Anglogold Ashanti PLC (AU) 2016 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti 2016 second half of the year and year-end results conference. (Operator Instructions). Please also note that this call is being recorded. I'd now like to hand the conference over to Stewart Bailey. Please go ahead.

Thanks Chris. I'm going to start off by reading the Safe Harbor Statement and then we'll get right into it. 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, productivity improvements, growth prospects and outlook of our operations, individually or in the aggregate, including achievement of project milestones, commencement and completion of commercial operations of certain of 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 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 our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although we believe that the expectations reflected in these statements and forecasts are reasonable, no assurance can be given that such expectations will prove to have been correct.

Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, amongst other factors, changes in economic, social and political and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government action, including environmental approvals, fluctuations in gold prices and exchange rates, outcome of pending or future litigation proceedings, and business and operational risk management.

For a discussion of these factors refer to our Annual Report on Form 20-F which is 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 the date hereof, or to reflect the occurrence of unanticipated events, save for the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by these cautionary statements.

The communication may contain certain non-GAAP financial measures. We use these non-GAAP measures and ratios in managing our business. Non-GAAP financial measures should be viewed in addition to and not an alternative for the reported operating results or cash flow from operations or any other measure 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 our website under the Investors tab on anglogoldashanti.com. It's important information. You should review it.

Venkat.

Thank you, Stewart. Good morning, good evening, ladies and gentlemen. Before we move to the results for the second half and the full year 2016, let's briefly revisit our overarching strategy, which has remained absolutely consistent since 2013. It's also important to note that this strategy is underpinned by a strong set of ethics and values that really form the DNA of our organization.

In every decision we make, we consider our five key business objectives and how they can support our central strategic goal of delivering sustainable improvements to cash flow and returns.

Through this presentation, the team will highlight key progress areas in which we have delivered against our strategy, in particular, our brownfield opportunities that we are actively working through. This is especially relevant today, as we outline our plans for inward investment in 2017, to deliver better quality production that will add to margins, extend mine life and also shape the portfolio in the longer term. It's important to note that this is not a new tack for us, but an approach that has been fundamental to our strategy over the past four years.

What's key in looking at the Company today is to appreciate the results of the work we have done in lowering cost, reducing debt and rebuilding our balance sheet. A critical factor that differentiates us now, as compared to a few years ago, is our ability to withstand shocks in the gold price, whilst bringing a number of smaller capital, quicker payback options into play on a disciplined basis. Importantly, they are self-funded and we have not asked our shareholders to foot the bill.

Turning to the next slide, headed 2016, key indicators. We remain one of the gold industry's most geographically diversified companies, with about three-quarters of our production coming from our international operations and one in four ounces from our mines here in South Africa.

This helped us deliver $278 million in free cash flow, even after paying $30 million premium to bullet our highest cost debt. Our exploration team helped us come very close to covering our depletion and our balance sheet continued to strengthen with lower leverage and improved flexibility.

In the second half, we lifted our production 8% above the first half, driven by a recovery in South Africa, Brazil and Kibali, and generated a healthy $170 million of free cash flow. Importantly, that has helped us to resume dividend payments for the first time since we suspended our payout in early 2013.

We'll be paying approximately $0.10 a share dividend, which is in recognition of the free cash flow -- cash generation, our much-improved balance sheet, and our commitment to capital discipline, but also our growing confidence in the robustness of our business and its potential.

But encouraging as all of that is, the most important achievement for us all in 2016 was the improvements we saw in safety. We ended the year with a fatality-free fourth quarter, and managed to end the year with almost 160 days without a fatality in South Africa, and we currently remain fatal-free for the Group as at today.

Turning to the slide on safety and environment, to be very clear, safety remains our highest priority. It underpins everything we do. It's an area that we continue to work on improving.

Despite showing a marked reduction of over a third in the number of fatal accidents, we still reported six fatalities in South Africa last year and another one in Brazil. This remains by a long way the most disappointing part of our performance last year, and the one we are committed to improving upon.

We will look for inspiration to some of the important milestones of this past year, particularly in South Africa, thanks to the tireless efforts of Chris and his team and the corporate safety team, where Moab remained fatality-free at the year end, after reaching full year in September. The Vaal River region hit 2 million fatality-free shifts and Mponeng and Kopanang both reached 1 million. Continental African's operating mines had another year without any fatality.

Our improvements of the past decade are a result on one hand of the continued focus on and investment in improved operating and safety systems and technologies. These are advances that we, as part of this industry, have helped spearhead and roll out across our operations. The results are encouraging, but we realize that there is more to do here.

But technology alone is not sufficient. Like in any heavy industry, and especially in a Company like ours, that employs more than 50,000 people globally, human error remains one of our biggest challenges and therefore opportunities. This is an aspect of the business that we'll continue to work hard to mitigate, in cooperation with a broad group of stakeholders.

We also work continually to ensure that every person in AngloGold Ashanti places a greater focus on identifying and avoiding risk. In an environment where minor missteps can have catastrophic consequences, it is critical that we not only are relentless in identifying and eliminating hazards, but instill a sense of culture that prizes safety above all else. We have made encouraging strides in that regard, and we'll continue to look for ways to improve.

We have also seen continued year-on-year improvement in the critical area of environmental stewardship, with another steep drop in environmental incidents. This is the absolutely critical building block in our social license to operate.

Turning to the next slide, we shared an ambitious list of priorities with you this time last year. And I'm happy to report we covered good ground in fulfilling these obligations. Safety has improved. We have moved our capital projects closer to development, improved margins and seen some good exploration successes, which Graham will touch upon shortly.

