Anglogold Ashanti PLC (AU) 2010 Q4 法說會逐字稿

Ladies and gentlemen, a very good afternoon to you and welcome to the AngloGold Ashanti Q4 2010 earnings results conference call. (Operator Instructions). I would now like to hand the conference call over to Stewart Bailey. Thank you and over to you.

Thanks, Leroy. Good afternoon or good morning, everybody, and welcome to the presentation by the AngloGold Ashanti executives of our results for the quarter and for the year ended December 31, 2010.

Turning to the presentation of the format, we'll have Mark Cutifani reviewing the Company's performance over the quarter, before Venkat walks us through the financials. Mark will then wrap up and take questions.

We do have members of our executive team present. We have Charles Carter, EVP Strategy, and we've got Robbie Lazare, EVP South Africa, with us to field any questions you might have.

As is customary, I'll read the Safe Harbor disclaimer before we proceed. Certain statements made in this communication, 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 individually or in the aggregate, including the completion (multiple speakers) commencement of commercial operations of certain of AngloGold Ashanti's exploration and production projects, the completion of announced mergers and acquisitions transactions, AngloGold Ashanti's liquidity and capital results as an expenditure, and the outcome and consequences of any litigation proceedings, AngloGold Ashanti's Project ONE performance targets, contain certain forward-looking statements regarding AngloGold Ashanti's operations, economic performance, and financial condition.

Although 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 have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in the economic and market conditions; success of business and operating initiatives; changes in the regulatory environment and other government actions, including environmental approvals and actions -- fluctuations in gold price and exchange rate; and business and operational risk management. For a discussion of these factors, refer to AngloGold Ashanti's annual report for the year ended December 31, 2009, which was distributed to shareholders on March 30, 2010.

The Company's annual report on Form 20-F was filed at the SEC in the United States on April 29, 2010, as amended on May 18, 2010. 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.

This communication contains certain non-GAAP financial measures. AngloGold Ashanti utilizes certain non-GAAP performance measures in ratio in managing its business. Non-GAAP financial measures should be viewed in addition to and not as an alternative for the reported operating results of cash flow from operations or any other measures of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly-titled measures other companies may use.

AngloGold Ashanti posts information that is important to investors on the main page of its website at www.AngloGoldAshanti.com and under the investors tab on the main page. The information is updated regularly. Investors should visit this website to obtain important information about AngloGold Ashanti.

With that, I'll hand you over to Mark.

Thank you very much, Stewart, and welcome to everybody in terms of our results presentation.

I'll swing straight into the fourth-quarter overview. The good news is we've had a solid performance in the fourth quarter with operations under firm control. The significant highlight was the continuing improvement in safety, as we recorded only the second fatality-free quarter in our recorded history. This represents another milestone for every individual in that business and is a performance that we're particularly proud of and particularly in the case of our South African operations.

We saw Project ONE continue to make a difference with production of 1.148 million ounces at $670 an ounce, again ahead of guidance. It is no coincidence that delivery of five consecutive quarters on guidance, as well as making our annual guidance, coincides with the accelerated implementation of Project ONE.

Adjusted headline earnings of $294 million were well ahead of last quarter, once you strip out the one-off tax credit of $84 million versus the previous result. You'll also notice our improved cash generation capacity after elimination of the hedge, with operation -- with operating cash flow at almost $700 million for the quarter.

We saw another strong performance from the South African team, keeping a tight rein on costs and maintaining production despite the sale of Tau Lekoa. Uranium also delivered another glowing quarter, delivering increasing volumes into an increasingly positive market. Sunrise Dam delivered a strong result on all metrics, while Siguiri showed increased traction from the Project ONE intervention. Argentina once again shut the lights out in what was a difficult inflation -- in what is a difficult inflation environment.

Our project teams have made good progress on all fronts, with Corrego do Sitio, Tropicana, and the [Penang] deepening all moving ahead according to plan, as did our feasibility studies in the DRC and Colombia. Our exploration effort continues to forge ahead with some recent exceptional grades at Tropicana reinforcing our faith in the significant growth potential of this district.

In Colombia, we continued drilling at Gramalote and La Colosa and started work on the Quebradona property, which continues to look like another really interesting prospect.

In terms of the full-year overview, while 2010 was not without its challenges, most notably at Obuasi and Savuka, the balance of the portfolio performed well and demonstrated the benefits flowing from our interventions over the past six months, and this particularly applies in the second half of the year.

