Anglogold Ashanti PLC (AU) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti Q4 result analyst teleconference. (Operator Instructions). Please note that this conference is being recorded.

I would now like to turn the conference over to Stewart Bailey. Please go ahead.

Thanks, John, and welcome, everybody, to this presentation of our results for the fourth quarter and the full year 2014.

I'm going to start off by reading the Safe Harbor statement and then run into the agenda.

All right, as usual, our 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, all-in sustaining costs, all-in costs, cost savings and other operating results, return on equity, productivity improvements, growth prospects and outlook of our operations, individually or in the aggregate, including the achievement of project milestones, commencement and completion of commercial operations and certain of our exploration and production projects and the completion of acquisitions and dispositions, of joint-venture transactions, our liquidity, capital resources, capital expenditures and the outcome and consequences of any potential or pending litigation or regulatory proceedings or environmental health and safety issues, are forward-looking statements regarding our operations, economic performance and financial conditions.

These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements and forecasts are reasonable, no assurance can be given that these 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, change 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 these factors, refer to our Annual Report on Form 20-F for the year ended December 31, 2013, filed with the US SEC on April 14 last year. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have adverse material effects on future results. Consequently, you are cautioned not to place undue reliance on forward-looking statements.

We undertake 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, save for the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by these forward-looking statements.

The communication may contain certain non-GAAP financial measures. We use these measures and ratios in managing our 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 the information important to investors on the main page of our website at anglogoldashanti.com. The information is updated regularly. You should visit the website to keep up to date on this information.

The agenda for today, we are going to start off with Venkat on some introductory comments; we are going to pass over to Ron Largent who will look at the international portfolio, Mike O'Hare then on the South-African portfolio, Graham Ehm on our projects and exploration; and Christine Ramon on our -- on the financials and also the outlook for 2015. Venkat will wrap up with some concluding remarks. Venkat.

Thank you, Stewart. Good morning, ladies and gentlemen, or good afternoon, ladies and gentlemen. I'll be quickly referring to some of the slides in here, starting with slide number 6.

Our strategy of delivering sustainable free cash flow and returns, to recap, is built on five strategic pillars. Firstly, getting the foundation right, which is around safety, people and sustainability. Then ensuring that we have the financial flexibility to operate and deliver on our objectives. Thirdly, maintaining strict cost discipline across all of the aspects of the business, [totally] improving the quality of our portfolio continuously and then finally remembering that mining is, indeed, a long-term gain, and preserving and improving the long-term optionality within the business.

Turning onto the highlights page, which is slide number 7, our results announced today shows eight consecutive quarters of delivery in terms of our performance. If you look at our full-year performance, production was 4.463m ounces. It's the top end of the -- it's at the top end of our market guidance. It's 8% growth year on year, 12% when you compare it to 2012; and importantly second year of delivery to annual guidance.

All-in sustaining costs at $1,026 per ounce came in at the lower end of guidance and shows a 13% improvement year on year. A similar trend on all-in costs, which has come in 22% improved year on year, on the back of a growth in profitable output, here notably Kibali and Tropicana, tight cost management and capital discipline.

And, as Christine will cover in her presentation, adjusted EBITDA has been flat year on year, despite a 10% drop in gold price. And free cash flow improved significantly compared to what it was last year. It was minus $112m as compared to a [bond] rate of about $1b, after fully funding interest, capital expenditures, funding of once-off Obuasi retrenchments and Rand Refinery loan, and pre these once-off expenditures at Obuasi and Rand Refinery, the cash generation for the year was $142m.

And when you add the interest bill of $250m, you can see that the pre interest service cash flow of $400m, even after funding project capital of $350m to $400m, shows the good cash generation potential of the business.

For the fourth quarter, production at 1.156m ounces came in ahead of guidance and slightly ahead of that of our prior quarter. Cash cost of $724 beat guidance and improved year on year and from the previous quarter. All-in sustaining costs showed a 2% improvement from the previous quarter, and progress was underway in terms of self-help deleveraging measures.

The table on slide 8 shows what we have been able to deliver over eight quarters, despite the significant drop in the gold price of $137 an ounce and the related headwinds, we have improved production, we have reduced costs, we have slashed overhead, reduced the capital spend, whilst preserving the long-term optionality, and we are seeing the cash flow swing from where it was in 2013. Importantly, over this period we have had to absorb 2 years' worth of inflation in 10 jurisdictions, so the real cost reductions are in fact higher.

On slide 9, safety. As you know, safety is our first value and it comes first in everything we do. And we have continued to improve on the work we have done previously in this area of the business.

After our longest run without a single fatality in the Group, 220 days and 17 months without a fall-of-ground fatality in South Africa, we unfortunately lost three of our colleagues in South Africa during the fourth quarter, one of whom we announced when we announced our results for the third quarter. And we have had two more unfortunately since that date, at our Mponeng mine.

One lift lost is one too many and it shows we cannot afford to be complacent in this area, and more work indeed remains. Having said this, it would be remiss of me not to highlight a 67% drop in fatal accidents from the 2012 base, and new records being created across the Group with the all-injury frequency rate improving.

South Africa in particular set a new record, with the most reduced number of fatalities since its foundation, and the international part of the business improved their performance year on year.

