Anglogold Ashanti PLC (AU) 2011 Q4 法說會逐字稿

Good day and welcome to the AngloGold Ashanti Q4 2011 results conference call. (Operator Instructions). Please also note that this conference is being recorded. I would now like to turn the conference over to Mr. Stewart Bailey. Please go ahead, sir.

Thanks, Dylan. And everybody, good morning and welcome to the presentation by AngloGold Ashanti's executive team of our results for the quarter ended -- quarter and full year ended December 31 of 2011. The presentation format will be as usual. Mark Cutifani will review the Company's performance over the quarter (technical difficulty) then contextualize the financials and Mark will conclude by highlighting key projects and exploration progress before taking your questions.

We do have members of our executive team present and we're also joined by Frank Arisman, a Non-executive Director on the Board. As usual we'll read the Safe Harbor statement.

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 outlook of AngloGold Ashanti's operations individually or in the aggregate including the completion and commencement of commercial operations of certain of AngloGold Ashanti's exploration and production targets and the completion of announced mergers and acquisition transactions, AngloGold Ashanti's liquidity, capital resources and capital expenditure and outcome and consequences of any litigation or regulatory proceedings or proceedings or environmental issues contains 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 prices and exchange rates and business and operational risk management.

For a discussion of certain of these and other factors, refer to AngloGold Ashanti's Annual Report for the year ended December 31 of 2010 which was distributed to shareholders in March 29, 2011 and the Company's 2010 Annual Report on Form 20F, filed with the SEC in the US on May 31st, 2011. These factors are not sincerely all of the important factors that could cause AngloGold Ashanti's actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results.

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.

The communications -- this communication contains certain non-GAAP financial measures. AngloGold Ashanti uses certain non-GAAP financial measures and ratios in managing its business. Non-GAAP financial measures should be viewed in addition to and not as an alternative for the reported operating results or cash flow from operations or any other measures or 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 important to investors on the main page of its website, www.AngloGoldAshanti.com, and under the investors tab on the main page. This information is updated regularly and investors should visit the website to obtain important information about AngloGold Ashanti and with that, I'll hand over to my Mark Cutifani. Mark?

Thanks very much, Stewart. Ladies and gentlemen, I will start with a couple of comments on the gold price. Certainly, since the pullback in the gold price late last year we certainly had a much more positive start to 2012 with the price up a healthy 10% since the beginning of January.

We believe the fundamentals for a strong gold price remain intact. Inflation across many of the key emerging markets is a reality. The euro crisis continues to rage across the continent and the Fed has created certainty over near zero interest rates for the foreseeable future.

The long-term resolution to the expanded US balance sheet, however, is a little less obvious and while demand remains robust from investors and consumers alike and the industry is finding it tough as ever to respond to record price levels notwithstanding AngloGold Ashanti's very prominent pipeline or growth pipeline that will kick in over the next two years. Consistent with gold's revitalized value proposition in our uncertain world, we believe the AngloGold story is one of a revitalized business leveraging value for shareholders out of both the short and the long term by and through three key areas.

Firstly, growing the size and quality of our resource base; second, improving margins and returns on investment; and third by providing a clear pathway to value growth for shareholders both in terms of capital and cash flow appreciation direct to our shareholders.

With the full year and fourth-quarter results behind us or time periods behind us, I'm happy to report an exceptionally strong set of results for the full year with a significant -- with significant gains across several key metrics. Most notably we posted record adjusted headline earnings of $1.3 billion, up 65% from last year. That earnings figure was built on cash flow from operating activities of more than $2.6 billion, an increase of almost 60% from last year and if one reflects back to 2008 off a $600 million base it's more than a 300% improvement over that timeframe.

So that improvement talks not only to the improvement within the operations, but also the overall improvement in the market for our product.

Free cash flow after all outgoing expenditures from capital expenditures and finance charges was a robust $833 million, an impressive number that has been reflected in the halving of our net debt to around $600 million at year end. With the earnings power demonstrated from the engine room of the business and with a strengthening balance sheet, even with increased investment in our growth projects, the Board has declared another significant increase in our final dividend of ZAR2.00 per share.

This is more than double the level we flagged at our Q3 results in November and provides a clear indication of our intent to improve direct returns to shareholders once we provided for our growth pipeline and preserved our investment grade credit rating.

