Anglogold Ashanti PLC (AU) 2007 Q2 法說會逐字稿

in progress -- Anglogold Ashanti second quarter earnings results. All participants are now in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you should need any assistance during the conference, then please signal an operator by pressing star and then zero. Please also note that this conference is being recorded.

I would now like to turn the conference over to Charles Carter. Please go ahead, sir.

Thank you, Dylan, and welcome to this presentation by the Anglogold Ashanti executive team of our results for the second quarter ended 30th of June, 2007.

The format of the presentation will be as follows -- Bobby Godsell, our COO, will discuss the company's financial operating results for the quarter together with the management changes that have been announced today; Venkat, our Finance Director, will discuss our financials in slightly more detail; and this will be followed by presentations by Neville Nicolau discussing the operations in Africa; and Robert Cavalho Silva covering international operations; Richard Duffy will conclude with an update on our global greenfields exploration activities during the quarter.

After these presentations, we'd be happy to take your questions.

Before we begin, it is necessary for me to read a declaration regarding forward-looking statements that may be made during this presentation.

Certain statements made during this presentation, including and without limitation those concerning the economic outlook for the gold mining industry, expectations regarding gold prices, production, cash costs and other operating results, growth prospects, and the outlook of AngloGold Ashanti's operations, including the completion and commencement of commercial operations of certain of our exploration and production project, and its liquidity and capital resources and expenditure, contain certain forward-looking statements regarding AngloGold Ashanti's operations, economic performance and financial condition.

With that, AngloGold Ashanti believes that the expectations reflected in such forward-looking statements are reasonable. No assurance can be give than such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulating environment and other government actions, fluctuations in gold prices and exchange rates, and business and operational risk management. For a discussion of such factors, refer to AngloGold Ashanti's annual report for the year ended 31 December, 2006, which was distributed to shareholders on 29 March, 2007. AngloGold Ashanti undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date, which will reflect the occurrence of unanticipated events.

With that, let me hand you over to Bobby. Thank you.

Anglogold Ashanti is saddened by the tragic accident in which two of our co-workers lost their lives at the Moab Khotsong mine in South Africa on the 20th of July, 2007. This highly unusual rock burst incident came immediately on the back of a quarter in which we have seen an improved trend with regard to fatal accidents.

A comprehensive safety review and new set of safety actions, reinvigorated actions, is in place. In respect of our African underground operations, this is being led by Johan Viljoen. Johan has been the manager of the Mponeng mine and has led that mine with a significant performance in production costs and safety over a number of years, and I'm confident that we will see the benefits of his leadership in the African underground operations going forward.

Turning to our financial performance this quarter, adjusted headline earnings were $82 million, lower than the previous quarter's $98 million due to local currency appreciation, higher exploration spend, and continued hedge book delivery.

Our second quarter price received was $605/oz was 9% below spot, marginally higher than that of the previous quarter and within our market guidance. Over the quarter, the hedge book decreased by a further 840,000 oz, decreasing the net delta position of the hedge to 8.75Moz, a decrease of 9%. It is our intention to continue to actively manage our hedge book in a value-accretive manner, whilst reducing our overall hedge position.

In respect of production we report of 1.35Moz for the second quarter, this is 2% higher than the previous quarter. Our total cash costs remained relatively steady at $333/oz quarter-on-quarter.

The South African operations reported a steady performance with the Kopanong, Mponeng, and TauTona mines all reporting solid production increases, while Great Noligwa and Savuka remain steady quarter-on-quarter.

At Moab Khotsong and Tau Lekoa, however, we saw decreased production due to lower recovered grades as a result of increased stoking with an off-reef mining at Moab Khotsong and the effect of the [moline replacements] in the first quarter of Tau Lekoa.

There were improvements at several of our African operations with Iduapriem in Ghana, Sadiola in Mali, and Geita in Tanzania, all posting higher production. Morila, in Ghana, was affected by lower grades, while Siguiri in Guinea was affected by power disruptions and maintenance shutdowns consequently resulting in lower production levels at these mines.

Our international assets continue to perform solidly with Sunrise Dam, Cripple Creek, and Victor and Anglogold Ashanti Mineracao posting strong production results. Neville and Roberto will take you through the operating performance of their respective regions in detail.

Finally, for the six months ended 30th of June, 2007, with incurring a dividend of 90 South African cents, or $0.03 U.S. providing exchange rates per share.

This conservative interim declaration comes against the backdrop of an important juncture that the industry -- gold mining industry, in general, finds itself in. On the one hand, we are seeing gold prices higher than they have been for decades, and in the case of the gold price in South African currency terms higher than ever in history.

This is brought into contention, mine expansion and extension projects, which were previously not economic and has greatly increased the rapidly rising call for capital expenditure.

On the other hand, production challenges, rapidly increasing input costs was dramatically evident in oil prices and rising interest rate regimes impacting on the cost of debt, operating and earning margins under pressure.

