Anglogold Ashanti PLC (AU) 2013 Q3 法說會逐字稿

Good day and welcome to the AngloGold Ashanti Q3 2013 results conference call. (Operator Instructions). Please note that this conference is being recorded.

At this time, I'd like to turn the conference over to Stewart Bailey, Senior Vice President, Investor Relations. Please go ahead.

Thanks, Ari. And thanks everyone on the call for joining us for our Q3 results for the three months through September 30. You have a group of our executive management team here in Johannesburg. And I'll run through the agenda just after I've done our customary reading of the Safe Harbor Statement.

Certain statements contained in this document, other than statements of historical fact, including without limitation those concerning the economic outlook for the gold mining industry, expectations regarding gold price, production, cash costs, cash savings and other operating results, return on equity, productivity improvements, growth prospects and outlook of our operations individually or in the aggregate, including achievement of project milestones, commencement and completion of commercial operations of certain of AngloGold Ashanti's exploration and production projects and the completion of acquisitions and dispositions, our liquidity and capital resources and capital expenditures and the outcome and consequences of any potential or pending litigation or regulatory proceedings or environmental issues, are forward-looking statements regarding our operations, economic performance and our financial condition.

These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause AngloGold Ashanti's actual results, performance or achievements to differ materially from anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although AngloGold Ashanti believes that the expectations reflected in such forward-looking statements and forecasts 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, amongst other factors, changes in economic, social and political and market conditions, the success of business and operating initiatives, changes in the regulatory environment and other government actions, including environmental approvals, fluctuations in gold prices and exchange rates, the outcome of pending or future litigation proceedings, and business and operational risk management.

For a discussion of such risk factors, refer to the prospectus supplement of AngloGold Ashanti's prospectus dated July 17, 2012 filed with the SEC on July 26 this year. Those factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expect in any -- expressed in any forward-looking statements. Other unknown or unpredictable factors could have material adverse effects on future results.

Consequently, readers are cautioned not to place undue reliance on forward-looking statements. AngloGold Ashanti undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti or anyone acting on its behalf are qualified by the cautionary statements herein.

The communication may -- this communication may contain certain non-GAAP financial measures. We use these non-GAAP financial measures and ratios in managing the 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 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.

We post information important to investors on the main page of our website at 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 us.

Thank you.

We'll be starting off with Venkat. We'll be moving onto Richard Duffy who will talk us through the financials and reconciliation of the earnings, then through to the operators, Mike O'Hare on South Africa, Ron Largent on the international portfolio and then Graham Ehm on our project portfolio including Tropicana.

What I would ask you to do in the meantime is you will see a link on our -- the front page of our website to a video, just showing the startup of Tropicana, be some interesting visuals for you to basically look at while Graham is talking through that piece later on in the presentation.

Venkat.

Thank you, Stewart. Good morning or good afternoon ladies, and gentlemen. If I can kick off with slide number 6 which is headed building blocks for AngloGold Ashanti.

In the last quarterly presentation and at the presentation at the Denver road show our messages were very clear in terms of the strategy where we are taking AngloGold Ashanti. Five key messages. We said message number one during these tough times in the industry we have a dedicated management team and the people to drive the results whilst we remain focused on both safety and our social licenses to operate.

The second message was that we have proactively and decisively moved to address any fears that might exist around our financial flexibility and our balance sheet. And we'll come onto that later.

And message number three is that we are tackling head on optimizing all aspects of costs, whether its operating costs, overheads, capital spend to improve cash flow without compromising the long term prospects of the business.

And the fourth message was that during the quarter we'll see two mines now going into production, and Tropicana and Kibali both coming on stream literally within a few days of one another. We'll keep improving the quality of the portfolio whilst we remove marginal ounces from the mix.

And importantly the last message which is we are keeping our long-term optionality intact using lower cost options and a very focused exploration portfolio.

What does this mean for our shareholders these five pillars will do the following for AngloGold Ashanti? It will help us ride through any gold price shocks, improve our cash generation and preserve the long-term future for the company. So if the speculation that the gold price run is over turns out to be wrong and the gold price does indeed surprise us to the upside, then we'd be able to cream an extra cash flow.

So if we can just start with the third quarter overview and here we are on slide number 7. The third quarter of 2013 was a very eventful quarter for AngloGold Ashanti but for all the correct reasons. From an operational point of view it was a very strong quarter on all fronts, whether its production, total cash cost, overhead, capital spend all-in sustaining costs and cash flow, and we'll come onto that later.

