Edgar Filing: ANGLOGOLD ASHANTI LTD

Page 1

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, 2018

Commission File Number 1-14846

AngloGold Ashanti Limited

(Name of registrant)

76 Rahima Moosa Street

Newtown, 2001

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

South Africa

(Address of principal executive offices)

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

Form 20-F X Form 40-F

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

Yes

No X

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

Yes

No X

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

Yes

No X

Enclosure: Press release ANGLOGOLD ASHANTI LIMITED – INTEGRATED REPORT FOR THE
YEAR ENDED DECEMBER 31, 2017

HOW TO USE THIS REPORT

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CONTENTS

OVERVIEW

About our reports

Directors’ statement of responsibility

Corporate proﬁle

Chairman’s letter

Highlights of the year

CEO’s review

Quick links

Picture:

Mponeng, South Africa

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

2 0 1 7

ABOUT THIS REPORT

OUR PERFORMANCE

CHAIRMAN’S LETTER

HIGHLIGHTS

SECTION 1

OVERVIEW

SECTION 2

BUSINESS CONTEXT

SECTION 3

STRATEGY

SECTION 4

PERFORMANCE REVIEW

SECTION 5

ACCOUNTABILITY

SECTION 6

SHAREHOLDER INFO

Accountability

Shareholder information

OVERVIEW

SECTION 1

We provide an overarching view of our

reports, including the Chairman’s message to

stakeholders, our corporate proﬁle and the year’s

highlights, as well as the CEO’s account of our

delivery on the previous year’s commitments,

and the outlook for the year ahead.

About our reports

Directors’ statement of responsibility

Corporate profile

Chairman’s letter

Highlights of the year

CEO’s review

Picture:

Siguiri, Guinea

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

About this report

This integrated report, covering the year

from 1 January to 31 December 2017,

offers a concise review of our performance

and progress in delivering on our strategic

objectives, while taking into account our

external operating environment (the ensuing

opportunities and material risks identiﬁed),

as well as actions taken in mitigation. We

also report on our regional operational

performance and provide a view on our

growth options for the future and long-term

sustainability of the business.

Underpinning all that we do are our corporate

values, our code of ethics and our governance

framework. These are especially signiﬁcant

given the recent adoption of the King IV

Report on Corporate Governance for South

Africa, 2016 (King IV), to which an integrated

approach to the strategy and operations of a

business, are integral. Integrated reporting is a

natural outcome of this approach. King IV has

been applied throughout this report.

Our integrated report takes into account the

socio-economic context in which we operate,

the factors giving rise to the material risks

and opportunities that may affect our ability

to create value – including the gold industry

landscape – and the various interdependent

stakeholders whose needs, interests and

expectations have an impact on us.

Our reporting also acknowledges our role as

a corporate citizen within this context, and

the consequent rights, responsibilities and

obligations conferred upon us as a result.

The material risks and issues reported are

those considered most likely to affect the

sustainability of our business in the short,

medium and long term. In identifying these, as

well as any opportunities, we have taken into

account our operating context and stakeholder

feedback during the year. Our material issues

are discussed in full in the

<SDR>

The information presented in this report, aimed

primarily at current and potential investors

and ﬁnanciers, we believe should enable them

and other interested stakeholders to assess

the viability of our business and our ability to

create value.

In addition to King IV, this report is aligned

with the International Integrated Reporting

Council’s framework, the South African

Companies Act 71 of 2008 (as amended) and

the JSE Listings Requirements.

Scope and boundary

This integrated report covers the entire

company and its main business units and

functions, including joint ventures and

investments, over which we exercise control

or have signiﬁcant inﬂuence. Performance

is reported regionally, in line with our

corporate structure, and we report fully

on all operations managed by AngloGold

Ashanti. Those operations in which we have

an ownership interest but do not manage

– Kibali and Morila – are partially reported

in terms of their safety, environmental and

socio-economic performance. There were no

signiﬁcant changes to the scope, boundary or

measurement methods used in this report.

Restatements (if any) of comparatives,

are indicated.

As this is a group-level report, operating

targets and performance are discussed

regionally rather than by operation, although

certain detail on operational information is

given if appropriate. Additional information,

including maps of our greenﬁelds and

brownﬁelds exploration activities, is available

on our website, www.anglogoldashanti.com.

Information relating to joint ventures and other

interests is provided for context and elsewhere

if deemed material. Production, costs and

capital expenditure data is attributable,

unless otherwise indicated. Employee data

and average workforce data are reported for

AngloGold Ashanti with joint ventures reported

on an attributable basis. Employee data

includes both permanent employees

and contractors.

While this report covers the 2017 ﬁnancial

year, any signiﬁcant, material event that occurs

between the end of the year and the date on

which this report is approved is included.

ABOUT OUR REPORTS

USEFUL LINKS

Visit our reports website:
www.aga-reports.com

Visit our corporate website:
www.anglogoldashanti.com

Download the full suite of reports

Picture:

Moab Khotsong, South Africa

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

OUR 2017
SUITE OF REPORTS

Click on any of the links below to download the relevant PDF

<IR>

Integrated Report

<SDR>

Sustainable Development Report

<AFS>

Annual Financial
Statements

<NOM>

Notice of Annual General
Meeting and Summarised
Financial Information
(Notice of Meeting)

<R&R>

Mineral Resource and
Ore Reserve Report

<WWW>

www.aga-reports.com

ABOUT OUR REPORTS CONTINUED

Integrated Report

<IR>

is the primary

document in our suite of reports and

provides a concise overview and

explanation of our performance in terms

of our strategic objectives, how we create

value and the outlook for the company.

Both ﬁnancial and non-ﬁnancial

performance are reviewed.

Notice of Annual General Meeting and

Summarised Financial Information

(Notice of Meeting)

<NOM>

is produced

and posted to shareholders in line with

the JSE Listings Requirements and

the requirements of the South African

Companies Act, 71 of 2008,

as amended (Companies Act).

Sustainable Development Report

<SDR>

compiled in line with the Global Reporting

Initiatives’ (GRI’s) latest G4 guidelines, is

published together with the accompanying

GRI scorecard and supplementary data.

Mineral Resource and Ore Reserve

Report

<R&R>

, presented in line with the

SAMREC and JORC codes, provides

detailed information on all our operations

and projects.

Annual Financial Statements

<AFS>

are prepared in accordance with the

International Financial Reporting

Standards (IFRS).

Operation proﬁles are compiled

for each of our mining operations

and provide a summary overview of

operating performance.

A dedicated annual reporting website,

www.aga-reports.com, hosts PDFs of the

full suite of these reports to facilitate ease

of access by, and communication with,

our stakeholders.

AngloGold Ashanti Limited’s 2017 suite of reports is made up

as follows:

MINE

RAL

RESOURCE

AND

ORE

RESERVE

AND

ORE

RESERVE

REPO

RT 2017

NOTICE OF

ANNU

AL GENER

MEET

ING

2017

ANNUAL

FINANCIAL

STATEMENTS 2017

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

ABOUT OUR REPORTS CONTINUED

Directors’ statement of responsibility

The board of AngloGold Ashanti Limited (AngloGold Ashanti) and the Company’s executive

management consider the matters discussed in this report to be those that most inﬂuence

our ability to successfully achieve our strategic objectives, create value and manage the risks

we face, and believe that this report fairly records our performance in the past year.

The board, assisted by the Audit and Risk Committee and the Social, Ethics and

Sustainability Committee, is ultimately responsible for overseeing and conﬁrming the integrity

and completeness of this

<IR>

and the entire suite of 2017 reports. The board, having

reviewed and applied its collective mind to the preparation, information and presentation

of this report, declared that this

<IR>

addresses all material issues and presents a fair and

balanced view of our integrated performance for the year ended 31 December 2017.

On the recommendation of the Audit and Risk Committee, the board approved this

<IR>

19 March 2018.

Sipho M Pityana

Rhidwaan Gasant

Chairman

Chairman: Audit and Risk Committee

Srinivasan Venkatakrishnan

Christine Ramon

Chief Executive Ofﬁcer

Chief Financial Ofﬁcer

Approvals and assurance

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

reviews of the information and data published in our reports, are conducted regularly. In addition,

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

commercial, safety and sustainability aspects of the business. The outcomes of these reviews and

external assurances, as well as of any independent technical reviews, provide reasonable assurance

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

effectiveness of the group’s internal control systems and procedures.

Picture:

Quebradona, Colombia

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CORPORATE PROFILE

AngloGold Ashanti,an international gold mining company with a

globally diverse, high-quality portfolio of operations and projects,

is headquartered in Johannesburg, South Africa. Measured by

production, AngloGold Ashanti is the third-largest gold mining

company in the world.

Our business

Our business activities span the full spectrum of

the mining value chain. Such activities include

mitigating our impact on the communities and

environments in which we operate. To maintain

and strengthen our social capital, we aim to

create sustainable value for shareholders,

employees, and social and business partners

through safe and responsible mining and

discipline in the allocation of capital.

Over the past ﬁve years, AngloGold Ashanti

has transformed itself by increasing efﬁciencies

and competitiveness, focusing on safety

and sustainability performance, improving

margins, containing operating and overhead

costs, and generating positive cash ﬂows.

Given the current market environment and

the scrutiny of ﬁnancial capital allocation, we

ensure responsible capital distribution, in line

with business requirements. We do this while

optimising internal expertise to aggressively

identify and implement operational efﬁciencies,

reducing overhead costs, improving capital

discipline and pursuing other business

improvement initiatives without compromising

safety. We continue our focus on debt

reduction to further strengthen our balance

sheet and on improving the quality of our

portfolio. This we aim to do by unlocking value

from existing operations, and developing

brownﬁelds opportunities, the redevelopment

of the Obuasi mine, and other long-term

growth projects, including Colombia.

Our organisational and management

structure aligns with global best practice in

corporate governance. By using our human

capital efﬁciently, group support functions

cover planning and technical, strategy,

sustainability, ﬁnance, human resources, legal

and stakeholder relations. The planning and

technical functions focus on identifying and

managing opportunities, maintaining long-term

optionality, and ensuring the optimal use of our

intellectual capital through a range of activities

that include brownﬁelds and greenﬁelds

exploration as well as innovative research

focused on mining excellence.

Corporate status 2017

•

South Africa region restructured to

ensure sustainability of the business, as

a consequence of which, TauTona and

Savuka were placed into orderly closure,

while Moab Khotsong and Kopanang have

been sold, together with our interests in

the Nuclear Fuel Corporation (Nufcor)

and the Margaret Water Company. These

transactions were successfully concluded

on 28 February 2018

•

The feasibility study at the Obuasi Gold Mine

was completed. Agreements have been

reached with the government of Ghana for

the redevelopment of Obuasi, subject to

ratiﬁcation by Ghana’s parliament

•

At Yatela, closure remains on track with

completion scheduled for 2021

•

All other assets remained fully operational

•

Disclosure refers to continuing operations

Picture:

Siguiri, Guinea

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

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Safety is our

ﬁrst value.

We treat each

other with dignity

and respect.

We are accountable

for our actions
and undertake

to deliver on our

commitments.

We want the

communities and

societies in which we

operate to be better

off for AngloGold

Ashanti having

been there.

We value
diversity.

We respect the

environment.

OUR

VALUES

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

AMERICAS

1 Argentina
Cerro Vanguardia (92.5%)

2 Brazil
Serra Grande
AGA Mineração

3 Colombia
   Gramalote (51%)
   La Colosa
   Quebradona (93.5%)

SOUTH AFRICA

9 South Africa

Vaal River

Kopanang

Moab Khotsong

West Wits

Mponeng

TauTona

(3)

Surface Operations

(4)

Argentina

Colombia

DRC

Tanzania

Australia

Ghana

Guinea

Mali

South Africa

Brazil

AUSTRALASIA

10 Australia

Sunrise Dam

Tropicana (70%)

LEGEND

Operations Greenfields projects

CONTINENTAL AFRICA

4 Guinea

Siguiri (85%)

5 Mali

Morila (40%)

(1)

Sadiola (41%)

6 Ghana
Iduapriem
Obuasi

(2)

7 DRC

Kibali (45%)

(1)

8 Tanzania
Geita

LOCATION OF ANGLOGOLD ASHANTI’S

OPERATIONS

AND PROJECTS

CORPORATE PROFILE CONTINUED

OUR PORTFOLIO OF ASSETS

As at 31 December 2017, our portfolio of 17

operations and three projects in ten countries

included long-life, relatively low-cost operating

assets with differing orebody types, located in

key gold-producing regions. These operating

assets were supported by greenﬁelds projects

and a focused exploration programme.

Our operations and projects are grouped

as follows:

South Africa

Vaal River, West Wits and
Surface Operations

International Operations

Continental Africa

Democratic Republic of the Congo (DRC),
Ghana, Guinea, Mali and Tanzania

Americas

Argentina, Brazil and Colombia

Australasia

Australia

Percentages indicate the ownership interest held by AngloGold Ashanti. All operations
are 100%-owned unless otherwise indicated.

(1)

Morila and Kibali are managed and operated by Randgold Resources Limited

(2)

Obuasi remained on care and maintenance in 2017. The feasibility study was
completed and redevelopment of the mine is imminent

(3)

TauTona had its ﬁnal blast on 15 September 2017, and has now been placed into
orderly closure

(4)

Surface Operations includes First Uranium SA, which owns Mine Waste Solutions
(MWS). MWS is managed and operated as a separate cash-generating unit

Picture:

Mponeng, South Africa

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CORPORATE PROFILE CONTINUED

Geographic distribution of shareholders

(as at 31 December 2017)

•

United States

•

South Africa

•

United Kingdom

•

Rest of Europe

•

Asia

• Ghana

•

Rest of world

3 1 4

Exploration

Our exploration programme aims to establish

an organic growth pipeline to enable us to

generate signiﬁcant value over time.

We undertake greenﬁelds and brownﬁelds

exploration in both established and new

gold-producing regions through managed and

non-managed joint ventures, strategic alliances

and wholly-owned ground holdings. Our world-

class greenﬁelds discoveries include La Colosa,

Gramalote and Quebradona (Nuevo Chaquiro)

in Colombia.

Our product

Once mined, gold ore is processed into doré

(unreﬁned gold bars) on site and dispatched

to precious metals reﬁneries for reﬁning to a

purity of at least 99.5%, in accordance with the

London Bullion Market Association’s standards

of ‘good delivery’. The reﬁned gold bars are

then sold directly to bullion banks.

While gold is our principal product, several

by-products also make up a small proportion of

our manufactured capital output. By-products

are silver in Argentina, uranium in South Africa

and sulphuric acid in Brazil. In compliance with

all applicable legislation, great care is taken to

ensure the safe production, transportation and

storage of uranium and sulphuric acid, which

are hazardous materials. AngloGold Ashanti

complies with the International Atomic Energy

Agency’s (IAEA) safeguards regarding all its

uranium sales contracts and shipments. For

more information on uranium and its handling

process, see the South Africa regional review.

As of 1 March 2018, following the sale of the

Vaal River operations, which included the

uranium producing unit, AngloGold Ashanti will

no longer produce uranium.

Shareholders

AngloGold Ashanti is an independent gold

producer, with a diverse spread of shareholders

that includes some of the world’s largest ﬁnancial

institutions – see

Shareholder Information

The government of Ghana also holds a 1.55%

stake in the company with the respective

national governments holding direct interests

in our operating subsidiary in Guinea and joint

ventures in the DRC and Mali. In Argentina,

Fomicruz, a state company in the province of

Santa Cruz, has an interest in Cerro Vanguardia.

The primary listing of the company’s ordinary

shares is on the JSE in South Africa. Its shares

(or depository receipts) are also listed on

the New York, Australian and Ghana stock

exchanges. More detailed information on our

listings on various stock exchanges is provided

in Shareholder Information on page 196.

At 31 December 2017, AngloGold Ashanti

had 410,054,615 ordinary shares in issue

and a market capitalisation of $4.18bn

(2016: $4.29bn). Post year-end, at 19 March

2018, the date on which this report was

approved by the board, the company’s market

capitalisation was $3.71bn.

Picture:

Serra Grande, Brazil

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

It was a year in which the executive team,

once again oversaw the making good on its

commitments and continued execution of

the company’s strategy to deliver sustainable

improvements to cash ﬂow and returns. This

consistency in delivery is a hallmark of a

strong leadership team and a deep bench of

management and functional talent. This has

allowed AngloGold Ashanti to meet each of its

operating and cost guidance metrics for the

past ﬁve years, whilst extending its trajectory

of long-term improvements in sustainability

metrics, namely environmental stewardship,

safety and the all-important engagement with

our stakeholders. The improvements were

AngloGold Ashanti Stakeholders,

It is my pleasure t oreflect on

2017, another eventful year in

our emerging-market gold-mining

universe and beyond.

made despite an increasingly volatile operating

and market environment.

Global context

It was a year in which the world grew used to

a steady ﬂow of breaking news from the White

House in the US as President Donald J. Trump

settled into his new role. Across the Paciﬁc,

North Korea proved up to the task of matching

the drumbeat of aggressive political rhetoric

emanating from Washington DC, while in

Europe, Brexit talks lurched from one impasse

to another, with little more certainty now than

a year ago on how the UK will leave the EU.

In Italy, Germany and Hungary, right-wing

populists made signiﬁcant gains at the ballot

box, an ominous portent for political discourse

in the ‘developed world’.

Emerging markets were only marginally

less volatile. In the Middle East, a clutch of

Arab states, led by Saudi Arabia, severed

diplomatic ties with Qatar as part of broader,

regional hostilities against its one-time

ally Iran. This Cold War theme continued

elsewhere in the region as the multi-player

war in Syria, which has now drawn in Russia

and the US, raged on.

Brazil continued to reform its political arena

by going after corrupt elites, helping speed

its emergence from a brutal recession. In

Argentina, President Mauricio Macri pressed

ahead with unpopular, but necessary reforms.

In South Africa, in the days before Christmas,

Cyril Ramaphosa wrested control of the

governing African National Congress (ANC)

from Jacob Zuma and his loyalists. Only weeks

into the new year, Zuma was forced by the

ANC to resign as president of the country,

ushering in a new era of hope and economic

recovery, after a decade of wanton corruption

and mismanagement which took the country

to the brink of ﬁnancial ruin. This was a victory

for the country’s independent media and

civil society, which had exposed so-called

State Capture and called for his resignation.

Importantly, it was also a vindication of

the strength and robust structure of its

constitutional democracy.

Meanwhile, most major asset classes –

equities, bonds, commodities, property,

among others – continued to rise to dizzying

heights, fuelled by low interest rates. The

consensus emerging from the World Economic

Forum meeting in Davos in January of this

year, was that the world is primed for a period

of synchronised growth, turbo-charged by

sweeping tax cuts in the US and long-awaited

market reforms in France.

The US Federal Reserve continued its efforts

to normalise monetary policy, raising interest

rates in three 25 basis point increments to

1.50%. This did little to dampen market

enthusiasm, as many traditional ways of

pricing risk appear to have been abandoned

CHAIRMAN’S LETTER

Sipho Pityana

Chairman

Consistency
in delivery

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CHAIRMAN’S LETTER CONTINUED

– or at least forgotten – by investors engaged

in an insatiable search for yield. For evidence,

look no further than Argentina, a country with

a history of defaults over the past century,

which managed to issue a 100-year bond.

In June, a month after a soldiers’ mutiny in

the Ivory Coast, and only six years after the

West African country’s previous default, the

country completed a spectacularly successful

debt issue that was almost ten times

oversubscribed. It ﬁnally issued $1.25 billion

of 16-year bonds with a 6.25 percent rate and

625 million euros of eight-year notes yielding

5.125 percent. These are historically low

borrowing costs that demonstrate the market

appetite for yield above all else.

Volatile times

All of this is to say that we live in volatile times,

with unprecedented economic and market

conditions that are likely to create additional

political and market volatility when these

trends start to revert to the long-term mean.

As countries and economies buffeted by these

forces try to adjust, we should be prepared for

unforeseen repercussions.

As they most often do, threats to the bullish

outlook on world markets have already

started to emerge. The US has announced

punitive tariffs on steel and aluminium imports,

the ﬁrst salvo in a trade war that will have

repercussions far and wide. Inﬂation has

started to raise its head as price increases

start to nose upward toward the US target

range, after ﬂatlining for years.

Staying the course on strategy

Gold is responding well to these external

factors, shrugging off the panic of rising

interest rates that have kept a lid on prices for

the past four or ﬁve years. It seems – for now

at least – that among gold investors the need

for protection from rising inﬂation is beating out

the fear of higher US rates, with the gold price

on average ﬂat through 2017, ﬁnishing the year

strongly. It has continued that trend through

the ﬁrst quarter of 2018.

Notwithstanding this helpful tailwind from the

gold price, the board is clear that it will not

relax the imperative for vigilance with respect

to the executives’ prudent management of

the business, which has been exemplary

since the severe downturn in the gold market

in 2013. You will read in the CEO letter, and

elsewhere in this report, that the management

of the company is more focused than ever on

ensuring continued pursuit of our strategic

objectives. This means intensifying scrutiny of

costs, exploring ways to make our operations

more productive and efﬁcient, strengthening

our balance sheet where possible, and making

further improvements to our portfolio.

As the board, we are in full support of the

executive’s view that the best way to manage

market risk in the long-term is to be ruthless in

our allocation of capital – ceaselessly searching

out ways to improve our portfolio and extend

the life of our existing assets, at reasonable

cost, through the development of project

options that generate returns above our hurdle

rates. Following this strategic path to long-term

self-sufﬁciency has not always been easy. We

have not issued new equity to the market for

the past eight years, relying instead on ‘self-

help’ to effect structural improvements to our

portfolio and to strengthen our balance sheet

through the reduction of our net debt by almost

a third. Only by effectively utilising our capital

and producing superior project returns can we

hope to remain a sustainable gold producer

than can offer acceptable returns to investors

and strong leverage to the gold price.

We are proud to have achieved this through a

combination of cash generation, cost savings

and asset sales. Operating cash generation

from the business remains strong and long-

term optionality continues to improve.

We made the difﬁcult call during 2017 to

restructure our South African portfolio, selling the

unproﬁtable Kopanang mine, and our prized –

but relatively short-life – Moab Khotsong asset,

and put the unproﬁtable TauTona mine into

orderly closure. This was a difﬁcult decision for

the company given the job losses we faced at

the start of the restructuring process, which were

subsequently saved through the asset sales.

