Anglogold Ashanti PLC (AU) 2015 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the AngloGold Ashanti analyst conference call. (Operator Instructions). Please note that this conference is being recorded. I would like to hand the conference over to Mr. Stewart Bailey. Please go ahead, sir.

Thanks very much, Judith. I'll start with the Safe Harbor statement. Then we'll get into the itinerary.

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, total cash costs, all-in sustaining costs, all-in costs, cost savings and other operating results, return on equity, productivity improvements, growth prospects and outlooks of our operations, individually or in 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, dispositions or joint venture transactions, our liquidity and capital resources and capital expenditures and the outcome and consequence of any potential 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 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 result -- reflected in such forward-looking statements and forecasts are reasonable, no assurance can be given that such expectations will prove to have been correct.

Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, amongst others, changes in economic, social and political and market conditions, success of business and operating initiatives, changes in 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 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 also have material adverse effects on future results, and consequently you are cautioned not to place undue reliance on these 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 reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti or any other person acting on its behalf are qualified by these cautionary statements.

The communication may contain certain non-GAAP financial measures. We use these measures and ratios in managing our business, and they should be viewed in addition to and not as an alternative for reported operating 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 important information on the main page of our website at anglogoldashanti.com, under the investors tab. You should read it.

It's a busy set of results today, so we'll get right to it. Venkat will be starting off, followed by the operators, and then Christine chatting to the financials last, before Venkat wraps up. Venkat.

Thank you, Stewart. Morning, ladies and gentlemen. It gives us great pleasure to stand before you today and present our fourth-quarter 2015 and full-year results.

As you'll have seen from the results, the highlights include consistency around meeting our production guidance, beating our cost estimates, delivering free cash flow and a sharp reduction in net debt levels, all of which have happened despite the fall in gold prices, and some very good brownfield exploration successes which we are seeing within our portfolio. You will recall that since 2013, we have implemented a number of initiatives and self-help measures, and these results show cumulative benefits of these measures and efforts coming through.

Starting with our strategy, our strategy which was launched in 2013 has at its core delivering sustainable cash flow improvements and returns, which in turn we believe will drive shareholder value in both bear and bull markets. This is supported by five simple business objectives that have done the job well for the past three years.

First, strong foundation built on safe production, best people and a well-enshrined sustainability model. Second, placing enormous importance on balance sheet strength and flexibility. Third, focus and delivery on production improvements, cost management and sound capital discipline. Then, improving our portfolio quality consistently, and remembering that mining is a long-term game and therefore value-adding growth remains important, and therefore ensuring that we keep the long-term optionality firmly on the radar at an affordable cost. We'll outline some of our successes later on during the presentation.

If we can move to slide number 7, which shows the map of where the operations are, as you can see, we are one of the gold industry's geographically diversified companies, with around 25% of our production coming from South Africa and 3 times that amount coming from our international operations. As Christine will elaborate, we offer good leverage to gold prices, weakening currencies and oil prices, and this positions us very well in the current macro environment.

At a high level, looking at the results for the fourth quarter, our production came in at close to 1m ounces at an all-in sustaining cost of $860 an ounce and an all-in cost of $959 an ounce, all coming in significantly better than guidance. Costs improved 14% year on year.

For the full year 2015, production of 3.95m ounces came in at the top end of our guidance. All-in sustaining costs of $910 an ounce and all-in costs of just over $1,000 an ounce was also a beat on guidance. Equally importantly, we generated good free cash flow for both the fourth quarter and the year and applied it to further slash net debt, which currently stands at 30% lower than the same time last year.

Looking back a year ago, we were certainly not the mining industry's most indebted company by any means, but we were the first to commit to a range of self-help measures to lower debt from internally generated cash without diluting shareholders. As you can see from the slide, we have delivered on most of our self-help measures, such as margin improvements, cost savings throughout the business, significant brownfield exploration success, with Obuasi and Colombia being work in progress.

There's still work remaining at Obuasi, which Graham will cover a bit later. In Colombia, given depressed market conditions for early stage greenfield projects, we are rationalizing our annual spend further, whilst we work to continue to move these projects up the value curve.

Turning to safety, safety continues to remain top priority, with our biggest challenge at our South African operations, which accounted for 80% of the fatal accidents for the year. We unfortunately lost two of our colleagues in the fourth quarter, Mr. [Pieter Minnaar] at our engineering electrical unit in South Africa, and Mr. [Jos Balfour] at our Obuasi Mine.

Plus, we have made great strides in reducing injuries across our whole portfolio, as evidenced by the improvement in our all-injury frequency rate. We continue to devote significant effort and resources to realizing the next step change improvement that is needed in this critical area of both our business and strategy.