Now into the fourth quarter, we saw strong performances from Continental, from the Continental Africa portfolio and good cost containment in South Africa, helping us to hit the production guidance number of 1.114 million ounces at a total cost of $762 an ounce which was actually better than our target set in November.

Crucially, the year ahead is the bridge for us as we return to growth in 2013 in the first phase of our target step up to our 5.4 million to 5.6 million (technical difficulty) to 2014 production range. Adjusted headline earnings for the three-month period were $295 million, impacted primarily as we flagged in November by non-cash rehabilitation charges.

This compares with adjusted headline earnings of $457 million the previous quarter which you will remember had a once-off benefit from a $70 million tax credit. Venkat will go into the details but I should make the point that that once off non-cash charge is a provision that goes over 30 years predominately at Obuasi and so on an annual basis is almost negligible, compared to the baseline $400 million profit level that we are operating at as we go forward.

In terms of gold price, just -- so, just to cash a look back to the year we had last year and how far we've come as a business, I think it's important to look at the year on year picture and it shows that the financial leverage that exists across all key earnings and cash flow metrics, relative to the rise in the gold price, is quite significant. Earnings have almost doubled and free cash flow that is calculated after all capital expenditure has also seen a strong increase.

As we have demonstrated on the ground, if you want leverage to the gold price look no further than AngloGold Ashanti. In shorthand, for every 1% increase in the gold price we are delivering more than a 2% increase in our key financial metrics.

On dividends, you'll recall after last quarter we moved to a quarterly dividend schedule and declared a [made in] third-quarter dividend of (technical difficulty) [ZAR0.90] a share. While we flagged our intention to do the same again in the fourth quarter the Board has elected to pay a significantly higher ZAR2.00 dividend in recognition of the strong cash flow and earnings performance in 2011 as well as the strong fundamental outlook for the business.

That paints the full-year dividend payout in 2011 to ZAR3.80 which is 162% more than was paid in 2010.

Importantly, this represents a compound average growth of 56% since 2008 when we launched our new business strategy and our change model. Looking forward to 2012, and taking into account not only the increased project capital expenditure but also the health of the business, we will target a quarterly payout of around ZAR1.00 per share for the year.

While this will be obviously contingent on a number of factors, not least of which is the gold price, cash flow and other greatest opportunities that may present themselves we believe this is a sustainable level to pitch the dividend for the year ahead.

On the downside, we've had an extremely difficult quarter from a safety perspective. We lost three colleagues at Kopanang in the [Bar] River region in addition to two contract employees at Obuasi and an employee at Gramalote. We continue to push ahead with our systemic initiatives aimed at eliminating fatalities across all our operations and we have made a number of adjustments to the key programs to try and accelerate that improvement to go further ahead.

Having said all of that we must have knowledge the good work in the operation, because it actually was on a full-year basis our best-ever safety performance representing a 15% improvement on our all accident frequency rate and actually a 10% improvement on our year-on-year fatality frequencies rate.

So yes, it was a tough quarter. But at the same time we must have knowledge best ever annual performance and we've got to do a lot more work to make sure that this year is better again.

On operations, Richard Duffy's team in Continental Africa turned in another solid quarter with production up 2%. While we did see an 8% increase in cost, we are still investing heavily in our liability and maintenance improvements across the organization. Most importantly and I think indicative of the management improvements, the region delivered a 42% improvement in safety performance for the year. One of the more encouraging stories for the quarter was the success we've seen in Siguiri where the rollout of Project ONE has resulted in an outstanding performance from the Mill which saw record throughput to mitigate some of the lower grades we've been dealing with of late from the mining operations.

Our aggressive exploration -- our net production was up 20% and again, basically, no capital achieved that result.

Our aggressive exploration campaign is continuing with almost 14,000 meters of RC drilling -- reverse circulation drilling -- done in December alone. I'll talk to some of these results in our exploration discussion but suffice it to say the hits in the potential oxide resource that we spoke to last quarter have kept coming.

Once we have the Project ONE success married with improved grade reconciliation and potentially some new high-grade surface oxide, the significant upside continues to unfold for this great asset in Guinea.

Navachab in Namibia also provided a good case study during the quarter with the Project ONE improvements to plant availability and improved grade together, helping the mine achieving a 19% boost to production and a 16% cost reduction.

