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- Directors and management
- Group information
- Regulatory environment
- Mine-site rehabilitation and closure
- Gold production
- Sustainable development
- Corporate governance
- Risk management and internal controls
- Directors’ approval
- Secretary’s certificate
- Report of the independent auditors
- Directors’ report
- Remuneration report
- Annual Financial Statements<
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- Directors’ report
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Directors’ report
Nature of business
AngloGold Ashanti conducts mining operations in Africa, North and South America and Australia, and undertakes exploration activities worldwide. In addition, the company is involved in the manufacturing, marketing and selling of gold products, as well as the development of markets for gold.
Shareholders holding 10% or more of AngloGold Ashanti’s issued share capital
Paulson & Co. Inc, an investment management company, from the United States holds 42,849,864 AngloGold Ashanti ADRs or some 11.83% of the issued share capital. Paulson acquired its shares from Anglo South Africa Capital (Proprietary) Limited, a wholly-owned subsidiary of Anglo American plc when that company divested from AngloGold Ashanti in March 2009. In addition, Allan Gray Unit Trust Management Limited, holds a total of 36,689,809 AngloGold Ashanti shares, representing 10.13% of the issued share capital.
Share capital
Authorised
At the annual general meeting of shareholders held on 15 May 2009, shareholders approved an increase in the company’s authorised ordinary share capital. The authorised share capital of AngloGold Ashanti at 31 December 2009 was made up as follows:
| R150,000,000 |
| R1,070,000 |
| R1,000,000 |
| R50,000 |
The following are the movements in the issued and unissued capital from the beginning of the accounting period to the date of this report:
Issued
Ordinary shares
| Number of shares | Rand | Number of shares | Rand | |
|---|---|---|---|---|
| 2009 | 2008 | |||
| At 1 January | 353,483,410 | 88,370,853 | 277,457,471 | 69,364,368 |
| Issued during year | ||||
| – Rights offer | 69,470,442 | 17,367,611 | ||
| – Golden Cycle acquisition | 3,181,198 | 795,299 | ||
| – São Bento acquisition | 2,701,660 | 675,415 | ||
| – Equity offering to fund the initial effective 35% interest in the Kibali gold project | 7,624,162 | 1,906,041 | ||
| – Bokamoso ESOP on conversion of E ordinary shares | 1,181 | 295 | 94 | 24 |
| – Exercise of options by participants in the AngloGold Share Incentive Scheme | 1,131,916 | 282,979 | 672,545 | 168,136 |
| At 31 December | 362,240,669 | 90,560,167 | 353,483,410 | 88,370,853 |
| Issued subsequent to year-end | ||||
| – Exercise of options by participants in the AngloGold Share Incentive Scheme | 33,282 | 8,321 | ||
| At 31 January 2010 | 362,273,951 | 90,568,488 |
E ordinary shares
On 11 December 2006, shareholders in general meeting authorised the creation of a maximum 4,280,000 E ordinary shares to be issued pursuant to an Employee Share Ownership Plan and a black economic empowerment transaction (BEE transaction). All E ordinary shares have been issued.
| Number of shares | Rand | Number of shares | Rand | |
|---|---|---|---|---|
| 2009 | 2008 | |||
| At 1 January | 3,966,941 | 991,735 | 4,140,230 | 1,035,057 |
| Cancelled in exchange for ordinary shares in terms of the cancellation formula | (171,943) | (42,986) | (173,289) | (43,322) |
| At 31 December | 3,794,998 | 948,749 | 3,966,941 | 991,735 |
| Cancelled subsequent to year-end | ||||
| – Cancelled and exchanged for ordinary shares issued in terms of the cancellation formula | (25,706) | (6,426) | ||
| At 31 January 2010 | 3,769,292 | 942,323 |
In terms of the authority granted by shareholders, on vesting, E ordinary shares are cancelled in exchange for ordinary shares, in accordance with the cancellation formula. All E ordinary shares which are cancelled may not be re-issued and therefore, do not form part of the authorised but unissued share capital of the company.
E ordinary share capital amounting to R17,505,881 in respect of 138,059 unconverted but cancelled E ordinary shares was transferred to ordinary share premium. E ordinary shares do not convert to ordinary shares in the instance when the market price of an AngloGold Ashanti ordinary share is less than the value of the E ordinary share as calculated in accordance with the cancellation formula.
