Anglogold Ashanti PLC (AU) 2008 Q4 法說會逐字稿

Good afternoon and welcome to the AngloGold Ashanti fourth quarter earnings results. All participants are now in listen-only mode, and 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 and welcome to this presentation by the AngloGold Ashanti team, of our results for the fourth quarter and year ended December 31, 2008. The presentation will start with Mark Cutifani, our CEO, who will review the Company's performance over the quarter and the year. And this will be followed by Venkat, our CFO, who will discuss the financial aspects in more detail. And thirdly, Richard Duffy will talk to the Africa operations performance.

Before we begin, it is necessary for me to read the declaration regarding forward-looking statements that may be made during this presentation. Certain statements made in this communication, including, without limitation, those concerning the proposed sale of AngloGold Ashanti's joint venture interest in the Boddington gold mine, the benefits anticipated from the proposed sale and the timing of the satisfaction of the conditions precedent to the transaction, the timing of the repayment of AngloGold Ashanti's bridge financing and AngloGold Ashanti's strategy to reduce its gold hedging position, including the extent and effects of the reduction, contain certain forward-looking statements regarding AngloGold Ashanti's operations, economic performance and financial condition.

Although AngloGold Ashanti believes that these expectations reflected in such forward-looking statements are reasonable, no assurance can be given that 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 unanticipated delays or difficulties in obtaining regulatory or third-party approvals and other factors.

For a discussion of such factors that may affect AngloGold Ashanti, including 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, refer to AngloGold Ashanti's annual report for the year ended December 31, 2007 which was distributed to shareholders on March 31, 2008, and the report to shareholders for the quarter and nine months ended September 30, 2008 which was distributed to shareholders on October 30, 2008.

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. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti, or any person acting on its behalf, are qualified by the cautionary statements herein.

AngloGold Ashanti posts information that is important to investors on the main page of our website at www.AngloGoldashanti.com and under the 'Investors' tab on the main page. This information is updated regularly and investors should visit this website to obtain important information about the Company. With that, let me hand over to Mark.

Thanks very much, Charles. Ladies and gentlemen, thanks for joining us here today. Before I start, I think it's worthwhile reflecting for just a moment on what sort of year we've had. Very clearly, it's been a year of reconstruction from AngloGold Ashanti. And if you were to look at where we stood even 18 months ago, net debt in excess of $2b, hedge book almost 12m ounces, not delivering on commitments and a whole range of other matters that we'll discuss and work through today, you'll see that I think we've delivered, in the main, against all of our strategic objectives.

And, in those areas where we haven't made as much progress as we would have liked, I think we've been very honest and open, and we'll talk to the plans we have in place to continue that process going forward. But, irrespective of those areas that need more work, we're in a substantially different position as we stand here today. And, certainly, I think we're well set up as we go into 2009 and the next five to ten years for the business.

We've now delivered on our fourth consecutive quarter consistent with our commitments to the market, which include continuing improvements in safety, both in South Africa and across the globe, although, as we said, we acknowledge we've still got lots to do. Gold production of 1.268m ounces, which exceeds the prior year's performance and market guidance. Our total costs are $422 an ounce, which is a 13% improvement on the prior quarter and 8% better than guidance. And we secured a $1b term facility to enable us to refinance our convertible bond, which was achieved within a very difficult debt market context. Certainly, those issues have been the highlights of the fourth quarter in 2008.

If we then reflect specifically on the 2008 scorecard, and I won't go through all the major events and the restructuring we've gone through, but if I pick up the key points. Firstly, on the safety front, fatal injuries are down 57%, and by more than 70% since we introduced our "Safety is our First Value" campaign in November 2007. Our all accident frequency rate was down 20% in 2008, which further indicates the depth and the nature of the change, which isn't just about those fatal risks, it's about the way we manage safety and the way we manage the business in its total.

We have met our production and cost expectations and guidance numbers, both on each quarter and for the full year. We have delivered resource growth of 40.5m ounces, 33.4m ounces net of depletion, which includes the 12.3m ounce discovery at La Colosa in Colombia, while adding 7.7m ounces to reserves, or 1.8m ounces net of depletion.

We continue to execute on our portfolio review, which included consolidated minority interests at Cripple Creek in the US, acquiring Sao Bento in Brazil. And, post year-end, we delivered the sale of our Boddington minority interest for approximately $1.1b which, when we look at the full year, puts us in excess of $1.2b realized from asset sales against our original target of $1b.

We have also executed a $1.7b rights issue, which then enabled us to almost halve the hedge book to 5.99m ounces which was, again, ahead of our target of 6.25m ounces by year-end. And we have a delta position today of 5.22m ounces. Both figures materially better than our original targets. We have also restructured the management team, building more capability and a streamlined structure and improving accountability which, in turn, has underpinned the significant improvements on delivery across the range of strategic initiatives and across our operations.

Against these very positive milestones, the disappointment has been the continuing poor performance of Geita in Tanzania, where we will continue to work the problem through a range of ongoing interventions. This contrasts to the improvements we have delivered in South Africa, Siguiri in Guinea, Argentina, Brazil and Obuasi in Ghana, which has just delivered its second consecutive quarter of production improvement, up another 7%, which is underpinned by a 24% improvement in development across the operation. Richard Duffy will talk to these operations more -- in more detail, a little later.

