statement, statement of financial position and statement of cash flow for 2018 are available in the group financial statements for 2018.

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 for first production by the end of 2019;


•	Complete asset sale processes;


•	Ongoing stakeholder engagement; and


•	Advance Colombian projects up the value curve.

The guidance for 2019 is set out in the table below:



		Guidance	Notes
Production (000oz)		3,250 - 3,450	Production will be back weighted, with a stronger second half expected for Geita, Siguiri and Brazil
Costs	All-in sustaining costs ($/oz)	935 - 995	First quarter costs impacted by anticipated lower production
Costs	Total cash costs ($/oz)	730 - 780
Overheads	Corporate costs ($m)	75 - 85
Overheads	Expensed exploration and study costs ($m)	130 - 140	Including equity accounted joint ventures
Capex	Total ($m)	910 - 990
	Sustaining capex ($m)	520 - 560
	Non-sustaining capex ($m)	390 - 430	Expenditure related to Obuasi, Siguiri, Tropicana, Mponeng and Quebradona
Depreciation and amortisation ($m)		680
Depreciation and amortisation - included in equity accounted earnings ($m)		160	Earnings of associates and joint ventures
Interest and finance costs ($m) - income statement		130
Other operating expenses ($m)		85	Primarily related to the costs of care and maintenance for Obuasi and South Africa Region

Both production and cost estimates assume neither labour interruptions or power disruptions, nor 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 for the year ended 31 December 2017, filed with the United States Securities and Exchange Commission (SEC).

Sensitivities to the above guidance are as follows:



Sensitivity*	AISC ($/oz)	Cash from operating activities before taxes for 2019 ($m)
10% change in the oil price	6	21
10% change in local currency	58	148
5% change in the gold price	2	193
50koz change in production	14	56

*All the sensitivities based on $1,200/oz gold price and assumptions used for guidance.



Currency and commodity assumptions
$/R exchange rate	14.00
A$/$ exchange rate	0.75
$/BRL exchange rate	3.65
$/ARS exchange rate	40.00
Oil ($/bbl)	74

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 our high calibre financial team whom I applaud. Finally, I look forward to the year ahead with enthusiasm and 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

DIRECTORS’ APPROVAL

In accordance with Section 30(3)(c) of the Companies Act, No. 71 of 2008, as amended, the annual financial statements for the year ended 31 December 2018 were approved by the board of directors on 19 March 2019 and are signed on its behalf by:

DIRECTORS

SM Pityana, Chairman

KPM Dushnisky, Chief Executive Officer

KC Ramon, Chief Financial Officer

R Gasant, Chairman: Audit and Risk Committee

SECRETARY’S CERTIFICATE

In terms of Section 88(2)(e) of the Companies Act, No. 71 of 2008, as amended, I certify that the company has lodged with the Companies and Intellectual Property Commission all such returns and notices as are required of a public company in terms of the Act, and that all such returns and notices are true, correct and up-to-date.

ME Sanz Perez

Company Secretary

Johannesburg

19 March 2019

AFFIRMATION OF FINANCIAL STATEMENTS

In accordance with Section 30(2) and 30(3) of the Companies Act, No. 71 of 2008, as amended, the annual financial statements for AngloGold Ashanti Limited, registration number 1944/017354/06 (AngloGold Ashanti), for the year ended 31 December 2018, have been audited by Ernst & Young Inc., the company’s independent external auditors, whose unqualified audit opinion can be found under Independent Auditor’s Report, on page 25.

The financial statements have been prepared by the corporate reporting staff of AngloGold Ashanti, headed by Ian Kramer (CA (SA)), the Senior Vice President: Group Finance. This process was supervised by Kandimathie Christine Ramon (CA (SA)), the group’s Chief Financial Officer and Kelvin Dushnisky (B.SC (Honours); M.Sc; Juris Doctor), the group’s Chief Executive Officer.

DIRECTORS’ REPORT

For the year ended 31 December

NATURE OF BUSINESS

AngloGold Ashanti conducts mining operations in Africa, South America and Australia, and undertakes exploration activities in these jurisdictions as well as North America. At certain of its operations, AngloGold Ashanti produces silver and sulphuric acid as by-products in the course of producing gold.

A review of the unaudited performance of the various operations is available in the operational profiles on AngloGold Ashanti’s annual report website www.aga-reports.com.

SHAREHOLDERS HOLDING 10% OR MORE OF ANGLOGOLD ASHANTI’S ISSUED SHARE CAPITAL

As at 31 December 2018, Van Eck Global holds 12.7% of the company’s issued share capital. This does not take cognisance of the shares held by the Bank of New York Mellon as depositary for the AngloGold Ashanti American Depository Receipt (ADR) programme.

SHARE CAPITAL

AUTHORISED

The authorised share capital of AngloGold Ashanti as at 31 December 2018 was made up as follows:



	SA Rands
600,000,000 ordinary shares of 25 South African cents each	150,000,000
2,000,000 A redeemable preference shares of 50 South African cents each	1,000,000
5,000,000 B redeemable preference shares of 1 South African cent each	50,000
30,000,000 C redeemable preference shares of no par value	0

The following are the movements in the issued and unissued share capital from 1 January 2018 to 28 February 2019:

ISSUED



Ordinary shares	Number of Shares	Value SA Rands	Number of Shares	Value SA Rands
	2018		2017

At 1 January	410,054,615	102,513,654	408,223,760	102,055,940
Exercise of options by participants in the AngloGold Ashanti Share Incentive Scheme	2,715,365	678,841	1,830,855	457,714
At 31 December⁽¹⁾	412,769,980	103,192,495	410,054,615	102,513,654

At 31 December⁽¹⁾	412,769,980	103,192,495
Issued subsequent to year-end:
Exercise of options by participants in the AngloGold Ashanti Share Incentive Scheme	658,706	164,676

At 28 February 2019	413,428,686	103,357,171


⁽¹⁾	Share capital of $16m (2017: $16m) is translated at historical rates of exchange at the reporting dates. Refer to group financial statements note 23.

Redeemable preference shares

The A and B redeemable preference shares, all of which are held by the wholly owned subsidiary, Eastvaal Gold Holdings Limited, may not be transferred. No further A and B redeemable preference shares will be issued. C redeemable preference shares which may only be issued to AngloGold Ashanti Limited or its subsidiaries, have not been issued at 19 March 2019. The group has started with a process to cancel all A, B and C redeemable preference shares.

Further details of the authorised and issued shares, as well as the share premium, are given in group financial statements note 23.

UNISSUED ORDINARY SHARES



	Number of ordinary shares
	2018		2017

At 1 January	189,945,385		191,776,240
Issued during the year	(2,715,365	)	(1,830,855	)
At 31 December	187,230,020		189,945,385
Issues subsequent to year-end	(658,706	)
At 28 February 2018	186,571,314

ORDINARY SHARES UNDER THE CONTROL OF THE DIRECTORS

Pursuant to the authority granted by shareholders at the Annual General Meeting held on 16 May 2018, 5% of the shares in issue were placed under the control of the directors to allot and issue, for such purposes and on such terms as the directors, in their discretion, may determine. The total number of shares placed under the control of the directors was 20,689,815. No shares were issued during 2018 by the directors in terms of this authority, which will expire at the close of the next Annual General Meeting, unless renewed.

Shareholders will therefore be asked at the Annual General Meeting to be held on 9 May 2019, to renew this authority by placing 5% of the number of shares in issue under the control of the directors to allot and issue, for such purposes and on such terms as the directors, at their discretion, may determine.

In terms of the Listings Requirements of the JSE, shareholders may, subject to certain conditions, authorise the directors to issue the ordinary shares held under their control for cash other than by means of a rights offer to shareholders. To enable the directors of the company to take advantage of favourable business opportunities which may arise for the issue of such ordinary shares for cash, without restriction, for the benefit of the company, shareholders will be asked to consider an ordinary resolution to this effect at the Annual General Meeting to be held on 9 May 2019.

Shareholders will also be asked to approve as a general authority, the acquisition by the company, or a subsidiary of the company, of its own shares from its issued ordinary share capital for certain specific housekeeping reasons.

