Anglogold Ashanti PLC (AU) 2015 Q3 法說會逐字稿

Ladies and gentlemen, good afternoon and welcome to the AngloGold Ashanti Q3 2015 results telephone conference. (Operator Instructions). Please note that this conference is being recorded. At this time, I'd like to turn the conference over to the Senior Vice President of Investor Relations, Stewart Bailey. Please go ahead.

Thanks, Harry. Welcome, everybody, to our results for the third quarter. I'm quickly going to run through the Safe Harbor Statement and then through the itinerary for the day.

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

These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause 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 these statements are reasonable, no assurances can be given that such expectations will prove to have been correct.

Accordingly, results could differ 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, 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 and business and operational risk management.

For a discussion of these factors, refer to our annual reports on Form 20-F filed with the SEC. 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 have material adverse 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 this date or to reflect the occurrence of unanticipated events, save for the extent required by applicable law. All subsequent written or oral forward-looking statements attributed to the Company or any person acting on its behalf are qualified by these cautionary statements.

The communication may contain certain non-GAAP financial measures which we use in -- we use these measures and ratios in managing the business. These should be viewed in addition to and not as an alternative for the reported operating costs or cash flow from operations, or any other measures of performance prepared in accordance with IFRS. The presentation of these measures may not be comparable to similarly titled measures other companies use. We post information important to investors on our website and you should read it.

Today we'll be, as usual, starting off with Venkat giving an overview of the results. Ron will then -- pardon me. Chris Sheppard will talk us through the South African region, Ron will talk us through the international region, Graham Ehms through projects and exploration, and Venkat will be filling in for Christine Ramon, our CFO, who is unfortunately attending her father's funeral today. She will be back later in the week. Venkat will then wrap up.

Thank you, Stewart. Good morning, ladies and gentlemen. You should have a PowerPoint presentation up before you and I'm just going to refer to the key slides, starting with slide number 5.

We're pleased to report another strong operating and financial performance for the third quarter. When we presented our strategy two years and nine months ago, our strategy was aimed at improving on a sustainable basis cash flow and returns.

It was based on five strategic pillars: getting the foundation right, which is around safety, people and sustainability; ensuring that we have balance sheet flexibility. The third pillar is around cost optimization across all aspects of costs in the portfolio. The fourth pillar is around improving portfolio quality, and the final fifth pillar is around the fact that mining is a long-term game and we need to have long-term optionality within the business.

In the past 33 months, we have been proactive and decisive despite quite challenging conditions. We have continued to maintain and show strong operating performance and delivery. We have taken decisive action on a number of our operations and, importantly, our balance sheet. Our cost management speaks for itself. We have shown portfolio improvements and rationalization within the business, whilst we have kept our optionality largely intact as we continue to focus on improving margins and cash flow.

Moving on to the next slide, which is the highlights of our third-quarter numbers. As you'll see from this slide, the team at AngloGold Ashanti have had a very busy quarter as we continue to deliver upon our commitments we made for this year, principally focused on deleveraging our balance sheet through self-help measures as we continue to weather an increasingly volatile market.

Production and all metrics of cost performance are better than guidance, largely thanks to an excellent quarter from our international operations. Production came in better than guidance. Cash costs showed an improvement year on year and again came in better than guidance. All-in sustaining costs showed a 9% improvement.

And net debt is down by about 25% as compared to the previous quarter. And as you know, during the quarter we immediately deployed the cash proceeds from the sale of Cripple Creek & Victor to reduce debt through a successful tender offer on our most expensive bond.

Further, in September, we announced our intention to form a joint venture with Randgold Resources to redevelop Obuasi in order to realize its full potential. We are working with Randgold Resources to consummate the joint venture early next year.

Turning on to slide number 7, Chris will cover this in some detail but it's sufficient to say that we had a very bad quarter in South Africa on safety. The fatalities during the quarter were unfortunately spread across all of our operating units in the region, and what is clear is that we need to redouble our efforts if we are to return to our strong safety performance in the last two years.