Looking at the quarter's operational performance in slightly more detail. In Africa, South Africa, the production was 3% lower. That's 16,185 kilos, primarily due to lower production quarter-on-quarter from Mponeng. Total [cash] in South Africa reduced by 1% in rand terms to ZAR101,675 per kilo, following lower summer tariffs and delivery of cost-saving initiatives. Savuka and Kopanang had solid quarters, with gold production up 18% and 8% respectively. And Moab was up 3% for the quarter.

The South African operations continue to provide currency leverage to a weakening rand, which is 28% against the previous quarter. And total cash costs reduced 23% to $318 per ounce. And operational free cash flow increased significantly, from $52m to $118m. This level of performance ranks up with any operation across the globe.

At Navachab in Namibia, production was 18% higher and total cash costs were 5% lower. The Ghanaian operations had a solid performance, increasing production 9% to 155,000 ounces, with both Obuasi and Iduapriem growing production for the second consecutive quarter. Siguiri in Guinea was 13% higher at 81,000 ounces, while the Mali assets increased production by another 15%.

As mentioned, Geita disappointed, with production down 30% due to SAG mill breakdowns. And, consequently, total cash increased 32%. It's clear we've still got a lot of work to do at Geita. The pleasing thing, from my perspective, is the great progress we've made across the other 20 operations. And for us, the full resources of the organization are being put behind Richard and the Geita team, in making sure that we affect the turnover during the first part of this year so that we, again, can deliver as we go forward in 2010 and beyond.

In the Americas, Cripple Creek was 24% higher at 78,000 ounces, while total costs were flat at $322 an ounce. Cerro Vanguardia continues to make good progress after its great quarter last quarter. We're up another 30%, consistent with the steps taken in the prior quarter to rectify plant constraints, with total cash costs now reduced 30% to $464 an ounce.

The Brazilian operations were 5% higher at 108,000 ounces, with Serra Grande having a good quarter. The currency leverage to a weakening Brazil real, which is 37% weaker for the quarter, total cash cost in dollars reduced to some -- reduced by some $100 an ounce to $255 an ounce, while free cash flow increased 83% to $42m.

In Australia, the Sunrise Dam production reduced 26% to 85,000 ounces, in line with the plan, following completion of formal mining in the MegaPit. In keeping with the solid performance of the team, the underground mining and reserve growth potential is now starting to look very exciting and we're certainly confident of having a very solid operation for another 10 years. And we are looking at additional ground opportunities in that area.

On the hedge book, and in respect of our financial performance which Venkat will talk to, I believe I should specifically note the continuing reduction of the hedge book to 5.99m committed ounces, which is an improvement on the 6.25m ounces that we set as a target at the time of the rights issue. For the fourth quarter, the received price was 13.6% lower than spot price, at $687 an ounce. Going forward, we will see this discount reduced to the targeted 6% in 2009.

In relation to earnings for the quarter, an adjusted headline loss of $17m was incurred, of which $48m is due to some specific accounting adjustments. For the year, the earnings numbers, as you will be aware, have been heavily impacted by the accounting impact of the hedge buybacks. And therefore, the adjusted headline earnings went from $278m in 2007 to a loss of $897m for 2008. And, as I said, a significant year in terms of restructuring for us for 2009 and as we go forward.

Venkat will talk to the asset impairment charges specifically, those that we have taken at the year-end. I have highlighted the ongoing execution following our asset reviews process earlier last year. While the sale of our minority interest in Boddington is the most substantial outcome to date, we shouldn't lose sight of the significant portfolio cleanup that has been undertaken on our smaller assets.

These include the purchase of the minority interest in Iduapriem. Royalties sold in El Chanate and Marigold. Equity position in B2Gold, following sale of various exploration interests in Colombia. Our merger with Golden Cycle to own the remaining stake in CC&V. The sale of our Nufcor interests for $50m, which freed up our uranium business to sell into the stock market. The purchase of Sao Bento Gold Company and its wholly owned subsidiary Sao Bento Mineracao S.A. from Eldorado Gold Corporation, for a consideration of $70m.

This provides us with the potential to double the scale of the proposed Corrego do Sitio mine which, once developed, will significantly enhance AngloGold Ashanti's Brazilian asset base. And we are progressing well with our other sales, including the sale that is currently underway on our Tau Lekoa -- our small Tau Lekoa asset in South Africa.

Overall, we consider 2008 to be the first full phase of restructuring the business to provide the platform for future growth. We are focused on four key areas. Safety, operational performance and delivery, asset portfolio and capital structure. In all of those areas, as I have already outlined, we have made very substantial progress during the last 12 months, and I now believe that we are very well-positioned as we move into 2009. The key for the year will be continuing to build on the progress we've made in both safety and operational improvement, whilst having the balance sheet flexibility to move on opportunities as they present, in what will undoubtedly be a challenging year in the broader economic environment.