DEPOSITARY INTERESTS

American Depositary Shares

At 31 December 2018, the company had in issue, through The Bank of New York Mellon as Depositary and listed on the New York Stock Exchange (NYSE) 183,174,711 (2017: 159,347,405), American Depositary Shares (ADSs). Each ADS is equal to one AngloGold Ashanti ordinary share. At 28 February 2019, there were 180,111,393 ADSs in issue and listed on the NYSE.

CHESS Depositary Interests

At 31 December 2018, the company had in issue, through the Clearing House Electronic Sub-register System (CHESS), and listed on the Australian Securities Exchange (ASX), 91,751,740 (2017: 90,233,125) CHESS Depositary Interests (CDI). At 28 February 2019 there were 91,751,740 CDI’s in issue. Every five CDIs are equivalent to one AngloGold Ashanti ordinary share and carry the right to one vote.

Ghanaian Depositary Shares

At 31 December 2018, the company had in issue, through NTHC Limited as Depositary and listed on the Ghana Stock Exchange (GhSE), 15,959,100 Ghanaian Depositary Shares (GhDSs) (2017: 15,959,100). At 28 February 2019 there were 15,870,400 GhDSs in issue. Every 100 GhDSs are equivalent to one underlying AngloGold Ashanti ordinary share and carry the right to one vote.

ANGLOGOLD ASHANTI SHARE INCENTIVE SCHEME

AngloGold Ashanti operates a share incentive scheme through which Executive Directors, members of the Executive Committee and other management groups of the company and its subsidiaries are given the opportunity to acquire shares in the company. The intention of the incentive scheme is to ensure that the medium to long term interests of the executive and shareholders are aligned, providing rewards to the executives and wealth creation opportunities to the shareholders when the strategic performance drivers are achieved.

Non-Executive Directors are not eligible to participate in the share incentive scheme.

Employees participate in the share incentive scheme to the extent that they are granted options or rights to acquire shares and accept them. All options or rights which have not been exercised within ten years from the date of grant, automatically expire.

The incentives offered by AngloGold Ashanti are reviewed periodically to ensure that they remain globally competitive, so as to attract, reward and retain managers of the highest calibre. As a result, several types of incentives, each with their own issue and vesting criteria, have been granted to employees. These are collectively known as the “AngloGold Ashanti Share Incentive Scheme” or “Share Incentive Scheme”.

Although the Remuneration and Human Resources Committee has the discretion to incentivise employees through the issue of shares, only options or awards have so far been granted.

The type and vesting criteria of the options or awards granted are:

BONUS SHARE PLAN (BSP)

The granting of awards in terms of the BSP was approved by shareholders at the Annual General Meeting held on 29 April 2005. The Scheme has undergone a number of changes, each approved by the shareholders. Currently, each award made in respect of the BSP entitles the holder to acquire one ordinary share at “nil” cost, provided that the participant remains in the employ of the company at the date of vesting unless an event, such as death, retirement or redundancy occurs, which may result in a pro-rata allocation of awards and an earlier vesting date.

The Executive Committee members receive an allocation of 150 percent of their cash bonus while all other participating employees receive a 120 percent matching. The vesting period runs over two years with 50 percent vesting 12 months after the date of issue and the remaining 50 percent vesting 24 months after the date of issue. The last BSP awards were granted in 2018 and it is not anticipated that further awards will be granted in future.

LONG TERM INCENTIVE PLAN (LTIP)

The granting of awards in terms of the LTIP was approved by shareholders at the Annual General Meeting held on 29 April 2005. Executive directors and selected senior management are eligible for participation. Each award made in respect of the LTIP entitles the holder to acquire one ordinary share at “nil” cost. Awards granted vest in three years from the date of grant, to the extent that the set company performance targets, under which the awards were made, are met, and provided that the participant remains in the employ of the company at the date of vesting, unless an event, such as death, retirement or redundancy occurs, which may result in a pro-rata allocation of awards and an earlier vesting date. Awards for 2016 and 2017 will be cash settled in lieu of share awards. No new LTIP awards were granted in 2018, and it is not anticipated that further LTIP awards will be granted in future.

The table below reflects the total number of options/awards that are available for issue in terms of the BSP and LTIP awards:



	2018 Options/Awards		2017 Options/Awards

At 1 January	1,057,617		1,252,708
Bonus Share Plan awards granted	(2,492,584	)	(1,926,549	)
Lapsed/Forfeited:Bonus Share Plan	359,343		218,601
Lapsed/Forfeited: Long Term Incentive Plan	1,186,330		1,512,857
At 31 December	110,706		1,057,617

CO-INVESTMENT PLAN (CIP)

To assist executives in meeting their Minimum Shareholding Requirements (MSR’s) with effect from February 2013, they were given the opportunity, on a voluntary basis, to participate in the Co-Investment Plan (CIP), and this has been adopted based on the following conditions: Executives are allowed to take up to 50% of their after tax cash bonus to participate in a further matching scheme by purchasing shares in AngloGold Ashanti, and the company will match their initial investment into the scheme at 150%, with vesting over a two-year period in equal tranches.

DEFERRED SHARE PLAN (DSP)

On 16 May 2017, the shareholders approved the introduction of the Deferred Share Plan to replace both the BSP and LTIP with effect from 1 January 2018. The DSP, designed with feedback from shareholders in mind, aims to better align the interests of company management with those of shareholders by, among others: rewarding decision-making that promotes the long term health of the business by increasing the maximum vesting period of shares from two years to a maximum vesting period of five years, and introducing a claw-back provision; reducing the impact of uncontrollable factors, like gold price and currency fluctuations, in determining remuneration; providing better incentive for prudent, value-adding capital allocation; capping the number of shares that can be issued under the DSP in any given year to 1% of total shares in issue; and providing greater incentives for excellence in the broad area of sustainability, which covers the safety, environmental, governance, community relations and human capital disciplines.

The first awards under this scheme will be made in the 2019 calendar year for the 2018 performance year.

CHANGES IN OPTIONS AND AWARDS

In accordance with the JSE Listings Requirements and the rules of the AngloGold Ashanti Share Incentive Scheme, the changes in options and awards granted and the ordinary shares issued as a result of the exercise of options and awards during the period 1 January 2018 to 28 February 2019 are disclosed below:



	Bonus Share Plan		Long-Term Incentive Plan⁽²⁾		Total Share Incentive Scheme

At 1 January 2018	4,479,679		2,518,210		6,997,889
Movement during year
- Granted⁽¹⁾	2,492,584		—		2,492,584
- Exercised	(2,055,001	)	(884,038	)	(2,939,039	)
- Lapsed/forfeited	(359,343	)	(1,186,330	)	(1,545,673	)
At 31 December 2018	4,557,919		447,842		5,005,761
Subsequent to year-end
Exercised	(611,750	)	(46,956	)	(658,706	)
- Lapsed/forfeited	(36,722	)	—		(36,722	)
At 28 February 2019	3,909,447		400,886		4,310,333

⁽¹⁾ BSP and LTIP awards are granted at no cost to participants.

⁽²⁾ Includes Share Retention Bonus Scheme awards.

DIVIDEND POLICY

Dividends are proposed by, and approved by the Board of directors of AngloGold Ashanti, based on the company’s financial performance. The dividend policy provides for an annual dividend to be based on 10% of the free cash flow, before growth capital expenditure, generated by the business for that financial year. Furthermore, this is subject to the Board exercising its discretion on an annual basis, after taking into consideration the prevailing market conditions, balance sheet flexibility and future capital commitments of the group.

In 2018, in line with the approved dividend policy, the Board has applied its discretion in adjusting the 2018 free cash flow, before growth capital expenditure metric for the $61m abnormal South African retrenchment costs paid. As a result, for the year ended 31 December 2018, the directors of AngloGold Ashanti declared a gross cash dividend per ordinary share of 95 South African cents (assuming an exchange rate of ZAR 13.7619/$, the gross dividend payable per ADS is equivalent to ~7 US cents).

The Board is satisfied that subsequent to the dividend declaration, the company has adequate balance sheet flexibility and sufficient funding facilities available to withstand market volatility. The continuation of the dividend reflects capital discipline and management's commitment to improving shareholder returns.

