[ CONTENTS ]

ITEM 2. DESCRIPTION OF PROPERTY

    For a description of the Company's properties, see "Item 1. Description of Business".

ITEM 3. LEGAL PROCEEDINGS

    There are no legal or arbitration proceedings, including any such proceedings which are active, pending or threatened against, or being brought by or against AngloGold or any member company of AngloGold, of which AngloGold is aware, which may have a significant effect on the financial position, results of operations or liquidity of AngloGold, or which have had such an effect during the last 12 months.

ITEM 4. CONTROL OF REGISTRANT

Description of AngloGold's Share Capital

    AngloGold's share capital consists of three classes of stock: ordinary shares, par value 50 cents each (the "Ordinary Shares"), A redeemable preference shares, par value 50 cents each (the "A Preference Shares"), and B redeemable preference shares, par value 1 cent each (the "B Preference Shares"). Only the Ordinary Shares and the A Preference Shares have voting rights, except that the B Preference Shares have limited voting rights under certain circumstances. The authorized and issued share capital of AngloGold at December 31, 1998, is set out below:

Major Shareholders of AngloGold

    Insofar as is known to AngloGold, the following entities held either directly or indirectly 5 percent or more of AngloGold's issued share capital as of December 31, 1998.

(1) Held directly and through subsidiaries.
(2) As part of the arrangement, in the sale of Driefontein, as announced on February 18, 1999, the Company's Holding Company will acquire, 1,968,769 Ordinary Shares representing 2.01 percent. of AngloGold's issued share capital. Upon completion of the transaction, which is expected to be on or around April 7, 1999, the interest of Anglo American will increase to 52.96 percent.

    Insofar as is known to AngloGold, except as described below, as of December 31, 1998 there was no person who, directly or indirectly, jointly or severally, exercised or could exercise control over AngloGold, nor is AngloGold aware of any arrangements which might result in a change in control of AngloGold.

Relationship with Anglo American

It is intended that Anglo American will invest in future exploration and mining of gold worldwide through investment in AngloGold. Anglo American is the largest shareholder of AngloGold with an equity interest and voting rights of 51 percent. Mr. N. F. Oppenheimer, a non-executive deputy chairman of Anglo American, is the non-executive chairman of AngloGold and four other members of the Board of Directors of AngloGold are affiliated with Anglo American. Accordingly, AngloGold is an important strategic investment for Anglo American. However, AngloGold will operate as an independent company. In this regard:

• AngloGold has a fully dedicated and entirely independent management. This includes its chief executive officer. The management is remunerated by AngloGold and incentivized by an AngloGold share incentive scheme;

• a majority of AngloGold's board of directors are non-executive directors and a majority of directors are fully independent of Anglo American;

• AngloGold has the management, financial capacity and resources to carry out all aspects of its ongoing business activities;

• where appropriate AngloGold may purchase selected specialized services from Anglo American on normal commercial terms. Any such contract is subject to the approval of a board committee consisting exclusively of directors independent of Anglo American; and

• AngloGold has no service agreements or other contracts pursuant to which any turnover or profit related fees are payable to Anglo American. Existing agreements of this nature have been ceded and assigned to AngloGold or its subsidiaries.

    There is no agreement between AngloGold and Anglo American concerning membership on the AngloGold Board of Directors. However, Anglo American has informed AngloGold that it does not currently intend to have more than five members affiliated with Anglo American on the AngloGold Board of Directors at any time.

    In addition, Anglo American has the right to participate in future profits of certain green field mineral rights that were transferred by Anglo American to the Company in connection with the Consolidation at a nominal value because such rights could not be valued with certainty at the time of the Consolidation.

    Prior to the completion of the Consolidation, Anglo American nominees comprised the majority of the Board of Directors of AngloGold and each of the Participating Companies. It was through this mechanism and the Service Agreements that the operations of these companies (except H.J. Joel where JCI performed this role) were managed and controlled by Anglo American.

Share Ownership of Directors and Executive Officers

    The following table sets forth the total number of AngloGold ordinary shares owned by the directors and executive officers as a group (27 persons) as of December 31, 1998, together with the percentage such ordinary shares represented of the total outstanding shares of the same class at such date.