We are also, today, declaring a dividend of ZAR0.50, or $0.05 for the first six months -- for the six months ended December 31, 2008. This represents a similar dividend payout as per the interim we -- in the declaration, resulting in the total dividend of ZAR1 or $0.11. I will now hand across to Venkat, to cover off on the financial details.

Thank you, Mark. I would now like to cover six matters. Kicking off with the hedge book update. Then, total cash costs for the fourth quarter and full year 2008. Adjusted headline earnings for the fourth quarter. Asset impairment charges recorded during the quarter. The refinancing of our $1b convertible bond. The recently announced Boddington transaction and the associated financial flexibility. And conclude by giving you some guidance for 2009.

Starting off with the hedge book update. The hedge delta and commitments, as at the end of last year, stood at 5.22m and 5.99m ounces respectively. During 2008, the hedge commitments were reduced substantially, by 5.29m ounces or 47%. We finished the year some 250,000 ounces ahead of the target that was announced at the time of the rights offering.

During the fourth quarter, the hedge commitments were reduced by 310,000 ounces, some 100,000 ounces more than we had originally estimated. As a result, the discount to spot price was slightly higher at 13.6%, but within our guided range of 10% to 15% given during the last earnings call.

Looking ahead to 2009, at an indicative price of $900 an ounce, we remain on track to obtaining a received price at a discount of 6% to the spot price.

In anticipation of a substantive asset sale, as outlined earlier, the hedge book was reduced by an additional 250,000 ounces, to take it down to 5.99m ounces. We will, during 2009, continue to opportunistically reduce the hedge book further and restructure positions maturing in later years, with a targeted discount of 6% to spot price in 2009, assuming a $900 per ounce gold price.

Moving on to our cash costs performance. You'll recall that we guided total cash costs for the fourth quarter at $460 an ounce. We finished the quarter 8.3% better than guided, at $422 per ounce, demonstrating the leverage AngloGold Ashanti offers to weakening currencies and falling oil prices. This also represents an improvement of 13% on the third quarter's performance of $486 per ounce, which also included some abnormal stockpile movements. Total cash costs for the full year 2008 amounted to $444 per ounce, well within our guided range.

More importantly, the aggregate of cash costs, sustaining capital expenditure, and expansion capital expenditure excluding Boddington, for the Group, in other words total outflows at a mine level, came in at around $600 per ounce for 2008. And, if one were to be conservative and add corporate costs, marketing expenses and exploration costs, the comparative figure works out to be $654 an ounce. An indication of the high operating cash margin AngloGold Ashanti offers, given its competitive total cash cost position within the gold-mining industry.

Turning to adjusted headline earnings. Our loss for the quarter was $17m. If you recall, during our third quarterly conference call we did flag that our fourth quarter results would be distorted by year-end provisions and resets, which aggregated $48m. These were, primarily, a provision against Geita stockpiles for $19m, consumable stores in continental Africa for $21m, and a reset of our deferred and current tax provision of $8m. Before these charges were put through, our adjusted headline earning was around $31m for the quarter.

As Mark mentioned, we have recorded asset impairment charges, aggregating approximately $1.25b net of deferred tax, during the fourth quarter. These related, primarily, to the former Ashanti mines in Ghana and Tanzania. Although this is an accounting charge, I'd like to spend some time providing you with more background and clarity behind this write-down.

At the time of the Ashanti acquisition, in accordance with the guidance provided under the accounting standard, the mines were brought on to the books of AngloGold based on the forward gold curve. Since then, AngloGold Ashanti has consistently applied this methodology, i.e., the forward gold curve off a 30-day average spot price during the fourth quarter, to test these assets annually for impairment purposes.

However, during 2008, although the spot price was higher than the previous year -- and for those of you who can see the slides on the webcast, if I can draw your attention to the graph which records the 2008 and 2007 forward curves. Although the spot prices were higher in 2008 as compared to '07, given the drop in the US interest rates, the forward curve was both lower and less steep during the fourth quarter of 2008. This had an adverse impact of $75 to $100 per ounce at these long-life mines, which are material.

In addition, the discount rates applied in 2008 in respect to these assets are higher than those used in the previous year by 1.5% to 2%, reflecting current market and economic conditions. Therefore, the above two factors, i.e., a lower and less steep forward curve plus an increase in discount rate, have been the primary cause of the accounting write-down.

I would now like to draw your attention to the following four important points. First, had we applied the previous year's forward curve point and the then-prevailing discount rate, the after-tax impairment charge would have reduced significantly, by some 73%.

Despite the impact of applying a lower, less steep forward curve and higher discount rate, we currently have large surpluses, aggregating well in excess of our current market capitalization of $10b on several of our other mines, when compared to their respective carrying values. These are more than adequate to negate the impairment charge in question. However, unfortunately the IFRS accounting literature prescribes us to test these cash-generating units individually, and does not permit offsets between surpluses generated in cash-generating units versus shortfalls in other cash-generating units.

None of the impairment charges have a cash impact, and are added back for determining both headline and adjusted headline earnings. And finally, the non-cash accounting write-down also have no impact whatsoever on the covenants which are included under our financing agreements.