At Geita, another great result. It was the outstanding performer within the Continental Africa portfolio, delivering 144,000 ounces at a cash cost of $486 an ounce despite repairs undertaken to the SAG mill gearbox. For the year, the team delivered 494,000 ounces at $536 an ounce, making it the second-largest contributor in the group, only slightly behind Mponeng. If we step back for a second and look at where this operation has come from, in 2008, Geita's production had dropped 264,000 ounces and [cost] ended the year at $921 an ounce and in fact we peaked at well over $1,000 an ounce in one quarter.

Since then we have undoubtedly had the benefit from improved grade. But it's the fundamental operating performance that's given us the biggest lift. And remarkably, in almost doubling production and significantly reducing costs, we've invested minimal capital.

Now, looking forward we are seeing extremely encouraging underground gauge coming from -- coming through that -- coming through that speak to the long-term future for what is a global tier 1 gold asset. If you recall, we set a target of 500,000 ounces at $500 an ounce as our twin objectives. We have now unequivocally delivered on the production targets and we've done better on cost after taking three years of inflation into account. So, very proud of what the team has achieved and certainly it all goes well for the future and it all goes well for the future in terms of the underground potential as well.

In Ghana, we continue to see signs of our two operations making strong recoveries.

Iduapriem continued to deliver on its targets and continues to deliver records on records on weekly basis with an increase in production through improved operation stability, and control. The reported costs were higher due to an increase in payroll costs and continuation of some of the maiden programs that have helped us deliver on this improved production. And that's been part of our Project ONE strategy, to invest in maintenance, get the assets performing to their potential, and then holding those assets at that higher production level.

At Obuasi, we again saw encouraging signs of stability at the operation that undoubtedly provides a significant value opportunity for the business. Better grades and underground equipment availability helped a 4% increase in production while the uptick in costs was largely due to preventative maintenance, again as part of our overall improvement program. You'll remember a similar pattern at Geita as we were bidding down the improvement programs back in 2010 and getting a handle on stability through the operation by working the maintenance backlog.

So we are in that early phase as part of the Obuasi rollout of Project ONE. And don't forget, Geita was the first project that we rolled out Project ONE and Obuasi was actually the last operation in the queue. While the full-year production of 313,000 ounces is not a big number for a resource of this size it is significant in that it represents for the first time, in our ownership history of the asset, that it's actually met its production targets and budgets. And even more important than this, it is that it made a contribution of almost $40 million to business after providing for all capital and working capital.

That compares to an outflow of almost $100 million in 2008 so the $140 million cash flow swing goes with $188 million EBITDA swing. And certainly that's a true, I think it's a true reflection on the good work the task force has done but certainly only started to scratch at the real potential we see in the asset.

With the depth of detail that comes along with this improvement work, we feel like we've made good progress getting to the heart of the issues on site. Consequently, and based on this better understanding, we've made a non-cash rehabilitation provision of some $71 million to fund the ultimate closure costs for this 30 million ounce resource. This will be paid under over the life of the operation which is longer than 30 years, and while we're not making not yet making any wild predictions for growth, what we have now is what we believe we now have is an asset making a real contribution that can start pushing towards 400,000 ounces by next year, on its way to its next markdown of 500,000 ounces from the existing mine footprint.

In the Americas, Ron Largent and the team have delivered another solid result. Despite a 2% decline in production, contribution at an earnings level is solid and while cash costs were up 17% it did reflect some abnormal (technical difficulty) in the quarter that (technical difficulty).

At Cripple Creek, production was marginally higher than previous quarters at 70 (technical difficulty) thousand ounces as (technical difficulty) stacked closer to the (technical difficulty) sections (technical difficulty) accelerating the gold. Standing increase in costs were up (technical difficulty) given the lower rate that were mined or (technical difficulty) placed at a hard (technical difficulty) cost. Encouragingly the chronic (technical difficulty) which has hampered the operation in the past year has showed some early signs of easing with some raining in recent months.

The team under (technical difficulty) Ray DuBois has done a great job under adverse conditions. Despite the [gap], 70,000 ounce production level that (technical difficulty) we are achieving is up 25% from where we were two years ago. (technical difficulty) DuBois's work in terms of turning the asset around really has borne fruit and all we need is a bit more water and you'd see another step improvement in terms of production performance.

very pleased with the guys over there at Cripple Creek. And praying for a little rain will see another leg up in the production (technical difficulty). At Cerre Vanguardia, we saw increases in costs, driven predominately by a timing issue in gold sales given the shipment from the mine transit over quarter, our 42% number (technical difficulty) the production number was actually $51,000 representing (technical difficulty) the previous quarter. This quarter it will normalize and we'll certainly see a result out of (technical difficulty) as a (technical difficulty).