This will reduce our South African business to

less than 15% of production, but allowed us

to shed loss-making ounces, whilst creating

additional ﬂexibility in our balance sheet. We

have also decided to move ahead to redevelop

our Obuasi Gold Mine in Ghana, with a plan that

we believe is robust, practical and appropriately

conservative in arriving at the attractive returns

that we anticipate from the project.

Local risk

On a more region-speciﬁc basis, we continue

to see the normal ebb and ﬂow of jurisdictional

risk across our portfolio. Australia’s gold

industry showed solidarity in helping rebuff

repeated attempts by the state government in

Western Australia to hike royalties and levy a

super-proﬁts tax, ultimately triumphing with the

argument that punitive taxes and constantly

changing legislation are severely detrimental to

the long-term sustainability of capital-hungry

mine investment.

We have seen encouraging improvements in

Ghana, where a new administration elected

on an anti-corruption ticket in late 2016, has

created an environment more conducive to

inward investment. Our decision to press

ahead on the Obuasi redevelopment is on

one hand based on a sound technical study,

and on the other, the strong support from the

government and local authorities in providing

a welcoming environment for job-creating

investment with several positive effects for that

economy – a true win-win situation.

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Overview

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Strategy

Performance review

Accountability

Shareholder information

CHAIRMAN’S LETTER CONTINUED

South Africa, too, has made decisive moves

in the right direction to attract investment by

promising to root out public mismanagement

and corruption, and to reduce the legal and

regulatory uncertainty that in recent years has

caused massive damage to its economy.

In Tanzania, President John P. Magafuli

has, since his election in 2016, made some

important steps toward introducing greater

accountability in the public service, rooting

out mismanagement and corruption, and

prioritising the progress of the country to

middle-income status by 2025. As one of the

largest taxpayers in the country, we are in

strong support of this overarching objective,

given the obvious beneﬁts that growth and

added stability bring to all investors active

in the country. The release in July of a suite

of new laws governing the extractive sector

has however created some uncertainty for

investors, who in turn have penalised the

valuation of assets in the country. The implied

value in the market of our Geita mine has

suffered as a result. We have reached out to

the government of Tanzania with the hope of

initiating a discussion that will help clarify the

co-existence of the new laws and regulations

with our pre-existing Mine Development

Agreement, which guaranteed us certain

ﬁscal stability when we ﬁrst committed billions

of dollars of capital investment to Tanzania.

It is important that such dialogue happens

and, we trust it will afford us the means to

provide certainty to our shareholders, funders

and employees; and to ensure the ongoing

investment in the future of that business, an

outcome that will beneﬁt all stakeholders.

Likewise, in the neighbouring Democratic

Republic of the Congo, the new Mining Code

has also created uncertainty with respect to

how the new law will be harmonised with the

guarantee of stability which was contained in

the previous Mining Code. We are, with our

joint venture partner and operator, and our

industry peers seeking an engagement with

the government, ahead of the publication

of the Regulations that will govern the

implementation of the new law.

The biggest requirements for the large, long-term

capital commitments that mining needs, is good

governance, regulatory certainty and the timeous

refund of corporate and indirect tax refunds,

which are important to ongoing reinvestment.

Equally, though, we are mindful that there

must be a quid pro quo, with lasting beneﬁt

provided to the countries which allow us to

extract their mineral wealth. We are working

hard to ensure improved linkages from our

operations to the broader economy through

speciﬁc focus on localisation of skills and a

commitment for an increasing proportion of

our total expenditure towards procurement

from local businesses.

Our Remuneration Report provides a wealth

of detail on the strides made in these areas,

particularly in our Continental Africa business

which, notwithstanding its growth in recent

years, has more than halved its complement

of expatriate staff. We have also placed added

emphasis on economic development initiatives

that will help incubate the very businesses that

over the long term can supply our needs and

those of the broader business community in

our host countries.

Dividend

In line with the approved dividend policy, the

board has applied its discretion in adjusting

the 2017 free cash ﬂow, pre-growth capital

expenditure metric for the $49m abnormal

South African retrenchment costs paid and

had approved a dividend of ZAR 70 cents per

share (approximately 6 US cents) per share.

Looking forward

As we look ahead to 2018, we will work

to ensure continued follow-through on our

strategic objectives and our ongoing work

to release latent value in this company. That

requires, among others, continued diligence

in extracting – in a safe, sustainable way –

as much beneﬁt from the natural resources

we mine as possible, while demonstrating

the equitable sharing of these beneﬁts with

all stakeholders. As ever, we also keep a

close eye on a range of strategic initiatives

that can complement those ongoing,

fundamental improvements.

Board and management

In 2017, the board bid a fond farewell to

Professor Wiseman Nkuhlu, who has made

an invaluable contribution and provided wise

counsel to the company over the years. I thank

him on behalf of the board and the company

for his support throughout the years. In April,

we then welcomed Sindiswa Zilwa, as a non-

executive director. Sindi is well regarded in the

areas of accounting, auditing and business

management, with extensive board and audit

committee experience in the public and private

sectors, traits that will beneﬁt us.

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

his executive management team, and

everyone throughout the organisation, for

their close adherence to AngloGold Ashanti’s

Values, which remain non-negotiable.

This absolute commitment to the ethical

prosecution of our overall strategy and

business plans, makes the job of chairing the

board of this company, one that I relish. I also

thank my board colleagues for their diligence

and commitment in overseeing the business.

Sipho M Pityana

Chairman

19 March 2018

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

HIGHLIGHTS OF THE YEAR

Fatalities

2013

2014

2015

2016

2017

Safety is a journey, rather than a destination,

as we continue on the path to eliminating all

injuries from our mines while intensifying and

continually improving safety practices.

New safety benchmarks were set in 2017

– three consecutive, fatality-free were

achieved quarters for the ﬁrst time; posting

349 days passed in South Africa without

a fatality. International Operations set a

record of 495 days without a fatality on

28 January 2018. Mponeng – the world’s

deepest mine – passed 2 million shifts

without a fatality; and TauTona marked

more than a year without a fatality.

The South Africa region received the

MineSAFE award recognising AngloGold

Ashanti for the most improved safety

performance year-on-year. Regrettably, this

performance was followed by a series of

seismic-related incidents in the second

half of the year when we lost seven of

our colleagues.

For the second consecutive year, Geita was

declared the overall winner in the mining

sector by the Tanzanian Occupational Safety

and Health Authority (OHSA). Iduapriem was

recognised as one of Ghana’s safest mines at

an awards ceremony in Accra in November.

In improving our capability to respond

to safety risks, our focus remains on

embedding and integrating safety into our

business processes.

All-injury frequency rate

(per million hours worked)

7.36*

7.18

7.49

7.71

7.48

2013

2014

2015

2016

2017

* 7.15 if adjusted for the impact of the earthquake,
that occured in August 2014

Safety is our
ﬁrst value!

Picture:

Sunrise Dam, Australia

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

2 0 1 7

Safety

Production

Employees

Free cash ﬂow

Costs

Capital expenditure

Environment

Community

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CEO’S REVIEW

Srinivasan Venkatakrishnan:

Chief Executive Ofﬁcer

This is a pursuit that is as rewarding as it is

challenging, particularly in a market as volatile

as the one in which we operate. The successes

that we have enjoyed would not have been

possible without the excellent team we have

assembled here at AngloGold Ashanti.

Consistency, reliability, capital
discipline and delivery

For those who are not familiar with our

company, it’s worth taking a quick step back

to tell you a little about ourselves. We are the

world’s largest and most diverse emerging-

market gold producer, with operations in nine

countries, spanning South America, South

Africa, Continental Africa and Australia. We

have a strong project pipeline in the short,

medium and long term, which is kept stocked

by a world-class exploration programme

around our mine sites and Colombia, the tenth

country in which we have a presence. We are

focused on returns – with investment expected

to deliver returns at least in the mid- to high-

teens through the cycle. Strict capital discipline

is our mantra, and we have not diluted our

shareholders by issuing new equity since

2010, when we extinguished a large, legacy

hedge position.

We have worked hard to make consistency

and reliable delivery on our commitments, the

hallmark of AngloGold Ashanti over the past

ﬁve years. To that end, production, costs and

capital have either been met, or improved on

our market guidance every year. This record

demonstrates our ability to effectively manage

the headwinds and volatility that come with a

single-commodity, emerging market portfolio.

I believe that this predictability is the absolute

minimum requirement to achieve the rerating

of our equity, and we will continue to

ensure that we set challenging targets and

then provide the right environment for our

operators to meet them.

We continue to place a premium on capital

discipline. Notwithstanding a muted gold price

over the past ﬁve years, we have worked

on our efﬁciencies and margins to generate

healthy cash ﬂows from the business, which

we’ve supplemented with some asset sales

as we’ve actively managed our balance

sheet and our portfolio. This combination has

allowed us not only to pay taxes and royalties

of $1.5bn over the past ﬁve years alone, but

to reinvest inward to improve the portfolio,

notably through $4.8bn in ongoing sustaining

capital as well as self-ﬁnancing the $1.8bn

development of two new, tier one assets in

Tropicana and Kibali.

In looking at the funding of the business,

we’ve favoured self-ﬁnancing our obligations.

Our legacy debt position, which we’ve

brought down by more than a third over

the past ﬁve years, has consumed about

$1 billion in interest payments and other

costs, while total dividends have accounted

for about a ﬁfth of that. Importantly, we’ve

done all of that without going to shareholders

to give us an equity top up at any time in the

past eight years, putting us in an increasingly

exclusive club.

Going forward – and obviously depending

on the gold price – we see the potential to

further improve returns to shareholders as

our operating cash ﬂows improve, while still

maintaining the integrity of the balance sheet.

Strategy – steady as she goes

Our strategy has remained steady over the

past ﬁve years, with our focus on safety,

active portfolio management and tightly

managing cost and capital to keep our

It is my pleasure to reflect on

another year of delivery on our

commitments, as we continue to

pursue our strategy of building a

sustainable, self-financing gold

producer that can create value for

stakeholders over the long term.

Consistency,
reliability,
discipline
and delivery

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

balance sheet robust enough to handle any

market environment. We have continued to

invest in the long-term health and sustainability

of this business, through sustaining capital

expenditure, exploration, life-extension and

margin improvement projects and some

modest production growth.

All of these business pillars support our central

objective of improving cash ﬂow and returns,

on a sustainable basis.

Safety remains our ﬁrst priority. It was one of

the true highlights that, in the ﬁrst half of the

year, we managed to record 349 days without

an operating fatality at any of our mines. That

includes the ultra-deep operations here in

South Africa.

We have shown what is possible, with

Mponeng – the world’s deepest mine –

passing 2 million shifts without a fatality.

TauTona marked more than a year without a

workplace death, which I’m happy to say is

a feat that a number of our operations can

now claim. In fact, our entire International

Operations passed 495 days with no fatalities

– a truly remarkable achievement. We also

ended the year with another improvement in

our all injury frequency rate.

Similarly, I cannot articulate the disappointment

that we didn’t extend that further, after a series

of seismic events ended that run in the second

half of the year in South Africa. In the end,

we lost seven of our colleagues to workplace

accidents during 2017. My sincere and

heartfelt condolences go out to the families

and loved ones of those who passed on.

While we can celebrate the progress in many

areas, our safety performance fell short of our

own goals and we continue to search for ways

to improve. Safety is a journey, rather than a

destination. It’s a point we never forget, as

we continue on the path to eliminating injuries

from our mines.

Our teams have also been exceptionally busy

integrating our values into the execution of

our strategy, with an enormous amount of

work done on the environmental and social

elements of our business that are crucial to

our ability to maintain our social licences to

operate. This work includes the community

engagement that is so important in ensuring

we understand the needs of our employees,

our host governments and communities. It

also includes the design of investments in

areas that not only mitigate the impacts of

mining, but also make a lasting improvement

in the lives of the people in the towns, regions

and countries in which we operate. There are

initiatives underway in public health, economic

development, education, and water and

sanitation, to name a few. The detail of this

work, and also our overarching strategy in this

regard, is contained in a separate

<SDR>

which I encourage you to read.

CEO’S REVIEW CONTINUED

Production

(Moz)

4,6

4,4

4,2

4,0

3,8

3,6

3,4

Actual result

2013

2014

2015

2016

2017

Original financial year guidance range

All-in sustaining cost

($/oz)

1,150

1,100

1,050

1,000

950

900

850

Original financial year guidance range

Actual result

2013

2014

2015

2016

2017

Capital expenditure

($m)

2,200

1,800

1,400

1,000

600

2013

2014

2015

2016

2017

Actual result

Original financial year guidance range

Five years meeting or beating output guidance while restructuring the portfolio

Five years meeting or beating guidance on costs and capital despite inﬂation
and volatile local currencies

Performance against guidance

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

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Overview

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Strategy

Performance review

Accountability

Shareholder information

Highlights and lowlights

Looking back at 2017, there are several

highlights, and some lowlights.

Legislative and regulatory uncertainty continue

to be one of the most pressing concerns

facing this industry. In Tanzania, the ongoing

lack of clarity over how a suite of new laws

and regulations will impact the mining sector

– including those companies operating with

clear mine development agreements. The

lingering uncertainty has penalised the value

of investments in the extractive sector, as

equity investors have voted with their feet.

In the Democratic Republic of the Congo,

the promulgation of a new mining code has

caused signiﬁcant destruction of value as

investors weigh up the attractiveness of

deploying new capital, against the risk of

shifting legislative goalposts. And in South

Africa, the reviewed Mining Charter – replete

with its contradictory legal provisions,

lack of sufﬁcient engagement and litany of

punitive prescripts – has thankfully been

suspended, pending a negotiation with the

new government leadership, though not before

causing signiﬁcant damage to investment in

the country.

We will continue to engage with governments

across our portfolio, to explain the need

for consistency and certainty, and also to

communicate the value proposition of having

a reputable, modern extractive industry that

can leverage real beneﬁt to host communities

and countries.

There were several highpoints during the year.

We saw our investments across the portfolio

helping to deliver production growth at 4%.

Cash ﬂows were also strong. We managed

to more or less break even on this basis,

notwithstanding the previously ﬂagged higher

capital expenditure during the year, as we put

money to work internally, extending the life of

our best assets and improving margins across

the portfolio where possible. Our suite of high-

return brownﬁelds projects all stayed well on

track and within our budget projections. We

also funded the restructuring in South Africa.

A look at our Mineral Resource and Ore

Reserve statement this year will show that we

managed to offset almost all depletion through

production, with an Ore Reserve of 49.5Moz,

despite the strong production performance.

Importantly, we have kept a conservative

$1,100/oz price at which we calculate our

Ore Reserve. Notable, too, is our maiden Ore

Reserve of 1.8Moz in Colombia, which we

believe will be the ﬁrst of many more over time,

as we start to bring this important jurisdiction

to account.

CEO’S REVIEW CONTINUED

Delivering on our commitments

Significant progress has been made as we restructure the South African

operations and move forward with the redevelopment of Obuasi

Further

improved
safety

and

sustainability
performance

Advance
low capital,

high return

brownﬁelds
opportunities

Continue
investment
to

enhance

margins

and

cash ﬂow

Extend

asset

lives

through

focused
exploration

Maintain

balance
sheet
ﬂexibility

Advance
South Africa’s
operational

turnaround
and
restructuring

Revisit

Obuasi

feasibility
study

; assess

all options

Move

Colombia
projects

up value
curve; reduce
holding cost

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CEO’S REVIEW CONTINUED

The strong overall operating and ﬁnancial

performance in 2017 – which is unpacked in

detail in this report and in Christine’s CFO’s

review, in particular – helped us declare a

dividend again since resuming payments

in 2016, answering some of the questions

around our ability to reinvest and offer a direct

return, albeit a modest one. Just to repeat

what I said last year, the dividend really is

a way of instilling capital discipline into the

business, giving back the ﬁrst slice of free

cash to shareholders before reinvestment for

growth. It is akin to a shareholder’s royalty.

We hope to improve this over time, as we

pursue our strategy and focus closely on

improving efﬁciencies, cost management and

appropriate investment in the enhancement of

the portfolio.

Scorecard

At the beginning of 2017, we shared an

ambitious list of priorities, and we covered

good ground in fulﬁlling those commitments.

While we saw improvement in our key

safety indicators, it is important that we

keep continued focus on the workplace

fatalities that remain a feature in our business,

particularly in South Africa. And while we take

encouragement from the new benchmarks we

set, we are more committed now than ever in

applying every tool at our disposal to eliminate

injuries – and especially fatalities – from our

work sites.

We saw improved adjusted EBITDA margins

and the exploration success mentioned above,

which helped offset most of our depletion.

Colombia is edging up the value curve at a

lower cost, as promised a year ago.

We made strong progress in restructuring

our business in South Africa, agreeing the

sale of the Moab Khotsong and Kopanang

mines, and associated infrastructure, and

taking the tough decision to place TauTona

into orderly closure to curb unsustainable

losses. The decision to part with these assets

was difﬁcult, given the job losses we faced

at the start of the restructuring process, but

the majority of these jobs were subsequently

saved in fulﬁlment of the terms of the asset

sales. We also saw Moab Khotsong’s

future being best served under different

ownership, given that our own competing

capital requirements would probably mean

that Moab’s Zaaiplaats life extension project

would be less likely to be approved within

an appropriate time, as part of AngloGold

Ashanti’s global portfolio.

The sale of Moab Khotsong to Harmony

Gold Mining Company Limited for $300m

was agreed in October and concluded post

year-end at the end of February. The sale

of Kopanang to Heaven-Sent SA Sunshine

Investment Company Limited for R100m,

which agreed to purchase the mine and

the accompanying plant, rescued the site

from closure and helped save as many as

3,000 jobs. TauTona, where shaft-sinking

commenced in the late 1950s, was placed into

orderly closure at the end of 2017.

All of the costs of these restructurings, including

the ﬁrst tranche of retrenchment costs paid

to employees, were self-funded. Gross sale

proceeds of R3.8bn have already been put to

work in reducing our borrowings in South Africa

and so further improving our ﬁnancial ﬂexibility.

But perhaps the most notable point to be

made is our decision to move ahead on the

redevelopment of Obuasi in Ghana. This is

a fundamentally re-engineered project that

we believe is one of the more attractive new

developments, from a return and capital

intensity perspective.

Obuasi

It bears taking a moment to explain our

decision to move ahead on Obuasi, which

has had a checkered operating history since

we took control of it in 2004, following the

business combination with Ashanti Goldﬁelds.

I’ve always said that you can’t change the tyre

of a car while it’s in motion. We learned this

lesson after years of trying to operate the old,

labour intensive and inefﬁcient Obuasi, while

simultaneously trying to make a fundamental

change to its mode of operation.

Instead of trying to transform a labour-intensive

operating asset into a modern, mechanised

operation while it was on the go, we decided

to take it down to limited operating mode

Picture:

Obuasi, Ghana

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CEO’S REVIEW CONTINUED

in 2014, retrench the entire workforce and

start from scratch. We’ve now done that,

and with the beneﬁt of three years, we’ve

studied every aspect of the project – from

the geology to the labour model, and from

mining and environmental management to

social responsibility. We now have strong

government support, evidenced by a suite of

agreements covering the redevelopment and

ongoing operations, and we believe now is the

right time to push ahead.

So, let’s look at the fundamentals. Obuasi is a

tier one asset with a 20-year-plus life that we

expect to have in production by the end of next

year. It has best-in-class capital intensity, with

approximately $450m to $500m in initial project

capital (excluding pre-production capital of

$64m) needed to give us an annual production

rate over life of 400,000oz – 450,000oz. Margins

are good, too, with all-in sustaining costs

estimated to average around $800/oz over the

mine life.

It has high grades, an elusive quality in short

supply these days. The orebody averages 8.1g/t

of gold, which is impressive by any standard.

It’s also big, with about 5.9Moz of Ore Reserve.

The Mineral Resource is 34.1Moz, giving us

scalability in production or life, over the project

life. Total production is expected to be 8.6Moz

over 21 years, with scope for optimisation and

life extension during that period.

The project capital will be phased, with 25% of it

spent this year, 55% next year and the remainder

in 2020. Of course, the early production – ﬁrst

gold is expected at the end of 2019 – will help

lower the cash call on the company over that

time. And ﬁnally, the returns are good. We expect

payback in less than 6.5 years, and to be cash

positive from year four. At gold prices ranging

from $1,100 to $1,240/oz, the internal rate of

return ranges from 16% to 23%.

Pipeline

A pipeline of real options is critical if you don’t

want to run out of road in two or three years,

and be forced to turn to expensive mergers

or acquisitions to stay in the game. While

Obuasi is the largest and most visible part of

our current pipeline, we are fortunate to have

a wealth of other options that we continue to

replenish and develop, as the case may be.

In the short term, the Siguiri hard rock project,

Mponeng Phase 1 and the Kibali ramp-up

are delivering both production and margin

growth, together with mine life extension.

In the medium term, Obuasi sits alongside the

Tropicana Long Island open-pit expansion, which

will deliver the next phase of improvements for

our cornerstone Australian operation.

A little further out, the Gramalote project

and the high grade copper/gold project at

Quebradona, will deliver value from Colombia,

while the Sadiola Sulphides project in Mali and

Phase 2 of Mponeng in South Africa remain

USEFUL LINKS

See also Regional reviews for more details

2018

DELIVERABLES

New quality ounces

Lower costs proﬁle

Extended LOM

Siguiri hard rock project

•

Extends LOM, enhances net asset value

2018-2020E Average:

c.355k oz @ AISC $910/oz

Mponeng Phase 1

•

Access higher grades

2018-2020E Average:

c.268k oz @ AISC $1,105/oz

Kibali underground development

•

Extends LOM, improves cost

2018-2020E Average:

c.340k oz* @ AISC $700/oz

2019

DELIVERABLES

New production

Enhanced margins

Ore Reserve additions

Obuasi start redevelopment

•

20+ year LOM, attractive returns

2020-2022E Average:

c.350koz @ AISC $800/oz

Tropicana – Long Island

•

Enhance margins, extend LOM

2018-2020E Average:

c.330k oz @ AISC $950/oz

Gramalote development

•

Attractive returns in a new area

•

Feasibility study underway

OPTIONS BEYOND

2020

Expansion opportunities

Potential for new development

Value-creating exploration

Sadiola sulphides project

•

High return, LOM extension

•

Certain government agreements required

Quebradona development

•

Prefeasibility study by early 2019

•

Maiden Ore Reserve declaration

Mponeng Phase ll

•

Mine life extension

* Attributable

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

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Strategy

Performance review

Accountability

Shareholder information

CEO’S REVIEW CONTINUED

options for us in the longer term. The projects

are all detailed in the Regional review section

elsewhere in this report.