On 1 November 2009, the first tranche of the E ordinary shares issued to the Bokamoso ESOP and to Izingwe Holdings (Pty) Limited (“Izingwe”) vested. In terms of the rules, if at the date of the vesting the cost price of the E Ordinary shares as calculated in accordance with the cancellation formula is greater than the market price of the last business day prior to the date of vesting, then the conversion of the E ordinary shares will be deferred. In respect of the Bokamoso ESOP, vesting will be deferred until 1 May 2010 at which time, the E ordinary shares will either be exchanged for AngloGold Ashanti ordinary shares or will be cancelled without benefit, as calculated in accordance with the cancellation formula. In respect of the E ordinary shares issued to Izingwe, and in accordance with the rules, notice was received from Izingwe deferring vesting. Izingwe have during the period 1 November 2009 to and including 1 May 2010 (“extended vesting period”), the option to exercise its rights to exchange the E ordinary shares for AngloGold Ashanti ordinary shares on the giving of such notice to do so, in accordance with the calculation formula. Any E ordinary shares that are unexercised during the extended vesting period will be cancelled.
Redeemable preference shares
The A and B redeemable preference shares, all of which are held by a wholly-owned subsidiary, Eastvaal Gold Holdings Limited, may not be transferred and are redeemable from the realisation of the assets relating to the Moab Lease area after the cessation of mining operations in the area. The shares carry the right to receive dividends equivalent to the profits (net of royalty, ongoing capital expenditure and taxation) from operations in the area. No further A and B redeemable preference shares will be issued.
Further details of the authorised and issued shares, as well as the share premium, are given in note 26 to the group’s financial statements.
Unissued
| Ordinary number of shares | ||
|---|---|---|
| 2009 | 2008 | |
| At 1 January | 46,516,590 | 122,542,529 |
| Authorised during the year | 200,000,000 | – |
| Issued during year | (8,757,261) | (76,025,939) |
| At 31 December | 237,759,329 | 46,516,590 |
| Issues subsequent to year-end | (33,282) | |
| At 31 January 2010 | 237,726,047 | |
Ordinary shares under the control of directors
Pursuant to the authority granted by shareholders at the annual general meeting held on 15 May 2009, 5% of the number of shares in issue from time to time are placed under the control of the directors to allot and issue, for such purposes and on such terms as they may, in their discretion, determine. This authority expires, unless renewed, at the annual general meeting to be held on 7 May 2010.
At 31 December 2009, the total number of shares placed under the control of the directors was 18,112,033. During 2009, the directors issued 7,624,162 ordinary shares in an equity offering to fund the initial effective 35% interest in the Kibali gold project.
In terms of the Listings Requirements of the JSE, shareholders may, subject to certain conditions, authorise the directors to issue the ordinary shares held under their control for cash other than by means of a rights offer to shareholders. To enable the directors of the company to take advantage of favourable business opportunities which may arise for the issue of such ordinary shares for cash, without restriction, for the benefit of the company, shareholders will be asked to consider an ordinary resolution to this effect at the annual general meeting to be held on 7 May 2010.
At the annual general meeting to be held on 7 May 2010, shareholders will be asked to approve as a general authority, the acquisition by the company, or a subsidiary of the company, of its own shares from its issued ordinary share capital.
At the general meeting of shareholders held on 11 December 2006, shareholders placed under the control of the shareholders, as a specific authority, 1,176,000 ordinary shares to be issued pursuant to an Employee Share Ownership Plan to be implemented outside of South Africa (ESOP-OSA). No ESOP-OSAs were implemented and this authority expired on 31 December 2009.
Depositary Interests
American Depositary Shares
At 31 December 2009, the company had in issue, through The Bank of New York Mellon as Depositary and listed on the New York Stock Exchange (NYSE), 176,762,305 (2008: 111,178,529) American Depositary Shares (ADSs). Each ADS is equal to one ordinary share. At 31 January 2010, there were 179,734,535 ADSs in issue and listed on the NYSE.