Turning to slide 10, our focus remains on high margin of quality ounces rather than an absolute production number. As this table that compares 2015 full-year results with that of last year shows, we faced headwinds from an 8% drop in the gold price, combined with lower production arising from a below-par performance from South Africa due to safety stoppages and loss of production from CC&V sale and Obuasi. Notwithstanding this, our costs dropped by 11%, EBITDA margins improved, free cash flow was up and net debt production targets were met.

Whilst our cost reduction and efficiency measures helped keep a lid on local inflation and production changes at our operations, the tailwinds from currencies and fuel provided us with the additional mitigation that was needed. Looking back at our journey over the past three years, our all-in sustaining costs have dropped by 54% from the peak of Q4 2012, where it was $1,597 an ounce, dropped now to $860 an ounce.

With those introductory comments, I'd hand you over to Chris.

Thanks, Venkat. So some three months ago, I said that the key issues that needed attention were our unsatisfactory safety performance that saw unprecedented impact on the business and the constraints we saw in immediately stopeable face length, which reduced our mining flexibility. I was also clear that if we succeeded in addressing these issues, you would see an uplift in production performance this year, but it would take much of the fourth quarter to recover from these stoppages and challenges, with the full benefit only evident in the new year.

Turning to slide 12, I'm pleased to be able to show that quarter four saw our all-in sustaining costs improve to ZAR451,000 a kilogram. You will see here a double-margin kicker, with the improved costs taking place against a backdrop of an average gold price that has climbed to around ZAR505,000 a kilogram.

This performance was underpinned by higher gold sales as opposed to pure production during the quarter, and also the move out of the higher winter power tariffs we see each year. You'll also be aware that we saw the benefit of the weak exchange rates, though to be clear that the rand only really fell sharply in the last few weeks of the year. We will be the beneficiaries this year of higher dollar gold price and the significantly weaker rand.

Turning to slide 13, regarding the operational performance of our South African operations, the improvements in safety achieved during the quarter saw return of stability and consistency to our operations, though it's worth noting that the real recovery from the safety interruptions that hit quarter three came at the end of quarter four, as we have flagged. That's why you see similar production levels quarter on quarter.

Mponeng improved its production levels by some 13% (sic - see slide 13 "15%"), in line with the derisk plan we put in place over the past three quarters to address the seismicity challenges we've experienced. This resulted in a pleasing 2% reduction in all-in sustaining costs to $959 per ounce.

Regarding the Below 120 project, the 123 level section continues its production ramp up to expectation, and the completion of 126 level infrastructure and support work is also continuing to plan. Operational readiness for the phase two access to the lower carbon leader reserve below TauTona is also progressing, with a pre-feasibility study approved to evaluate the merits of increasing the project footprint on the lower carbon leader, as well as co-extraction of the VCR from the same shaft-deepening infrastructure platform. We expect to finish the study by the end of this year.

Next door at TauTona, we saw a steady performance reflected in the 13% improvement in all-in sustaining costs to $957 per ounce. Our technology project also demonstrated significant progress through last year, with successful deployment of our latest generation reef-boring machine at the TauTona lower carbon leader shaft pillar, and preparations are now at an advanced stage for the deployment of reef-boring technology at the Savuka Mine carbon leader shaft pillar site.

Turning to our Vaal River operations, we saw Moab Khotsong continue to focus its efforts on establishing face length in the middle area of the mine, as we migrate resources from previously seismically damaged working places in the Great Noligwa section. All-in sustaining costs there improved from quarter three to some $997 per ounce.

Zaaiplaats Project remains on hold, while our option study there has resulted in approval for pre-feasibility study to proceed, and it's anticipated that this will be completed by the end of 2016.

At Kopanang, we continue our work on addressing previously reported face length efficiency. That delivered a 27% increase in total meters developed in the quarter and a modest 7% increase in tonnage mined.

Our surface sources returned a similar performance to quarter three. You'll recall that we took steps to improve recoveries at both uranium -- of both uranium and gold by reconfiguring the treatment plant at Mine Waste Solutions in order to float off the uranium first and then perform the carbon in leach gold extraction. In line with that initiative, we will see the first of two flotation streams recommissioned in quarter two.

Lastly, it's pleasing to note that the months of ore reserve position and the face length mined position have shown an overall improvement quarter on quarter.

On slide 14, progress is being made on all four pillars of our revised safety strategy or safe production strategy, shall I say. There are -- these are going around improved knowledge and skills, working on critical aspects of behavior and attitude, optimizing our work planning and, most critically, removing people from risk.