Given that we've reduced our interim dividend, the board will review the final 2007 dividend at the end of the year, when they will take into our account our earnings, cash flows for the second half of the year, together with our capital funding requirements for the future.

Let me now turn to the announcement this morning by our chairman regarding my forthcoming retirement and the appointment of Mark Cutifani as Anglogold Ashanti's new CEO. We also today announced that Robert Carvalho Silva, after a long and impressive career with this company and its predecessors in Latin America, spending more than three decades, that Roberto has also decided to leave in September. We, of course, wish him well in his future pursuits.

Neville Nicolau assumes the full responsibility as Chief Operating Officer of all the company's 21 operations. This is an enormous [brief], but Neville has very broad shoulders and a track record that will inspire confidence. Roberto will assist Neville in the consolidation of the two operating regions, and this consolidation will happen as soon as possible.

For me, this marks the end of 12 rich and rewarding years in this particular role. This 12-year period has seen the restructuring of Anglo American's seven listed individual gold mining companies into a single entity; it's seen very significant restructuring of Anglo's South African gold mines to ensure a long-term profitability; it's seen the acquisition of gold mining interests in North and South America, Australia, and in Africa outside of South Africa to the point where more than half of the company's production and earnings comes from these global operations.

It's seen the failed bid for Normandy and the successful combination of Anglogold with Ashanti; it has seen the conversion of the company's old order mineral rights to new order leases, and it did in 1998, see the listing of the company on the New York Stock Exchange where, at the moment, two out of every three shares trade.

Of course, there have been setbacks and disappointments aplenty, but it does seem to me that this company is more risk-diverse and generally more fit for the future than it was 12 years ago.

Today we do stand at the beginning of a new chapter. We are seeing stronger gold prices than at any time in the last few decades. Equally, we're seeing how tough it is for gold majors to replace their reserves, let along grow their production.

And gold miners, together with other mining companies, are in the grip of severe cost pressures, putting margins and earnings under pressure.

Finally, there is every indication that gold production is moving from the old world of South Africa, Australia, Canada, and the United States, into new countries and continents where miners face new challenges and opportunities.

For Anglogold Ashanti, Anglo American's exit as the controlling shareholder offers the company greater freedom than it has ever had. The company already has a good global reach, and a significant exposure to some important and increasingly valuable byproducts, particularly uranium and silver.

It's absolutely the right time to change leaders. In Mark Cutifani, we have a mining engineer with a wide and impressive track record of both operating and providing executive leadership across a range of mining products and on several continents. We have a new leader who brings exactly the qualities and experience needed for Anglogold Ashanti's new chapter. He is excited about the prospects for this global gold miner with its roots firmly in Africa but positioning the ambition and competence to mine gold profitability on a global basis.

This company has ore bodies as good as any gold major. It has impressively skilled and experienced people at all levels; it has core values right for the 21st century, and entirely appropriate, I might say, mining in emerging-market countries. And now it has a new leader with the right skills, values, and energies.

This new chapter will, I'm sure, see change and plenty of it. In 10 years' time, the company will look very different from what it is today -- different and very much better. On my part, after 34 years in corporate life, I am looking forward to exploring new ways of being a constructive citizen of my country.

I will now hand over to Venkat for a brief financial overview.

Thank you, Bobby. As Bobby mentioned, our adjusted headline earnings for the second quarter were U.S.$82 million as compared to the U.S.$98 million in the previous quarter. Despite slight increases in both production and received price and relatively flat cash costs, our earnings were adversely impacted, amongst other things, by three key factors.

Firstly, stronger local currencies, which included a 2% strengthening of the South African rand, a 5% strengthening of the Australian dollar, and 7% strengthening of the Brazilian real against the dollar, accounted for about $7 million of the swing in earnings.

Secondly, due to a planned additional exploration spend of $5 million, relating primarily to Tropicana in Australia, the DRC in China, to which Richard will talk more later.

And, finally, due to a higher discount to the average spot price for the quarter as a result of losses realized on reducing the hedge over the last three months in line with the maturity profile of the contracts.

You will have also noticed that our depreciation and amortization charge is higher quarter-on-quarter. However, this is simply reflective of the quarterly profile of our annual charge, which is still estimated to be around $600 million to $610 million in accordance with our previous market guidance for 2007.

Accordingly, the quarterly depreciation and amortization charge for the third and the fourth quarter is estimated to be between $160 million and $165 million for each of those quarters.

Looking ahead, production for the third quarter is estimated to be around 1.48Moz at an average cash cost of $330/oz assuming the following exchange rate -- 7.15 rand to the U.S. dollar; Australian dollar, 0.84 to the American dollar; and Brazilian real at 1.95 and the Argentinean peso at 3.11.