(1) 15,856 shares are held directly and 656,677 shares are held indirectly.

    In addition, the directors and executive officers of AngloGold are entitled to participate in a share incentive scheme. See Item 12. "Options to Purchase Securities from Registrant or Subsidiaries".

ITEM 5. NATURE OF TRADING MARKET

    Prior to the Consolidation, shares of AngloGold (formerly Vaal Reefs) were listed on the Johannesburg Stock Exchange ("JSE"), the London Stock Exchange ("LSE"), the Paris Stock Exchange ("PSE") and under grandfathered unsponsored ADR programs on the Nasdaq SmallCap Market. Shares of Freegold, Western Deep Levels and Southvaal were also listed under grandfathered unsponsored ADR programs on the Nasdaq SmallCap Market. Historically, the principal trading market for such shares (as well as for shares of Freegold, Western Deep Levels and Southvaal) has been the JSE and Nasdaq. As part of the Consolidation, shares of AngloGold, Freegold, Western Deep Levels and Southvaal were delisted from Nasdaq and shares of all Participating Companies were delisted from the JSE.

    Upon effectiveness of the Consolidation, the ordinary shares were listed on the JSE, the LSE and the PSE. In addition, American Depositary Shares ("ADSs") each representing 0.5 Ordinary Share and evidenced by American Depositary Receipts ("ADRs") issued by The Bank of New York under a program sponsored by the Company were listed on the New York Stock Exchange ("NYSE") on August 5, 1998.

    The following table sets forth, for the periods indicated, the reported high and low market quotations for AngloGold's (formerly Vaal Reefs) Ordinary Shares on the JSE and for its unsponsored ADRs on the Nasdaq SmallCap Market through June 26, 1998 and its sponsored ADRs on the NYSE from August 5, 1998.

(1) The ADSs were delisted from the Nasdaq SmallCap Market on June 26, 1998. Share price information with respect to the ADSs is given through June 26, 1998. Prior to June 29, 1998, each ADS represented 0.1 of one Ordinary Share. Since June 29, 1998, each ADS represents 0.5 of one Ordinary Share.
(2) NYSE from August 5,1998.

    As at December 31, 1998, 24,393,332 ADSs (equivalent to 12,196,666 Ordinary Shares or approximately 12.5 percent of the total outstanding ordinary shares) were outstanding and held of record by 5,520 registered holders. AngloGold is aware that many ADSs are held of record by brokers and other nominees, and accordingly the above numbers are not necessarily representative of the actual number of persons who are beneficial holders of ADSs or the number of ADSs beneficially held by such persons.

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

    The following is a general outline of South African exchange controls and such outline may not apply to former residents of South Africa. Investors should consult a professional adviser as to the exchange control implications of their particular investments.

    Although the exchange rate of the rand is primarily market-determined, its value at any time cannot be considered a true reflection of the underlying value of the rand while exchange controls exist. Various governmental officials have from time to time stated their intentions to lift South Africa's exchange control regulations when economic conditions permit such action. In his budget speech in March 1998, the Minister of Finance announced that restrictions relating to offshore investments by companies and individuals subject to South African exchange control would, to a limited extent, be lifted. It is impossible to predict with any certainty whether the government may make any major modifications.

    The comments below relate to exchange controls in force at the date of this Annual Report. These controls are subject to change at any time without notice.

Government Regulatory Considerations

    Generally, the making of loans to AngloGold or its subsidiaries, the ability of AngloGold and any of its subsidiaries to borrow from non-South African sources and the repatriation of dividends, interest and royalties by AngloGold will be regulated by the Exchange Control Department of the South African Reserve Bank (the "SARB").

    A foreign investor may invest freely in shares in a South African company. Any foreign investors may also sell shares in a South African company and transfer the proceeds out of South Africa without restriction.

    If a foreign investor wishes to lend capital to a South African company, the prior approval of the SARB must be sought mainly in respect of the interest rate and terms of repayment applicable to such loan.