Important to note that the single biggest shift from the previous safety strategy is the work being done on knowledge and skills. It is accepted in the South African region by the executive team that this critical aspect requires more prominence and focus from us, and it will take time and effort to achieve excellence in this regard. It is, however, a critical enabler to unlocking success in most other areas and achieving safe, sustainable production. Mponeng is a pilot site for many of our safety initiatives, and we'll be closely tracking progress there.

And then turning to 2016 priorities, the first and most pressing of our key priorities for the year is to put an end to the fatalities by improving workplace conditions and behaviors. We will look to create stability and control across the portfolio, focusing on ore reserve development and face length available and face length stopeable.

We're pushing hard to ensure full implementation of Project 500 cost reduction and continuous improvement frameworks, and projects in which we'll firstly modify the operating model and drive out off-mine cost reductions, where we're looking for some ZAR500m worth of reduction this year; secondly, to debottleneck the business; and thirdly, secure labor productivity improvement.

The Mponeng Below 120 phase one project delivery remains critical in the short to medium term, while the work (technical difficulty) underpins the longer-term optionality for Mponeng. The outcomes of Project 500 will also be crucial in this regard.

Our significant commitment to our technology program will remain driven by a focused project management team, fully integrated with the TauTona operational management team and guided by rigorous stage gate mechanisms, as we define our research and development efforts.

In closing, we're seeing some pleasing momentum starting to develop across our region, and I remain confident that we will deliver the 10% uplift in performance over last year's numbers.

Now I hand over to Ron Largent on international operations.

Thanks, Chris, and good morning. I'll provide some detail regarding our quarter-four 2015 operating results for continental Africa, Australia and Americas region, and then discuss some of the work streams that are underway to develop the optionality within this portfolio. As usual, I will not go into detail of each individual operating asset, as the detailed results are contained within the quarterly report.

On the all-in sustaining cost slide, as I stated last October, we believe this slide tells a compelling story around the outcomes that have been achieved by focusing on the operations and the relentless driving of efficiencies. Now, with three years of data to support us, we can illustrate not only the effectiveness but also the sustainability of the process we have implemented.

We have commenced a project to improve our efficiencies throughout the international operations in late quarter four 2012. As this graph illustrates, we saw our first step change in early 2013 and then a second step change in 2014. Now, we've put together four continuous quarters in 2015 that have indicated another step change to less than $850 all-in sustaining costs.

We believe the foundation that has allowed the improvement shown in this slide has been engrained in our operating framework and has set the foundation for the next step to operational efficiency. Overall, the international ops, which account for somewhere between 70% and 75% of AngloGold Ashanti production, have continued to improve margins even with the reduced price.

The next slide I first presented in quarter two 2015 to illustrate our journey compared to the global gold industry. Our objective was and is to continue to move our outcomes to the left on this slide.

As you can see, it's been a transformational move for the Company from the highest quartile in 2013 to below industry average in 2015. AngloGold had all-in sustaining costs for 2015 of $910. This is below the industry average of $938. For the international operations, 2015 was completed with an all-in sustainable cost of $822.

I want to remind everyone that our cost management work over the past three years has been focused at each individual site around all aspects of the operation, including but not limited to procurement, strategic planning, mining contract evaluation, manning levels, asset reliability, capital management and operating efficiencies.

To unpack the numbers at a high level, all-in sustaining cost at international ops has reduced by approximately $300 per ounce since 2013. In this three-year period, we can categorize it into general groups of currency about 30%, fuel and power about 15% and cost management and efficiency, net of inflation, about 55%.

Just one last comment I'll make is if you compare from 2013 to 2014, the industry had a reduction of a little more than $90; AngloGold reduced by $175. Going from 2014 to 2015, industry reduced an additional $50 an ounce; AngloGold reached a $110 ounce reduction. We think this reflects our focus on cost management over this timeframe.

Now, next slide, for quarter four the international operations produced 745,000 ounces at cash costs of $619 and all-in sustainable costs of $786.

To highlight a couple areas of performance, Geita had another strong performance in quarter four, producing 139,000 ounces at $465 (sic - see slide 19 "$480") cash cost. The Americas region delivered 831,000 ounces in 2015, with all-in sustainable costs of $792, an 18% year-on-year cost improvement.

At Tropicana, it produced its millionth ounce in quarter four, and as per the investment plan, 2016 grade reductions are being actively interrogated. The Kibali Mine had another strong quarter, 69,000 ounces attributable at $603 cash cost, while production ramp up continued throughout the year.

The next slide, 19, each quarter I try to talk about an individual asset or two with I think significant changes. I'd like to highlight the work at the Geita operation.