For the full year 2007, we are still targeting production of around 5.7Moz, and an average total cash cost of $328/oz based on exchange rates of 7.16 for the rand; 0.82 for the Australian dollar; and 2.0 for the Brazilian real; and 3.10 for the Argentinean peso.

I will now hand you over to Neville to take you through the performance of our African operations in more detail.

Thank you, Venkat. In South Africa, the operations had a mixed quarter with higher volumes achieved at all assets excepting Savuka. Declining grades somewhat mitigated the effect of the 9% volume increase, however, and production for the region rose 3%.

Total cash costs declined 2% to 71,551 rand per kilogram. Looking in more detail at these operations, of the seven South African operations, three posted improved production and cash costs this quarter with Mponeng reporting an encouraging 8% increase in production, and a 5% lower total cash costs of 56,000 and 82 rand per kilogram.

At Tau Tona, production improved by 3%, a total cash cost increase by 9% to 70,629 rand per kg due to the higher winter plow tariffs and increased expenditure on labor and consumables.

At Great Noligwa, improved face advance and face links resulted in a 10% volume increase, however, yield was 9% lower and resulted in gold production being equal to that of the previous quarter. The higher byproduct losses that we incurred in the first three months of the year reduced and resulted in total cash costs improving by 13% to 72,747 rand per kilogram.

At Tau Lekoa and Moab Khotsong, volume was higher by 7% and 9%, respectively, but lower recovery grades due to increased off-reef mining and stopping to negotiate dip faults resulted in production being 11% lower at Moab Khotsong.

The production at Tau Lekoa was lower at 1,223 kilograms versus the 1,325 kilograms of the first quarter when a [mole] liner replacement resulted in the release of previously locked up material; grade dilution at Sivuka due to increased development resulted in production being 3% lower; and total cash costs being -- were 19% higher due to additional expenditure on infrastructure maintenance.

At Obuasi, our other African underground mine, production was 9% lower at 92,000/oz due to the lower recovered grade despite marginally higher tonnage. The total cash cost increased 14% to $452/oz.

At our other Ghanan operation, Iduapriem, we saw lower production in the previous quarter due to a gear box problem in the mole that reduced tonnage throughput this quarter returned higher levels of production as forecast. Production was 59% better, and total cash costs decreased 36% to $293/oz as a result.

In Namibia, Navachab mine reported, once again, a steady production quarter-on-quarter with higher grades offsetting the effect of lower tonnage throughput. Cost-saving initiatives contributed to a 5% total cash cost improvement to $349/oz.

Production at Siguiri in Guinea declined 12% to 64,000 ounces due to internal power disruptions, maintenance shutdowns, and lower grade over the quarter. Total cash costs increased 20% to $500/oz.

The company is currently in discussion with the Guinean government on the treatment of fuel prices and exchange rates, which also contributed to the cost increases and may negatively affect costs, going forward.

The Malian assets had a mixed quarter. Production at Sadiola was 10% higher at 34,000 ounces due to an increase both in tonnage throughput and recovered grades. At our other two Malian operations, lower recovery grades led to production decrease of 15% at Morila while lower volumes mined at Yatela resulted in a 6% decline.

Total cash costs subsequently rose by 15% at Morila and 7% at Yatela. Encouragingly, Yatela was able to stack an additional 17% tonnage during the quarter.

Turning to East Africa, after the slope failure in the Nyankanga put in the first quarter, which significantly reduced the production outlook for the year. At Geita, production for the second quarter was 5% higher at 82,000 ounces and grade improved by 23%. Consequently, cash costs were 25% higher at 37 -- $337/oz.

Looking ahead to the next quarter, production is expected to increase for most of the African operations. Kopanang production is expected to be higher against the previous quarter due to an improved mining mix and a ramp up of activities at Moab will continue. At Tau Tona, grade dilution is expected to actively increase on the project below 120, but production is expected to be higher due to higher mining volumes.

At our Ghanan operations, both Obuasi and Iduapriem are expected to increase volumes and production in the next quarter. Product at Marila is expected to increase substantially due to higher grades. Similarly at Geita, mining has begun in the higher-grade area of the Nyankanga pit, and this is expected to have a significantly positive effect on production next year.

Production at Yatela, on the other hand, is expected to decline as the current pushback is mined off to the pit bottom, and the next and final pushback gets underway.

I will now hand over to Roberto to discuss the international operations.

Thank you, Neville. The international operations again posted a solid performance. Looking first to Australia, our Sunrise Dam mine reported strong results for the quarter with mining continued the higher-grade added as planned and using the 1% increase in production to 149,000 ounces. Also, cash costs were 7% lower at $355/oz due to a higher grade.

At our North American operations, CC&V in Colorado, gold production was 8% higher at 69,000 ounces, while total cash costs were 3% higher at $249/oz due to lower ounces (inaudible) and higher fuel costs.