Continental Africa completed its first-ever year with zero fatalities and the lowest injury rates. As we said earlier, there's no room for complacency and focus is on major hazard management, and we are currently assessing over 100,000 critical controls each month.

In terms of slide number 10, Christine will articulate our balance sheet position and this slide should be read in that context. A set of focused work streams are already underway, in terms of self-help deleveraging measures. In terms of the portfolio, starting with Obuasi, I recall that there was significant amount of skepticism that existed in 2013 on our ability to take the bleed rate down at the Obuasi mine down significantly.

We are pleased to be able to report that, based on the good work which was done by Ron, in laying the foundation from the technical base in 2013, the work then was picked up by Graham and David subsequently, and Ria and we have managed to move Obuasi into limited operating phase by the end of 2014, workforce has been retrenched and the feasibility study is well advanced.

We will progress the feasibility study during the course of this year, have the dialogue with the government before we make it public, and the intention here is to keep the mine largely in a limited operating state, whilst continuing with the underground decline for this particular year. And that's exactly in line with what we announced previously.

We are also looking options around JV or sale of an operating asset for full value. This option is being progressed, but we have intentionally not been specific about which asset we are looking at, for a variety of reasons, including that these are assets with employees and stakeholders and we only want to come to the market and announce when we have a transaction which we can announce.

We are also continuing to explore partnerships in respect of our Colombian projects, and that work stream is well advanced. One has to recognize, obviously, that we are dealing with difficult market conditions when it comes to finding partners in respect of greenfield projects.

With regard to cash-flow optimization, business plans are optimized to improve cash flows. The P500 project, which Ron will elaborate on, has achieved the $500m savings, and we are into our third consecutive year of all-in cost reductions.

Mike will articulate what they have done in South Africa to prune down their all-in sustaining cost and, in 2014, it's the lowest within the South African industry and he'll cover it in his presentation and where they've got to with regard to consolidation of regional hubs.

In terms of leverage, in addition to offering good leverage to the gold price, we are also exposed to currencies and lower fuel prices, and this will be unpacked by Christine in her presentation.

Turning to slide number 11, it shows what track record we have built in terms of consistency and delivery on our quarterly guidance. We have tracked it back close to 12 quarters and, as you can see, we have either met or beaten every production and cost target during at least the last two years, whilst we have had to weather numerous headwinds. And as we have said previously, it has not been a walk in the park given those challenges but we have continued to deliver upon our commitments.

You will appreciate that a business of ours is quite complex, and there may be the odd occasion where we've missed a quarter or two of guidance, but so far between 8 to 12 quarters we have actually banked our performance guidance intact.

With those introductory comments, I hand you over to Ron to walk you through our international operations.

Thank you, Venkat, and good morning. I will discuss the quarter-four 2014 operating results for Continental Africa, Australia and the Americas region. I will not discuss each asset individually, as they are within the quarterly report.

Firstly, the Company safety performance was covered by Venkat earlier, but I want to reemphasize the commitment of the operating group for the continued quarter-on-quarter improvement. We as management are very appreciate of the hard work the operating teams have shown in obtaining the milestones, but understand the commitment and work required in continuing driving these outcomes.

Each quarter, I comment on the cost rationalization work and have asked you to continue to watch the outcomes on a quarterly basis. The objective of moving -- removing the $500m from operating costs over an 18-month timeframe ended in quarter four 2014 and was achieved. This cost rationalization work has been transferred into the operating business improvement initiative process. Now cost improvements are continuing to be managed via site general managers and the corporate business improvement structures.

The BI work includes contract management, global procurement, ore-body scheduling, asset efficiencies and many others. We've now moved the efforts of the process into asset scheduling and efficiency improvements. We've also included considerable cost savings into our 2015 plans.

The international operations achieved an all-in sustainable cost of $987 per ounce for 2014. It is particularly interesting to reflect that the Continental Africa region's all-on sustainable cost of $970 per ounce reduced 35% year on year, and is at the lowest level since 2010.

So I'd like to go to slide 13 and make comments on each region very quickly. The Continental Africa region production for quarter four of 2014 was 419,000 ounces at cash cost of $687 an ounce, compared to 460,000 ounces at a cash cost of $839 for 2013.

Although the ounce production reduced on the year-on-year comparison due to planned reductions in the Mali mines, the sale of the Navachab mine and the work in resetting the Obuasi mine, which Graham Ehm will detail shortly, the cash costs have been reduced significantly. During the quarter, Geita, Kibali and Siguiri mines all delivered solid operating performances.

Slide number 14, the American region production for quarter four 2014 was 280,000 ounces at a cash cost of $677 per ounce, compared to 262,000 ounces at $634 in quarter three -- quarter four 2013. Increased tonnages at Cuiaba mine and Corrego do Sitio, and mining improvements at Serra Grande had positive impacts on production. All-in sustainable cost for the quarter was impacted by timing of stay-in-business capital.

The Cripple Creek and Victor mine in Colorado had lower production than planned, due to a couple of delays within starting up of the new milling circuit. I'm glad to say that the mill is currently in ramp-up stage.

Slide 15, the Australian region production for quarter four 2014 was 152,000 ounces at cash cost of $861, compared to production of 169,000 ounces at a cash cost of $640 in quarter four 2013. The quarter-four 2013 production numbers and cost metrics reflect the mining of the crown pillar a year ago, which openly end up in that difference in the production -- comparison of the production quarter on quarter.