Now, turning on to the balance sheet. During the quarter, we successfully arranged a $1b bridge facility to finance the redemption of the convertible bond that matures later on this month. And this was done, as Mark mentioned, in a pretty difficult financing environment. The removal of this refinancing risk placed us in a much stronger position to obtain full value from the sale to Newmont of our one-third interest in the Boddington project, which was announced on January 27, 2009.

To recap, the consideration for the sale of Boddington, which is expected to close around the end of the first quarter, involves the following elements. An upfront cash consideration on closing of the sale, of $750m. A deferred payment which is due at the end of this year before December 31, of $240m, payable either in cash or freely tradable Newmont shares. Full reimbursement upon closing of all cash costs for the project which have been funded by AngloGold Ashanti during 2009. Royalty payments of up to $100m from mid-2010, subject to the project achieving a cash cost margin in excess of $600 per ounce. And a payment from AngloGold Ashanti to Newmont of $8m upon closing, being its share of working capital as at December 31, 2008.

In addition to saving on a budgeted capital spend of approximately AUD269m during 2009, the proceeds from the sale to be received this year, excluding royalty proceeds but after capital gains tax, is expected to be in the region of approximately $907m. On a pro forma basis, on -- using December 31, 2008 balance sheet, the receipt of $907m from the Boddington sale during 2009 should reduce the net debt of the Company from its current levels of $1.28b to approximately $375m.

Turning to the sequence of events. We will initially draw down, later on this month, on the $1b bridge facility in full, and redeem the convertible bond in February. And this is because the Boddington transaction is not expected to close before the bonds are due for repayment. Thereafter, the upfront cash consideration received from the Boddington sale will be used to repay $750m outstanding on the bridge facility.

Subject to receiving regulatory approval and signing the documentation, both the Company and Standard Chartered Bank, the providers of the bridge facility, have reached an in-principle agreement to amend the bridge facility so that, in addition to the then-outstanding balance of $250m on the bridge, a further $250m will remain available to the Company until end of November 2010.

So, to put it in simple terms, $1b is drawn, $750m gets repaid, the bridge then goes down to $250m and an additional $250m of liquidity is injected within the bridge facility. The Boddington sale together with the amendment of the bridge facility, in addition to reducing the net debt significantly, will also provide us with further financial flexibility to November 2010. The Company will have cash and headroom under its two borrowing facilities, which is the revolving credit facility and the bridge, aggregating in excess of $1b.

It is important to note that, as a result of these transactions, the Company's refinancing needs and related risks have been reduced significantly. We also now have considerable flexibility to consider our long-term funding options when we look to refinance our residual debt, which is due to mature in late 2010.

And finally, to conclude, giving you some guidance for 2009. As Mark mentioned, we are guiding 2009 production, following the sale of Boddington, at 4.9m to 5m ounces, at a total cash cost of $435 to $450 per ounce. This is based on the following exchange rate assumptions. Rand at ZAR9.75, Australian dollar at AUD0.68, Brazilian real at BRL2.25, Argentinean peso at ARS3.65, fuel at $50 per barrel and lower consumable costs relative to last year.

Capital expenditure for 2009, after taking into account the reimbursement of the 2009 Boddington spend, is estimated at approximately $840m. This is a significant reduction of some $360m, or 50%, on the levels expended in 2008 by the Group. Looking at the first quarter, given the startup following the 12 day Christmas break in South Africa and the expansion plant tie-in at Iduapriem, we estimate that the first quarter's production will be around 1.13m ounces, at a total cash cost of between $440 to $450 per ounce.

Our additional guidance for 2009, after taking into account currency effects and asset impairments, are as follows. Depreciation and amortization, $575m for the year. Expensed exploration, $175m. Corporate and marketing costs, $135m. Net finance charges, including unwinding of the environmental provisions, of $100m to $115m. The total number of shares in issue as at December 31, 2008, including E Ordinary shares which relate to our ESOP and Black Empowerment scheme, qualifying for EPS, amounts to 358m shares. I will now hand you over to Richard Duffy.

Thank you, Venkat. Starting with the Southern African assets. In the Vaal River area at Moab Khotsong, our new deep level operation which continues to ramp up delivered a 3% improvement to 71,000 ounces, following increased tonnage throughput, partially offset by mining mix adversity affecting yield. Total cash costs were 28% higher at $317 an ounce, due to reduced byproduct contribution and lower underground inventory lockups. For 2009, Moab is expected to continue its ramp-up and, including the transfer of the SV4 section from Great Noligwa, gold production is expected to increase to 300,000 ounces as the operation moves towards its optimal production level of around 400,000 ounces from 2012.

I would also like to congratulate Johan Ferreira and the Moab team on winning the AngloGold Ashanti Group Safety Award for 2008 in recognition of their excellent safety performance.

Gold production from Great Noligwa was steady, while total cash costs were 4% lower at ZAR144,190 a kilogram, due to the higher byproduct contribution and lower summer power tariffs. The adjusted gross profit increased to ZAR78m against a loss of ZAR28m in the previous quarter.

Kopanang had a solid quarter with gold production 8% higher at 91,000 ounces, following increased mining volumes resulting from improved face length and higher grades due to improved quality tonnage delivered to the plant. Total cash costs consequently reduced by 5% to ZAR99,050 a kilogram and the adjusted gross profit increased to ZAR240m against ZAR57m in the previous quarter.