In January, the first round was detonated that commenced underground mining at this asset. The mining of the Star & Comet ore structure will consist of decline and incline access to known remaining high-grade structures. First ore was delivered to the mill from the activities as the structure was exposed in the depleted open pit. Our current resources that we're planning to mine averages a little more than 6 grams per tonne.

This underground project is the beginning of our work to extend mine life and is self-funding in the way we have it designed, in line with our Group strategy. This 117,000 ounce resource can be perceived as not being real relevant to the Geita Mine, but strategically this commences a new mining method at this asset and we believe leads us to the real potential, Nyankanga and Geita Hill deeper resources.

The next slide is Nyankanga underground potential. This current work will set the stage for future evaluation and potential development of underground mining at Nyankanga and Geita Hill ore bodies. You can visually see on the slide the resources that we've identified under the open pit design at Nyankanga. As you can see, there are indicated and inferred resources already defined. This is our longer-term future of the Geita operation, along with the continued brownfield exploration for surface mining sources.

Slide 21, 2016 priorities. I won't go through each set of work in detail, but we have optionality throughout our operating assets. The Sunrise and Siguiri work will be discussed by Graham, as these are two areas actively being implemented.

At Tropicana, down dip and the long strike extensions to the existing ore bodies are being defined by drilling to allow for mine planning options to be evaluated. We're in the middle of understanding our options to address the planned mill feed grade reductions.

At Iduapriem, brownfield drilling continues with successful results that allowed for considerable ore reserves in 2015 and planning the extraction sequence is currently progressing. In Argentina, we've completed an agreement with a neighboring landholder that allows us to explore the known structures that are contiguous to our existing operation.

In Brazil, Serra Grande, the development of the high-grade Inga ore body is on schedule for ore delivery in the second half of 2016. Drilling will continue on the second high-grade ore body, Palmeiras Sul, in this year. These higher-grade systems are the reasons AngloGold Ashanti purchased our JV partner's ownership in 2012.

And then at the Cuiaba Mine, we continue to define and understand the high-grade satellite ore bodies in the hanging wall and footwall of the known systems. This allows us to reduce our dropdown rate and also reduces the development cost per ore tonne metric.

As you can see, I believe there's tremendous options, opportunities and potential outcomes that we can manage within this suite of assets.

With that, I will turn you over to Graham Ehm.

Thanks, Ron. Today, I will cover our 2015 resources and reserves, exploration results, and I'll provide an update on some studies and projects.

I'm starting on slide 23. Our reserves at the end of 2015 were 51.7m ounces, compared to 57.7m ounces 12 months ago. Reserves are calculated at the same gold price as last year, or $1,100 an ounce.

Key changes have been the Cripple Creek sale and depletions of 4.3m ounces. Half of 2015's depletions have been offset by gains at Iduapriem, Obuasi, Sunrise Dam and across the other assets as a result of exploration success and mine optimization.

Our resources at the end of 2015 were 207.8m ounces, compared to 232m ounces 12 months ago. For 2015, we have reduced the resource gold price from $1,600 to $1,400 an ounce.

Key changes have been the disposal of Cripple Creek and Victor and Mongbwalu and depletions of 4.9m ounces. There were gains at Obuasi and Sunrise Dam, offset by reductions at Geita in South Africa and at Colosa.

Turning to Sunrise Dam, Sunrise Dam continues to show strong potential. Over the last few years, the mine has fully transitioned to underground mining, and the underground mining has increased from around 1m tonnes per annum to 2.8m tonnes per annum. Mining costs have come down considerably, from well over $100 per tonne to $45 per tonne.

Exploration has continued to be successful and has recently returned 11.7 meters at 15 grams per tonne, 4.75 at 350 grams per tonne and 10 at 15.7 grams per tonne from the Cosmo Vogue area. Deeper, the Carey Shear, continues to grow with recent drilling.

The strategy being pursued at Sunrise Dam is to increase the milling rate to 3.6 -- sorry, the mining rate to 3.6m tonnes per annum to match the mill capacity, while growing the resources and reserves, particularly at Vogue. To decrease costs, we are looking at an incline conveyer and underground crushing system, taking ore directly to the mill.

There's also scope to increase recovery by up to 5% through flotation and fine grinding. This would sustain Sunrise Dam as a 250,000 to 300,000 ounce a year producer and reduce its all-in costs to under $900. We expect to complete the work this year, leading to a decision in early 2017.

Last quarter, we reported good results at Cuiaba in Brazil. This has continued this quarter, with good results on the Serrontinho load, including 9 meters at 38 grams per tonne. The drilling has grown the resource by 238,000 ounces and improved confidence to indicated levels in some parts.