CHESS Depositary Interests
At 31 December 2009 and 31 January 2010, the company had in issue through the Cleaning House Electronic Sub-register System (CHESS), and listed on the Australian Securities Exchange (ASX), 91,443,205 (2008: 91,453,140) CHESS Depositary Interests (CDI). Every 5 CDIs has one underlying AngloGold Ashanti ordinary share and carries the right to one vote.
Ghanaian Depositary Shares
At 31 December 2009 and 31 January 2010, the company had in issue, through NTHC Limited as Depositary and listed on the Ghana Stock Exchange (GhSE), 11,512,534 (2008: 17,457,300) Ghanaian Depositary Shares (GhDSs). Every 100 GhDSs has one underlying AngloGold Ashanti ordinary share and carries the right to one vote.
AngloGold Share Incentive Scheme
AngloGold Ashanti operates a share incentive scheme through which executive directors, executive officers and managers of the company and its subsidiaries are given the opportunity to acquire shares in the company. The objective is to incentivise such employees to identify themselves more closely with the fortunes of the group and its continued growth and to promote the retention of such employees.
Non-executive directors are not eligible for participation in the share incentive scheme.
The maximum number of ordinary shares that may be allocated for the purposes of the scheme is equivalent to 2.75% of the total number of ordinary shares in issue at any time. At 31 December 2009, 9,961,618 ordinary shares (2008: 9,720,794) were available for purposes of the scheme, while the maximum aggregate number of shares which may be acquired by any one participant in the scheme is 5% of the ordinary shares allocated for the purposes of the share incentive scheme (or 0.1375% of the total number of ordinary shares in issue) – at 31 December 2009, a maximum of 498,080 ordinary shares per employee could be issued in aggregate (2008: 486,040).
Employees participate in the share incentive scheme to the extent that they are granted options or rights to acquire shares and accept them. All options or rights which have not been exercised within ten years from the date on which they were granted, automatically expire.
The incentives offered by AngloGold Ashanti are reviewed periodically to ensure that they remain globally competitive, so as to attract, reward and retain managers of the highest calibre. As a result, several types of incentives, each with their own issue and vesting criteria have been granted to employees – collectively known as the “AngloGold Share Incentive Scheme or share incentive scheme”.
Although the Remuneration Committee has the discretion to incentivise employees through the issue of shares, only options or rights have so far been granted. The type and vesting criteria of the options or rights granted are:
Time-related
The granting of time-related options was approved by shareholders at the general meeting held on 4 June 1998 and amended by shareholders at the annual general meeting held on 30 April 2002, when it was agreed that no further time-related options would be granted and all options granted hereunder will terminate on 1 February 2012, being the date on which the last options granted under this criteria may be exercised or they will expire.
Time-related options vest over a five-year period from the date of grant and may be exercised in tranches of 20% each in years two, three and four and 40% in year five. As of the date of this report, all options granted and outstanding have vested in full.
Performance-related
The granting of performance-related options was approved by shareholders at the annual general meeting held on 30 April 2002 and amended at the annual general meeting held on 29 April 2005 when it was agreed that no further performancerelated options would be granted and all options granted hereunder will terminate on 1 November 2014, being the date on which the last options granted under this criteria may be exercised or they will expire.
Performance-related options granted vest in full, three years from the date of grant, provided that the conditions under which the options were granted are met. All options granted and outstanding vested in full on 1 November 2007.
Bonus Share Plan (BSP)
The granting of rights in terms of the BSP was approved by shareholders at the annual general meeting held on 29 April 2005 and amended at the general meeting held on 6 May 2008 when shareholders approved an increase in the maximum level of the bonus payable to eligible participants, as well as shortening the vesting period. Executive directors, executive officers and other management groups are eligible for participation. Each award made in respect of the BSP entitles the holder to acquire one ordinary share at “nil” cost. In respect of all awards granted to and including 2007, these awards vest in full, three years from the date of grant, provided that the participant is still in the employ of the company at the date of vesting unless an event, such as death, occurs which may result in an earlier vesting date. In respect of awards granted in 2008 and onwards, the vesting period has been shortened to 40% in year one and 60% in year two from the date of grant or, in the event that the exercising of awards only takes place in year three, then 120% of awards granted will be available for exercising.