Dematerialised shareholders on the South African share register will receive payment of their dividends electronically, as provided for by Strate. Certificated shareholders, who have elected to receive their dividends electronically, will be paid via the company’s electronic funds transmission service. Certificated shareholders who have not yet elected to receive dividend payments electronically, are encouraged to mandate this method of payment for all future dividends.

WITHHOLDING TAX

Withholding tax of 20% on dividends and other distributions payable to shareholders are in effect from 1 March 2017.

BORROWINGS

The company’s borrowing powers are unlimited pursuant to the company’s Memorandum of Incorporation. As at 31 December 2018, the group’s gross borrowings totalled $2,050m (2017: $2,268m).

OTHER MATTERS

SIGNIFICANT EVENTS DURING THE YEAR UNDER REVIEW

AngloGold Ashanti completed the sales of the Moab Khotsong and Kopanang Mines - On 2 March 2018, AngloGold Ashanti announced

that all conditions precedent were fulfilled with respect to the sale of the Moab Khotsong Mine and related assets and liabilities to Harmony Gold Mining Company Limited, and the separate sale of Kopanang Mine and related assets and liabilities to Heaven Sent SA Sunshine Investment Company Limited as announced on 19 October 2017. Both transactions closed on 28 February 2018.

Settlement of silicosis and tuberculosis class action - On 3 May 2018, Richard Spoor Inc, Abrahams Kiewitz Inc and the Legal Resources Centre (representing claimants in the silicosis and tuberculosis class action litigation) and African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony and Sibanye-Stillwater announced that they have reached a settlement in this matter. Following

this announcement, on 13 December 2018, the Johannesburg High Court issued a court order setting out the processes in terms of which members of the settling classes and any interested parties should be invited to show cause why the settlement should not be made an order of court. Both the court order and the settlement agreement set out steps that will need to be followed from this point.

Obuasi mining contract - On 29 October 2018, AngloGold Ashanti announced the finalisation of a five-year underground mining contract at the Obuasi redevelopment project with Underground Mining Alliance Limited, a joint venture between Australia's African Underground Mining Services and Rocksure International, a wholly-owned Ghanaian mining contractor .

SIGNIFICANT EVENTS SUBSEQUENT TO YEAR-END

Yatela sales process

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 USD 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 affiliate 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.

Maiden Ore Reserve declared at Quebradona

On 19 February 2019, AngloGold Ashanti announced the maiden Ore Reserve for the Quebradona project. The Quebradona project is a Joint Venture between AngloGold Ashanti (94.876% and manager) and B2Gold (5.124%). The maiden Ore Reserve was declared of 1.26m tonnes of copper and 2.22Moz of gold.

MATERIAL CHANGE

There has been no material change in the financial results or trading position of the AngloGold Ashanti group since the publication of the report for the six months and year ended 31 December 2018 on 19 February 2019 and the date of this report. The results for the year ended 31 December 2018 were audited by Ernst & Young Inc., who issued an unqualified audit report on 19 March 2019.

ANNUAL GENERAL MEETINGS

•At the 74^th Annual General Meeting held on Wednesday, 16 May 2018, shareholders passed resolutions relating to the:

•Re-election of Messrs Garner and Gasant and Ms Richter, Mrs January-Bardill and Mrs Ramon as Directors of the Board;

•Appointment of the Audit and Risk Committee members being, Messrs Gasant, Kirkwood and Ruston, Ms Richter;

•Re-appointment of Ernst & Young Inc. as External Auditors of the company;

•General authority to directors to allot and issue ordinary shares;

•Separate non-binding advisory endorsement of the AngloGold Ashanti remuneration policy and implementation report;

•Remuneration of non-executive directors, which remains unchanged from the previous year;

•General authority to acquire the company’s own shares;

•General authority to directors to issue for cash, those ordinary shares which the directors are authorised to allot and issue;

•General authority to provide financial assistance in terms of sections 44 and 45 of the Companies Act; and

•Directors’ authority to implement special and ordinary resolutions.

Notice of the 75^th Annual General Meeting to be held in the Auditorium, 76 Rahima Moosa Street, Newtown, Johannesburg at 09:00 (South African time) on 9 May 2019, is printed as a separate document and distributed to shareholders in accordance with the Companies Act.

DIRECTORATE AND SECRETARY

During the period 1 January 2018 to 31 December 2018, Srinivasan Venkatakrishnan resigned as Chief Executive Officer effective 30 August 2018 and Kelvin Dushnisky was appointed effective 1 September 2018. Sindiswa Zilwa resigned as a non-executive director with effect from 15 May 2018, Alan Ferguson was appointed as an independent non-executive director with effect from 1 October 2018 and Jochen Tilk was appointed as a non-executive director with effect from 1 January 2019..

Company Secretary

There was no change to the office of the Company Secretary during 2018. The name, business and postal address of the Company Secretary are set out under Administrative Information on page 125.

Directors’ and Prescribed Officers’ interests in AngloGold Ashanti shares

The interests of Directors, Prescribed Officers and their associates in the ordinary shares of the company at 31 December 2018, individually did not exceed 1% of the company’s issued ordinary share capital and are disclosed in note 23 of the group financial statements.

Details of service contracts of Directors and Prescribed Officers

In accordance with Section 30(4)(e) of the Companies Act the salient features of the service contracts of Directors and Prescribed Officers have been disclosed in the Remuneration Report, which is included in the Integrated Report 2018.

ANNUAL FINANCIAL STATEMENTS

The financial statements set out fully the financial position, results of operations and cash flows of the group and the company for the financial year ended 31 December 2018.

The directors of AngloGold Ashanti are responsible for the maintenance of adequate accounting records and the preparation of the annual financial statements and related information in a manner that fairly presents the state of affairs of the company, in conformity with the Companies Act and in terms of the JSE Listings Requirements.

The directors are also responsible for the maintenance of effective systems of internal control which are based on established organisational structures and procedures. These systems are designed to provide reasonable assurance as to the reliability of the annual financial statements, and to prevent and detect material misstatement and loss.

In preparing the annual financial statements, the group has complied with International Financial Reporting Standards (IFRS) and used appropriate accounting policies supported by pragmatic judgements and estimates.

AngloGold Ashanti, through its Executive Committee, reviews its short-, medium- and long-term funding, treasury and liquidity requirements and positions monthly. The board of directors also reviews these on a quarterly basis at its meetings.

Cash and cash equivalents, at 31 December 2018 amounted to $329m (2017: $205m), and together with cash budgeted to be generated from operations in 2019 and the net incremental borrowing facilities available, are in management’s view, adequate to fund operating, mine development, capital expenditure and financing obligations as they fall due for at least the next 12 months.

Taking these factors into account, the directors of AngloGold Ashanti have formed the judgement that, at the time of approving the financial statements for the year ended 31 December 2018, it is appropriate to prepare these financial statements on a going concern basis.

Based on the results of a formal documented review of the company’s system of internal controls and risk management, covering both the adequacy in design and effectiveness in implementation, performed by the internal audit function during the year 2018:

•information and explanations provided by line management;

•discussions held with the External Auditors on the results of the year-end audit; and

•the assessment by the Audit and Risk Committee,

the Board has concluded that nothing has come to its attention that caused it to believe that the company’s system of internal controls and risk management are not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements.

The directors are of the opinion that these financial statements fairly present the financial position of the company and group at 31 December 2018 and the results of their operations, changes in equity and cash flow information for the year then ended in accordance with IFRS.

The External Auditor, Ernst & Young Inc., is responsible for independently auditing and reporting on the financial statements in conformity with International Standards on Auditing and the Companies Act of South Africa. Their unqualified opinion on these financial statements appears in the Independent Auditor’s Report, on page 25 of this report.

The company will file a set of financial statements in accordance with IFRS in its annual report on Form 20-F as must be filed with the US Securities and Exchange Commission (SEC) by no later than 30 April 2019. Copies of the annual report on Form 20-F will be made available once the filing has been made, on request, from the Bank of New York Mellon, or from the company’s corporate office detailed in the section Administrative Information.