In terms of safety we had a record safety performance, particularly South Africa under the leadership of Mike, did an excellent job in terms of improving their safety record within a short period of time, whilst our non-South African operations delivered a very good performance for the year to date. And we'll come to that later on in the presentation.

Another highlight of the quarter was Tropicana and Kibali, our two new twins coming on stream, starting production in Australia and in the DRC. And the Kibali project, as you know, is the joint venture with Randgold and Sokimo. Both these projects were delivered on time and on budget. And the focus now is to basically get the ramp up underway, and Graham will elaborate on that point.

Our balance sheet has been strengthened. Richard, following the appointment with the financial team with Rob Hayes, the Treasurer, have issued a seven-year bond which improves our liquidity and tenor. And that has actually created sufficient financial flexibility for us in terms of giving us a pot of cash on hand and ensuring that we don't touch our $1b undrawn facility.

And at the same time, that coincided with a lot of speculation about gold companies breaching covenants, and we have got a temporary easing of our banking covenants. We knew we were not going to need it, but in any event that was one way to silence the market. Richard will explain that later on in the presentation. And we have therefore maintained our production and cost guidance for the year.

If we can then turn onto slide 8 which effectively sums up in a nutshell what has happened during the quarter on a relative comparative basis. Let's start with the gold price. The gold price moved against us, quite a strong headwind $1,421 an ounce dropping to $1,327 an ounce. Roughly close to $100 an ounce disappeared from the gold price. That translates to a pre-tax blow in terms of our cash flow and earnings of $100m.

But what has turned is certainly levers which are within management control. Starting with production, gold production improved against all of the comparators it was up 12% on the previous quarter. And if you recall, we did say when we set our annual guidance that we expect the third quarter and the fourth quarter of the year to have a better profile in terms of gold production, and we said that at the start of the year, up 12% on the previous quarter.

We significantly exceeded our top end of the guidance. And certainly this was one scenario where all four regions outperformed, and the portfolio effect provided an extra boost.

It was importantly what needs to be born -- remembered is that the production levels were higher than the same quarter of last year, noting that the third quarter of 2013 i.e. this quarter just gone, had the impact of the South African strike and the fire at Kopanang, which had an impact on the ounces. And importantly the step-up in production has come without any meaningful production from either Tropicana or Kibali, given that they went on stream only in the last week of the last month of the quarter.

What is encouraging is all four regions were up quarter on quarter. South Africa was up 7%, and as Mike will clarify the underground production was higher quarter on quarter. Continental Africa was up at 12%. Americas was up 15%, largely driven by improvements from Brazil. And Australia was up 24% as Sunrise Dam started to enter the crown pillar area. At a country level nine out of 10 countries showed quarter-on-quarter improvements.

Turning onto costs, a good cost performance with a 10% better than the second quarter and importantly 3% better than the same quarter last year. And one has to note that the third quarter normally has wage increases and power tariffs coming through in South Africa and what we have managed to do is through a combination of grades and our volume improvements and cost savings, managed to get the cost down significantly as compared to where we were in the previous quarter. Admittedly, we have had some currency benefit as well.

Turning to what we call below the line spend, which is off-mine site spend, corporate and marketing cost, exploration and evaluation cost, quarter 2 was lower than quarter 1. If you recall, as we move towards our annual target for 2014 of $120m to $140m of corporate and marketing costs and $150m to $175m of exploration and evaluation cost which would provide a savings of around roughly $460m as compared to our spend in 2012, that reduction trend is progressing and quarter on quarter the improvement there is between 26% to 30%.

Turning to capital expenditure, as Tropicana build gets completed and we start to see some of the other capital expenditure projects taper off, we've shown improvement in our capital expenditure profile by around 19% quarter on quarter. We still have capital expenditure in terms of Kibali and in terms of CC&V expansion and some of the other mines which we will touch upon later on in the presentation.

Turning to all-in sustaining costs, to emphasize it is a non-GAAP measure. It is not a pure profit and loss measure it has an element of cash flow in there. It's basically aggregation of -- and it's been developed with -- in consultation of the World Gold Council. It includes total cash cost. It includes our sustaining capital. It excludes key project capital spend. It also includes greenfield exploration and it includes corporate costs and marketing.