One thing that we are (technical difficulty) people's radar in Argentina inflationary (technical difficulty) and inflationary (technical difficulty) wage demands continues to pose a challenge as does the regulatory environment that pertains to imports of goods to (technical difficulty) equipment at (technical difficulty). We continue to watch these developments very carefully and we'll keep you posted (technical difficulty) progress. But certainly from our point of view it's a great asset going forward.

At (technical difficulty) than the previous quarter given the boost of third-quarter production from (technical difficulty) release in the quarter. Lower output and continuing mining (technical difficulty) inputs and cash costs which were up (technical difficulty) percent quarter on quarter, (technical difficulty) see that turn back around as at quarter. Great improvements at Serra Grande contributed 40% (technical difficulty) output and a significant improvement across that operation.

In Australia, (technical difficulty) started its way back to recovery after the floods in early 2011. A 26% increase in production for the fourth quarter and a 6% improvement in costs. While the pit wall failure, which followed the flood. continued to impact operations we saw open pit mining (technical difficulty) partway through the quarter with the underground mine producing ore at an annualized rate of $1.3 million. Work is well on way to (technical difficulty) zone, which will provide around 50% underground ore feed for 2012 (technical difficulty) and 2013. Recent modeling of this zone has also led to a significant upgrade in the tonnage available.

An additional three underground drill rigs and two surface drill rigs have been mobilized on site to fast-track drilling on the new [Vogue] domain discovered last year. [Vogue Mineralizer] is an extension of the extension of the Cosmo and the (technical difficulty) infrastructure to 400 meters and to date have 900 meters below surface and by South Africa (technical difficulty) standards is still a relatively shallow mine deposit, and we have yet to find the bottom of those deposits.

It is hosted within volcanic rocks and structures equivalent to those that hedge Cosmo, Western Shir and the GQ mineralization. While it is too early to call its full potential we are very excited about what we've seen so far and certainly we believe it's appropriate to talk about a mine with more than 10 to 15 years life.

In South Africa, production was steady at 398,000 ounces while cash costs improved by 8%. We had a tail wind from the weakening rand and normalized power tariffs which helped us on the cost front. But we continued to use to face significant disruption from [safety] stoppages particularly in the Vaal River region. These stoppages remain one of the largest risks to forecasting production from South Africa and we will as usual offer quarterly updates on their impact.

Section 54 stoppages are an important tool for the State Mining Inspector to improve overall workplace standards. We have and will continue to support this and any measure that is reasonable to improve safety. We are, however, working closely with regulators to make sure we have a more collaborative approach so that we can see if we can reduce the impact on production so that we can realize certainly the real potential we see in the operation.

At this (technical difficulty), the operations had a standout quarter with each delivering significant production and cost improvements. Mponeng, the group's flagship mine, delivered an 18% increase in production of 138,000 ounces while costs were 12% lower. This was principally on the back of a 26% increase in the area mined following fewer operating disruptions.

TauTona produced 24% more ounces and a commensurate drop in costs after a smoother operating quarter with a marked drop in interactions. So, we can get that Vaal River operation back into balance. We should -- we believe we'll see significant upside. Credit must also go to Brian Penny's surface operations team which turned in a 16% rise in gold production and a 19% drop in cash costs to $714 an ounce on the backup process consistency and grade improvements.

The Vaal River operations struggled as I mentioned a moment ago with 31 full days of production and that's by mine, not for the total division. Stoppages across the region hitting [our port] hard even in comparison with previous quarter which was disrupted by the industry wide strike.

All three mines registered double-digit percentage drops in output but nonetheless managed good cost containment under tough circumstances.

Output of uranium, principally a byproduct from the Vaal River's gold production showed a 12% drop from the previous quarter, largely due to the mining volumes for the region, lower mining volumes for the region.

For the year, production was 1.38 million at a processing cost of $26.68 per pound. Given the average received price in 2011 of $54.69 a pound, it's clear that this is a highly profitable pro forma which -- that will increase in importance as recoveries in tonnage is expand in coming years.

I'll now hand across to Venkat to take you through the financials before taking you back through the projects and our exploration activities.

Thank you, Mark. Good morning, ladies and gentlemen. I'll be covering the following four areas in today's presentation, starting with the fourth-quarter financial results and then full-year financial results moving on to free cash flow and balance sheet and then concluding with the outlook for 2012.