Outlook: 2018 commitments

The CFO’s review will also take a detailed

look at our guidance, but allow me to provide

a high-level overview. We expect modest

improvements in production (from our new

base) and also in all-in sustaining costs, driven

by improving efﬁciencies and lower sustaining

capital expenditure as some of our brownﬁelds

investments near completion and begin to

deliver. Our International Operations team

is hard at work on an intervention to further

improve efﬁciencies and reduce costs, notably

by benchmarking each of their key operating

elements at every site, to global best practice.

By doing that, we will better understand the

potential of each orebody and each plant, from

a production and cost perspective. I urge you

to watch our performance in the next year and

beyond, to see how much more we can deliver

from the business for the beneﬁt of

all stakeholders.

We have a clear set of priorities ahead of

us. We will work to ensure the optimisation

of the remaining surface and support

businesses in South Africa, to ensure they

match our smaller production base.

We will continue our engagement with

our hosts in Tanzania, to ﬁnd the requisite

clarity around the legislative and regulatory

environment. We will, to be clear, be looking

for a pathway that ensures the long-term

viability of an asset that is important not only to

us, but to Tanzania as a whole.

In the DRC, we believe that the recently

promulgated Mining Code will disincentivise

new investment. We are working with our

joint venture partner and peers in the industry,

in engaging with the government to ensure

issues in the current agreement and other

relevant matters are appropriately catered

for in the regulations that will govern the

implementation of the Code.

We will, as always, continue to look for ways

to unlock latent value from within our portfolio,

while advancing our exciting set of projects to

completion – on budget and on schedule.

And ﬁnally, we will ensure that we do justice

to the spectacular high-grade orebody at

Obuasi which, for decades, has been waiting

to be modernised and capitalised in the

way that we’re now proposing – to ensure

a proﬁtable, long-life, high-margin gold

mining operation.

We’ll report back next year – as we always do

– on progress against each of these tasks.

Conclusion

In closing, I’d like to thank the shareholders

and lenders who own and ﬁnance the activities

of this business, for their continued loyalty

and support. We are committed to prudently

managing this business in order to create

long-term value. To our host governments and

communities – as well as their representatives

in civil society – we are mindful that you

provide our licence to operate. We renew our

commitment to working closely with you to

realise value and to ensure that we will endure

beyond the lives of our operations and to do

what we can to elevate that pledge beyond

simple corporate platitude into a tangible beneﬁt

that can be spread as widely as possible.

To the AngloGold Ashanti team – from

our Chairman Sipho Pityana, the Board

of Directors, the executive team, to each

and every employee and contractor in the

business – I thank you for your guidance and

support and doing so much more than just

simply showing up to work each day; your

commitment and initiative are truly humbling

and I remain grateful for your unstinting effort.

Srinivasan Venkatakrishnan

Chief Executive Ofﬁcer

19 March 2018

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

BUSINESS
CONTEXT

SECTION 2

We explain our business in context and how

we use our resource inputs to deliver desired

outcomes, while managing the impacts

and related material issues to achieve our

intended outputs.

Business model – creating value

Material concerns and our external environment

Stakeholder engagement and material issues

People are the business

Picture:

Cerro Vanguardia, Argentina

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

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

BUSINESS MODEL – CREATING VALUE

We do not conduct our business in isolation. We operate within the

global environment where external factors, can impact our ability to

create and deliver sustained value. These factors include:

Rigorous, risk management

involves identifying and

managing the risks and

mitigating their effects.

Exploration

Finding, identifying and

evaluating, economically

viable gold deposits

Mine development

Establishing the necessary

infrastructure to access

deposits via vertical shafts

and decline ramps

(in underground mining)

or material stripping

(in open-pit mining)

Mining

Extracting the gold-bearing

ore – either from deep-level

underground mines or from

shallow, open-pits –

and transporting it to the

gold plants

Processing

Processing the ore mined

to extract the gold, which

is smelted to produce doré

(unreﬁned gold bars),

and any by-products that

may occur

Reﬁning

Reﬁning the doré to a

speciﬁed level of purity of

at least 99.5% to produce

gold bullion that is sold to

international bullion banks

Rehabilitation and closure

Rehabilitating and restoring

the land for alternative

sustainable economic

uses. This is part of the

closure process that begins

once all the gold-bearing

ore in a deposit has been

economically mined or

is depleted

AngloGold Ashanti’s core business, the production of gold, involves a pipeline of activities:

OPERATING CONTEXT AND RISK MANAGEMENT

To create value for our shareholders, employees and society (communities, governments) by safely, responsibly and profitably exploring
for, mining and marketing our products. Our primary focus is gold, but we will pursue value-creating opportunities in other minerals
where we can use our existing assets, skills and experience to deliver value.

OUR

MISSION

See Material concerns and our external environment

See Managing and mitigating risks

•

Supply-demand dynamics in the gold market

•

Global economies and capital markets, especially US interest rates

•

Exchange rates

•

Regulatory changes and political environment

•

Availability of natural resources

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BUSINESS MODEL – CREATING VALUE CONTINUED

INPUTS

… use various capital inputs, such as

people, to develop and implement the

technology necessary to discover gold-

bearing ore bodies, to evaluate their

economic viability. These people have the

necessary skills and equipment to develop

and operate our mines.

OUTPUTS

… produce gold and other by-products

(silver, uranium and sulphuric acid) which we

sell to generate income. We also generate

waste which is responsibly stored and/or

disposed of.

IMPACTS

… manage the impact of our business

activities and maximise efﬁciencies in the

use of inputs to reduce and mitigate the

effects on the environment, communities, or

on the people with whom we work.

OUTCOMES

… deliver on our strategic objectives

to operate as efﬁciently as possible, to

generate sustainable cash ﬂow and returns,

and to distribute the value created to

our stakeholders.

In conducting our business, we...

In line with our strategic objectives, we optimise the use of various types of capital to enhance the outcomes achieved by our activities.

Picture:

Geita, Tanzania

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BUSINESS MODEL

– CREATING VALUE

CONTINUED

THE CAPITALS
EMPLOYED TO

CREATE VALUE

Optimising our use of
various forms of capital,
enhancing outcomes and
managing trade-offs

Picture:

Mponeng, South Africa

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NATURAL
CAPITAL

FINANCIAL
CAPITAL

MANUFACTURED
CAPITAL

HUMAN AND
INTELLECTUAL
CAPITAL

SOCIAL
CAPITAL

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

BUSINESS

MODEL

CONTINUED

OUTPUTS

2017

CONTINUED

INPUTS

OUTPUTS

OUTCOMES

IMPACTS

Milled and treated 83.8Mt of gold-bearing ore, yielding total attributable production of:

… and in the process:

GOLD

SILVER

URANIUM

3.8Moz

6.2Moz

SULPHURIC ACID

0.8Mlb

203t

GENERATED

102,964t

of waste (hazardous and non-hazardous,

excludes hydrocarbons) (2016: 100,549t)

DEPOSITED

89.8Mt

of tailings (2016: 85.5Mt)

PLACED

191.6Mt

of overburden and waste rock

(2016: 162.6Mt)

(2016: 3.6Moz)

(2016: 4.9Moz)

(2016: 0.8Mlb)

(2016: 195t)

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Performance review

Accountability

Shareholder information

In this section, we consider external

issues that have, or could have, an

impact on our ability to create value

in the short, medium or long term;

that may prevent us from delivering

on our strategic objectives; and/or

which may influence our economic

viability and the sustainability of

our business.

Gold market

Investors added more gold to their

portfolios during the year as political and

macroeconomic uncertainty increased

and inﬂation expectations started to rise.

Positive momentum held for much of the

year, helping to offset the potentially negative

impact of expectations for further interest

rate increases in the US. The gold price

averaged $1,258/oz over the 12 months

compared with $1,249/oz in 2016. It

touched a low of $1,152/oz on 1 February

2017 and reached a high of $1,347/oz for

the year. The gold price closed off the year

MATERIAL CONCERNS

AND OUR EXTERNAL ENVIRONMENT

Jan 2017

Dec 2017

Average monthly gold price

January 2017 to December 2017 ($/oz)

1,000

1,100

1,200

1,300

1,400

Source: Bloomberg

Jan-Jun 2017

Average gold price

$1,238/oz

$1,276/oz

Jul-Dec 2017

Average gold price

at $1,306/oz. Continued gold investments

into portfolios, with inﬂows into gold-backed

exchange-traded funds totalled $8.2bn or

6.72Moz, compared with 14.18Moz in 2016.

Speculators increased their net long gold

position by 7.36Moz year-on-year on the Comex

commodity exchange, further underpinning the

positive sentiment in the gold market.

Global stock markets ended the year at or

near record highs. The MSCI All-Country World

Index gained 22% or $9 trillion, during 2017,

a new high, as global growth accelerated and

investors bet on continued improvements to

corporate earnings. Additionally, US president

Donald Trump’s tax reform policies and the

US Federal Reserve’s gradual approach to

normalising monetary policy further buoyed

equity markets. These record valuations

coincided with continued strength in most

other asset classes in developed markets,

including property, bonds and alternatives

like collectibles and cryptocurrencies, though

some of the enthusiasm over the latter has

waned in the new year.

Monetary policy tightening across the globe

pushed up global short-term bond yields while

long-term yields remained relatively ﬂat. The

US Federal Reserve increased interest rates

three times during the year, by 25bps each

time, setting the target range between 1.25%

and 1.50%, while the Bank of England lifted its

benchmark rate during November for the ﬁrst

time in a decade to 0.50% (from 0.25%). The

European Central Bank claimed victory over

deﬂation and signalled that its monetary policy

would become gradually less expansionary.

Bond markets remained strong as investors

from developed countries offering historically

low yields on government debt, sought to

bolster returns by investing in asset classes

with traditionally higher risk levels, including

emerging market sovereign debt. As a result,

emerging market currencies strengthened and

borrowing rates from these countries remain at

or near multi-year lows.

Even geopolitical concerns about a US-

led nuclear war with North Korea, political

upheaval in Europe with the Catalan separatist

movement in Spain, a continued swing to

the right in several EU Member states and

an inconclusive German election, failed to

dampen sentiment. Surprisingly, the global

volatility index is trading at historically low

levels, despite being impacted by all the

aforementioned political events.

The US dollar price of gold rose 13% from

the ﬁrst to the last trading day of the year, its

biggest annual gain since 2010, outperforming

most major asset classes, other than stocks.

Aside from the tailwinds from geopolitical

uncertainty, gold received some support from

a weakening US dollar and elevated equity

valuations created concern over a potential

market correction. Debt investors were also

concerned about a record bull market that

was threatened by increasing prospect of

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Performance review

Accountability

Shareholder information

MATERIAL CONCERNS

AND OUR EXTERNAL ENVIRONMENT

CONTINUED

a normalisation in rates. The geopolitical

instability further heightened investor

uncertainty and fuelled ﬂows into gold, which

remains a hedge against these risks.

Central banks were also very active in the

gold market, with Russia increasing its

holdings, particularly in the last two months

of the year. The central banks remained an

important source of demand for gold and net

purchases by central banks recorded a gain

of 48% for 2017, up 123t to 381t compared

to 258t in 2016.

Jewellery demand

Jewellery consumption for 2017 was also

up 13% compared to 2016, with all major

regions recording year-on-year gains. India’s

jewellery consumption increased by 8% in the

last quarter of the year, helped by a surge in

sales during Dhanteras (the ﬁrst day of Diwali)

and lower prices toward year end. Jewellery

fabrication also increased 5.5% in 2017 from

2016. Chinese demand slipped 2% year-on-

year, with ongoing losses in the pure gold

segment as consumer preferences continued

to shift towards more fashionable pieces with

lower gold content. It is worth adding that after

posting double-digit percentage declines on

average since its 2013 peak, China’s jewellery

offtake appeared to have ﬁnally stabilised in

2017. Total physical demand increased on an

annual basis, with physical demand up 10.6%

from 3,555.9t in 2016 to 3,931.6t in 2017.

Gold supply was broadly unchanged and

mine production rose fractionally to 3,268.7t

in 2017 (2016: 3,236.0t), while there was

net dehedging of 30.4t. Recycling levels

declined by 10% year-on-year to 1,160t

in 2017. Scrap volumes remained ﬂat

year-on-year.

Capital markets

We entered 2017 in a subdued gold-

price environment and with higher capital

expenditure expected for the year as we

committed to investing in brownﬁelds

projects to extend mine life and/or improve

margins from key assets. The South African

operations performed poorly during the ﬁrst

quarter of the year, but recovered over the

remaining nine months. The International

Operations showed strong results

throughout the year, with good cost control

and projects that continue on schedule and

on budget.

Political uncertainty continued to spread

across many mining jurisdictions, particularly

with respect to ﬁscal and regulatory

uncertainty, with countries including the

Philippines, Ivory Coast, South Africa, Tanzania

and the DRC affected. Investors remained

wary of companies with signiﬁcant exposure in

these jurisdictions and gravitated toward those

with production from countries perceived as

more stable.

Picture:

AGA Mineração, Brazil

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MATERIAL CONCERNS

AND OUR EXTERNAL ENVIRONMENT

CONTINUED

During the year, we focused on clarifying

the long-term beneﬁt from our strict capital

allocation philosophy, which prioritises

self-sufﬁciency over the long term. We

also outlined the reinvestment programme,

prospects for growth from key assets

in coming years, details of Obuasi’s

redevelopment, and the beneﬁts from

the restructured South African portfolio.

However, we believe that growing political

and regulatory uncertainty in the DRC and

Tanzania, as well as the impact of sluggish

VAT remittances on cash ﬂows, remained a

signiﬁcant drag on the valuation.

The group was able to deliver a strong

production result, robust cash generation from

operations, disciplined capital allocation, clear

delivery on our strategic objectives and the

payment of a second consecutive dividend,

after resuming dividend payments in 2016.

In South Africa, the operating environment

has improved. Two asset sales announced

in 2017 were ﬁnalised at the end of February

2018, and the prospect for greater regulatory

certainty improved with a change of guard

in both the Presidency and the Ministry

of Mineral Resources. In Ghana, the new

administration elected in late 2016 continued

to deliver on its anti-corruption and investor-

friendly promises made during the election.

Legacy issues: silicosis

Settlement negotiations between the

Occupational Lung Disease (OLD)

Working Group and the class action’s legal

representatives have reached an advanced

stage. The OLD Working Group represents

African Rainbow Minerals, Anglo American

South Africa, AngloGold Ashanti, Gold Fields,

Harmony and Sibanye-Stillwater. The class

action members are represented by Richard

Spoor Inc, Abrahams Kiewietz Inc and the

Legal Resources Centre.

Given progress made by the OLD Working

Group since 31 December 2016, AngloGold

Ashanti management has estimated, within

an acceptable range, AngloGold Ashanti’s

share of a possible settlement of the class

action claims and related costs. AngloGold

Ashanti has provided for this obligation and

recorded an expense of $63m for the year

ended 31 December 2017. The ultimate

outcome of these negotiations and the court

sanction of the agreement remains uncertain

and, accordingly, the provision is subject

to adjustment in the future. In view of this

progress, on 10 January 2018, in response

to a request from all parties involved in the

appeal to the Supreme Court of Appeal (SCA)

in respect of the silicosis and tuberculosis

class action litigation, the Registrar of the

SCA postponed the hearing date of the

appeal until further notice. For more detail

and history on the silicosis class action see

notes to the

<AFS>

The OLD Working Group remains of the view

that achieving a comprehensive settlement

that is both fair to past, present and future

employees and sustainable for the sector, is

preferable to protracted litigation. To this end,

the companies have been holding settlement

talks with the lawyers acting for the workers

who ﬁled the legal proceedings and are

conﬁdent that they could reach a settlement.

The OLD Working Group will continue with

its efforts to ﬁnd common ground with all

stakeholders, including government, labour

and the claimants’ legal representatives. The

Group continues to assist the Medical Bureau

for Occupational Diseases (MBOD) and

Compensation Commissioner for Occupational

Diseases (CCOD), which are government

departments responsible for certiﬁcation

and compensation of mineworkers with

OLD, to ensure effective administration of its

responsibilities in terms of the Occupational

Diseases in Mines and Works Act (ODMWA).

Regulatory environment

Regulatory changes and uncertainty

The sector is facing various legislative reforms,

some of which have resulted in increased

resource rents in certain of the jurisdictions

in which we operate. Some of the current

and/or proposed changes have come with

uncertainties which impact market perceptions

of the sector and the company.

Regulatory uncertainty was most pronounced in

South Africa, where a reviewed Mining Charter

was tabled (and subsequently withdrawn by

the new Ramaphosa administration for a further

consultative process); in Tanzania, where a new

suite of laws and regulations were gazetted;

and in the DRC, where an amended mining

code was enacted in March 2018. In Australia,

two attempts to hike royalties and apply a

windfall tax were rebuffed by the Western

Australian state legislature.

For details on

these see the Regional sections.

Elections are planned in the next 12-18 months

in certain of AngloGold Ashanti’s operating

jurisdictions, including Colombia, Mali, South

Africa and the DRC. The period before and

immediately after elections is often one of

heightened uncertainty as politicians campaign

to change key legislation and policy.

USEFUL LINKS

See Australasia in the Performance review

See Regional reviews

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

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MATERIAL CONCERNS

AND OUR EXTERNAL ENVIRONMENT

CONTINUED

Brazil began emerging from a painful

recession. Despite the country’s poor

economic growth and some public unrest,

AngloGold Ashanti’s operations continued to

operate normally. The company will continue

to lobby for policy beneﬁcial to investment

in the industry, through the Brazilian

Mining Association.

In Colombia, the peace accord reached by

the government and the Fuerzas Armadas

Revolucionarias de Colombia (FARC) in late

2016, was implemented in 2017 though its

progress was slowed down later in the year by

a Colombian Constitutional Court ruling to end

the ‘fast track’ mechanism for passing various

of its provisions.

Social licence to operate: competing for
resources and infrastructure

Mining often creates competition for

resources, such as land, water and electricity.

The challenge for mining companies is to

strike the right balance between successfully

conducting their operations while limiting,

mitigating or offsetting the negative impact on

the communities and societies in which they

operate. AngloGold Ashanti’s work towards

sustainable mining, including environmental

stewardship, is covered in the stakeholder

engagement section, under communities, and

is detailed in the

<SDR>

Water

Water remains a scarce resource and is an

increasingly critical social, environmental

and economic issue which demands careful

attention given that the company has

operations in areas that are water scarce

and others which are prone to torrential

rainfall during parts of the year. Efforts are

underway to proactively reduce consumption

by recycling water and using groundwater

draining into underground operations that

would otherwise be discharged. “Clean-

dirty” water separation principles are applied

and rainwater is diverted from operations to

the greatest extent possible. In 2017, Mali,

Tanzania, Ghana and Guinea experienced

regional droughts, although our operations

were not affected.

In addition to harvesting rainwater for our

operational needs, we also draw on three sources

of raw water: groundwater from boreﬁelds, or

water collecting in underground operations from

ﬁssures and cracks; water purchased from utilities;

and, where permitted, limited water drawn (under

licence) from surface sources, such as rivers or

lakes. We continually work to optimise the use of

raw water in our operations, and ensure the safe

discharge of excess water. We recognise water

recycling as a key feature of water stewardship,

and we track water recycling efﬁciency. The

company’s raw water imports have increased by

3% year-on-year, mainly due to lower rainfall in

several of our operations which necessitated more

water imports. For water usage statistics see the

Five-year statistics in the Regional Performance

section

In Tanzania, an additional pipeline built to supply

water from Lake Victoria also provided access

to water for irrigation for many communities

and farmers alongside the pipeline’s path. In

Ghana, Iduapriem experienced abnormally low

rainfall, which required increased water transfer

from the Block 7 pit lake. Siguiri Mine in Guinea

required increased water from the Tinkisso River

due to poor rainfall.

In South Africa, management of extraneous

water from neighbouring mines is a key focus

area to protect AngloGold Ashanti’s own

operations downstream. In 2017, AngloGold

Ashanti adjusted the pH of acidic water

draining from the abandoned Blyvooruitzicht

mine, which allowed it to be used in mining

and gold processing circuits and offsetting

fresh water imports to the operation.

Electricity

Most of AngloGold Ashanti’s energy

requirements are generated from fossil fuels,

either purchased from utilities or generated

by its operations. A minor percentage of the

energy used is sourced from hydropower, with

Brazil and the DRC most notable in this regard.

AngloGold Ashanti’s energy consumption is

8.9% lower since 2013, as a result of cost

savings, energy efﬁciency initiatives and

reduced number of operations. More than

95% of the company’s greenhouse gas (GHG)

emissions arise from energy consumption.

Approximately 70% of 2017 GHG emissions

arose from the South African operations

due to use of emission-intensive coal-based

electricity, purchased from the national utility.

Energy efﬁciency is a key element in the

South Africa region’s strategy. Some of the

energy reduction efforts include energy

management and reporting processes,

together with various efﬁciency projects across

all operations. Additionally, in South Africa,

back-up generators for disaster recovery are

in place to ensure employee safety in case of

an emergency and to prevent infrastructural

damage during outages. Over the years,

annual energy intensity has improved

consistently in terms of GJ per tonne of ore

treated. It is expected that in the coming

year, the reduced number of operations in the

region, following the sale of assets, will reﬂect

a reduction in the overall usage of electricity.

USEFUL LINKS

See: www.aga-reports.com

As detailed in the Five-year statistics in
Performance Review.

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MATERIAL CONCERNS

AND OUR EXTERNAL ENVIRONMENT

CONTINUED

Australian operations achieved full conversion

from oil- to gas-powered generation. A small

number of diesel units remain at each site to

provide peak-load capability and emergency

back-up power for critical systems should

there be any interruptions in gas supply. In

Australia, Tropicana applied to the Clean Energy

Regulator for a calculated baseline under

the Federal Government’s Carbon Emission

Safeguard Mechanism. This legislation is aimed

at limiting future growth in GHG emissions.

After setting baseline emission thresholds,

the Safeguard Mechanism will require that

companies submit carbon credits or pay

penalties for excess emissions.

In the Continental Africa region, each site now

has an energy management plan and a KPI

dashboard that monitors improvements while

further identifying energy saving opportunities.