A quick look at the full-year performance shows a strong underlying earnings of $787 million, despite 10 months of discounted gold sales. Production came within our original guidance at 4.52 million ounces at a total cash cost of $638 an ounce. On the full-year look, uranium, 1.46 million pounds was ahead of our expectation.

Our four critical turnarounds, South Africa, Geita -- well, three of our four critical turnaround projects, South Africa, Geita, and Cripple Creek, delivered to their recovery plans, and our Project ONE teams initiated implementation across 15 new sites as they applied in mining and processing.

On safety, it is an enormous privilege to me again for us to report on behalf of 63,000 employees a fatality-free quarter for only the second time in the Company's history, certainly a most significant event. Given the strong operating result, this proves that safe and productive mining go hand in hand. A look at our long-run achievement, improving the all-injury frequency rate, shows a very promising long-term trend in how it has dovetailed with our operating improvements in recent years. There's more for us to do, but we continue to set high watermarks as we progress through our new operations model or as we talk to it, Project ONE.

On reserves and resources, our exploration effort added modestly to reserves during the quarter with the total now at 71.2 million ounces after depletion with good additions from South Africa, the U.S., and Mali. There was little change to our significant resource base of 220 million ounces.

However, you'll notice that we've maintained a conservative $850 an ounce price in calculating those reserves and $1,100 an ounce for resources. We are currently working on an update to our resource and reserve inventory at somewhat higher prices in the second half. We are looking at in the range of $1,000 to $1,100, which is in line with the robust fundamentals for the gold market and our positive medium- to long-term view on the price.

It's important to note that we see our exploration investment as a long-term endeavor with discovery cycles that don't necessarily coincide with the calendar year. Over the past four years, our brownfields team has added 31 million ounces at an average cost of $13 an ounce. Our greenfields team, which is a much longer-term horizon, has contributed more than 22.3 million ounces over the past eight years at less than $25 an ounce. And we would expect that number, in terms of ounces, to go up significantly as we continue to open up the potential of these regions that we've established good positions in, and obviously, as a consequence, the cost per ounce discovered would also go down.

On a combined basis, we have added 53 million ounces of less than $18 an ounce, obviously a very strong result, and when you add the now prudent acquisitions, we've added another 20 million ounces at around $28 an ounce. We believe that's a pretty good metric against the purchasers that we've seen in the market in most recent times going up to $1,000 an ounce in terms of cost per resources and reserves. So we're very pleased with what we've seen in our regions, and add to that the potential that we see, given those positions, we think the upside in terms of the next two or three years is quite significant.

From an operations overview point of view, it was another strong result from Ron Largent and our Americas team. Production trended lower, slightly lower, as planned, to 196,000 ounces. Total cash costs were $465 an ounce for the period, with the escalation contained to 7% in what we consider a challenging environment or currency environment, particularly in our Brazilian operations.

Cerro Vanguardia in Argentina delivered another exceptional quarter, lifting quarterly production 4% on the back of improved tonnages, while lowering costs by 5% to $357 an ounce, and again, in terms of Argentina, against a continued inflationary-pressured environment. This remains the operation to beat in terms of consistency and operating excellence, and if you reflect again back two years, we were almost draining up to $100 million a year in free cash flow. So, the operating free cash flow turnaround has been more than $200 million in less than three years.

At Cripple Creek, we saw a planned drop in production in line with our strategy of stacking higher-grade ore closer to the pad in the first half of the year. It's interesting to note that we've actually beaten our budget targets for the first time in five years, and I think that certainly heralds a new understanding and operating mind to the operation, which we believe sets us up nicely for 2011 and beyond.

The new MLE project will kick in from Q2 this year. So expect -- you can expect higher production in the second half of the year.

Notwithstanding the strong real, as I mentioned earlier, the cash margin from our Brazilian operations is impressive, off a cash cost base of less than $500 an ounce. Brazil remains the cornerstone for our medium-term growth plans for the Americas with 842,000 ounces produced from the region in 2010, set to top 1 million ounces within the next two years, and to step up further in the ensuing periods. And that's before an ounce from Colombia is factored into our forward projections.

Production from continental Africa was largely unchanged at 374,000 ounces, with costs up 9% to $790 an ounce. Good cash flows from Mali and another strong operating result from Geita underpinned the quarter, as did good improvements at Iduapriem, Siguiri, and Navachab. Geita remains on track to achieve its 500,000-ounce target for the year, a remarkable recovery for what will now -- from what is in our eyes one of the group's largest contributors and certainly represents a most gratifying turnaround story.

