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Anglogold Ashanti Limited - Report for the Quarter ended 31 March 2005
ANGLOGOLD ASHANTI LIMITED
(formerly: AngloGold Limited)
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
ISIN: ZAE000043485
Share codes:
JSE: ANG
Report for the Quarter ended 31 March 2005
Report to shareholders
for the quarter ended 31 March 2005
Group results for the quarter...
Price received improved $29/oz (7%) quarter-on-quarter to $424/oz, following
the hedge restructure announced in January.
Production reduced by 5% to 1.569Moz (after adjusting for the closure of Ergo),
predominately due to lower South African production and after strong
performances at Morila and Cerro Vanguardia in the prior quarter.
Former Ashanti assets Obuasi, Iduapriem and Geita delivered improved
production, while Sunrise Dam in Australia reported record production.
Total cash costs increased by 4% to $284/oz, due to lower gold produced,
stronger operating currencies and inflationary pressures in most operating
regions.
Headline earnings adjusted for the effect of unrealised non-hedge derivatives
were $77m.
Quarter Quarter
ended ended
Mar Dec
2005 2004
SA rand/Metric
Operating review
Gold
Produced -kg/oz(000) 48,808 51,360
Price received1 -R/kg/$/oz 82,152 76,691
Total cash costs -R/kg/$/oz 54,778 53,299
Total production costs -R/kg/$/oz 70,639 67,925
Financial review
Gross profit -R/$million 255 116
Gross profit adjusted
for the effect of unrealised non-
hedge derivatives2 -R/$million 676 610
Profit attributable to equity
shareholders -R/$million 50 230
Headline earnings -R/$million 102 275
Headline earnings adjusted for the
effect of unrealised non-hedge
derivatives3 -R/$million 464 782
Capital expenditure -R/$million 864 1,181
Earnings per ordinary share -cents/share
Basic 19 87
Diluted 19 87
Headline 39 104
Headline earnings adjusted for
the effect of unrealised non-
hedge derivatives3 175 296
Dividends - cents/share
Quarter Year
ended ended
Mar Dec
2004 2004
SA rand / Metric
Operating review
Gold
Produced -kg/oz(000) 36,497 181,311
Price received1 -R/kg/$/oz 87,651 81,051
Total cash costs -R/kg/$/oz 55,004 54,276
Total production costs -R/kg/$/oz 68,038 68,221
Financial review
Gross profit -R/$million 716 1,697
Gross profit adjusted
for the effect of unrealised non-
hedge derivatives2 -R/$million 877 2,844
Profit attributable to equity
shareholders -R/$million 99 728
Headline earnings -R/$million 137 937
Headline earnings adjusted for the
effect of unrealised non-hedge
derivatives3 -R/$million 234 1,858
Capital expenditure -R/$million 567 3,764
Earnings per ordinary share -cents/share
Basic 44 290
Diluted 44 289
Headline 61 373
Headline earnings adjusted for
the effect of unrealised non-
hedge derivatives3 105 739
Dividends - cents/share 350
Quarter Quarter
ended ended
Mar Dec
2005 2004
US dollar / Imperial
Operating review
Gold
Produced -kg/oz(000) 1,569 1,651
Price received1 -R/kg/$/oz 424 395
Total cash costs -R/kg/$/oz 284 274
Total production costs -R/kg/$/oz 366 350
Financial review
Gross profit -R/$million 57 4
Gross profit adjusted
for the effect of unrealised non-
hedge derivatives2 -R/$million 112 101
Profit attributable to equity
shareholders -R/$million 22 34
Headline earnings -R/$million 31 41
Headline earnings adjusted for the
effect of unrealised non-hedge
derivatives3 -R/$million 77 135
Capital expenditure -R/$million 144 192
Earnings per ordinary share -cents/share
Basic 8 13
Diluted 8 13
Headline 12 16
Headline earnings adjusted for
the effect of unrealised non-
hedge derivatives3 29 51
Dividends -cents/share
Quarter Year
ended ended
Mar Dec
2004 2004
US dollar / Imperial
Operating review
Gold
Produced -kg/oz(000) 1,173 5,829
Price received1 -R/kg/$/oz 404 394
Total cash costs -R/kg/$/oz 253 264
Total production costs -R/kg/$/oz 313 332
Financial review
Gross profit -R/$million 107 243
Gross profit adjusted
for the effect of unrealised non-
hedge derivatives2 -R/$million 131 441
Profit attributable to equity
shareholders -R/$million 16 108
Headline earnings -R/$million 22 141
Headline earnings adjusted for the
effect of unrealised non-hedge
derivatives3 -R/$million 35 298
Capital expenditure -R/$million 84 585
Earnings per ordinary share -cents/share
Basic 7 43
Diluted 7 43
Headline 10 56
Headline earnings adjusted for
the effect of unrealised non-
hedge derivatives3 16 119
Dividends - cents/share 56
Notes: 1. Price received including realised non-hedge derivatives.