These enable the identiﬁcation of incremental

energy-saving opportunities. Actions across

the region include renegotiation of utility

tariffs, replication of best practices from other

mines in the AngloGold Ashanti portfolio,

and the increased use of solar power for

roadway lighting and other applications. In

Tanzania, work was well advanced by year

end to replace the existing power station with

a new, more efﬁcient facility. The new power

station is scheduled to be commissioned in

mid-2018. For data on our energy usage, see

Five-year statistics by operation

and for more

information see Responsible environmental

stewardship in the

<SDR>

Climate change – carbon emissions

Climate change is a global challenge posing

risk to society and the environment. AngloGold

Ashanti endeavours to contribute to climate

change mitigation by reducing emissions and

improving our efﬁciency of fossil energy use. In

2007, AngloGold Ashanti set a greenhouse gas

emission target of 30% improvement in carbon

intensity. This target has since been revised.

Since 2013 the company has adopted a per

tonne of ore processed denominator, replacing

gold ounces produced. The initial target

was framed using ounces of gold produced,

however, the effect of reducing gold grades in

ore mined has undermined this. This is because

the primary drivers of energy consumption (and

concomitant GHG emissions) in AngloGold

Ashanti operations are the volume of rock

mined, trammed and hoisted, distances trucked

and tonnages milled in processing plants. In

addition, our underground mines commonly

use signiﬁcant amounts of energy to ventilate

and cool the underground workings.

Land use and rehabilitation

As part of securing the ongoing licence

to operate, AngloGold Ashanti tries to

ensure that land resettlement standards

and procedures are implemented at all our

operations, before or during mining activities.

The company’s process involves an initial

assessment of land requirements, including

the environmental, social and health impacts,

followed by a resettlement management

plan, in line with global best practice as set

out in the International Finance Corporation’s

Performance Standard 5. For resettlements that

took place in 2017, see the

<SDR>

Further, AngloGold Ashanti is committed to

ensuring that our tailings are non-polluting,

stable and contained. In South Africa, at the

Kareerand facility, we experienced an intense

storm early in the year where more than 50mm

of rain fell in less than three hours. This deluge

overwhelmed the facility’s already-full process

water management system and caused a

reportable environmental incident. The facility

itself remained stable and freeboard of the

dam was safely maintained. In response to the

incident, the water-management system was

upgraded to improve its capability.

The land rehabilitation processes undertaken

by AngloGold Ashanti are guided by the

company’s Closure Planning Standard, among

others, to set a consistent benchmark across

all our operations. At Yatela in Mali, where the

closure process has commenced, we made

good progress in the implementation of mine

closure activities in 2017. The processing of

tailings continued in 2017 as part of closure

activities, including rinsing and rehabilitation

of the heap leach pads and will continue

until the end of 2021, with the completion of

mine closure expected at the end of 2022.

In Brazil, at Córrego do Sítio I, rehabilitation

activities have been implemented concurrently

with mining operations since 1992. The site

is in various stages of regeneration, including

the planted indigenous vegetation. Various

rehabilitation and conservation strategies are

used. Also see the

<SDR>

for more work

done regarding land use and rehabilitation.

Picture:

Surface Operations, South Africa

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Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Our stakeholder engagement process involves:

•

direct and indirect interactions

•

addressing the material issues identiﬁed

•

understanding stakeholders’ needs and

managing expectations

•

sharing our objectives, policies and

standards

•

articulating our performance as a

responsible corporate citizen

The engagement process is aimed at not

only establishing but maintaining mutually-

beneﬁcial relationships with all stakeholders,

driven primarily by the material issues

identiﬁed through our interaction with them.

It is an inclusive, continuous two-way

process between AngloGold Ashanti and the

people or organisations that are impacted

by our business and who in turn, impact

our business. Our stakeholder engagement

process continues throughout the lifecycle

of an operation, from exploration through to

closure, and encompasses a range of activities

and approaches. We view our stakeholders as

important partners and we continuously strive

to interact with them directly. In line with the

King IV principles, our approach is to mindfully

partner with our stakeholders to assess,

manage and mitigate ethical and regulatory risk.

In the everchanging environment in which we

operate, the board is responsible for ethical

and effective leadership which is fundamental

to a successful stakeholder engagement for

AngloGold Ashanti. Stakeholder engagement

is discussed at board level through the

board committees. We conduct stakeholder

engagement at various levels within the

company, including executive management,

operational management and community and

government outreach. The board maintains

oversight of material issues concerning

stakeholders. Our consistent engagement with

stakeholders, including our host governments

and communities, is also backed by actions

on the ground, where we demonstrate our

adherence to our value set.

Given the diverse footprint of our business,

there is a correspondingly diverse set of

stakeholders, each operating within a unique

social, economic, political and regulatory

context. Engagement takes place at various

levels. Either at group level, with stakeholders

whose interests require them to have an

overview of the business as a whole, or at an

operating level, where each site is responsible

for its stakeholders, for understanding the

impact the operation may have, and the

potential that stakeholders have to inﬂuence

the business.

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

Our approach

Our stakeholder

engagement is informed

by the stakeholders that

we have identified, our

operating environment,

and our business risks and

opportunities.

We prioritise and respond by reviewing

the material issues for our business

and those of our key stakeholders, as

well as comments from the Executive

Committee and board. Building

and nurturing relationships with all

stakeholders is an integral part to our

ability to secure and protect our licence

to operate, to address our material

issues, and to enhance shareholder

value as we execute our strategy.

Picture:

Mponeng, South Africa

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Strategy

Performance review

Accountability

Shareholder information

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

We strive to conduct all stakeholder

engagements in dynamic, honest, transparent

and inclusive ways. Given the wide range

of stakeholders, we adopt a multi-pronged

approach, including among others:

•

Visiting communities and government

bodies in and around the areas/countries in

which we operate

•

Meeting providers of capital and ﬁnanciers

•

Co-ordinating community focus groups in

the regions where we have operations

•

Undertaking community grievance

procedures and mechanisms

•

Seeking employee views by means of our

group-wide engagement survey and “town

hall” meetings

Guided by the International Integrated

Reporting Council and its related framework,

King IV, the GRI’s G4 guidelines and

the Accountability AA1000 Stakeholder

Engagement Standard to identify major issues

of material concern that affected the company,

our internal review process involved:

•

A review of the previous year’s

material issues

•

Identiﬁcation of emerging issues

•

Prioritising material issues, based on,

among others, their relation to our strategy,

operations and their potential impact on our

social licence to operate.

Engaging with governments
and regulators

Mitigating regulatory and political risk

We focus on maintaining good working relations

with governmental authorities, keeping them

appraised of any new developments at our

operations and projects and raising any key

concerns within each jurisdiction where we

operate. Our aim is to also establish regulatory

certainty and create an environment conducive

to mining sector investment and development,

for the long-term growth of the business and

the respective countries, while we maintain law-

abiding citizenship. Our responses in navigating

political and regulatory uncertainty are informed

by our code of ethics, and applied within the

country’s regulatory framework. In engaging

with governments and regulators, our actions

generally fall into one of three categories:

•

Engaging proactively in policy

development, regulatory proposals and

conﬂict resolution, seeking mutually

beneﬁcial and sustainable outcomes

•

Enhancing our internal systems and

activities to meet the requirements of any

regulatory changes

•

Disputing and seeking recourse where we

believe that we have been treated unfairly and/

or outside of accepted regulatory prescripts.

Who are our

stakeholders?

Those who are affected, either

directly or indirectly, by our

business activities and those who

can affect the outcomes of our

operations and projects.

Communities, NGOs, NPOs, etc

Shar

eholders, investors
and financiers

Media

Government and regulators

Suppliers and industry partners

Employees

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

Governments engage with us in all the

jurisdictions in which we operate, to ensure

that the beneﬁts of mining ﬂow through to the

state at national, local and community levels.

In addition to job creation, taxes, royalties, and

investment, the beneﬁts of mining at a local

level include employment, skills development,

local procurement and infrastructure and service

development. Governments also engage with us

to ensure and monitor regulatory compliance.

Engagements with governments and

regulators included those in:

•

South Africa – regarding the reviewed

Mining Charter, and as part of the Working

Occupational Lung Disease (OLD). The OLD

Working Group continues to engage the

Medical Bureau for Occupational Diseases

(MBOD) and Compensation Commissioner

for Occupational Diseases (CCOD),

which are the government departments

responsible for the certiﬁcation and

compensation of mineworkers with OLD, to

assist in ensuring effective administration in

terms of the Occupational Diseases in Mines

and Works Act (ODMWA).

We also engaged with regulators on the

restructuring of the South African operations

which included the sale of our mines in the Vaal

River region. These engagements were held

with local, provincial and national governments;

trade union representatives; host communities

and civil society organisations; and small,

medium and micro enterprises.

•

Ghana – AngloGold Ashanti was in

discussions with the government of

Ghana throughout 2017 to secure the

necessary agreements and permits for the

redevelopment of Obuasi. The relevant ﬁscal

and development agreements have been

signed by the government, and are now

subject to ratiﬁcation by Ghana’s parliament.

•

Tanzania – following changes in legislation,

we are seeking engagement with the

government to obtain clarity regarding the

new laws and regulations that impact the

mining sector. These changes apply to

those companies that have long-standing

mine development agreements.

•

DRC – we are working with our joint

venture partner and operator – Randgold

Resources – and peers in the industry,

seeking engagement with the government

of the DRC, ahead of the publication of the

regulation that will govern implementation

of the new law. We aim to ensure issues

in the current agreement and other

relevant matters are appropriately catered

for in the regulations that will govern the

implementation of the code.

See our website for updates on this.

•

Australia – extensive engagement between

the newly-elected Western Australian

government and gold industry in the region

took place as the industry lobbied against

proposed changes in tax legislation that

speciﬁcally targeted mining companies.

•

Brazil – various stakeholders, including the

government were involved in our Expanded

Dialogue initiative that is dedicated to open

and transparent discussions on AngloGold

Ashanti’s performance and impact on

host communities. These sessions were

held in the municipality of Sabará (with

representatives from the municipalities within

the State of Minas Gerais participating), as

well as in the municipality of Crixás.

Engaging industry partners
and suppliers

Promoting partnership towards the long-term

sustainability of the industry and our company

We collaborate with our peers in the sector

and industry bodies, to engage governments,

labour and other key stakeholders on new

developments to promote the future of the

industry. These industry partners include

the World Gold Council, the International

Council on Mining and Metals (ICMM),

other companies within the industry and the

Chamber of Mines.

USEFUL LINKS

For the latest work on OLD, see the
External Environment on page 26

Details of which are available on:
www.qhubekatrust.co.za

For more information on the Working
Group, see the External environment on
page 26

Our engagements included:

•

Interactions and work throughout the year

with the OLD Working Group. The focus

is to develop, in conjunction with key

stakeholders, a comprehensive solution

to silicosis litigation and related statutory

compensation. AngloGold Ashanti,

together with Anglo American South Africa,

established a trust – the Q(h)ubeka Trust – to

provide compensation to qualifying claimants

and dependants of ex-mineworkers in a legal

settlement that covers about 4,365 named

ex-mineworkers. Much progress was made

by the Trust during the year.

2,3

•

Industry partners – we engage regularly

with the local Chamber of Mines in the

various regions in which we operate. During

the year, in Australia, this was to lobby the

government of Western Australia on the

proposed increase in the gold tax. In South

Africa, we focused primarily on negotiations

related to the reviewed Mining Charter.

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Performance review

Accountability

Shareholder information

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

•

Suppliers – AngloGold Ashanti always

endeavours to have suppliers apply our

business ethics and values. Our supplier

code of conduct encourages all our

suppliers, including contractors, to align

their businesses with our internal policies

and codes of ethical behaviour, particularly

on human rights practices, labour relations

and employment practices, the environment,

our anti-corruption policies, and safety

procedures, policies and standards.

Suppliers are assessed on their governance

conduct, as well as to their socio-economic

behaviour. Furthermore, we work closely

with suppliers to promote local procurement,

transformation and capacity building.

Engaging with communities

Managing expectations, upholding human rights and

ensuring security (of assets and the community)

Our community engagement aims to establish

partnerships with host communities for shared

value creation. We are also driven by the

need to maintain our socio-political licence to

operate, which is core to how we work with

our host communities and conduct business.

We are guided by our global Engagement

Management Standard that requires each

operation to prepare and implement an

engagement strategy that is, among others,

forward-looking and identiﬁes potential areas

of concern to stakeholders. We have local

economic development programmes that

run in partnership with local governments

and host communities. These contribute

to economic growth, stimulate income

generating opportunities, create employment,

and aim to nurture sustainable livelihoods

beyond the life of mine. For more information

see the

<SDR>

on contributing to self-

sustaining communities.

During the year we engaged with

communities in:

•

South Africa – the restructuring of our

South African operations led to the sale

of some of our mines. As this change

is bound to affect host communities,

among others, we engaged with the

Department of Mineral Resources (DMR)

at a national and regional level, local

communities (NPOs, NGOs and youth),

small, medium and micro enterprises, as

well as the local municipalities in affected

host communities and major labour-

sending areas. Engagements were aimed

at informing relevant stakeholders of

recent developments and our plans, and

to address the transfer of the TauTona

and Kopanang Social and Labour

Plan obligations, their environmental

programmes and mining rights as well as

some employees to the new owners of the

Kopanang mine.

•

Ghana – at Obuasi, together with the

Environmental Protection Agency, we

hosted a public meeting in 2017 to engage

communities and regulatory bodies on the

potential redevelopment of the mine. These

engagements also included the paramount,

divisional and local Chiefs, local NGOs

and other stakeholders. The purpose was

to create an opportunity for all relevant

stakeholders to express their perspectives

on the proposed mine redevelopment plans,

as well as proposals for environmental

management initiatives, such as tailings

facilities and water infrastructure projects.

•

Brazil – we hosted an annual meeting,

the Expanded Dialogue, dedicated to

open and transparent discussions on the

company’s performance and impact on host

communities. This event was attended by

representatives of key stakeholder groups,

including host communities, local government,

media, civil society and suppliers.

Our community engagements also include

instances where we require access to land

for mining activities. These may lead to the

subsequent resettlement of people, a complex

and emotive matter with long-term implications

for the relationship with our host communities.

We therefore, manage these with sensitivity

while engaging the related communities.

In areas where we require land access

within communities, we begin with an initial

assessment that is followed by a resettlement

management plan developed in consultation

with local authorities, as well as with the

affected community, in line with global best

practice as set out in the International Finance

Corporation’s Performance Standard 5. Should

the displacement be unavoidable, affected

communities are fully, fairly and promptly

compensated for any loss of assets.

Resettlements that took place during the year

are discussed in the

<SDR>

Engaging with employees

Mitigating safety risk, employee wellness and

ensuring stable labour relations

AngloGold Ashanti’s approach to employee

engagement is driven by an understanding

that this is a two-way interaction and is aimed

at promoting good labour relations, increasing

productivity and maintaining a focus on our

strategic objectives. The wellbeing of all our

employees and their safety is the foundation of

who we are and how we conduct ourselves.

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STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

Our company value – Safety is our ﬁrst value –

captures the importance of safety, which remains

our top priority.

It is vital that engagement be not only

professional and respectful but also in line with

the laws and regulations that govern the mining

sector in our various operational jurisdictions.

Furthermore, good labour relations encourage

a collaborative approach to problem-solving

in the workplace. Our engagement, using a

variety of approaches and forms, emphasises

and reinforces the importance of being safe

in the workplace, of complying with safety

procedures and standards, while also covering

wellness, indebtedness, employee security, and

performance against our strategic objectives, as

we work to create value for our stakeholders.

AngloGold Ashanti employees have a right

to freedom of association and to collective

bargaining at all operations, where the

country’s regulations allow.

The following include some of the year’s key

employee engagements:

•

South Africa – a forum is in place at which

management and employees’ organised

labour representatives meet regularly

to discuss issues and take action on

employee-related matters, including the

employee transition framework related to

the restructuring in 2017. Using this forum,

we engaged with employees on the various

restructuring processes undertaken during

the year, including the sale of some mines.

After extensive engagement with unions

and regulators, all parties agreed to reduce

the impact of job losses – by including

voluntary severance packages and transfers.

This resulted in only 21, out of an initial

estimated 849, employees being dismissed

for operational requirements. Additionally,

following a review of various options to

safely turn around the performance of

the loss-making operations, AngloGold

Ashanti made the difﬁcult decision to

restructure certain South African business

units. Consequently, further engagements

were held with employees, their labour

representatives – the unions and the DMR

at national and regional level. Through

these engagements, more job losses were

mitigated. For more details, see

Regional

Reviews

– South Africa. In addition, the

Chief Operating Ofﬁcer and the head of

human resources in South Africa briefed

all management employees regularly, and

engaged with the leadership of organised

labour as necessary, throughout the year.

Picture:

Iduapriem, Ghana

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Shareholder information

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

•

Continental Africa – labour relations

remained stable across the region and,

despite labour disputes on salaries at our

Malian operations and protracted wage

negotiations at Siguiri, there were no

production interruptions. We view this as

a reﬂection of the good relations between

management and employees. There were no

unresolved labour issues in 2017.

•

Employee survey – we conduct a survey

every two years to understand employees’

perceptions and views of the company.

Engaging with the
investment community

Managing expectations, particularly against targets

and strategic objectives

We conduct our engagement with the

investment community regularly, in person

and by email, at our interim and annual results

presentations, market updates, via conference

calls, site visits, investor conferences and

at one-on-one meetings. We engage in a

transparent manner, in compliance with JSE

Listings Requirements, the stock exchange on

which AngloGold Ashanti has its primary listing,

and with the regulations of the various other

exchanges on which we are listed.

Our investment community is geographically

diverse and includes ﬁnanciers and bond

holders, and the providers of capital – our

shareholders and prospective investors.

We always report on our performance, both

operational and ﬁnancial, and on progress

made in delivering on our strategic objectives,

as well as on material matters that may

have an impact on our performance, such

as regulatory and political risk, corporate

activity by way of acquisitions or sales, other

corporate transactions, labour unrest, and

community matters, amongst others.

We believe that open and transparent

engagement can enhance the valuation and

credit rating of our company, thereby improving

our access capital. These engagements

are necessarily proactive, to inform of any

developments in the company, and become

even more important during periods when

investor sentiment is negative. Some of the

points we engaged the investment community

on, in addition to performance against our

strategic objectives, in 2017 are:

•

Safety – improved safety performance

•

Changes in remuneration – resolution

supported at the AGM with the remuneration

report receiving 97% shareholder approval

•

Restructuring of the South Africa region –

ﬁnalisation of asset sales and operational

turnaround

•

Communities – Siguiri resettlement in line

with company processes on community

engagement and human rights

•

Tanzania – surprise legislation changes on

additional royalties and clearance levy

•

Obuasi – redevelopment into a modern,

mechanised mine to extract value

•

Balance sheet – improved liquidity position,

thereby maintaining ﬁnancial ﬂexibility

•

Low-capital, high-return project

opportunities – self-funded Siguiri

expansion, Tropicana optimisation and

Long Island study

•

South Africa – reviewed Mining Charter,

the activities of the OLD Working Group and

the overall political uncertainty in the country

•

Exploration – particularly progress made

in Australia

Engaging with the media

Complements engagement with many

other stakeholders

Our media engagement is transparent, covers

a range of matters, facilitates understanding

of AngloGold Ashanti’s activities, and

promotes accurate reporting and constructive

relationships with other stakeholders.

Engagement with the media augments

and underpins communication with other

stakeholders such as communities, investors

and government, and other interested entities.

Successful media engagement is fundamental

to ensuring accurate representation and

understanding of the company, management

USEFUL LINKS

For more detail on this survey see People
are the Business on page 36

of our reputation and our credibility, and

maintenance of our social licence to operate.

It can be used to address speculation and

misinformation in the public domain.

We engage with the media through holding

roundtable sessions to provide deeper

insight into our business, interviews

granted during the company’s results

announcements and as necessary to

provide reporters with company updates

developments, including:

•

Political and regulatory engagements: in

Tanzania for the export ban, mandatory

listing, and the legislative changes. In

South Africa for the MPRDA & the reviewed

Mining Charter, and in the DRC on the new

mining code

•

Social Licence to Operate: in Colombia on

the La Colosa plebiscite outcomes; in Guinea

on the Area 1 Resettlements; and in South

Africa on the community demands for jobs,

particularly with restructuring in South Africa

•

Others matters: included fatalities in

the mines in South Africa; the OLD

working group relating to the class action

certiﬁcation by the High Court; and the

settlement negotiations

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Shareholder information

STAKEHOLDER ENGAGEMENT

AND MATERIAL ISSUES

CONTINUED

In engaging with stakeholders, various material issues are highlighted. The major material

issues identified as a result of this engagement are the following:

Detailed information on our approach in addressing these issues is described in the

<SDR>

Contributing to
self-sustaining

communities

Artisanal and small

scale mining (legal

and illegal)

Responsible

environmental

stewardship

Employee and

community health

Employee,

community and

asset security

Talent

management and

skills development

Employee safety

Respecting

human rights

Integrated closure

management

Navigating

regulatory

and political

uncertainty

and risk

Picture:

Serra Grande, Brazil

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Strategy

Performance review

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Shareholder information

PEOPLE

ARE THE BUSINESS

In the South Africa region, the human

resource challenge is framed by

signiﬁcant structural rationalisation of

the portfolio, with reduced employee

numbers and a need to retain talented

individuals, particularly staff with critical

and scarce skills. This needs to be done

while the retained employees transition

to their new roles. The focus of our

human resource strategy has enabled

us to respond to the primary challenges

we face, namely ensuring organisational

effectiveness while rationalising part of

the portfolio, as well as operating and

growing others.

The regions within our International

Operations’ portfolio continue on

their strategic trajectories to become

world-class operations that are safe

and proﬁtable in all circumstances.

The business has leveraged the

operational excellence initiative, aided

by employing people with the right

skills and behaviours and creating

an organisational culture conducive

to operating at a high level and

continuously improving performance.

The need to deliver on our business strategy, coupled with the challenging

business environment, places an increased focus on our people as we strive to

ensure that the company remains competitive, and consistent in the deliver y of

excellence. In view of this, our human resource strategy has remained resolute

in ensuring that the company has created the environment for staff to thrive and

add value to the business.

Picture:

Serra Grande, Brazil

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Shareholder information

PEOPLE

ARE THE BUSINESS

CONTINUED

Our People strategy is underpinned by our values and enables business strategy execution

AngloGold Ashanti’s people philosophy

Given the importance of having the right people doing the right work well, our business context is relevant to how our people work

People Strategic Pillars

Goal

Organisational design

and operating model

aligned to business

strategy

Health of Discipline

framework to enable

Operational Excellence

Develop capable

ethical leaders across

the organisation

Focus on employee

engagement and

commitment

Integrated talent

management and

succession planning

Simpliﬁed and

integrated global

human resource

systems

Intent

Optimal organisational

design and structure

which gives effect to

the company strategy

in a way that is globally

consistent, yet locally

relevant.