All of this has been underpinned by a vastly improved balance sheet. As you will all know, South Africa's turnaround remains work in progress, notwithstanding the fact that we saw a successful and strong performance from our flagship mine, Mponeng, towards the latter part of last year, which Chris will talk to in a moment. We are back into Obuasi after a year's disruption from illegal mining, so we have work to do there this year to find a lasting resolution.

Our primary objective remains, not production growth for its own sake, but rather on margin enhancement. We have strategically positioned AngloGold Ashanti to achieve sustainable cash flow through the cycle, giving us the balance sheet flexibility to make decisions around our future investments.

We carefully consider every dollar we invest, and ensure that our capital is allocated to the highest return options that have been appropriately handicapped for project and country risk. We target returns in the mid-teens for these investments, and this year we have a good pipeline of growth that we'll bringing to fruition.

Our disciplined approach to planning has assisted us in making proper investment decisions across our portfolio. In general, our all-in costs remain well below the current reserve price, leaving a significant cushion when compared to the average three-year gold price and the current spot price.

Turning to the next slide, which shows disciplined inward investment, 2017 focused areas, quite clearly, the industry is coming to a point where companies either need to reinvest in their business, or, as we have seen increasingly, turn to M&A to shore up or improve their portfolios. We are firmly in the reinvestment camp, with a pipeline of very good, high-return brownfield opportunities that will improve our production mix.

We will also continue to look for ways, as we have done recently with Tropicana, to unlock value by making fundamental and lasting improvements through innovation, rather than large capital investment. Ron and Graham will focus on these investment areas in their presentations, but we have a number of well-thought through, targeted investments to occupy us this year.

You should also note that these mine lives outlined on this slide are based on our current life of mine plans and our views on geology at these concessions. It shows that our core portfolio still has a long runway ahead of it, with further extensions possible from the exploration potential.

So what does this investment buy you? On a five-year view, you will see that we can maintain a steady level of production, whilst our sustaining capital profile peaks this year, before moderating. Our overall tonnage profile will remain more or less steady, and we'll see grades pick up in the coming years, as we reap the benefit of our inward investment across our portfolio.

These charts don't include Obuasi and Colombia, and we'll update you on those as and when we gain better certainty on the path forward. I must add here, we won't hesitate to cull production that does not make our margin or return criteria.

Before I hand over to Chris, I'd like to take a minute to bid a fond farewell to Ron Largent, who, after more than 20 years with the Group and 30 years in the industry, has elected to retire. It would not be an exaggeration to say Ron has effected one of the gold industry's most significant operational turnarounds over the past four years, turning our international portfolio into a globally competitive suite of assets, with an incredible set of growth and life extension options.

The numbers we have posted over the past four years are really a testament to Ron's status as one of the world's best mining operators. We bid him a fond farewell, and a restful retirement, much deserved, with his family. And from me, thank you, Ron, for all your personal support since I took on this role.

Testament to Ron's leadership is the strong succession pipeline he's helped create through his tenure here. So he passes the baton on to a familiar face for many of you, in the form of Ludwig Eybers. Ludwig and his team worked hand-in-glove with Ron in effecting perhaps the most noteworthy of these turnarounds, which was turning our continental African business from a significant cash drain into our largest source of cash inflow.

He has widened margins, opened up high-return investment options and placed it amongst the best performers, globally, from a safety perspective. Ludwig has held safety, production, cost, capital and planning accountability in the international team, since his appointment as Deputy Chief Operating Officer, International last year. We welcome him to the Executive Committee from tomorrow, and are confident that he'll continue to build on the successes to date with us.

Ron will remain with us until June 30 this year, to assist Ludwig in a continued, orderly transition, which is already well-advanced. I'll now hand you over to Chris.

Thank you, Venkat. Good day, ladies and gentlemen. In my previous presentation to this audience, I stated that one of the key issues facing the South African operations was an unsatisfactory safety performance. Six months later it is pleasing to note, as alluded to by Venkat, that the South African operations have been fatal-free since July 26, 2016. And Moab Khotsong received a fatal-free 2016, and has recently been recognized with the AngloGold Ashanti 2016 Safety Achievement Award.

And while six regrettable fatalities were reported in 2016, compared to nine in 2015, we remain completely focused on our endeavors to achieve our goal of zero harm.

So turning to page 14, therefore, the need to hold all levels in the organization accountable for safe outcomes has never been more compelling. Our focus continues, through our safe production strategy, to improve skills, safe behavior, work planning and protecting workers from risk and thereby improving levels of compliance in the workplace.

In this regard, much attention is being given to major hazard critical controls, in particular, the management of fall of ground and rail-bound equipment. Pleasing progress has been made in ameliorating the effects of seismicity, particularly at Mponeng, where the rigorous application of in-stope roof-bolting and netting, preconditioning of the advancing stope face and improved quality of backfill is delivering far safer outcomes in our deepest mining operations.

Turning to the next slide, while the South African operations enter a transition phase, over the next five to seven years, where some of our operations reach the end of their economic lives, it must be emphasized that AngloGold Ashanti remains a significant investor in its South African production base, which employs some 28,000 people and has a potential future spanning some 30 years.

The viability of this business needs to be ensured, by ensuring that costs are actively managed according to the projected production base. Pleasing progress has been made with the prefeasibility work, regarding the life of mine extension project adjacent to the below 120 level phase one project at Mponeng, which reaches completion and final production ramp-up in early 2018.

Critical path activities within the life-of-mine extension projects continue, while the feasibility study is completed for AngloGold Board consideration mid-2018.