2. Refer to note 5 of notes for the definition.
3. Refer to note 4 of notes for the definition.
$ represents US dollar, unless otherwise stated.
Quarter 1 2005
Operations at a glance
for the quarter ended 31 March 2005
Price received1 Production
$/oz % oz (000) %
Variance4 Variance4
Great Noligwa 441 3 180 (11)
Geita 372 6 192 1
Sunrise Dam 424 (2) 131 15
TauTona 438 2 131 -
Morila5 425 2 67 (26)
Cripple Creek & Victor 406 28 81 (11)
AngloGold Ashanti Mineracao 416 14 57 (3)
Cerro Vanguardia5 385 (7) 57 (16)
Kopanang 436 1 120 (2)
Mponeng 441 2 115 3
Obuasi 448 43 92 2
Serra Grande5 416 15 24 -
Sadiola5 440 5 38 (19)
Iduapriem5 446 42 46 10
Yatela5 428 (2) 23 (18)
Bibiani 432 39 33 (3)
Siguiri5 448 45 43 -
Tau Lekoa 445 3 65 (13)
Navachab 431 1 19 12
Savuka 444 4 32 (24)
Other 23 (18)
AngloGold Ashanti 424 7 1,569 (5)
Total cash costs Cash gross profit
(loss)2
$/oz % $m %
Variance4 Variance4
Great Noligwa 277 18 26 (32)
Geita 213 (19) 25 14
Sunrise Dam 279 (1) 22 (21)
TauTona 272 (2) 21 17
Morila5 173 15 17 (29)
Cripple Creek & Victor 220 (8) 16 100
AngloGold Ashanti Mineracao 147 9 16 23
Cerro Vanguardia5 141 8 15 (32)
Kopanang 307 8 14 (13)
Mponeng 329 (1) 13 30
Obuasi 362 13 8 300
Serra Grande5 147 - 7 40
Sadiola5 283 11 6 -
Iduapriem5 288 (19) 5 350
Yatela5 280 1 4 -
Bibiani 289 2 4 500
Siguiri5 395 (9) 4 144
Tau Lekoa 432 9 1 (50)
Navachab 413 (11) 1 200
Savuka 555 21 (3) (50)
Other 8 (56)
AngloGold Ashanti 284 4 230 7
Gross profit(loss)
adjusted for the
effect of unrealised
hedge derivatives
%
$m Variance4
Great Noligwa 20 (39)
Geita 10 120
Sunrise Dam 13 (35)
TauTona 9 13
Morila5 12 (37)
Cripple Creek & Victor 7 800
AngloGold Ashanti Mineracao 13 30
Cerro Vanguardia5 10 (38)
Kopanang 9 (25)
Mponeng 3 50
Obuasi (1) 92
Serra Grande5 6 50
Sadiola5 2 (33)
Iduapriem5 2 129
Yatela5 2 -
Bibiani - 100
Siguiri5 2 118
Tau Lekoa (5) (67)
Navachab - 100
Savuka (5) (25)
Other 3 (73)
AngloGold Ashanti 112 11
1 Price received includes realised non-hedge derivatives.
2 Gross profit (loss) adjusted for the effect on unrealised non-hedge
derivatives plus amortisation of tangible and intangible assets less non-cash
revenues.
3 Refer to note 5 of notes for the definition.
4 Variance March 2005 quarter on December 2004 quarter - increase (decrease).
5 Attributable.
Financial and operating review
OVERVIEW OF THE QUARTER
The hedge restructure announced in January resulted in the price received for
the quarter improving by $29/oz or 7% to $424/oz. This compares to an average
spot price for the quarter of $427/oz. The benefit of this gain, and that of an
inventory increase, was partially countered by a 5% decline in production to
1.569Moz (after adjusting for the closure of Ergo) and a 5% increase in total
production costs to $366/oz. Gross profit adjusted for the effect of unrealised
non-hedge derivatives increased to $112m from $101m last quarter.