Looking across to South America, Cerro Vanguardia in Argentina saw production fall 4% to 50,000 ounces due to lower feed grade. Total cash costs accelerated by 36% to $256/oz mainly as a result of reduced silver byproduct credit and increased consumption of mine supplies.

Finally, in Brazil, Anglogold Ashanti Brazil Mineracao continues its commissioning of the Cuiaba expansion reflecting the planned mining rate built up. This, together with reduced rainfall over the period resulted in 11% higher production for the mine. However, due to the appreciation of the Brazilian real, lower grades and high operating costs related to the commissioning of the Cuiaba, total cash costs rose 20% to $249/oz.

Production at Serra Grande was again unchanged quarter-on-quarter at 24,000 ounces but local currency appreciation and rising power costs pushed it up. Cash costs by 13% to $263/oz.

Looking ahead, most international operations are expected to maintain their solid performance for this quarter. At Anglogold Ashanti Mineracao, production is expected to be higher as the Cuiaba expansion continues to ramp up, while at CC&V we are expecting increased production due to an improved response of the [Valley Ridge] facility.

At Serra Grande and Cerro Vanguardia, production is expected to plan marginally due to lower grades.

Finally, I am glad to have served at Anglogold Ashanti and pleased with the Anglo American group for the past 34 years and, like Bobby, I believe it's time for a change in leadership.

Because of the addition of the operations, a single COO makes all sense, and I am glad to hand over my passion to Neville, with whom I have been working over the last seven years and sharing the COO's responsibility for the last two years and a half. I wish him all the best, and to my other colleagues as well.

I will now hand it to Richard to discuss the highlights of the greenfields exploration program for this quarter.

Thank you, Roberto. Exploration activities continued during the quarter in Australia, Colombia, the DRC, China, last, the Philippines and Russia. With good progress, in particular, at Tropicana in Australia, Gramalote in La Colosa in Colombia, and Mongbwalu in the DRC.

Importantly, this quarter saw an additional $5 million spent on greenfields exploration activity against the previous quarter bringing the year-to-date greenfield spend to $42 million.

Total exploration spend for the year-to-date is $74 million. Brownfields exploration comprised $32 million of this with $18.5 million spent in the second quarter. A total of $12.4 million of exploration spend was capitalized during the quarter, and a total of $21 million for the first six months of this year.

Drilling at the Tropicana joint venture is underway on both the Tropicana and Havana zones. A pre-feasibility study commenced this quarter that will focus on the economics of an open-pit mine over a 4-kilometer strike length. This study is expected to be completed by the middle of next year. Reverse circulation and diamond drilling was completed during the quarter at the Tropicana zone and focused on testing down-dip extensions to the known mineralization.

The results obtained from the drilling were encouraging with results of 13 meters at 13.3 g/t, 14 meters at 2.85 g/t and 9 meters at 4.37 g/t. Infill drilling at Havana was also undertaken with the best results including 5 meters at 33.7 g/t, 6 meters at 5.06 g/t and 14 meters at 3.85 g/t.

In Colombia, drilling continued on the bulk tonnage gold target at Gramalote, and the interim results from first-pass drilling at the new La Colosa gold porphyry are encouraging. The preliminary scoping study and additional infill drilling will be undertaken at the Gramalote project during the second half of this year.

In the Mongbwalu region of the northeastern DRC, diamond drilling continued to focus on the resource potential of the mineralized mylonite zone located to the southeast of the past-producing Nzebi mine. Two RC rigs continue to evaluate the shallow open-pit resource potential of the Adidi North, Sokomutu, and Pluto sectors and will assist in the calculation of inferred gold resources by the end of the year.

A preliminary scoping study on the economics of the Mongbwalu project is expected to be completed by the end of June 2008.

Regarding our joint ventures, during the quarter we concluded our transaction to acquire the Veduga and Bogunay projects from Trans-Siberian Gold for $40 million. These assets will be vended into our 50-50 strategic alliance with [Polimetal], which forms the basis for our future exploration and business development in Russia. The initial focus of the alliances to update the pre-feasibility study for Veduga, and we expect the formal documentation for the strategic alliance with [Polimetal] to be signed in August.

At the Yili project in China, the business license for the cooperative joint ventures between Anglogold Ashanti and the Yunlong Mining was issued and ground-magnetic and soil-sampling programs commenced. Results are anticipated from this exercise at the end of the third quarter of this year.

At Red Valley in Qinghai, we have begun earning into our cooperative joint venture, which accounted for the increase of spend there and a 5,000-meter draw program has been proposed to test for high-grade mineralization.

In the Philippines, work continues on finalizing the Mapawa and Outer Siana joint venture agreements with Red 5 Limited, while in Laos, under the Oxiana Limited joint venture, regional reconnaissance sampling and mapping programs were undertaken and will continue throughout the rest of the year.

I will now hand you back to Charles.