INVESTMENTS

Particulars of the group’s principal subsidiaries and operating entities are presented in this report on page 120.



EY 102 Rivonia Road Sandton Private Bag X14 Sandton 2146		Ernst & Young Incorporated Co. Reg. No. 2005/002308/21 Tel: +27 (0) 11 772 3000 Fax: +27 (0) 11 772 4000 Docex 123 Randburg ey.com

INDEPENDENT AUDITOR’S REPORT

The Board of Directors and Shareholders of AngloGold Ashanti Limited

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

OPINION

We have audited the consolidated and separate financial statements of AngloGold Ashanti Limited and its subsidiaries (the group) set out on pages 29 to 121, which comprise the consolidated and separate statements of financial position as at 31 December 2018, and the consolidated and separate income statement, consolidated and separate statement of comprehensive income, consolidated and separate changes in equity and consolidated and separate cash flows for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the group as at 31 December 2018, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of South Africa.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IRBA Code), the International Federation of Accountants’ Code of Ethics for Professional Accountants (IFAC Code) and other independence requirements applicable to performing the audit of the group. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code, IFAC Code, and in accordance with other ethical requirements applicable to performing the audit of the group. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of the audit of the consolidated and separate financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and separate financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated and separate financial statements.



Key Audit Matter (KAM)	How the matter was addressed in the audit
VAT recoverability at Geita (consolidated KAM) Geita Gold Mine (GGM) Limited has recorded $84m of VAT receivables due from the Tanzanian Revenue Authority (TRA), of which a substantial amount was not refunded in a timely manner. $32m has been classified as current assets, and the remaining $52m is classified as non-current assets based on management’s plan to offset the VAT receivables with future taxes in accordance with current legislation. As disclosed in note 20 on page 60, an amendment, effective 20 July 2017, to Tanzania’s mining legislation included an amendment to the VAT Act 2015 to the effect that no input tax credit can be claimed for expenses incurred in the production of raw materials which are to be exported. The total VAT claims submitted since July 2017, in relation to these expenses amounts to $83m. Management have disputed this interpretation of the legislation by the Tanzania Revenue Authority. As a result, the recoverability of these receivables was considered to be a key audit matter in the current year.	We have read correspondence between Management and the TRA, including the results of the tax returns and assessments received during the year. We have read correspondence from management indicating their intention to set off the VAT receivable balances against other taxes. We have read external legal counsel opinions obtained by management to support their interpretation of the tax legislation for set offs of this manner. We challenged the recoverability of the VAT receivable based on the above correspondence and interpretation of legislation, historical payments received to date as well as past and current year experience in setting off VAT receivables. We challenged the classification of the VAT receivables as current or non-current, based on managements planned scheduling of setting off the VAT receivables. This scheduling is based on management’s forecasts of available taxable income against which set offs can be made. We reviewed the appropriateness of the VAT receivable disclosure in the financial statements. We considered the design, and tested the operating effectiveness, of internal controls in relation to this matter.



Rehabilitation and decommissioning provision (consolidated and separate KAM) At 31 December 2018 the rehabilitation and decommissioning provision amounted to $637m ($622m classified as non-current liabilities, and $15m as current liabilities) in the consolidated financial statements, and R796m in the separate financial statements. We focussed on this area due to the significance of the provision in the consolidated and separate financial statements as well as the judgemental nature of the provision. The determination of the provision is based on, inter alia, judgements and estimates of current damage caused, nature, timing and amount of future costs to be incurred to rehabilitate the mine sites, estimates of future inflation, exchange rates and discount rates. Because these assumptions, are subject to change on an annual basis as a result of continued mining, rehabilitation being undertaken and environmental changes, and the inherent sensitivity to changes in the assumptions, we consider this as an area requiring significant auditor attention in the current year. The consolidated and separate disclosures are included in Note 25 and Note 19 Environmental rehabilitation and other provisions, respectively.	We identified and tested controls to management’s processes in place to approve and accurately determine the provision. With the assistance of our valuation experts, our audit procedures included the assessment of management’s macro-economic assumptions in their rehabilitation models. The most significant of these assumptions were the risk-free interest rates, expected inflation and exchange rates as these have the largest quantitative effect on the provision balance. We tested the mathematical accuracy of the valuation models. We compared the timing of the expected cash flows with reference to the expected life of mine plans at the respective regions. We compared the current year cash flow assumptions to those of prior year, and corroborated management’s explanations where these have changed or deviated. We tested the cost rates applied with reference to publicly available information as well as recent rehabilitation activities. We inquired from operational management whether additional environmental disturbance occurred that will require additional rehabilitation in future, and we corroborated this understanding through site visit and mine plans. We also assessed the integrity of the financial rehabilitation models. We read the reports prepared by management’s internal experts and external experts, where these had been engaged by management, to support the provision. We reviewed the appropriateness of the related disclosure in the consolidated and separate financial statements.
Recoverability of the net asset values of South African assets (consolidated and separate KAM) The SA Region has been subject to prolonged restructuring, which included the closure Tau Tona and Savuka and disposal of Kopanang and Moab Khotsong in the prior and current periods, respectively. This has necessitated a significant restructuring and downsizing of the region. The assessment of recoverable amount of the remaining assets (i.e. Mponeng, Surface Operations and First Uranium Group) requires significant judgement which can be influenced by AngloGold Ashanti Limited’s current and long-term business plans for the South African region, future metal price assumptions, proven and probable reserves, including the costs to develop and produce mining reserves, and appropriate escalation and discount rates. As a result we considered the recoverability of the aforementioned assets (i.e. Mponeng, Surface Operations and the First Uranium Group) as a key audit matter.The consolidated and separate disclosures are included in Note 14 and Note 9 Tangible Assets, respectively.	We evaluated management’s processes, and considered other supporting information, to identify the South African cash generating units and determine whether impairment indicators existed for the respective cash generating units. We also evaluated management’s methods, processes and controls in place to determine the carrying values, and the associated recoverable amounts, of each cash generating units. We compared the mine plans, including the mineral reserves and resources quantities to the plans that were approved by the directors, and identified and tested controls audit over management’s processes and controls related to the declaration of mineral reserves and resources that were included these business plans. Our audit procedures included involving experts to support us in critically assessing management’s assumptions in their valuation models, including weighted average cost of capital, inflation forecasts, future gold prices and exchange rates. We also considered the key operational and cashflow assumptions, including production, resultant revenue, capital expenditure and cost movements. We tested the arithmetical accuracy of the valuation models. We considered the adequacy of the related disclosures in the consolidated and separate financial statements.

OTHER INFORMATION

The directors are responsible for the other information. The other information comprises the Audit and Risk Committee - Chairman’s Letter, the Chief Financial Officer’s Review, the Company Secretary’s Certificate and the Directors’ Report in the Annual Financial Statement as required by the Companies Act of South Africa, as well as the directors’ approval and affirmation of consolidated and separate financial statements. It also includes the Integrated Report and the Reserve and Resource Statement which we obtained prior to the date of this report. Other information does not include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.


•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control.


•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

•

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group to cease to continue as a going concern.


•	Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.


•	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In terms of the IRBA Rule published in Government Gazette Number 39475, dated 4 December 2015, we report that Ernst & Young Inc., and its predecessor firm, has been the auditor of AngloGold Ashanti Limited for seventy-five years. Ernst & Young Inc. was appointed as auditor of Vaal Reefs Exploration and Mining Company Limited in 1944. In 1998 all of Anglo American’s other individually listed gold mines, which were not audited by Ernst & Young Inc., or its predecessor firm, were merged into Vaal Reefs Exploration and Mining Company Limited. Vaal Reefs Exploration and Mining Company Limited was renamed AngloGold Limited in 1998, and in 2004 to AngloGold Ashanti Limited. Ernst & Young Inc. was retained as auditor of AngloGold Limited (and AngloGold Ashanti Limited) and has been the auditor of the expanded Company for nineteen years. We confirm that we are independent in accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors and other independence requirements applicable to the independent audit of AngloGold Ashanti Limited.

Ernst & Young Inc.