Sunrise Dam production accomplished record ore production from the underground mine, at 619,000 (sic - see slide 15 "675,000") tonnes in quarter four 2014, up 10% from previous quarter. This is important as the underground has -- was planned to produce 2.4m tonnes in 2014 on its] ramp up, to somewhere north of there in 2015, to ultimately feed the mill that has better than 3m-tonne-per-year capacity.

The Tropicana mine recorded record production on higher ore tonnes, and -- which allowed higher grades to be delivered to the mill.

On slide 16, I want to take this time -- this graph represents the cost management outcomes across the international assets over the past few years. All-in sustainable costs have reduced from approximately $1,200 per ounce in 2012, to $968 in 2014. Additional reductions are planned and scheduled for 2015, but within this I thought it would be goo] to give an overview of the reduction, but -- that are included in the $500m reduction over that two-year period.

Global procurement, we -- is responsible for about $150m over these two years. Process plant improvements, which could be throughput, consumable management, recovery changes, are responsible for approximately $70m reduction over the 2 years. Restructuring of offices, G&A and labor responsible for about $140m over the 2 years. Contract management, primarily reworking the contract mining throughout Continental Africa, is accountable for approximately $60m over those 2 years. And scheduling and efficiencies of asset planning is accountable for about $80m.

These are the sustainable costs that we are working on to -- continue to work on year on year in (inaudible), and we should be able to manage these throughout 2015 and beyond.

So with that said I'd like to turn it over to Mike O'Hare.

Thanks. Morning, all. If I could start with safety and talk a little bit about the fact that we had a really good 2014 where we achieved 1m fatal-free shifts in the quarter across every one of our operations. Unfortunately we then had a fatality at Kopanang mine, which was the first one since 2012, which was followed rapidly thereafter with two more fatalities at Mponeng. And both of those events reduced the production significantly at both of those mines.

Sadly, we've had another fatality at Mponeng during Q1, which shows that despite the fact that we went over 250 days without a fatality, we cannot let our guard up for a minute. But given the long-term trend in our fatalities, I'm confident that we will continue on our journey towards zero harm.

Having said that, I think we need to note that both Moab Khotsong and TauTona had good performances during the quarter, both from a production and a cost point of view. The surface sources, who mine the hard rock [MODs], had a steady quarter, and Mine Waste Solutions continued with their slow improvement, and it's pleasing to announce that they produced their maiden uranium, with 4,000 kilograms of uranium being produced during the quarter.

I move to slide 19 to talk a little bit about what we're doing with costs. Ron mentioned the Project 500 work, and you'll see the results in our region of that over a number of years.

We need to look at this graph against a background of declining production, as we cut low-grade ounces. As you've seen during the year, we've cut both at Kopanang and Great Noligwa. And I would like to unpack a little bit further what we've really done in terms of the cost restructuring, and maybe a little bit of the future for 2015, on slide 20.

In 2014 we noted that we were going to restructure both Moab and Great Noligwa in order to reduce the CapEx, increase the productivity of the people by decreasing the commute to workplaces. But this resulted in us then having to reduce Moab Khotsong's all-in sustaining costs by 25%, if you compare 2013 to 2014. They are now producing at $900 per ounce. Great Noligwa over the same period has reduced their costs by 10%, to $1,185 per ounce, despite the fact that they have decreased their production.

Given the success of this during 2014, we announced in the last quarter that we will be extending this process to Kopanang. Kopanang is the highest-cost underground mine in the region, and we need to apply similar principles to that mine to bring down the costs there in order to increase our margins.

A leadership team has been appointed for the Vaal River district, and they've been tasked with three things to do. Firstly, to come up with a revised Kopanang mining plan, which increases our margin, secondly to pull costs out of the Vaal River district footprint -- that district was designed for 11 mines and we are really only operating three now -- and then to look at where we've got duplication between the regional areas and the mines, in order to eliminate those duplications.

If I move to slide 21, I'm going to talk a little bit about energy. 25% of our costs come from our energy requirements, and in the region, as you'll see form the bars, we've really followed a strategy that reduces our consumption. Our belief is that reducing your own consumption requires very little capital outlay, and the benefits are immediate.

We have been able to do this work over many years, by re-engineering things like cooling and ventilation systems underground, closing areas down and making our surface plants that generate the cooling more efficient. We recover energy from turbines installed at the bottom of the mines, which are really pelton wheels which recover energy as the water goes underground into each and every mine.

Finally, if I move to slide 22, progress on our technology. For 2014 we drilled 83 production holes and recovered over 100 kilograms of gold. If one looks at the margin that we've created with this mining only, we have a better-than ZAR50,000-per-kilogram margin.

The work for 2015 is to improve the technical availability of the machines that we have installed. Secondly, to get to mining for 345 days a year, and this means engaging the workforce and engaging the unions around changed shift arrangements, and working over weekends and public holidays. Those negotiations have begun already.

And with that I'd like to hand you over to Graham. Thank you.