Starting with the fourth-quarter financial results, adjusted headline earnings of $295 million for the fourth quarter were adversely impacted by the following three factors, all of the amounts post-tax, lowest spot prices as compared to the previous quarter and higher unit cash costs $42 million. Profit lockup and higher levels of unsold gold at the quarter end $8, million and as Mark mentioned, annual research of environmental rehabilitation provisions of $105 million.

The other factors and higher quarterly expenditure profile resulted in lower adjusted headline earnings as compared to the $457 million recorded in the third quarter which, if you remember, included the benefit of a $70 million once off deferred tax credit. Adjusted headline earnings per share was $76 or ZAR6.15 for the quarter.

For the benefit of analysts on the call, a breakdown of the year-on-year increase in the rehabilitation provision is as follows. Inflation and discount rates assumptions amounted to 40% of the increase. Design, change in design of the [tailing] storage facility amounted to 23% as Mark mentioned. primarily Obuasi. Change in methodology following requests from the EPA, 20%. Revision of life of mine plans resulting in accelerated cash flows, 17%.

Net profit attributable to equity shareholders for the quarter amounted to $385 million and this included the $95 million post-tax benefit of the impairment reversal at Geita following the asset turnarounds. It's important to note that the impairment reversal benefit is not included in headline earnings or adjusted headline earnings, given its capital nature.

Margins calculated on both cash costs and cash costs plus capital expenditure remained healthy at 45.2% and 27.6%, respectively, notwithstanding a higher capital spend in the fourth quarter.

For those listening on the call, the slide shown on slide number 17 will be a helpful reconciliation as it identifies the impact of once off tax credits and the environmental provisions charge in the third and the fourth quarter adjusted headline earnings, respectively.

Turning to the full-year financial results, 2011 was AngloGold Ashanti's first year without a hedge book, adjusted headline earnings rose on the back of a better spot price, and improved performance from Geita to a record $1.3 billion. Adjusted headline earnings per share were $3.36 and ZAR24.40.

Net profit attributable to shareholders for the full year was $1.55 billion. Our full-year returns on capital employed in equity were 20% and 25%, respectively, and as Mark mentioned, these metrics are well ahead of those recorded in 2010.

Turning to free cash flow and balance sheet, the fourth quarter's cash generation was better than anticipated, notwithstanding the higher scheduled capital expenditure, tax payments, and the payment of the maiden third-quarter dividend during the fourth quarter. Cash employed from operating activities was $644 million and free cash inflow -- that is after all outgoing, other than dividends -- was $97 million. Net debt levels were slightly lower at $610 million as compared to the previous quarter.

For the full-year 2011 all cash flow metrics were strong as follows. EBITDA, $3 billion, cash inflow from operating activities, $2.65 billion, and pretax pre-cash inflow $833 million. In addition, $39 million for post-tax was realized from the sale of non-core assets during the year.

This healthy cash generation helped us both increase the 2011 dividend payouts significantly when compared to last year. And at the same time achieve a prudent dividend cover of just over four times free cash flow for the year.

In December, a dedicated AUD600 million full-year unsecured revolving credit facility was obtained from a syndicate of 11 banks at competitive terms to assist with the funding of the Tropicana project. The primary reason for obtaining this facility was to remove any currency volatility when amounts are drawn from our $1 billion revolver to fund Australian dollar requirements.

None of AngloGold Ashanti's principal debt facilities which include the two rated bonds maturing in 2020 and 2040, 3.25% convertible bonds and the two revolving credit facilities mature until the second quarter of 2014.

Looking at the 2012 outlook, Group's gold production for 2012 is currently estimated at between 4.3 million to 4.4 million ounces, total cash costs are estimated at $780 to $805 an ounce and average exchange rates against the US dollar of R7.40 to the dollar, BRL1.74, AUD1.01 and ARS4.43 and fuel at $110 per barrel.

Both production and total cash cost estimates will be reviewed quarterly in the light of safety related stoppages currently being experienced in South Africa and any other unforeseen factors.

Gold production for the first quarter of 2012 is estimated at 1.03 million ounces. Total cash costs are estimated at $8.20 to $8.35 an ounce at similar exchange rates for the year. Both estimates could see some downside risk in light of safety related stoppages currently being experienced in South Africa.