At Navachab, good tonnage and great improvements, as well as the new DMS plan, came together to deliver an excellent production result, while at Siguiri, the conveyor-belt modifications that stemmed from the early Project ONE work helped us achieve a 15% bump in production. Billy Mawasha is doing some great work for the team at Iduapriem with record tonnages recorded in the last two months of the year flowing from improved availability in the plant, very similar to the early days of the Geita story. While production improved, costs felt the pinch from higher power tariffs, including a once-off charge for energy costs at the higher rate, which was backdated to the third quarter.

As flagged during the fourth quarter, Obuasi continued to lag due to an unplanned plant shutdown and also continued ore pass hangups and suboptimal development performance. The latter resulted in an ongoing lack of flexibility, limiting access to higher-grade blocks. These are not new problems and form part of the extensive work already underway by the multidisciplinary task force, which is on site and developing the next phase of recovery planned for this asset.

Now, in Siguiri, while we have stripped out more than $70 million from our operating (multiple speakers). What did I say?

Siguiri.

Excuse me. Should be Obuasi. This has obviously helped us turn a very negative cash flow outcome post-two years to a positive outcome last year where we produced marginal cash flow -- a marginal positive cash flow.

However, we are still lagging on our production transition program, due to the slower development rates and the inability to maintain the necessary tight control in our stope extraction processes.

As I mentioned at the last quarter in November, we have created the Obuasi taskforce under Richard Duffy's leadership and with the full support of the executive to address the significant and short-term operating challenge we face. The team comprises three areas. The focus on short-term stabilization and optimization is led by Peter Anderson, addressing legacy sustainability issues led by Toby Bradbury, and the development of the future plan or blueprint of the strategy that we currently have in place, led by Keith Faulkner. All three individuals are capable, experienced mining professionals who are familiar with Obuasi and the challenges and the issues that face us.

Peter has assembled his team, and together they are prioritizing key areas of focus to effect rapid improvements at the operation, much as Robbie did in South Africa a year ago. He's working with local contractors and stakeholders of the operation to develop a mutually beneficial and crucially a sustainable solution to bring this large resource to account. We will provide a progress up to date at mid-year. Meanwhile, Keith and his team are working on the long-term strategy, which we expect to report back on around the end of year.

In Australia, Australia posted its second consecutive production increase, this time by 10% to 102,000 ounces, while costs dropped 16% to $894 an ounce. Remember again that this includes a non-cash deferred stripping charge of some $160 an ounce, which obscures the real contribution from Sunrise Dam. You'll see the very strong cash flow of around $146 million in the operation, which really does reflect the true production growth and the improvement in the operating costs when we take out that $160 an ounce. Work is well advanced on the pre-feasibility study, looking at both underground mining methods with completion targeted for the end of the year.

South Africa delivered another encouraging quarter, maintaining production at 476,000 ounces, despite the sale of Tau Lekoa during the period. Costs were well controlled at $616 an ounce, despite a very strong rand, as the focus remained squarely on productivities and production improvement.

The key thing -- or the key challenges we experienced during the quarter were some grave and dilution issues at Moab, which impacted the Vaal River operations. However, the West Wits delivered strong production gains from Mponeng and TauTona, where the improved safety performance was the consequence of reduced disruptions from 60 and 54 stoppages, which resulted in improving tonnage throughputs. It's a virtuous circle that we're working hard to perpetuate, that is safety and productivity, as the two go hand in hand. Project ONE forms the basis of our efforts to embed these improvements in the DNA of the business, and the initial results following the implementation across some of the deep underground mines, which are undoubtedly more logistically complex than processing plants and open-pit operations where we've had early success.

Each of the operations has identified five clear leaders for unlocking value, and our ready to sharpen focus on scheduling and planning is yielding measurable gains and putting us on the front foot in what remains a challenging inflationary environment. The performance underscores the world-class status of these assets, which are not only endowed with exceptionally long lives, but are also capable of spinning off excellent cash flows. The $611 million free cash flow generated to 2010 is despite 10 months of hedge discounts, and if we reverse those discounts, you would've seen more than $700 million, and I think that really does demonstrate the potential that we're delivering -- both the performance that we're delivering and the potential we have to improve as we run the business unhedged.