Ernest Adriaan Lodewyk Botha - Director

Chartered Accountant (SA)

Registered Auditor

Johannesburg, South Africa

19 March 2019

GROUP - INCOME STATEMENT

For the year ended 31 December



US dollar millions	Notes	2018		2017		2016
				Restated		Restated

Revenue from product sales	3	3,943		4,510		4,223
Cost of sales	4	(3,173	)	(3,736	)	(3,401	)
Gain (loss) on non-hedge derivatives and other commodity contracts		2		10		19
Gross profit (loss)	2	772		784		841
Corporate administration, marketing and other expenses		(76	)	(64	)	(61	)
Exploration and evaluation costs		(102	)	(114	)	(133	)
Other operating expenses	5	(97	)	(88	)	(110	)
Special items	6	(170	)	(438	)	(42	)
Operating profit (loss)		327		80		495
Interest income		17		15		22
Dividend income		2		—		—
Other gains (losses)		(9	)	(11	)	(88	)
Finance costs and unwinding of obligations	7	(178	)	(169	)	(180	)
Fair value adjustments		(3	)	—		9
Share of associates and joint ventures' profit (loss)	8	122		22		11
Profit (loss) before taxation		278		(63	)	269
Taxation	11	(128	)	(108	)	(189	)
Profit (loss) for the year		150		(171	)	80

Allocated as follows:
Equity shareholders		133		(191	)	63
Non-controlling interests		17		20		17
		150		(171	)	80

Basic earnings (loss) per ordinary share (cents)	12	32		(46	)	15
Diluted earnings (loss) per ordinary share (cents)	12	32		(46	)	15

GROUP - STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December



US dollar millions	2018		2017		2016

Profit (loss) for the year	150		(171	)	80

Items that will be reclassified subsequently to profit or loss:	(150	)	148		189
Exchange differences on translation of foreign operations	(150	)	123		180
Available-for-sale financial assets	—		25		9
Net gain (loss) on available-for-sale financial assets	—		20		13
Release on impairment of available-for-sale financial assets	—		3		—
Release on disposal of available-for-sale financial assets	—		(6	)	(2	)
Deferred taxation thereon	—		8		(2	)

Items that will not be reclassified subsequently to profit or loss:	9		6		(2	)
Net gain (loss) on equity investments	9		—		—
Actuarial gain (loss) recognised	5		8		(2	)
Deferred taxation thereon	(5	)	(2	)	—


Other comprehensive income (loss) for the year, net of tax	(141	)	154		187

Total comprehensive income (loss) for the year, net of tax	9		(17	)	267

Allocated as follows:
Equity shareholders	(8	)	(37	)	250
Non-controlling interests	17		20		17
	9		(17	)	267

GROUP - STATEMENT OF FINANCIAL POSITION

As at 31 December



US dollar millions	Notes	2018		2017		2016

ASSETS
Non-current assets
Tangible assets	14	3,381		3,742		4,111
Intangible assets	15	123		138		145
Investments in associates and joint ventures	17	1,528		1,507		1,448
Other investments	18	141		131		125
Inventories	19	106		100		84
Trade, other receivables and other assets	20	102		67		34
Deferred taxation	27	—		4		4
Cash restricted for use	21	35		37		36
		5,416		5,726		5,987

Current assets
Other investments	18	6		7		5
Inventories	19	652		683		672
Trade, other receivables and other assets	20	209		222		255
Cash restricted for use	21	31		28		19
Cash and cash equivalents	22	329		205		215
		1,227		1,145		1,166
Non-current assets held for sale		—		348		—
		1,227		1,493		1,166

Total assets		6,643		7,219		7,153

EQUITY AND LIABILITIES
Share capital and premium	23	7,171		7,134		7,108
Accumulated losses and other reserves		(4,519	)	(4,471	)	(4,393	)
Shareholders' equity		2,652		2,663		2,715
Non-controlling interests		42		41		39
Total equity		2,694		2,704		2,754

Non-current liabilities
Borrowings	24	1,911		2,230		2,144
Environmental rehabilitation and other provisions	25	827		942		877
Provision for pension and post-retirement benefits	26	100		122		118
Trade, other payables and deferred income	28	3		3		4
Deferred taxation	27	315		363		496
		3,156		3,660		3,639

Current liabilities
Borrowings	24	139		38		34
Trade, other payables and deferred income	28	594		638		615
Taxation	29	60		53		111
		793		729		760
Non-current liabilities held for sale		—		126		—
		793		855		760

Total liabilities		3,949		4,515		4,399

Total equity and liabilities		6,643		7,219		7,153

GROUP - STATEMENT OF CASH FLOWS

For the year ended 31 December



US dollar millions	Notes	2018		2017		2016

Cash flows from operating activities
Receipts from customers		3,947		4,534		4,231
Payments to suppliers and employees		(3,015	)	(3,383	)	(2,929	)
Cash generated from operations	30	932		1,151		1,302
Dividends received from joint ventures		91		6		37
Taxation refund	29	5		14		12
Taxation paid	29	(171	)	(174	)	(165	)
Net cash inflow (outflow) from operating activities		857		997		1,186

Cash flows from investing activities
Capital expenditure
- project capital		(176	)	(156	)	(93	)
- stay-in-business capital		(476	)	(674	)	(618	)
Dividends from other investments		2		—		—
Proceeds from disposal of assets		313		7		4
Other investments acquired		(81	)	(91	)	(73	)
Proceeds from disposal of other investments		98		78		61
Investments in associates and joint ventures		(8	)	(27	)	(11	)
Proceeds from disposal of associates and joint ventures		—		—		10
Loans advanced to associates and joint ventures		(5	)	(6	)	(4	)
Loans repaid by associates and joint ventures		22		—		—
Cash payment to settle the sale of environmental trust fund		(32	)	—		—
Decrease (increase) in cash restricted for use		(4	)	(8	)	8
Interest received		12		15		14
Net cash inflow (outflow) from investing activities		(335	)	(862	)	(702	)

Cash flows from financing activities
Proceeds from borrowings		753		815		787
Repayment of borrowings		(967	)	(767	)	(1,333	)
Finance costs paid		(130	)	(138	)	(172	)
Bond settlement premium, RCF and bond transaction costs		(10	)	—		(30	)
Dividends paid		(39	)	(58	)	(15	)
Net cash inflow (outflow) from financing activities		(393	)	(148	)	(763	)

Net increase (decrease) in cash and cash equivalents		129		(13	)	(279	)
Translation		(5	)	3		10
Cash and cash equivalents at beginning of year		205		215		484
Cash and cash equivalents at end of year	22	329		205		215

GROUP - STATEMENT OF CHANGES IN EQUITY



	Equity holders of the parent
US dollar millions	Share capital and premium	Other capital reserves⁽¹⁾		Retained earnings (Accumulated losses)⁽²⁾		Fair value through OCI		Available- for-sale reserve		Actuarial gains (losses)		Foreign currency translation reserve		Total		Non-controlling interests		Total equity

