Anglogold Ashanti PLC (AU) 2007 Q4 法說會逐字稿

Good afternoon and welcome to the fourth quarter earnings results for AngloGold Ashanti. 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. (OPERATOR INSTRUCTIONS). 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, Dillon, and welcome to this presentation by the AngloGold Ashanti executive team of our results for the fourth quarter and year ended December 31, 2007.

Before we begin our meeting, let me just talk you through the procedure. Mark Cutifani, our Chief Executive Officer will review AngloGold Ashanti's performance over the quarter and the year, provide guidance for 2008 and provide some detail on the assets review process underway, together with his initial thoughts on the challenging business strategy.

Venkat, our Financial Director, will discuss our adjusted headline earnings for the quarter and the year. And this will be followed by Robbie Lazare discussing the African operations in detail. Commentary on our international operations, together with our exploration activities, will be picked up by Mark during his presentation.

After these three speakers, we will then take your questions.

Before we begin, let me just read a declaration regarding forward-looking statements that may be made during this presentation.

Certain statements made during this presentation including, 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 production projects and its liquidity and capital resources and expenditure, contain certain forward-looking statements regarding the Company's operations, economic performance and financial condition.

Although the AngloGold Ashanti believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in gold prices and exchange rates, and business and operational risk management.

For a discussion of such factors, refer to our Annual Report for the year ended December 31, 2006, which was distributed to shareholders on March 29, 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, or to reflect the occurrence of unanticipated events.

In connection with the proposed merger transaction involving AngloGold Ashanti and Golden Cycle Gold Corporation, AngloGold Ashanti will file with the Securities and Exchange Commission a registration statement on Form F-4. And Golden Cycle will mail a proxy statement and prospectus to its stockholders. And each will be filing other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors are urged to read the proxy statement and prospectus regarding the proposed transaction and any other relevant documents carefully when they become available, because they will contain important information about the proposed transaction.

The final proxy statement and prospectus will be mailed to Golden Cycle stockholders, who can also obtain a free copy of these documents and other filings relating to AngloGold Ashanti and Golden Cycle, without charge, at the SEC's website, www.sec.gov.

With that, let me hand you over to Mark to begin the proceedings. Thank you.

Thanks very much, Charles. Ladies and gentlemen, it's my first full quarter, so I'll be saying and talking a little bit more than I normally would. We'll normally have more participation from the team but, given this is my first full quarterly and I've had now four months in a row, I think it's appropriate to share with you first thoughts, comments on the results, obviously, from 2007 and what it means for us for 2008, and also where we are in our thinking at a strategic level.

I started on September 17 and my tenure actually started with a bang, with us completing the U.S. $3b secondary placement as our colleagues at Anglo America pursued other strategic initiatives. And that was completed in early October in the quarter.

At the business level, things have been eventful as well, as we put in place key safety initiatives, restructured the management team to ensure more focus and accountability on the key issues, commenced our asset review and, more recently, started dealing with power issues in South Africa. At the same time, we've been busy looking at the business from a number of perspectives and we are building a clear sense of our strategic direction.

Based on my first impressions, we are not delivering to our potential. We have started a process that is questioning every asset we possess, every action we take and each strategy we've met for the business, the key question being how does it add value?

Consistent with asking the right questions and finding the right answers, we are putting the right people in the right place doing the right work. I would like to start the discussion today with an overview of our performance for the quarter where I will outline the key issues we are facing. This, for me, defines a starting point for where we are today and what it means for 2008.

I will then outline how we intend to start reshaping the business, to work on our weaknesses and build off our strengths. While as you can appreciate, these are initial impressions, the areas of critical focus are emerging very quickly and so I believe we can start some early strategy conversations, as we promised. To help you understand how our thinking is developing and what will be some of the key elements of this strategy, we will consolidate these conversations by the end of March and we will be presenting a much broader view of the strategy with our next quarterly results.

To discuss performance we'll start off with safety. In the first five weeks of the fourth quarter we reported eight fatalities; the loss of eight of our friends and colleagues. As of November 2, we'd reported the loss of 34 of our colleagues in 2007. For all of us at AngloGold Ashanti, this was unacceptable.

On November 8 we introduced our Safety is Our First Value campaign which accompanied a range of other collaborative interventions. While I will talk to this program a little later, I think the encouraging outcome to note that at this point is that we did not report another fatal event in 2007, and 2008 has certainly started off better than where we were in 2007.

On the production front, Gold output was 5% down on Q3 at 1.37m ounces, following both planned and unplanned safety interventions in South Africa and the continuation of the poor and unacceptable performance at Geita. Cash costs at $404 an ounce were 13% higher, reflecting lower production and the inclusion of some one-off items that had been flagged in the previous quarter.

The South African operations reported 9% lower production driven by lower volumes, as a result of the fatal incidents in October and a broader safety -- and the broader safety related issues and actions that we talked about earlier.

As guided in the previous quarter, 300,000 pounds of uranium were purchased to meet contractual obligations when the price dipped to $75 a pound. As a result, total cash costs for South African operations increased to $405 an ounce, or ZAR87,949 per kilogram; up 14% for the quarter.

Despite the higher fixed cost base of the South African operations, cost interventions were undertaken to minimize the impact of lower volumes and total cash costs, excluding the purchase of the uranium, increased by only 4% quarter on quarter, demonstrating our ability to manage costs in difficult times.

Looking at the operations in The Americas, they generally posted strong results. Starting with South America at AngloGold Ashanti Brasil Mineracao, production was 5% higher at 91,000 ounces. Costs took a hit -- a 14% hit, following higher transport costs as we transferred ore following downtime at one of the processing plants.

At Serra Grande, production decreased 9% in line with the operating plan, due to the lower grade material and feed from the open pit and the Nova mine. While total cash costs were higher at $292 an ounce, the adjusted gross profit improved 17% to $7m due to higher realized gold prices.

At Cerro Vanguardia in Argentina, production improved 2% to 51,000 ounces due to higher feed grade. However, total cash costs increased 7%, the result -- as a result of the lower silver by-product credits from lower sales. Gold sales were 31% lower due to ongoing discussions with the Government of Argentina regarding its proposed tax changes.

We are currently going through the process with the government and, as we have said, we're supporters of all stakeholders in the governments and in the countries in which we operate. And I'm sure that we'll be able to work out a solution for both parties that provides the right solution to make sure that we go on and be effective and productive in the country.

At our North American operations, CC&V in Colorado, I'm pleased to report a solid quarter with production up 48%, as solution flows in the leach pad normalized, leading to increases in recoverable ounces. Total cash costs decreased 10% due to reduced royalty expense and improved production, while the adjusted gross profit increased 87% to $28m.

In Australia, Sunrise Dam continued its positive run, producing 150,000 ounces for the quarter, and the year ending with a record 600,000 ounces. Total cash costs increased 19% to $392 an ounce, owing to higher fuel costs and some inventory and stockpile movements.

In 2008, production at Sunrise Dam is expected to normalize to 400,000 ounces, as the high grade GQ lode is being depleted and production will be sourced from a combination of open-pit, underground operations and stockpiles. This will see Sunrise Dam reduce its accounting contribution year on year, as non-cash stockpile accounting entries are brought to book. But the operation will continue to be a substantially cash flow-positive operation.

Turning now to the financial performance for the quarter, the received Gold price at $687 was 13% below the average spot price for the quarter as the Company continued to deliver a significant proportion of its production into the hedge book. Adjusted headline earnings for the fourth quarter were $18m. This is after some $62m (sic - see presentation) in accounting adjustments, which you will recall we flagged during the third quarter and to which Venkat will speak in more detail.

I would just note that, excluding these charges, adjusted headline earnings would have been marginally higher than the third quarter, despite the lower production and the material discount to the spot gold price.

Looking at the year's results, starting with production which declined 3% to 5.5m ounces, this decline was largely attributed to reduced contribution from Great Noligwa due to the lower grades mined in the SV3 area, as well as lower ounces from TauTona where mining outside the zone of influence surrounding the shaft pillar was substantially redesigned following risk and associated safety assessments that we talked to in the second half of the year. These decreases were further exacerbated by the ongoing disappointing performance from Geita.

Total cash costs were 16% higher at $357 per ounce, due to the lower production, stronger local currencies, increases in by-product credit losses, higher royalty payments, increased maintenance activities and the impact of input cost inflation pressures.

Despite these issues, I regard the cost performance as solid, particularly in the face of the global energy and commodity input cost increases. In this context, I think that our performance relative to our global peers has been respectable. At the same time, we don't accept that performance, and we are working on a number of fronts to continue to bring our costs down.

We will continue to maintain our focus and manage our cost base through dedicated savings programs which, this year, have yielded $58m in sustainable cost reductions. These gains are in addition to the $73m achieved in 2006 and $160m achieved in 2005.

Adjusted headline earnings for the year were $278m following production reductions, higher costs and increased exploration activities.

I've now been in the role for four months, but I have visited more than half of our operations and sat one-on-one with more than 50 of AngloGold Ashanti's senior executives and leaders. In this context, and while reflecting on the results for 2007 and what it means for 2008, it is time that I share with you my observations and thoughts on the key issues going forward.

First -- and I won't go further with my discussions on safety, but people do know where I stand. And we, as an Organization, stand together in efforts to improve the business and improve performance in our safety within in all of our -- within all areas of the business.

As with safety in South Africa being a personal priority, the South African power situation is now our most urgent and immediate issue for the management team. As everyone is well aware, following recent announcements and widespread media commentary, power shortages in South Africa have had a significant impact on the country, the mining business, the gold industry and our business. We're working around the clock to adapt our operating plans to the current situation and to understand what the likely scenarios are for us going forward.

While the story is still evolving, we are working towards a stable 90% power allocation. Eskom is still working on its own situation and, so, waiting for more concrete guidance on how things will be managed going forward. And we are lobbying and working with the unions, Eskom and the government to develop the best workable solution for the business, noting that the consequences for this Company, the mining industry and the country, more generally, are critical.

While we agree it's not the time to point fingers, it is certainly a time for all key players to walk towards a sustainable and best outcome for all key stakeholders. And we're taking accountability for those conversations and we're working at every level within the government and within the bureaucracy to come up with solutions.

If we assume a constant 90% power supply, we will have to reduce power consumption within the operations by an equivalent 10% from a standing start. To put this challenge into perspective, since 2004 AngloGold Ashanti's South African operations has delivered energy efficiency improvements, reducing consumption by 17%.

Improvements have been delivered from energy management and applying new technology to old techs -- to old systems. We have further targeted a 15% improvement over the next five years in our recent strategy work. And so we are scrambling to see what we can bring forward in a super-accelerated timetable to help address Eskom's current constraints.

In the meantime, and before we introduce any of those key measures, if we are constrained to a reliable and stable 90% supply, we will be looking at a potential 200,000 ounce annual impact rate.

Due to the sudden stoppage of all South African operations on January 25, 2008, and the following build-up of power supply back to the 90%, which took a week later, we were further impacted by an additional 200,000 ounces. And as I count those numbers today, we're about 150,000 ounces behind. And I'm assuming that we will still have some interruptions over the next few weeks that will fully account about 200,000 ounces. So, on a full-year basis, that equates to around 400,000 ounces for AngloGold Ashanti.

I must stress that at a steady, stable, reliable power supply of 90%, we can manage the situation. We will be affected by some 200,000 ounces annually, which is equivalent to about 8% of the South African estimated production and a 4% impact on Group production. It is still serious but, from our point of view, it can be managed. And from our point of view, the key is to get with the government, to work with the unions to put our case, to manage and to input good ideas while we're also looking for efficiencies within our own operations.

At a 90% scenario, this may result in the likelihood of at least one business unit closing, obviously, our -- one of our lower-production, higher-cost units, and an additional one running at 50%, again, focusing on the lower-yielding margin areas. This rationale has been based on optimizing the current reduced power supply, taking into account long-term risks as well as contractual obligations. We have a lot of work to complete the details and find alternative pathways to better solutions. However, this is where we are today and based on the information Eskom is able to provide us.

Let me now turn to the third area of initial focus, namely, underperforming operations with significant turnaround potential. When I first walked through the door, I was aware that Obuasi would need to be a key area of focus, firstly, to understand the issues that it was facing and then to get the right set of actions in place, along with a team to deliver the recovery.

We will outline the scope of the comprehensive asset review that is in process a little later. However, the valuation of Obuasi has already been undertaken and the key issues for resolution are very clear. While the last quarter's performance was again disappointing compared to potential, the team has been working hard and has now stabilized production delivery from the asset.

The current primary mining methods in use at Obuasi are well known; long-haul open sloping and sub-level caving. Along with the mine layout designs and associated development optimization, there is significant scope for improvement and optimization of the operation. A 2 gram per ton, or 25%, grade differential between geology and extraction delivery indicates we have a design and control gap in our core mining processes. By reducing ore loss and waste dilution through design and appropriate extraction sequences and controls, we should be able to make significant inroads towards delivering grade improvement.

While a practical 10% to 15% grade improvement is more realistic, given the available skills and local circumstance, the prize is still substantial and presents a compelling value proposition at existing Gold prices, particularly with the associated low marginal costs associated with delivery on this potential.

A further constraint to Obuasi is mining flexibility, which is inhibited due to the low development mining rates, the scattered geography of the mining operations and the poor maintenance on critical equipment. We are also looking at high-speed development strategies for key areas and focusing on key mining districts to consolidate mining activity to improve efficiencies to [reduce] costs.

In addition to the management team on the ground, we have appointed world-leading experts to help with the planning process to address these issues, as well as providing support on the development of the recovery plan.

The approach we're adopting across the portfolio review is to put leaders in the field with our local and regional management teams to support them, but do not do their job. The issue of accountability is central to our new organization structure and the key players in their new roles.

As leaders, we're accountable for everything that happens in the business. There is no such thing as shared accountability. We own everything and we are accountable for everything that happens in the business.

And on that theme, let me deal with Geita. While the immediate issues are clear, the real failure restricting access to the deeper high-grade ore, the poor performance of the new mining fleet and the impact of the harder ore in the mill, ore that has been mined out of sequence, and the loss of key staff, to be blunt, are all issues that are reflective of symptoms; they aren't the driving issues. The restructuring of the operation's leadership has been necessary to put the appropriate capability and experience in the key areas to deal appropriately with these challenges.

In the case of Geita, the changes have impacted three levels of management, reduced to two, with new leadership under Robbie Lazare, responsible for Africa, and Richard Le Seur, the new GM, Geita. We have moved quickly to put the right leadership in place to put focus on the key issues. We are supporting the team with new and more appropriate technical expertise. And we are looking to rebuild the operating team after a period of low morale and high turnover.

As you know, performance at Geita this last quarter was very disappointing, with production down 47% to 58,000 ounces, due to an 8% lower tonnage throughput and a 43% lower recovered grade.

During November, tonnage throughput was adversely affected by discharge pump failures on both mills, large build-up of mill scats and other issues associated with poor operation and housekeeping within the business. These problems were further exacerbated by the refractory nature of the ore from Geita pill hit -- Geita Hill pit which reduced recoveries and was substantially replaced with lower-grade stockpile material, further reducing production.

Total cash costs were $722 an ounce, reflecting the litany of problems experienced. In addition to the cost impacts, mineral resources and reserves has been reduced year on year by 2.2m ounces and 2m ounces respectively, due to higher costs, changes in estimation methodologies, planning model changes and the flattening of mining slopes.

While I'm bitterly disappointed with the short-term implications of the poor operating performance, I am encouraged that the geological resource indicated the extensive presence of gold. The key is to correct the physical performance to address the cost blow out. The current underperformance has had significant implications for 2007 and for the year ahead, in particular our production and cost guidance.

Finally on Geita, we have reconstructed the management team and put in place new leadership. The asset review team has identified additional potential. As we rebuild the team, we are developing the scope for recovery works and we are supplementing the local team with additional expertise. We plan to have the broad work scope by the end of March with detailed execution plans completed and in process by the end of June. In the meantime, we are supporting the new leadership with regional staff to help recovery of the immediate issues.

I said this, this morning in answer to a question; I'll say it again. I've been in the industry for 31 years. I've been extremely disappointed with what we've found at Geita. AngloGold Ashanti has the people to correct these sorts of issues, and we'll apply the best resources in the Organization to get the issues fixed.

As I said, I've been in the industry for 31 years. I've been -- I've run the deepest and the largest coal mines in Australia. I've run Western Mining's nickel operations and reconstituted the whole business. We've rebuilt Normandy's gold business, developed KCGM operations in Kalgoorlie. And in the last five years I've been working with the Inco team, reconstructing the whole global operations across the business.

What we have in Geita is no bigger than any of the issues we've dealt with -- or I've dealt with or seen in my 31 years. We've got the people. It's a matter of putting the leadership in place, providing the team the guidance and support, and we will make a difference. And we will fix Geita. Robbie Lazare has already made a great start and has made a number of changes and put the team in place to turn the situation around. And in the next two quarters, we will report to you in detail our progress and where we're taking the operation.

Moving away from operational issues and focusing now on the hedge book. It is well known that I'm not a fan of hedging, particularly in a rising gold price market. In the current gold price environment, our received price continues to diverge in percentage terms from the spot price. At current gold price levels, we anticipate our received price will be in the range 18% to 20% below spot; that's at $900 an ounce. However, Mark Lynam and the team continue to manage our positions and have reduced our net exposure by around 200,000 ounces quarter on quarter to 10.4m ounces.

Deliveries in the contracts drove the reduction, although the positive impact was dampened by an increase in the hedge delta, largely driven by increasing gold price which increased by $92 over the quarter. Over the last 12 months our hedge commitments reduced by 300,000 ounces, again, in an environment that saw gold price rise 31%. At current spot prices, and where we will deliver into our positions as planned, we will reduce the hedge delta by more than 2m ounces by managing the book over the course of 2008.

Now, that is assuming that the gold price remains at spot where it is today. Obviously, if the price goes down, we'll do better. And we may do a little worse if the price goes up. But we are talking that type of improvement on the basis of delivering in the current positions.

Even more important than the absolute reduction in the hedge delta is the percentage of reserves the hedge book represents. At the end of 2007, the hedge book represents 15% of reserves and 5% of resources. The reduction in these ratios in 2007 has been material, thanks to the significant ounces that were added to both reserves and resources. This is the base and the foundation upon which we will build the future of the Company and start driving growth through the business.

We would clearly prefer to increase our exposure to the spot price and remain confident in the outlook for the price of gold. We will, therefore, continue to look at all ways in which we can effectively manage this exposure to improve our shareholders' exposure to spot price, while at the same time managing solutions consistent with protecting shareholder value.

Now, let me turn to the outlook for 2008. I am, and we are developing a good sense of the asset base and our future potential. In going forward, we are more focused on the strategy necessary to fully realize that potential. The good news is that we are fully aware of the key issues that are impacting performance and we are all well progressed in building action plans to address them.

We are very optimistic about the long-term outlook, but there is a lot of work to do. Our opportunity pipeline is extremely robust with a number of positive developments coming into focus in the last few months, which I will outline later.

However, this does not mean that the current operating issues will be resolved overnight. In particular, the power issue in South Africa will need to be managed as the story unfolds. We have taken a leading position in dealing with the government, the bureaucracies, to sort the issue out. And we take full responsibility for working our position through and making sure we position ourselves to deliver.

At the same time, we recognize that we're not in full control. But we certainly will be keeping very close to Eskom to make sure that we have every impact we can on influencing a positive outcome. We will also continue to work on our contingency and mitigation plans in case we see further system weaknesses.

Therefore, taking into account the uncertain impact of Eskom power supply, together with Geita's near-term underperformance, overall, we anticipate annual production to be in the region of 4.8m to 5m ounces at a cash cost between $420 to $435 an ounce. This is based on the assumption of 90% power availability in South Africa and the January incident impact that I outlined earlier.

AngloGold Ashanti is navigating a crossroads in its history as it builds investment in exploration, new development of brownfields projects. As a consequence, it is a period of substantial investment in our business and, therefore, we anticipate aggregate capital expenditure for 2008 in the region of $1.2b.

Despite the short-term present -- pressures, our business and our capital funding requirements will remain robust on the outlook -- long-term outlook. Therefore, we will keep the dividend at a single payout level to headline earnings as at the mid year. We are declaring a dividend of ZAR0.53 per share, or $0.07 per share for the six months ending December 31, bringing the total dividend payout for the year from ZAR1.43 per share and $0.20.

While we will maintain a close watch on the South African power situation, we will review our funding requirements as part of our ongoing strategic and review, and so we will keep our dividend policy under ongoing review.

In turning more closely to the strategic discussion, the focus of the strategic plan is very clear; maximization of value. We've defined that word, "value", in the context of our management team and in three parts. First, we will be a business that generates cash and cash flow. Second, we will focus on strategies driving growth, meaning more cash and cash flow underwritten by competitive returns on capital employed. And third, and consistent with delivering on commitments, we will deliver on those commitments to our shareholders so they know and understand our strategies and are willing to reward us for innovative and lateral pathways to delivering more cash and cash flow.

We believe we have a number of key elements in place to drive value. And let me provide a brief update of where we are in that process and what we see as the next steps. The first priority is to ensure that the right management team is in place with the right structure, to ensure that every member of the team has a well-defined role and clear accountability.

Second, we want to ensure that we have the right assets in our portfolio and that there is a well-considered operating and financial plan for all of our assets. In order to do that, we have put an asset review process in place. We will outline the scope of the review, the current status and next steps. Across the portfolio we need to ensure that we have a coordinated and coherent growth strategy, built on a multi-platform foundation that gives us a range of pathways to value.

Finally, we have to ensure we've established the financial structure and the cash-generating capability to maintain and build the potential of our assets and prospective portfolio.

You have already have seen that the changes I've made to the leadership structure with the implementation of a regional structure, with Robbie Lazare heading Africa, Ron Largent leading The Americas and Graham Elm in Australia. I've also mentioned earlier the changes to the management team at Geita, reinforced with a direct reporting line to Robbie.

The emphasis here is to remove non-value adding layers of management, bringing the operational reporting closer to the CEO and to ensure that the renewed focus on -- our renewed focus [is] on the delivery of commitments on safety, productivity and business efficiencies. As CEO, it is my accountability to have the right structure, the right people, focused on the right work to deliver results.

Consistent with my personal accountability -- and I've already had one-on-one interactions with more than the top 50 managers in the Company. As part of that process, we have agreed to part company with 20% of the managers impacted. This is not -- does not point to a weakness or failures in all cases. It does -- however, it does indicate the degree of focus we have on building a new culture, focused on delivery on commitments and full accountability for everything that occurs in the business.

That leaves us with a very high-quality core team, all of whom have the clear scope and accountability in their role. We have extended that ethos across the business, and our Johannesburg quarters have now been reduced by 60 people, with [30] people in the process of relocating to our regional hubs in [Prosastru] for the South African division and [Accra] and for West Africa.

We will continue to reassess the structure as the strategic planning evolves, but I will say that I think we are building a very high-quality team to manage our challenges and to develop to our full potential. And there will be no confusion as to what accountability means.

When I came through the door, one of the processes that I wanted to inaugurate was a [wit] branch-and-leaf re-evaluation of every asset in the portfolio in order to define the value potential in all of our assets. In each case we were -- we are assessing where we are on the value journey and defining what actions are required to get us on the value pathway as quickly as possible. To do that, we commissioned an asset review process run by a small group of people, under the leadership of Richard Duffy, combining internal and external expertise.

The conclusions and recommendations of that review are now in process of being finalized. And for each asset there will be an overall recommendation as to whether the asset should be sold, fixed or further optimized. However, I think that it's important to point out that my philosophy is to constantly reassess the issues facing each asset and the business overall, and to maintain flexibility to redeploy capital to wherever it will ultimately drive the most value for shareholders.

Once the initial process is complete, we will at least have a baseline expectation on value and potential for each asset that can help inform a judgment as to where capital will be most effectively deployed. This is, of course, not a one-off exercise, as this approach is a philosophy that will underpin an ongoing assessment of how to maximize value in the business and how best to renew the portfolio to deliver long-term sustainable results that we're targeting.

As the asset review process has not been concluded, we won't jump to any early, or premature judgments. However, I will say that it is very clear that we've got some gaps between our greenfields and brownfields exploration programs, which provide a real opportunity to develop and push harder in certain assets that we have in the portfolio.

When I talk about one of the reasons I joined AngloGold Ashanti was the quality of the reserve base, the core assets and the exploration portfolio, they arguably represent some of the most attractive potential in the industry.

Beyond that, there also a value in the business that hadn't been appreciated prior to the review. Early flags indicate, and include, the iron ore deposits in Brazil, uranium tailings potential in South Africa, unrealized exploration potential at Siguiri and a range of other properties.

Some of the fixed and optimized recommendations I've already talked to in terms of Obuasi and Geita. Some of the recommendations around rationalization of the portfolio have also come to light, with our decision to consolidate the ownership of Iduapriem and through the proposed acquisition of Golden Cycle, our Joint Venture partner at CC&V.

The pending sale of royalties of Royal Gold is another example of hidden value. Meanwhile, we have started the process to consider the disposal of our interest in Morila in Mali, and we've handed across the management to Randgold as we speak. We are also going to start a process with our other assets in Mali, being Sadiola and Yatela, where the current focus is on identifying the full upside potential before we then open the process to the market.

As I've said, I will go into more details and update you next time around regarding our results and progress in this process. In that strategy update, we will also set forth our growth plans.

To wrap my contribution, I would like to take you through an outline of a few highlights, our revised reserves and resources statement, which illustrate our growth potential which will now provide an important foundation for the finalization of our strategy work in March.

I'm pleased to announce that during 2007 we've added 31m ounces of resources which, after depletion, stand at almost 207m ounces; up 18%. Significant additions include almost 7m ounces from greenfield activities which were delineated by AngloGold Ashanti's greenfields exploration teams at three key prospects; Tropicana in Western Australia, Mongbwalu in DRC and Gramalote in Colombia. We will continue to update the greenfields exploration results during the course of the year, as not all drill programs coincide with the calendar year end and associated reporting.

Significant other additions include 17m ounces at Mponeng as a result of improved economics and revised methodologies. We've also made significant upgrades at Cripple Creek and Victor of 4.1m ounce -- 4.7m ounces in resources, again, a significant increase.

Looking at reserves, our 2007 mineral reserve has increased this year by 9% to 73m ounces net of depletion. And for those that have been tracking my comments on the hedge book, as we've said before, we'll deliver into the hedge book as we've described. We'll work on our resources, which we're doing. We'll work on our resources, which we're delivering. We'll work on the asset portfolio to release funds to look at capital deployment in the business, which we're doing. And we'll look at other options to continue to manage our positions.

We're also delighted to report that our uranium reserves have increased 65%, from 17m pounds to 43m pounds for the year, making its future contribution to AngloGold Ashanti significant. In addition, both silver and copper reserves have increased year on year and total by-product contribution is expected to benefit cash costs significantly in the future.

In terms of brownfields development, the five key areas with news this year are our Boddington Joint Venture. At the year end, the Boddington expansion project was 62% completed, achieving 4m ounces without a lost injury time. We expect to be able to commission the project in December 2008, straddling into early 2009.

The only negative that we have to report is there has been an increase in the capital costs, increasing from 600 to -- $670m attributable share to $770m to $900m. The adverse movement in the estimate is largely due to the flow-on effects of recent commodity boom and recent -- and resulted labor cost increases by over 40%. This is also taking into account a doubling of fuel costs since the estimate was completed.

Whilst there's been approximately a 30% increase in the estimate, we are pleased to announce the attributable resources at Boddington has increased by 2.1m ounces to 10.3m ounces from the original estimate. Attributable reserves have increased by 1.7m ounces to 5.5m ounces, increasing the notional life, or the target life of the operation by an additional four years to over 20 years in total. Combined with a strong gold price, the value attributable to the project remains very attractive.

I've already talked about resource and reserve increases at Mponeng. At Moab Project Zaaiplats, and between those two operations, we're heading over 7m ounces in reserves to [predict] underground potential in South Africa. These 3.4m ounce and 3.8m ounce reserve increases will increase the life of those two projects by around 14 years and 15 years, respectively. We intend to take those projects to the Board on a staged basis by the end of the year.

Obuasi continues to provide upside with an additional 4m ounces into the reserve for the year. And certainly, from our point of view, the deep strategy looks very robust.

Cripple Creek and Victor increased reserves by an additional 1m ounces and, as I said, [4.7m] ounces of resources.

Looking at our greenfields projects, in 2007 we committed to deliver 6m ounces of [inspurred] resources, at a discovery cost of $15 an ounce. We are delighted to announce that we have delivered on this commitment with 9.1m ounces at 100% and 6.95m ounces, or almost 7m ounces at an attributable level and, even more importantly, at a discovery cost less than $15 an ounce. These ounces were delineated by the greenfields team at the prospects Tropicana in Australia, Gramalote in Colombia and Mongbwalu in DRC.

These areas will be an important focus in our strategy update next quarter, but let me highlight three areas with significant news in the resource update today and we hope we've more to come.

Again, we've talked about Tropicana. What we're looking at is 62.8m tons at a grade of 2 grams containing 4m ounces; 2.8m ounces of that is attributable. The pre-feasibility study is underway, which will be completed in 2008. And that will point us in the right direction in terms of the future. We are looking at resource extensions along the line of [lode] and very excited about the prospects at Tropicana.

Our second resource generation is coming from the DRC where we have a 10,000 square kilometer concession. We've defined a 33m ton 2.68 gram per ton resource which is around, on an attributable basis, of 2.5m ounces for AngloGold Ashanti. The results were based on assay data from 80,000 meters of diamond core drilling and RC drilling that was completed over a period of two and a half years.

In Colombia, in Gramalote, very impressed with what we have and we've also found indications of significant resources at our La Colosa project. To date, 12,000 meters have been drilled from 42 drill holes. Additional drilling and conceptual studies are underway and results are expected during the first quarter of 2008.

At Gramalote we've completed a conceptual economic study defining 57.8m ton at a grade of 1.14 gram per ton for 2m ounces; that's on a 100% basis.

Ownership of Gramalote project is currently 75% AngloGold Ashanti with B2Gold having a 25% share, but it does have a signing capability to earn 51% of the project in return for taking the project to feasibility.

On these positive notes, I'll hand over to Venkat to take you through the more detailed information on the financial performance.

Thank you, Mark. I would like to cover four aspects which are, firstly, unpacking the reason for the increase in unit cash cost quarter on quarter, year-end adjustments and its impact on adjusted headline earnings, some of the achievements we have seen this year from Group supply chain and cost savings initiatives and, finally, provide you with some guidance on depreciation and amortization charges and expensed exploration spend planned for 2008.

Starting with the increase in unit cash costs, our unit cash costs for the quarter, quarter on quarter, increased from $357 an ounce to $404 an ounce, and that can be explained as follows. Firstly, picking on the items in respect of which guidance was issued at the time of the third quarter's results, the impact of uranium purchase during the fourth quarter was $16 an ounce.

Impact of stronger currencies of about $11 an ounce. Impact of lower volumes and grades, primarily in South Africa and Geita, of $15 an ounce. And lastly, inflation, higher royalties and inventory movements of about $5 an ounce.

Turning to adjusted headline earnings, you will recall that when we presented our third quarter results in October of last year, we noted that our fourth quarter earnings would be significantly distorted due to accounting adjustments at the year end, including resetting of tax provisions, rehabilitation and inventory adjustments.

During the fourth quarter these charges totaled some $64m and they can be broken down as follows. Charges in respect of reassessment of the rehabilitation liabilities, primarily in Obuasi and certain other mines, came to $25m. Provision in respect of direct and indirect taxes in Mali, Tanzania and Brazil amounted to $31m. Increased amortization and redundancy costs incurred in the fourth quarter of some $8m.

The impact of the above adjustments, which total $64m, resulted in our adjusted headline earnings reducing from $81m recorded during the third quarter, to $18m.

The Company has a solid track record with regard to cost management and once again delivered savings to the value of $58m, to partially mitigate inflationary increases. This bring the total sustainable savings for the past three years to $291m, which have been achieved though various interventions, including efficiency improvements, procurement interventions and restructuring initiatives.

The South African region has led the process again, contributing $31m out of the $58m savings for 2007. With the changed management structure, framework and processes in Africa, we will be rolling out the successful initiatives from South Africa to the rest of Africa under the leadership of Robbie Lazare, who will be working closely with our global supply chain team based in Johannesburg.

Our efforts for 2008 in this regard, which are aimed at generating a similar amount of savings at least this year, will continue to focus on business improvements and efficiencies, restructuring activities and procurement activities, which will target three key areas, namely, low-cost country sourcing. Secondly, capital expenditure rationalization and, thirdly, rolling out our South African procurement savings model into Africa, in areas like fleet and fuel management.

Looking ahead for 2008, we estimate that our depreciation and amortization charge for the year will be around $600m to $610m, and our expensed exploration would be around $140m.

Before I hand over to Robbie, I wish to point out an error in our quarterly release, on page 10, in terms of the guidance for the received price for 2008. The release states that the discount would be in the region of 18% to 20% for 2008, on the basis that gold trade in a range of $700 to $900 an ounce. The reference to $700 is incorrect. The range of 18% to 20% is spot at around $900 an ounce after taking into account, a, the reduced production profile of 4.8m to 5m ounces and the delivery next year of about 32% of our hedge book, which is 2.24m ounces.

I will now hand you over to Robbie to take you through the African assets portfolio in more detail.

Thanks, Venkat. Before I reflect on some of the key operating issues during the quarter, I would like to unpack some steps that we have taken on our electricity usage in the South African operations. Our historic performance on cost savings has been comprehensive in ensuring that all input costs are optimized and that every opportunity is capitalized.

Energy cost has always been an area of focus for the South African operations and we have a track record of working together with Eskom in realizing benefits to both parties. We have seen our electricity consumption reduce 17% over the last four years. Our energy management strategy largely focuses on two areas, namely, demand side management and energy conservation.

Looking at the demand side first, demand side management is essentially managing the consumption during peak demand times and seeking to balance this residential and industrial [lode] profiles. These lode shifting projects which we have implemented include optimized pumping schedule, equipping domestic hot water cylinders with radio-controlled switches, and ice storage facilities, and rock hoisting schedules.

That is before the critical power outage which stopped all of our mines. We agreed with Eskom to reduce our power consumption by 40% during 6.30 to 8.30 at night, so as to assist Eskom with managing peak demand across South Africa, particularly as -- related to domestic use.

The second approach, energy conservation and efficiencies, has been largely targeted through applying appropriate technology. At present, we are currently replacing the dewater pumping system at Moab Khotsong with a superior system which uses the principle of a [U-tube] system to remove water from our mine. This is when the cold water goes down, the hot water comes up. And this system actually uses less electricity. This is expected to reduce Moab's electricity consumption by at least 3.5 megawatts and will be completed in the first week of March.

Other projects that can also deliver some saving is in progress and it includes areas such as compressed air utilization, cyclic control of space heating in winter months, to mention a few.

We are proud of the energy savings that we have realized to date, and I'd like to recognize all of my colleagues in South African operation who have made this possible. As Mark has said, a 10% reduction in energy consumption for South African operations will result in a loss of annualized production of 200,000 ounces but, for 2008, will impact by 400,000 ounces. And I think Mark explained that quite well previously.

The South African team, under the leadership of Johan, [the full unit] is currently looking at all avenues to improve energy efficiencies within the constraints that we now face. They will use -- this will allow us to optimism our production schedule. Timing is a major issue and we are in discussions with all of the Unions to assist us in this process.

We are having workshops to identify all opportunities, big and small, and we have set up a [process] whereby the full workforce can participant in idea generation and process. This is the feedback that they had a workshop about two hours ago, decided they're going to establish control rooms with representatives from all the unions and they're going to put up monitoring charts in terms of the water usage, the air usage underground. And they will be combined all the teams that go down the mines to go and identify those areas because, as you know, water, air, hoisting, those are the big energy consumptions within the gold mining industry. So the process is going ahead.

What we need from Eskom is to ensure that we at least get a minimum of 90% power consistently. As you can see from our 2008 forecast, a 10% reduction in power can lead to an 18% to 20% reduction in gold. Power levels below 90% could rapidly double this gold loss, and we need to ensure that that does not happen.

Lastly, we are serious in our attempts to avoid retrenchments or to close mines down. Our first objective is to try and achieve the 10% savings through other innovative means, and this is where our focus is at this moment. It will also give you the assurance that all our South African mines have sufficient back up power systems that will enable us to hoist our employees in emergency situations.

Let me now turn to the operational performance for the fourth quarter, starting first with the Southern Africa assets. Moab Khotsong mine, our new deep-level operation with good growth potential, continues to ramp up with volumes treated up 13% and values mined increasing 3% with the resultant gold production 39% higher at 736 kilograms. Total cash costs were marginally lower at ZAR150,000 a kilogram as the operations [build up] into capacity.

Gold production from Great Noligwa was 2% lower as a result of lower yield and the safety interventions, and I will report on all of the South African operations about the safety. We lost quite a number of production days during the fourth quarter due to DME closures and also safety interventions that we initiated within our own organizations. And also, we had a one-day safety strike by the unions in South Africa. So quite a number of shifts were lost and all of the operations were affected by this.

But if we return to Great Noligwa, we also purchased uranium to meet our obligations. Total cash cost increased by 31% to ZAR117,000. Excluding the purchase of the uranium, total cash costs, rand per kilogram, would have been marginally lower, absorbing the (inaudible) impact of lower production.

Following geological structure changes at Kopanang, the yield reduces by 5%. And also all the safety interventions that I spoke about, the volume reduced by 7%, gold reduced by 11% to 3,229 kilograms. However, with the improved efficiency the total cash costs only increased by 3% to ZAR71,500 a kilogram. Consequently, the adjusted profit was 10% lower at ZAR180m.

Tau Lekoa was unfavorably affected also by the safety incidents. They had a fatality as well. And both their grade and their volume was 7% and 13% lower. Gold production reduced by 7% and total cash costs increased by only 2%.

Following the loss of five shifts at Mponeng mine, they had a multiple fatality accident in which four of our fellow workers died. Combined with some of the safety interventions and gold production was down 12%, and, totally, cash costs went up by 14%.

Savuka saw an improved yield due to reduced grade dilution from lower development and improved stoping work, but this was offset by the safety issues, as mentioned, and the one day [none] strike. This resulted in 13% lower gold production. Various cost interventions resulted in the cost reducing marginally against the previous quarter, while the adjusted gross profit increased almost two-fold to ZAR29m.

At Tau Tona, increased geological risk from seismic activity required the re-planning once again of the areas within the shaft pillar. This is the third round of re-planning that we've done from a safety perspective to reduce the risk within the shaft pillar. This -- and they've also had three fatal accidents at Tau Tona mine; one of them was again in the shaft pillar. Further mine stoppages reduced the volume and the yield and gold production to 18% lower. Total cash costs increased by 7%.

At Navachab, our operation in Namibia, gold production decreased at 5% due to planned lower feed grade. And total cash costs were 22% higher at $527 per ounce due to a weaker U.S. dollar, higher [stores] drilling and fuel costs. On the back of improved gold price the adjusted profit, however, increased by 50% to $3m.

Turning to the operation in the rest of Africa and starting with Obuasi. As Mark has said, Obuasi was on par with the previous quarter, which was somewhat disappointing. This was a roll over of the plant shutdown at the end -- middle of September month. And also we were plagued by parallel power outages, both for our Obuasi mine and for our Iduapriem mine in Ghana. As you are aware, we have been in previous quarterly presentations made you aware of the power shortage problems within Ghana as well.

We have effected some restructuring to the operations at Obuasi, which has resulted in a further reduction of 200 employees during the quarter. Which now over the year period -- sorry, over a two-year period the reductions to the number of positions and employees has been 1,500 as we are trying to downsize the operation in terms of the number of people to the gold profile that it is producing.

At Iduapriem, also in Ghana, power shortages resulted in 16% lower tonnages and, consequently, gold production decline 13% and total cash costs increased 15%.

As mentioned, power shortages in Ghana; the Chamber of Mines has -- of Ghana, has established a consortium representing the four gold mining companies. This consortium is working with the VRA, the power provider in Ghana, and the government. And we are in the process of installing the 80 megawatt power generation unit in Tema in the harbor area of -- in Ghana. And this will feed into the national power network and will be for the use of the mining industry.

To date, AngloGold Ashanti has contributed $9m of an estimated $12m to this contract. And the plant is generating -- presently generating between 40 megawatts and 50 megawatts and within the next three months we will ramp this up to the promised 80 megawatts of power.

It's also encouraging to note that power outages have reduced following good interaction with the VRA and the installation of the generation unit. And we're experiencing that, specifically in January, we've had far less power outages.

Siguiri in Guinea had a sold production quarter, posting a 36% improvement to 83,000 ounces, after a 26% increase in grade and 9% higher tonnage throughput. Total cash cost consequently fell 15% to $439 per ounce. And for 2007, Siguiri achieved a record annual production and we will continue to target further growth, as discussed earlier, and continue to look at way of unlocking it.

The Malian assets had a mixed quarter, with production steady at Morila with 52,000 ounces, and total cash costs were 15% higher. While at Yatela, production decreased by 27%, due to release of low grade ore that was stacked in the previous quarter. Production was 14% higher at Sadiola, to 40,000 ounces, as both grade and tonnage throughput improved. And the adjusted gross profit increased 17% to $7m.

You will also have seen from Rand Gold's results this week that we are in the process of handing over operatorship at Morila, while also in discussion on the potential sale of this asset.

I will now hand back to Mark for brief wrap up.

Thanks very much, Robbie. One thing I'd like to acknowledge is Robbie and his team, they've taken on some of the toughest challenges in the business. And, certainly, in the very short period of time that I've been with the business, around four months, they've made one hell of a difference. And, certainly, I can see where they've been and the impact they've had. And I expect that in the next three to six months you'll start to see some of those impacts roll through the business.

I started on September 17; I think the honeymoon lasted for about a week. And we've been into a number of issues and we've been dealing with a number of challenges. The good news is I think we've got great potential.

But if I was to summarize the key points from my perspective, and on behalf of the team, firstly, safety is our number one value. Accountability and delivery on commitments is an imperative, it is a belief and that is what will define how we operate as a management team. And, certainly, from our point of view we won't shirk from delivering on our accountabilities. We have some challenges and we know what has to be done. We've got on with the job and we've already made inroads into -- in on a number of fronts and we've got a hell of a lot more to do.

We have the resources, we have assets and we have the people. We are absolutely focused on delivery, we're absolutely focused on creating value for shareholders and, as I said, we've got some challenges to navigate over the next couple of quarters. And we'll share with you our thinking on our -- or a broader thinking on our strategy and our strategy for growth at the next review.

But, certainly, we've got some great foundations being built with our resources, reserves, the new development projects we've got in mind and how we're taking the business forward and, certainly, in focusing on those assets that need to be corrected and delivering to their potential.

So, I'm quite happy to hand over and ask anybody if they'd like to ask questions.

Thank you very much. (OPERATOR INSTRUCTIONS). Our first question comes from Victor Flores of the HSBC. Please go ahead.

Yes, thank you. Good morning. I have a few random questions. First of all, just addressing the issue of safety. It's congratulations on achieving zero fatalities after implementing your new strategy. How do you make sure that that's just not a one off effect, everybody rallies to the cause in the first few weeks or months and then after that you start to watch it slide again?

Hello, Victor, it's Mark. Victor, one thing that was very important, in the last two months of 2007, obviously, we had a clear run. Unfortunately, in the first six weeks of the year we've had two, but -- and I would never speak lowly of two fatalities but, for us, that's a 70% reduction in the frequency rate in that six weeks. But, obviously, you need a more significant decrease over the three months.

The two fatalities we did have were preventable-type fatalities; one was associated with a locomotive accident and the other one was an ore pass. As Robbie pointed out, we've had a couple of quite significant seismic events that we've actually -- everybody -- the systems worked, people were doing the right things, so all the things that we've been putting in place worked.

So the good news is we've -- it looks like we've made a real difference, but there's still a lot of work to be done and it's constant attention and focus to detail. It's exactly the same things that we have to do on safety that'll drive productivity and drive future performance improvement as we go deeper in the South African mines.

Okay, great. Thanks. And then, if I could just turn to a couple of operational questions. It's interesting to note that grade is your issue at Obuasi but, more significantly, what you've learned about the asset, does that change your view at all on Obuasi deeps?

Yes, this is Robbie, Victor, speaking.

Hello, Robbie. How are you?

We are continually still doing drilling at Obuasi deeps. We've drilled basically down to between 60 and 70 level at this stage, and there's more on the one side, which is the KMS side of the ore body. We're really only starting to do some serious drilling on the [Adunsi] side.

What we've actually found is that, on the KFS side, we're actually getting much higher grades than we anticipated which is quite exciting. But on the Adunsi side, the opposite is now true. Again, we're getting lower grades than what we anticipated. But the grades at Obuasi deeps are looking good.

In terms of our work on potential capital project, we are looking at a different way a accessing the ore body, a less capital-intensive way in terms of the first step at least, where we're looking at between 45 level and 55 level which is, of course, now -- from 50 level is down into the deeps. But we will put -- looking at the option of putting deep lines down, actually generating cash up front, and then using that cash to start sinking some of the shafts to the lower levels at Obuasi.

But we're going to take this in incremental steps. And we're going to make sure with our drilling program that we are satisfied with the grade down there before we start committing major amounts of money to this project.

I think Robbie's approach, Victor, is much more business focused and, certainly, will enhance what I think is the strategy. And he's focusing on the north/south rationalizing, getting the areas tight, buying time and then looking to drive to the deeps in a much more cost effective way. And so I think the strategy is coming together pretty well.

And again, we'll opt that over next couple of quarters. But the key in the that next 12 months will be to just get the grades right out of the long hole open stopes and the sub-level cave, which then will enhance what we do in any way, shape, or form, as we go deeper.

Great, thanks. If I could just also turn to an operating question regarding Geita. You mentioned the poor implementation of the owner fleet. Could you just update us on what those issues have been and how you correct them because, please forgive me for saying this, but buying a fleet and running it doesn't sound like a particularly difficult thing to do.

Yes, Victor, Robbie Lazare here again. Just realizing that I've just recently taken over that asset, but my impressions of that is I think in the first place there was over-optimistic in terms of what it's going to cost to implement this new fleet.

I think, secondly, we've got a major skills problem in Geita, and it's a skills problem in terms of local and ex-pats; it's not just that a local skills problem in terms of maintaining our equipment at the site. And we are busy addressing that quite fast and quite seriously at the stage. We've sent quite a number of senior guys over the last month into the operation to go and identify where the problem areas are and to come up with instant solutions.

If we just look at Geita over the last year, they had a 54% labor turnover. Now, you can't build in any continuity in terms of productivity improvements, or maintenance improvements, or truck utilization improvements with those levels of turnover. And our big job now is to stabilize that operation. We've taken out the previous managing director there, we've taken out quite a few of the senior engineering personnel and in terms the metallurgical personnel, and that operation must now turn around into the future.

I need this quarter to go and do a serious analysis of what the real problems are, in terms of the skills side and in terms of the mining and technical issues. And, hopefully, by the -- not hopefully, by the end of this quarter I should have a fair idea. And the end of next quarter we will give you a fixed plan in terms of how we're going to fix up this asset. But I wouldn't like at this stage to make any forecasts which I cannot keep to.

Great, thanks. And then, if you'll just indulge me, one final question on this power situation. You mentioned a 200,000 ounce loss of production in January and 400,000 for the year. How would you break that down say into first half versus second half, or quarter by quarter, based on what you know at this point?

Yes. Robbie Lazare here again. The big issue was the immediate stoppage of the mines, the closure of mines that's cost us close on to a week of full lost production of Gold and that's where the 200,000 ounces for the first quarter comes in.

If we look at what we need to do from now on in this quarter still, we're still not on 100% of production. It's going to be extremely difficult to get to 100% production within the 90% power availability and that's why we're looking at these efficiency improvements at this stage. At this stage, we're running on a scheduled basis our winders to hoist us our rock from underground, and we're hoisting most of it, in actual fact, over the weekends in order to save power.

So, we're not into a full production mode yet and it's going to take us some time to get there. So that's why the biggest impact is in the first quarter, and then within this quarter we need to try and stabilize the production profile at the 90%. And that would be, then, the 200,000 ounces for the rest of the year that we're forecasting to be down. Does that make sense, Victor?

Right. So, take the other 200 and roughly spread it out from February through the end of the year?

That's right. From April.

From April.

Victor, what Robbie's saying is, take 200,000 in the first quarter and then spread the balance, the 200, across the remaining three.

That's correct.

Yes, I got it. Okay, great. Listen, thank you so much.

Our next question comes from John Tumazos of Southside Research. Please go ahead.

John Tumazos's, Very Independent Research, thank you. Could you describe how much the delta hedge increased the ounces of hedge exposure as the price rose, partly offsetting the deliveries from production in 2007?

Yes, John, Mark Lynam will pick that one up.

John, hello. John, if the gold price at the end of December had been the same as at the end of September, the hedge book delta would have decreased by 900,000 ounces. So we actually only decreased by 200, so I think 700,000 ounces was the increase in the delta due to the gold price increasing $91 quarter on quarter.

Could you just review, by year, over the last five years roughly how much was that price effect delta hedge increase?

I haven't got that at the hand right now, apologies, John. I can certainly take it up with you off line and we can get that data, but I haven't got it to hand.

Certainly, thank you.

Our next question comes from [Mandy Legrange] of Nomura. Please go ahead.

Hello, gentlemen. I'd like to ask a question with regards to the loss on the non-hedged derivatives and other commodity contracts. Could you, first of all, give us a break -- well, a rough idea of what amount of that is attributable to the commodity contracts?

And then could you please just clarify whether that includes anything from -- sorry, any losses on the uranium contracts, since we already know that the 300,000 pounds that you had to purchase is calculated into the total cash costs of the South African operations? That's the first part of my question.

And then secondly, with regards to the uranium hedge book, could you just give us a little bit more of a feel for how much of that -- how much in volume terms is still hedged over the next two years, and why you're actually not managing to meet that hedge commitment, and why you've having to go to the market and purchase this 300,000 pounds of uranium?

Actually, if I can pick up the very first point here in terms of commodity contracts. Basically, what has -- if you look at the quarterlies, on page 42, we do provide you with a breakdown.

In terms of the movement, a chunk of it is in respect of unrealized non-hedged derivatives. And in terms of gain or loss on future deliveries on other commodities is only 25, which is actually booked in there, so a large chunk of it relates to the movement only on the hedge book. And Mark will pick up the comment in terms of the Australian hedges.

Mandy, hello. The -- basically we're fully committed on our uranium production until middle of 2009 on the current plan. Thereafter, the uranium commitments drop down to about 400,000 pounds a year and one remaining contract out to 2013.

Madam, does that answer your question?

Thank you, that's great. Yes, I think that all I've got to ask for now.

Our next question comes from Alex Rackwitz of Nevsky Capital. Please go ahead, sir.

Hello, thank you. I just wanted to understand the electricity situation a little bit better, because what we were told on different electricity call was that 55% of electricity usage is your baseline requirement just to keep the mine running. So -- which means that if you have a 10% reduction in electricity, it actually has a double impact on production. So that a 10% decrease in electricity could up to decrease production up to 20%, whereas, you have suggested (technical difficulty) is only 10%. Why has your loss decreased?

Alex, it's Mark Cutifani here. I'd actually use that type of analysis and a couple of people in the industry have picked it up. In general, the deep underground mines vary between 60% to 70% of infrastructure because of the depth, the (inaudible) generation pumps, lights, monitoring and a whole range of activities going before they start production. And then, if all production mode starts at 60%, then if you take a 10% reduction you get a 25% reduction in production.

However, in our case, because of some of the opportunities we have to wheel loads between different operations, the net impact across the business is not the same in terms of every power consumed per ounce produced.

So what Robbie's able to do is wheel power to different operations, for example Mponeng, which is his most profitable highest production, and I think just about his highest grade operation. He's able to give that full power. And so he can, on a prioritized basis, allocate his power, so at the top end 10% power equals about 10% of his production. So that's how he's done it. He's also already put some efficiencies in place so we're getting -- he's getting a little bit better. So that's how we keep our nose above water on the first 10%.

That's also why we're pushing very hard with the government because we're saying, I don't want to go another 10%, because then it gets tougher. And so those numbers start to come in line when you get to the second 10% and the third 10%. So, at 10%, that's manageable from our point of view and we've got the potential to claw something back over the next 18 months.

Unfortunately, for some others they're in a lot tougher circumstances than we are, and so they're going to find it a little bit tougher. But that's why we're able to manage, but probably a little bit better than some of our competitors.

Okay, that's great. Thanks for that. I've got one more question, and that's if you sell your assets in Mali, or other assets after the strategic review is completed, what were you planning to do with the cash? And if you do invest it into the hedge book, obviously, there's a bit of a trade off. If you sell an asset, you've got less production, so the discount would increase. But if you invest in your hedge book (inaudible) should decrease. Do you think you can decrease it overall if you invest into your hedge book?

That sounds like a not-so-well disguised hedge book question. Alex, what we're doing is -- as I said, the focus we've got is starting it again. We've got lots of options in terms of kicking our capital into the right sort of projects; the hedge book is one of those options, clearly.

And we've talked to a multi-layered approach to the hedge book as I've spoken to, and in terms of seven point strategy. And in fact, we've already been in action on delivery, resource, reserves, the M&A clean up at (inaudible) in Gold and cycle so we'll continue to work those fronts.

In terms of the cash, as I said, we've got a number of projects that we're looking at and we're in a conversation about capital deployment, as we are all the time. And so, we'll continue to consider what are the best options over the next three to six months.

Alex Rackwitz; Okay, great. Thanks a lot.

Thank you very much. I would now like to hand the conference back to Charles Carter for closing comments.

Thank you, Dillon. I'd just like to thank participants for joining us on the call.

Thank you very much on behalf of AngloGold Ashanti. That concludes this afternoon's conference. Thank you for joining us. You may now disconnect your lines.