Other line items are currently estimated as follows for 2012. Depreciation and amortization $880 million; corporate marketing Project ONE and capacity building costs $300 million; and the SA technology project $15 million; expensed exploration $230 million; and [studies] $150 million; interest and finance cost P&L $195 million; and after eliminating accounting entries in the finance cost line, cash outflow of $140 million. That includes the coupon on the mandatory convertible bonds. Capital expenditure of $2.2 billion to $2.3 billion, of which $1.1 billion relates to project capital, 60% of which is being spent on three projects, too in the DRC and one in Australia, being Tropicana.

The number of shares that qualify for basic EPS as of December 31, 2011 was 386 million shares. I will now hand it back to Mark Cutifani.

Thanks very much, Venkat. We continue to make very good headway on project development and a notable indicator here is not only our focus on staying within budgets on projects but also our improving capacity internally to fully invest the capital expenditure budget in 3Q.

Our total capital bill last year was $1.53 billion against guidance of $1.6 billion. Good progress on all our major growth projects which accounted for more than $500 million of that expenditure. As Venkat mentioned in his outlook piece, we will significantly step up the growth portion of our expenditure in the coming year as we move into development in the DRC in Mali and continue to progress Tropicana towards production.

I'm pleased to announce approval as we flagged at our Analyst Day in November of our Zaire phase 2 project at Moab Khotsong at a capital cost and this is a life of mine capital cost of $395 million, and the first phase of the Below 120 CLR project at Mponeng of $416 million, again, a life of project estimate. And in fact our project expenditures in South Africa are about $170 million for the year, about 17% of our project capital spend, both large-scale, very important projects but at the same time extremely cash-generative and will be self-funded by the South African business and they will still have good cash flows above and beyond those projects.

So again low-risk, high-return projects that extend the life of the two cornerstone mines in South Africa on a relatively low commitment in terms of the full project capital portfolio allocation.

At Tropicana, the project remains on budget and on track to pull first gold in Q4 2013. We expect to be -- that will be the first of our major projects to start delivering gold to the expanded AngloGold Ashanti. The 220 kilometer access road to site made completion during the quarter and work continued on earth works for the plant side, internal roads, and the airstrip.

Engineering and procurement is now substantially complete and all key positions in the new operating management team were filled. Drilling of the ballfield 40 kilometers north of the project was wrapped up during the quarter.

At Mongbwalu in the DRC, the optimized feasibility study is complete and will be submitted to the Joint Venture Board next month. The good news is our Board and the Joint Venture Board have continued to support our pre-project funding of critical project items so that will maintain our focus on the timeline to deliver production beginning 2014. So, that timeline won't be compromised.

Meanwhile, our team on the ground at Mongbwalu has made significant progress on the physical developments. Staff accommodation was upgraded and good headway was made on the construction of the road to Bunya. This remains an important beachhead project for us in our very prospective [key load belt] region where active greenfield and brownfield exploration continued on our extensive tenements.

Similarly at our Kibali joint venture with Randgold, the Board supported continuing commitment to critical project or critical path project expenditures; and Randgold's team has continued to successfully drive the project's momentum. A further 250 families were relocated from the first of 14 villages identified in the relocation plan. As of year-end, about 500 houses had already been built.

The design of the tailings facility, the mid-plant shared service facilities in general mine infrastructure was completed, while work on the detailed mining zone continued. Importantly, major long lead items as I said continue to be purchased and our (technical difficulty) progressively being to deliver this to site. As with Mongbwalu, funding for critical path items have been released and supported by our Board allowing Mark Bristow and his team to continue according to their public stated timelines ahead of final approvals from our Board.

And finally, at Corrego do Sitio, the most advanced of our projects the mine ramp phase continued according to plan. The second entrance to the underground mine was connected to surface during December and the (technical difficulty) commissioned last month. That amounts to a successful execution for this 140,000 ounce a year project on time and substantially on budget, given exchange rate fluctuations over the development period.

So our track record of delivering on our commitments on projects over the last three years remains on track and will certainly underpin, we believe, the success of our new projects going forward.

On reserves and resources, we've seen a significant effort in building the resource base with excellent progress during the year, more than offsetting -- and with increases more than offsetting production and other depletion. We've used fairly conservative prices in these calculations when compared to the current spot price, sticking close to the levels viewed midway through 2011 of $1,100 an ounce for reserves and $1,600 an ounce for resources.