Balance at 31 December 2015	7,066	116		(3,174	)			7		(19	)	(1,566	)	2,430		37		2,467
Profit (loss) for the year	—	—		63				—		—		—		63		17		80
Other comprehensive income (loss)	—	—		—				9		(2	)	180		187		—		187
Total comprehensive income (loss)	—	—		63				9		(2	)	180		250		17		267
Shares issued	42	—		—				—		—		—		42		—		42
Share-based payment for share awards net of exercised	—	(7	)	—				—		—		—		(7	)	—		(7	)
Dividends of subsidiaries	—	—		—				—		—		—		—		(15	)	(15	)
Transfer to reserves	—	—		(2	)			—		2		—		—		—		—
Translation	—	7		(6	)			1		(2	)	—		—		—		—
Balance at 31 December 2016	7,108	116		(3,119	)			17		(21	)	(1,386	)	2,715		39		2,754
Profit (loss) for the year	—	—		(191	)			—		—		—		(191	)	20		(171	)
Other comprehensive income (loss)	—	—		—				25		6		123		154		—		154
Total comprehensive income (loss)	—	—		(191	)			25		6		123		(37	)	20		(17	)
Shares issued	26	—		—				—		—		—		26		—		26
Share-based payment for share awards net of exercised	—	(1	)	—				—		—		—		(1	)	—		(1	)
Dividends paid (note 13)	—	—		(39	)			—		—		—		(39	)	—		(39	)
Dividends of subsidiaries	—	—		—				—		—		—		—		(19	)	(19	)
Translation	—	9		(10	)			1		(1	)	—		(1	)	1		—
Balance at 31 December 2017	7,134	124		(3,359	)	—		43		(16	)	(1,263	)	2,663		41		2,704
Impact of adopting IFRS 9	—	—		10		33		(43	)	—		—		—		—		—
Opening balance under IFRS 9	7,134	124		(3,349	)	33		—		(16	)	(1,263	)	2,663		41		2,704
Profit (loss) for the year	—	—		133		—				—		—		133		17		150
Other comprehensive income (loss)	—	—		—		5				4		(150	)	(141	)	—		(141	)
Total comprehensive income (loss)	—	—		133		5				4		(150	)	(8	)	17		9
Shares issued	37	—		—		—				—		—		37		—		37
Share-based payment for share awards net of exercised	—	(17	)	—		—				—		—		(17	)	—		(17	)
Dividends paid (note 13)	—	—		(24	)	—				—		—		(24	)	—		(24	)
Dividends of subsidiaries	—	—		—		—				—		—		—		(15	)	(15	)
Transfer of gain on disposal of equity investments	—	—		1		(1	)			—		—		—		—		—
Translation	—	(11	)	12		—				—		—		1		(1	)	—
Balance at 31 December 2018	7,171	96		(3,227	)	37				(12	)	(1,413	)	2,652		42		2,694


⁽¹⁾	Other capital reserves include a surplus on disposal of company shares held by companies prior to the formation of AngloGold Ashanti Limited of $10m (2017: $11m; 2016: $10m), surplus on equity transaction of joint venture of $36m (2017: $36m; 2016: $36m), equity items for share-based payments of $48m (2017: $75m; 2016: $68m), cash flow hedge reserves and other reserves.


⁽²⁾	Included in accumulated losses are retained earnings totalling $283m (2017: $287m; 2016: $250m) arising at the equity accounted investments and certain subsidiaries which may not be remitted without third party consent.

GROUP - NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December

1 ACCOUNTING POLICIES

STATEMENT OF COMPLIANCE

The consolidated and company financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International Accounting Standards Board (IASB), Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, JSE Listings Requirements and in the manner required by the South African Companies Act, 2008.

NEW STANDARDS AND INTERPRETATIONS ISSUED

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period on 1 January 2018. The adoption of the new standards, interpretations and amendments effective from 1 January 2018 had the following impact on the group.

IFRS 15 “Revenue from contracts with customers”

Management assessed the potential impact of IFRS 15 on the financial statements of the group and concluded that the group does not sell product based on multiple-element arrangements and it does not sell product on a provisional or variable pricing basis and as such the new standard did not have a significant impact on the timing or amount of the group’s revenue recognition. However, the adoption of IFRS 15 resulted in the presentation of by-product revenue in revenue from product sales where previously by-product revenue was included in cost of sales. Revenue from product sales includes gold income and by-product revenue. This change in classification resulted in a corresponding increase in costs of sales, and therefore did not have an impact on previously reported gross profit.

As previously reported:



US dollar millions	2017		2016

Revenue	4,543		4,254
Gold income	4,356		4,085
Cost of sales	(3,582	)	(3,263	)
Gain (loss) on non-hedge derivatives and other commodity contracts	10		19
Gross profit	784		841
Gross profit %	18.00	%	20.59	%

By-products revenue for the years ended 2017 and 2016 ($154m and $138m respectively) was included in the Revenue line, but was offset and thus reduced cost of sales in the income statement.

On adoption of IFRS 15, AngloGold Ashanti discloses revenue from all product sales, including by-products sales in Revenue from product sales in the income statement. Accordingly, the income statement was restated for the effects of adopting IFRS 15 as follows:



US dollar millions	2017		2016

Revenue from product sales	4,510		4,223
Cost of sales	(3,736	)	(3,401	)
Gain (loss) on non-hedge derivatives and other commodity contracts	10		19
Gross profit	784		841
Gross profit %	17.38	%	19.91	%

AngloGold Ashanti applied IFRS 15 retrospectively to each prior reporting period presented in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.

IFRS 9 “Financial Instruments”

The group’s financial assets include debt instruments (held to maturity bonds and negotiable certificates of deposit), trade receivables, cash restricted for use and cash and cash equivalents which are subject to the IFRS 9 expected credit loss model as they are carried at amortised cost. The accounting policy for listed equity investments depends on the nature of the listed investment. Listed equity investments which are held to meet rehabilitation liabilities are classified as fair value through profit or loss (FVTPL) to eliminate accounting mismatch, which previously arose from the unwinding of the rehabilitation liabilities recognised in profit or loss and the fair value adjustments to investments held to meet the rehabilitation liabilities recognised in other comprehensive income. Listed equity investments held for other purposes are classified as fair value through other comprehensive income (FVTOCI). Financial liabilities are carried at amortised cost and there is no change in their recognition or presentation under IFRS 9. The adoption of IFRS 9 did not have a significant impact on total assets, total liabilities or the results of the group.

In accordance with the transitional provisions in IFRS 9, upon adoption, comparative figures were not restated. The available for sale reserve of $43m was transferred to the FVTOCI reserve - $33m and to accumulated losses - $10m in respect of equity investments at FVTOCI and FVTPL respectively. Refer statement of changes in equity for reclassifications.

AngloGold Ashanti assesses the significance of new standards, interpretations and amendments to standards in issue that are not yet adopted but are likely to affect the financial reporting in future years. We have identified that IFRS 16 “Leases” which has an effective date of 1 January 2019, is likely to affect future financial reporting.

IFRS 16 “Leases”

Management is in the process of completing its assessment of the accounting impact and required disclosures arising out of the adoption of this standard. IFRS 16 requires lessees to recognise right-of-use assets and lease liabilities arising from lease contracts with additional disclosures about leasing arrangements. Leases within the scope of IFRS 16 will result in increases in assets and liabilities. Based on contracts in existence at 31 December 2018 containing leasing agreements within the recognition scope of the IFRS 16, we expect an increase in the group’s depreciation charge of between $36m and $42m, and a finance cost increase of between $6m to $8m. Operating cashflows are expected to increase and financing cashflows to decrease by between $39m and $45m as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities, while previously the operating lease payments were classified as cash flows from operating activities. Management has determined that certain mining, drilling and power generation contracts which are not classified as finance leases under the current accounting standards (IAS 17 and IFRIC 4), will have the most impact on the group’s results on adoption of IFRS 16. The adoption of the new standard will result in the recognition of additional right-of-use assets and lease liabilities of between $135m to $160m on 1 January 2019. AngloGold Ashanti has elected to transition to IFRS 16 retrospectively with the cumulative effect of initially applying the Standard recognised at the date of initial application. AngloGold Ashanti will not restate comparative information. Instead, the cumulative effect of initially applying IFRS 16 will be recognised by adjusting the opening balance of retained earnings at the date of initial application. The adoption of IFRS 16 will not impact AngloGold Ashanti's current debt covenant arrangements with financial institutions.

The significant accounting principles applied in the presentation of the group and company annual financial statements are set out below. The accounting policies adopted are detailed in Annexure A: “Summary of significant accounting policies”.

1.1 BASIS OF PREPARATION

The financial statements are prepared according to the historical cost convention, except for the revaluation of certain financial instruments to fair value. The group’s accounting policies as set out below are consistent in all material respects with those applied in the previous year except for the changes arising from the adoption of IFRS 9 and IFRS 15 as described in “New Standards and Interpretations Issued” above.

The group financial statements are presented in US dollars.

Based on materiality, certain comparatives in the notes have been aggregated and comparatives have been restated to accord with current year disclosures.