Turning to the next slide, this slide shows the operational performance over the period 2015 and 2016. Mponeng delivered a good set of results for 2016, and was one of the top performers in the AngloGold portfolio.

TauTona, now some 60 years in operation, was severely hampered by the impact of three fatal incidents during the year. Modifications to support standards to address seismic risk were implemented, which impacted on ore reserve development rates in the short-term.

Moab Khotsong improved volumes, through improved face links, mine grade and mine core factor. Kopanang, however, experienced headwinds, particularly after the regrettable fatality in July, after having been fatal-free for a full 12 months. Significant safety stoppages ensued in the second half of 2016, resulting in disappointing productivity levels and a resultant financial loss for the year 2016.

Surface operations produced a steady result for 2016, characterized by anticipated lower marginal ore dump grades, and increased throughputs at our mine waste solution operation. The uranium circuit was recommissioned in the second half of 2016, and optimization efforts are under way to improve plant recoveries further.

Regarding unit costs, the weak exchange rate benefit was largely offset by lower production volumes, which were partially due to safety-related stoppages, as well as operational inefficiencies, and was further impacted by cost inflationary pressures, including annual power tariff increases and salary adjustments in the second half of the year.

Turning to the next slide, the first and most pressing of our key priorities for 2017 is to put an end to fatalities, by improving workplace conditions and behaviors, along with improved compliance. Much focus is being placed on ensuring sustainable and effective adoption of safe production processes, including technology rollouts.

Options are being studied with a view to assessing the most appropriate manner to integrate the remaining life of mine of TauTona and Savuka into our long-life Mponeng operation. A comprehensive P500 program is once again under way, to realize both on-mine and off-mine cost reductions, as we manage the transition on production, as our mines reach the end of their respective economic life of mine.

Surface operations, or surface sources will focus on increased throughput and recovery, to manage then the impact of anticipated lower grades, while we reduce our surface footprint.

The Mponeng below 120 phase one project production ramp-up remains critical, with rock handling and logistics infrastructure being completed in July 2017. The Mponeng life-of-mine extension project will be progressed to feasibility study finalization by mid-2018, with critical path activities continuing through this year, 2017.

Our significant commitment to our technology program will remain driven by a focused project management team, fully focused on delivering a viable mining production system. We are currently progressing the authorization of continuous operations with the regulator, to enhance the business case of this capital-intensive technology.

In closing, we continue to see pleasing momentum at Mponeng, as we position it as a long-life, tier one asset.

I'll now hand over to my colleague, Ron Largent.

Thank you, Chris, and good morning. I'll provide an overview regarding our second half 2016 operating results for continental Africa, Australia, and the Americas region, and a high-level discussion on the international operating portfolio.

Starting on slide 19, I stated during the year end 2015 results discussion, one year ago, that our all-in costs would be impacted by exchange rates and some levels of inflation. We actually saw this impact in the 2016 numbers, with the largest impact being associated with the Brazilian real.

In addition to the foreign exchange and inflationary impacts, we have lifted the investment in brownfields pipeline, with aggressive drilling under way at a number of our operations, and also the execution of life-of-mine extensions that we're planning for, during 2017 and beyond. The increase in brownfield investment can be seen in our reserve additions in 2016.

To manage cost, we introduced operational excellence as our operating platform. Whereas P500 involves processes for identifying and monitoring the execution of discrete cost reduction projects, operational excellence drives improved behaviors from every person in the workplace. This is about continuous improvement across all facets of the business, utilizing the P500 process to support the improvement.

We have seen improvements across the entire portfolio, whether it is in production metrics, planning sequences, equipment efficiencies, recoveries, etc. Operational excellence is based on a very simple model, but everybody must be engaged to have successful outcome. It requires certain management behaviors that are supported by organizational design, leadership behaviors and business systems -- P500 being one of them. With this work, the business performance can be altered to ultimately enhance asset value.

My takeaway from this slide is we've established a sustainable operating margin for our international portfolio, with Continental Africa completing the year with cash costs of $717 per ounce, the South American operations at $578 and the Australia area at $793. Overall the international operations had a successful 2016, and met their operating targets.

The next slide. As work continues to enhance the mid- to longer-term effectiveness of the international portfolio, there are some priority areas of work for 2017. At Sunrise, in Australia, as the outcome to the successful transition to solely underground mining, now at an annualized rate of 3 million tonnes to 3.2 million tonnes per annum, the ore types are known and understood. This requires a change to the process flow sheet that includes fine grind and flotation that will dramatically improve recoveries.

Associated with this, is the continued work on resource extension, through drilling and the materials handling study for improved ore transport efficiencies, required in the future.

At Siguiri, construction and execution of the hard rock combination plant has the favorable outcomes of increased production, lower cost and extended mine life beyond 2023. This project is approved, permitted and long lead items have been ordered.

At the Geita mine, in Tanzania, we commenced underground mining 18 months ago. 2017 will be our first full year of production from the Star and Comet underground mine. The portal in the Nyankanga ore body commences in quarter one 2017, which also allows for ore extraction and development drilling to the deeper underground resources. This mine will ultimately use both surface and underground mining methods for resource exploitation into the future. This is key for resource definition at depth.

At Iduapriem, 2017 represents a change to the operation in the fact that pre-stripping has commenced at Teberebie. This allows for elevated grades and commensurate production profiles into the future.

In the South American operations, brownfields work is scheduled to improve ore body knowledge, to extend and optimize the life of mines. As the Mineracao assets have life of mine beyond 2030, work is concentrated around bringing forward opportunities that positively improve production profiles.