On uranium, it's also pleasing for me to report an excellent year from our uranium business. Remember that we are South Africa's largest uranium producer, a position we're in no danger of relinquishing. A better-than-expected production of 1.46 million pounds last year on the back of improved recoveries and efficiencies has left us with inventories of around 1.2 million pounds as at year-end.

We've consciously held back sales as we've waited for the price to improve as we were looking at the fundamentals of the business, and we've seen an improvement from around $40 a pound to more than $65 a pound. So the market has certainly been very strong. With uranium prices up more than 50% over the past year, it looks like we've made the right call.

We will continue to focus on this important aspect of our South African business and we'll look for ways to realize growth from our significant resource of 239 million pounds. This is an important business for us, which not only provides a partial offset against rising energy prices in South Africa, but gives us an exciting optionality given the size of the resource base.

It is again the backdrop of much of -- this much improved operating performance that I'm pleased to announce a final dividend of 80 cents -- or ZAR0.80 a share, taking our total dividend for the year to ZAR1.45. As a Board, we are very mindful of the need to demonstrate our improved operating performance in a tangible way while maintaining a balance sheet that is able to fund our growth objectives. I believe this final dividend, an increase of 23% over the interim payout and 14% on last year's final decoration, strikes that balance.

I'll now hand over to Venkat to look at the financials.

Thank you, Mark. Good morning, ladies and gentlemen. I'll be covering the following four areas in today's presentation, fourth quarter's financial results, full year's financial results, free cash flow and balance sheet, and finally, the 2011 outlook.

Starting off with the fourth quarter's financial results, record gold prices, full exposure to the spot price from October 7, gold production and costs being marginally better than guidance helped push AngloGold Ashanti's adjusted headline earnings for the fourth quarter to $294 million, or $0.76 per share. This represents a $75 million uplift on third quarter's adjusted headline earnings after normalizing it for the one-off credit which was taken during the third quarter.

And this uplift is despite the $45 million after-tax impact following the annual reset of our environmental provisions. In other words, the improvement on net margins was close to $120 million. It was pulled back by the $45 million year-end annual reset of environmental provisions, giving us a net improvement of $75 million quarter on quarter.

As flagged during the last quarter's earnings call, the hedge book closeout, which traveled across Quarters 3 and 4, was completed on October 7. This resulted in a charge to earnings of $1.06 billion, which was within the guided range, and it gives me great pleasure, ladies and gentlemen, that we will not be referring to the hedge book in future earnings calls.

The fourth quarter saw the South African ZAR, the Brazilian real, and the Australian dollar all strengthen, with average Rand exchange rates strengthening -- with the average Rand exchange rate strengthening by around 6%. This currency strength, higher royalties on the back of improved spot price, and fuel prices saw unit cash costs at $672 per ounce, which was within the exchange rates' adjusted guidance.

Excluding the accounting deferred stripping charge of $20 an ounce, the total cash cost was $652 an ounce, giving a cash margin of 52.5% of the average spot price for the quarter.

Turning to the full year's financial results, the 2010 annual results were impacted by the $2.5 billion cost of the accelerated hedge closeout. The adjusted headline earnings, excluding this impact, was $787 million. Production of 4.515 million ounces was within the guided range of 4.5 million to 4.7 million ounces, and was impacted by the 10-week shutdown at Iduapriem, operational issues at Obuasi, and the five-week impact at Savuka.

The total cash costs of $638 per ounce were within the exchange rate adjusted guidance. Excluding the accounting deferred stripping charge of $26 per ounce for the year, the total cash costs for the year came in at $612 per ounce.

Looking at returns, which is one of our strategic measures, our full-year returns on net capital employed and on equity were 16% and 19.9%, respectively.

Now turning to free cash flow and balance sheet, the Group's cash flow statement for the quarter and the full year are distorted by the accelerated hedge takeout and associated capital raisings. It will therefore be useful to look at the cash generation without these distorting items.

The capital expenditure profile for the Group tends to be higher during the fourth quarter of any year. Notwithstanding this expenditure of $365 million, which was incurred in the fourth quarter, the Group still generated strong free cash flow, defined as after all outgoings, which is after all capital expenditure, exploration, corporate costs, tax, and finance charges of $252 million during the fourth quarter. In addition, $68 million was generated from the sale of a 10% equity interest in B2Gold.