The group financial statements incorporate the financial statements of the company, its subsidiaries and its interests in joint ventures and associates. The financial statements of all material subsidiaries, the Environmental Rehabilitation Trust Fund, joint ventures and associates, are prepared for the same reporting period as the holding company, using the same accounting policies.

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Control would generally exist where the group owns more than 50% of the voting rights, unless the group and other investors collectively control the entity where they must act together to direct the relevant activities. In such cases, as no investor individually controls the entity the investment is accounted for as an equity method investment or a joint operation. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date on which control ceases. The group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies, including any resulting tax effect are eliminated.

Subsidiaries are accounted for at cost and are adjusted for impairments, where appropriate, in the company financial statements.

1.2 SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

USE OF ESTIMATES

The preparation of the financial statements requires the group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results could differ from those estimates.

The more significant areas requiring the use of management estimates and assumptions relate to Ore Reserve that are the basis of future cash flow estimates and unit-of-production depreciation, depletion and amortisation calculations; environmental, reclamation and closure obligations; asset impairments/reversals (including impairments of goodwill); and write-downs of inventory to net realisable value. Other estimates include employee benefit liabilities and unrecognised tax positions.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The judgements that management has applied in the application of accounting policies, and the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Carrying value of tangible assets

Amortisation

The majority of mining assets are amortised using the units-of-production method where the mine operating plan calls for production from a well-defined proved and probable Ore Reserve.

For other tangible assets, the straight-line method is applied over the estimated useful life of the asset which does not exceed the estimated mine life based on proved and probable Ore Reserve as the useful lives of these assets are considered to be limited to the life of the relevant mine.

The calculation of the units-of-production rate of amortisation could be impacted to the extent that actual production in the future is different from current forecast production based on proved and probable Ore Reserve. This would generally arise when there are significant changes in any of the factors or assumptions used in estimating Ore Reserve.

These factors could include:


•	changes in proved and probable Ore Reserve;


•	the grade of Ore Reserve may vary significantly from time to time;


•	differences between actual commodity prices and commodity price assumptions;


•	unforeseen operational issues at mine sites; and


•	changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates.

Changes in proved and probable Ore Reserve could similarly impact the useful lives of assets amortised on the straight-line method, where those lives are limited to the life of the mine.

Stripping Costs

The group has a number of surface mining operations that are in the production phase for which production stripping costs are incurred. The benefits that accrue to the group as a result of incurring production stripping costs include (a) ore that can be used to produce inventory and (b) improved access to further quantities of material that will be mined in future periods.

The production stripping costs relating to improved access to further quantities of material in future periods are capitalised as a stripping activity asset, if and only if, all of the following are met:


•	It is probable that the future economic benefit (improved access to the orebody) associated with the stripping activity will flow to the group;


•	The group can identify the component of the orebody for which access has been improved; and


•	The costs relating to the stripping activity associated with that component or components can be measured reliably.

Components of the various orebodies at the operations of the group are determined based on the geological areas identified for each of the orebodies and are reflected in the Ore Reserve reporting of the group. In determining whether any production stripping costs should be capitalised as a stripping activity asset, the group uses three operational guidance measures; two of which relate to production measures, while the third relates to an average stripping ratio measure.

Once determined that any portion of the production stripping costs should be capitalised, the group determines the amount of the production stripping costs that should be capitalised with reference to the average mine costs per tonne of the component and the actual waste tonnes that should be deferred. Stripping activity assets are amortised on the units-of-production method based on the Ore Reserve of the component or components of the orebody to which these assets relate.

This accounting treatment is consistent with that for stripping costs incurred during the development phase of a pit, before production commences, except that stripping costs incurred during the development phase of a pit, before production commences, are amortised on the units-of-production method based on the Ore Reserve of the pit.

Deferred stripping costs are included in ‘Mine development costs’, within tangible assets. These costs form part of the total investment in the relevant cash-generating unit, which is reviewed for impairment if events or a change in circumstances indicate that the carrying value may not be recoverable. Amortisation of stripping activity assets is included in operating costs.

Impairment

The group reviews and tests the carrying value of tangible assets when events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets, which is generally at the individual mine level. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time and impact the recoverable amounts. The cash flows and value in use are significantly affected by a number of factors including published reserves, resources, exploration potential and production estimates, together with economic factors such as spot and future metal prices, discount rates, foreign currency exchange rates, estimates of costs to produce reserves and future capital expenditure. At the reporting date the group assesses whether any of the indicators which gave rise to previously recognised impairments have changed such that the impairment loss no longer exists or may have decreased. The impairment loss is then assessed on the original factors for reversal and if indicated, such reversal is recognised.

The recoverable amount is estimated based on the positive indicators. If an impairment loss has decreased, the carrying amount is recorded at the recoverable amount as limited in terms of IAS 36 “Impairment of Assets”.

The carrying value of tangible assets at 31 December 2018 was $3,381m (2017: $3,742m; 2016: $4,111m). The impairment and derecognition of tangible assets recognised in the consolidated financial statements for the year ended 31 December 2018 was $104m (2017: $288m; 2016: $3m).

Carrying value of goodwill and intangible assets

Where an investment in a subsidiary, joint venture or an associate is made, any excess of the consideration transferred over the fair value of the attributable Mineral Resource including value beyond proved and probable Ore Reserve, exploration properties and net assets is recognised as goodwill.

Intangible assets that have an indefinite useful life and separately recognised goodwill are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

An individual operating mine is not a typical going-concern business because of the finite life of its reserves. The allocation of goodwill to an individual mine will result in an eventual goodwill impairment due to the wasting nature of the mine reporting unit. In accordance with the provisions of IAS 36, the group performs its annual impairment review of assigned goodwill during the fourth quarter of each year.

The carrying value of goodwill in the consolidated financial statements at 31 December 2018 was $116m (2017: $127m; 2016: $126m). The impairment of goodwill recognised in the consolidated financial statements for the year ended 31 December 2018 was nil (2017: $9m; 2016: nil).

Income taxes

The group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The group tax reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rate, prepared in accordance with IAS 12 "Income Taxes”, applies the South African corporate tax rate of 28%.

The group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the group operates could limit the ability of the group to obtain tax deductions in future periods.

Carrying values of the group at 31 December 2018:


•	deferred tax asset: nil (2017: $4m; 2016: $4m);


•	deferred tax liability: $315m (2017: $363m; 2016: $496m);


•	taxation liability: $60m (2017: $53m; 2016: $111m); and


•	taxation asset: $6m (2017: $3m; 2016: $14m), included in trade ,other receivables and other assets.

Unrecognised value of deferred tax assets: $501m (2017: $470m; 2016: $477m).

Provision for environmental rehabilitation obligations

The group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The group recognises management’s best estimate for decommissioning and restoration obligations in the period in which they are incurred. Future changes to environmental laws and regulations, life of mine estimates, inflation rates, foreign currency exchange rates and discount rates could affect the carrying amount of this provision.

The carrying amount of the rehabilitation obligations for the group at 31 December 2018 was $622m (2017: $724m; 2016: $705m).

Stockpiles and metals in process

Costs that are incurred in or benefit the production process are accumulated in stockpiles and metals in process values. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product, based on prevailing and long-term metals prices, less estimated costs to complete production and bring the product to sale.

Surface and underground stockpiles and metals in process are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained ounces based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile ore tonnages are verified by periodic surveys.

Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of metals actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical balancing process is constantly monitored and engineering estimates are refined based on actual results over time.

Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realisable value are accounted for on a prospective basis.

The carrying value of inventories (excluding finished goods and mine operating supplies) for the group at 31 December 2018 was $404m (2017: $424m; 2016: $397m).

Recoverable tax, rebates, levies and duties

In a number of countries, particularly in Continental Africa, AngloGold Ashanti is due refunds of indirect tax which remain outstanding for periods longer than those provided for in the respective statutes.

In addition, AngloGold Ashanti has unresolved non-income tax disputes in a number of countries, particularly in Continental Africa and in Brazil. If the outstanding input taxes are not received and these disputes are not resolved in a manner favourable to AngloGold Ashanti, it could have a material adverse effect upon the carrying value of these assets and our results of operations.