Three shifts were lost to safety stoppages and maintenance requirements at Tau Lekoa and production reduced by 6% to 36,000 ounces, with total cash costs increasing by 7% to ZAR152,541 a kilogram. On the back of an improved price received the adjusted gross profit increased to ZAR22m against a loss of ZAR16m in the previous quarter.

Turning now to our West Wits operations. At our flagship operation in Mponeng, production was down 12% to 144,000 ounces from the previous quarter due to reduced mining volume that was constrained by face length and lower vamping activities. Despite being lower than the prior quarter Mponeng has consistently outperformed their plan during the year.

Total cash costs for the operation improved 2% to just over ZAR71,000 a kilogram or $222 an ounce, the lowest cost in the Group for the quarter. And the adjusted gross profit increased significantly to ZAR594m primarily on the back of a higher received price.

It is also worth noting that Mponeng is now the deepest gold mine in the world having reached 3,777 meters on February 3.

Savuka had an operationally strong quarter with improved drilling and blasting, higher vamping activities and better mining mix. Resulting in gold production being significantly higher at 18,000 ounces with cash costs reducing by 46% to just over ZAR81,000 a kilogram. The adjusted gross profit was ZAR24m higher at ZAR42m for the quarter on the back of improved mining and a stronger received price.

At Tau Tona, mining volumes were deliberately reduced to address safety concerns and gold production was 11% lower, at 70,000 ounces, as a consequence. On the back of the lower summer power tariffs and cost savings initiatives, total cash costs decreased 6% to ZAR103,961 a kilogram.

Gold production at Navachab increased 18% to 20,000 ounces as both throughput and yield improved over the quarter. Tonnage throughput increased on the back of the successful implementation of continuous shifts, while improved grade control allowed for improved delineation of higher grade blocks from the North Pit 2 area. Total cash costs reduced 5% and the adjusted gross profit doubled from the previous quarter to $2m.

Moving now to operations and the Rest of Africa, starting with Tanzania.

Geita had a disappointing fourth quarter as Mark mentioned, with production being adversely affected following a crack in the SAG mill shell in September and a breakdown of the SAG mill's two main gear boxes in December.

As a result, tonnage throughput was 11% lower and yield was 21% down due to lower grade softer surface material being processed through the ball mill resulting in production for the quarter of 52,000 ounces.

Total cash costs consequently increased by 32% to $921 an ounce. Repairs to the SAG mill shell and gear boxes have been completed, although two maintenance shutdowns are scheduled in the first and third quarters of this year to replace a thrust ring on the SAG mill and to put the new front end on the SAG mill shell.

We are projecting an increase in Geita's production this year, from 264,000 ounces to 315,000 ounces or 19%. This is lower than our initial 2009 plan, primarily as a result of a downward adjustment to average grades, both out of Star & Comet and also as a result of a four month delay in delivering higher grade ore out of Cut 5 in the Nyankanga pit, resulting in the substitution of lower grade ore from surface stockpiles.

Towards the end of last year we carried out an internal review and external audit of our resource models at Nyankanga, Star & Comet and Geita Hill, together with supporting drill programs. Information from these reviews and additional drilling has been incorporated in our revised 2009 Plan resulting in the grade adjustment I mentioned at Star & Comet.

Recommendations to increase our infill and grade control drilling are being implemented and steps have been taken to address the drop-down rates through improved drill and blast performance.

Geita's production levels are expected to pick up in 2010 as we deliver higher grade ore out of Nyankanga's Cut 5, with a further step up in 2011 as we access the high grade ore at the bottom of Cut 6.

In order to provide greater focus on our operations in West Africa, we are moving towards a country structure and have split out Ghana on the one hand and Guinea and Mali on the other. Keith Faulkner will be assuming responsibility for Ghana and will also take on the role of MD of Obuasi, taking over from John Miller. I would like to acknowledge John's contribution to Obuasi over the last 18 months, reflected in the improved performance from August last year.

Dave Ingle will support Keith Faulkner as the Technical Head, Ghana, responsible for the turnaround project and coordinating other projects and technical support for both Obuasi and Iduapriem.

Keith Faulkner has more than 35 years of experience in the mining industry, the last 20 in senior management roles. From 2002 through 2007 Keith was Managing Director of OK Tedi Mining, a large scale copper/gold producer in Papua New Guinea, so he is no stranger to challenges. He has also worked in Africa, including South Africa and the DRC.

Dave Ingle has 37 years experience in the mining industry in Australia, New Zealand and Africa. He has spent a considerable amount of time in Ghana, initially with Abosso Gold Fields Ltd at Daman as well as with Newmont Ghana Gold Ltd from July 2004 to July 2007 in a General Manager role.

Last quarter I spoke about the improvements at Obuasi in meeting the production targets in August and September. This strong performance has continued into the fourth quarter with production at 98,000 ounces, 7% higher than the previous quarter in line with its plan.