Thanks, Mike. I'll start with Obuasi, on slide 24. We advised in mid-2014 of the plan to wind down the operation at Obuasi and conduct a feasibility study into the mine's future. At the end of December and with the approval of the government of Ghana, wind-down of the operation was completed and we are now in the limited operating phase, which involves care and maintenance of the fixed assets, retreatment of tailings from the [Diawusu] area, and continuation of the development of the Obuasi decline.

The entire Obuasi work force was released and a workforce was employed for the limited operating phase. We have made good progress on the feasibility study, with the assistance of SRK, who are helping us with overall coordination and will ultimately sign off the work.

The future operation is shaping up as a 5,000-tonne to 6,000-tonne per day mechanized underground mine. The new operation is being designed to lift head grades, eliminating low-margin ounces and targeting a 20% to 30% all-in sustaining cost margin at the current spot price.

To achieve these lower cost structures, we will need to reinvest in plant and infrastructure, refurbishing the KMS shaft to achieve the higher capacity, upgrade the underground material handling system, construct a paste fill plant and refurbish the mill.

Importantly, we will establish a new operating model, similar to that at Sunrise Dam, with an integrated approach to grade control, mine geology, mine planning, mechanized contract mining and long-hole stoping.

When we have defined the scope of Obuasi's development in the feasibility study, we will present our plans to the government and other key stakeholders, and obtain the necessary licenses and permits. Consequently 2015 will be a year in which Obuasi will remain in the limited operating phase, while the future of the operation is optimized and the necessary agreements and approvals are put in place. Only when agreement has been reached with the government of Ghana will we be in a position to detail our plans for Obuasi's redevelopment.

In regard to reserves, you'll note that as a consequence of configuring our higher-grade mine, the state 2014 reserves have reduced to 5.3m ounces, while resources stand at 27m ounces. It's a large difference and due to a number of factors. The reserve price is at $1,100 while resources are at $1,600 an ounce.

The quoted reserves are in the south end of the mine, where the resource excluding reserves is approximately 8m ounces. With the application of incremental cut-off grades and mine optimization, up to 30% could come into reserve at the reserve planning price, or up to 2.5m ounces. Other resources are in the northern end of the mine in remnant, high-grade quartz vein areas; we are not focused on these areas at this stage. There's also approximately 1.7m ounces in old tailings dams, which could add supplemental ounces in the longer term.

In summary, between 30% and 50% of the exclusive resource could come into reserve in time, or between 5m ounces and 10m ounces.

Moving on to Kibali, on slide 25, Kibali had a very good December -- sorry, December quarter -- achieving gold production of 178,000 ounces on 100% basis. You can observe from the chart that progress has been made by the Kibali team on the ramp up.

Construction and commissioning of the met plant and associated infrastructure has now been completed. Design throughput and recoveries have been achieved, and a key focus is on improving plant run time. The shaft's sink is progressing very well, reaching 720 meters at the end of the year. Development of the crusher level has commenced, decline development continues ahead of plan, and first stope ore was mined in December.

On a 100% basis, approximately $270m of the initial capital remains over the next three years, and this is associated with the paste fill plant, shaft and underground development and two hydropower stations. With the main project development completed on a 100% basis, Kibali can now be considered a 600,000-ounce per annum operating mine, with an all-in sustaining cost of approximately $600 an ounce.

Moving onto Cripple Creek, construction of the mill has been completed and commissioning is now well underway, and construction of the Valley Leach is on track for mid-2016. The total capital forecast for the project remains at $585m, of which $342m is spent. Projected capital for 2015 is approximately $100m.

Turning to exploration on slide 27, and in Colombia I'll comment on Nuevo Chaquiro. Last quarter we released the maiden resource for Nuevo Chaquiro, with 4m tonnes of copper and 6m ounces of gold. Drilling during the December quarter has returned additional good results outside the resource, including 1,088 meters at 0.82% copper, and 0.4 grams/tonne gold. This additional data is expected to add 20% to 30% to the resource.

We've also had some good results in brownfields exploration at our mines, and I'll only comment on two. At Sunrise Dam in the upper part of the Vogue domain with good drill results, the resource increased year on year from 624,000 ounces to 990,000 ounces. And at Cuiaba in Brazil drill results provided further evidence of the footwall zone between the 15 and 24 levels.

We also had quite good results come from Kibali, but I'll focus on those next quarter.

Moving on to resources, on slide 29, we quote our resources at $1,600 an ounce, and total resources were more or less unchanged year on year, with depletions and reductions offset by additions at Nuevo Chaquiro, Colosa in Brazil, and at Sunrise Dam and Siguiri.

In regard to reserves, our reserves are quoted at $1,100 an ounce and, compared to our peers, AngloGold is one of the more conservative on the reserve gold price. Production depletion of our reserves was 4.9m ounces, and the Navachab sale accounted for 1.9m ounces.

Reserves increased by 2m ounces, dominantly at Siguiri and Sunrise Dam. And as I commented earlier, we are designing a new Obuasi for higher margins and lower costs. Consequently we saw a reduction of 2.6m ounces as we removed high-cost ounces from the plan. And drilling at Mponeng and at Moab identified more complex geology, resulting in a reduction of 2.1m ounces.

Our reserves at yearend then stood at 57.5m ounces. Reduction in reserves has also been an outcome of the lower drilling and evaluation spend over the last two years as we responded to the reduced cash flows with the lower gold price. The reserve change should not be considered a concern. You can see from the resource base that this is strong, and we expect that future investment in exploration and evaluations will bring the resource conversions in time.