The last time we have had five fatalities in a quarter was the third quarter of 2012. So we want to get back to our good safety performance, relatively speaking, in 2013 and 2014, and our focus in this regard is on improving compliance to procedures and systems and influencing appropriate behavior at all levels within the Company.

What is notable is that our other safety metrics still show a positive trend, which is around our all injury frequency rate which showed a 12% quarter-on-quarter improvement. Our lost time injury frequency rate was down 16%.

Continental Africa in particular, in addition to delivering a very strong quarterly production and cost performance, also delivered a good safety performance, with Siguiri, Iduapriem and Sadiola remaining injury free.

Turning on to the table on slide number 8, we have continued to manage the controllable variables within our business despite a sharp year-on-year drop of 12% in the gold price, which is outside of our control.

If you then look at our normalized production, which is effectively comparing apples and apples by removing Cripple Creek & Victor with the mine that was sold, and also making Obuasi on a like-for-like basis as it went into limited operating phase in 2015, our production is about 5% below and it was principally due to South Africa, where we lost around 48,000 ounces due to safety stoppages. Even there, where we lost 20% of our planned production, we came in pretty close to what we produced in the second quarter of this year, showing what the latent potential in this business is if we can get over the hump we currently saw on safety.

Whilst lower gold prices and volumes flow through to the bottom line, we have kept our EBITDA margin steady and posted positive free cash flow before the once-off bond take out costs.

With those introductory comments, handing you over to Chris Sheppard.

Thanks, Venkat. Good morning, or good afternoon as the case might be, ladies and gentlemen.

At the outset, I'd like to address the key issues that have impacted the South African region performance in quarter three, and I might add are being addressed in quarter four so as to deliver an uplift in 2016.

The key issues are, one, an unsatisfactory safety performance that saw unprecedented safety stoppages and resultant loss of life and production; and two, constrained immediately stopable face length resulted in a lack of mining flexibility.

A thorough review of the five fatal incidents for the quarter has focused our management attention on the following areas: the knowledge base of critical skills and supervision needs attention as we seek to improve the overarching level of compliance to standards in our operations; secondly, addressing safe behavior patterns of supervisors and work teams through the entrenchment of established work routines, combined with safety leadership from our management teams; thirdly, the entrenchment of key critical hazard controls as we further seek to improve the levels of safety compliance in our operations.

Besides the 48,000 ounce impact of safety stoppages on our operational output, mining volumes were further constrained by less than adequate stopable face lengths, which was impacted upon by consequences of seismic damage to workplaces or reserve development delays and geological features.

Concerted efforts are underway to address the underlying issues in this regard, which should manifest improvements during 2016. These measures include increased resourcing and performance management of teams to equip the requisite face length, that is, stope panels to provide the necessary flexibility to improve production team efficiency. Secondly, critical ore reserve development oversight to ensure timeous delivery of ore reserve blocks for commencement of stoping production. And thirdly, heightened focus on quality of initial stope ledging operations to support future efficient stoping operations.

The successful implementation of these measures will see an uplift in production performance moving into 2016, and it's important to note that recovery from our quarter-three stoppages and challenges is only taking place through quarter four, and the full benefit of these actions will only be evident in the new year.

Turning to slide number 10, this presentation would not be complete without referencing the 2015 gold sector wage negotiations. After the longest negotiation process on record, we succeeded in signing a wage agreement during the quarter with the NUM, Solidarity and UASA, who represent the majority of our employees, and we thereby extended the agreement to our AMCU affiliated employees.

I believe it's important to note from the slide that despite widely publicized demand for a ZAR12,500 per month wage, that our settlement delivers a total monthly guaranteed pay package inclusive of medical and retirement contributions of exactly that. AMCU has appealed a labor court judgement upholding our right to extend the 2013 agreement to AMCU, and we await the outcome of that appeal somewhere between now and quarter one of 2016.

It must be noted this legal process is totally separate from the recently reported judgements relating to the reinstatement of dismissed AMCU members, the content thereof which we are still studying to determine our further response.

Although this slide focuses on our category four employees, it should be noted that miners, artisans and officials agreed to an increase of 6% on standard rate of pay in year one and 6% or CPI, whichever is the greater, in years two and three.