Global cost increases - driven largely by the same factors that have
contributed to the higher gold price, including strong currencies outside the
US, a higher oil price and the higher price of consumables driven by demand in
China in particular - contributed to the quarter"s higher total cash costs of
$284/oz.
Last year, group cost savings initiatives reduced costs by $50m, although lower
production levels and strong operating currencies - including the rand and
Australian dollar - continue to erode margins.
AngloGold Ashanti management has budgeted for a further $50m in cost savings in
2005. In light of the increase in cash costs this quarter, additional measures
are being implemented to ensure that the company reaches its published cash
cost target for the year of $273/oz.
Headline earnings for the quarter, adjusted for the effect of unrealised
non-hedge derivatives, declined to $77m. This includes a statutory tax rate
reduction of $12m. Headline earnings for the prior quarter, adjusted for the
effect of unrealised non-hedge derivatives, of $135m included an abnormal net
tax gain of $59m. On a comparable basis to accommodate abnormal items in both
quarters, headline earnings adjusted for the effect of unrealised non-hedge
derivatives decreased from $76m in the last quarter to $65m in the first
quarter.
Including the after-tax unrealised loss on non-hedge derivatives of $46m,
profit attributable to equity shareholders decreased to $22m.
In South Africa, production was 7% lower, with Great Noligwa down 23,000oz and
production at both Tau Lekoa and Savuka down 10,000oz. After strong fourth
quarter performances, production at Morila in Mali and Cerro Vanguardia in
Argentina declined 23,000oz and 11,000oz, respectively.
Although many of the other operations, most notably Sunrise Dam, which posted
another record production quarter at 131,000oz, performed well, lower
production at the majority of the operations worked to offset the benefit of
these more solid operating performances.
At the former Ashanti operations, both Iduapriem and Bibiani recorded improved
operating performances and Geita continued to perform well. At Obuasi, gold
production increased 2% to 92,000oz, with tonnage treated up 10% on the
previous quarter, due in part to the treatment of the Kubi pit surface oxides,
which in turn reduced the overall yield. At the time of reporting, underground
grades at Obuasi have improved by 1g/t and management expects production to
reach 100,000oz next quarter. Obuasi"s operating loss for the quarter of $1m is
an $11m improvement on that of the previous quarter.
On 12 April, AngloGold Ashanti filed an application with the South African High
Court for an interim order seeking the continuation of pumping of underground
water at mines located updip from the AngloGold Ashanti Vaal River operations.
On 15 April, the South African Department of Water Affairs and Forestry issued
an interim directive, ordering AngloGold Ashanti, Harmony and DRDGold to share
equally the costs of pumping the water, until the Court reaches a final
decision regarding the relevant legal liabilities and responsibilities.
Looking ahead, production for the second quarter is estimated to be 1.6Moz at
an average total cash cost of $276/oz, assuming the following exchange rates to
the US dollar:
R6.10; A$0.77; BRL2.90 and Argentinean peso 2.70. Capital expenditure for the
quarter is estimated at $207m but will be managed in line with profitability
and cash generation.
Notes:
All references to price received include the realised
non-hedge derivatives.
In the case of joint venture operations, all production
and financial results are attributable to AngloGold
Ashanti.
Rounding of figures may result in computational
discrepancies
Review of the gold market
The strong investor interest in gold seen during the latter half of 2004 abated
during the first quarter of the new year. As a result, gold prices were down
for this period. The quarter closed exactly $10/oz lower than the opening spot
price at $428/oz, and the average spot price of $427/oz for the full quarter
was $7/oz or 2% lower than the average price for the final quarter in 2004.
There has been little activity in the market since the end of the quarter to
change this position, and gold continues to trade sideways.
Whilst the average exchange rate of the rand to the dollar at around R6/$1 for
the quarter remained much the same as the previous quarter, the rand tended
weaker during much of the quarter. The exchange rate for the local currency
closed at R6.22 to the dollar, or some 10% weaker than the opening rate of
R5.64. As a result of these circumstances, the South African gold price has
also remained trapped within a relatively narrow band of R80,000- R86,000/kg,
with an average local spot price of R82,219/kg for the quarter. This price was
4% down on the average rand spot price for the previous quarter.
GOLD
The gold price remains closely tied to the strength or weakness of the dollar,
most specifically against the euro. This relationship continued throughout the
latest quarter. Whilst the price/exchange rate correlation is not as
near-perfect as it was during the latter half of last year, the profile of
movements in the two markets is very similar.
The other element through which the gold price can be tracked and predicted
remains the behaviour of open interest in gold on the New York Commodity
Exchange (Comex). Investor behaviour in gold on the Comex tracks very closely
the movement in the US dollar/euro exchange rate, reflected in investor
activity in the US dollar on the International Money Market (IMM) in Chicago.
There is a very close relationship between the size of net short US dollar
positions on the IMM and the size of net long gold positions on the Comex. When
those trading on the IMM reduce their net short positions on US dollars, so
investors and speculators reduce their net long positions on Comex. As the US
dollar short position in IMM increases, so the long position in gold on the
Comex increases.
The link between the US dollar gold price and the net open positions in gold on
Comex however, was somewhat weaker during the past quarter than it has been
over the past three and a half years. The Comex sustained a substantial
correction in open interest in gold early in 2005, with net positions falling
for six weeks to a low of only some 7Moz net long in mid- February. This
relatively low open position in gold co- incided with the strongest point of
the US dollar against the euro during the quarter, confirming the link between
behaviour on the Comex, and changes in value of the US dollar. However, this
sharp fall in the net long position in gold on the Comex translated to only a
small correction in the US dollar spot price of gold. It is likely that the
increase in gold offtake during January 2005 for the streetTracks Gold Fund in
the US softened the negative impact on the spot gold price of the fall in net
long interest in gold on Comex. Since the low point in mid-February, investor
interest in gold on Comex has recovered much of the lost ground, and gold
futures and options have traded for the past four weeks at around 15-17Moz net
long.
PHYSICAL DEMAND
The improved physical demand for gold reported in the latter half of 2004,
particularly in respect of jewellery offtake in certain markets, has been
maintained into 2005. With a small recovery in gold mine production this year
(due largely to the return of Freeport to full gold production in 2005), the
physical gold market is likely to be largely unchanged, and in balance for most
of the year. With investment demand still positive for gold, however, the final
balance of supply and demand in the gold market will remain of secondary
importance, and investor and speculation purchases on the margin will continue
to be the price-determining force in the gold market. However, in the longer
term it is important that physical demand is healthy because of the ability of
the physical market to provide offtake and floor price support at times when
investor or speculator interest weakens.
OFFICIAL SECTOR
The most significant issue for gold in the official sector in recent months has
been the discussion over the gold reserves of the International Monetary Fund
(IMF), and the campaign for debt relief for Heavily Indebted Poor Countries
(HIPCs). Gordon Brown, Chancellor in the British government, has made the issue
of debt relief through the sale or revaluation of gold reserves of the IMF a
central issue for his term of office as chairman of the International Monetary
and Finance Committee of the IMF.
This is an idea which is not new to the IMF. During 1999, a campaign with the
same objectives was undertaken with the objective of selling IMF gold reserves
to fund HIPC debt relief. The compromise reached on that occasion involved not
the outright sale, but rather a revaluation of some 12.9Moz or 13% of IMF gold
holdings to generate sufficient value on the IMF balance sheet to meet the
needs of the proposal at that time for debt relief. This time, IMF management
seems determined that a process of revaluation of the gold reserves on their
balance sheet will be inappropriate for the scheme to relieve debt, and that
only outright sale would be appropriate. All of those who have supported this
campaign insist that such outright sales would be undertaken in a manner that
would not damage the gold market. More specifically, it has been mooted that
any gold sales by the IMF should be effected only within the constraints and
terms of the second Washington Agreement which provides currently for the sale
of 2,500t of gold over five years by signatories to the agreement (September
2004 - September 2009).
Whilst the proposal to sell a part of the IMF gold holdings has contributed to
some measure of negative sentiment in the gold market, it is not at all clear
that such a sale will eventuate. The US Treasury opposes the sale, and central
bank officials from both Germany and the European central bank have spoken out
in opposition to a sale of IMF gold holdings to fund debt relief. The debate on
this subject continues.
CURRENCIES
Whilst there is a broad consensus amongst market analysts and commentators that
the US dollar needs to weaken further against the currencies of the major
trading counterparties of the US, the dollar lost little ground during the
first quarter of 2005. The structural problems of budget and current account
deficits faced by the US economy are neutralised in the market from time to
time by the cyclical advantages currently enjoyed by the USA. These cyclical
advantages include the continued above-average growth of the US economy and the
steady increase in US interest rates, which are today higher than European
central bank rates for the first time in three years.
With the offset between cyclical and structural influences, the dollar has
appeared almost to be in equilibrium in a range around $1.30 to the euro during
recent months. It is unlikely that this equilibrium can last. It is likely that
US growth will flag during this year, and that significantly higher oil prices
might yet begin to show some influence on consumer prices in the developed
economies. Any threat of inflation will trigger more aggressive monetary and
interest rate policies with direct effect on US growth.
In all, it is difficult to believe that the structural adjustment required by
the US economy is over, or that the US currency will not devalue further as
part of that adjustment.
HEDGING
As at 31 March 2005, the net delta hedge position of AngloGold Ashanti was
10.72Moz or 334t, valued at the spot price of gold at that date of $428/oz.
This net delta position reflects an increase of some 240,000oz or 7.5t in the
net size of the AngloGold Ashanti hedge compared with the position at the end
of the previous quarter. This increase is not due to new hedging commitments
entered into by the company during the quarter, but by measuring the hedge at
the new higher US interest rates, which give rise to a higher contango, and
therefore to higher gold forward prices. These higher forward prices in turn
translate into higher delta values for open option positions in future years,
and this has reported as an overall increase in delta hedge tonnage.
The marked-to-market value of the hedge position as at 31 March 2005 was
negative $1,066m, little changed from the negative value of $1,161m recorded
at the end of December 2004. The pric received by the company for the quarter
under review was $424/oz, compared to an average spot price for the period of
$427/oz. The company continues to manage its hedged positions actively, and
to reduce overall levels of pricing commitments in respect of future gold
production by the company.
Hedge position
As at 31 March 2005, the group had outstanding the following forward-pricing
commitments against future production. The total net delta tonnage of the hedge
of the company on this date was 10.72Moz or 334t (at 31 December 2004: 10.49Moz
or 326t).
The marked-to-market value of all hedge transactions making up the hedge
positions was a negative $1.066bn (negative R6.62bn) as at 31 March 2005 (as at
31 December 2004: $1.161bn or R6.58bn). This value at 31 March 2005 was based
on a gold price of $428/oz, exchange rates of R/$6.2124 and A$/$0.7734 and the
prevailing market interest rates and volatilities at that date.
As at 26 April 2005, the marked-to-market value of the hedge book was a
negative $1.046bn (negative R6.35bn), based on a gold price of $432/oz and
exchange rates of R/$6.0675 and A$/$0.7773 and the prevailing market interest
rates and volatilities at the time.
These marked-to-market valuations are not predictive of the future value of the
hedge position, nor of future impact on the revenue of the company. The
valuation represents the cost of buying all hedge contracts at the time of
valuation, at market prices and rates available at the time.
Year 2005 2006 2007 2008
DOLLAR
GOLD
Forward Amount(kg) 16,084 19,510 32,993 30,076
contracts US$/oz $293 $336 $344 $365
Put
options Amount(kg) 7,545 8,592 1,455
purchased US$/oz $337 $345 $292
Put
options Amount(kg) 6,376 4,354 855
sold US$/oz $391 $339 $390
Call
options Amount(kg) 15,613 11,211 6,357
purchased US$/oz $330 $333 $344
Call
options Amount(kg) 30,866 28,367 27,560 27,516
sold US$/oz $365 $373 $374 $380
RAND GOLD
Forward Amount(kg) * 782
contracts Rand per kg R10,709
Put
options Amount(kg) 1,875
purchased Rand per kg R93,602
Put
options Amount(kg) 6,874 1,400
sold Rand per kg R85,095 R88,414
Call
options Amount(kg)
purchased Rand per kg
Call
options Amount(kg) 11,506 4,517 1,058
sold Rand per kg R91,660 R102,447 R154,002
A DOLLAR
GOLD
Forward Amount(kg) * 307 3,110 8,398 3,110
contracts A$ per oz A$1,072 A$749 A$650 A$678
Put
options Amount(kg) 622
purchased A$ per oz A$600
Put
options Amount(kg) 622
sold A$ per oz A$565
Call
options Amount(kg) 3,110 6,221 3,732 3,110
purchased A$ per oz A$724 A$673 A$668 A$680
Call
options Amount(kg) 622
sold A$ per oz A$620
** Total Delta(kg) 23,910 35,771 57,446 54,834
net gold: Delta (oz) 768,723 1,150,063 1,846,929 1,762,951
Year 2009 2010-2014 Total
DOLLAR GOLD
Forward contracts Amount(kg) 26,288 53,566 178,517
US$/oz $380 $402 $365
Put options purchased Amount(kg) 17,592
US$/oz $337
Put options sold Amount(kg) 1,882 9,409 22,876
US$/oz $400 $430 $398
Call options Amount(kg) 33,181
purchased US$/oz $334
Call options sold Amount(kg) 26,211 76,048 216,568
US$/oz $407 $468 $410
RAND GOLD
Forward contracts Amount(kg) 933 151
Rand per kg R116,335 R633,352
Put options purchased Amount(kg) 1,875
Rand per kg R93,602
Put options sold Amount(kg) 8,274
Rand per kg R85,656
Call options Amount(kg)
purchased Rand per kg
Call options sold Amount(kg) 2,986 5,972 26,039
Rand per kg R202,054 R223,756 R139,018
A DOLLAR GOLD
Forward contracts Amount(kg) 3,390 3,110 20,811
A$ per oz A$665 A$691 A$761
Put options purchased Amount(kg) 622
A$ per oz A$600
Put options sold Amount(kg) 622
A$ per oz A$565
Call options
purchased Amount(kg) 1,244 3,110 20,527
A$ per oz A$694 A$712 A$688
Call options sold Amount(kg) 622
A$ per oz A$620
Delta(kg) 50,872 110,670 333,503
** Total net gold:
Delta (oz) 1,635,570 3,558,118 10,723,126
* Long position.
** The Delta of the hedge position indicated above, is the equivalent gold
position that would have the same marked-to-market sensitivity for a
small change in the gold price. This is calculated using the
Black-Scholes option formula with the ruling market prices, interest
rates and volatilities as at 31 March 2005.
Year 2005 2006 2007
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg) 32,659 43,545 43,545
$ per oz $7.11 $7.11 $7.40
Put options sold Amount (kg) 32,659 43,545 43,545
$ per oz $6.02 $6.02 $5.93
Call options purchased Amount (kg)
$ per oz
Call options sold Amount (kg) 32,659 43,545 43,545
$ per oz $8.11 $8.11 $8.40
2008 2009 2010-2014 Total
DOLLAR SILVER
Forward contracts Amount (kg)
$ per oz
Put options purchased Amount (kg) 119,749
$ per oz $7.22
Put options sold Amount (kg) 119,749
$ per oz $5.99
Call options purchased Amount (kg)
$ per oz
Call options sold Amount (kg) 119,749
$ per oz $8.22
The following table indicates the group"s currency hedge position at 31 March
2005
Year 2005 2006 2007
RAND DOLLAR (000)
Forward contracts Amount ($) 4,065
US$/R R5.91
Put options purchased Amount ($)
US$/R
Put options sold Amount ($)
US$/R
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) 50,000
US$/R R6.22
A DOLLAR (000)
Forward contracts Amount ($) 15,970 39,222
A$/US$ A$0.44 A$0.75
Put options purchased Amount ($)
A$/US$
Put options sold Amount ($)
A$/US$
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 75,000 20,000
A$/US$ A$0.76 A$0.74
BRAZILIAN REAL (000)
Forward contracts Amount ($) 18,000 24,000 4,000
US$/BRL BRL2.89 BRL3.18 BRL3.31
Put options purchased Amount ($) 300
US$/BRL BRL3.43
Put options sold Amount ($) 300
US$/BRL BRL3.27
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 15,300 20,000
US$/BRL BRL2.99 BRL3.29
Year 2008 2009 2010-2014 Total
RAND DOLLAR (000)
Forward contracts Amount ($) 4,065
US$/R R5.91
Put options purchased Amount ($)
US$/R
Put options sold Amount ($)
US$/R
Call options purchased Amount ($)
US$/R
Call options sold Amount ($) 50,000
US$/R R6.22
A DOLLAR (000)
Forward contracts Amount ($) 55,192
A$/US$ A$0.62
Put options purchased Amount ($)
A$/US$
Put options sold Amount ($)
A$/US$
Call options purchased Amount ($)
A$/US$
Call options sold Amount ($) 95,000
A$/US$ A$0.75
BRAZILIAN REAL (000)
Forward contracts Amount ($) 46,000
US$/BRL BRL3.08
Put options purchased Amount ($) 300
US$/BRL BRL3.43
Put options sold Amount ($) BRL3.27
Call options purchased Amount ($)
US$/BRL
Call options sold Amount ($) 35,300
US$/BRL BRL3.16
Exploration
In South Africa, surface diamond drilling continued to test Vaal Reef grade and
facies models in the lower Mine Block at Moab Khotsong and to the southwest of
Kopanang.
In Tanzania at Geita, diamond drilling of the Geita Hill Northeast Extension
zone is underway in order to establish the final open pit extent and define
areas for infill Mineral Resource drilling in 2005.
At Sadiola in Mali, a drilling programme has commenced to evaluate the sulphide
potential at FE3, FE3 South and FE4, while Mineral Resource modelling is in
progress at the Deep Sulphide project. Further satellite oxide targets were
identified in a target generation exercise and are being followed up with
drilling.
Greenfields exploration in southern Mali was terminated and the projects will
be farmed out to third parties.
At Obuasi in Ghana, underground exploration continues to focus on the below-50
Level project, testing both the northern and southern corridors of the Main
Reef Fissure.Results remain encouraging.
At Bibiani, drilling is centred on the delineation of additional underground
Mineral Resources to the north and below the existing pit.
At Siguiri in Guinea, drilling is underway to test the oxide depth and strike
extensions of the existing pits. Results to date have been
encouraging.Reconnaissance drilling commenced on a 2km soil geochemical anomaly
at Foulata, situated 45km west of the plant.
In the Democratic Republic of Congo at the Kimin project, diamond drilling
commenced in January in the Adidi Mine area to firm up previous geological
interpretations of the mineralisation. As a precautionary measure, exploration
activities in the area were temporarily suspended at the end of February to
avoid possible conflict with elements of the local militia. The issues were
resolved by the District Commissioner and other government representatives and
exploration activities recommenced in April.
In Namibia at Navachab, infill drilling is underway at Anomaly 16, situated
5km from the current pit.
At Cripple Creek & Victor in the United States, exploration efforts focused on
Mineral Resource expansion drilling of the Wildhorse Extension project.
Additional metallurgical and geotechnical studies are ongoing at both the W
ildhorse Extension and South Cresson projects.
In Alaska, a first phase Reverse Circulation drilling programme was completed
on the Lost Mine South project, situated 40km southwest of the Pogo mine. The
drilling intersected a series of highly altered structural zones with initially
encouraging gold results. At Livengood, efforts are currently centred on the
definition of higher grade gold zones within a large, low-grade gold
mineralised envelope. Further prospective land has been staked and acquired in
Alaska and will be explored in the next few months.
In Brazil, Mineral Resource definition drilling continued at Lamego, where the
Carruagem exploration ramp advanced 246m during the quarter to 498m.
At Corrego do Sitio, ongoing drilling at Carvoaria Velha-Bocaina (situated 2km
northeast of Cachorro Bravo) has confirmed the presence of multiple narrow,
locally high-grade sulphide horizons. Drilling at Bocaina has extended the
known oxide Mineral Resource to the north and confirmed the down-plunge
continuity of the sulphide mineralisation. Underground drilling at Cachorro
Bravo continues to intersect high grade mineralisation in the hanging wall 300
series ore horizons.
At Serra Grande, drilling continued throughout the quarter on potential open
pit targets.
At the Cerro Vanguardia mine in Argentina, reconnaissance drilling is underway
to define additional upside on the Fortuna and Atila veins.
Diamond drilling was completed on a target in eastern Peru with marginal gold
results; the property is now being offered for joint venture.
Two new targets are expected to be drill-tested this year and regional
exploration joint ventures were signed in February with both Bear Creek Mining
and WestMag Ltd for data packages in southern Peru.
In Colombia, field evaluation of greenfields targets and advanced-stage
opportunities in the San Lucas and Middle Cauca project areas continued, with
four projects planned to be drilled in 2005.
At Sunrise Dam in Australia, drilling from surface and underground continued
to focus on the underground targets of GQ, Cosmo, Astro and Hammerhead. Deep
drilling targeting the Carey Shear beneath the open pit intersected
encouraging mineralisation over a strike length of approximately 400m.
At the Tropicana JV, the initial, broad-spaced diamond drilling testing for
bedrock mineralisation intersected wide, moderate grade gold intercepts at the
Tropicana Prospect.An induced polarisation geophysical survey is planned to
commence before additional drill testing is undertaken. Auger sampling along
strike to the south of the prospect has defined a new geochemical anomaly,
which will be tested by aircore drilling in the next quarter.