The footwall quartz veins has also added 235,000 ounces to the resource. And drill intercepts this quarter were narrow but very high grade, including 0.8 meters at 156 and 1.43 meters at 137 grams per tonne.

On the next slide, in Guinea at the Siguiri Mine, the first grade controlled drilling in the hard rock pit at the Kami Pit has returned better than expected results, with consistent grades of around 3.5 grams per tonne over 30 to 35 meters.

This leads me into the Siguiri hard rock project on the next slide. The Siguiri hard rock project involves adding hard rock crushing capacity to the current process plant, to treat the fresh and transitional ore containing approximately 1.6m ounces. The feasibility study has been completed and frontend engineering has commenced.

The project extends the mine life from 2019 to 2023 and opens significant potential from satellite pits. Annual production would be maintained at 300,000 ounces per annum and all-in costs would be less than $900 an ounce. Capital is approximately $115m over two years and project returns of $1,200 an ounce are good at 24%. We expect to give the project the full go ahead by mid-year, when all the requisite consents and approvals are in place.

Turning to Obuasi, here we were disappointed that Randgold withdrew as we believed we could successfully redevelop the mine together. In withdrawing, Randgold commented that the project didn't meet their investment criteria of 20% at $1,000 per ounce, a pretty tough target.

We have now refocused our efforts on three fronts. Firstly, we're optimizing our feasibility study to decrease upfront capital, especially in mine development, and reduce operating costs and improve recovery based on recent test work. We expect to finish this work by mid-year.

We are working with the Ghana EPA to undertake a thorough environmental review process for the redevelopment. We expect this to take us into the second half of this year. Thirdly, we are working with the government of Ghana to agree an investment development agreement, which will define and stabilize the fiscal conditions under which the project will operate.

With these three elements in place, we'll have a full investment package to offer a prospective development partner.

And lastly, you will have seen from our press release that there has been an incursion of several hundred illegal miners, or galamsey in local language, in the northern part of the Obuasi mine. To provide a little bit of context, illegal mining was causing considerable disruption to mining operations across Ghana, and in early 2013 the government implemented a program to remove the galamsey from illegal mining tenements across the country, including at Obuasi. And through the Chamber of Mines, the industry entered into an agreement with the government to provide ongoing security support to supplement the efforts of our own security people.

The tenement map in the slide shows the area of the lease and it shows the location of the galamsey in the northern end of the mineralized corridor. Unfortunately, on February 2, supplementary security support was withdrawn and this was followed by an incursion on February 6 of several hundred galamsey.

As the situation was volatile, we took steps to remove all non-essential people from the mine. We have kept government stakeholders updated on the development on site at every step of the way, and we have engaged with the authorities to the highest level for the reestablishment of law and order and the removal of the illegal miners from the site. Our priority is a safe and peaceful resolution to the current situation.

And last Monday, a high-level delegation was sent to the site to evaluate matters and we are awaiting formal feedback from the visit. We're hopeful of a speedy resolution and a situation where law and order is reestablished and the security of the mine is reestablished.

Thank you. I'll hand over to Christine.

Thank you, Graham. Good morning and good afternoon, everyone.

As you've heard from Venkat and my other colleagues, we continued to deliver on our self-help measures reflected in the strong set of results, again beating market consensus view. These improved metrics, together with lower debt levels, have resulted in improved free cash flow generation in the Group, providing the much needed flexibility in the current volatile environment.

I'll now talk through our fourth quarter's and full year's performance and conclude on the outlook for 2016.

Slide 32. Our geographic diversification continues to differentiate AngloGold Ashanti from the majority of its peer group, providing resilience in a volatile market. With the exception of the dollarized environment in continental Africa, we realized benefits which cushioned the impact of the lower gold price in South Africa, Brazil, Argentina and Australia. Together, these comprise the remaining two-thirds of our production.

We note that even though the gold price has declined by 8% in the past year, on a production weighted basis the Group has realized a 30% increase in the gold price when taking our currency exposure into account.

We remain sensitive to changes in our currency basket and the oil price, and we issue the following sensitivities with a health warning. For every $10 per barrel change in the average Brent crude oil price, it will impact our cash costs by approximately $8 per ounce. And for every 1% change in our currency basket, it will impact our cash costs by approximately $6 an ounce.

Slide 33. Despite the falling gold price since the fourth quarter of 2012, we have been able to steadily reduce both our all-in sustaining costs and all-in costs per ounce through relentless focus on cost control, portfolio improvements and operational excellence.