    Where 50 percent or more of a South African company's capital, voting power or earnings is directly or indirectly controlled by non-residents of South Africa, such a company is designated an "affected person" by the SARB, and certain restrictions are placed on its ability to obtain local financial assistance. AngloGold is not, and never has been, designated an "affected person" by the SARB.

Dividends

    Although payments to non-South African residents are subject to SARB approval, in practice, dividends are freely transferable out of South Africa from both trading and non-trading profits earned in South Africa by public listed companies through a major bank as agent for the SARB. "Affected persons" must apply for SARB approval for the remittance of dividends offshore if such companies have made use of local borrowing facilities.

    As a general matter, an "affected person" that has accumulated historical losses may not declare dividends out of current profits without first making good past losses. Moreover, in situations where a South African company has a calculated tax loss without a concomitant accounting loss, the SARB requires that a notional tax charge be deducted from current profits before the profit available for distribution to shareholders is determined.

Interest

    Interest on foreign loans is freely remittable abroad, provided the loans received prior SARB approval.

Voting Rights

    There are no limitations imposed by South African law or by the Memorandum and Articles of Association of AngloGold on the rights of non-South African shareholders to vote the Shares.

ITEM 7. TAXATION

South African Taxation

    The following discussion summarizes South African tax consequences of the acquisition, ownership and disposition of Shares or ADSs by a beneficial owner of Shares or ADSs that is: (i) a citizen or resident of the United States, (ii) a corporation organized under the laws of the United States or any state thereof or the District of Columbia, or (iii) otherwise subject to U.S. federal income tax on a net income basis in respect of the Shares or ADSs (a "U.S. holder"). This summary is based: (i) upon current South African tax law and South African Inland Revenue practice, (ii) upon the South Africa?United States Income Tax Convention as in effect on the date hereof (the "Treaty"), and (iii) in part upon representations of the Depositary, and assumes that each obligation provided for in or otherwise contemplated by the Deposit Agreement and any related agreement will be performed in accordance with their respective terms.

    The following summary of South African tax considerations does not address the tax consequences to a U.S. holder: (i) that is resident in South Africa for South African tax purposes, (ii) whose holding of Shares or ADSs is effectively connected with a permanent establishment in South Africa through which such U.S. holder carries on business activities or, in the case of an individual who performs independent personal services, with a fixed base situated therein, or (iii) who is otherwise not entitled to full benefits under the Treaty.

    The statements of law set forth below are subject to any changes (which may be applied retroactively) in South African law or in the interpretation thereof by the South African tax authorities, or in the Treaty, occurring after the date hereof. It should be expressly noted that South African tax law does not specifically address the treatment of ADSs. However, it is reasonable to assume (although no assurance can be made) that the tax treatment of U.S. holders of Shares is also applicable to U.S. holders of ADSs.

Holders are strongly urged to consult their own tax advisers as to the consequences under
South African, U.S. federal, state and local, and other applicable laws, of the acquisition, ownership and disposition of Shares.

Taxation of Dividends

    South Africa imposes a corporate tax known as Secondary Tax on Companies ("STC") on the distribution of earnings in the form of dividends, to the extent that this distribution exceeds the corporation's dividend income. Under the terms of an option granted to gold mining corporations, AngloGold has elected not to be subject to STC. As a result, AngloGold's dividend payments are not subject to STC, AngloGold pays corporate income tax at a slightly higher rate than would otherwise have been the case and this results in the overall tax paid by the Company being lower than the tax payable using the standard corporate tax rate together with S.T.C.

    South Africa does not impose any withholding tax or any other form of tax on dividends paid to U.S. holders with respect to Shares.

    Should South Africa decide in the future to impose a withholding tax on dividends paid to a U.S. holder with respect to Shares, the Treaty would limit the rate of this tax to (i) 5 percent of the gross amount of the dividends if a U.S. holder holds directly at least 10 percent of the voting stock of the Company; and (ii) 15 percent of the gross amount of the dividends in all other cases.