Thanks very much. I'll now hand over to Christine.

Thank you, Graham. Good morning and good afternoon, everyone. As we've heard from Venkat, we have consistently delivered on our production and cost targets, ahead of guidance for quarter four 2014, beating market consensus views, amidst continuing adverse market conditions.

Our focus remains on strengthening the balance sheet in the medium term and creating a prudent buffer for volatility. We will achieve this by prioritizing the generation of sustainable free cash flows from our diversified portfolio of assets and focus on progressing our self-help measures.

I will now talk in more detail through our fourth-quarter and full-year performance, as well as our balance sheet's [debt] focus before I end on the outlook for quarter one and full-year 2015.

Moving on to slide 32, our favorable trajectory on costs reflect continued discipline on all costs and strict capital allocations. Overall, full-year production levels increased by 8% compared to last year, reflecting the first full-year of production from Kibali and Tropicana, which underpinned the improvement in all-in sustaining costs of 13%. In addition, a strong focus on the reduction of direct operating costs, corporate overhead from exploration costs, has enabled the Group to deliver significant savings both in quarter four and for the full year, as reflected in the lower cash costs and all-in sustaining costs.

Capital expenditure has reduced by 24% in quarter four and by 39% for the full year, compared to last year, reflecting project completion and capital prioritization.

Slide 33, corporate and exploration costs have reduced by approximately two-thirds, respectively, from its peak in 2012. We believe that we've reached sustainable levels in corporate overhead, taking into account inflation, whilst a strong focus on cost optimization and cost discipline will continue. As we heard from Graham, we continued to focus on fewer countries for greenfield exploration, including Colombia and Australia. We have prioritized brownfield exploration at our operating mines that show best potential for growth.

Slide 34. Our effort to tackle costs across a broad front continued to bear fruit, as reflected in the 2% decrease in our all-in sustaining costs from $1,036 per ounce in quarter three to $1,017 per ounce in quarter four, on the back of higher production, with Kibali and Tropicana being lower-cost producers.

We also saw the benefit of weaker local currencies, lower power tariffs and the scale down of Obuasi, despite higher sustaining CapEx and higher exploration and rehabilitation costs due to the quarterly spend profile as in prior years. All-in costs of $1,143 per ounce compared to quarter three is flat.

Slide 35. In order to provide a better understanding of our adjusted headline earnings, we show normalized earnings. The major adjustments made in adjusted headline earnings to our normalized adjusted headline earnings of $68m relates to operational and corporate redundancies of $147m, mainly relating to Obuasi and closure and termination costs of $13m, which primarily related to Mongbwalu.

Moving on to slide 36, our balance sheet is highly geared and efficiently structured with a strong leverage to the gold price. Our net debt level has increased between 2011 and 2013, given the investment in maintaining and enhancing our portfolio as reflected in the $8.3b capital spend over the past five years.

The sharp drop in the gold price since 2012, together with the completion of capital expenditure on our growth projects to bring them into production is directly correlated to the increase in the net debt levels in the Company. As signaled in quarter three results, the 2014 year-end debt levels are $3.1b, has remained similar to last year, despite the higher capital profiling in quarter four, the Obuasi retrenchment payments and the Rand Refinery loan funding.

We are focused on strict capital allocation and capital prioritization, as reflected in the 48% reduction in capital in 2014 compared to 2012, when capital expenditure was at its peak. We have prioritized stay-in-business capital to ensure the sustainability of our operations.

The 20% decline in the sustaining capital for 2013 primarily relates to the downscale of Obuasi, the focus on optimizing the cash flows relating to discretionary capital and weakening currencies. Project capital includes Mponeng phase 1, Kibali underground and the MLE2 expansion at CC&V and the Obuasi decline development, which Graham spoke about. These projects will enhance the long-term optionality of our Group, enabling us to deliver long-term shareholder returns.

Slide 37. Our debt has long-dated maturities with a spread of types of facilities and currencies, enhancing flexibility and currency matching. The US-dollar and Aussie-dollar facilities are five-year terms. The US dollar RCF is $1b, of which $100m was drawn down in December 2014 to facilitate the Obuasi retrenchment. The Aussie-dollar facility has been reduced to AUD500m and is currently AUD315m drawn.

The rand facility of ZAR1.5b reflects similar terms as our US-dollar and Aussie-dollar facilities. These facilities incorporate a looser single covenant with net debt to EBITDA now set at 3.5 times from 3 times previously, with a one six-monthly period waiver of up to 4.5 times, subject to certain conditions. The earliest bond maturity date is in April 2020, allowing the Company sufficient time to plan for the redemption or refinancing.

The high-yield bond issuer's call can only be exercised from July 2016 onwards at our discretion, thus allowing us sufficient time and flexibility to fully explore our self-help measures before we decide how to proceed with this opportunity. We continue to have both the full discretion and sufficient time in deciding how to use this opportunity should we decide to go that route. The conclusion of the potential asset sale and JV partnerships should help determine whether or not we elect to exercise the high yield bond call option.

Our credit ratings remain unchanged at Baa3 ratings with a negative outlook by Moody's and BB+ with a negative outlook by S&P.