For the full year, despite the normalized hedge discounts seen during the first three quarters of the year and a capital expenditure bill of just over $1 billion, the Group's free cash flow rose to $525 million. In addition, $134 million was realized from the sale of the Tau Lekoa mine in South Africa and the sale of B2Gold investment referred to earlier.

The Group's operating cash flow, which is basically cash flow before capital expenditure and finance costs, was approximately $1.7 billion for the year, and this was after penalizing it for around $300 million to $400 million of hedge discount for the first nine months of the year. The strong cash flows helped the Group deliver a much better net debt position at the year-end of $1.3 billion, thereby positioning it extremely well to meet the 2011 project capital requirements.

Looking at the outlook for 2011, we are forecasting Group production at between 4.55 million to 4.75 million ounces. This represents a 200,000 to 225,000 ounces increase, close to 5%, year on year on the 2010 levels as adjusted for Tau Lekoa, which was sold in 2010, and the Savuka ounces. Total cash costs are expected to be in the region of $660 to $685 per ounce at an average rand exchange rate to the U.S. dollar of 7.11, 1.70 for the Brazilian real, 0.98 for the Australian dollar, and 4.12 for the Argentinian peso.

Fuel is budgeted at $95 per barrel for the year. Other one-line items that are forecast for the year are as follows. Depreciation and amortization, $810 million; corporate marketing, which is the cost of the World Gold Council subscription, Project ONE, and capacity building cost, $275 million; expensed exploration and pre-feasibility studies, $295 million, plus $30 million in respect of equity accounted associates and joint ventures. Interest and finance charges, including the accounting unwinding of certain costs, i.e. the P&L cost, is $205 million. The finance costs cash flow is $145 million, both of which include the coupon on the mandatory convertible bonds.

The capital expenditure for 2011 is estimated at between $1.5 billion to $1.6 billion, and this includes about $100 million that was unspent in 2010 which has carried forward to 2011. The number of shares that qualify for EPS as at December 31, 2010, was 384 million.

Ladies and gentlemen, you will recall that the first quarter of each year tends to be a slow start, given the seasonal slow startup in South Africa, and this year is going to be no different. For the first quarter of 2011, we are guiding production at 1.04 million ounces at a total cash cost of $675 to$700 per ounce at average rand exchange rates against the U.S. dollar of 7.0, 1.7 for the Brazilian real, 1.0 for the Australian dollar, and 4.03 for the Argentinian peso. Fuel is at $95 per barrel.

I will now hand you back to Mark Cutifani.

Thanks very much, Venkat. Ladies and gentlemen, I'm going to ask you to try and multitask. I will be referring specifically to overhead 21 and overhead 22 in our presentation, so if you've got your eye on the monitor, I think it's important that you run your eye over our operating assessment, and this chart, which shows our assessment of the portfolio in 2008, and on the right-hand side of the chart, we show our cash flow. So the way we like to put it is engineering meets financial imperative, and for us, a very important way of thinking about the engine in the business, or the engines in the business, and where they are performing.

And as you can see, in 2008, and we've rank our assets from one to five -- a red representing a one, which indicates a cash drain material risk to the business, right up to a blue, which indicates best industry practice as we assess it, and then you've got brown showing improvement needed, yellow is an operation with a turnaround plan that is delivering good trends, green being solid performance delivering solid cash flows.

And you'll see that in 2008, looking at 16 asset clusters, with a potential score out of 80, we scored 32. Obviously, lots of improvement needed, lots of reds and browns.

On the right-hand side, you can see the operating free cash flow. South Africa, 426, basically carrying the business. Australia, making marginal cash. Continental Africa, draining $126 million, and the Americas making a solid contribution, but again, nothing to write home about. Total cash flow from the business, around $597 million. When you took capital and other costs into account, we were losing money hand over fist.

You can roll the clock on two years and you go to the next overhead, you see the improvements that have been delivered within the operations in that two-year period. And as you can see, the reds are gone, the three reds -- Obuasi, Geita, and Cerro Vanguardia. Two of those assets are very strongly cash flow positive and Obuasi marginally cash flow positive. Each of them reflecting some very good work in terms of cost controls. Geita and Cerro Vanguardia reflecting significant operating improvements. Obuasi is obviously lagging, but at least we've taken it out of the emergency ward. Now it's a matter of getting to that potential across the portfolio.

Lots of yellows. That represents -- or those yellows represent operations that have turnaround plans that have at least two quarters of positive trends indicating we're heading in the right direction. Greens are actually indicating that that's a solid operation with a solid plan with good ideas for a future improvement, and the blue, our processing operations in South Africa, representing what we would consider best practice.