When you compare it on a like-for-like basis between quarter 2 and quarter 3 we have shown a reduction of about 11% in terms of our all-in sustaining costs. And this is purely an aggregation of the reduction across the four lines above.

What is important to remember is our all-in sustaining costs of $1,155 an ounce includes $40 an ounce of redundancy costs. So we have been conservative in including that in our all-in sustaining costs. But if you were to strip it out the reduction is close to $200 an ounce on a quarter-on-quarter basis.

That translates directly into the cash flow line. Our cash inflow from operating activities improved by 128%, largely driven by the operational improvements and the cost savings but also we had lower lock-up in terms of our working capital this particular quarter.

And ultimately when you look at free cash outflow, our free cash outflow was close to $0.5b in the second quarter of 2013. In the third quarter of 2013 we have come much better than what we thought would be the case at an outflow of $205m. And one needs to compare that with our project capital spend in the third quarter, which was higher than the free cash outflow line of $216m and $29m of refinancing and acceleration of financial -- of financing costs. So when you add the two together you're close to around $245m worth of project capital and financing, one-off financing costs and the free cash outflow was only $205m, showing the marginal cash generation without those items in the third quarter of 2013.

Finally looking at the safety slide, before I pass across to Richard to talk about the financials, safety remains our first value and our focus and is even greater at these times. If you recall in the Denver presentation we started with our safety performance, we have shown significant improvements. And thanks to the efforts which we have put in over several years, as you can see from the table, all of the metrics have actually improved significantly.

We recognize one fatality is one fatality too many, but there have been a sharp improvement under whatever metric whether it be all-injury frequency rate, lost-time injury frequency rate, fatal injury frequency rate, they have all improved. All of them represent an all-time record particularly with regard to South African region, they have had 150 consecutive fatal-free days. And Vaal River in South Africa has had a 14-month run without a single fatality, excellent work by the South African team.

We sadly had one accident involving a third-party contractor in Iduapriem mine in Ghana, but immediate corrective action has been taken and preventive action has been taken across our portfolio.

What we still see is high potential incidents or what we call near misses. We are spending a lot of time and energy in relation to high potential incidents and learning from what happened in the high potential incidents and then translating that knowledge across all of our mine sites.

What this quarter clearly shows is what can be done if a team, which is highly motivated, comes together and pulls in one direction. You start to deliver a good safety record, you start to deliver good production, you bring projects on stream and on budget, cost improvements can be delivered and you can maintain a site discipline in terms of our corporate costs, overhead spends and capital expenditure.

With that introductory comment, I'll now pass you over to Richard.

Thank you, Venkat. Total earnings attributable to ordinary shareholders amounted to $1m for the quarter, which compares to the June quarter loss of $2.2b. As you may recall, the June quarter was impacted by asset and stockpile impairments of $2.4b after tax.

Adjusted headline earnings for this quarter were $576m, which includes a realized fair value gain of $567m on the mandatory bond conversion into AngloGold Ashanti shares. This compares to the adjusted headline earnings loss of $135m in quarter 2.

In order to remove the noise around the quarter 2 impairment and the quarter 3 fair value gain on the $789m mandatory convertible bond, early settlement of the $733m May 2014 convertible bond, and new issue of our $1.25b seven-year bond, we have normalized our adjusted headline earnings as we've set out in the table on the slide in the presentation. In addition to these adjustments, we have also stripped out corporate retrenchment and termination charges and operational redundancy costs, resulting in normalized adjusted headline earnings for this quarter of $110m.

For comparative purposes we have also normalized our adjusted headline earnings for quarter 2, showing a profit of $9m. The waterfall graph that we included in the presentation shows the $57m impact of a 7% lower gold price, $15m associated with higher wages and winter power tariffs in South Africa, together with $13m in additional finance charges associated with the $1.25b bond.

These were more than offset by the $27m savings on corporate and exploration costs, a $25m favorable impact on the back of weaker local currencies, and just under $150m in improved operational performance resulting in an underlying quarter-on-quarter improvement of just over $100m.

The operational performance was driven by grade and volume improvements, with better grades delivering around 75% of the benefit. Improved grades were delivered at a number of operations including Moab Khotsong in South Africa, Iduapriem and Obuasi in Ghana, Siguiri in Guinea, Sunrise Dam in Australia, Cerro Vanguardia in Argentina, and AGAM in Brazil. Mine volumes improved at Moab, Mponeng and TauTona, largely as a result of better production performance. Geita's plant throughput improved as a result of less downtime when compared to quarter 2.