Turning to slide number 11, regarding our operational performance of our West Wits mines. Mponeng has stabilized its production levels in line with the de-risk plans implemented during the last two quarters to address the seismicity challenges. The reduction in planned extraction rates in specific areas has shown an improved seismic response, and the learnings from our recent seismic related fatality has seen our seismic monitoring and response protocols improved to further ameliorate the effects of seismicity.

Regarding the Below 120 project, the 123 level section has commenced a production ramp-up according to expectation, and the completion of the 126 level infrastructure and support work continues according to plan. Activities relating to the operational readiness for the phase two access to the lower carbon leader reserves below TauTona mine is progressing, while we review options to extract further value from the Below 120 footprint.

Then turning to TauTona, despite the regrettable seismic related fatality during the quarter, it must be noted that TauTona celebrated a lifetime achievement of 3m fatality free shifts in its 58-year history during the quarter. TauTona delivered a modest improvement in efficiency, with ore reserve development performing to expectation.

And most importantly, regarding the technology project within the greater AngloGold Ashanti, this has seen a significant progress through 2015 and in this past quarter has seen the successful deployment of our latest generation reef boring machine at the TauTona lower carbon leader shaft pillar. We've seen reef boring cycle times of 159 hours per hole, improving through quarter two to performances of 82 holes per hour now in quarter three, which compared to our blueprint of 72 hours per hole is a most pleasing development that continues to receive focused management attention.

We have furthermore succeeded in developing our ultra-high strength backfill product to the point where we are able to pump the product over the required 1,000 meter distance, a prerequisite for a full production mining cycle.

Turning to slide number 12, regarding our Vaal River operations. Moab Khotsong performed relatively well, despite volume deficiencies related to the three fatalities in the district. Concerted efforts to establish face length in the middle area of Moab continue, as we migrate resources from previously seismically damaged workplaces in the Great Noligwa portion of Moab mine.

The Zaaiplaats project continues to be on hold while an option study is underway at present, and will by the end of quarter one 2016 conclude whether to proceed with a prefeasibility study through the rest of 2016.

Regarding Kopanang, Kopanang has been impacted upon by a face length deficiency which has negatively affected ore production. This is now systematically being managed back to normality and recovery in this regard will be evidenced in 2016. Obviously, the previous comments made relating to safety stoppages and the impact thereof apply equally in the case of Kopanang.

Lastly, the previously reported progress and benefits of the restructured Vaal River district continue, while we actively seek to reduce the overall surface footprint of the district.

And then turning to page -- slide 13, regarding our surface operations, which consist of the hard rock marginal ore dumps, or MODs, and our tailings retreatment mine waste solution business. MOD production was characterized by an overall drop in grade as planned production migrates to lower grade resources over time, coupled with short-term grade fluctuations as we move into new production area MODs.

Key focus continues with regard to debottlenecking surface transport logistics flowing from changing centers of gravity of production. The screening of MOD material has been introduced towards the end of the quarter, and we should see an increase in grade reporting now to our treatment plants.

Volumes of material treated through Mine Waste Solutions has improved throughout the quarter, but the plant recoveries have continued to disappoint. A decision has been taken to reconfigure the treatment plant to float off the uranium first and then perform the carbon and leach gold extraction, thereby improving the overall recovery of uranium and gold. The changeover is underway at present and the first of two flotation screens will be recommissioned during quarter one 2016.

Now I'll hand over to Ron Largent, who will report on the international operations. Thank you.

Thank you, Chris. Good morning. I will provide detail regarding our quarter-three 2015 operating result for Continental Africa, Australia and Americas region, and also discuss some of the critical work streams that are underway to develop the optionality within the portfolio. As usual, I will not dig into the detail, as each operating asset's detailed results are contained within the quarterly report.

Before I get into each regional outcome for quarter three, I'd like to reflect on some of the trends that we've seen in the international portfolio over the past two plus years, since we embarked on our drive to improve efficiency and not only navigate a volatile low gold price scenario, but to show that we can actually thrive in this environment.