It's no accident that when you look on the right-hand side and you see the free cash flow generation from the business, and don't forget, even in 2010, we've gone three-quarters of the year with a hedge discount. You're seeing improvement across every jurisdiction. Firstly, the operating improvements as a consequence of the Project ONE work and its associated projects has improved the free cash flow across the business by more than $500 million a year.

Secondly, obviously the gold price in absolute terms has improved the performance, and the third point being the continuing reduction in hedge discounts. And as you know, the last quarter of last year, first quarter where we've been essentially hedge book free, and as we go into 2011, you have to think about, okay, a 5% improvement in volumes, a likely, or as we can best estimate, a likely 20% improvement in realized prices underpinning what we would expect to see a better than $2 billion free cash flow performance out of our operations expected through 2011. Obviously, subject to the gold price.

But gives you a sense of where we've come from, almost a fourfold increase -- or a threefold -- fourfold increase in our operating free cash flows, and so, at this point in time, we think we can reasonably argue that the potential leverage in our business relative to gold price now is where it should be, and certainly we believe 2011 is where we've set up the organization for a very strong 2011 and beyond.

On projects, 2010 saw significant progress in this regard. First, the MLE project at Cripple Creek, or leach pad extension, has been delivered 12 months earlier and at lower cost than planned. Corrego do Sitio in Brazil was approved in May, and since then the speed of progress has been impressive. The autoclave has been manufactured, delivered, and installed. The stopes and mining infrastructure are also complete and ready for the production ramp-up starting at around the end of the third quarter.

At Tropicana, improved in November, we've planned first gold in the final quarter of 2013. Procurement for infrastructure is well advanced and detailed plant design has commenced. We've received all key approvals and have made great strides, as promised, on the feasibility for Boston Shaker pit, and more about that in a moment.

So not only have we focused on financial restructuring, getting the balance sheet right, getting the operations to start delivering to their [bench width], and as I said, with our assessment of the assets going from 34 out of 80 to 52 out of 80 in 2010 and delivering a $500 million free cash flow improvement, we believe we can deliver another $500 million underlying free cash flow improvement over the next three years. Put that with our new project, then we really do become, we believe, a value-accretive proposition in terms of today and into the future.

The other nexus of growth for us is in the DRC, where we're running a dual-track process to bring Kibali and Mongbwalu projects on track by 2014. Our partner, Randgold, is leading the Kibali process with the energy and commitment we'd expected when we formulated the joint venture in 2009. Mark Bristow and his team believe they can deliver the project by 2013, and while we can see some challenges to achieving this aggressive timeframe, we will do our best to be a supportive partner.

Good progress has been made on scheduling resettlement and on developing infrastructure in this remote region in the Congo's northeast. The scale of work done is evident, nowhere more than the construction of a 179-kilometer road between Aru and Doko, an important staging point for the project. This commute between these towns has been cut down to three hours, whereas it used to take several days during the rainy season. This makes an enormous difference not only to Kibali's development, but also to regional commoners.

We continue to plan the first production in 2014 and applaud the efforts to accelerate that schedule. We will continue to offer technical support to ensure the highest project management standards are maintained throughout and that we have a long-term value-accretive and sustainable operation.

At the smaller Mongbwalu project, our teams are working to deliver a feasibility study on schedule by the end of the first quarter. We're working on an agreement between Mongbwalu and the Kibali joint venture for high-growth power generation and distribution in order to lock in an obvious regional synergy.

On exploration, the project pipeline is being fed by a world-class exploration team. Just to recap those numbers, 22.3 million ounces from greenfield discoveries at $25 an ounce, and the best part is these discoveries are still growing in Colombia, Tropicana, DRC, Block Two in Guinea, amongst others. That stands in stark contrast to the prices being paid for resources by several of our major peers, which are several multiples above the numbers we're delivering in terms of our exploration team. We're happily not in that contest.

We are currently having one of the world's largest exploration -- we currently have one of the world's largest exploration holdings of more than 122,000 square kilometers. We are unashamedly the world's most aggressive explorer and we have first-mover advantage in the world's most important -- some of the world's most important gold belts, which is where we generate the most value.

We've restarted our drilling campaign in Colombia during the fourth quarter and plan a major exploration push this year where we'll work up our knowledge on La Colosa region, where there is significant potential.