Ensure that we have

deﬁned the right

competencies and

capabilities required per

functional area to enable

operational excellence

and strategy execution.

The best leaders are

in place, with a global

mindset, and who

use a requisite set

of competencies to

shape and drive a high-

performance culture.

Employees are fully

engaged so that they

thrive and give their best

in achieving their own

and company objectives.

Integrated cross

functional talent

management with the

requisite capabilities in

place, enabling us to

navigate the business

landscape and achieve

strategic objectives.

Human resources

data is effectively

managed in order to

enable more effective

decision making,

optimise internal and

external reporting, and

drive superior business

performance.

Key Enabler:

Values Based Ethical Leadership and Management Practices - “How We Work”

People strategy

Engaged

talent

Business

results

Social

sustainability

Shareholder

value

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Shareholder information

Our business context drives the
following six human resources
strategic priorities:

•

Develop integrated talent management

systems and succession planning

•

Build capable global leaders across

the organisation to ensure a high-

performance culture

•

Develop and drive a Health of Discipline*

framework that ensures that the various

disciplines have effective organisational

structures, staffed by competent people and

with appropriate work processes, to achieve

our business objectives

•

Focus on employee engagement

and commitment

•

Shape AngloGold Ashanti’s culture with a clear

organisational design and operating model

•

Develop simpliﬁed and integrated human

resource information systems

The Health of Discipline refers to our framework
to ensure that we have the right people, with the
appropriate competencies, in the right positions.

Our actions in 2017

Given the challenges in our operating

environment, the company’s human resources

discipline increased its emphasis on building

capacity and capability, to position itself as

an effective strategic partner to the business.

Our focus was on delivering productive,

innovative people management initiatives and

accelerating delivery of our strategic priorities.

In the following sections, we reﬂect on our

performance regarding the strategic priorities

of integrated talent management, health

of discipline, organisational leadership and

employee engagement.

Integrated talent management

In advancing our talent management

capability, 2016 and 2017 were devoted to

building on the foundation of existing talent

management practices and strengthening the

operationalisation and maturity of our talent

management process. This was supported

by the development of a talent management

toolkit and system to ensure an integrated

and consistent approach across our

operating base.

PEOPLE

ARE THE BUSINESS

CONTINUED

Integrated talent management approach

Opt

ise overhead, costs and

cap

ital expend

iture

i
nta

i
n long-term opt

i
onal

i
ty

Focus on people, safety and sustainability

Ensure f

i
nanc

i
al flex

i
b

i
lity

Improve portfol

io qual

ity

Supporting

our strategy for

sustainable

cash flow

improvements

and returns

RATEGIC FOCU

S A

Business strategy

Human resources

strategy

Engaged talent

Leadership

competency

framework

Business results

Identify

Develop

Deploy

Integrated

talent

management

Assess

Retain

Talent and succession planning

During the year, the Chief Executive Ofﬁcer’s

talent pool, comprising Stratum IV (Vice

President level and above), was reviewed and

presented to the board. Critical leadership

and technical positions were identiﬁed, and

potential successors in the short, medium

and long term, were identiﬁed for all these

positions. In so doing, talent was reviewed

cross-functionally across AngloGold Ashanti.

Cross-functional talent reviews assist with the

management of speciﬁc talent management

risks, including unﬁlled vacancies in critical

leadership and specialist positions. To

ensure that these potential risks are avoided,

we have development plans for potential

successors through a blended-learning

approach, covering both formal and informal

training. Additionally, while focusing on

strengthening leadership talent, we are

mindful of gender diversity and continue to

work towards gender parity.

We continued to make progress with internal

succession placements – about 80% of

key positions were ﬁlled internally. At our

Continental Africa operations, where the

company largely employed expatriate staff

in the past, employment of expatriates has

been reduced. This change has had no

adverse impact and operations continue to

excel with greater localised employment.

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Strategy

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Shareholder information

PEOPLE

ARE THE BUSINESS

CONTINUED

In the South Africa region, we implemented the

Advanced Leadership Development (ALDP)

and Managerial Leadership Development

(MLDP) programmes for key personnel in

partnership with the University of Cape

Town Graduate School of Business. These

programmes aim to provide managers with

the requisite skills, knowledge and required

behaviours to be effective leaders by facilitating

exposure to classroom training, as well as

on-the-job coaching and mentoring. This

is evidence of AngloGold Ashanti’s steadily

maturing approach towards integrated talent

management, with real application in a fast-

paced, real world business environment:

•

The cover ratio for Executive Committee

members and other key leadership roles shows

strong bench strength across the group

•

A strong focus on appointing candidates

from within the company to key positions,

with around 80% of positions having been

ﬁlled internally

•

Good leadership talent retention (senior and

executive management) positions with a 3%

turnover rate

•

A strong talent pipeline with most of the

workforce being between 26 and 45 years

of age

•

7% year-on-year improvement in identifying

women successors for inclusion into the

talent pool – this remains a focus area

•

Representation by historically disadvantaged

South Africans in the CEO’s talent pool was

14% higher year-on-year

•

Retention risks being managed proactively

with expanded retention strategies, including

a structured focus on both formal and

informal development interventions

•

Talent management governance structures

streamlined across the organisation with

clear guidelines for talent pool identiﬁcation

Talent development: Chairman’s Young
Leadership Development Programme

In strengthening employee development and

expanding the leadership pipeline internally,

AngloGold Ashanti continued its focus on

nurturing and developing young talent from

lower levels through the Chairman’s Young

Leaders Programme. The programme,

focuses mainly on emerging young talent,

is well established and in its third year. It is

yielding positive results in developing, and

nurturing future leadership and/or critical skills

talent pipeline across AngloGold Ashanti.

From the 2015 and 2016 intakes, (out of

17 participants), 76% have either been

promoted or have had their roles expanded

to assume greater responsibility. Nine young

leaders joined the 2017 programme and

received global exposure through three cross-

functional job rotations across the business

during the year. All nine delegates completed

the programme successfully.

Picture:

Iduapriem, Ghana

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Strategy

Performance review

Accountability

Shareholder information

Now that those on the programme have

completed it, the next intake of young leaders

into the programme will be in 2019. In the

interim, the following key interventions will

be undertaken:

•

Launching of a mentorship programme

•

Ensuring visibility of talent through ongoing

engagements with the senior leadership team

•

Focusing on implementation of development

plans and continuing with career guidance

Localisation and expatriate
management

Localisation is a key driver for talent and

succession management across our

operations. In Continental Africa, our

deliberate approach to reducing the number

of expatriate employees and creating

opportunities for local employees, has

resulted in 41% less expatriates in the region

since 2013. This was a result of both the

appointment of local successors and the

redundancy of some expatriate roles given

local skills development. Between January

2016 and December 2017, 62.5% of

expatriate roles were localised. Our managers

continue to focus on local skills development,

including skills transfer programmes.

Organisational leadership

Leadership is an integral part of AngloGold

Ashanti’s How We Work people management

philosophy. In 2017, we developed a

leadership competency framework, aimed

at clearly outlining the competencies and

behaviours required by AngloGold Ashanti

leaders across the business. This framework

is in line with the principle of values-based

ethical leadership for all leaders and thus

demonstrates the AngloGold Ashanti values of

being socially responsible, having integrity and

embracing multicultural diversity.

Implementation of this framework will be

supported by an upskilling toolkit and allow for

regional interpretation and integration into our

“How We Work” people management practices.

PEOPLE

ARE THE BUSINESS

CONTINUED

Picture:

Sunrise Dam, Australia

Number of expatriates in Continental
Africa Region

211

183

142

166

240

2013

2014

2015

2016

2017

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

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Strategy

Performance review

Accountability

Shareholder information

PEOPLE ARE THE BUSINESS CONTINUED

Strategic and

commercial acumen

Operational

excellence

Clear vision and

direction setting

Drive

performance

Safety

mindset

Adaptability

and resilience

Business leadership

People leadership

Self leadership

Stakeholder

management

Innovation

Leading and building

diverse teams

Ensure

accountability

Teamwork and

collaboration

Emotional

intelligence

Supporting our strategy for sustainable cash ﬂow improvements and returns

•

Optimise overhead costs and capital expenditure

•

Improve portfolio quality

•

Maintain long-term optionality

•

Focus on people, safety and sustainability

•

Ensure financial flexibility

Optimise
overhead,
costs and
capital
expenditure

Maintain
long-term
optionality

Focus on people, safety and sustainability

Ensure
financal
flexiblity

Improve
portfolio
quality

Supporting

our strategy for

sustainable

cash flow

improvements

and returns

OUR CORE STRATEGIC FOCUS AREAS

Values based ethical leadership

AngloGold Ashanti’s values

Safety

Dignity and respect

Diversity

Accountability

Communities

Environment

Communication and capability building

Integration into talent practices, including Recruitment, On-boarding, Development, Health of Discipline and Performance, Career and Succession Management

Technical and functional competencies

Our business
strategy

Our leadership
competency
framework

How we
enable this

The AngloGold Ashanti leadership competency framework

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

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Shareholder information

Skills development

As part of skills development, AngloGold

Ashanti Training and Development Services

(ATDS) in South Africa, which has eight major

training centres (including two underground),

provided comprehensive technical, leadership

and behavioural training and development

to staff in 2017. ATDS trained approximately

27,000 learners and is fully accredited by the

South African Mining Qualiﬁcations Authority

(MQA) and is ISO 9001 and OHSAS 18001

accredited. Learners are primarily employees

from our South Africa and Continental Africa

regions, but also include learners from external

organisations such as the South African

National Defence Force and the national power

utility, Eskom.

Health of Discipline

The Health of Discipline framework was

positioned as a company-wide consistent

approach to achieve the following objectives:

•

Continuous supply of functional, technical

and leadership competence in critical roles;

•

Execution of succession planning for

critical skills

•

Career management through clear and

relevant processes to design career paths for

all key employees and key talent segments

In 2017, implementation of the initial phase

of the Health of Discipline framework and

toolkit were accelerated to ensure that the

various disciplines have effective organisational

structures, staffed by competent people

with appropriate work processes to achieve

our business objectives. Signiﬁcant traction

in implementing the Health of Discipline

practice has been noted at the International

Operations, particularly relating to metallurgy,

mining, geotechnical, and greenﬁelds and

brownﬁelds exploration. The next phase will

cover all other disciplines across the regions

and the group – drawing from the successes

and learnings of the ﬁrst phase.

Employee engagement

AngloGold Ashanti initiated a global engagement

survey in August 2014. In early 2017, a second

engagement survey was conducted to assess

progress made in the intervening period and

to identify further work to be done to promote

levels of employee engagement. The survey was

conducted by an external provider, Talent Map.

Customised questions on the global

engagement survey, pertinent to AngloGold

Ashanti, were included with speciﬁc focus

on safety, company values and ethics. A

representative sample of employees was

surveyed across all levels, including age,

gender, race and tenure. The following was

the key dimensions covered:

•

Company values

•

Organisational vision

•

Senior leadership practices

•

Innovation

•

Ethics

In the 2014 survey, three areas came

up as areas requiring improvement:

senior leadership practices; managerial

effectiveness; and ethics. These were

determined as the most signiﬁcant areas

as they are strong drivers of employee

engagement. A range of interventions were

undertaken, underpinned by the roll-out of

the How we Work people practices which

aims to build supervisor and manager

capability in managing and engaging

employees in the workplace.

In the 2017 global engagement survey,

the results showed an improvement of the

overall engagement score compared to the

2014 survey: from 69% in 2014, increasing

to 76% in 2017 as depicted below:

PEOPLE

ARE THE BUSINESS

CONTINUED

Engagement scores

Unfavourable

Overall engagement

I am proud to tell others

I work for my company

I am optimistic about

the future of my company

My company inspires me

to do my best work

Data is rounded to the nearest number

* Number indicates % favourable score

Neutral

Favourable

Frequency (%)

100

AGA

2014*

AGA

2017

Large

organisation
benchmark*

Industry

benchmark*

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Strategy

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The employee engagement survey also

indicated that working on entrenching and

ensuring demonstrable and visible company

values and principles by employees and

managers across the group, is a key

positive engagement driver for AngloGold

Ashanti. Notwithstanding the improved 2017

performance, we continue to do more work to

drive employee engagement.

There will be speciﬁc focus on enhancing and

ensuring awareness of our company values,

as a key leverage area to improve employee

engagement. How We Work will continue

as a global management system to enable

accountable leadership and implementation

of the requisite people management practices

within AngloGold Ashanti. Having taken heed

of the results of the previous surveys, a follow-

up survey will be conducted in 2019.

Diversity and inclusion

As a global company, AngloGold Ashanti

embraces and recognises employees

from diverse backgrounds. This includes

cultural, geographical and gender diversity,

along with the need to address localisation

requirements and the many forms of

discrimination arising from diversity. All our

policies linked to diversity and inclusion are

underpinned by our value that we must

treat each other with respect, regardless

of race, religion, gender, disability, size,

age, or country of origin. In all its aspects,

embracing diversity is a source of value

rather than a challenge which needs to be

managed. The company has continued

to work actively in strengthening women

representation at board, executive and

senior leadership levels, and compares

favourably with peers in the mining industry.

Our focus remains the identiﬁcation and

appointment of women leaders into

technical roles. The challenge we face can

be attributed to the competition for talent,

particularly for women at senior level as

well as the small pool of senior women with

technical skills, a barrier generally faced

by the mining and industrial sectors. We

continue to work with Women in Mining

and tertiary institutions to address this.

Throughout the year we participated in, or

continued to subscribe to various bodies

and interest groups focusing on gender

diversity, enabling us to help inﬂuence a

progressive diversity agenda. Through

the 30% Club Boardwalk, 25 women at

management level have participated in this

development initiative to nurture aspiring

leaders in senior management positions.

The company also joined the South African

and Australian chapters of Women in

Mining, an organisation which, among other

things, supports development initiatives

including coaching and mentoring and

enabling suitable work environments.

Through its focus on women’s development

in South Africa, the company received a

number of accolades at the 2017 Gender

Mainstreaming awards. Among companies

listed on the Johannesburg Stock Exchange,

AngloGold Ashanti was placed ﬁrst in the

category of Economic Empowerment of

Women; second in Women on Boards;

and third in the three categories of

Empowerment of Women in the Community,

Women on Executive Committees in

Multinationals and Gender Reporting.

PEOPLE

ARE THE BUSINESS

CONTINUED

2017 Performance scores by main survey attributes

Unfavourable

Professional growth/Personal development

Safety

Organisational vision

Innovation

Work environment

Values

Teamwork

Immediate management

Performance feedback

Ethics

Company information on communication

Work/life balance

Stakeholder focus

Senior leadership practices

Managerial effectiveness

Remuneration/reward

Data is rounded to the nearest number

* Number indicates % favourable score for AngloGold Ashanti

Neutral

Favourable

Frequency (%) 0

100

AGA 2014*

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Labour relations

AngloGold Ashanti employees have a right

to freedom of association and to collective

bargaining. This is embraced and viewed by

management as central to effective labour

relations at all our operations where the

country’s regulations allow. For labour relations

activities and engagements that took place

during the year, see the regional reviews

sections in

Performance review

Safety strategy

The safety strategy is aimed at systematically

identifying and eliminating workplace

hazards and risks, particularly in the ultra-

deep gold mining environment with many

geological challenges, where missteps can

have disastrous consequences. There was

a signiﬁcant improvement in the various

components of the strategy given the strong

focus on safe production.

Our South African operations have recently

reviewed the strategy in order to align it

with current trends. And, following the fatal

accidents that occurred in South Africa in the

latter half of the year, mitigation measures

were put in place to avoid a recurrence. These

measures include, among others:

•

Compilation and review of guidelines on

changes to mining conﬁguration

•

Investigating the use of technology to

assess rock mass competency, ground

penetrating radar is currently being tested

•

Improving cycle mining compliance

•

all supervisors attended refresher sessions

on cycle mining requirements

•

the booking system was reviewed to

align with activities rather than volumes

mined (m

)

•

the second wave crew training to begin,

starting with supervision accountabilities

•

Reviewing stope proﬁles to improve rock

stress redistribution ahead of the stope by

determining the optimal lead/lags for varying

panel lengths and taking into account the

principles of cycle mining

•

Reviewing start-up risk assessment formats

and processes to incorporate learnings

and trigger action response plan principles

(similar to ledging risk assessment)

•

Awareness training on the reviewed/

updated procedures

Our four-pillar safety strategy (i.e. knowledge

and skills, behaviour and attitude, planning

work, and removing people from risk) is aimed

at creating a culture of “planning for safe work”

while integrating safety principles into work.

Signiﬁcant progress was made during the year

in terms of safety leadership training, employee

capability and risk propensity as well as hazard

and risk management training for supervisors.

PEOPLE

ARE THE BUSINESS

CONTINUED

Gender representation on the board: 2014 - 2017

(%)

2014

2015

2016

Male 7

Female 2

% Female 22%

27%

36%

2017

40%

30%

20%

10%

27%

36%

2014

2015

2016

Male 6

Female 3

% Female 33%

33%

2017

35%

30%

25%

20%

15%

10%

Gender representation in executive management: 2014 - 2017

(%)

33%

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STRATEGY

SECTION 3

This section sets out how we create value for

our stakeholders in the short, medium and long

term, and how we have performed in terms of

our strategic objectives, while managing the

related risks and opportunities.

Our strategy

Performance against strategic objectives

Managing and mitigating risks, identifying opportunities

Picture:

Mponeng, South Africa

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

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OUR

STRATEGY

Focusing on the strategic areas of the company

ANGLOGOLD ASHANTI’S INVESTMENT CASE:

Optimise overhead, costs and

capital expenditure

Maintain long-term optionality

Focus on people, safety and sustainability

Ensure financial flexibility

Improve portfolio quality

Supporting

our strategy for

sustainable

cash flow

improvements

and returns

OUR CORE STRATEGIC FOCUS AREAS

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

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

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

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

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

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

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

longer term.

AngloGold Ashanti's core strategic focus is to generate sustainable

cash flow improvements and returns by focusing on five key areas,

namely: people, safety and sustainability; ensuring financial flexibility;

actively managing all expenditures; improving the quality of our

portfolio; and maintaining long-term optionality.

HIGH-QUALITY portfolio

of long-life, pure gold

assets with strong leverage

to energy and currencies

Transparent, DECISIVE,

DISCIPLINED

management team,

focused on delivery, long-

term shareholder value

PRIORITISING MARGINS

over volume – focus on

cost and capital discipline

Decisive STRATEGIC RESPONSE

to the gold price – business plans

adjusted, and exploration and

development projects curtailed or

advanced, as appropriate

Balance sheet

FLEXIBILITY, with

appropriate liquidity,

and within covenant

threshold

WELL-DEVELOPED

ENGAGEMENT model

ensures strong stakeholder

relationships and maintains

licence to operate

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‘Our people’ include our employees, the host

communities and all other stakeholders as

discussed under the

Stakeholder engagement

section in this report. During the 2017 year,

the focus on the employees included ensuring

an integrated talent management process,

employee development, and succession

planning to ensure that we have the right

people, with appropriate competencies,

in the right positions. This is the key

aspect in ensuring creation of the right

working environment, encouraging a high-

performance culture, to enable delivery on our

strategic objectives.

Our drive to maintain sustainable cash

ﬂows, is not only dependent on our capable

employees, but is also inﬂuenced by our

ability to operate safely, in line with our

ﬁrst value and zero harm goal, and to

conduct our business ethically. To keep

an uncompromised license to operate, we

maintain full engagement with our host

communities and governments, and remain

responsible stewards of the environment,

notwithstanding the invasive nature of mining.

Safety remains our highest priority as we

continue on the path to eliminating all injuries

from our mines. In achieving this strategic

pillar, we create value, sustainably, while

investing back to the communities.

PERFORMANCE

AGAINST STRATEGIC OBJECTIVES

AngloGold Ashanti's performance against its strategy is set out below for each strategic pillar. These were

achieved by delivering better quality ounces, improved margins, self-funded investments into the portfolio for

the long term sustainability of the business, while generating and returning cash to investors.

Our core strategic focus areas remain:

Focus on people, safety,

and sustainability

Number of employees

58,057

52,266

51,480

52,649

66,434

2013

2014

2015

2016

2017

Community investment

(by region 2017)

•

South Africa

•

Continental Africa

•

Australasia

•

Americas

Productivity*

(oz/TEC)

9.30

9.50

9.66

8.97

7.77

2013

2014

2015

2016

2017

* Continuing operations

Picture:

Sunrise Dam, Australia

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Shareholder information

Despite higher capital expenditure increasing

our net debt slightly from $1.9bn to $2.0bn,

net debt to adjusted EBITDA ratio (1.35

times) remained well below our covenant

threshold (3.5 times). The capital expenditure

increase was planned to pursue high-return

opportunities – these are stated under strategic

pillar 4 on the following page. We have

maintained ﬁnancial ﬂexibility in the current

volatile environment, our balance sheet is robust

with strong liquidity, sufﬁcient undrawn facilities

and no near-term maturities.

Continued positive cash generation helped

us return cash to shareholders, enabling us

to declare a dividend at ZAR 0.70 cents,

equivalent to ~6 US cents (2016: 10 US cents)

a share. The proceeds from the sale of the two

mines in South Africa were applied to reduce

debt, further improving ﬁnancial ﬂexibility.

Total cash costs of $792/oz were 6%

higher than the previous year, impacted by

inﬂation, stronger local currencies and the

expensing of certain capital costs at the

South African operations as they went into

orderly closure. Corporate costs, however,

were up 5%, negatively impacted by inﬂation

and currency effects.

Cost management initiatives continue under

the Operational Excellence programme. This

programme drives improved behaviours within

the workplaces for enhanced operational

efﬁciencies, to reduce cost structures and

improve margins.

All-in sustaining costs were higher compared

to 2016 due to the higher planned sustaining

capital expenditure as we self-funded our

portfolio development, reinvesting in high return

options within our existing portfolio. In 2018,

capital expenditure is expected to be lower

at between $800m and $920m (inclusive of

growth projects at $200m-$250m).