Long-Term Incentive Plan (LTIP)
The granting of rights in terms of the LTIP was approved by shareholders at the annual general meeting held on 29 April 2005. Executive directors, executive officers and selected senior management are eligible for participation. Each award made in respect of the LTIP entitles the holder to acquire one ordinary share at “nil” cost. Awards granted vest three years from date of grant, to the extent that the stretched company performance targets, under which the rights were granted, are met and provided that the participant is still in the employ of the company, or unless an event, such as death, occurs which may result in an earlier vesting date.
Options and rights
As is required to be disclosed in terms of the AngloGold Share Incentive Scheme and stock exchange regulations, the movement in respect of options and rights granted and the ordinary shares issued as a result of the exercise of options and rights during the year 1 January 2009 to 31 January 2010 is as follows:
| Time-related | Performance related | Bonus Share Plan(1) | Long-Term Incentive Plan (1) | Total | Ordinary shares issued | |
|---|---|---|---|---|---|---|
| At 1 January 2009 | 116,491 | 1,389,833 | 945,027 | 990,445 | 3,441,796 | 4,968,504 |
| Movement during year | ||||||
| – Granted | – | – | 666,541 | 534,574 | 1,201,115 | |
| – Exercised | (88,239) | (725,620) | (246,872) | (71,185) | (1,131,916) | 1,131,916 |
| – Lapsed – terminations | – | (24,238) | (68,988) | (190,085) | (283,311) | |
| At 31 December 2009 | 28,252 | 639,975 | 1,295,708 | 1,263,749 | 3,227,684 | 6,100,420 |
| Average exercise/issue price per share | 146.28 | 241.28 | 249.07 | 253.60 | ||
| Subsequent to year-end | ||||||
| Granted | – | – | – | – | – | |
| Exercised | – | (7,947) | (24,905) | (430) | (33,282) | 33,282 |
| Lapsed – terminations | – | – | (505) | (6,157) | (6,662) | |
| At 31 January 2010 | 28,252 | 632,028 | 1,270,298 | 1,257,162 | 3,187,740 | 6,133,702 |
(1) BSP and LTIP awards granted at nil cost to participants.
Effective 15 October 2008, the JSE amended Schedule 14 (Requirements for share incentive schemes) of the Listings Requirements. AngloGold Ashanti is required to amend the terms of its Share Incentive Scheme by obtaining shareholder approval to amend the total number of shares attributable to the share incentive scheme, from 2.75% of issued share capital from time to time, to a fixed number of shares that may be issued to the scheme. Although the amendment only has to be in place by 1 January 2011, AngloGold Ashanti will be seeking shareholder approval at the annual general meeting to be held on 7 May 2010 to grant to the directors, authority to issue up to 17,000,000 shares (approximately 5% of issued capital at 31 December 2009) which is management’s estimate of options/awards to be granted over the next three years, including options/awards granted and outstanding as at 31 December 2009. The total number of options/awards that may be issued in aggregate to any one participant to the scheme will remain at 5% of the total number of shares attributable to the scheme.
Also effective 15 October 2008, the recycling of options/awards that have vested and which have been delivered and for which AngloGold Ashanti shares have been issued, is no longer allowed. The table below reflects the total number of options/awards that are unissued, as affected by this Listings Requirements rule change:
| Details | Options/Awards |
|---|---|
| Total number of options attributable to the scheme at 31 December 2009* | 9,961,618 |
| Less: | |
| – Total number of options/awards granted and outstanding at 31 December 2009 | 3,227,684 |
| – Total number of options/awards exercised: | |
| – During the period 15 October to 31 December 2008 | 101,013 |
| – During the period 1 January to 31 December 2009 | 1,131,916 |
| Total options/awards available but unissued at 31 December 2009 | 5,501,005 |
* Based on the shares attributable to the share incentive scheme without taking cognisance of the proposed change.
Analysis of options and rights outstanding at 31 December 2009
| Holding | Holders | Number of options | |||
|---|---|---|---|---|---|
| 1 | to | 100 | 125 | 8,236 | |
| 101 | to | 500 | 741 | 230,488 | |
| 501 | to | 1,000 | 288 | 196,359 | |
| 1,001 | to | 5,000 | 237 | 473,471 | |
| 5,001 | to | 10,000 | 56 | 410,562 | |
| 10,000 | to | 100,000 | 78 | 1,808,441 | |
| Over 100,000 | 1 | 100,127 | |||
| Total | 1,526 | 3,277,684 |
Financial results
The financial statements set out fully the financial position, results of operations and cash flows of the group and the company for the financial year ended 31 December 2009.