At Tropicana, our program is considerably further along the track. As promised in November, additional drilling at Boston Shaker and Havana Deeps has been added to add upside to the production profile in years four and five of the project.

The latest grades returned from Boston Shaker are pretty impressive, most notably 25 meters at 14.5 grams, from around 277 meters, with visible gold evident from that core sample. Results from Havana Deeps are similarly encouraging, and not only affirm our decision to proceed with the development of this project, but also our view, based on extensive knowledge of the geology, that this deposit will both improve in quality and will keep growing.

Elsewhere in the neighborhood, the Kele joint venture in the Solomon Islands is also cause for some optimism, with the latest drill results showing some exceptional grades of more than 8 grams out of a very decent width. My advice is to watch this space over the next two quarters.

On earnings leverage, we have secured a long and prosperous future given the strength of our opportunity pipeline. We have a business in good health, generating strong cash flows, and we haven't paid to create that opportunity pipeline. A look at last year's profile shows the impressive step up as we built production and peeled away the hedge. That decision to wipe out the hedge once and for all looks good from where we sit.

Despite the difficult decision to issue equity to fund the take-out from 12 million ounces in 2008 to zero at the end of 2010, we have managed to more than double free cash flow on a per-share basis, perhaps the strongest measure of shareholder creation.

In terms of talking to driving shareholder value, in closing I point you to the fact that our financial restructuring is complete. We have a robust capital structure that is only enhanced by the operational improvements that we continue to make across the business. At the same time, our improved returns on both equity and capital invested show that we're focused on real measures of shareholder value. We'll continue to keep the discipline as we push forward on our growth path.

We have an improving suite of operating assets delivering real cash flows with significant potential, and we have a plan to continue until we improve.

Finally, we have developed a best opportunity profile in the gold sector. The good news is that we've created it substantially based on the use of intellectual capital, not shareholder capital. You've seen what kind of returns we can generate with one hand tied behind our backs. Now it's time to see what we're capable of with the hedge gone and our operations working toward their potential, and I think the last quarter of last year was a first insight into what's possible in terms of the business.

In terms of generating additional cash flows, we've thought very carefully about where we applied those funds in terms of creating value in both the short, medium, and long term. First order of priority is to continue to feed that opportunity pipeline with capital increasing 50% as we develop those new prospects and drive to 5.5 million ounces over the next four years.

We're also positioning ourselves with that pipeline of opportunity to continue value growth in the following five years through Colombia, the DRC, and as we look at those new exploration opportunities we've created. At the same time, we'll still be reducing our debt to improve our balance sheet flexibility so we can organically fund growing the business, as we promised we would, and certainly, again, the fourth quarter and, in fact, the second half of last year, giving you a glimpse of what's possible in terms of the business and where we've come from.

And finally, and most importantly, we continue to sensibly increase dividend flows to our shareholders, and we will continue to increase those flows as we improve free cash flow and performance of the underlying business. With that, we'd be more than happy to take questions.

(Operator Instructions). [Dan Kikskis], Morgan Stanley.

Thanks for taking my question. I was surprised to read in the press last week that you were considering spinning off your South African assets. Could you comment on that a little bit more?

Yes, we were surprised to read it as well, Dan. It was -- I was asked a question by a Bloomberg journalist regarding a rumor that we had been planning to split our assets.

In fact, in the last 12 months, that's been a conversation. We look at a whole range of options in terms of creating value. And that conversation has been one that's been around for quite a while, and I was asked a question point-blank and I made it very clear. We are not considering at this point in time splitting the assets.

We have the world's best development profile in terms of the business. We've outperformed all of our major competitors in terms of share price over the last 2.5 years, and we believe we can continue to outperform given the results and given the cash flows we're generating.

So I want to make it clear. We have no immediate plans. We continue to keep a whole range of possibilities on the table in terms of creating value, and we'll continue to look at all options, but we have no plans, and I repeat, no plans, to split the Company.

(Operator Instructions). Mr. Cutifani, we have no further questions from the conference call.

That's good. I hope people are counting the cash flow.

Leroy, thank you very much. Ladies and gentlemen, thank you very much for joining the call. Please do get in touch with us if there are any follow-ups, and we'll chat to you again in May for our Q1 results. Thank you.

Thanks, everyone.

Thank you. On behalf of AngloGold Ashanti, that concludes this afternoon's conference. Thank you for dialing in. You may now disconnect your lines.