As you can see, we saw a 6% net growth in reserves and a 5% net increase in our reserves resource base, further extending an already impressive mine life profile. As an aside, if you take the last three years' average gold price at $1,280, that $1,100 looks to be an extremely conservative figure in that context.

Through the work done by our South African team on developing technology in-house to improve recovery from our tailings dam, we've added 3.2 million ounces to our reserve base. Importantly these are low-risk low-complexity ounces in our tailings facilities which come with a potentially lucrative uranium byproduct to help offset rising labor and power costs in the country.

Other notable success on the resource front from our extensive drillings came at programs at La Colosa where we added another 3.8 million ounces, taking the project to a 16.3 million ounce and at Gramalote we bagged almost 1 million additional ounces. At brownfields exploration, the drilling has again yielded a good cropper results with the work on extending the lift at Geita looking particularly promising.

In our campaign during the quarter, which saw more than 11,000 meters drilled. we continued to hit good, thick, high-grade sections which confirm and extend underground potential. The best intersection for us during December was 24.2 meters at more than 22 grams per ton at a relatively shallow depth of 262 meters.

With this mine now fulfilling its potential from an operating perspective and I mean that as a current operating perspective, nudging 500,000 ounces a year mark, these results take on increased significance and certainly increased economic significance for the group. Similarly at Siguiri, we are aggressively targeting the Scylla core off-site target which lies within two kilometers of the plant. That is two kilometers.

Among a good set of results we're 7.7 meters at 4.4 grams per ton and almost 14 meters at 5.6 grams per ton. This is potentially a very rich feed for the plant which is setting new operating records and -- but with great constraint. So this drilling has a real potential to give us a sweetener that will certainly improve our capacity in 2012, probably more significantly in 2013.

At Tropicana, we added another 1 million ounces to the resources during Q4, given the success of drilling they have on the biggest portion of the orebody which lies between the Tropicana and Havana pit areas. Again, this vindicates Graham Ehm and his team who have long believed the additional potential exits -- the additional potential exists to increase the reserve and maintained the elevated levels of production envisaged by the mine plant in the first three years of production.

At Cerro Vanguardia in Argentina, drilling of the vein structures continues to show stellar results albeit at a narrow width associated with the vein structures typical of the region. One intercept returned grades of 151 grams of gold per ton and 94 grams of silver per ton, over a little less than a meter. Another, over a true width of 20 meters, returned grades of 1.23 grams of gold and 3.8 grams of silver.

As this operation ramps up at [sea bleach] and underground projects the options to increase the size of the mine continue to be evaluated by a project team seconded from our Denver office. And finally at Colosa, five drilled rigs continue working around the clock to build the resource still further. A look at these results shows good grade intersections over wide areas and we're talking about 100 meters over 2 grams along the northern edge of the concession. These will almost certainly add to a very large resource during the coming year while also enhancing the average grade of the resource as well.

On greenfields, it may be worthwhile to point to you to some key areas we are looking out for in 2012 as we again step up a level from 2011 when we drilled in excess of 200,000 meters across our key areas along with an enormous amount of target generation and early-stage discovery. Key areas of focus for us will be the so-called blocks 2,3, and 4 adjoining our Siguiri mine in Guinea where the [KoonKoon] and Soraya targets bode well for our overall expansion ambitions in the region. At Soraya the main resource results include 9 meters at more than 2 grams and 4 meters at 17 grams from a 66-meter hole.

Areas outside of the immediate Tropicana project area will also get more attention as they did last year as we searched for another significant deposit in this area that we control along a strike length of several hundred kilometers.

Similarly, in Colombia where we hold a dominant land position of 6,000 square kilometers across several provinces in the country's most prospective regions. Quebradona, an early-stage target, is showing copper gold potential from early drill testing and will be one that we will be reporting on in our next few quarters.

And finally the other area to note is Egypt where the greenfields team is becoming increasingly enthused that what they are seeing at the [Huttee] target we're drilling with successfully intersection, up and down dip extensions of the targeted load. You can expect -- you can also expect to hear more about this project as the year progresses.

And now on cash flow improvements, it is a worthwhile look at the record earnings and cash flow generated in a difficult operations year. The chart that we've shown in the pack makes clears or demonstrates the clear gains that we've made on improving the underlying health of the business since launching our new strategy three years ago. And the gains have built on three legs -- have been built on three legs -- the rising gold price, the hedge book removal and, of course, the internally generated improvements through the implementation of our Project ONE change model, all roughly unique and all of those three contributions are in equal measure across the business.