PERFORMANCE

AGAINST STRATEGIC OBJECTIVES

CONTINUED

Ensure ﬁnancial

ﬂexibility

Optimise overhead, costs

and capital expenditure

Group annual capital expenditure*

($m)

1,209

857

953

811

1,993

2013

2014

2015

2016

2017

* Includes equity-accounted investments and
discontinued operations

Corporate and overhead costs

($/oz)

2013

2014

2015

2016

2017

Net debt

($m)

3,133

2,190

2,001

1,916

3,105

2013

2014

2015

2016

2017

Net debt to adjusted EBITDA ratio

(times)

1.94

1.49

1.35

1.24

2.04

2013

2014

2015

2016

2017

USEFUL LINKS

For further detail on the relationship
between net debt and adjusted EBITDA,
see the CFOs review on page 62

For detailed Outlook see page 66

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PERFORMANCE

AGAINST STRATEGIC OBJECTIVES

CONTINUED

Improve the quality

of the portfolio

Maintain long-term

optionality

We continue to look for ways of unlocking

value and improving our portfolio for the

long-term sustainability of the business, a

fundamental element of our strategy. We are

mindful that mining is a long-term business,

and so we continue to invest in world-

class exploration talent and high-potential

brownﬁelds and greenﬁelds programmes.

During the year, we continued work on the

Below 120 Level life extension project of the

Mponeng mine in South Africa which aims

to access deeper, higher-grade ore (Also see

detail in South Africa in the

Regional reviews

We also progressed mine expansion with

Siguiri’s hard rock project. At Obuasi, following

positive interactions with government, it is

anticipated that redevelopment of the mine

will commence as soon as the ﬁscal and

development agreements have been ratiﬁed

by the Ghana parliament during 2018. In

Colombia, the Gramalote project, a joint

venture with B2Gold, declared its maiden Ore

Reserve and is expected to undertake a full

feasibility study.

2018 DELIVERABLES

New quality ounces; lower cost proﬁles;

and extended life of mine (LOM)

Siguiri hard rock project

•

Extends LOM; enhances NAV

•

2018-2020E

• Production: c.355,000oz

• all-in sustaining cost: $910/oz

Mponeng Phase 1 – accessing higher grades

•

Extends LOM; access higher grades

•

2018-2020E

• Production: c.268,000oz

• all-in sustaining cost: $1,105/oz

Kibali underground development

•

Extends LOM; improve cost

•

2018-2020E

• Production: c.340,000oz*

• all-in sustaining cost: $700/oz

* Attributable

Exploration within AngloGold Ashanti is

focused on creating signiﬁcant value for the

business. In building the long-term prospects

during the year, greenﬁelds exploration was

undertaken in Australia, Brazil, Colombia and

the USA. We also pursued our good, high-

return brownﬁelds opportunities that will not

only improve the quality of production, but

will extend mine lives in quite a few of our

assets, shaping our long-term optionality. The

brownﬁelds exploration programme is based

on innovation in geological modelling and

mine planning, and continual optimisation of

our asset portfolio. In line with a good capital

discipline, exploration and evaluation costs

were down by a signiﬁcant 14% for the year.

In 2017, we managed to offset almost all

depletion through production, ending the

year with Ore Reserve of 49.5Moz, at a

conservative gold price of $1,100/oz at which

we calculate our Ore Reserve. Also see the

Mineral Resource and Ore Reserve summary

section in this report or the full statement

<R&R>

Exploration and evaluation costs

($m)

142

132

114

133

250

2013

2014

2015

2016

2017

Picture:

Siguiri, Guinea

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Shareholder information

Risks have been identified

and quantified with input from

senior management to ensure

accountability. The relevant

risk owners were consulted to

confirm risk ratings, both in

terms of severity and likelihood,

to ensure correct alignment

with independent assessments

conducted from time to time

A three-year time horizon has

been applied to the top group

risks, together with the latest

business planning data, to reflect

a more dynamic heat map.

GROUP TOP RISKS

The risks tabulated alongside are the group’s

top ten risks as at the end of 2017, ranked

from highest to lowest, in order of magnitude.

The corresponding ranking in 2016 is given

in parentheses.

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES

Summary of top ten group risks

Ranking

(Previous)

POTENTIAL RISK

1 (2)

Elevated political and country risk proﬁle in core production areas

2 (3)

Operational underperformance negatively impacting improved track record

3 –

Cost competitiveness

4 (1)

Adverse gold and commodity prices, and currency movements

5 (6)

Growth projects delaying

6 (5)

Labour-related stoppages

7 (4)

Inability to develop projects to bring the Ore Reserve to account

8 (9)

South African net debt and increasing debt servicing levels

9 (8)

Critical skills and talent retention

10 (10)

Legacy occupational and community health compensation claims/litigation

SEVERITY

LIKELIHOOD

Principal risks identified

Operational

External

Strategic

Political

Operational
underperformance

Growth projects

Critical
skills

Health

Labour

Ore
Reserve

Debt

Cost competitiveness

Commodity prices and currencies

Top group risks heat map

Picture:

Serra Grande, Brazil

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Shareholder information

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

Risk

Potential consequences

Mitigation action plan

1. Elevated political
and country risk
proﬁle in core
production areas

•

Regulatory uncertainty

•

Increased tax and royalties

•

Adverse impact on our business plans

•

Adverse impact of market capitalisation

•

Increased operational costs

•

Reduced cash ﬂow

•

Reputational damage – continued scrutiny from governments,

international NGOs and communities

•

Political instability

•

Compromised employee safety and security

Tanzania

•

In July 2017, the government of Tanzania passed into law a new legal

framework for the country’s extractive industries

•

Working capital locked up as VAT is not being refunded

South Africa

•

Restructuring in the South Africa region

•

The reviewed Mining Charter

•

Targeted stakeholder mapping and engagement with greater focus on government

structures, local community and non-governmental organisations

•

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

•

Exploring opportunities for inclusive engagement and broader collaboration with NGOs

(activists)

•

Constant monitoring of legislative/political landscape conducted in anticipation of any

negative impact on business

Tanzania

•

Arbitration proceedings under the rules of the United Nations Commission on International

Trade Law – a precautionary measure to safeguard AngloGold Ashanti assets in Tanzania

•

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

business, media and communities

•

Mine plans amended to ensure break even cash ﬂow and capital expenditure is being

redirected to other parts of our portfolio

South Africa

•

Maintain engagement with all key stakeholders, including through the Chamber

of Mines with the Minister of Mineral Resources, who has committed to an open and

stakeholder inclusive renegotiation towards ﬁnalisation of the Mining Charter

•

Full compliance with the Labour Relations Act and the MPRDA

•

Security/operational readiness for any potential labour/community unrest

Mitigation of top ten group risks 2017-2018

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Strategy

Performance review

Accountability

Shareholder information

Risk

Potential consequences

Mitigation action plan

1. Elevated political
and country risk
proﬁle in core
production areas
(continued)

Colombia

•

The use of the constitutional right to engage in popular consultations

to circumvent an array of public and private projects/ programmes

continues to challenge investment security

•

Failure to implement the peace process with Fuerzas Armadas

Revolucionarias de Colombia (FARC) and successfully conclude

negotiations with ELN (the National Liberation Army) remain as risks

to political stability in the country

Brazil

•

Widespread public unrest, sweeping corruption scandals and

deepening social polarisation are maintaining the country’s elevated

political risk, which is weighing on investor sentiment and contributing

to uncertainty in terms of policy direction

•

The issue of land invasions, spurred by populist sentiment, and

associated community unrest, remains a threat which could escalate

and disrupt operations

Colombia

•

Stakeholder engagement continues to strengthen our relations with civil society and

government and to build broad consensus around the future development of our

project portfolio

•

Establish future optionality from legislative and social licence to operate processes, in

response to positive/negative scenarios

•

Security/operational readiness for any potential community unrest

Brazil

•

Stakeholder engagement and constant monitoring of the legislative/political landscape are to

be conducted in anticipation of and to mitigate any negative impact on the business

•

A strategy to address ongoing land invasions that involves multi-stakeholders is being

implemented

2. Operational
underperformance
negatively impacting
improved track
record

•

Unsustainable loss-making operations resulting in reduced cash ﬂow

and decreased liquidity

•

Reduced earnings, uncertain delivery on targets and disproportionate

penalty on share price

•

Decline in investor conﬁdence

•

Credit ratings affected

•

Restricted ability to invest in strategic growth and development

projects

•

In terms of safety underperformance, Section 54 stoppages would

threaten the long-term viability of the South African mines

South Africa

•

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

improve liquidity

•

TauTona and Savuka have been placed into orderly closure. A business transition process is

planned to reduce Mponeng’s overhead costs

•

New shift arrangements are being negotiated for Mponeng – these would be expected to

improve face time and associated productivity

•

AngloGold Ashanti is currently working through the observations and recommendations

made by the Institute of Mine Seismology (IMS) to improve seismicity related risks

Brazil

•

Increase mine development rate to provide mine ﬂexibility

•

Focused exploration and drilling in priority areas

•

Drive operational excellence to improve productivity and efﬁciency

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Risk

Potential consequences

Mitigation action plan

3. Cost
competitiveness

•

Reduced proﬁt margins owing to high cost of production

•

Operational underperformance leading to failure to achieve

business plans

•

Our aging portfolio demands increased mining depth and distances

to the mining face, which increases sustaining capital required

•

Higher than inﬂation increases in wages and power costs

•

Stronger local currencies, speciﬁcally the South African rand and

Brazilian real, increase our costs relative to our peer group

•

Inﬂation of mining consumables, such as steel, steel-bearing

products and support products; chemicals, abrasives and explosives,

has been increasing in tandem with the increased gold price

•

New mining taxes and/or increasing royalty rates in key

operating areas

•

Organisational design that is equipped for larger business portfolio

South Africa

•

Maintain the discipline required to continue with self-help measures and efﬁciency improvements

•

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

•

The sales and closure of certain South African operations will help address the loss-

making TauTona and Kopanang mines, and ultimately lead to lower operating costs for the

remaining business

•

Ongoing reviews of the off-mine cost structure and business model for the South Africa

region are underway to further address a return to proﬁtability

International operations

•

More rigorous 2018 targets for operations in Continental Africa, Americas and Australasia

regions – with options for growth

•

The targets, based on desk-top studies, indicate that they are achievable, by a combination

of Operational Excellence initiatives, improved grades, lower operating costs and

streamlined systems and structures

•

Continued aggressive cost management focus on regional, general and administrative

expenses with external support sought to review corporate costs in line with the

reduced portfolio

4. Adverse gold
and commodity
prices, and currency
movements

•

Inadequate free cash ﬂow/liquidity, impacting our credit ratings

•

Inability to develop strategic growth and development projects to

bring the Ore Reserve to account

•

Lower market capitalisation

•

Need to recapitalise the company at distressed equity prices and in

poor market conditions

•

Potential to breach ﬁnancial covenant

•

A sustained period of signiﬁcant gold price volatility may adversely

affect the company’s ability to evaluate the feasibility of undertaking

new capital projects; the continuity of existing operations and their

ability to meet operational targets; or to make other long-term

strategic decisions.

•

Maintain the discipline required to continue with self-help measures and efﬁciency improvements

•

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

•

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

continuously replenished

•

Further reduce our annual interest bill

•

Further deleverage the balance sheet

•

Manage input oil costs, to extent possible

•

Focus on executing the Operational Excellence initiatives

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

Risk

Potential consequences

Mitigation action plan

5. Failure to deliver
on growth projects

Ghana – Obuasi

•

Continued cash drain on the group

•

Inability to bring the Ore Reserve to account

•

Adverse socio-economic stakeholder impact and reputational

damage

•

Litigation with the government of Ghana

•

Litigation/penalties/ﬁnes

•

Inability to redevelop the mine triggers signiﬁcant closure liabilities

Mali – Sadiola

•

Agreement delays will negatively impact the project and may result in

a production gap in early 2019

Colombia – Projects

•

Projects not positioned to best achieve value, leading to decision – to

advance or sell

•

Government taxes are high by international measures and may

impact project outcome

•

The use of the constitutional right to engage in popular consultations

to circumvent an array of public and private projects/programmes is

creating investment insecurity

•

Failure by the government to implement the peace process with

FARC and complete negotiations with ELN, threaten the stability of

the country’s political environment, and mining sector discussions

and perceptions

South Africa – Mponeng

•

Mponeng Phase 2 advancement not executed

Ghana – Obuasi

•

The investment development agreement (stability agreement), reclamation security
agreement and security agreement, which maintains law and order, are in principle agreed
and signed. Ratiﬁcation by the Ghana parliament is imminent

•

Settlement agreement for arbitration has been ﬁnalised

•

Redevelopment of this project provides a potential tier one asset that has an all-in sustaining
cost that is lower than the average for the group. Will be essential to execute the project on
time and budget, and to manage social and community expectations

Mali – Sadiola

•

Due to protracted negotiations with the government of Mali, management is currently
planning to place Sadiola mine on care and maintenance. Options to dispose of pre-ordered
mining equipment are being reviewed

•

A steering committee and technical committee have been reconstituted. The project
organisation has been redesigned to support and direct the project

Colombia – Gramalote

•

A prefeasibility study has been completed on how to best achieve value and to declare the
Ore Reserve

Colombia – La Colosa

•

Force majeure declared at La Colosa or, depending on legal advice and assessment of
scope, consequences and costs of each option

•

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

•

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

South Africa

•

Feasibility study is being updated on Mponeng LOM extension project

•

A business transition process is planned to reduce Mponeng’s overhead cost

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Risk

Potential consequences

Mitigation action plan

6. Labour-related
stoppages

•

May adversely impact investor conﬁdence which in turn would impact

our market capitalisation and could result in a decline in credit ratings

•

Production stoppages and losses would adversely impact the

company’s liquidity and, if protracted, may result in a liquidity crisis

•

Deteriorating operational and safety conditions would impact

employee safety and asset security

•

Potential violence and intimidation may lead to wide-spread chaos

and lawlessness

•

Accelerated organisational restructuring and mine closure

•

Negative impact on community stability

•

Adverse regulatory response

South Africa

•

Stakeholder engagement strategy involving executive management implemented

•

Ongoing communication and regular updates, in line with strategy, across various

statutory platforms

•

Full dialogue with union structures and leadership, employing existing union-employee

structures and consultation processes

•

Security strategies and operational framework in place, based on strategic working relations

with various security institutions and agencies (SAPS, NATJOC and Public Order Units)

•

Collaboration with gold sector peers to manage and contain the contagion effect of labour

risks spreading across the industry

•

Legal strategies and action plans in place

•

Recourse to exercise obligations as contained in recognition agreements with labour unions

•

Strike prevention and management strategies and authority protocols in place and tested

•

SASRIA insurance

•

A high-level operational framework in place to deal with a myriad of eventualities emanating

from restructuring, labour conﬂict, legal disputes and wage negotiations, which may result in

strike action

•

Have in place a labour exit strategy as a subset of the all-inclusive multi-disciplinary mine

closure action plan

Continental Africa

•

Ongoing engagement and consultative meetings with relevant labour unions

•

Established grievance procedures and disciplinary processes at all mine sites

•

Dedicated regional human resource team supporting operations

•

Capacity building with newly-elected union committee members (branch committees)

•

Strike contingency and management plans in place

•

Regular reporting and updates on labour relations to monitor trends and the industrial

relations climate at each operation

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Risk

Potential consequences

Mitigation action plan

7. Inability to develop
projects to bring
the Ore Reserve to
account

•

Ore Reserve write-down and possible decline in market capitalisation

•

Impairments and lower future earnings per share

•

Reduced production proﬁle and business plan

•

Loss of tenements

•

Premature mine closure or mothballing of operations

•

Identify suitable joint venture partnerships and alternative sources of funding

•

Revised tenements strategy with focused exploration funding for critical operations

•

Robust business planning, portfolio optimisation and considered feasibility studies to

withstand potential risks

•

Focused project management to deliver projects on budget and schedule

8. South African net
debt and increasing
debt servicing levels

•

Increased debt has the potential to lower revenues as more money

is spent servicing that debt, which could affect return on equity and

return on assets

•

Additional interest burden will put pressure on the remaining South

African asset’s margins and ability to generate cash

•

Decline in investor conﬁdence

•

Restricted ability to invest in strategic growth projects

South Africa

•

The proceeds from the sales of the Kopanang and Moab Khotsong mines used to reduce debt

•

Accelerate the restructuring process in the South Africa region, considering all relevant off-

mine and restructuring costs and aligning with reduced production base in that region

MANAGING

AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES

CONTINUED

Picture:

Kopanang, South Africa

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Risk

Potential consequences

Mitigation action plan

9. Critical skills and
talent retention

•

Insufﬁcient talent and succession planning pools

•

Failure to execute and deliver on strategic objectives

•

Increased labour costs

•

Potential impact on productivity and safety levels

•

Depending on the skills or talent lost – potential impact on

market conﬁdence

•

Localisation pressures, resulting in loss of depth of skill and experience

•

Owing to localisation pressures, staff deployed to gain relevant work

experience but given more challenging regulatory environment, there

are difﬁculties in obtaining permits

•

Higher cost of retention

•

Pay competitive market-related salaries and beneﬁts

•

Further broaden short and long-term incentive schemes to provide ﬁnancial and

non-ﬁnancial beneﬁts

•

Roll-out global performance management system, aligning roles with strategic plans

•

Implementation of an integrated talent management and succession planning process

across the business, with an increased coverage ratio for critical skills

•

Continue Chairman’s Young Leaders Programme (emerging talent pool) to aid development

of a healthy talent pipeline for future leadership positions

•

Update the CEO’s talent pool and succession/development plans

•

Implement talent development interventions

•

Increase training capacity for scarce artisan skills

•

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

a tailored approach to ensure critical skills are available when needed

•

Develop rotation guidelines

•

Deﬁne the global leadership framework, the Health of Discipline framework, and develop a

global talent management system as set out in the People are our Business section

10. Legacy
occupational and
community health
compensation
claims/ litigation

•

Negative ﬁnancial impact

•

Reduced market capitalisation

•

Reputational damage, if not well managed

•

Employee well-being affected

South Africa

•

Defend all claims on their merits (both individual and class action)

•

Participate in industry working group on occupational lung diseases (OLD) to contribute to a

comprehensive and sustainable compensation solution for OLD

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

USEFUL LINKS

Refer to page 42 for additional details

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

MANAGING AND MITIGATING RISKS, IDENTIFYING OPPORTUNITIES CONTINUED

Type

Opportunity

Strategy

Strategic

Obuasi

•

Deliver revised feasibility study to ensure optimal

returns from high-margin, mechanised operation

•

Ensure buy-in for redevelopment from all

stakeholders, including government

•

Find optimal funding structure

Disciplined

approach to growth

•

Continue with disciplined investment to ensure

pipeline of brownﬁelds and greenﬁelds expansions

•

Maintain diversiﬁed portfolio capable of

withstanding “single jurisdiction / operation” shocks

Renewed optimism

and potential for

mining regulatory

certainty in

South Africa

•

Negotiate fair and sustainable wage agreement and

shift arrangements (South Africa)

•

Participate and inﬂuence Mining Charter and related

mining legislation

•

Advance Mponeng Phase 2 feasibility study

Stakeholder

relations

•

Enhanced engagement model to build strong

stakeholder relationships

Colombia

•

Revise tenements strategy with focused

exploration funding

•

Progress Quebradona and Gramalote projects up

the value curve

•

Advance engagements at La Colosa and lift

force majeure

Type

Opportunity

Strategy

Business planning

and portfolio

optimisation

processes

•

Sound business planning with top-down goals

•

Portfolio optimisation and revise ﬁt for

purposes structures

Asset sale or joint

venture for full value

•

Potential to realise full value of operating asset in

cash for sale or joint venture to enhance value

and optionality

•

Increased ability to deleverage in a value-enhancing

manner

Operational

Improving

production mix

•

Improved efﬁciencies and mine plan changes driven

through operational excellence initiatives

•

Inward investment into high-return projects

Beneﬁts from

increase in gold

price enhanced by

cost reduction

•

Actively improve the quality of the portfolio

•

Focus on margins through initiatives to improve

all-in sustaining costs and all-in costs, through

Operational Excellence initiatives

•

Improve leverage to the gold price

Pursuing key growth

opportunities for our

asset portfolio

•

Focused brownﬁelds exploration activities

•

Prefeasibility studies for life-of-mine extensions and

improved recoveries

Technology

step-change in

South Africa

•

Continue work with AngloGold Ashanti Technology

and Innovation Consortium

•

Continue to evaluate thermal spalling and ultra high-

strength backﬁll at Mponeng

Top group opportunities

Top group opportunities

We recognise that identifying and managing opportunities is an important component of risk management. The company identiﬁes suitable opportunities – endeavouring to exploit,

harness or maximise them – with the aim of creating value by mitigating our risks. This table lists our key opportunities along with the strategy for each.

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

PERFORMANCE
REVIEW

SECTION 4

We provide an overview of our ﬁnancial, operational and

sustainable development performance over the past ﬁnancial

year, as well as a summary of our Mineral Resource and

Ore Reserve portfolio and initiatives to extend this portfolio to

ensure long-term optionality.

CFO’s review

The year ahead – outlook

Financial review

Economic value-added statement

Regional reviews

Five-year statistics by operation

118

Mineral Resource and Ore Reserve – summary

138

Planning for the future

145

Picture:

Cuiabá, Brazil

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CFO’S

REVIEW

Christine Ramon:

Chief Financial Ofﬁcer

The company advanced the restructuring of

its South African portfolio, including some

signiﬁcant asset sales; executed, according

to plan, the key self-funded brownﬁelds

projects to sustainably improve mine lives

and margins; and achieved its annual cost,

production and capital guidance for the ﬁfth

consecutive year.

AngloGold Ashanti continues to make

progress on its strategic objectives and has

delivered a strong ﬁnancial and operating

performance. The ﬁnancial results for the

year have been impacted by some signiﬁcant

once-off charges and impairments, but cash

ﬂows and the balance sheet remain robust.

Total cash costs for the full year of $792/oz

were 6% higher than the previous year’s

$744/oz, and within the guidance range of

$750/oz to $800/oz. Costs were negatively

impacted by inﬂation, stronger local currencies

and the expensing of certain capital costs

at the South African operations as those

operations underwent orderly closure. All-in

sustaining costs came in at the bottom end of

the guidance range at $1,054/oz, 7% higher

than the previous year’s all-in sustaining cost

of $986/oz, due to higher planned sustaining

capital expenditure levels and the stronger

local currencies.