In quarter 3 we continued our prudent and proactive management of our balance sheet to provide sufficient liquidity and flexibility as we restructure the business. Part of the proceeds from our new $1.25b bond were applied to early settle the May 2014 $733m convertible bond and cancel the $750m backstop bridge facility, thereby eliminating refinancing risk providing additional liquidity and improving our debt maturity profile.

Our net debt to EBITDA ratio was 2.02 times for the quarter as compared to 1.55 times at the end of quarter 2, and remains significantly below our temporarily increased bank facility covenant level of 4.5 times and well within the nameplate covenant level of 3 times that will again apply from December 2014.

Our next debt maturity is only at the end of 2015 in the form of our AUD600m revolving credit facility, which is currently drawn at AUD560m which will start to be repaid from the cash generated by our new Tropicana operation as it ramps up.

Turning to our outlook, as Venkat mentioned earlier in his presentation, we are maintaining our production and cost guidance for the year. In the last quarter we expect our production to be between 1.13m and 1.17m ounces at around $800 an ounce cash cost as we start to see ounces delivered through the ramp-up at our new Tropicana and Kibali operations with additional ounces from accessing the high grade crown pillar at Sunrise Dam. The assumptions for our Q4 outlook are set out in our presentation.

Please note, as in prior years, our fourth quarter earnings may be distorted by yearend accounting adjustments such as reassessment of useful lives, reset of environment and rehabilitation provisions, direct and indirect tax, and inventory provisions. We will continue to pull down our corporate and exploration costs, but bear in mind that our quarter 4 costs are typically lumpy around our seasonal spend profile.

So, notwithstanding potential challenges that we still see throughout the industry we have maintained our annual gold production guidance at between 4m to 4.1m ounces at a cash cost of between $815 to $845 an ounce. Our assumptions again are included on the presentation slide.

I will now hand across to Mike O'Hare to take us through our South African operations.

Hi, afternoon, everybody. I am on slide 16, which describes the performance from the West Wits operations. I think before I talk about the West Wits, let me talk about the region's gold production which as Venkat mentioned was up 7% quarter on quarter. What's pleasing about that is our underground production increased by 10% quarter on quarter.

And last quarter I said that we'd be concentrating on two of the fundamental mining basics that increase the gold. The first one being the blast frequency, which directly determines how much rock is actually blasted. I am pleased to report that, that increased by 12% across the region over the quarter. And secondly concentrating on dilution in order to improve the yield, we improved the dilution as measured by stope width by 4% quarter on quarter.

The West Wits production increased by 10% with improvements both at Mponeng and at TauTona mines. Mining volumes improved by 10% at Mponeng and together with a 6% reduction in dilution caused both the tonnage treatment and the yield to improve at this mine. Grade management at Mponeng however remains our key priority.

Despite the cost headwinds in the form of increased winter tariffs from Eskom which are normally 20% higher than our summer rates, annual salary increases and the impact of pumping costs, we managed to hold the unit rates in rand terms favorable across the region.

Moving across to the Vaal River area, the next slide, firstly the wonderful safety work in the Vaal River has resulted in them maintaining a clean sheet as far as fatalities are concerned, for which we are all extremely grateful.

A stellar production performance at Moab Khotsong managed to offset the effects in the Vaal River of a three-day protected strike together with a fire in a high grade production area Kopanang.

At Moab, the efforts to reduce dilution by reducing stope width, monitoring cross-tramming and increasing the mining grade improved the yield by 20%. Concentration on blasting frequency meant that the [value] mined this quarter improved by 17% over the quarter.

If we move to surface [sources], slide 18, the gold increase -- the slight gold decrease sorry, quarter on quarter, was a reduction in the volumes treated at Mine Waste Solutions which was caused by commissioning problems of a pipeline and a pump station from the AGA tailings facilities to Mine Waste Solutions. These teething problems have now been sorted out, and record tonnages are currently being treated.

During the quarter at Mine Waste Solutions we unfortunately experienced an environmental incident where bolts were stolen, were attempted to be stolen off a pipeline causing the flange on the pipeline to open up on a residue line between the plant and the tailings facility. This caused a spillage of tailings. Prompt action ensured that the risk was contained.

If I move to slide 19 the technology which is under the technology piece, the reason I put this slide in I think it shows what we are trying to do with the technology. And our mantra being we are trying to safely mine all of the gold but only the gold all of the time.