For the past two years, I've recommended you to watch and monitor the cost numbers in each of our quarterly results and to draw your own conclusions around the effectiveness and sustainability of this cost management work within AngloGold.

Slide 15 shows our all-in sustainable costs over this timeframe. As I stated last quarter, this slide tells a compelling story around the outcomes that have been achieved by focusing on the operations and the relentless drive to efficiency. Now, with more than two years of data to support us, we can illustrate not only the effectiveness but the sustainability of the process we've implemented.

We saw our first step change in early 2013 and a second one in 2014. Now we've put together three continuous quarters in 2015 that indicate another step change to all-in sustainable costs of less than $850 per ounce. The next step in managing and improving these metrics is currently being defined.

We believe the foundation that has allowed the improvements shown on this slide have been ingrained in our operating strategy and have set the foundation for the next step in operational efficiency. Overall, the international operations, which account for approximately 70% to 75% of the total production, have continued to improve margin even with the reduced gold price.

Slide 16. I first presented this slide last quarter to illustrate our journey compared with the global sector. The data is from publicly available information.

As you can see, it's been a transformational move for the international portfolio of assets. We moved from the top quartile in 2013 to the lower quartile in 2015. Our next step to manage costs and improve inefficiencies is well underway.

For 2015, the operations have managed approximately an additional $100 out of the all-in sustainable costs from the 2014 base. This is even greater if you compare it to the previous year's base.

The international operations group performed well on all production related metrics during quarter three 2015. Production totaled 702,000 ounces, which is a 7% reduction in output compared to quarter three 2014, but primarily due to the asset sale or taking Obuasi to a limited operation phase, with an associated $826 per ounce all-in sustaining cost, a 14% reduction in this cost metric.

And now I'd like to go into the regional specifics on slide 17. Continental Africa region production for quarter three was 349,000 ounces, at a cash cost of $687 an ounce. This is compared to 410,000 ounces at $799 in quarter three 2014. The reduction is due to the planned reductions at Obuasi and our anticipated grade reduction at the Siguiri mine.

The Geita mine had a good quarter at 138,000 ounces, at cash costs of $483 an ounce. The Kibali mine, operated by Randgold, had another strong production quarter, producing 72,000 attributable ounces with cash costs of $658 per ounce.

Slide 18. The Americas region production for quarter three was 219,000 ounces at cash costs of $570 per ounce, compared to 195,000 ounces at $702 in quarter three 2014. Those stated production costs did not include any quarter-three production from CC&V.

Ounce production from Brazil totaled 148,000 ounces at $538 per ounce. This is an improvement off the 133,000 ounces in quarter three 2014 at $724 an ounce.

Slide 19. The Australia region production for quarter three was 134,000 ounces at cash costs of $718, compared to 152,000 ounces at $861 for quarter three 2014.

Sunrise Dam underground ore production annualized rate has increased to 2.75m tonnes per year. This is aligned with plans for increased ore extraction from the underground operation. The mine tonnage movement is critical for establishing the future mine plans and asset capability. However, quarter-three production was impacted by ore grade reconciliation difference.

The Tropicana mine produced 83,000 attributable ounces at $500 per ounce. This asset is producing at the designed throughput and cost assumptions, and in early quarter four 2015 the asset produced its one-millionth ounce.

Now for slide 20. I won't go through each one of these individually, but I'd like to make a comment on a couple of these.

In Sunrise, due to the comprehensive work changing from open cut to undergrounding mining method, the mining efficiencies have been the priority. The site has reduced unit mining costs by greater than 40% and increased total ore mined to 2.75m tonnes per year. Drilling of the initial fans from underground platform have commenced for resource conversion in the gold orebody. Initial results are very encouraging.

At Siguiri, priority work around access to area one for reserve drilling, which is a community and government affairs priority. The prefeasibility for the combination plant is completed and now the finalization of the feasibility study is expected. Work continues on the optionality of the remote orebodies, Koun Koun and Saraya.