Review of operations
The performance of the various operations are comprehensively reviewed under Review of operations.
Dividend policy
Dividends are proposed by, and approved by the board of directors of AngloGold Ashanti, based on the interim and year-end financial statements. Dividends are recognised when declared by the board of directors of AngloGold Ashanti. AngloGold Ashanti expects to continue to pay dividends, although there can be no assurance that dividends will be paid in the future or as to the particular amounts that will be paid from year to year. The payments of future dividends will depend upon the board’s ongoing assessment of AngloGold Ashanti’s earnings, after providing for long-term growth, cash/debt resources, the amount of reserves available for a dividend based on the going-concern assessment, and restrictions placed by the conditions of the convertible bond and other factors.
Dividends declared since 1 January 2009:
| Final dividend number 105 | Interim dividend number 106 | Final dividend number 107 | |
|---|---|---|---|
| Declaration date | 6 February 2009 | 29 July 2009 | 16 February 2010 |
| Last date to trade ordinary shares cum dividend | 27 February 2009 | 14 August 2009 | 5 March 2010 |
| Record date | 6 March 2009 | 21 August 2009 | 12 March 2010 |
| Amount paid per ordinary share | |||
| – South African currency (cents) | 50 | 60 | 70 |
| – United Kingdom currency (pence) | 3.518 | 4.54 | 6.20 |
| – Ghanaian currency (cedis) | 6.565 | 10.956 | 13.22 |
| Amount per CDI (1) – Australian currency (cents) | 1.546 | 1.7916 | 2.079 |
| Payment date | 13 March 2009 | 28 August 2009 | 19 March 2010 |
| Amount per GhDS (2) – Ghanaian currency (cedis) | 0.06565 | 0.10956 | 0.1322 |
| Payment date | 16 March 2008 | 31 August 2009 | 22 March 2010 |
| Amount per ADS (3) – United States currency (cents) | 4.999 | 7.6553 | (4)9.10 |
| Payment date | 23 March 2009 | 8 September 2009 | 29 March 2010 |
| Amount per E ordinary share South African currency (cents) | 25 | 30 | 35 |
| Payment date | 13 March 2009 | 28 August 2009 | 19 March 2010 |
(1) Each CDI (CHESS Depositary Interest) is equal to one-fifth of one ordinary share
(2) Each GhDS (Ghanaian Depositary Share) is equal to one-hundredth of one ordinary share
(3) Each GhDS (Ghanaian Depositary Share) is equal to one-hundredth of one ordinary share
(4) Illustrative value assuming the following rates of exchange: R7.69: $. The actual rate of payment will depend on the exchange rate on the currency conversion date and/or date of payment.
Withholding tax
On 21 February 2007, the South African Government announced a proposal to replace the Secondary Tax on Companies with a 10% withholding tax on dividends and other distributions payable to shareholders. This proposal is expected to be implemented in 2010. Although this may reduce the tax payable by the South African operations of the group, thereby increasing distributable earnings, the withholding tax will generally reduce the amount of dividends or other distributions received by AngloGold Ashanti shareholders.
Shareholders on the South African register who have dematerialised their ordinary shares receive payment of their dividends electronically, as provided for by STRATE. For those shareholders who have not yet dematerialised their shares or who may intend retaining their shareholding in the company in certificated form, the company operates an electronic funds transmission service, whereby dividends may be electronically transferred to shareholders’ bank accounts. These shareholders are encouraged to mandate this method of payment for all future dividends.
Borrowings
The company’s borrowing powers are unlimited. As at 31 December 2009, the group’s borrowings totalled $1,931m, R14,355m (2008: $1,933m, R18,270m).
Significant events during the year under review and subsequent to year-end
Sale of interest in the Boddington Gold Mine: On 28 January 2009, AngloGold Ashanti announced that it had agreed to sell to Newmont Mining Corporation, its 33.33% joint venture interest in the Boddington Gold Mine. The transaction was completed on 26 June 2009. All refunds and reimbursements between the company and Newmont were settled.