Moving on to slide 38, we have sufficient facilities and headroom in our balance sheet to fund our ongoing operational requirements before and after downsizing facilities relating to production disruptions within reason.

In order to contextualize the potential impact of a production disruption in the SA region, bear in mind that 72% of our EBITDA is currently generated by our international operations. Hence, our geographic diversification enhances our resilience to continue our production delivery despite any potential production disruptions in South Africa.

Our net debt level is unchanged from last year, and our net debt to EBITDA ratio has remained steady at 1.88 times, despite the once-off large nonoperational funding requirements.

Looking ahead to 2015, we expect to break even at free cash flow level, including finance costs, at a planning gold price of $1,200 per ounce. Hence, we are expecting our debt levels to remain steady at the end of 2015, although it may increase slightly in the first half due to free cash flow profiling, taking into account our budgeted assumptions and excluding proceeds from asset sales or JV partnerships.

Our covenant of 3.5 times net debt to EBITDA is based on a 12-month rolling EBITDA.

We have therefore already banked 90% of our net debt cover that is needed for the June 2015 testing period, which is based just on the past two quarters' EBITDA, with two more quarters to make up the remaining 10%.

As we have said previously, our medium-term leverage target is 1.5 times net debt to EBITDA. We would like to reduce our debt by approximately $1b to take us to our comfort threshold, which would include a reasonable buffer for volatility, including the gold price risk and production disruptions. Our aim is to achieve this debt reduction through a variety of self-help measures, as Venkat elaborated earlier.

Importantly, we are under no external pressure to achieve this. This is an aspirational target that can be achieved over the next few years.

Slide 39. This slide shows the movement in commodity prices and currencies over the past year. The drop in the gold price has been offset by weaker global currencies, and a sharp drop in the oil price has helped reduce input costs. Our sensitivities are issued with a health warning and have been calculated at our budgeted exchange rate and commodity price assumptions for 2015, as detailed on the next slide.

For a 1% weakening in our currency basket, it will positively impact our cash cost by approximately $6 an ounce. The SA region is expected to have the highest impact, contributing approximately 45% to the currency basket, with the Aussie dollar and the Brazilian real contributing together about 34%.

On the oil price sensitivity, for every $10 per barrel weakening in the oil price, it positively impacts our cash costs by approximately $7 an ounce.

So ending on slide 40, the outlook, our quarter-one guidance on production, 900,000 ounces to 940,000 ounces, and the consequential flow-through on cash costs estimate of $830 per ounce to $860 per ounce takes into account the historically slower quarter in the SA region, as well as the recent safety stoppages that Mike covered in his presentation.

Our annual production guidance of 4m to 4.3m ounces for 2015 reflects Obuasi's limited operations phase with no underground production anticipated in 2015, the disposal of Navachab and the production declines in the Mali mines. We have made no provision for production disruptions in South Africa, any unforeseen operational disruptions or changes to the portfolio. However, we have included the production ramp-up from CC&V from quarter two.

All-in sustaining and cash costs at $1,000 to $1,050 an ounce, reflecting reduced CapEx and costs. All-in sustaining costs will exclude the care and maintenance costs relating to Obuasi. However, this will be included in all-in costs.

Total cash costs of between $770 to $820 per ounce are based on the weaker average exchange rate assumptions provided and lower oil price assumptions, as indicated. Corporate and marketing costs are estimated at between $95m to $110m and includes inflationary effects and the retention of critical skills.

Exploration costs are expected to remain steady from 2015 and includes the equity-accounted joint ventures and the ongoing investment in Nuevo Chaquiro and La Colosa, pending potential joint venture partnership opportunities that we may consider.

CapEx guidance of between $1b to $1.1b, of which just over 70% relates to sustaining CapEx, reflects a reduction in respect of Obuasi and reprioritization of CapEx across the Group.

On that positive note, I will now hand back to Venkat to conclude. Thank you.

Thanks, Christine. If we can conclude on slides 42, 43 and 44, and the focus here is what we have done on our portfolio, the focus on margins and the investment case.

Looking at our portfolio over the last two years, we have made significant improvements to that. We have brought on-stream two new low-cost mines, Tropicana and Kibali. As Ron mentioned, the mill has been installed successfully at CC&V and the mine life extension is currently underway.

Our reef-boring technology in South Africa continues to progress well, improve productivity and unlock higher-grade ounces that would have not otherwise been accessible. We're also converting, for example, our Sunrise Dam mine in Australia to a more productive and profitable operation.

We have monetized our mine in Namibia. We have addressed loss-making ounces at Yatela and Obuasi, and we will reopen Obuasi as a mechanized, productive, modern, profitable, high-grade operation.

Looking at slide number 43, focusing on margins, our focus to improve cash margins over this period, as you will see form the slide, has been relentless. If you look at the quarterly profile and from the peak of Q4 2012 and the little triangle there refers to all-in costs, we have pulled over $1,000 an ounce from the quarterly peak.

With regard to all-in sustaining costs, which is the yellow bar highlighted on the slide, we've reduced over $500 an ounce from that quarterly peak, as well. The extent of this reduction, either when you take into account relative to where we were and our ability to fight inflationary pressures and sustain this over eight quarters compares very favorably in relative to the peer group within the gold-mining industry. In fact, we have gone far further than what the rest of the industry has potentially done.