Thank you, Richard. At this point, we'll take your questions. I do just again ask you to please put your hand up and wait for a mike and then introduce yourself. Thank you.

Muneer Ismail from Deutsche Bank. Bobby, all the best, it's been good fun, been a tough ride, I'm sure, especially towards the end here, but thank you very much for all your time and your patience with us and this -- Roberto, as well, my apologies, sorry, I'm focused on Bobby.

Well, two aspects -- the first one is your dividend policy continues to be very, very vague, and I understand that, you know, there are certain challenges that you face and the board face in making a decision on the dividend.

Could you tell me what would it take for you to move back to a firm dividend policy where previously you had a (inaudible) of 1.3 times. Right now, as analysts, we don't really know where to pin that. It just seems as though when Geita is out of the woods, when Obuasi comes right, when this, when that -- do you have a checklist that you need to tick off where you decide on moving towards a permanent dividend policy? That's the first one.

And then the second one is on grades, Neville -- Great Naligwa, if you can give us some idea on -- Great Naligwa is really underperforming. It's well below its true potential, I believe. I could be wrong. Tell me I'm wrong. But if you could walk us through Great Naligwa and then, lastly, Geita on the grade side. What sort of grades are expecting for the next quarter and how should we start to progress straight up from Geita?

On the dividends, I'd like to offer you an initial -- we are in transition, I appreciate that. That's why [Russell] is sitting next to me. So I'll offer you something that is, in a way, backwards looking and then offer Russell a chance to see if there's a better context, going forward.

For gold mining companies, the term "dividend policy" is, I think, rather difficult to -- I mean, certainly, it's -- companies, for example, have a progressive dividend policy in which they wouldn't like to cut their dividend, maintain it, or increase it, or they have a dividend policy in terms of a cover ratio.

For us, I mean, in the times I've been around, every dividend debate has been formed by two factors -- what are our earnings, and what are our growth needs? And it's exactly those two factors.

We have, I must say, given -- in the past, we've given very strong weight to growing the company and, remember, for gold mining companies, I think one has to say it, and I guess all gold majors would have to say this -- growth means as much replacing last year's production as it does growing from 4 million or 5 million or 6 million or 7 million ounces, and you will see, if you look at acquisitions, if you look at the costs of bringing a mine to production, growth is expensive.

So we are certainly equally balanced or perhaps even -- we've placed a premium on growth as opposed to returning cash to shareholders prior a dividend or, indeed, any other means. And I think you want to see this dividend simply in the light that we are sitting this year at kind of 1.2, 1.3 billion capital for very good growth; that we're sitting on the prospect to bring some new further mine expansion and life extension projects onto our books in South Africa; 150,000 rand kilogram gold price, if you believe it's sustainable, really changes the parameters of mining possibility in South Africa.

And I guess at this point in time, prior to completing next year's budget, prior to a new CEO arriving, prior to a strategic review of these issues that I've been talking about, we wanted, in a sense, to keep our powder dry.

In my view, it's consistent with putting growth ahead of returning money to shareholders. Anyway, that's the way I've thought about dividends over the last 12 years, and you will note the words in the statement that the board has said it will review the final dividend in the light of the cash generation in the second half and also what 2008 and 2009 look like also in terms of the growth possibilities.

I'd just add something here -- and I'm entirely highly sympathetic to your question. Clearly, the object of any investment is to give a return to the investor, and at the moment, frankly, with our company expenditure and other costs, we are cash negative, and that is not a good situation in which to pay growing dividends. We would like to return to the position (inaudible), but I think it's a question of balance, and there may be -- we want to think about what that balance is.

I'll offer two general comments on Great Naligwa and Geita and then [Osrabi] and [Fitzdu] to add to the numbers.

Great Naligwa's yield has been a little bit variable, and it's down in the quarter, but it's not significantly down from where we've been forecasting Great Naligwa's grade for some time. Remember, Great Naligwa's mining towards Kopanang, and as we mined the last of the high-grade areas in the lower part of the mine, the grade trend will be done.

So it is slightly below where we expect it to be due to sort of a lack of flexibility and a phase-length problem, which has improved during the year, and I think we'll be much better in the second half of the year.

The other thing that affected it was the Moab shaft problems, which affect the high-grade section of Great Naligwa.

So those are -- where Great Naligwa is, I don't think that it's actually all that far down on where we expect it to be. Of course, we'd like it to be a little bit higher and there's always -- Great Naligwa can always perform in terms of grade.

At Geita, we have steady improvement in the grade during the year. We've got up to the grades, which we forecast past the slope failure. The monthly production at Geita has moved from the mid-20,000 ounces per month to the high-50,000 ounces per month. That's what we forecast for the second half of the year. It's a direct result of the Nyankanga pit coming into production and volume increases in the ore mining of the Nyankanga pushback 4, which is where the grade is supposed to come from, and this will push the grade up to the 3.5 also grams of ton, which is where we forecast it to be.