If one looks at the photograph which we took during a director's visit to the testing site, you can clearly see how perfectly we've managed to cut between the two yellow lines. And the two yellow lines represent the tram lines of the reef. So we've definitely been able to cut virtually only the reef. The white block that you see indicates how this would have been mined conventionally. So I think you would see quite clearly how much additional dilution is added versus the technology way of mining the reef boring. So I think we are getting down the road quite significantly on mining all of the gold but only the gold. What we need to move now towards is being able to do this for 24 hours a day for 365 days a year.

On slide 20, to note there's our performances during the quarter on the technology implementation. I think to report we've just completed a hole, we call it hole 15 which for us is a fairly significant hole as it's the first hole that we've actually drilled in a blind-bore fashion with a purposely designed bit. We managed to drill this hole in 3.2 days, which is still off our 2 day target that we are aiming at but is the best we've managed to achieve. We only had a small deviation in the hole which fell within our quality limits.

The focus now is on drilling these holes ever closer together so that they become closer and closer to each other and this will happen whilst we monitor the effect of the backfill, with eventually having the intent to overlap the holes to ensure complete extraction. As a matter of interest the 15 holes that we've drilled so far out of the test bite has generated 35 kilograms during this testing period.

Thanks. With that, I'll hand over to Ron.

All right, thanks Mike. Good morning everyone. I'd like to take you through a short discussion on the performance of our assets in Continental Africa and the Americas region. I won't comment on safety performance as Venkat took us through a quite comprehensive review of that earlier.

In Continental Africa, I am on slide number 21, quarter-on-quarter comparisons for the region saw a little better than 10% a 40,000 ounce increase in gold production. We can go back and trace that to grade and to tonnage throughput that -- various operations. And cost reductions of about $80 per ounce. These were real cost reductions, of course volume variances compared to or associated with the increase in gold output.

At Geita we've seen a considerable increase in tonnage through the mill in comparing to quarter 2, primarily due to more run time due to the SAG mill replacement in quarter 2.

In Siguiri we've seen an increased in ounce production, tonnage was maintained as equivalent to quarter 2 but saw an increase in recoverable grade.

Iduapriem had a stellar quarter as we've seen large improvements to cash cost both to do with volume of gold produced and also to do with a little bit of grade. I believe that it was the highest production in a decade at Iduapriem mine for a quarter.

At Obuasi we continue to see improvements. We had an increase in production by 17% and more important to me we've seen a decrease in cash costs down 30%.

I'd like to talk to slide 22 because that's -- that really is some metrics that we've put together to look at the Obuasi project. The picture is actually a picture of the decline entrance which is our main portal entrance into the mine. But I think if you look at -- our objective here is to mechanize this operation and you can see from quarter 1 to quarter 2 to quarter 3 we went from zero to almost 900 meters of development. Quarter 4 will be considerably more. We commenced the decline development in quarter 2 as it is showing that there was no meters in quarter number 1.

Another component of this project is to right-size our staff. I think it's important to see that we were systematically reducing as we mechanize the operation with a lot of work left to be done but more than 500 AngloGold employees have been removed during the quarter.

Production showed an increase of about 10,000 ounces. You've got to remember all this production comes off the hand-held work that's currently ongoing, so there has been a big push to work on minimizing dilution but there has also been an improvement in daily production from the hand-held operation that's currently producing the gold.

And at the bottom I think the metric on cash cost is driven in many directions but it's not just on volume there has been a considerable cash reduction including the reduction of employment at Obuasi. I think the team at Obuasi has great plans for the next quarter. I guess you'll have to wait and see how our production profile looks at quarter 4.

As for the Americas a regional view, basically a 10% improvement for the region and about a $70 reduction in cash costs. That does have a foreign exchange component in the cash cost piece not only in volume driven reduction.

At Cripple Creek there has been improvement in production, as most people that have followed, we always are somewhat controlled by the amount of water we have in the water balance. We've had decent rainfalls in the region, so right now we don't have a water balance to challenge.

In Brazil, primarily at the Cuiaba mine we've seen the higher grades and some good tonnages come out. The higher grades were actually planned for quarter 2. We were somewhat behind on delivering them, but now we'll see them in quarter 3 and again in quarter 4.

And Cerro Vanguardia again put in a good quarter with all the challenges in their inflationary environment, but we're able to start hitting the name plate on the heap leach production, heap leach facility that we have put in production later last year.