So to conclude with the investment case, our investment case is strong, with a number of value catalysts that will open up during the next two years. We've got a high-quality portfolio of long-life gold assets. We offer very good leverage to over 4m ounces of gold and 1.3m pounds of uranium and, to the South African rand, Brazilian real, Aussie dollar, Argentinean peso and to fuel, to name a few.

We have shown that whilst we get production growth, we have maintained our focus on margins and our focus on cost and capital discipline will continue, irrespective of the gold price environment. We have been decisive in delivering a strategic response to a lower gold price on various fronts -- production, costs, capital and overheads.

Despite having appropriate liquidity, covenant and debt maturity profiles, we are demonstrating that we do have a proactive track record in balance sheet management, and in that regard, we are prioritizing self-help measures to deleverage the balance sheet. And importantly, we do have a well-developed engagement model that ensures strong stakeholder relationships and license to operate, and what we have been able to achieve in Obuasi in the last two years is a very good case in point.

As I mentioned at an investor presentation earlier this year, I have never felt so optimistic about our Company as I presently do in terms of the prospects for the next year or two. On that note, I am handing you over to Stewart Bailey.

Thank you. Sean, we're happy to take questions on the line.

(Operator Instructions). Kane Slutzkin, UBS.

Hi there, gents. Yes, just a few questions. Mike, just maybe for you first, just looking at the underground grade in SA, and it seems to have picked up quite a bit this last quarter, and I guess even if we look on an annual basis, versus, say, something like 2012, it's up about 10%. So I know you've spoken about these sort of sweet spots in previous quarters. Can you just maybe provide some color on that in terms of what we should expect going forward?

And also, on the technology, do you have a sort of target of what you're looking at this year in terms of ounces?

And then, yes, just finally on Geita, I see the costs there significantly lower. I know volumes are up there, but should we be expecting on Geita going forward?

So, Kane, Mike will pick up the first two questions, and then Ron will pick up the third.

Thanks, Kane. Let me talk to the grade first. What we've been continuously trying to do is eliminate low-cost ounces -- in other words, ounces that fall below our cutoff grades. So I have mentioned that the reductions at Great Noligwa. We've largely stopped mining the low-grade series there. We've cut low-grade ounces out of Kopanang. That by itself increases the underground grade mined.

The increase that we're seeing is largely coming from Moab Khotsong, and again, if you have a look at the reserve grade, we're mining very close to the reserve grade. And in fact, the only mine that looks strange from a reserve grade point of view is actually Great Noligwa, which seems to be mining, if you compare the reserve grades to the actual grades that we're mining, differently to the reserve grade. That's coming on the back of us now mining low series and a slight increase in the dilution due to the fact that we mixed products at Great Noligwa -- i.e., we put the [ORD] development together with that.

Into the future, we expect a similar kind of grade in SA region from the underground mines. Technically -- sorry, then technology, as far as the ounces are concerned, we talked about 100 kilograms for 2014. I'd be looking towards 500 kilograms odd for 2015.

Ron? Geita cost?

On Geita, I guess we can say there's been considerable work done at Geita to get us where we ended in 2014. Cash costs will probably be marginally higher in 2015, so I think in general, more of the same, but marginally higher in 2015.

All right, thank you. And just to say, Ron, is the level of production going to be similar to this last quarter, the 140?

No, I think the last quarter was higher than -- not than expected, than we thought because of the grade distribution or the grade. So on average, for 2015, it'll be annualized slightly higher.

Okay.

In fact, what we are projecting for Geita for 2015, we have given a range. The top end of that range is close to 496,000 ounces for Tanzania.

Okay. Thanks a lot, guys.

(Operator Instructions). Andrew Byrne, Barclays.

Hi. Good afternoon, guys. Ron, I'll try not to get too bogged down with this set of results, because I [don't know] if there's too much new information. I was wondering if you could maybe talk us through kind of what the Company looks like in two or three years. And I appreciate there's a lot of moving parts, but from the outside, when we look at AngloGold, we see a company that's produced about 4m ounces, plus or minus, for the last four or five years, but obviously, the mix and the quality of those ounces has changed quite a bit over this time as Kibali, Tropicana and Geita have come on.

But then, equally, there's an awful lot of moving parts with bringing in JVs, closing down Obuasi. When you look at 2017, 2018, you're assuming a flat gold price. What do you see the free cash flow potential of the Company being once you've paid down some of the debt, potentially, for your asset sales? Can you [give us] a feel for what the Company looks like in that period?

I think, really, Andrew, you're asking us to look ahead 2018, 2019. Free cash flow potential is going to be dictated by the gold price, but what we are focused on right now is removing the marginal assets and ounces from our portfolio, trimming down our cost curve. Certainly, as you see us going into 2016, 2017, you will start to see Obuasi pick up, then expansions potentially taking place in some of the key assets, such as Geita, etc.

So you will see certainly our tier-one assets largely impacted, so we'll be very careful in terms of picking which asset we JV in this regard for value. But certainly, looking ahead, we'd expect to see our tier-one assets largely intact and continued development across those tier-one assets. In South Africa, we'd expect to see technology bring in more ounces. We'd expect to see in Mponeng phase 2 expansion go ahead with a view to bringing more cash flows from South Africa onto the table. But what you will also see is some of the (inaudible) mines fall off of the portfolio.