All-in sustaining costs have been reduced by approximately $735 an ounce from the quarterly peak and all-in costs have been cut by more $1,200 an ounce over the same period. Our margins have improved through the cycle, reflecting a 3% improvement in our all-in sustaining costs margin compared to last year, at 21%

Slide 34. Quarter four has delivered a strong operational and cost performance, with production and cash costs beating guidance. Year-on-year production declined due to the disposal of CC&V, Obuasi's move into limited operation, South Africa's disruptions linked to safety stoppages and the grade related reduction in contribution from Australia.

Both the cash costs and all-in sustaining costs for quarter four, at $663 an ounce and $860 an ounce, respectively, are the lowest since 2012 and reflect the benefits of our cost savings initiatives, weaker currencies, lower oil prices, favorable inventory movements and lower sustaining capital spend. All-in costs for Q4 were $959 an ounce.

Despite 3% lower adjusted EBITDA, at $388m for quarter four, margin improved to approximately 38% compared to a little under 33% in 2014. Free cash flow for the quarter, at $160m, improved significantly as a result of all-in costs -- sorry, lower all-in costs, tax and VAT refunds which together amounted to $36m, favorable inventory movements which amounted to $35m and lower finance costs.

Moving on to slide 35, looking at the cost performance in the year -- year on year, we note that efficiencies were key to delivering the improvement in cash costs for the quarter compared to last year, as the favorable currency effects were offset by inflation and lower volumes and grades.

All-in sustaining costs per ounce were $145 per ounce lower in quarter four compared to last year on the back of lower cash costs, lower sustaining capital and favorable rehabilitation and other non-cash effects.

In particular, the lower sustaining capital benefited from favorable currency effects, mine plan adjustments at Iduapriem, resulting in lower deferred stripping and lower ORD development in the South Africa region due to the safety stoppages. The lower deferred stripping, together with favorable currency effects, can be banked as permanent savings and the ore reserve development in South Africa is regarded as a timing issue.

Moving on to slide 36, the full year ended with an adjusted headline earnings of $49m or $0.12 per share, compared to an adjusted headline loss of $1m last year. As indicated on the slide, we normalize the adjusted headline earnings for deferred tax rates, prior year adjustments, inventory and other provisions for comparability purposes.

Adjusted headline earnings was mainly impacted by the 8% decline in the gold price, lower ounces sold and inflation increases, whilst it was offset in part by weaker local currencies, lower oil prices, improvements in operating costs and lower finance costs.

Slide 37. The $819m net proceeds received on the disposal of CC&V in August 2015 helped reduce the net debt levels in the Group by approximately 30% compared to last year. We have now reached our target net debt to adjusted EBITDA ratio of 1.5 times through the cycle and we compare favorably to our peers. The ample headroom to our covenant levels of 3.5 times net debt to adjusted EBITDA, our strong liquidity, sufficient undrawn facilities and long-dated debt maturities provides the financial flexibility required in the current volatile environment.

Slide 38. Our self-help measures have benefited our free cash flow generation and for the first time since 2011 we have been free cash flow positive on an unadjusted basis, and that is after taking all costs and CapEx into account, including tax. On an adjusted basis, excluding once-off payments related to the bond offer repurchase premium in 2015, the Obuasi retrenchment payments and the Rand Refinery loan in 2014, for two consecutive years we have been free cash flow positive.

Going forward, we expect this positive cash flow momentum to continue, benefiting from efficiency improvements as well as the leverage to currencies and the oil price. Furthermore, we will be significantly reducing the spend in Colombia to approximately $44m in 2016, reflecting AGA's attributable share whilst retaining optionality on the projects there.

As Graham mentioned, we will be proceeding to secure an investment package for Obuasi, and the related spend in this limited operation space will be reduced to approximately $70m in 2016.

We have saved about 30% on our annual interest bill by repurchasing 62% of the high yield bond in the past year. We continue to see the option on the high yield bond at the end of July 2016 as an opportunity, and we will keep all options open in this regard.

Hence, we will prioritize further deleveraging in 2016 with the aim of further optimizing the interest bill in order to improve free cash flows. We are focused on creating a platform to deliver sustainable returns to shareholders whilst pursuing incremental growth opportunities.

Finally, on slide 39, which deals with the outlook for 2016, our production guidance of 3.6m to 3.8m ounces takes into account the disposal of CC&V, Obuasi in limited operations phase with no production, planned reductions in Geita and Tropicana according to the mine plan, mitigated by the recovery in South Africa.

Please note that the first half in South Africa factors in a slower startup post the festive season and the Easter break. No production disruptions, power shortages or changes to the asset portfolio have been factored into the outlook.