The turnaround strategy is focused on increasing development to provide flexibility, ensure that the sulfide treatment plant improves tons milled, and recovery through improved floatation and grind, increasing productivities and improving maintenance.

Total cash costs for the quarter were 5% higher at $712 an ounce, primarily due to once-off consumable write-offs. As part of the planned turnaround at Obuasi we are focusing on increasing our production volumes and improving our cost management. And in the case of cost management, not just at Obuasi but across continental Africa more generally.

At our other Ghanaian operation, Iduapriem, gold production also increased for the second consecutive quarter by 14% to 57,000 ounces, following improved plant availability that helped in increasing tonnage throughput by 10%, while improving mining mix resulted in yield increasing 2%.

Total cash costs were 2% higher at $577 an ounce while an adjusted gross profit of $3m was achieved against a loss of $1m in quarter three.

Siguiri in Guinea had another solid quarter, posting a 13% improvement to 81,000 ounces as a result of improved plant availability and utilization. Siguiri has consistently exceeded its target during the year and achieved record annual production of 333,000 ounces, or 19% higher than in 2007.

Siguiri continues to provide us with significant growth potential into the future.

The Malian assets had a strong quarter with production at Morila 24% higher at 47,000 ounces, and total cash costs 17% lower. While at Yatela, production decreased 11% to 16,000 ounces due to the release of low grade ore that was stacked in the previous quarter.

Production at Sadiola increased by 20% to 49,000 ounces as both grade and tonnage throughput improved.

I'll now hand back to Mark to conclude. Thank you.

Thanks very much, Richard. Before I give a little summary and unpack the changes, how the changes have impacted on cash flow and how we get to a $1.1b turnaround, I think it's important to just make, again, a couple of points in reflecting on 2008.

And if I can say that the key points from our perspective, first, Anglo America is now a 13.3% shareholder, well off its original base of 53% and certainly over the last 14 months, their holding has come down and I guess based on what we've seen it will come off further during the course of the year.

Working out how to do that constructively with Anglo America is an important project for us to work with our major shareholder.

We have carved up the hedge book and leave ourselves with the option to manage the residual elements on an opportunistic basis. We have delivered significant improvements in safety, production and cost management, delivering four quarters consistent with our commitments to the market and within our internal operating targets.

We have rebuilt the balance sheet, leaving us well positioned to build our growth platform without diluting our shareholders and the value opportunities that we will present them with.

We have, during the course of the year -- during the course of the last 14 months, competed six plus billion dollar transactions as we reconstructed the business and rebuilt its ability to generate cash, deliver returns and value for shareholders.

We will generate real cash in 2009 with 2009 representing a $1.1b year-on-year turnaround for the operating assets, and we will deliver double digit returns on capital employed.

Finally, we have positioned the business to grow and with Colombia and our other exploration opportunities, we are positioning to further build our value proposition.

In terms of what those changes mean in terms of the numbers, we have restructured the business to improve margins and so our 2009 plan gives us total cash costs of approximately $440 an ounce, stay-in-business and all reserve development capital of approximately $117 an ounce, with expansion capital of approximately $51 an ounce, giving us a total spend of $608 per ounce.

This should be seen against a comparable spend in 2007 of $684 an ounce. As a result of the hedge restructure completed in 2008 and assuming a gold price of $900 in 2009, with a 6% hedge discount, we expect to receive a price of $846 per ounce. This will result in cash generated at our operations increasing by some $1.1b this year.

Any gold price upside above $900 will obviously provide greater cash flow and earnings leverage and in the event we continue to see gold price volatility with potential downside pressure, we will retain a robust business model with sound cost control and capital rationing flexibility.

When you consider that many of our North American peer groups have enjoyed byproduct cash costs weakness, such as copper, through all of last year, and that these are now contributing less given recent commodity price corrections, I do expect us to outperform going forward.

If you add to this our improved local operating currency leverage, I'm excited about what the business can deliver this year. With those issues and with those comments we'd be happy to take a few questions.

Thank you very much. (Operator Instructions). Our first question comes from Victor Flores of HSBC. Please go ahead.

Yes, thanks. Good morning. Can you spend a couple of minutes talking about what you expect for this year from the development stage projects?

You've declared a resource for La Colosa but as far as I can tell that's still held up by permitting issues. You've had to pull out of the DRC, at least temporarily and perhaps you can update us on what the security situation is there.

And you've put out some good numbers on Tropicana, but I'm just trying to get a sense as to what point in time you feel comfortable enough with Tropicana to push it a bit harder. Thanks

Okay, there's a few questions in that, Victor. Let me start with the three areas that you mentioned.

Firstly, at Columbia, we've just done some of our public presentations to the local communities on our plans going forward. They've gone fairly well. We are in discussion with the Government as we speak and we would hope to see something positive in the next few weeks with respect to the next step on the environmental work.

What we would like to see is all our permits covered off during the course of this year and additional drill holes will have been completed in some of those two or three prospects that we have in fairly close proximity to La Colosa. So we would expect to see the environmental pathway very clear and set. The program we have with the local communities in making sure we bring them along. And the third point will be some early results from the two or three other deposits we have in the local area.

Those elements will come together to give us an indicative timeline on development and at what level we'd expect those developments to take. So that's Colombia.