The only project we have in the region right now to speak of is the CC&V mine life extension which includes the next phase of the valley leach -facility and then the 2m-tonne-a-year mill. The picture shows the -- both the rod mill and the ball mill shell set. That's critical because now we can work on through the winter as most all of the concrete is out of the ground and we can take the winter months as we do the surface inspection there.

One last slide, slide number 25 it's -- we talked about cost rationalizations last quarter, I think the key is to watch this quarter on quarter with an objective we had of getting down in a certain timeframe to the $1,100 all-in cost.

But I think if we look at the work that we commenced where we started with overhead reductions, stay-in-business reduction, direct cost and we are well in the middle of this project. I think the direct costs are included in the spin and now we have labor to work on and then we have basically the, I'll say working cap -- working inventory to address.

So I think we are showing we are meeting those objectives and we have considerable more work to complete. This work is across the whole asset, the whole suite of assets from Cerro Vanguardia where we are working on de-bottlenecking the heap leach plant, Siguiri optimizing shutdown of our milling facility, the efficiencies in the locomotive, the number of loco's in our South African mines and we've had some good work in Cuiaba on reducing dilution to some of the mining areas. Every asset is completed and now we are actually implementing our -- or extracting our value.

So with that said, I'll turn it over to Graham.

Thank you, Ron. I'm on slide 28. This is the overview of Australia but this slide really talks to Sunrise Dam. Sunrise Dam's production is up 24% on grade. This is from the crown pillar which is the high grade load right at the base of the pit. Costs are commensurately down. But the point to note in regard to Sunrise Dam is that at the end of this year open pit mining will be completed after some 16 years and some 5m ounces.

Sunrise Dam will continue as an underground mine. We've been operating underground for quite some time. But in preparations for the changeover from open pit mining to solely underground mining we've been building the production rate up. And the production rate has increased from around 1.4m tonnes per annum in 2012 and is now approaching 2m tonnes per annum.

In regard to the Kibali project, the Kibali project is a joint venture with Randgold and Sokimo, AngloGold and Randgold each 45% and Sokimo 10% and Randgold are the manager. My comments however will be in regards to 100%.

With a big push by the team on site in the third quarter, first gold was bored at the end of September. This is from the oxide circuit. And over the next quarter the oxide circuit will be ramping up towards full production and all supply was from the oxide component of the KCD pit.

Construction continues in parallel now with operations. And construction will now focus on completing the sulfide hard rock circuit, which will be commissioned in quarter 2 2014. It focuses on Nzoro hydro power station which will be commissioned at that same time. And it focuses on the development of the underground mine which will continue through next year and then in 2015, 2016.

The twin declines are progressing very well, and first ore from these declines will come in quarter 4 2014. The shaft and head frame and the winders and the main sinking winder have been completed. The main sink commenced on November 1. So progress around the underground mine is going well and particularly around the declines is going around 20% faster than initial plans.

The very important part of Kibali has been the relocation program for some 15,000 people who are living on and around the project area. This work has now been completed and over 4,000 new homes have been constructed.

Now moving onto Sunrise Dam -- sorry, onto Tropicana, Tropicana was approved some three years ago and has been in execution phase. You'll see from the video that Stewart alluded to, and that will give you a sense of what has been constructed at Tropicana.

Now Tropicana's construction is now fully complete and all commissioning started in September with first gold on September 26. So the focus now is on the ramp up. And if you move to slide 31 you'll see that after five weeks we are progressing quite well on the ramp up curve and are now at about 40% of capacity.

We are dealing with the usual range of issues, but we have no major problems to deal with those that would call into question the integrity of the plant design.

Now design throughput rate in tonnes per hour terms have been achieved, so the focus now is on run time and consistent operation. We'd expect in the fourth quarter to product between around 110,000 and 130,000 ounces on 100% basis assuming that the ramp up continues to go in accordance with the plan.

The other important aspect to note in regard to Tropicana is that mining has now been progressing for around 12 months. We've mobilized the third fleet in June and mining is progressing at the rate according to plan.

The resource reconciliations are also tracking well to plan, and the charts show this reconciliation. Grades were variable in the upper oxide benches, but now as we've move through into the lower saprolite and into the hard rock the grade and tonnage reconciliations are slightly positive.