Sale of the Tau Lekoa Mine: On 17 February 2009, AngloGold Ashanti announced that it had agreed to sell with effect from 1 January 2010, the Tau Lekoa mine, together with the adjacent Weltevreden, Jonkerskraal and Goedgenoeg project areas, to Simmer & Jack Mines Limited (Simmers). On 25 November 2009, AngloGold Ashanti announced that the closing of the sale may be delayed pending approval of the South African Department of Mineral Resources (DMR), of the transfer of the applicable mining rights, the only remaining condition to the sale. AngloGold Ashanti and Simmers have subsequently agreed to extend the deadline for the completion of the transaction from 31 March 2010 to 30 September 2010, to allow for a further possible delay in closing pending the approval of the DMR. Closing of the transaction is anticipated to occur before 30 September 2010.
Issue of $732.5m, 3.50% guaranteed convertible bonds due 2014: On 18 May 2009, AngloGold Ashanti launched an offering of convertible bonds issued by its wholly-owned subsidiary, AngloGold Ashanti Holdings Finance plc, unconditionally and irrevocably guaranteed by AngloGold Ashanti Limited. Bonds totalling $732.5m were issued at an interest coupon rate of 3.50% per annum, payable on 22 May and 22 November each year, are convertible into AngloGold Ashanti ADRs at a conversion price of $47.6126 per ADR and are due on 22 May 2014. On 30 July 2009, shareholders approved a special resolution placing 15,384,615 ordinary shares under the control of the directors to be issued upon the conversion of the $732.5m convertible bonds.
Formation of a strategic alliance with Thani Dubai Mining Limited: On 10 June 2009, AngloGold Ashanti and Thani Dubai Mining Limited announced the formation of a strategic alliance to explore, develop and operate mines across the Middle East and parts of North Africa. Each company will have a 50% interest in the alliance which will explore for gold, precious and base metals.
Acquisition of an effective 45% interest in the Kibali gold project: With effect from 22 December 2009, AngloGold Ashanti and Randgold Resources Limited (Randgold) each hold an effective 45% interest in the Kibali gold project (formerly the Moto gold project), while L’Office des Mines d’Or de Kilo-Moto (OKIMO), a Congolese parastatal holds the remaining 10% stake, thereby maintaining the continued vested interest of the Government of the Democratic Republic of the Congo (the DRC) in the Kibali gold project.
Issue of 7,624,162 AngloGold Ashanti ordinary shares: On 31 August 2009, AngloGold Ashanti announced the launch of an equity offering to fund a portion of its acquisition of the Kibali gold project. This was followed by an announcement on 1 September 2009 detailing the placing of 7,624,162 AngloGold Ashanti ordinary shares at an issue price of $37.25 per American Depositary Share (ADR) (or R288.32 per ordinary share) which price represented an approximate 3% discount to the closing price of an AngloGold Ashanti ADR on the NYSE on 31 August 2009. The offering closed on 8 September 2009 and total proceeds of some $284m was received.
Formation of a joint venture with De Beers Group of Companies: On 5 October 2009, AngloGold Ashanti and the De Beers Group of Companies announced the formation of a joint venture (AuruMar) to explore for, and ultimately mine, gold and other minerals and metals, excluding diamonds, on marine deposits located in, or adjacent to, the area between the high water mark and the edge of the continental shelf on a worldwide basis.
Acquisition of an additional interest in Sadiola: On 29 December 2009, AngloGold Ashanti, together with IAMGOLD Corporation purchased from the International Finance Corporation (IFC), the IFC’s 6% stake in Soci?t? d’Exploitation des Mines d’or de Sadiola, which owns the Sadiola Gold Mine. This transaction has resulted in AngloGold Ashanti and IAMGOLD each increasing their respective interest in Sadiola from 38% to 41%. In addition, AngloGold Ashanti and IAMGOLD have extended an offer to the Republic of Mali to take up its proportionate entitlement of 19.15% of the 6% sale interest, by acquiring an equal 0.574% interest in SEMOS from each of them, on or before 31 March 2010.
Temporary suspension of operations at Iduapriem mine: On 19 February 2010, AngloGold Ashanti announced that following discussions with the Environmental Protection Agency of Ghana (EPA), the Iduapriem mine in Ghana had been temporarily suspended to address potentially adverse environmental impacts arising from the current tailings storage facility.