On Tropicana, remember we slowed the project up because we weren't happy that we had really got our arms around the scope of the resource. That work, in the last six months has delivered another 1 million ounces, or a 20% upgrade in the resource base, which we are very happy with.

We're actually drilling at the moment and Graham Ehm took us through seven targets that are all going pretty well, so we would expect to see more resource upgrades. We would expect to commit to full feasibility midyear -- mid to late third quarter this year and we'll take the project forward.

The good news about that drilling as well is that we've also improved the grade and so we have now got a project based on the enhancement study that's indicating a 15% return. So we are starting to get in the right ballpark for us to think seriously about putting that in the capital competition as we call it, here at AngloGold Ashanti.

In terms of DRC, we've progressed our conversations with the Government, so we are happy with the way those conversations are going. I would expect that we know where we stand by the end of the month. At the same time we've downgraded our spending for the moment while the insurgency that you had up in the northeast settles down, and that seems to be going the right way.

But I think it's safe to say that this will be a quiet year for us as we watch very carefully. We don't expect to spend more than $5m on the actual exploration development work on the ground. I think the important thing now is to make sure we've got the alignment with the Government on how to go forward and looking at a couple of other strategies that we will look to see how we yield better value.

In our joint venture, one thing we didn't mention, our joint venture with Polymetal, we've restructured that joint venture. We've reduced our ongoing operating cost to a minimal amount. We're still watching Russia fairly carefully and given recent changes to the legislation we've slowed all of our programs up. And certainly as I understand it, some of our North American counterparts who are committed in a much bigger way are battling through some issues. So we are just going to watch that very carefully. So we are much lower key.

In terms of all the other projects that we have, the pushing of Obuasi up to 600, the potential to double Siguiri, the improvement work at Geita, the Brazil strategy to go from 400,000 to 600,000 ounces, the 10 year development of the underground operation of Sunrise Dam and obviously the additions at Tropicana, we've got something in the order of 1.2m to 1.5m ounces in those other developing projects that we see as very important to us over the next five years. And certainly they're the ones we're thinking about in terms of taking us towards that 6m ounce target that we see, certainly in terms of high returning value to our shareholding portfolio.

And obviously Colombia and DRC and other things come above that 6m which we would see in the five to seven year time frame.

I hope that covers the key issues, Victor.

Yes. Thanks, Mark. If I could just ask a follow up on Geita. I mean you've had another setback there during the fourth quarter. You've had to bring down the production numbers for '09. What should we expect for the future of Geita because I mean it should be doing a great deal more than it is and for some reason or another you just keep on having setbacks there?

Yes, obviously, that's the one issue that's disappointed us in terms of what we've done in the last 12 months, Victor. We have made some progress with some of the issues but clearly we're not happy with where we are. And if you remember last time I was asked the question here in this call, we were talking about the site wanting to have a go at drill and blast and guaranteed they'd deliver some 30% improvement, and I said that if that wasn't delivered we'd be going contract. And needless to say the site hasn't delivered the 30% and we are looking at going contract.

So those changes will be worked through over the next month or two. And in terms of what we are doing, our overall and our long term targets haven't changed, but Richard's got a bit of work to do on the drilling side over the next couple of months and he's got to settle the team down. He's going to need about another three to four months to get the pieces settled. And we will probably come back with our long term prognosis and the exact timing on the shorter term recovery work, both in the next quarter and the following quarter.

But certainly unhappy and that will be fixed and we're putting full resources of the organization behind Richard to get that sorted out.

Great, thank you very much, Mark.

(Operator Instructions). Our next question comes from Shane Hunter of BJM. Please go ahead.

Good afternoon again. Just a follow up question really, I suppose to carry one with Geita. I know you've just spoken about it, but if you could just remind me what were the numbers that you were looking at say in the medium to longer term in terms of ounces per year. Looking at the currents of the situation that you have now, and I think you just said that the overall numbers haven't changed, but if you could just tell me what they actually are for now.

Shane, we had previously indicated around August of last year that we had hoped to be heading towards 400,000 ounces at Geita for this year. The setbacks that we outlined have caused us to revise this downwards. But just to make the point that what drives the production at Geita is really the higher grade ore in Nyankanga and because we're behind on Cut 5 we are not getting into that as early as we had anticipated when we mentioned the near 400 in August of last year.

So when Mark says we still have the same targets, our targets were to initially get the mine up to 400,000 ounces and then up towards 500,000. We are probably between nine months-ish behind in terms of those targets, but we still are targeting getting up towards 400,000 probably over the next 12 to 18 months and then on to 500,000 ounces thereafter.

Okay, so you think that the peak would obviously then be 500,000. I just recall there might have been also a number of 600,000 some time back.

Yes, look, it depends on Cut 6 in Nyankanga pit which is really where the high grade piece is. We could well go north of 500,000 ounces but we're targeting 500,000 ounces as the sustainable production base for the mine.

Shane, one of the things we said was we would be punching towards 600,000 towards the end of the five year period and that was based on the regional work. We still haven't given that up, what we've been focused on is getting the shorter term issues. So we're still looking for the same sort of targets, but that will be subject to the drilling that Richard's got scheduled for the balance of the year.