The net carrying value of recoverable tax, rebates, levies and duties for the group at 31 December 2018 was $194m (2017: $174m; 2016: $135m).

Post-retirement obligations

The determination of AngloGold Ashanti’s obligation and expense post-retirement liabilities, depends on the selection of certain assumptions used by actuaries to calculate amounts. These assumptions include, among others, the discount rate, the expected long-term rate of return of plan assets, health care inflation costs, rates of increase in compensation costs and the number of employees who reach retirement age before the mine reaches the end of its life. While AngloGold Ashanti believes that these assumptions are appropriate, significant changes in the assumptions may materially affect post-retirement obligations as well as future expenses, which may result in an impact on earnings in the periods that the changes in these assumptions occur.

The carrying value of the post-retirement obligations at 31 December 2018 was $100m (2017: $122m; 2016: $118m).

Ore Reserve estimates

An Ore Reserve estimate is an estimate of the amount of product that can be economically and legally extracted from the group’s properties. In order to calculate the Ore Reserve, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.

Estimating the quantity and/or grade of the Ore Reserve requires the size, shape and depth of orebodies to be determined by analysing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgements and calculations to interpret the data.

The group is required to determine and report its Ore Reserve in accordance with the South African Code for the reporting of Exploration Results, Mineral Resources and Mineral Reserves (The SAMREC Code) 2016 Edition.

Because the economic assumptions used to estimate changes in the Ore Reserve from period to period, and because additional geological data is generated during the course of operations, estimates of the Ore Reserve may change from period to period. Changes in the reported Ore Reserve may affect the group’s financial results and financial position in a number of ways, including the following:


•	asset carrying values may be affected due to changes in estimated future cash flows;


•	depreciation, depletion and amortisation charged in the income statement may change where such charges are determined by the units-of-production method, or where the useful economic lives of assets change;


•	overburden removal costs, including production stripping activities, recorded on the statement of financial position or charged in the income statement may change due to changes in stripping ratios or the units-of-production method of depreciation;


•	decommissioning site restoration and environmental provisions may change where changes in the estimated Ore Reserve affect expectations about the timing or cost of these activities; and


•	the carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.

Development expenditure

Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project has reached a stage at which economically recoverable reserves exist such that development may be sanctioned. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described in the accounting policy for exploration and evaluation assets. Any such estimates and assumptions may change as new information becomes available. If, after having started the development activity, a judgement is made that a development asset is impaired, the appropriate amount will be written off to the income statement.

Provision for silicosis

Significant judgement is applied in estimating the costs that will be incurred to settle the silicosis class action claims and related expenditure. The final costs may differ from current cost estimates. The provision is based on actuarial assumptions including:


•	silicosis prevalence rates;


•	estimated settlement per claimant;


•	benefit take-up rates;


•	disease progression rates;


•	timing of cashflows; and


•	discount rate.

Management believes the assumptions are appropriate, however changes in the assumptions may materially affect the provision and final costs of settlement. Prior to 2017, a silicosis provision was not raised as a reliable estimate could not be determined.

The carrying value of the silicosis provision at 31 December 2018 was $63m (2017: $63m).

Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory proceedings, tax matters and losses resulting from other events and developments.

When a loss is considered probable and reasonably estimable, a liability is recorded in the amount of the best estimate for the ultimate loss. The likelihood of a loss with respect to a contingency can be difficult to predict and determining a meaningful estimate of the loss or a range of loss may not always be practicable based on the information available at the time and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. It is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information is continuously evaluated to determine both the likelihood of any potential loss and whether it is possible to reasonably estimate a range of possible losses. When a loss is probable but a reasonable estimate cannot be made, disclosure is provided.

In determining the threshold for disclosure on a qualitative and quantitative basis, management considers the potential for a disruptive effect on the normal functioning of the group and/or whether the contingency could impact investment decisions. Such qualitative matters considered are reputational risks, regulatory compliance issues and reasonable investor considerations. For quantitative purposes, an amount of $18m has been considered.

As a global company, the group is exposed to numerous legal risks. The outcome of currently pending and future proceedings cannot be predicted with certainty. Litigation and other judicial proceedings as a rule raise difficult and complex legal issues and are subject to uncertainties and complexities including, but not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction in which each suit is brought and differences in applicable law. Upon resolution of any pending legal matter, the group may be forced to incur charges in excess of the presently established provisions and related insurance coverage. It is possible that the financial position, results of operations or cash flows of the group could be materially affected by the unfavourable outcome of litigation.

2 SEGMENTAL INFORMATION

AngloGold Ashanti Limited's operating segments are being reported based on the financial information provided to the Chief Executive Officer and the Executive Committee, collectively identified as the Chief Operating Decision Maker (CODM). The group produces gold as its primary product and does not have distinct divisional segments in terms of principal business activity, but manages its business on the basis of different geographic segments (including equity accounted investments). Individual members of the Executive Committee are responsible for geographic regions of the business.

Group analysis by origin is as follows:



	Gold income
US dollar millions	2018		2017		2016

Geographical analysis of gold income by origin is as follows:
South Africa	602		1,101		1,173
Continental Africa⁽¹⁾	1,983		1,895		1,663
Australasia	780		709		646
Americas	1,021		1,104		1,036
	4,386		4,809		4,518
Equity-accounted investments included above	(581	)	(453	)	(433	)
	3,805		4,356		4,085

Foreign countries included in the above and considered material are:
Brazil	634		705		659
Guinea			489		—
Tanzania	715		664		591
DRC	468

Geographical analysis of gold income by destination is as follows:
South Africa	1,445		1,659		1,719
North America	450		456		893
Australia	780		709		645
Europe	387		399		377
United Kingdom	1,324		1,586		884
	4,386		4,809		4,518
Equity-accounted investments included above	(581	)	(453	)	(433	)
	3,805		4,356		4,085



	By-product revenue
US dollar millions	2018		2017		2016

South Africa	6		15		23
Continental Africa⁽¹⁾	3		3		4
Australasia	2		2		2
Americas	128		135		110
	139		155		139
Equity-accounted investments included above	(1	)	(1	)	(1	)
	138		154		138

The Group's revenue is mainly derived from gold income. Gold is sold through numerous traders worldwide. The Group is not economically dependent on a limited number of customers for the sale of its gold production.



2	SEGMENTAL INFORMATION CONTINUED

		Gross profit (loss)⁽²⁾
	US dollar millions	2018		2017		2016

	South Africa	21		(3	)	149
	Continental Africa⁽¹⁾	380		386		334
	Australasia	160		159		106
	Americas⁽¹⁾	310		253		283
	Corporate and other⁽¹⁾	3		2		(4	)
		874		797		868
	Equity-accounted investments included above	(102	)	(13	)	(27	)
		772		784		841



	Cost of sales
US dollar millions	2018		2017		2016
			Restated		Restated

South Africa	590		1,129		1,064
Continental Africa⁽¹⁾	1,607		1,513		1,334
Australasia	622		551		542
Americas⁽¹⁾	838		987		863
Corporate and other⁽¹⁾	(4	)	(3	)	5
	3,653		4,177		3,808
Equity-accounted investments included above	(480	)	(441	)	(407	)
	3,173		3,736		3,401



	Amortisation
US dollar millions	2018		2017		2016

South Africa	72		133		167
Continental Africa⁽¹⁾	379		421		365
Australasia	149		130		126
Americas⁽¹⁾	192		273		260
Other, including non-gold producing subsidiaries	3		2		5
	795		959		923
Equity-accounted investments included above	(165	)	(136	)	(114	)
	630		823		809



	Total assets^(1)(3)(4)
US dollar millions	2018	2017	2016

South Africa	1,106	1,734	1,818
Continental Africa	3,135	3,153	3,090
Australasia	888	929	804
Americas	1,286	1,258	1,273
Other, including non-gold producing subsidiaries	228	145	168
	6,643	7,219	7,153



2	SEGMENTAL INFORMATION CONTINUED

		Non-current assets⁽⁵⁾
	US dollar millions	2018	2017	2016

	Non-current assets considered material, by country are:

	South Africa	1,005	1,295	1,678
	Foreign entities	4,234	4,259	4,144

	DRC