Appointment of chairman: Tito Mboweni has been appointed with effect from 1 June 2010, as Chairman of AngloGold Ashanti, to succeed Russell Edey following his retirement as Chairman and from the board.
Investments
Particulars of the group’s principal subsidiaries and operating entities are presented under the Financials section.
Litigation
There are no legal or arbitration proceedings in which any member of the AngloGold Ashanti group is or has been engaged, including any such proceedings which are pending or threatened, of which AngloGold Ashanti is aware, which may have, or have had during the 12 months preceding the date of this Annual Report 2009, a material effect on the group’s financial position, other than those disclosed in group note 35 of the financial statements.
Material change
There has been no material change in the financial or trading position of the AngloGold Ashanti group since the publication of its results for the quarter and year ended 31 December 2009.
Material resolutions
Details of special resolutions and other resolutions of a significant nature passed by the company and its subsidiaries during the year under review, requiring disclosure in terms of the Listings Requirements of the JSE, are as follows:
| Nature of resolution | Effective date | |
|---|---|---|
| AngloGold Ashanti Limited | Passed at the annual general meeting held on 15 May 2009: | |
| Approval to increase the authorised share capital of the company by the creation of 200,000,000 new ordinary shares of R0.25 each. | 2 June 2009 | |
| Amendments of the company’s articles of association to remove an inconsistency in article 86 relating to the calculation of the number of directors to retire by rotation and, in accordance with the proviso to section 302 of the Companies Act, 1973, as amended, to provide authority to make the financial statements available to shareholders in electronic format. | 2 June 2009 | |
| AngloGold Ashanti Limited | Passed at the general meeting held on 30 July 2009: | |
| Approval to place 15,384,615 ordinary shares in the authorised but unissued share capital of the company under the control of the directors, for purposes of the conversion of the $732.5m, 3.50% convertible bonds due 2014, issued by AngloGold Ashanti Holdings Finance plc and irrevocably guaranteed by AngloGold Ashanti Limited. | 30 July 2009 |
Annual general meetings
At the 65th annual general meeting held on 15 May 2009, shareholders passed ordinary resolutions relating to:
- the adoption of the financial statements for the year ended 31 December 2008;
- reappointment of Ernst & Young Inc. as auditors of the company;
- the re-election of Mr RP Edey, as a director of the company;
- the renewal of a general authority placing 5% of the unissued ordinary shares of the company under the control of the directors;
- the granting of a general authority to issue ordinary shares in the capital of the company for cash, subject to certain limitations in terms of the Listings Requirements of the JSE;
- increase in non-executive directors’ fees;
- the granting of a general authority to the directors to allot and issue convertible bonds which may be converted into a maximum of 15,384,615 ordinary shares;
- increase in the authorised share capital of company by the creation of 200,000,000 new ordinary shares of R0.25 each; and
- amendment to the company’s articles of association in order to remove an inconsistency in article 86, relating to the calculation of the number of directors to retire by rotation, and to make the financial statements of the company available to shareholders in electronic format in accordance with the proviso to section 302 of the Companies Act, 1973.
Details concerning the special resolution passed by shareholders at this meeting are disclosed above.
Notice of the 66th annual general meeting, which is to be held in the Auditorium, 76 Jeppe Street, Newtown, Johannesburg at 11:00 (South African time) on Friday, 7 May 2010, is enclosed as a separate document with the Annual Financial Statements 2009. Additional copies of the notice of meeting may be obtained from the company’s corporate contacts and the share registrars or they may be accessed from the company’s website.
Directorate and secretary
The following movements to the board of directors took place during the period from 1 January 2009 to 31 December 2009.
Executive directors
There were no changes to the executive directorate during the year under review.
Non-executive directors
Mr RE Bannerman and Mr JH Mensah retired from the board effective 15 May 2009.
Professor LW Nkuhlu resigned from the board effective 5 May 2009 and was reappointed with effect from 1 June 2009.
The directors retiring by rotation at the forthcoming annual general meeting in terms of the articles of association are Mr FB Arisman, who offers himself for re-election, and Mr RP Edey, who will retire as chairman of the board and as a member of the board from the conclusion of the annual general meeting of shareholders to be held on 7 May 2010.