Cash ﬂow from operating activities for the

year ended 31 December 2017 declined

by 16% when compared to 2016, reﬂecting

tighter margins, working capital lockups, and

payments in respect of retrenchment costs

in South Africa, offsetting a 1% increase in

the gold price received and a 5% increase in

gold sales. Free cash ﬂow of $1m for the year,

compared to $278m in 2016, was supported

by a strong second half performance which

delivered free cash ﬂow of $162m. This

was, however, impacted by the increase in

the lockup of VAT receivables at Kibali and

Geita, which was approximately $20m and

$50m for the year respectively, and the higher

planned capital expenditure. In line with the

reinvestment strategy of AngloGold Ashanti,

total self-funded capital expenditure of $953m

increased by $142m from the previous year

(2016: $811m).

Production rises 4% year-on-year to

3.755Moz

, above top end of guidance

Total cash costs of

$792/oz

, in line with full

year guidance of between $750 to $800/oz

All-in sustaining costs of

$1,054/oz

, at

lower end of the guidance range

Free cash ﬂow of

$125m

, before growth

capital; impacted by South Africa

restructuring costs and VAT lockups in

Continental Africa

Dividend of

ZAR 70

cents per share

(approximately 6 US cents per share)

declared, given strong cash ﬂow performance

Adjusted headline earnings of

$9m

, after

retrenchment costs ($71m) and silicosis

provision ($46m)

Brownﬁelds projects

to improve life and

margins, all remain on schedule

New safety benchmarks set:

three,

fatality-free quarters for ﬁrst time

Obuasi redevelopment

approved on strong

return metrics and good government support

SA restructuring progressing well:

Moab

Khotsong and Kopanang sales closed on 28

February 2018 and TauTona in orderly closure

Strong Ore Reserve-replacement

performance

, declaration of maiden Ore

Reserve in Colombia

AngloGold Ashanti continued to

make considerable enhancements

to the quality of its portfolio

during the year ended

31 December 2017.

Enhancing
our portfolio

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

CFO’S

REVIEW

CONTINUED

Free cash ﬂow for the year, before taking

growth capital into account, was $125m

versus $394m a year earlier, impacted by 19%

higher planned sustaining capital expenditure

of $829m compared to the previous year of

$695m, South African retrenchment costs paid

of $49m and higher cash costs.

The balance sheet reﬂects strong liquidity

comprising $965m available on the $1bn US

dollar syndicated RCF at the end of December

2017, $85m undrawn on the $100m US dollar

RCFs, A$290m undrawn on the A$500m

Australian dollar RCF, approximately R2.95bn

available from the South African RCFs and

other facilities and cash and cash equivalents

of $205m as at the end of December 2017.

We continue to focus our efforts on reducing

our taxation exposures, speciﬁcally indirect

taxes, in all jurisdictions that we operate in.

Our transparent group tax policy continues to

support a low risk approach in dealing with

tax matters across the various jurisdictions in

which we operate.

Other pertinent matters include:

•

At the end of June 2017, AngloGold Ashanti

announced that it would restructure its

South African operations to safely return the

business to proﬁtability, while mitigating job

losses. This included placing TauTona and

Savuka into care and maintenance, followed

by orderly closure. In October 2017, we

announced the sale of the Kopanang mine

and related infrastructure to Heaven-Sent

SA Sunshine Investment Company Limited,

with one of the conditions being that the

majority of existing workers continue to

work at the operations. Simultaneously,

we announced the conclusion of the sale

agreement for the disposal of the Moab

Khotsong and Great Noligwa mines and

related infrastructure to Harmony Gold

Mining Company Limited. All the conditions

precedent to these sale contracts were

met subsequent to year end and the

transactions closed on 28 February 2018.

•

Agreement has been reached with the

government of Ghana for the redevelopment

of Obuasi, subject to ratiﬁcation by

Ghana’s parliament of the relevant ﬁscal

and development agreements. These

agreements have been signed by the

government and ratiﬁcation is scheduled

during the current parliamentary sitting. The

redevelopment will establish Obuasi as a

long-life, modern, mechanised underground

mining operation, which is a fundamental

departure from the previous operating

method used at the mine.

•

The DRC has recently promulgated a new

mining code that makes a number of changes

to the operating environment for the DRC’s

extractive industries, including those in its

mining, and oil and gas sectors. On 8 March

2018, AngloGold Ashanti announced that a

meeting had been held between the DRC

president and mining industry representatives

to discuss the new mining code prior to

its promulgation. The DRC government

has agreed to continue discussions with

the mining industry representatives, post

the promulgation of the new mining code,

regarding issues existing in the current

agreement and the implementation of the new

mining code. AngloGold Ashanti is in full

support of Randgold Resources, our partner

and the operator in the Kibali joint venture,

in its continued engagement with the

DRC government.

•

The settlement negotiations between the

Occupational Lung Disease (OLD) Working

Group and class action legal representatives

have reached an advanced stage. The

OLD Working Group represents African

Rainbow Minerals, Anglo American SA,

AngloGold Ashanti, Gold Fields, Harmony

and Sibanye-Stillwater. The class members

are represented by Richard Spoor Inc,

Abrahams Kiewietz Inc and the Legal

Resources Centre. On 10 January 2018,

in response to a request from all parties

involved in the appeal to the Supreme Court

of Appeal (SCA) in respect of the silicosis

and tuberculosis class action litigation, the

Registrar of the SCA postponed the hearing

date of the appeal until further notice.

Focusing on margins

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.

Despite stronger currencies and inﬂationary

pressures, our continued focus on meeting

production targets, strong cost management

and stringent capital discipline, have resulted

in the all-in sustaining cost margin increasing

from 17% in the second half of 2016, to

19% in the last six months of 2017. This is

especially encouraging given the ﬂat gold price

and is illustrated in the graph that follows.

For the full year, the all-in sustaining cost

margin decreased from 21% to 16%, mainly

the result of currency and inﬂation pressure on

cash costs. We, however, continue to pursue

efﬁciencies and productivity and attempt to

improve margins on a sustainable basis and

will be working hard to ensure that these

efforts are reﬂected in the all-in sustaining cost

margin in the coming year.

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

•

continuing to drive our Operational

Excellence Programme, which considers

innovative ways to improve efﬁciencies

and productivity at our operations

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Continued ﬁnancial ﬂexibility

We saw a slight rise in net debt from $1.9bn

to $2.0bn, mainly as a result of higher capital

expenditure, the funding of the South African

retrenchment costs and VAT lockups in

Continental Africa, all of which were partially

offset by a reduction in interest paid of $34m.

The net debt to adjusted EBITDA is 1.35

times, slightly up from 1.24 times at the end

of 2016, however, reﬂecting an improvement

from 1.56 times at the end of June 2017. The

ratio shows ample headroom compared to our

covenant levels of 3.5 times.

Our liquidity position has improved from $1.58bn

at the end of December 2016 to $1.72bn at the

end of December 2017, reﬂecting the additional

facilities put in place to assist with our South

African funding requirements. Proceeds from

the Moab Khotsong sale transaction that closed

on 28 February 2018, have been applied to

reduce our South African debt ($218m as at

31 December 2017), which will beneﬁt our

South African interest bill going forward by

~$20m per annum.

Our balance sheet remains robust with strong

liquidity, sufﬁcient undrawn facilities and no

near-term maturities, giving us ﬂexibility in what

remains a volatile market environment. We

have demonstrated our ability to self-fund our

high-return reinvestment opportunities, while

sustaining our cash dividend, reﬂecting our

commitment to disciplined capital application.

CFO’S

REVIEW

CONTINUED

All-in sustaining costs, all-in costs and average gold price

All-in sustaining costs*

Average gold price

All-in costs*

H1 2012

H1 2013

H1 2014

H1 2015

H1 2016

H2 2016

H1 2017

H2 2017

1,154

1,326

1,022

924

911

1,058

17%

19%

1,071

All-in sustaining cost margin

1,038

1,800

1,400

1,000

800

400

$/oz

* World Gold Council standard adjusted to exclude stockpile write-offs.

Last-12-months net debt to adjusted EBITDA ratio

Net debt and net debt to adjusted EBITDA

Net debt to adjusted EBITDA

Net debt

3.5

2.5

1.5

0.5

3,500

3,000

2,500

2,000

1,500

Net debt to adjusted EBITDA

Net debt ($m)

2014

2015

2016

2017

1.81

1.70

1.94 2.02 1.95

1.54 1.49 1.47 1.44

1.26

1.24

1.38

1.56 1.49

1.35

Undrawn facilities

(at 31 December 2017)

•

A$290m AUD RCF

•

R2.95bn ZAR RCF

•

US$1,050m USD RCF

•

US$205m Cash

$1.720bn

Total calculated with ZAR facilities at R12.3574/$
(excluding DMTNP), AUD facility at 0.78009$ to A$

Picture:

AGA Mineração, Brazil

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Continued positive cash ﬂow momentum

We continue to follow a balanced approach, i.e. positive free cash ﬂow generation while

reinvesting in our portfolio:

CFO’S

REVIEW

CONTINUED

2014 Adjusted for Obuasi redundancy costs of $210m and Rand Reﬁnery loan of $44m

** 2015 Adjusted for bond redemption premium of $61m on part settlement of $1.25bn high-yield bonds
*** 2016 Adjusted for bond redemption premium of $30m on settlement of the remainder of the $1.25bn bonds
**** 2017 adjusted for the South African retrenchment costs paid of $49m

Free cash flow generation (adjusted free cash flow)

($m)

Growth capex

Adjusted FCF generation

Adjusted FCF pre-growth

2013

2012

2014

2015

2016

2017

155

391

371

424

174

(361)

821

703

249

169

116

124

142*

202**

308***

50****

(1,064)

(666)

We indicated a year ago that our new

dividend policy is to return 10% of free cash

ﬂow, before growth capital, to shareholders,

subject to the board’s discretion. Volatility is

to be expected in the dividend payout, given

the basis used for the calculation, coupled

with our variable reinvestment needs, as

demonstrated with the ﬂagged 19% increase

to $829m in sustaining capital expenditure

for 2017.

Free cash ﬂow before growth capital was

$125m (2016: $394m). 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 $49m, and has

approved a dividend of ZAR 70 cents or

approximately 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 2017
ﬁnancial objectives

1. Maintain our focus on cost and capital discipline

to deliver competitive all-in sustaining costs and

all-in costs

The group continues to focus on sustainably

reducing the costs associated with producing

gold. These initiatives have covered a broad

spectrum of activities, including a greater

focus on capital allocation and project

delivery, as well as enhanced recoveries,

while internal cost reduction efforts continued

simultaneously.

All-in sustaining costs for the year ended at

$1,054/oz, a 7% increase from 2016 at $986/

oz. All-in sustaining costs came in at the

bottom end of the guidance range, reﬂecting

the effect of planned higher sustaining capital

expenditure for 2017 (~$26/oz) and stronger

local currencies.

The South African rand averaged 9% stronger

versus the dollar in 2017 compared with 2016,

and the Brazilian real and Australian dollar

averaged 8% and 3% stronger, respectively.

We continued to roll-out our wider-focused

Operational Excellence Programme across all

our operations, with our restructuring efforts

in South Africa assisting us to improve the

proﬁtability and sustainability of our remaining

assets in South Africa.

2. Continue to enhance margins and cash ﬂow

through continuing focus on operational efﬁciencies

and productivity

Our margins on total cash costs (37%), all-in

sustaining costs (16%), and all-in costs (10%)

came under pressure in 2017 because of

stronger local currencies and higher planned

sustaining capital expenditure. This increased

expenditure was required to ensure that we

continue to maintain and improve our margins

and cash generation ability in future years.

We remain committed to keeping our margins

at acceptable levels and our performance in

the second half of the year reﬂects margins on

total cash costs (38%), all-in sustaining costs

(19%), and all-in costs (13%) returning to full

year 2016 levels and higher levels than those

achieved for second half of 2016.

Cash ﬂows remain positive despite funding

once-off items such as the South African

retrenchment costs.

The strengthening of the South African rand

and Brazilian real was detrimental to us, given

that most of our cost base in those countries

is denominated in the local currencies, while

our gold is sold in US dollars, contributing to

the 21% year-on-year increase in total cash

costs in South Africa and 10% increase in the

Americas region. In contrast, although the

Australian dollar strengthened by 3%, total

cash costs declined by 6% in that region.

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CONTINUED

3. Dividend underpinned by sustainable

cash generation

Despite the signiﬁcant headwinds experienced

in free cash ﬂow generation, AngloGold

Ashanti declared a dividend of ZAR 70 cents

per share (~6 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 last year.

Our focus with the substantial restructuring

of the South African operations, combined

with the South African asset sales, as

well as the signiﬁcant planned sustaining

capital expenditure in 2017, has been to

be appropriately positioned to maintain the

dividend in future years underpinned by

sustainable cash generation.

4. Move to a sustainable resolution at Obuasi

During 2017, signiﬁcant positive developments

at Obuasi resulted in AngloGold Ashanti

announcing in February 2018 the

advancement of the redevelopment of the

Obuasi project. Some of the beneﬁcial

developments in 2017 included the improved

security situation with the last enclave of illegal

miners being evicted from site in April; the

lifting of the force majeure; the extension of the

Amended Mining Programme entered into with

the government of Ghana to April 2018; and

the suspension of the international arbitration

initiated with the International Centre for

Settlement of Investment Disputes (ICSID).

All the above developments paved the way

for successful negotiations with the Ghanaian

government relating to the Reclamation

Security Agreement; a Tax Concession

Agreement; a Development Agreement;

a Security Agreement; and a Settlement

Agreement. These agreements have been

signed by the government, with the Tax

Concession Agreement and the Development

Agreement subject to ratiﬁcation by Ghana’s

parliament, which is scheduled to occur during

the current parliamentary sitting.

Mine production for the ﬁrst 10 years will

be focused on the upper ore bodies and is

expected to average 350,000oz to 400,000oz

at an average head grade of 8.1g/t. Total cash

costs are expected to average between

$590/oz to $680/oz, while all-in sustaining cost

is expected to be between $795/oz to

$850/oz. Mine production for the second 10

years increases to 400,000oz to 450,000oz per

annum, as the mine deepens into higher grade

ore. All-in sustaining cost is then expected to

improve to between $750/oz to $800/oz. The

project delivers internal real rates of return of

between 16% and 23% at real gold prices of

between $1,100/oz and $1,240/oz, and is highly

leveraged to the gold price. Initial project capital

expenditure anticipated over the ﬁrst 2.5 years

is expected to be between $450m to $500m,

excluding pre-production capital of $64m.

The redevelopment will establish Obuasi

as a long-life, modern, highly mechanised

underground mining operation, replacing

the labour-intensive, hand-held operating

systems previously used at the mine. The

redevelopment will deliver a mine that makes

use of automation and controls for better

safety, improved operational efﬁciencies and

consistent performance. It envisages a smaller,

but more skilled workforce that can operate in

a mechanised/automated environment with a

strong sense of accountability.

5. Execute on low capital, high return brownﬁelds

projects, while continuing to move long term

projects up the value curve

AngloGold Ashanti’s approach to growth

investments and project approvals is based

upon a multi-factor model that takes into

account how the investment or project will

improve our portfolio, ﬁnancial ﬂexibility,

sustainability and long-term optionality. Such

investments or projects must generate returns

meeting our required hurdle rate of 15% in real

US dollar terms.

We continue to execute on our robust

brownﬁelds exploration programme at most of

our operations in the group as described earlier.

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 Kibali, the underground materials handling

system and ore hoisting via the shaft were

commissioned with ramp up progressing.

The paving on the central haulage level was

completed during the year, allowing haulage

from the ore passes into the underground

crushers to the shaft system. In addition,

development of declines is continuing. The

construction of the third hydropower station at

Azambi and the next phase of tailings storage

facility is scheduled for completion in 2018.

The Mponeng mine life will be extended

through access to deeper, higher-grade ore

via the development of a decline below the

current secondary shaft, with completion

expected around mid-2018. Additional

ventilation and water management, and ore

handling infrastructure are in the process

of being constructed. A feasibility study is

being undertaken into the deepening of the

secondary shaft to further extend the mine’s

life beyond 2026.

The Sadiola sulphides project, which will add

sulphide-ore processing capability to the

plant, continued to be evaluated. Discussions

with the government of Mali continue

regarding the project.

At Siguiri, we are investing about $115m over

approximately two years to add a hard-rock

plant to the current processing infrastructure,

providing the ability to develop the signiﬁcant

sulphide-ore potential that exists on the

current concession. The company is also

building a new power plant at a cost of $43m,

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

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CFO’S

REVIEW

CONTINUED

to provide electricity to the new facility. During

2017, $67m was spent on the project and a

total of $145m has been committed to date.

The project remains largely on schedule for

completion and the ﬁnal costs are currently

being reviewed as all major commitments have

now been concluded.

Finally, we announced the declaration of

the maiden Ore Reserve for the Gramalote

project in Colombia of 63.7Mt @ 0.86 g/t

gold comprising contained metal content of

1.8Moz, on an attributable basis. Gramalote

represents a long-term option for AngloGold

Ashanti, and all avenues to realise value from

this important asset remain open. AngloGold

Ashanti’s management is currently in

discussions with the joint venture partner,

B2Gold (49%) on how to further progress

the project.

6. Maintain ﬁnancial ﬂexibility and further reduction

in ﬁnance costs

Our net debt to adjusted EBITDA ratio of 1.35

times reﬂects a marginal increase to 2016

at 1.24 times. This remains well within our

debt covenant level of 3.5 times. Coupled

with the successful completion of the South

African sales transactions of Moab Khotsong

and Kopanang at the end of February 2018

where the proceeds have been utilised to

further reduce our South African debt, we have

successfully maintained ﬁnancial ﬂexibility and

anticipate a further reduction in our ﬁnance

costs in 2018.

Looking ahead to 2018, the key
ﬁnancial and other objectives
are to:

•

Maintain our focus on cost and capital

discipline to deliver competitive all-in

sustaining costs and all-in costs

•

Continue to enhance margins and

cash ﬂows with a focus on operational

efﬁciencies and productivity through

Operational Excellence

•

Maintain the dividend underpinned by

sustainable cash generation

•

Seek resolutions for the Tanzanian and

DRC regulatory uncertainty

•

Progress implementation of the Obuasi

redevelopment

•

Execute on low-capital, high-return

brownﬁelds projects, while continuing

to progress long-term projects up the

value curve

•

Maintain ﬁnancial ﬂexibility and further

reduce ﬁnance costs

Acknowledgement

I would like to express my appreciation to

our committed and diligent ﬁnance team

across the group who have been proactive

in supporting the business to manage costs

and capital as well as dealing with working

capital and other business challenges

associated with the developing market nature

of the jurisdictions that we operate in. 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 absolute focus on our strategic objectives

with the aim of improving shareholder returns,

on a sustainable basis.

Christine Ramon

Chief Financial Ofﬁcer

19 March 2018

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THE YEAR AHEAD

– OUTLOOK

Both production and cost estimates assume neither operational or 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. 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.

Guidance 2018

Guidance

Notes

Production

(000oz)

3,325 – 3,450

Includes monthly production of ±30,000oz from Moab Khotsong and

Kopanang for a period of three months

Costs

All-in sustaining costs ($/oz)

990 – 1,060

Assumptions: R12.79/$, $/A$0.78, BRL3.20/$, ARS19.61/$; Brent $62/bl

Total cash costs ($/oz)

770 – 830

Overheads

Corporate costs ($m)

70 – 80

Expensed exploration and study costs ($m)

115 – 125

Including equity-accounted joint ventures

Capital expenditure

Total ($m)

800 – 920

Sustaining ($m)

600 – 670

Non-sustaining ($m)

200 – 250

Obuasi, Kibali, Siguiri hard-rock project, Mponeng

Depreciation and amortisation

($m)

775

Depreciation and amortisation

– included in equity-accounted earnings

($m)

150

Earnings of associates and joint ventures

Interest and ﬁnance costs

($m)

140

Other operating expenses

($m)

Related primarily to the costs of care and maintenance

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

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FINANCIAL

REVIEW

Five-year summaries

Summarised group ﬁnancial results – income statement

US dollar million

2017

2016

2015

2014

2013

Gold income

4,356

4,085

4,015

4,952

5,172

Cost of sales

(3,582)

(3,263)

(3,294)

(3,972)

(3,947)

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

(7)

Gross proﬁt

784

841

714

993

1,319

Corporate administration, marketing and other expenses

(64)

(61)

(78)

(92)

(201)

Exploration and evaluation costs

(114)

(133)

(132)

(142)

(250)

Other operating expenses

(88)

(110)

(96)

(28)

(19)

Special items

(438)

(42)

(71)

(260)

(2,951)

Operating proﬁt (loss)

495

337

471

(2,102)

Dividends received

–

Interest received

Exchange (loss) gain

(11)

(88)

(17)

(7)

Finance costs and unwinding of obligations

(169)

(180)

(245)

(276)

(293)

Fair value adjustments on convertible bonds

–

(17)

307

Share of equity-accounted investments’ proﬁt (loss)

(25)

(162)

Loss (proﬁt) before taxation

(63)

269

257

170

(2,192)

Taxation

(108)

(189)

(211)

(225)

237

(Loss) proﬁt after taxation from continuing operations

(171)

(55)

(1,955)

Discontinued operations

(Loss) proﬁt from discontinued operations

–

(116)

(245)

(Loss) proﬁt for the year

(171)

(70)

(39)

(2,200)

Allocated as follows:

Equity shareholders

– Continuing operations

(191)

(74)

(1,985)

– Discontinued operations

–

(116)

(245)

Non-controlling interests

(171)

(70)

(39)

(2,200)

7% increase

in gold income
in 2017 reﬂects
higher gold price
received year-on-
year on higher
production levels

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FINANCIAL

REVIEW

CONTINUED

Summarised group ﬁnancial results – statement of ﬁnancial position

US dollar million

2017

2016

2015

2014

2013

Assets

Tangible and intangible assets

3,880

4,256

4,219

5,088

5,082

Investments

1,645

1,578

1,557

1,553

1,459

Inventories

783

756

736

1,524

1,639

Cash and cash equivalents

205

215

484

468

648

Other assets

706

348

288

501

846

Total assets

7,219

7,153

7,284

9,134

9,674

Equity and liabilities

Total equity

2,704

2,754

2,467

2,871

3,107

Borrowings

2,268

2,178

2,737

3,721

3,891

Provisions

1,064

995

954

1,199

1,115

Deferred taxation

363

496

514

567

579

Other liabilities

820

730

612

776

982

Total equity and liabilities

7,219

7,153

7,284

9,134

9,674

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FINANCIAL

REVIEW

CONTINUED

Summarised group ﬁnancial results – statement of cash ﬂows

US dollar million

2017

2016

2015

2014

2013

Cash ﬂows from operating activities

Cash generated from operations

1,151

1,302

1,250

1,343

1,307

Dividends received from joint ventures

–

Net taxation paid

(160)

(153)

(163)

(153)

(164)

Net cash inﬂow from operating activities from continuing operations

997

1,186

1,144

1,190

1,161

Net cash (outﬂow) inﬂow from discontinued operations

–

(5)

Net cash inﬂow from operating activities

997

1,186

1,139

1,220

1,246

Cash ﬂows from investing activities

Capital expenditure

(830)

(711)

(667)

(849)

(1,431)

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

(27)

(1)

(12)

(466)

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

(12)

810

(11)

(8)

Interest received

Decrease (increase) in cash restricted for use

(8)

(17)

(20)

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

(862)

(702)

139

(773)

(1,902)

Cash outﬂows from discontinued operations

–

(59)

(170)

(138)

Net cash (outﬂow) inﬂow from investing activities

(862)

(702)

(943)

(2,040)

Cash ﬂows from ﬁnancing activities

Net (repayments) proceeds from borrowings

(546)

(867)

(144)

864

Finance costs paid

(138)

(172)

(251)

(246)

(200)

Dividends paid

(58)

(15)

(5)

(17)

(62)

Other

–

(30)

(61)

(9)

(36)

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

(148)

(763)

(1,184)

(416)

566

Cash outﬂows from discontinued operations

–

(2)

(5)

(6)

Net (outﬂow) inﬂow from ﬁnancing activities

(148)

(763)

(1,186)

(421)

560

Net (decrease) increase in cash and cash equivalents

(13)

(279)

(144)

(234)

Translation

(17)

(16)

(30)

Cash and cash equivalents at beginning of year

215

484

468

628

892

Cash and cash equivalents at end of year

(1)

205

215

484

468

628

(1)

The cash and cash equivalent balance at 31 December 2013 includes a bank overdraft included in the statement of ﬁnancial position as part of other liabilities of $20m.