At the Geita mine, we are mobilizing the underground contractor for the Star and Comet orebodies by the end of 2015. This is the commencement of the underground work on site. Continuation of the evaluation of additional underground options at other orebodies, namely Nyankanga and Geita Hill, are being designed and exploration work is happening right at the moment.

I think the one we don't talk about often is SerraGrande. We've done quite a bit of work in Northern Brazil on orebody capability, and we're right in the middle of developing the Inga orebody with first mill to -- first ore to mill in mid-2016, and it will be followed up shortly with the Palmeiras Sul orebody.

And then last but not least would be Cuiaba, where we're maximizing the orebody capability, exploring satellite orebodies at the Cuiaba mine which are quartz veins in the hanging wall and footwall, confirming vertical continuity of the primary orebodies below the 20 level and testing certain ore sourcing opportunities.

So I think we have tremendous options, opportunities and outcomes that we can manage within the suite of assets.

I think to summarize international assets, the work around cost management, consistent delivery of plans, the asset planning and scheduling, the continued focus on business improvement, the all-in sustainable costs for quarter three 2015 of $826 per ounce has shown this positive outcome.

With that said, thank you and I'll turn it over to Graham Ehm.

Thanks, Ron. This morning I'll cover projects and focus on some key brownfields exploration results.

I'm on slide 22. Ron has spoken about the strong production performance at Kibali, which is mostly from the KCD and Mengu Hill open pits. Underground production is ramping up via the declines and will then ramp up via the shaft in 2017.

The shaft sink was completed in July and the shaft fit out is expected to be completed in the first half of 2016. Off-shaft development of the crusher and loading systems will follow, with production hoisting commencing in mid-2017.

Commissioning of the second hydropower station at Ambarau has just commenced and this will bring on 10 megawatts of hydropower. Detailed design of the third hydropower station at Azambi has just commenced and this will add a further 10 megawatts.

On slide 23, in regard to Colombia, Colombia provides a significant opportunity in the longer term for AngloGold. However, in the current environment, we are reducing our spend rate while preserving our future optionality.

At Colosa, work is in progress with the on-mountain options at various scales, including options to start small and grow over time. And technical work at Gramalote is progressing well. We're optimistic that this work on several fronts is sufficiently encouraging to advance the project PFS, or prefeasibility study, in 2016. Scoping study work is continuing on the Nuevo Chaquiro or Quebradona copper gold resource.

In regard to Obuasi, the limited operating phase has progressed well during the quarter, producing 13,000 ounces from tailings retreatment. This tailings retreatment will be completed in quarter four and we'll then proceed to place the plant on care and maintenance. The Obuasi Deeps Decline has proceeded on plan, and work on optimizing the draft feasibility study is progressing well.

The most significant development in the quarter has been the investment agreement with Randgold. Clearly there's considerable work to be done in order to complete the preconditions for the formation of the joint venture next year. In parallel with our work, optimizing the draft feasibility study and Randgold's due diligence, Randgold are preparing a development plan which builds on AngloGold's work. Randgold's focus is on geology, mine design and scheduling and cost optimization.

The other significant work stream is our joint engagement with the government of Ghana to negotiate a development agreement which will define a stable framework for the redevelopment of Obuasi. One of the most significant engagements needs to be with the EPA, so that we can agree the approach for operating the new mine and the reclamation plan for the historical mining areas and infrastructure, dating back to last century, when it was operated by Ashanti Goldfields and the government of Ghana.

On slide 25, turning to some of the brownfields exploration results, at Sunrise Dam there's some good results coming through. Cosmo was a lode that we mined at the end of last decade and it produced close to 1m ounces at 6 grams.

Four significant intersections have been hit at Cosmo North this quarter, directly along strike from Cosmo orebody. This potentially adds higher grade ore into the production profile in the medium term. The best result was 10.6 meters at 22.9 grams, hosted in volcaniclastic sandstone, and showed abundant fine grained pyrite and visible gold.

Further on Sunrise Dam, on the next slide, we have reported to Vogue previously. It's a large area to the south west, plunging south west of the main orebody. We have now established underground access to the top of Vogue and have commenced infill extension drilling programs. The results are looking good and are providing -- or proving up our plans to establish Vogue as another main production area.