There's specific work to bring forward higher grade resources, defining the potential of newly-defined structures, the applicability of the ore-sorting technology, and defining the potential optionality of the newly-defined junior -- JV with Orinoco, in the Serra Grande region of Goias state.

Now I'd like to go on to Tropicana just for a couple of slides. I think it's important to state the Tropicana mine was built and operated in line with our investment case. The project was built on schedule and within the capital budget, and most importantly, the payback schedule has been met, despite the downward pressure on gold price since commissioning, approximately four years ago.

The continued success of the brownfields drilling program, down dip and a long strike of current ore bodies has allowed us to define a larger reserve and resource, adding 1.1 million ounces to reserve and 1.5 million additional ounces to resource in 2016. There was, and continues to be, a set of parallel work that has defined targets to grow the reserve, improve production profile, lower costs and extend life.

The ongoing work has included plant optimization and circuit upgrades that have produced a 30% increase to nameplate design, of 5,6 million tonnes per annum. The expansion to 7.5 million tonnes per year was completed in 2016, at very limited capital investment, with plans to move this to 7.6 million tonnes to 7.9 million tonnes per annum, with additional debottleneck activities in 2017.

The plant throughput improvements, combined with the resource and reserve growth, has allowed us to re-evaluate the mining sequence, to ultimately reduce mining costs. A large face shovel was delivered in quarter four of 2016, thus driving a reduction in mining unit cost and improved productivities. All this work is aimed at making material improvements to Tropicana's life of mine plan from 2017 and beyond.

The timeline for this -- I step back a little bit. In late 2016, with the addition of the resource and the reserve, and the updated information from drilling programs, the plant optimization above nameplate design and the mining equipment additions and modifications to support a new mining plan, has thus allowed us to enter back into grade streaming in 2017, combined with an elevated mill throughput that positively impacts our ounce production profile for 2017 and in the future.

Optimization and scheduling of the new reserve will make a new business plan for Tropicana. This new life of mine schedule allows for improved pit extraction rate and improved profiles into the future. As you can see from the timeline, 2019 is when the initial cutback commences, but gold profiles commence change in 2017.

That finalizes my comment on international operations, but I'd like to take one minute and give -- as this is my last results presentation, I'd like to thank my colleagues at AngloGold Ashanti for an incredible journey through the last two decades, but most importantly, the last four years. Together we have managed to take this business, when many things were not aligned, whether it's the markets, the cost, our balance sheet, and so on, and turn it into a world-class portfolio with an exciting range of future options.

In particular, I'd like to thank Venkat, for steering us through this volatile time. I believe we've come out of this challenging time, stronger, more focused and with a very bright future. I hand over to Ludwig with great confidence that he will continue to build on the good work we've done in creating a framework of doing business that not only focuses on basic fundamentals, but also utilizes innovation to ensure we generate a healthy return for our stakeholders, while continuing to develop our long-term options.

Thank you, and I now turn it over to Graham Ehm.

Thank you, Ron. Firstly, to our resources, and reserves update. I'm pleased to report that the effort of our greenfields and brownfields teams has delivered a good result in 2016. Resources are estimated $1,400 an ounce, and have replaced depletions of 4.5 million ounces, and have increased year on year from 208 million ounces to 215 million ounces.

Notable increases have been at several operations, including Mponeng, Tropicana, Sunrise Dam, in Brazil, Geita and at Obuasi, while there have been some decreases at Kibali and at some South African operations.

Reserves are again estimated at $1,100 an ounce, and have come close to replacing depletions of 3.9 million ounces. Reserves have decreased, year-on-year, from 51.7 million ounces to 50.1 million ounces, with notable increases at Tropicana, Brazil, and Sunrise Dam.

Venkat has already spoken to value-driving portfolio improvements. On the back of good brownfields exploration results, Ron has also spoken about a number of projects at several operations aimed at improving margins, improving efficiencies and extending mine life. In Guinea, the Siguiri hard-rock expansion is now fully approved and is under way, now that the government completed the final steps to ratify the convention de Base.

The project initially extends mine life to 2023, producing around 300,000 ounces per annum at an all-in sustaining cost of around $900. The capital cost is estimated at $158 million, $43 million higher than reported previously, as we had decided on an owner-build approach for power -- for the power station, as this reduces the power cost from $0.20 a kilowatt hour to $0.165 a kilowatt hour, including capital charges. First gold from the expansion is scheduled for quarter three, 2018.

At Sadiola, a joint venture with Iamgold and the government of Mali, is also planning a hard-rock expansion. The study is very well advanced and we're in detailed discussions with the government, regarding the mining charter and power supply. This project will add 10 years to mine life, producing 300,000 ounces per annum at around $900 an ounce, at a capital cost of $409 million.

These two projects combined deliver over 4 million ounces, at significantly lower costs.

On the next slide, there are a number of other studies in the pipeline, aimed at daylighting value from under-appreciated assets. At Gramalote in Colombia, the team aims to complete the optimized prefeasibility study this year, and will enable the resource-to-reserve conversion at the same time.

The project is already permitted, so it is a matter of optimizing the study and proceeding to feasibility study and project execution planning. As you know, Gramalote is a low-grade deposit, but it is in a favorable location, has a low strip ratio and very good and simple metallurgy, leading to low operating costs. On 100% basis, the project would produce around 350,000 ounces per annum for over 10 years. All-in sustaining costs are quite low, at $700, and capital costs are in the order of $950 million, with an all-in cost basis of around $900 per ounce.

And at Obuasi, you'd be aware of the illegal mining challenges during 2016. At the end of December all illegal mining activity had been stopped in the operating footprint. Following a security risk assessment, it was concluded that the event leading to the declaration of force majeure no longer exists, and force majeure was lifted on February 13.

On January 7, this year, a new Ghana government, the New Patriotic Party, was sworn in, following the elections in December. The NPP was elected on a platform of pro-business, anti-corruption and development, including the redevelopment of Obuasi. Our first round of interactions with the government has been extremely encouraging, with promises of support to lift any roadblocks hindering Obuasi's redevelopment. This includes assisting us to find a suitable joint venture partner, should we need one.

Despite its challenges of the past Obuasi is a world-class ore body with 33 million ounces at 7 grams per ton. In 2016 we continued mine planning and study work, examining a sizeable project based on the capability of such a large resource. And a smaller scale lower capital and earlier start option. In 2017 we will progress this work and pursue all other options to provide a lasting solution to Obuasi.

Mponeng is also a large resource at 50 million ounces at 17 grams and a reserve of 12.5 million ounces at 10 grams. As Chris explained we've been working to a phased development strategy to extract the VCR and carbon leader reefs. The team has reassessed this approach and have just completed a pre-feas study into a combined extraction approach.

This approach optimizes the project as a whole and would set up Mponeng as a 450,000 ounce a year producer for over 20 years with all-in sustaining costs improving to approximately $750 an ounce.

Typical of these deep level mines, project execution occurs in parallel with ongoing production over a long period. And the capital cost is approximately $1 billion nominal but is spread over 10 years. With the maximum capital spend of about $80 million in any one year. The work is now progressing to feasibility study which is planned to be completed in the second half of 2018.

Turning to Kibali. Kibali saw some significant improvements in quarter 4. On 100% basis gold production increased to 182,000 ounces, a vast improvement on the first half of the year. Gold production for the year was 586,000 ounces.

The all-in sustaining cost for the quarter was $825 and for 2016 was $893 per ounce. You'll note a difference in the cost recorded by Randgold as AngloGold reports on an all-in sustaining cost basis .

Underground production in quarter 4 was a record. 454,000 tons and the mined grade improved as issues with stope execution and backfill were resolved.

The process plant performance was significantly improved with record tons milled. Due to much improved operating time and stable operations on both the sulfide and oxide circuits. Recovery improved from the lows of the first half to 83.3%.

Earlier in the year, a trial with 100% sulfide identified weaknesses in the flow sheet. Additional fine grinding and concentrate leeching was needed as well as a number of operating improvements. The plant modifications to add four additional fine grinding mills and expand the pump cell circuit is on schedule for commissioning in quarter 2 this year.

Commissioning -- on the next slide -- commissioning of the second hydropower station at Ambarau with 12 megawatts of capacity commenced in early February and construction of the third power station at Azambi is underway. This will provide Kibali with 42 megawatts of hydropower capacity which is generated at a cost of less than $0.02 a kilowatt hour compared with $0.28 a kilowatt hour for thermal power.

Off-shaft development of the crusher and materials handling system is on track for commissioning on ore in quarter 4 this year. With the commissioning of ore production from the shaft, this will bring an end to Kibali's initial project scope and capital.

Finally, a few comments on exploration. AngloGold has a very good track record of discovery, consistently delivering ounces at less than $25 an ounce. Greenfields exploration spend peaked in 2011, 2012 and was rationalized following the drop in gold price.

Greenfield spend was $25 million in 2016 and we plan to keep the grass roots spend at around $30 million per annum in the future, only increasing this for a drill out of a significant discovery. We focus greenfields exploration in the countries in which we operate and have a significant presence.

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

Good day, everyone. As you would have heard from Venkat and my other colleagues, our strong operating and financial performance underpins our strategy to improve cash flows and returns on a sustainable basis. Free cash flow has almost doubled compared to last year allowing the Company to further reduce debt -- net debt levels -- self-fund our capital requirements, as well as resume the payment of a cash dividend to shareholders.

Moving on to slide 31. The second half of 2016 reflects a steady performance despite 4% lower production which was impacted by 60,000 ounces of lost production due to safety stoppages in South Africa, planned lower grades at Geita and Tropicana and the Obuasi mine having been on care and maintenance for the full 2016 year.

Production during the second half of 2016 was 8% higher than the levels recorded in the first half due to strong improvements from Kibali, Brazil and South Africa.

All-in sustaining costs reflected an 18% increase on H2 last year increasing to $1,058 an ounce. Although all-in sustaining costs was overall favorably impacted by weaker local currencies in South Africa and Argentina, this was more than offset by lower ounces sold. Inflationary pressures and higher sustaining capital due to the usual higher spend at our operations in the second half as well as the delay in CapEx spend in the first half of 2016.

Our EBITDA margin improved by 1.6% from the second half of 2015 to approximately 36%. Free cash flow for the second half of 2016 at $170 million increased by more than 50% from 2015. On the back of lower finance costs and other higher gold prices received, despite negative working capital movements.

The net negative movement in working capital primarily related to the unsold gold lock up. Increases in receivables relating to import fee base in Argentina and prepayments for the new power plant and truck fleet at Geita.

Moving on to slide 32. Our focus remains on improving margins despite gold price volatility, currency headwinds and lower grades. In looking at the space between the yellow cost bars and the orange gold price line you can clearly see that this is a Company committed to improving efficiencies and widening or at least maintaining margins regardless of the lower gold price.

Both our all-in sustaining costs and all-in cost margins remain steady compared to last year at 21% and 14% respectively. We will continue to look at widening those margins by focusing on the controllable factors, in particular, stringent cross management, reinvestment in low capital, high return options within our business and driving our operational excellence program which looks to innovative ways to improve efficiencies in our operations.

Moving to slide 33. Looking at the cost performance in detail year-on-year, we note that inflation, lower grade, which were partly offset by higher volumes, and higher sustaining CapEx have pushed costs higher in the second half of the year. In addition, environmental rehabilitation provision increases and other non-cash provisions further contributed to the all-in sustaining cost increase by approximately $21 an ounce in the second half of 2016. The increase in the environmental rehabilitation provisions was due to changes in the assumptions around discount rates and the timing of cash flow.

Moving to slide 34. The full year ended with adjusted headline earnings of $143 million, almost trebling in absolute terms compared to 2015 adjusted headline earnings of $49 million.

Headline earnings for the year was $111 million which was $48 million higher than basic earnings, primarily as a result of the recycling of the historic foreign exchange losses of $60 million from the foreign currency translation reserve in the statement of changes in equity to the income statement.

We then adjust headline earnings for unrealized losses on non-hedged derivatives, devalue adjustments, bond premium costs and certain impairments to determine adjusted headline earnings for comparability purposes. Adjusted headline earnings benefited from weaker local currencies, higher gold prices received and lower finance costs.

This was offset in part by the decline in ounces sold, inflationary effects and lower equity earnings from the Kibali and Marula joint ventures as well as increased expenditure of $5 million in respect of Gramalote.

The net impact of one-off costs and non-cash movements as detailed at the bottom of the slide, resulted in normalized adjusted headline earnings of $130 million. This movement includes a deferred tax credit arising in our South American operations of $35 million due to the weakening of the Brazilian real.

Moving on to slide 35. The net debt levels in the Group fell by a further 13% from last year mainly due to the strong free cash flow generation on the back of lower interest costs and the higher gold price. Going forward, we expect our positive cash flow momentum to continue to benefit from efficiency improvements as well as the leverage to gold price, despite currency headwinds.

We have fully redeemed our high yield bond on August 1, 2016 utilizing cash on hand and a draw on the US dollar RCF facilities to the extent of $330 million. The outstanding balance on the US dollar RCF was $50 million at the end of December 2016. Going forward, we expect to save interest of approximately $105 million on an annualized basis relating to the high yield bond although we will continue to bear interest at a much lower cost on any outstanding amounts under these revolving credit facilities.

Our net debt to adjusted EBITDA ratio of 1.24 times reflects ample headroom to our covenant level of 3.5 times net debt to adjusted EBITDA.

Our balance sheet remains robust with strong liquidity, sufficient undrawn facilities and long-dated maturities providing the financial flexibility required in the current volatile environment whilst positioning the Company to remain self-sufficient with regards to its low capital, high return, reinvestment opportunities as well as to resume the payment of an annual cash dividend.

Moving to slide 36. The positive cash flow momentum over the past three years has given us comfort regarding sustainable free cash flow generation in our business despite significant volatility in the gold price. We see the resumption of the dividend as a positive catalyst.

As Venkat mentioned, the declaration of the dividend, although modest at $0.10 a share, reflects capital discipline, management confidence in the ability to sustain free cash flow generation in our business and our commitment to improving shareholder returns.

Our dividend policy is based on 10% of free cash flow generation, pre-growth CapEx, subject to the Board's discretion taking into consideration market conditions, the strength of our balance sheet and our future capital requirements.

Moving to slide 37 where I will conclude on the guidance for 2017. Our production guidance of 3.6 million ounces to 3.75 million ounces for the year assumes a slow start-up in South Africa in the first half of the year aligned with past trends and no production at Obuasi for the full year.

The stronger average exchange rate assumptions in particular as it relates to the South African rand and the Brazilian real together with higher planned sustaining CapEx for the year results in a higher all-in sustaining costs and a guidance range of $1,050 an ounce to $1,100 an ounce for 2017. Both our costs and cash flows remain highly sensitive to the average changes in the commodity prices, currencies and production. We provide indicative sensitivities on all-in sustaining costs and cash flows pre-tax with a health warning at the forecast average commodity prices and exchange rates as well as production provided.

Total CapEx is guided at $950 million to $1,050 million with 85% being sustaining capital. The increase in sustaining capital relates to ore-reserve development at AGA Mineracao and advancing the underground developments at Geita, Kibali and Sunrise Dam and increased deferred stripping at Iduapriem. All of these with the objective of extending the mine life and improving production grades and recoveries in certain instances at the relevant operations as noted by Ron earlier. In 2018 we expect the sustaining capital to reduce to a level between 2016 and 2017 spend.

Graham discussed our growth projects earlier. We estimate growth capital at between $120 million to $150 million for 2017 which relates primarily to the Siguiri hard rock project including a power plant and the Kibali plant upgrade and hydropower plant, Mponeng as well as our proportionate share of funding for 2017 in respect of the Sadiola sulfide project.

The funding on the Sadiola sulfide project of $410 million which relates to 100% for the project is expected to commence only once the investment decision has be approved post the successful negotiations of fiscal terms and other approvals required from the Malian governmental authorities. And our share is currently estimated at $21 million for 2017.

I will now hand over to Venkat to conclude.

Thank you, Christine. As the slide maps, our actual production delivery against our annual guidance over the past four years. Despite uncertainty and headwinds, we have stayed within the production guidance range for each of the years as it's shown on the slide. Our operations remain the engine room of our business and we continue to believe that predictable performance will ultimately assist us in improving our rating. Robust planning, realistic forecasting and consistent delivery on commitments has been a pillar our strategy. We will redouble our efforts to ensure that this remains the case.