So in summary in regard to Tropicana, Tropicana is coming on stream and AngloGold is really delivering what we promised to build some two to three years ago.

With that, I'll hand back to Venkat. Thanks.

Thank you, Graham. Just in terms of concluding, if we can look at slide number 34. Over the two -- over the past two quarters we have been articulating our message and direction very clearly. Importantly, we have started to get some early runs on the board ahead of 2014. To name a few on safety, delivery of Tropicana and gold pour at Kibali, focus on improving the quality of our ounces at good margins, cost reductions whether at the operating level, whether at the exploration corporate cost level or for that matter in terms of capital expenditure level, and still keeping the targeted expansions we have around our existing mine sites such as Kibali and CC&V.

We are well advanced in terms of what I would call off-mine site spend reductions, and if you annualize the third quarter corporate and marketing expenses and the exploration expenses you'll notice we are not far off our 2014 target.

But importantly, we are keeping the optionality in the portfolio open and we continue to invest in the SA technology project and keep critical exploration sites which are not where we have our existing mine sites but for other sites still open albeit at a low cost. All of this helps improve the shareholder returns both in the short, medium and hopefully in the long term as well.

So with that, I'll pass you over to Stewart.

Ari, we are happy to take questions.

(Operator Instructions). Patrick Mann, Deutsche Bank.

Hi there guys, good afternoon. Just a quick question on whether you'd like to update your guidance for corporate costs, exploration costs and depreciation for the full year. Obviously you've come in $42m on corporate and $55m on exploration. Have you changed your $240m for the entire year on the corporate line and $227m for exploration costs because that implies quite a large number in the fourth quarter?

Now I know you said there's some chunky expenses that might come through in the fourth quarter, does that affect these numbers or have you just achieved your cost savings quicker than originally guided?

Patrick, we'd expect the numbers to come down but we have not refreshed our guidance. And our request to you is that you maintain the annual guidance asset for now. If there are any revisions we'll update the market, but for now we'd appreciate you holding it but we expect to do better in Q4 than purely what the annualized number less the first three quarters are.

Thanks very much.

[Zenobia Warner], Oasis Group Holdings.

Hi, good afternoon, Venkat and the team. Well done on the results. You're actually speaking to Ismail Ebrahim from Oasis Group Holdings. I've just got two questions, number one is on the cash costs how much of the change in the cash cost is a reduction of 10% how much of that relates in fact to the currency?

Richard, you want to pick it up?

To answer your question the breakdown of that $898 to $809 an ounce exchange made up about $33 an ounce in that improvement. The bigger drivers on the improvement as we discussed earlier were around the operational performance, grade and volume.

And then maybe one final question is just on the net debt, while you've spent the majority of the expected CapEx and there is still Cripple Creek and Victor expansion coming through in Kibali underground. To what extent have we see the peak in net debt and what -- if you can give us any indication on the outlook.

On net debt we don't provide guidance around net debt in terms of outlook, but all I would say is obviously it also depends on your view on gold price. As we said, Kibali although there is still ongoing capital there next year remember that it is generating production and we would expect that to be self-funding.

And we would also just flag that Tropicana is now in production and that capital comes off, which certainly more than offsets the ongoing spend at Cripple Creek & Victor. So we've got two new projects coming on 550,000 to 600,000 ounces of new production at less than $700 an ounce.

We have got lower capital spend on expansionary projects with Tropicana coming off and Kibali only doing the underground development. And we've got the impact of the cost saving measures and operational improvements that we've discussed. So we'll talk more to that at our next results as we go into 2014.

Just one supplementary point to add to what Richard has said, if you had a look at our net debt to EBITDA position and you were to -- that obviously is a 12-month trailing metric, but if you look at our third quarter EBITDA and you annualized that our net debt to EBITDA is around 2.3 times.

So what you would expect to see probably is a bit of an increase in the net debt in the fourth quarter as we streamline down the capital expenditure and as we go into 2014 where Richard correctly said that 2014 would be cash generative.

Perfect, thank you very much.

(Operator Instructions). There are no further questions at this time. Would you like to make some closing comments?

Ari, I think that should do the trick. Thank you very much. It was a pretty comprehensive presentation so happy we preempted a lot of the questions. We are available at any time for anyone who does have any follow ups. Thanks for joining us and we'll do this all again early next year. Thank you.

Thank you. On behalf of AngloGold Ashanti that concludes today's call. Thank you for joining us. You may now disconnect your lines.