The results which have just been received are shown on the cross-section, and they include 8 meters at 6.8 grams per tonne, 6.5 at 7.2, almost 20 meters at 14 and almost 12 meters at 5 grams.

On slide 27, at Cuiaba in Brazil, underground drilling is infilling the continuation of the Serrontinho orebody below the 17 level; that is below the current production level. The underground drilling intercepts are impressive and range from 6 to 20 meters in width at grades of 12 to as high as 70 grams per tonne.

Notably, the underground drilling is identifying mineralized quartz veins in the hanging wall and footwall of the main lodes. This increases the ounces per vertical meter and consequently decreases the development cost per ounce, as they are close to existing development. In addition, a surface drill hole intersect of 20 meters at 25 grams per tonne between the 20 and 21 level, showing orebody continuity approximately 400 meters along strike from the current workings.

With that, I'll pass back to Venkat.

Thank you, Graham. If I can pick up on the financial slides before going to the conclusion.

As you'll have seen from slide number 29 which is in your pack, the trend over the past 33 months shows that we are working very hard to adapt to a collapse in the gold price, which has fallen by around $600 an ounce. Despite headwinds impacting our South African performance in more recent periods, we have seen a reduction of more than 40% in our all-in sustaining costs whilst our all-in costs have halved over the same period. As you can see from Ron and Chris' presentations today, we're working on wringing more benefits out of our business.

I'll not spend too much time on the slide on the next page, which is largely self-explanatory. As you can see from the slide, the costs are down, the debt is down, free cash flow is modest given the impact of the gold price. And the one to look out for in the subsequent quarters is the reduction in the interest bill following the repurchase of the high yield bond during the quarter. On an annualized basis, that saving equates to around $66m a year.

We remain a beneficiary of weakening local currencies and fuel prices, both of which provide an important shield to our margins in times such as these.

Now turning to slide number 31, that unpacks details around the cost reductions year on year. Whilst our improved cost performance reflects the benefits of weakening currencies and oil prices, there's also a fundamental shift in efficiency improvements as we continue to outrun the orebody decline and mining inflation that continue to snap at our heels.

Moving on to slide number 32, there's been a fair amount of noise in our

earnings for the quarter, and if I can unpack the movements in adjusted headline earnings. Our adjusted headline earnings after removing the impact of the bond take out and the Obuasi provision was a loss of $52m. However, this was after a number of accounting non-cash adjustments.

Most notably was the deferred tax adjustment of $37m, which largely relates to Brazil where we use US dollar as functional currency, and this creates deferred tax swings with sharp currency movements. So when the real weakens you see a deferred tax hit to the income statement and when it strengthens you see a credit coming through the income statement.

In addition, the other adjustments include inventory write-downs, tax and rehabilitation provisions. Had we not had these adjustments, our adjusted headline earnings would have been positive at $18m.

Turning to the balance sheet, our proactive and decisive approach around ensuring balance sheet flexibility has served us well. Having kept net debt steady despite falling gold price, we have achieved a step reduction of 25% in our debt level. This has helped us improve our net debt to EBITDA ratio by a similar level from its recent peak towards our targeted range of 1.5 times through the cycle.

Our balance sheet is in a stronger position than it was a year ago. We have ample liquidity, covenant headroom, good mix of facilities and no imminent bond maturities -- material bond maturities until 2020.

Now, turning to the outlook, given the strong cost performance we have seen so far this year, we have improved our cost guidance for the year and it's shown on this slide. We have improved out total cash cost guidance from $770 to $820 previously to $720 to $770, an improvement of around $50 an ounce. Our all-in sustaining cost guidance has improved from $1,000 to $1,050 previously to $950 to $980 an ounce, an improvement of $50 to $70 an ounce.

Our capital expenditure bill, which was guided following the sale of CC&V at a lower level of $900m to $1b, we now expect to come closer to the $900m mark, of which 70% is sustaining capital. We have also narrowed our production guidance for the year, still within the previous range at around 3.8m to 4m ounces.