That's really how we look at it when we project the portfolio going out into the future. Importantly, what we want to ensure is that we sit on the right side of the cost curve, because clearly, we don't control the gold price, certainly not when you look ahead 2018, 2019, but what we want to do is to manage the cost, so that when the gold price pops, we provide sufficient leverage to the gold price. So that's really where the focus is in terms of the portfolio.

Okay. Thanks very much.

Tanya, Scotiabank.

Great. Thank you. Good afternoon, everybody. I just have a couple of questions. I'm going to start off with Obuasi, and maybe, Venkat, you can give us an outlook for the next 12 to 18 months in terms of the key milestones for Obuasi that we can look forward to, and maybe remind me what the reclamation liability is on that property?

Okay. Let me give you the milestones you can look for, too. When we stood up in 2013, we said in 2014, we want to take the mine into limited operating state. By the end of 2014, early 2015, we got there early. We actually -- the underground production ceased in November of 2014. So the milestone in 2015 is really the following.

Delivery of a feasibility study and optimized business case during the course of the year; two, consultations with the government in terms of inputs that go into the feasibility; three is continued development of the underground decline. We are at 20 level already. We want to progress that with the jumbo we currently have at Obuasi.

So when we stand up, at the time when we announce our results for 2015 and early 2016, we want to be in a position to say this is the outcome of the feasibility study, government buy-in received, and how do we see the development going either on our own or through a joint venture partner. That's really where our thinking is.

2013 was preparing the ground, 2014 taking it into limited operating state. 2015 is limited operating state. 2016 is basically giving the pathway into the development of the mine. That's really the milestones we are looking at at this stage.

And then, Venkat, when you say minimal production for this year, what exactly is minimal? And then remember the reclamation liability.

Yes, sure. Sorry. With regard to the production for this year, for 2015, we are showing no underground production. Production is purely from tailings treatment, and it's a small amount. Graham can actually say it's about 20,000 ounces coming in in that regard. With regard to the reclamation, Christine can pick it up.

Yes. It's about $200m, and I think to bear in mind that this does actually vary with discount rate changes and re-estimation of liabilities. So we did see some adjustments in this last quarter with regard to that.

Okay, and that's $200m US?

Correct.

Okay, perfect. And actually, Christine, while I have you there, can you also give me what the book value is for Cripple Creek, now that we've been spending all of this capital?

It's in the region of about $950m.

Okay, perfect. Thank you, there. I just had a bit of a cold. And then, Venkat -- I'm sorry, thank you very much for that, Christine. Maybe just also just thinking about your overall strategy, you talked a bit about obviously bringing down this debt by about $1b, I think Christine said over the next few years, which is your medium-term goal, and we talked about obviously cost cutting and then asset sales.

When you talk about joint venturing of assets, would we assume that if that was to occur, that you would maintain operatorship of operating assets?

So first thing, just to put it in context here, the $1b was an aspirational target where we are trying to see how we can get to the interest bill. It doesn't need to come all from asset sales. We can choose to finance a stub using a lower-cost instrument, so from our point of view, what we are looking at is basically in terms of balance sheet, yes, deleveraging to give us some cushion in terms of gold price volatility.

If any assets we look at joint venturing, we'd obviously want to keep the operatorship, because of the historical knowledge of that particular asset and also to participate in our share of the upside going out into the future. So any JV having operatorship by AGA is a big plus point when it comes to both AngloGold Ashanti and for any joint venture partner.

Okay, perfect. Thank you very much.

Thank you.

Harry Mateer, Barclays.

Hi. Good afternoon. Just a couple questions. I guess, first, you did mention the credit ratings during the call and talked about your debt reduction medium-term aspirations. Can you just update for us where you stand with the rating agencies, in particular, and whether you see a potential for movement on the negative outlooks that are currently in place on the ratings.

Sorry, I just wanted to ask, the question is about the credit ratings?

Yes, and whether there's going to be any movement on the credit ratings which we see --

On the outlooks.

On the negative outlooks, yes.

Harry, I think we -- we [contact often] with the ratings agencies. They're on the line, on the call, so I think we do have some ratings review meetings coming up, but in terms of the reviews that have actually been recently conducted, I've reaffirmed our status with a negative outlook, but I think quite importantly is the views on the gold sector actually does actually impact on the ratings agencies' view. And I think let's leave it at that.

I think the important thing is we do focus on the factors under our control, and I think the focus will remain as regards that going forward.

Okay, thank you. And then, Venkat, when you talk about using lower-cost instruments to get interest costs down, can you elaborate on that? Are you talking about potential convertible issuance or any other leverage you're looking at there?

No. We're not referring to any particular instrument. It was just giving an example where we financed it at that stage in market conditions which were not conducive, so we paid a high-yield coupon, and coupled with that, we put an issuer's call, which is also priced in at a premium.

We'll make that call nearer the time based on market conditions prevailing at that point in time.

Got it. Thank you.

Thanks very much, Sean. I think that's it from us. Thank you, everyone, for your attention, and we'll chat again in three months.

Ladies and gentlemen, on behalf of AngloGold Ashanti, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines.