Group – key data

Group safety

AngloGold Ashanti’s focus on safety continued in 2009. The company’s approach to managing risk and enabling employees to work safely in a supportive work environment is based on a new conversational culture, where many voices participate and make a meaningful contribution to designing the way in which the company works and protects itself from both known and unexpected risks. The success of this approach depends on four key factors – leadership, engagement, systems, and learning. For these factors to be effective, they need to occur in an enabling environment. The focus of the safety transformation process is on moving the organisation towards a culture of engagement and learning that stimulates awareness of the nature of risk.

It is with much regret that the company reports that 16 employees lost their lives at work in 2009 (2008: 14 fatalities). While it is particularly disappointing that this figure indicates a relapse from the prior year, AngloGold Ashanti remains focused on decreasing the long-term trend in fatal accidents.

Expressed in terms of safety performance statistics, the fatal injury frequency rate (FIFR) was 0.10 per million hours worked, compared with 0.09 in 2008 and 0.21 in 2007. The lost-time injury frequency rate (LTIFR) in 2009 was 6.57 per million hours worked compared with 7.32 in 2008 and 8.24 in 2007.

Group operating review

In 2009, AngloGold Ashanti produced 4.60Moz of gold, a decrease of 8% on the 4.98Moz produced in 2008. This was in line with the revised production forecast.

This year-on-year decline in gold production was a result of:

• lower grades mined;
• safety stoppages in South Africa;
• seismic event at Savuka that damaged the shaft infrastructure;
• two-month stoppage at TauTona;
• lower grade ore processed at Sunrise Dam due to the high-grade Mega open pit being exhausted in 2008; and
• lower leach-pad recoveries at CC&V.

Group total cash costs for the year increased from $444/oz to $514/oz. This was mainly due to lower production volumes and grade, ore stockpile inventory draw downs and inflation.

Total cash cost increases varied by region, with the South African operations under the most pressure. Here, a 9.7% wage increase and a 31.3% increase in electricity tariffs – both effective from mid-year – together with the relative strength of the local currency, compounded by a 14% drop in production, resulted in a cash cost increase of 29% for the South African operations.

Given the focus on optimising operational performance and maintaining costs, the group continued to invest significantly in capital expenditure. Capital expenditure for the year amounted to $1,027m (2008: $1,201m), of which 26% ($264m) was stay-in-business expenditure, 34% ($347m) was spent on Ore Reserve development, principally at the South African operations and 40% ($416m) was spent on new project development, primarily at:

• Mponeng below 120 CLR Project;
• CC&V Mine Life Extension Project and
• Boddington joint venture – an amount of $145m incurred to June 2009 was reimbursed with the sale of the asset.

Safety remained the highest priority for the group and the performance of each operation is detailed in separate discussions below. In addition, given the group’s move towards integrated reporting, significant issues related to sustainable development are dealt with briefly in these operational discussions. For a more detailed review of these issues, see the Sustainability Review 2009.

Group outlook

Gold production in 2010 is expected to be between 4.5Moz and 4.7Moz. Given that the relative strength of local operating currencies is anticipated to continue, total cash costs are expected to remain under pressure, ranging between $590/oz and $615/oz. AngloGold Ashanti’s exchange rate assumptions for 2010 are: R7.70/$, A$/$0.93, Brazilian real 1.70/$ and the Argentinean peso 3.90/$.

Capital expenditure is estimated at $1bn to $1.1bn for 2010.