These are provided with the usual health caveats and the stated exchange rate assumptions.

Now, moving on to the conclusion slides, there are three slides in the conclusion, starting with slide number 36. We have quarter by quarter, brick by brick, built a strong record of consistent performance and delivery that now spans close to three years. We have either met or beaten our production guidance and performed better on the cost side. With a global business of 19 operating units in 9 countries, hiccups are bound to happen so we could miss a quarter here or there, but certainly our performance to date has been steady and is in the right direction.

Moving on to the next slide, and that slide captures what the last 12 months' production in ounces is by asset and what the last 12 months' all-in sustaining cost is. And our strategy is directed towards creating a high-quality, high-margin portfolio as we unlock sustainable cash flow improvements and returns.

As you can see, some of our assets already fit into this category and work is underway to get some of the outliers into our desired target zone. We see Obuasi as having a potential to provide us with such a long-life quality asset that delivers near-term growth as well. South Africa currently sits as an outlier and we are working on key areas of improvement, as Chris highlighted, to move it to the left.

Finally, to conclude, looking at our scorecard in terms of performance against strategy, on the foundation we have had good successes but setback in this quarter in relation to safety which we are turning around. On balance sheet flexibility, ticks in the box in terms of delivery of a core asset sale and immediate debt reduction to get the debt level to where we want it to be.

On the cost optimization side, we are starting to see that improvement come through. We're also seeing the benefit of currency weakness and we continue to chip away at the overhead structures wherever they are located. And going forward into 2016, we are looking at halving the spend on Colombia as compared to the $85m budgeted for 2015.

On the portfolio side, Obuasi redevelopment plan is underway. Kibali continues to ramp up. We're looking at safety as a key lever for the South African region improvement and we are evaluating brownfield opportunities around our existing mine sites, as Ron eluded in his presentation.

On long-term optionality, South Africa is focusing its reef boring in the West Wits area. And in the same period last year we had 3,000 ounces; from technology this year it goes up to 13,000 ounces. Colombia remains a key long-term opportunity for the business, as it holds significant amount of gold beyond a 2020/2023 horizon, and we continue to have ongoing exploration deliver ounces into our inventory.

With that concluding remark, very happy to take any questions you may have.

(Operator Instructions). Richard Hatch, RBC.

Thanks very much. Afternoon, morning, all, and thanks very much for your time. Just a question on Cerro Vanguardia. You note production improvements you're looking at there. Can you just talk a bit around that? How could it progress? What could the asset go to in terms of production and what's your existing mine life on it?

And then perhaps you could just have a few comments around the safety challenges in South Africa and how much of a risk that is to your 2016 expected gold production. Thanks.

Okay. I can pick up this one. I can pick up the Cerro Vanguardia. Right now, the mill heap leach and underground open pit mining is -- basically, the mill's filled to above nameplate capacity at a little over 1.1m tonnes a year. The production profile is really, I would say, the current average reserve price or the reserve grade. And right now the big challenge is the inflationary pressures that keep driving the reserves up or down, depending on the exchange rates in Argentina.

We are doing a considerable amount of brownfields work and looking at other land positions close to the Cerro Vanguardia land package. So it's got a good life. I think the challenge down there is managing the internal inflationary pressures, and maybe to a certain degree not getting any of the weakening of the Argentine peso. So we looked at -- this will be long term in our portfolio, the longer-term plan at the same sort of production rate we are today.

And on South Africa, Chris will cover what we are doing in terms of safety. But to answer your question on how much of a risk it is in terms of 2016 numbers, obviously the ramp-up coming for the fourth quarter of 2015 understandably has a carryover impact from the fatalities we had in the third quarter of this year.

But looking into 2016, we are expecting to see improvement in terms of our South African production. We expect South Africa to produce just over 1m ounces this year; I mean 2015. In 2014, it produced over 1.2m ounces. So a 10% improvement as compared to where we are now when we get safety under control is not an unreasonable assumption, so around 1.1m ounces-ish for 2016, a 10% improvement or 100,000 ounces.

And Chris can perhaps come in and explain what we are doing in terms of safety to address this.