Taxation of Gains on Sale or Other Disposition

    In general, gains realized on the sale or other disposition of Shares held by a U.S. holder as a capital asset will not be subject to taxation in South Africa. In contrast, gains on the disposal of securities which are not capital in nature are usually subject to income tax. However, even in the latter case, a U.S. holder will not be subject to income tax unless the U.S. holder carries on business in South Africa through a permanent establishment situated therein. In such a case, such gain may be subject to tax in South Africa, but only so much as is attributable to that permanent establishment. Even in such circumstances, a gain in respect of a share held for at least five years may be tax free pursuant to an election exercisable under South African tax laws.

ITEM 8. SELECTED FINANCIAL DATA

    The selected financial information set forth below for the years ended and as at December 31, 1996, 1997 and 1998 has been derived from, and should be read in conjunction with, the U.S. GAAP Financial Statements included under Item 19 of this Annual Report. The acquisition of the Participating Companies and the interests in the Share Interests Companies has been accounted for as a purchase business combination under U.S. GAAP. Accordingly, the U.S. GAAP Financial Statements for the years ended and as at December 31, 1996 and 1997 do not include the operations or financial condition of these companies, whereas the operations and financial condition of the Participating Companies and the Share Interests Companies are included in the U.S. GAAP Financial Statements of AngloGold for the year ended and as at December 31, 1998 from June 29, 1998, the effective date of the Consolidation for accounting purposes. Therefore, such financial statements are not necessarily indicative of the Company's financial condition or results of operations for any future periods. The selected financial information set forth below for the years ended and as at December 31, 1994 and 1995 has been derived from AngloGold's financial statements prepared in accordance with SA GAAP and restated in accordance with U.S. GAAP.

(1) Restated in accordance with U.S. GAAP.
(2) Includes the results of operations and financial condition of the Participating Companies and Share Interests Companies from June 29, 1998, the effective date of the Consolidation for accounting purposes.
(3) Translated solely for the convenience of the reader from rand into U.S. dollars at the Noon Buying Rate on December 31, 1998 of U.S.$1.00 = R5.90.
(4) Operating costs include production costs, management fees paid to related parties, general and administrative, employment severance costs and other.
(5) Cash cost amounts have been calculated using the average rand to U.S. dollar exchange rate for the periods presented.

Annual Dividends

    The table below sets forth the amounts of interim, final and total dividends paid in respect of the past five years in rands per ordinary share and translated, solely for convenience, into U.S. dollars per share at the Noon Buying Rate on each of the respective payment dates for such interim and final dividends. AngloGold's Board of Directors declared an interim dividend of R7.50 per ordinary share in respect of 1998 on July 17, 1998 with a record date of August 8, 1998 and a payment date of September 18, 1998 and a final dividend of R8.00 per ordinary share on February 2, 1999, with a record date of February 19, 1999 and a payment date of March 26, 1999. See Item 7, "Taxation".

(1) Based on the Noon Buying Rate on each of the respective payment dates for interim and final dividends. Such exchange rate was U.S.$1.00 = R3.55, R3.67, R4.50, R4.68 and R5.93 for interim dividends, and U.S.$1.00 = R3.60, R3.92, R4.44, R4.98 and R6.27 for final dividends declared in respect of 1994, 1995, 1996, 1997 and 1998, respectively.

    The Company is not subject to any laws or agreements that materially restrict its ability to pay dividends. Future dividends will be dependent on the Company's cash flow, earnings, financial condition and other factors. The Company's future dividend policy is currently being reviewed by AngloGold's Board of Directors. In the short term, however, it is not anticipated that the Company would substantially change its past practice of paying out as dividend the free cash flow generated in each year.

Exchange Rate Information

    The following table sets forth for the periods and dates indicated certain information concerning the Noon Buying Rate expressed in rands per U.S.$1.00. On March 26, 1999, the Noon Buying Rate between rands and U.S. dollars was R6.27 = U.S.$1.00.

(1) The average of the Noon Buying Rates on the last business day of each month during the year.

    Dividends are paid by the Company in rands, and exchange rate fluctuations will affect the U.S. dollar amounts received by holders of ADRs on conversion by the Depositary of such cash dividends paid. Moreover, fluctuations in the exchange rates of the U.S. dollar and the pound sterling will affect the dollar equivalents of the pound sterling price of the ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of the ADSs in the United States.

[ CONTENTS ]