I don't know if Bobby and Fritz have got anything to add to that.

It might be in terms of Great Naligwa mine. The Great Naligwa mine is a mere reality. It's not the mine it was five years ago. It's got a new gold profile. It's adjusting its cost profile to its new gold profile. There aren't many opportunities in terms of increasing volume at Great Naligwa mine.

Where we've lost price link, I think, due to geology and have increased other areas, in terms of price link, that's been on [sea reef] and, as we know, sea reef is a lower grade than the -- while [river reef] used to be or still is.

So, yes, so we're looking at Great Naligwa mine and saying this used to be a 2-ton gold producer five or six years ago, and it's actually now between 1,300 and 1,400 kilograms of gold per month producer. And that is how we're planning Great Naligwa into the future, and that is how we'll structure its cost profile, going into the future.

Neville has really told you the story on Geitra, but the grade, going forward, as he mentioned, was going to come, other than Nyankanga pit where we lost part of the available ore due to the stoke freighter that we had in the first quarter. It didn't cover all of that cut ore, so the replanning of Geita focused on giving a mix to the rest of the year that will give us just over 3 g/t and 3.13 million tons per quarter. And that would steadily grow through the year but not much -- to about 3.5 g/t towards the end.

Bobby, [Benjamin Rice], Financial Mail. Any update on the situation regarding Anglo American's plans for its stake in Anglogold Ashanti?

No.

I thought I'd try for that one.

[laughter]

Well, I have a question for Russell. What has the incoming CEO been told about the situation regarding Anglo American and Anglogold Ashanti? I mean, does he need guarantees for another job in two months' time.

[laughter]

Well, I don't think he's coming into it blindly, let me put it that way. He's clearly been on our website, which, I'm sure is pretty interesting. He's met all the non-executive directors and Bobby, and he's an experienced miner. So he's not a babe in the woods. I don't think he's going to come here and find anything particularly surprising, certainly, in my interviews with him.

He asked a lot of very good questions, and those that I couldn't answer, I got somebody else to answer. But he was right on the button with his questions. I don't think he'll find any ghastly surprises, that's what I hope, anyway.

So he knows what's going to happen with Anglogold, then, I mean, he knows Anglo American's plans for the group?

He's aware that there is an overhang, and he knows that back in October 2005 they said they were going to reduce their stake. Does he know when they're going to reduce the stake next? No, anymore than Bobby or I do.

But they've made it perfectly clear of that back in Dublin and then later on that they were planning to do something, and I think they'll probably do something this year as the market's scared badly against them, but the answer is we don't know with any certainty, but he certainly knows there's an overhang and Anglo American proposed to reduce it.

Is he going to pay something like a golden hello to compensating for that risk that he might not have a job shortly?

[laughter]

He's been promptly remunerated for it, and he certainly -- a golden hello would be the wrong term, but he certainly has, if you like, a parachute for the first two years in case somebody comes out of the woodwork and makes a bid for the company.

So he has a golden parachute?

If you'd like to call it a golden parachute, yes.

It's [Alan Cook], all the best, Bobby and Roberto. Just a quick question -- I see you've added to some of the longs in the hedge book. Could you guys just again review what your strategy is with the hedge book and the accelerated reduction in the hedge book -- [I see the marks here]? And then just talk to the additional longs -- is this going to continue and the guidance we'll see for this year has remained in place? Should we take it that that will continue into 2008 and beyond? Just some guidance on the hedge book and where we are with the strategy toward the hedging.

Yes, there are new longs in the hedge book that were established this quarter. I think it's absolutely in line with all the previous quarter's activities since 2001. It's never consistent, quarter-on-quarter, but I think the trend is still there, the comments on management from the board is so that it be actively managed with a view to reducing the hedge book. So you can expect to see that sort of activity going into 2008 right now.

I'm not really sure how to address this question, so I also would like to add my best wishes to Bobby and Roberto. I think we've had a couple of interesting conversations over the year, which were stimulating.

I'm not sure your mike is on, by the way.

Is it on? Okay.

[laughter]

You mentioned growth a lot, and I'm sure it's escaped nobody's attention, but bullion has out-performed the top five global gold equities over the last two years, in fact, since the ETF payment. What is growth? Is it ounces or is it shareholder value? And all we have in here, you're talking about, along with your major colleagues in the global top five, to be fair, maybe with the exception of one recently -- is buy, buy, buy. We never hear you say, "Well, maybe we've got geographic outlines. Maybe it's a bit too much to manage 21 operations in 10 countries on four continents by remote control from Johannesburg."

Is there a possibility that we might see some shorter-life or higher-cost outlying assets that we never hear you speak out, that you're silent, except at the bottom of the cycle, which, along with the rest of your colleagues, you start selling at. Could you just talk to us about your philosophy about growing shareholder value as opposed to growing ounces?

I'm afraid, for that question, you get me for now. Because the new CEO, he will come into a context of a board and a management team that -- I take your point entirely.

In a way, what I tried to indicate is I think the gold mining industry globally is where the South African gold industry was in 1997, and I think what I mean by that is you have to confront what value means, what growth means, and you've got to examine the equation.

This is an industry -- it's wonderful to have the freedom to say these things with you, which has been oddly obsessed by production answers. I mean, clearly, it believes size counts, and so it has been a competition for who is at the top of the league in terms of annual ounce production.

We were to ask ourselves in South Africa in 1997, was it still possible to make money out of gold mining in South Africa? I think the gold mining industry has to ask itself exactly that question now because you're right. The gold price itself and the ETFs have outperformed the capital appreciation in gold mining equities.

I think the reality is, I mean, somebody once finally said that all economics is captured by the simple equation -- value and volume. And certainly for gold mining that's true. You can't benefit from a higher gold (inaudible) producing some answers. So the volume of your production does, indeed, matter, along with the price received.

But the view we came to in South Africa was that it was the margins that really mattered; it was the ounces times the margin. And we did actually, in South Africa, reduce from 7.5 million ounces to now we're 2.5, and we're making a lot more money out of those 2.5 million ounces in South Africa than we were making out of the 7.5 million.

Now, I think -- and we went and found answers elsewhere. What this company has discovered is that aging mines, like aging individuals, I have nobody in particular in mind, can decline quite rapidly. The grade can go to hell, the costs can increase. So having, in our home country, really restructured mines -- I think, honestly, more ruthlessly than anybody else has -- why should we not do that to mines elsewhere?

But, I mean, if you do look at this company right now, we do have 1.2 billion on organic growth. We are extending mine share in South Africa, we've -- if you take the expansion of Sunrise Dam, if you take the expansion of Cuiaba, if you take the paired extension of Cripple Creek, we've put a lot of money into organic growth. Richard has got, now, a more focused greenfields exploration project.

I think those have actually probably added a lot more ounces than M&A activity. I've consistently said M&A activity -- it's the highest-risk table in the casino, because you really are making bets about future gold prices.

In short, I think we are very concerned to get returns of capital and returns of equity back into the low teens. That's where we would like to go. We've very into grow our earnings. If there is any one number that I'd take away from a quarter, it is the adjusted headline earnings. That's the wealth we've added in the quarter, and in terms of getting there, I think managing your costs is the cheapest way to add extra dollars, growing your existing operations is the next cheapest, finding some new mines, which Richard has promised us is going to happen next year and the year after, is M&A is the highest risk alternative.

But are we wedded to have 21 operations in 10 countries? No, we're not the United Nations. All we want to do is make some money. So if we concluded that this was a good time to dispose of some assets, and somebody -- I mean, we've said repeatedly, every one of our mines is for sale to you, personally, and anybody else, simply for the right price, and the right price is actually north of the MPV, if we think we're going to achieve for that mine, over time.

This would conclude -- I'm identifying with your question. I think the central challenge that all of the gold majors first is simply to make some money for their shareholders, and we face it as well.

I suppose where we're trying to get to, I mean, we're trying to get our mind around what is the optimum size for a gold mining company. I mean, at 6 million ounces, obviously, that's a hell of a base to grow off, and growth, to us, is what you said, Bobby, is growth in margins, it's growth in value creation, and we're just trying to get our minds around where, sanely, you can do that from, I guess, and we've seen Newmont, Barrick, yourselves, Gold Fields, Harmony, the top five gold producers in the world, we've seen their price to PV multiples decaying over the last few years, and we're just trying to get our minds around the new way forward for gold miners, face them precisely what you say -- the OECD countries are in decline, the new addresses are really difficult places to do business, and we just kind of wonder if there isn't required a shift in --

I've just got two further comments in here -- I think the right size for a company including the gold mining company, is the size that you can manage well, and I really would stress that, sir. We increasingly are having the view that we'd like a certain volume of production out of a particular country because what we've learned is that countries are politics-intensive; that you need a very effective presence in the capital -- you've got -- in a debate, about the first cold war world, you better show that gold mining is good for an entire country.

So there is a minimum level of production. You shouldn't have more mines than you can manage well. We already have a spread. I mean, I have concerns about this man's health, I mean, for those of you who followed us will know that [Dave Hodgin] paid a real price for his travel schedule. He's fortunate to have very good -- a team of very good executives on the mine and in the country.

So the two things are you shouldn't grow beyond your capacity to manage well, and that would be evident in the results, and then the question of risk -- we're not a risk-averse company, as you know, but for us it's not -- is a country risky or not, it's do we understand the risk and believe that we have the internal capacity to manage that risk?

Simply adding volume growth to the equation has not done the trick on earnings, at least not for the last few years.