To conclude with some commitments for 2017 as we do every year. We have a clear idea of where our efforts will be focused during this year. Of course, safety tops the list and we will continue to invest time and resources into ensuring that we make further gains in this regard to build on our efforts over the past decade.

As you have seen we will have our work cut out for us in respect of our brownfields projects across our portfolio which will set us up for a strong future. Therefore, ensuring flawless execution on this is going to be critical.

We will also be ensuring that the longer terms step out projects continued move up the value curve at a reasonable cost. This is imperative to our strategy precisely because it removes us from the feverish bidding for assets that happens when many companies in the sector realize that their pipeline is bad. We remain committed to investing in our asset base through the cycle and not chopping and changing in this regard.

At the same time, Ludwig and Chris will be working closely with their operational excellence teams to find efficiency in every corner of the business. We will innovate, get back to basics and negotiate hard to ensure that we will get the best, most sustainable margins possible in our suite of assets.

The integrity of our balance sheet remains absolutely central to our approach. And Christine will be ensuring that at every step of the way that we have the best possible financial foundation to work from in this regard.

We have today announced our return to dividend-paying status and our efforts will continue to be directed towards ensuring capital discipline that the owners of this Company are recognized for their patience and confidence they have shown in us.

Obuasi remains an area that need to be addressed and we ask for your patience in this regard as we re-enter the site, evaluate its condition, update our studies and restart talks with a new, progressive and business friendly administration in Ghana. Whatever the path forward for this asset will be, the environment for a lasting resolution that suits all parties is better than it's been for many years.

And finally, though we saw a good recovery in the second half, there remains work to be done to consolidate emerging turnarounds in South Africa and at Kibali where we will continue to work closely with our partners Randgold to ensure that that asset goes from strength to strength.

I'll hand you back to Stewart.

Thanks, Chris, and we're happy to take some questions.

(Operator instructions) Our first question is from Richard Hatch from CIBC I think it is.

RBC

RBC, sorry sir.

Yes, I haven't been poached yet but I'm always open to offers. Good afternoon, guys, and thank you very much for making the time for the call. A couple of questions. Firstly on Sadiola., you were mentioning about the power and the mining charter being -- some points that you're trying to discuss and agree on. What are the key headwinds for the agreement? What are the stumbling blocks here? Just so we can get some sort of understanding on exactly what the bottleneck is?

Richard, I'll pick this up, it's Venkat here. Firstly, in terms of major stumbling blocks, there shouldn't be any because the alignment in terms of the Mali government and the joint venture partners is firmly intact. They do want the project going ahead. It's a critical growth project as far as Mali is concerned particularly given that Yatela is actually heading into closure.

The areas around where we need to reach agreement with the government of Mali is under which mining code does this project fall under. The second area is around all the financial and the fiscal stability arrangements which need to be in place. The third area is around permitting but that's less of an issue. And the fourth area is around the power tariff and the supply of power.

So it's purely a case of taking time in negotiations as you would have seen. The teams have actually already met a couple of times and are actually trading positions at various stages during the discussions. So probably over the next couple of months we expect to see some finality both IAMGOLD and AngloGold have impressed upon the Mali government the urgency to get his project up and running given that the oxides have a finite life.

Okay, thanks, Venkat. And then the second one in the South African business, I was reading with interest that you're making some adjustments at Kopanang and forgive me if I've missed this. I was just interested to find out a bit more about what is your face time that you are able to get per shift. And how long is the travel time to get down to the face and where do you see the opportunities to improve that?

Chris?

Alright, thank you Venkat. Richard, having assessed all the bottlenecks that have challenged us at Kopanang I can tell you that we have got face times down to as little as four hours in actual fact at this point in time.

All right, how long (Multiple speakers) --

Actually working on that one to actually out of -- it's eight hours 45.

(Multiple speakers)

Wow, okay. Cool.

Thank you very much. Our next question is from (inaudible) of UBS, please go ahead.

Hi, thank you for the presentation. Would you please talk about your expectations for gold prices for this year? And also behind the drivers in increase of maintenance CapEx, thanks.

In terms of gold price assumptions we actually use various gold price assumptions in terms of our sensitivity analysis. We don't box ourselves into one particular gold price. But let me hand you over to Christine who will give you some sensitivities and also the major swings in terms of capital.

Yes, so I think our gold price assumption for this year is pretty much aligned to probably slightly lower than where the current spot is. But I think, yes, one looks at the current spot but like I said you've got to really look at what is your average assumption for the full year. And I think also quite close to the consensus views out there.

I think the other aspect of -- on sustaining CapEx so the increase in the sustaining CapEx like we said directly relates to ore reserve development at Mineracao in Brazil and advancing underground developments at Geita, Kibali and Sunrise Dam as well as increased deferred stripping that we're actually doing at Iduapriem. And clearly the objective of all this is to extend mine life, improve production, tonnages, grades, enhanced recovery. So we will expect to see the benefits certainly in the future. I think -- did you ask the question about the reserve price? I think we --

Yes, the reserve price will run at a lower price --

The reserve price is --

-- $1,100 an ounce -- not [so much].

No, I didn't. Thank you.

Okay.

Thank you. Our next question is from David Haughton of CIBC. Please go ahead.

Good morning, Venkat and team, thank you for the conference call. Just looking at page 11 of your slide deck. I'm finding this really very useful. And I guess it goes in part to the previous question of the lumpiness of your sustaining CapEx. I presume that a lot of those projects that you'd mentioned -- whether it's for Geita or Sunrise Dam or Mineracao that that's expected only to be a one year bump and then it backs off somewhat because looking at some of the higher CapEx it appears as though Continental Africa has got quite a reasonable bump in the Americas.