20% drop

in ﬁnance costs
mainly from fully
retiring the $1.25bn
high yield bonds in
August 2016

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FINANCIAL

REVIEW

CONTINUED

Ratios and statistics

Units

2017

2016

2015

2014

2013

Operating review – gold

Production from continuing operations

000oz

3,755

3,628

3,830

4,225

3,874

Production from continuing and discontinued operations

000oz

3,755

3,628

3,947

4,436

4,105

Gold sold from continuing operations

000oz

3,772

3,590

3,850

4,248

3,862

Gold sold from continuing and discontinued operations

000oz

3,772

3,590

3,965

4,458

4,093

Continuing operations

Closing spot price at year-end

$/oz

1,258

1,247

1,160

1,266

1,411

Average gold price received

$/oz

1,258

1,249

1,158

1,264

1,401

Total cash costs

$/oz

792

744

712

785

836

All-in sustaining costs

(1)

$/oz

1,054

986

910

1,020

1,195

All-in costs

(1)

$/oz

1,126

1,071

1,001

1,114

1,466

Earnings

Gross proﬁt

784

841

714

993

1,319

Gross margin

Adjusted EBITDA

(2)

1,483

1,548

1,472

1,616

1,525

Adjusted EBITDA margin

Interest cover

times

Asset and debt management

Net debt to adjusted EBITDA

(2)

times

1.3

1.2

1.5

1.9

2.0

Continuing and discontinued operations

Proﬁt (loss) attributable to equity shareholders

(191)

(85)

(58)

(2,230)

Proﬁt (loss) attributable to equity shareholders

US cents

(46)

(21)

(14)

(568)

Headline earnings (loss)

111

(73)

(79)

Headline earnings (loss)

US cents

(18)

(19)

Adjusted headline earnings (loss)

143

(1)

599

Adjusted headline earnings (loss)

US cents

(0)

153

Capital expenditure

(3)

953

811

857

1,209

1,993

Net cash inﬂow from operating activities

997

1,186

1,139

1,220

1,246

Free cash inﬂow (outﬂow)

278

141

(112)

(1,064)

See footnotes overleaf

Production

ended above top
end of guidance
provided

Positive

free cash ﬂow
maintained,
however, current
year affected by
South African
retrenchment cost
paid of $49m

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FINANCIAL

REVIEW

CONTINUED

Units

2017

2016

2015

2014

2013

Asset and debt management

Equity

2,704

2,754

2,467

2,871

3,107

Net capital employed

5,031

5,101

5,190

6,640

5,519

Net debt

2,001

1,916

2,190

3,133

3,105

Net asset value – per share

US cents

659

675

609

711

770

Market capitalisation

4,178

4,290

2,877

3,515

4,727

Return on net capital employed

Net debt to equity

109

100

Other

Weighted average number of shares

million

415

413

410

408

393

Issued shares at year-end

million

410

408

405

404

403

Exchange rates

Rand/dollar average

13.30

14.68

12.77

10.83

9.62

Rand/dollar closing

12.36

13.73

15.46

11.57

10.45

Australian dollar/dollar average

1.30

1.35

1.33

1.11

1.03

Australian dollar/dollar closing

1.28

1.39

1.37

1.22

1.12

Brazilian real/dollar average

3.19

3.48

3.33

2.35

2.16

Brazilian real/dollar closing

3.31

3.26

3.90

2.66

2.34

Argentinean peso/dollar average

16.57

14.78

9.26

8.12

5.48

Argentinean peso/dollar closing

18.65

15.89

12.96

8.55

6.52

(1)

World Gold Council standard, excludes stockpile write-offs.

(2)

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

(3)

Includes attributable share of equity-accounted investments.

Ratios and statistics

(continued)

Stronger
currencies

in South Africa and
Brazil negatively
impacted costs

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ECONOMIC

VALUE-ADDED STATEMENT

For the year ended 31 December

Gold revenue by region – 2017

•

South Africa

•

Continental Africa

•

Australasia

•

Americas

1,101

1,895

709

1,104

Value retained per year

(%)

2013

2014

2015

2016

2017

Breakdown of distribution – 2017

•

Employees

•

Government

•

Community

•

Suppliers

•

Capital providers

ECONOMIC

VALUE-ADDED STATEMENT

For the year ended 31 December

Economic value distributed (82%)

(1)

Supporting business objectives and material issues

Economic value generated (100%)

2017

2016

Total distribution

3,735

3,408

Employees

1,002

858

Salaries and wages

966

823

Training and development

Government

659

656

Current tax

(5)

176

234

Royalties

(3)

114

101

Employee taxes

(3)

268

237

Production, property

and other taxes

(3)

101

Community

(4)

Social licence to operate

Region speciﬁc economic

development programmes

Suppliers and services

1,839

1,691

Production costs

Corporate expenditure and

other overheads

Rehabilitation expenditure

Exploration and evaluation

Audit, governance and

assurance

Providers of capital

208

180

Finance cost and unwinding

of obligations

169

180

Dividends

–

2017

2016

Total income

4,558

4,263

Gold sales and by-products

(2)

4,510

4,223

Interest received

Royalties received

Proﬁt from sale of assets

Income from investments

2017

2016

Tax per country

(5)

South Africa

(2)

Argentina

Australia

Brazil

Ghana

Guinea

United States of America

(16)

(7)

Tanzania

Other

(2)

Economic value retained (18%)

Value retained ($m)

Focus on people,

safety, and

sustainability

Navigating

regulatory and

political risk

Managing

community

expectations and

demonstrating

contribution

Optimise overhead,

costs and capital

expenditure

823

855

INPUTS

OUTPUT

(1)

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

(2)

Gold income increased by 7% as a
result of a 1% increase in the gold
price received and 5% increase in
gold sales.

(3)

Employee, production, property and
other taxes and royalties reported on
a cash basis.

(4)

Community and social investments
exclude expenditure by equity-
accounted joint ventures.

(5)

Current taxation includes normal

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

Across the group, we are due

refunds for input tax and fuel duties

totalling $252m (2016: $199m;

2015: $195m), including attributable

amounts for equity-accounted joint

ventures, which have remained

outstanding for periods longer

than those provided for in the

respective statutes

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

REGIONAL

REVIEWS

SOUTH AFRICA

Our South Africa region has undergone

extensive restructuring to ensure its

long - term sustainability

Picture:

Mponeng, South Africa

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

REGIONAL

REVIEWS

CONTINUED

South Africa

Anglo Gold Ashanti’s three South

African de e p - l e v e l m i n e s a n d

s u r f a c e p r o d u c t i o n f a c i l i t i e s

a r e d i v i d e d i n t o t h r e e m i n i n g

e n t i t i e s – Va a l R i v e r, We s t W i t s

a n d S u r f a c e O p e r a t i o n s – w h i c h

c o m p r i s e t h e f o l l o w i n g :

Vaal River

The two Vaal River mining operations, which

share a milling and treatment circuit and are

located around 180km from Johannesburg,

near the Vaal River, on the Free State-North

West Province border, are:

•

Kopanang

, which is bound to the south by

the Jersey Fault, has a single shaft system to

a depth of 2,334m. It exploits the Vaal Reef

almost exclusively, producing gold as its primary

output and uranium oxide as a by-product.

•

Moab Khotsong

, AngloGold Ashanti’s newest

South African mine, is located in the Free

State and has a single shaft system mining

to a depth of 3,100m. Given the geological

complexity of the Vaal Reef, the mine’s

principal reef, scattered mining is employed.

Great Noligwa’s operating infrastructure and

employees have been incorporated into Moab

Khotsong since 2015.

West Wits

The West Wits mining district’s operation, situated

south-west of Johannesburg, on the border
between Gauteng and North West Province, is:

•

Mponeng

, the world’s deepest gold mine

and our ﬂagship South African operation,

exploits the Ventersdorp Contact Reef (VCR)

via a twin-shaft system at depths of between

2,800m and 3,400m below surface. Ore is

treated and smelted at the mine’s gold plant.

•

TauTona

, with a three-shaft system, exploits

the Carbon Leader Reef (CLR) predominantly

and the VCR on a small scale through

technology, with secondary and tertiary

shafts sinking to depths of between 2,700m

and 3,300m below surface. Following the

full integration of Savuka into TauTona’s

infrastructure in 2015 and to further improve

efﬁciencies and beneﬁt from economies of

scale, ore mined at TauTona is processed at

Mponeng’s gold plant. TauTona’s ﬁnal blast took

place on 15 September 2017, and the mine

has since been placed into orderly closure.

Surface Operations

Surface Operations encompasses those facilities

at the Vaal River and West Wits operations which

process and extract gold from:

•

marginal ore dumps on surface

•

tailings storage facilities on surface

Surface Operations also includes Mine

Waste Solutions (MWS), which operates

independently, processing slurry material

reclaimed hydraulically from various tailings

storage facilities. Uranium is produced as a

by-product, as is backﬁll for use as mining

support in underground mined out areas.

Restructuring of the South Africa region

AngloGold Ashanti decided during the
year that TauTona (including its Savuka
section) was to be placed on care
and maintenance, followed by orderly
closure. In addition, on 19 October
2017, the company announced the
proposed sale of Kopanang and Moab
Khotsong in two separate transactions.
These sales were concluded on
28 February 2018.

URANIUM*

The uranium by-product is produced as

oxide concentrates (U

) in the form of a

powder extracted from gold-bearing ore.

It is then processed into a ‘yellow cake’

material that is transported in special-

purpose secure road tankers from the mine

to the Nuclear Fuels Corporation of South

Africa (Nufcor) for further ﬁltration and

calcining, resulting in uranium diuranate (in

slurry form). The ﬁnal product is shipped

to Nufcor’s major customers: nuclear

electricity generating utilities around the

world. Nufcor is a wholly-owned subsidiary

of AngloGold Ashanti and is arguably the

world’s longest continuous producer and

marketer of uranium.

Contribution to regional production

(excluding technology)

•

West Wits

•

Vaal River

•

Surface operations

Contribution to group production

•

South Africa

•

Rest of AngloGold

Ashanti

Click on the map below to enlarge

* As of 1 March 2018, AngloGold Ashanti will not

produce uranium. Details of the sales are available on
www.anglogoldashanti.com/investors/announcements

USEFUL LINKS

Refer to Corporate developments on
page 77

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

2 0 1 7

SOUTH

AFRICA

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

REGIONAL

REVIEWS

CONTINUED

South Africa

Key statistics

Units

2017

2016

2015

Operational performance

Tonnes treated/milled

38.9

39.6

36.8

Pay limit

(1)

oz/t

0.43

0.37

0.39

g/t

15.97

13.81

14.38

Recovered grade

(1)

oz/t

0.202

0.219

0.225

g/t

6.93

7.51

7.70

Gold production

000oz

903

967

1,004

Total cash costs

$/oz

1,085

896

881

Total production costs

$/oz

1,247

1,089

1,091

All-in sustaining costs

(2)

$/oz

1,245

1,081

1,088

Capital expenditure

150

182

206

Productivity

oz/TEC

3.57

3.56

3.74

Safety

Number of fatalities

AIFR

per million hours worked

12.68

12.02

10.81

People

Average no. of employees: total

26,245

28,507

28,325

– Permanent employees

22,738

25,205

25,274

– Contractors

3,507

3,302

3,051

Training and development expenditure

See footnotes overleaf

Production

(000oz)

1,223

1,004

903

967

1,302

2013

2014

2015

2016

2017

Productivity

(oz/TEC)

4.40

3.74

3.57

3.56

4.47

2013

2014

2015

2016

2017

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

REGIONAL

REVIEWS

CONTINUED

South Africa

Units

2017

2016

2015

Environment

Total water consumption

20,503

23,161

25,182

Total water use per tonne treated

kL/t

0.527

0.586

0.685

Total energy usage

10.05

10.54

10.65

Total energy usage per tonne treated

GJ/t

0.26

0.27

0.29

Total GHG emissions

000t CO

2,733

2,864

2,756

Total GHG emissions per tonne treated

t CO

e/t

0.070

0.073

0.075

Cyanide used

10,122

9,672

9,573

No. of reportable environmental incidents

Total rehabilitation liabilities:

119

– restoration

– decommissioning

101

Community and government

Community expenditure

(3)

Payments to government

118

106

105

– Taxation

–

– Withholding tax (royalties, etc.)

– Employee taxes and other contributions

105

– Property tax

– Other (includes skills development)

(1)

Refers to underground operations only.

(2)

Excludes stockpile write-offs.

(3)

Includes corporate social investment expenditure.

Key statistics

(continued)

AIFR

(per million hours worked)

11.85

10.81

12.68

12.02

12.63

2013

2014

2015

2016

2017

Total cash costs and all-in sustaining costs

($/oz)

1,120

849

1,064

1,085

1,245

881

1,088

896

1,081

850

2013

2014

2015

2016

2017

Total cash costs

All-in sustaining costs

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

Corporate developments

Earlier in the year, AngloGold Ashanti signalled

to stakeholders that it would review its South

African mining operations in light of the heavy,

and ultimately unsustainable losses being

incurred. In June 2017, the company took

a decision to restructure the South African

assets, to focus on returning the South African

business to proﬁtability while mitigating job

losses. Some of our older mines in the South

Africa region have reached the end of their

economic lives, several decades after they

started production. These mines face systemic

challenges, including the near depletion of their

Ore Reserve, increasing mining depths and

distance from central infrastructure, declining

production proﬁles, and cost escalations that

have continued to outpace both inﬂation and

a subdued gold price. The affected mines

are TauTona and Kopanang. Costs at these

operations were making it uneconomical to

continue mining, with the all-in sustaining costs

incurred far exceeding the average gold price.

To safeguard the long-term sustainability of

our South African business, after a complex

and careful consultation process with all the

relevant stakeholders

, AngloGold Ashanti

decided to:

•

place on care and maintenance the

Kopanang mine, a Vaal River operation, and

both TauTona and the Savuka section of

the TauTona mine, in the West Wits district.

TauTona started mining operations in 1962,

with the main shaft sunk in 1957. Savuka

had been in operation since 1958, with its

operating life already extended 10 years

beyond what was originally envisaged.

Kopanang produced its ﬁrst gold 36 years ago

•

evaluate the feasibility of integrating

elements of TauTona into the neighbouring

Mponeng mine.

After the announcement was made outlining

our intention to restructure the South African

business, unsolicited expressions of interest

were received from several parties which

ultimately led to the decision to sell Kopanang,

the nearby West Gold Plant and related

infrastructure to Heaven-Sent SA Sunshine

Investment Company Limited (HSC), a Chinese

capital management company headquartered

in Hong Kong. HSC currently holds a 74%

interest in Village Main Reef Limited which owns

and operates the Tau Lekoa mine, also located

in the Vaal River region. The sale transaction

was concluded on 28 February 2018, having

fulﬁlled all conditions precedent.

It was, however, eventually decided in the

latter half of the year to place TauTona and

Savuka on orderly closure.

Additionally, on 19 October 2017, AngloGold

Ashanti announced that it had agreed to the

disposal of the Moab Khotsong and Great

Noligwa mines and related infrastructure,

including the Great Noligwa processing

complex, the Vaal River villages and AngloGold

Ashanti’s interest in the Margaret Water

Company to Harmony Gold Mining Company

Limited (Harmony). This transaction was also

subject to a number of conditions precedent,

all of which were achieved in early 2018.

Consequently, the Moab Khotsong and Great

Noligwa sale transaction was concluded on

28 February 2018.

Resultantly, as of 1 March 2018, AngloGold

Ashanti ceased to have underground mining

operations in the Vaal River area. We will

retain the long-life MWS tailings retreatment

operation, as well as the surface rock-dump

reclamation operations that will continue to

be treated through the Kopanang gold plant

which was also retained by AngloGold Ashanti.

These two operations in the Vaal River region

together with the long-life Mponeng mine

in the West Wits region will form AngloGold

Ashanti’s operating base in South Africa, and

are expected to account for about 13% of

production in 2018.

Operational performance

Production

The South African operations produced

903,000oz, a 7% decrease year-on-year as

tonnes mined were affected by a poor start up

to the year at all operations. Underground yield

dropped 8% to 6.93g/t, a result of lower feed

grades as well as higher dilution year-on-year.

This was mainly due to an increase in waste

tonnes at Moab Khotsong, moving away

from higher grade areas at Mponeng, and the

reclamation of the tailing storage facilities at

the West Wits Surface Sources.

The decision to stop the loss-making

operations in the third quarter further

impacted full-year production. The ﬁnal blast

at TauTona took place on 15 September 2017

and the Section 189 consultation process

with employees and their organised labour

representatives, continued. At Kopanang, the

Section 189 process happened in parallel

with the pending disposal of the mine as was

announced in October 2017.

REGIONAL

REVIEWS

CONTINUED

South Africa

USEFUL LINKS

Refer to Employee engagement on page 81

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Overview

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Strategy

Performance review

Accountability

Shareholder information

The work ahead for the region will be mainly

to drive productivity and other efﬁciency

improvements in the mining cycle, work

routines, compliance and face length generation

and recoveries. The South Africa regional

management team will also be focused on

ensuring all support structures are properly

aligned to the new, smaller production base, as

they aim to return the region to proﬁtability and

positive cash generation.

At West Wits, production was lower than in the

previous year at 315,000oz, mainly due to the

slow start-up to the year following safety-related

stoppages late the previous year. Production

at Mponeng decreased year-on-year, mainly

as a result of the planned mining of lower-

grade areas, face-time constraints with mining

occurring further away from shaft stations,

as well as three separate seismicity-induced

fatal accidents in the second half of the year.

The mine’s performance improved towards

the end of the second quarter through to the

third quarter, due to improved efﬁciencies.

Production highlights were a 4% increase in

the mineable face length which allowed for

more face-length ﬂexibility. During the year,

the average monthly face advance increased

from less than 4.9m to more than 5.0m in

June, which was maintained for the rest of

the year. Mponeng’s yield improved in the last

quarter of the year, to an average of 8.54g/t.

Unfortunately, safety-related work stoppages

following the fatal accidents in late October and

early November contributed to a disappointing

decline in production in the last quarter.

At TauTona, severe production challenges, in

addition to a depleted Ore Reserve and limited

mining ﬂexibility, compounded operational

inefﬁciencies and low productivity, and led

to the decision to place the mine into orderly

closure. As mining areas moved further away

from the main infrastructure towards the

lower-grade eastern boundary of the mining

lease, and areas with more complex geological

structures and greater seismic risks, this

resulted in greater inefﬁciencies and the natural

decline in grades.

At the Vaal River operations, production

improved by 4% year-on-year to 385,000oz.

The main contribution was from Moab

Khotsong where efﬁciencies improved and

there were fewer safety-related disruptions,

despite dilution and a lower mine call factor.

At Kopanang, production remained ﬂat

year-on-year, impacted by safety-related

interruptions following the fall-of-ground fatal

incidents in the fourth quarter. However,

volumes mined improved and implementation

of the cycle mining strategy showed early

signs of success.

Surface Operations’ production was up 3%

at 192,000oz for the year. At Mine Waste

Solutions, production was 18% higher at

REGIONAL REVIEWS CONTINUED

South Africa

Picture:

Mponeng, South Africa

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

2 0 1 7

Overview

Business context

Strategy

Performance review

Accountability

Shareholder information

109,000oz compared with the same period

in 2016, given the improvement in feed

grades from the Sulphur Paydam and East

tailing storage facilities (TSF), coupled with

improved recoveries. The yield increase

was as expected as the Sulphur Paydam

is normally associated with higher reef

values. Production was also boosted by

higher volumes of ﬂoor cleaning material

reclaimed. Gold recovery efforts improved

in the last quarter of the year to around 7%,

aided by reagent suite optimisation and

improved carbon management. Operations

at the ﬂotation and uranium circuit remain

suspended as investigations into improved

water reticulation continue.

Production from hard rock dumps was lower

owing to a drop in tonnage throughput, and

lower recoveries due to the increased amount of

clean-up material which is refractory in nature.

The sticky nature of the material processed

through the Surface Operations’ plants

negatively impacted metallurgical efﬁciencies.

Surface Operations’ production was also

affected by the suspension of the Kopanang

marginal ore dumps and reduced availability of

the mill at the Kopanang gold plant.

Costs

All-in sustaining costs were 15% higher than

2016 at $1,245/oz. Total cash costs for the

region increased to $1,085/oz compared

with 2016, due to lower production volumes,

inflationary pressures and a 9% stronger

rand on average against the dollar. In line

with the company’s continued focus on

improving efﬁciencies, a cost savings plan