Okay. Chris here. Just I think with my opening comments on slide, I think it was about 8 or so, I did indicate the key issues that we are actually dealing with on the safety front, but just to recap, really focusing on knowledge and skills base of our work teams and our supervisors, focusing on reinstalling the necessary requisite compliance to safety standards and really focusing on work routines within our work teams and our supervisory staff, and then a focus area on risk management in terms of critical risk controls.

Those are the key issues, as I alluded to earlier on. If there's any further questions in that regard, I'll happily take them.

Very kind. Thank you very much.

(Operator Instructions). Richard Hatch.

Sorry. I think it's just you and me, guys. I just wondered whether you might be able to talk about -- obviously your cost performance is really good and the mines are running nicely in terms of cost and margin. Can you perhaps just give a talk around your dividend, thoughts on dividends, whether -- at what point you might feel that it might be the time to start recommencing paying a dividend, or is it just too volatile to say at the moment what with perhaps the Fed rate hike in the end of the year? Thanks.

I think certainly dividends are strongly in the mix in terms of our long-term approach in terms of returning value to shareholders, but what we have said previously we will not do is to borrow money to pay dividends. I think that's an incorrect strategy. So what we'd like to see is an element of sustainability come back in in terms of the macro environment, and also more free cash flow come out of the business.

But certainly, right now, the priority would be to chip away at the balance sheet and the debt from free cash flow before we put dividends in the equation there, but it's firmly on the table for the right time, once we're satisfied that we can consistently meet it without having to resort to borrowing to pay the dividend.

Cool. Thank you.

Howard Flinker, Flinker & Co.

Hello, everybody. I have two questions and a comment. The first question, from the first page of your release, shows ongoing production down year over year. Do I calculate it correctly at about 500,000 annualized, 500,000 ounces? That excludes dispositions.

Sorry. Which number are you referring to?

The first line says 'produced from continuing operations'. So for the September quarter you have 955,000, and a year ago at the same time it was 1,072,000 and for the nine months 2,833,000 and 3,123,000. Is that roughly a decline in annualized production of 500,000 ounces, excluding --?

No, it's not. If I can answer that question, the three big swing factors in that regard are firstly Obuasi. Obuasi was in full operation in 2014. We took a conscious decision to move Obuasi into limited operating state, and the delta there is around 200,000 to 230,000 ounces of production coming down, but it obviously improves the cash profile because they were cash burning ounces.

No, I'm not concerned with that. I just want to know about demand and supply. For the nine months, the production is down close to 300,000 ounces, and let's add the fourth quarter, so it will be 400,000 to 500,000 ounces; is that correct?

Our annual number, for this year we have guided 3.8m to 4m ounces, and that doesn't change.

What was last year's number?

It was around 4.1m; 4.1m last year.

Okay. So it's 300,000 ounces, roughly.

Yes.

Okay. That satisfies that. Second, if you proceed with the JV with Mark Bristow and Randgold, will there be any further write-downs of assets?

If we proceed with the joint venture with Randgold, currently, as you can see, we've actually provided for effectively the 50% of the carrying value of the asset. We don't anticipate any further write-downs if we were to proceed with the JV with Randgold.

The only caveat I put, and it's a small number, is that we are currently responsible for the development of the decline until the development plan is approved in the event the deal goes ahead. So it's purely the cost of the decline development between now and when both parties say, yes, we're a go on the deal. And we're not talking big numbers in here.

No, you've already done it. Okay. I wanted to clarify that.

Great.

And third I have a comment. You could reduce the introductory comments to about 15 minutes instead of 45. Most of what you said has little relevance to the long-term health of the business, or to the profitability. They are minor details that might satisfy some general managers listening to the conference call, but it's irrelevant to the big picture. And you could concentrate and sharpen your comments about where the business is going by shrinking it from three-quarters of an hour to a quarter of an hour. That's my only comment.

All right. Thanks for that, Howard.

You're welcome.

And thank you, everybody, for joining the call. I think that's it. We don't have any more questions in the queue. We look forward to chatting to you again in three months' time.

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