So that longer term regional target remains in place, but certainly we've been focused on getting the short term stuff fixed and start putting the operation onto a footing where it's making a positive contribution.

So we'll go four, five with the longer term target still based on the regional play but as we said we're going to sort the front line issues out first and then push ourselves forward after that.

Okay, fine, thanks for that.

(Operator Instructions). Our next question comes from Paul Durham of HSBC Securities. Please go ahead.

Thank you. Good afternoon, gentlemen. Now that '08 is finished and you've got all the data in, can you just give us some handle of how the South African operations and productivity and safety improvements have actually obviously benefited from taking a fresh, very conscious approach to safety.

Can you tell us what the numbers are year on year and any productivity measures you've got for your South African operations that you can share with us as well, please?

Paul, I'll just go through a couple of things and hand off to Richard if he wants to add.

Firstly, on the safety front, what we did is we've really rebuilt the whole process and approach and if I can say, upgraded discipline around the processes and we use the scatter grid approach as opposed to longwall.

So we've been transferring from a scattered grid mine -- from a longwall mining approach to more of a scattered grid, which gives us better management and handling of the geotechnical technical issues that drive seismic activity.

So that's been a fairly significant change in the way we've been operating and the way we've been managing the process on a daily basis and obviously the first expression (technical difficulty) that clearly has yielded benefits from the safety front.

Obviously, we've been impacted with the Eskom crisis earlier in the year which hit us by about 200,000 ounces and that makes up the difference between this year and last year. But on a go forward basis, our grades are a bit lower so we've used 2 million ounces as about the base. We think we are going to improve our productivities around 5% a year on a go forward basis, which is really making sure that the scattered grid approach is working to its optimum.

We've introduced the Hilti drills at one of our sites, and we've seen a 15% improvement on drilling productivity and about a 6% improvement as part of the overall mining cycle productivity. And we will be introducing the Hilti drills, which are the electric drills, across all the operations over the next two years. So that's one of the productivity platforms and obviously the safety improvements were the other productivity work, which is all about discipline and timing and scheduling of the operations.

We're targeting a 5% improvement year-on-year over the next five years. But I think 2 million to 2.3 million ounces is about the right base to work off for the South African operations. Richard, do you want to add to that?

Mark, the only thing I've added, I think that the safety performance has further improved our working relationship with the other key stakeholders in the tri-party alliance being the Government, the DME and in particular the unions, and that has allowed us to really engage with them a lot more closely on our safety work. And I think we will start to see the benefits of that as we move forward.

So that's been a further spinoff in terms of our improved safety performance in South Africa.

And we've just started the implementation -- we're just about to start the implementation of our business improvement program. And for those in North America, some of you would have been exposed to the reconstruction of Inco's nickel business over five years where we increased productivity by around 50% in the Canadian operations.

We've just started the implementation of that program and in fact, Mponeng site is the first site which really is a reconstruction of the whole way -- the way we manage the whole business process and that is a key to underpinning that 5% a year improvement that we're looking at over the next five years. And we will actually introduce that more formally in the next month and then to the market at the next quarterly report.

Okay, thank you. Just one final question. Is there any major labor intense difference -- intensity difference between longwall and scatter grid or is it just basically the same thing but just a different mining method?

I mean I'm used to the old longwall stuff, but scattered grid, are you using the same number of people per -- is the labor complement the same per face, if you want to call it that way?

With the introduction of the Hilti drills we're dropping the face labor component by about 15%. So not only does it improve productivity it actually takes people away from the higher risk areas also.

Apart from that in terms of the physical process of mining which is drill and blast, it doesn't change. It just changes the way you manage the orientation of the faces.

Yes, that's what I assumed. Okay, thanks ever so much.

Our final question comes from Leon Esterhuizen from RBC. Please go ahead.

Yes. Hi, guys, for Mark or Venkat. Just curious to know whether there has been any action in the hedge book since the back end of the year? In other words, have you done anything since the end of December?

And then just to follow up on that, given the fact that you are looking to sell some more assets with Tau Lekoa being highlighted here. Is that money going to go towards further hedge book restructuring or are we going to see a slowdown on that front, rather looking to put this money into some growth? If you can just elaborate on that, please?

Thanks for that, Leon. In terms of the hedge book restructuring, what we are planning to do for '09, we haven't gone any further than what we have disclosed in the market. The reality here is that we have balance sheet flexibility now, as I said in the presentation we would be opportunistic in terms of tackling the hedge book.

Our commitment is still to bring the hedge book in terms of committed ounces down, and to get a targeted discount to spot of about 6% in later year, so it will involve a combination of buyback of the non-hedged derivative contracts and in terms of rescheduling some of the hedges. This is something which we will continuously look at. With any asset sale, as we did in respect of Boddington, we will rebalance the hedge book. So as part of any asset sales proceeds, some of those proceeds will be plowed into the hedge book to ensure that the hedge book is proportionately pulled down to reflect the asset sale.

Thanks.

Gentlemen, we have come to the end of the conference. Would you like to make some closing comments?

I would 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.