Cash costs have been guided at $680 an ounce to $720 an ounce and all-in sustaining costs at $900 to $960 an ounce, and that takes into account the revised exchange rates and oil prices, as stated, as well as the lower production guidance and grade variances.

Capital expenditure of $790m to $850m includes project capital of $120m to $140m which relates to Siguiri, the Kibali underground and Mponeng, with 85% of CapEx in 2016 relating to sustaining capital.

In order to reduce costs, lastly, and keep the focus on the value adding business initiatives, AngloGold Ashanti will be moving to half-yearly reporting. We will continue to provide market updates on selected key data on a quarterly basis. However, the full interim financial reporting will now be done on a six-monthly basis. We will continue to engage with the market in this regard.

I will now hand over to Venkat to conclude.

Thank you, Christine.

Turning to slide number 41, as you can see, for the past three years we have quarter by quarter, brick by brick built a strong track record of consistent performance and delivery, and that's been despite formidable headwinds.

This slide tracks our actual production and cost performance versus our market guidance, and as you would see, we have for 12 consecutive quarters either met or beaten our production and cost targets. Looking at it on an annual basis for 2013, 2014 and 2015, it is also the first time that AngloGold Ashanti has met its annual production and cost targets for three consecutive years.

Moving to slide 42, our to-do list for this year is a busy one too. Top priority is to turn around safety and operational performance at our South African operations, where we are targeting a 10% year-on-year improvement.

We'll continue to target efficiency and cost improvements within the business to further improve margins and cash flow, which will be applied prudently to scale back debt. These efforts will not slack despite the recent improvements seen in the gold price or the weakening of the exchange rates.

Despite currently not being in production, Obuasi will occupy a disproportionately higher weighting in our list, wherein the next steps include optimizing further our feasibility study and securing the full package of regulatory consents and approvals needed before we seek to develop this asset through a joint venture.

Despite the recent security setback that Graham elaborated on, given the most recent proactive feedback received from the highest levels within the Ghanaian government, I'm cautiously optimistic of demonstrating further progress this year on this large reserve asset that is highly geared to the gold price.

Looking at our portfolio on slide 43, our job is to manage and improve the quality of our mining asset portfolio. This important slide shows how we monitor and evaluate this. Key is for the operations to move up and to the left.

As you can see from this slide, we have been successful in improving the quality of our continental African, American and Australian operations within the business. This year, we should start to see the benefits of our efforts on the outlier, our South African operations, start to yield both production and cost improvements, thereby pushing these closer to our international operations.

To conclude, we have a strong investment case with several catalysts that we are methodically ticking one by one. We have a high quality portfolio of long life gold assets with strong leverage to gold price, particularly on the back of improved margins, leverage to energy and currencies also.

We are a transparent and decisive management team that is focused on delivery and returns. We tell you what we are going to do, go away, do it, and then we come back and set a higher hurdle for the next round of improvements.

We continue to prioritize margins over production growth with relentless cost and capital discipline, and it's our decisive actions to date that have provided us with much needed balance sheet flexibility.

Finally, when we had the call last year, same time, I did say that I felt optimistic about the prospects of this business, and this has been proved with the benefit of hindsight a year later. I see little reason why this optimism should wane during 2016.

Thank you.

Chris, now over to you for questions.

(Operator Instructions). Christopher Rivituso, Debtwire.

Thank you very much. Good day, gentlemen. My name is Christopher and I'm a reporter with Debtwire. You have mentioned reducing your net debt by a further 30% on the year in 2016. I'd be very interested in knowing exactly how you plan to undertake that. That's my first question.

My second question is I also wanted to find out if the Company for its -- for I believe it's Ghanaian project more than anything else, is planning to raise any new debt or what it plans to do in order to -- or what measures it might be undertaking, either this year or in the coming years, to finance any new assets coming on stream. Thank you.

Thanks, Christopher. It's Christine speaking. I'll answer your question. I think, importantly, when we spoke to the debt reduction, we were referring to 2015, that we've reduced the gross debt by -- the net debt levels by approximately 30%.

Okay.

I think what we did say was that we would like to reduce the cost of debt in the Group, so in other words we would like to optimize the interest bill.

Okay.

And we are exploring various options in that regard. I did speak to the high yield bond. At the end of July is when that option comes up. We certainly see that as an opportunity, but at this point in time we are assessing market conditions. As you know, it has changed compared to last year and we're certainly keeping all options open in that regard.

Okay. Very good.

And then Chris, just in respect of your Ghana question, we have no plans to raise any fresh debt for anything in Ghana or any other projects that are on the slate at the moment.