Good morning, everybody, I'm [David Hall] from [McCauley] Securities. I have two questions, and I also wish Bobby and Roberto good luck into the future.

First, is the (inaudible) on the debt, and if I calculated correctly this morning, your debt levels have gone up, I think, which is about 38%. Could you please talk us through that -- what kind of figures you are comfortable with, where you think it may be going with all the capex?

And the second question is for Neville -- can we have an update on the uranium found -- what you have in there? The impacts of this year and where you see uranium going forward in the company?

If I can pick up the first one, Dave, on debt. The debt levels are going up are entirely in accordance with our plan. If you recall, when we went and raised the $0.5 billion worth of equity along with Anglo American's placement, we did say that we have got a large capital expenditure profile coming this year, particularly with over US$440million going for Boddington over a three-year period. And you are seeing Boddington expenditure ramp up, certainly, in 2007 and 2008, and the debt is purely a reflection of that.

The ratio, which we monitor, in terms of net debt is really net debt to EBITDA. It is currently sitting just below 1 in terms of our ratio. In terms of comfort threshold, it depends on who you talk to -- Mark Lynam or me -- you'll get different answers. I tend to be risk-averse.

But, really, anything up to 2 is certainly manageable for us, and we have been there before, not of 2, so we're not sort of debt-averse, but what we've got to balance is the capital needs of the company.

So it's entirely according to plan, but a number of around 2 is a sensible number.

We don't have much to add to what we said in the previous quarter. The plant upgrade of the South Vaal uranium plant is underway. It's progressing well, and we are -- the heart of the plant is five CCIX towers, and we're busy converting them -- over one a month or one every six weeks -- and that will be complete by the end of this year.

Our production is in line with what we forecast earlier in the year, and by the end of the year, our annualized capacity should be just below 1.5 million pounds. We have announced that we will be embarking on a capital project to treat what we call the corporate onstream, and we are, in this business, for any cycle in this review of operations, we are looking at uranium as a business unit on its own, and it attracts all of the attention in terms of generating reserves and optimum treatment of all of the reserves that we have in our portfolio, and we will announce projects along those lines as they -- just after we present them to the board.

[Davoresh Kelly] from "Mining Information." Bobby, I would just also like to add my best wishes, but I would like to congratulate you over the last few years for leading on social policy starting at the beginning of the alphabet, I see [Abbot's], AIDS, and ART to start with, and I think Anglo, under your leadership, has taken calculated risks and often come out well ahead of the game. So I think, for example, ART, I remember, a lot of the mining companies saying "This is too risky," and about six months later, you guys said, "Let's go for it full force." I think the last one was your malaria campaign in Ghana. So I think the last point you mentioned of gold mines persuading risky political venues or locations that they're good for the country, I think you've got a fair amount of credibility there. Congratulations.

I like that sort of question.

[laughter]

[Martin Clemon], Mining Weekly. Bobby spoke of the 150,000 gram per kilogram, changing the parameters of mining. Could you give us some sort of insight as to your vision of that, both in brownfield and possibly even greenfield terms? Many of your industrial market reports, you speak of new advances in industrial uses of gold, and new emission and pollution control systems containing gold. Can we get some of your -- how much the industrial market is likely to absorb, going forward, and also some detail on this new emission and pollution control system?

I suggest your first question goes to Robby, and your second question to Tara.

If you're looking at South Africa specifically, we're talking about brownfields rather than greenfields. As you know, in the first quarter we announced the Mponeng deepening project, which was the VCR project down below 120 level. We believe, with two feasibility studies at the moment, between October of this year and this part of October next year we will take them to the board.

We've put the (inaudible) project that's opening, it's essentially another mine. There's a total of new mines down there. It's a massive ore body down there, and we're talking going down to about 4,500 feet or potentially if the project (inaudible).

The other one is the Moab Phase 2, or we'd also like to call it "Project Cyclops." This is a bigger block of ground that we're looking at the existing mine at this stage more towards the waste of the existing block of ground, and we're busy with feasibility studies in that area as well.

Then, of course, the third one is the Africa underground region that you're looking at these Obuasi deeps, the Obuasi below 50 down to 90 level. We're busy with the feasibility studies on that one. We've got a team up there now doing the feasibility studies, and also towards the latter part of next year, we should conclude those feasibility studies and (inaudible) positively turns us on, and we'll take it to the board then.

Currently the industrial and dental sector uses about 450 tons of gold, or 15%. For the last three years, being the fastest-growing demand area. The extent to which it can grow, I don't know. AT the moment, growth is coming from the growth in the electronics industry around the world, and we expect this to continue. There's a lot of research taking place around the world. The exact where we're going to end up nobody can really tell you. I would love to just give you a number there.

I think we can stop there and certainly (inaudible), and we do have tea and coffee next door, so we invite you to talk to management outside. Thank you very much.