Yes, if I can pick that up, Dave. Really it's a one to two year hump we are looking at. But what we have said is the chunk of the expenditure happens in 2017. For example, the Siguiri project -- the power plant etc. is spread over two years and that's the growth capital. But the pre-stripping at Iduapriem big spend happens this year. Similar with Sunrise Dam and in terms of Geita and also Kibali as well before it starts to go full-fledged underground. You will see the sustaining capital into 2018 come down to a number somewhere between 2016 and 2017 which is what is illustrated in there.

And I think (Multiple speakers) --

All right and then -- oh, go ahead, Christine, sorry.

--just add in one point is that the assumptions or let's just say CapEx is actually sensitive to our foreign exchange rate assumptions. So I think we've just to bear that in mind as well. (multiple speakers) indicative CapEx that we've actually put out for the longer term.

Right and then looking at the non-sustaining CapEx. You've got $120 million to $150 million there. You've identified four key projects. Are you able to give us a bit of a split as to how we should be thinking about the allocation of that CapEx across the key projects?

Yes, so I can -- I've spoken but I can give you the amounts -- the indicative amounts. I think certainly we've spoken about the Siguiri hard rock project. And in this next year the Siguiri hard rock project together with the spend on the power plant will amount to about $87 million. And the balance will be then thereafter in 2018.

We've previously given out amounts for the Siguiri hard rock project at $150 million and $43 million is going to be spent on the power plant. So you can work out the balance. The Kibali plant upgrade and hydropower plant in terms of the spend for 2017 was $24 million and we've got about $19 million for Mponeng. And I've spoken to Sadiola in particular our share is estimated at about $21 million for 2017. So that sort of gives you the big-ticket items on project capital for 2017.

All right and according to your commentary the guidance for 2017 is going to be more backend loaded, seasonal effects typical in South Africa. Is that a reasonable assessment? Do you have a split here? Would it be 45%, 55%?

Very much so, David. In fact, in terms of production etc. it will be very much towards a stronger second half of the year than the first half of the year. And it's not just confined to South Africa, it's across a couple of other operations as well.

A percentage kind of split 45%, 55%? Or is it broader than that?

Broad--

I'd say that's roughly the kind of split that we see, pretty much aligned to our production split across the two halves as well.

All right, that's good, thank you.

The one thing to bear in mind David is that the CapEx element will probably be skewed a little bit more in the first quarter than you would have normally been used to first and second because some of the commitments will start to go out in the first and second quarter of this year. So just bear that in mind.

Thank you very much, Venkat and Christine. And Ron, good luck in your future.

Thank you, David.

Thank you. We have a follow-up question from Richard Hatch, please go ahead.

Thanks. Chris, I don't know if we got cut off. You were saying that the face time was as little as four hours at Kopanang out of an eight hour 45 shift. So -- and then you were -- I think you were just starting to talk about what you were doing and where the opportunities you saw to address that.

Yes, it's currently work in progress, Richard.

Okay have you -- okay, fair enough. So we -- perhaps that's something that plays out over the course of the next couple of quarters or over the course of the year and you'll talk a bit more about that. Is that fair to say? (Multiple speakers)

We can't hear you very well, Richard.

Sorry Richard, are you saying is that work in progress that's going to take place over the course of this year?

Correct.

Yes.

In engagement with regulators at the moment (Multiple speakers).

Correct.

I see, okay--

Because, Richard, what we've got to do is have engagement with organized labor and the regulators to make any shift arrangements. And that's part of the wage negotiations we've agreed with the union and that's the discussion --

Yes.

--we need to have.

Venkat are you able to give a steer on where the average is for your SA operations in terms of available face time versus the shifts?

I wouldn't be able to give it to you off hand because it varies operation to operation here.

Yes.

Invariably bulk of the time is spent travelling to and from the workface. So one has to bear in mind when you look at productivities of the SA operations you get very little time actually at the face relative to the overall shift. And what both Chris and his team and also wider industry are working on is to see how we can actually improve more time at the face by making shift changes without compromising safety. And at the same time looking at ways of improving productivity and that is work in progress. And it varies mine to mine for example.

Yes, I mean this is specific to Kopanang that we're talking now specifically, Richard. And I think very important bit is that recognizing that there is a finite limit to what you can achieve with face time within constraints is we're actually looking at maximizing our mineable face link and allowing crews -- facilitating crews being able to cycle more than one panel in actual fact in order to get through the work required.

Okay, thank you. And then one for Christine. Christine, are you able to give a bit of clarity over your short to medium term debt repayment profile please?

So are you wanting us to break it down or (Multiple speakers) --

Yes, I just want to see how roughly where you are with how much you've got to pay--

--by 2020 -- 2022. So we don't have any short-term debt maturities. I think clearly like we said our RCF facilities are the really -- the only short term ones. But -- and that's 2018 -- end of 2018 to 2019 timeline. And then the bonds are really from 2020, 2022 and then 2040. So there's no short term particularly.

And you asked which RCF will we prioritize? I think we'll have to assess it. I think it's important for us to actually keep headroom and to keep sufficient liquidity on the balance sheet. So it's more than likely that as we get closer to those maturities for the RCF that we would consider then refinancing it. I think given the volatility in our business, it's important to keep the flexibility.

Okay, that's very helpful. Thank you very much.

Thank you.

Thank you. We have no further questions in the queue gentlemen.

Thanks very much, Chris. Thanks, everyone, for making the time on what was a pretty long call today but we appreciate your presence. Yet again, in three months.

Thank you very much, sir. Ladies and gentlemen, that concludes this conference and you may now disconnect your lines.