Okay. Got it. One thing, though. You said that you'd like to reduce the cost of your debt. Can you indicate what it is now and what you are aiming for?

Well, we've given guidance on the finance costs for next year, and I think it's $175m cash flow on the income statement and $190m -- yes, on the income statement. Sorry, $175m cash flow, $190m income statement. I think clearly we'd like to reduce that even further, and hence we certainly have to keep you informed as we go forward as regarding that.

Thanks, Christopher.

No, what I meant was you said you are looking to reduce the cost of the debt.

Christopher, we're just going to take another question on the line. I think we don't give the average cost of debt --

I think it's 5%, there or thereabouts.

5%, okay.

Average cost of debt, yes.

All right. Okay. Fair enough. And any idea how much you'd like to bring that down to?

Chris, we're going to go on to the next question here. I think we've got a couple in the line. Thank you.

(Inaudible).

Hi. Good afternoon. I was wondering if you could -- it's my understanding that we're going to see elections in the DRC this year and I was wondering if you saw -- if you could give us an update on the situation, and if those elections were to become a bit more problematic than expected, whether you expect any disruption to your Kibali operations or any potential changes in the royalty regime in the DRC.

We're aware that the election is coming up towards the end of the year and the general intents of the current incumbent president. The operation has been proactive in that regard. And in the Orientale province, that province by the government was divided into three and the local governor representation to government was to put a strong local governor in place, and likewise, in terms of the security or police force in that area, to also put a strong leader in place, more or less to be proactive and on the front foot should there be any possibility of disruption.

Overall, we don't expect any disruption to Kibali. Our security intelligence is sophisticated, it's well developed and it's well communicated in partnership with the government. So we're not expecting disruptions even though there may be in that country leading up to the election.

Got you. And then I had a quick question for Christine. You mentioned you have a focus on reducing interest costs and I was just wondering how you guys think of your capital structure, because you obviously have the 2020 bond which is 8.5% yield, but you also have a long duration bond which trades at a significant discount to par. And on a yield adjusted basis, they're probably at similar levels in terms of interest cost savings. So how would you look to optimize your interest bill in relation to this dimension?

I think let me pick this up, actually, because at the end of the day, we look at all opportunities on a completely weighted basis to see which gives the best return for our shareholders. What we don't want to comment out here is which bond, when and how much we'd be actually looking at at this stage. We'd like to keep all of the options open when we assess that, and we've got to compare it with other return opportunities it provides to shareholders.

All right. Thank you.

Harry Mateer, Barclays.

Hi, guys. Two from me. So I guess the first, just another balance sheet item, but I know Moody's is undertaking a broader view of the mining sector, not just Ashanti in particular. But given you have hit your net debt target, is there any sense you can give us for your discussions with the agency and your expectations for the rating there?

Look, we do have regular discussions with both ratings agencies, and as you've referred to, that Moody's has placed the commodity sector on a negative outlook. So we are due for a ratings review in the near term with both ratings agencies. I think, quite importantly, what differentiates us from other gold companies in particular is our exposure to currencies. About two-thirds of our production is actually exposed to currencies, which certainly mitigates the impact of the gold price.

I think quite importantly, we saw the 30% net debt reduction in our business and we've also seen the benefits of lower costs coming through. Yes, we've had the benefit of currencies and lower oil prices but I think, quite importantly, what we've been able to demonstrate is the efficiency improvements in our business as well as the flexibility in our business. So we've got financial flexibility, and I think certainly this stands us in good stead for the ratings review.

Okay. Thanks very much. And then secondly, can you just talk a bit about the M&A environment, what you're seeing, whether there are any assets at this point that would be of interest to the Company and if you think that the bid/ask spreads are getting to a point where there might be some opportunities for Ashanti to use some of this balance sheet flexibility and free cash flow to actually deploy into acquisitions?

I'll pick that one up, actually, Harry. From our point of view, as you would have seen from the presentation we outlined now, we see very good brownfield opportunities in our own backyard and we have highlighted a few here. One is in respect of Siguiri in Guinea. We have highlighted what prospects Sunrise Dam holds and Brazil holds. So these are just illustrative in that regard. In addition to that, we're looking at other options from within the portfolio itself.

So there's really no need to go fishing for M&A. I think the best return is the one which is right next to our own backyard, in terms of actually getting that into the production machine and delivering the cash flows from it.

Okay. Got it. Thanks very much.

Thank you very much. Gentlemen, we have no further questions at the moment, if you would like to make some closing comments.

All right, Chris. Thanks very much. And thank you, everybody, for making the time today. We will be in touch certainly with the schedule for next quarter's reporting under the new regime. Thank you very much.

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