Before I close, I would -- I think it's important to acknowledge Robbie Lazare, our former head of the South African Operations, will retire before the time before we report our next set of quarterly results. We'd like to all take the opportunity to thank Robbie for his wonderful contribution over 30 years and it's also very important to advise the market that we have completed a very smooth leadership transition period to Mike O'Hare, and we all wish Robbie the best in his future career at Jefferies Bay. He will be missed by his colleagues in AngloGold as well as the chamber of mines and other -- our other many stakeholders across the industry.

So, we start 2012 with an optimistic outlook and a very clear sense of purpose. What we present is clear. A company emerging from several tough years which is strongly in a position of strength from which to reinvest in its own portfolio. That reinvestment from record earnings and cash flow will fund our growth to 5.5 million ounces by 2014, a target we are absolutely focused on delivering and a plan to achieve -- and we have a plan to achieve from projects that are either in construction, have been nearly approved or are set to go to the Board in the next few months. The value creation we aim to deliver, all things being equal, will be an effective 25% increase in production per share and associated cash flow per share area.

And finally, after financing that growth from our internal sources and securing our investment grade credit rating, we are committed to ensuring our shareholders are rewarded through a balance of both capital and dividend appreciation.

With that we'd be more than happy to take questions.

(Operator Instructions). Sabrina Grandchamps, HSBC.

Thanks for taking my question and thanks for the update. Firstly, congratulations to Robbie on a really strong career at AngloGold and good luck to him on his future endeavors.

My first question is on Kibali. Can you maybe provide some details on what is required for Board approvals and how that differs from what has been done so far? And hypothetically speaking, when could be the hold up in approvals be negative to the project timeline?

The holdup in project approvals will not be negative to project timelines. The Board approved commitment on critical path expenditures. It will not have an impact on (technical difficulty) lines. What we're actually doing is finalizing the detail in the feasibility study that our Board requires to sign off that all risk measures have been appropriately addressed.

We've already demonstrated in material form that those issues are under control. The Board was satisfied and supported the continued commitment to the timelines that we've put forward. I expect the approval will occur in the next few weeks, certainly probably before the next set of Board meetings, but one must remember that we have made a massive change to our project execution strategies in the group.

Unlike most other groups we are not reporting drags in timeline delivery or capital estimates and we're going to make sure that we don't change that with Kibali and Mongbwalu. I think Mark and his team have done a great job at Kibali and there should be no impact certainly from our end with respect to the delivery of the Kibali project and for Mongbwalu on the same regard -- in the same regard.

Thanks. That's very helpful and can you provide an update on your South Africa technology project?

Yes, we are very pleased with the way that's going. The team is actually putting together a proposal for a prototype implementation to be installed at Great Noligwa. We are hoping to have that completed by the end of 2013 so that we've actually got an operating prototype in 2014. And for us, that's a really important milestone as it's both a safety project, it's a productivity project, it's a cost reduction project, it's an energy reduction project and it will change the face of mining in South Africa.

So we're very excited. We expect to see a prototype in place and we will in fact be presenting some key elements of that project in Brazil in April as part of the Kellogg Global Innovation Network Meeting that I'll be chairing with the head of the Mining Innovation Group out of the Kellogg University from Chicago. Very proud to be the lead player in that program.

Carli Lourens, Bloomberg.

I didn't actually have a question. I need the operator to cancel that.

Dylan, do you have any more questions?

I have no further questions, sir. Would you like to make some closing comments?

Very happy. As we said from the outset, the last 3.5 years the organization has been through a major restructure. We've seen record earnings results, return on capital employed is 25%. Return on equity, 20%. We are investing cash flows in high-return projects that will add value for our shareholders. And at the same time, we are continuing to build our dividend return to our shareholders on the basis of a very solid balance sheet, a very conservatively geared balance sheet.

We believe that 2012 will be another significant improvement here and as we move into 2014 that growth, as we grow both production base per share and our cash flow per share, we think provides compelling value and demonstrated leverage compared to the physical goal where a 1% increase in yield price in our case represents a 2% improvement in our key financial metrics and for us without improving dividend yield we think presents a compelling case for the purchase of equities and, in particular, AngloGold Ashanti equities and thanks for listening.

Thank you very much, sir. On behalf of AngloGold Ashanti, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

(EDITOR - Transcript in its entirety will be posted when complete audio is available.)