Prof LW Nkuhlu, who was appointed as a director during the year, will retire at the annual general meeting and offers himself for re-election.
In terms of the company’s memorandum and articles of association, there is no mandatory retirement age for non-executive directors. Non-executive directors do not hold service contracts with the company.
The names and biographies of the directors of the company are listed under Board and executive management.
There was no change in the office of the Company Secretary. The name, business and postal address of the Company Secretary are set out in Administrative information of this report.
Directors’ interests in shares
The interests of the directors in the ordinary shares of the company at 31 December 2009, which did not individually exceed 1% of the company’s issued ordinary share capital, were:
| Beneficial | Beneficial | |||
|---|---|---|---|---|
| Direct | Indirect | Direct | Indirect | |
| 31 December 2009 | 31 December 2008 | |||
| Executive directors | ||||
| M Cutifani | 10,000 | – | 10,000 | – |
| S Venkatakrishnan | 10,351 | – | 5,221 | – |
| Total | 20,351 | – | 15,221 | – |
| Non-executive directors | ||||
| FB Arisman | – | 4,984 | – | 4,984 |
| RP Edey | – | 3,063 | – | 3,063 |
| LW Nkuhlu | – | 800 | – | 800 |
| Total | – | 8,847 | – | 8,847 |
| Grand total | 20,351 | 8,847 | 15,221 | 8,847 |
There have been no changes in the above interests since 31 December 2009. A register detailing directors’ and officers’ interests in contracts is available for inspection at the company’s registered and corporate office.
Annual financial statements
The directors are required by the South African Companies Act to maintain adequate accounting records and are responsible for the preparation of the annual financial statements, which fairly present the state of affairs of the company and the AngloGold Ashanti group at the end of the financial year, and the results of operations and cash flows for the year, in conformity with the Companies Act, 61 of 1973 and in terms of the JSE Listings Requirements.
In preparing the annual financial statements reflected in United States dollars and South African rands, the group has complied with International Financial Reporting Standards (IFRS) and used appropriate accounting policies supported by reasonable and prudent judgements and estimates. The directors are of the opinion that these financial statements fairly present the financial position of the company and the group at 31 December 2009, and the results of their operations and cash flow information for the year then ended.
AngloGold Ashanti, through its Executive Committee and Treasury Committee, reviews its short-, medium- and long-term funding, treasury and liquidity requirements and positions monthly. The board of directors also reviews these on a quarterly basis at its meetings.
Cash and cash equivalents at 31 December 2009 amounted to $1,100m (2008: $575m), and together with cash budgeted to be generated from operations in 2009 and the net incremental borrowing facilities available are, in management’s view, adequate to fund operating, mine development and capital expenditure and financing obligations as they fall due for at least the next twelve months. Taking these factors into account, the directors of AngloGold Ashanti have formed the judgement that, at the time of approving the financial statements for the year ended 31 December 2009, it is appropriate to use the going concern basis in preparing these financial statements.
The external auditor, Ernst & Young Inc., is responsible for independently auditing and reporting on the financial statements in conformity with International Standards on Auditing and the Companies Act in South Africa. Their unqualified report on these financial statements appears under Report of the independent auditors.
To comply with requirements for reporting by non-US companies registered with the SEC, the company will prepare a set of financial statements in accordance with US Generally Accepted Accounting Principles (US GAAP) which must be filed with the SEC by no later than 30 June 2010. Copies of the annual report on Form 20-F will be made available once the filing has been finalised, on request, from the Bank of New York Mellon, or from the company’s corporate office or its contacts as listed under Administrative information.
Under the Sarbanes-Oxley Act, the Chief Executive Officer and Chief Financial Officer are required to complete a group certificate stating that the financial statements and reports are not misleading and that they fairly present the financial condition, results of operations and cash flows in all material respects. The design and effectiveness of the internal controls, including disclosure controls, are also included in the declaration. As part of the process, a declaration is also made that all significant deficiencies and material weaknesses, fraud involving management or employees who play a significant role in internal control and significant changes that could impact on the internal control environment, are disclosed to the Audit and Corporate Governance Committee and the board.
ANGLOGOLD ASHANTI Annual Financial Statements 2009