Drill-testing of targets in the Yamarna JV continued, with assay results
forthcoming.
A Heads of Agreement has been signed with Eurasia Mining plc to forge an
exclusive exploration alliance covering areas in south- eastern Siberia.This
will allow AngloGold Ashanti to benefit from Eurasia"s local expertise in order
to identify and explore potential exploration and acquisition
opportunities.Eurasia will manage the projects.
In Laos, a number of high priority exploration targets were identified outside
of the Sepon project area by the newly formed joint venture with Oxiana
Limited. Initial field work programmes have commenced.
In Mongolia, drilling of the Torimkhan prospect at Altan Uul in the southern
Gobi region generated initially encouraging gold results, which are being
followed up with additional drilling and geophysics. Drilling at Tsagaan
Tolgoi, situated in northwestern Mongolia, did not intersect economic gold
grades.
In China, the technical team continues to focus on a number of exploration
opportunities, as well as the establishment of relationships with suitable
local partners.
Group income statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2005 2004 2004 2004
Restated Restated Restated
SA Rand million Notes Unaudited Unaudited Unaudited Audited
Revenue 4,008 4,257 3,332 15,558
Gold income 3,858 4,054 3,134 14,788
Cost of sales 2 (3,415) (3,466) (2,412) (12,306)
Non-hedge
derivatives (188) (472) (6) (785)
Gross Profit 255 116 716 1,697
Corporate
administration
and other
expenses (99) (66) (76) (331)
Market development
costs (21) (23) (26) (100)
Exploration costs (60) (77) (59) (283)
Amortisation
of intangible assets - (46) (52) (200)
Impairment of
tangible assets - - - (8)
Net other
operating expenses (19) (39) (4) (69)
Operating
profit (loss) 56 (135) 499 706
Interest receivable 46 66 83 285
Other net income 16 28 8 59
(Loss) profit
on disposal of
assets and
subsidiaries (1) 23 20 88
Finance costs
and unwinding of
decommissioning
and restoration
obligation (148) (144) (158) (563)
Fair value
adjustment on
option component of
convertible bond 115 94 (148) 161
Fair value
(losses)gains on
interest rate swaps (16) 20 (18) 10
Profit (loss)
before taxation 68 (48) 286 746
Taxation 3 59 317 (151) 179
Profit after taxation 127 269 135 925
Discontinued
operations 9 (51) (16) - (73)
76 253 135 852
Allocated as follows
Equity
Shareholders 50 230 99 728
Minority
interest 26 23 36 124
76 253 135 852
Headline
earnings 4 102 275 137 937
Earnings per
ordinary share
(cents)
- Basic 1 19 87 44 290
- Diluted 19 87 44 289
- Headline 1 39 104 61 373
Gross profit
adjusted for
the effect of
unrealised
non-hedge
derivatives 5 676 610 877 2,844
Headline
earnings
adjusted for
the effect
of unrealised
non-hedge
derivatives 4 464 782 234 1,858
Dividends 2
- Rm 926
- cents per
share 350
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS).
1 Calculated on the basic weighted average number of ordinary shares.
2 Dividends are translated at actual rates on date of payment.
Group income statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2005 2004 2004 2004
Restated Restated Restated
US Dollar
million Notes Unaudited Unaudited Unaudited Audited
Revenue 667 706 493 2,429
Gold income 642 672 464 2,309
Cost of sales 2 (568) (575) (357) (1,925)
Non-hedge
derivatives (17) (93) - (141)
Gross Profit 57 4 107 243
Corporate
administration
and other
expenses (16) (11) (11) (51)
Market development
costs (4) (4) (4) (15)
Exploration costs (10) (13) (9) (44)
Amortisation of
intangible assets - (7) (8) (31)
Impairment of
tangible assets - - - (1)
Net other
operating
expenses (3) (6) (1) (11)
Operating
profit (loss) 24 (37) 74 90
Interest
receivable 8 11 12 44
Other net
income 2 5 2 9
Profit on
disposal of
assets and
subsidiaries - 4 3 13
Finance costs
and unwinding of
decommissioning
and restoration
obligation (24) (24) (23) (87)
Fair value
adjustment on
option
component of
convertible bond 19 17 (22) 26
Fair value
(losses) gains
on interest rate
swaps (3) 3 (3) 2
Profit (loss)
before
taxation 26 (21) 43 97
Taxation 3 9 62 (22) 41
Profit after
taxation 35 41 21 138
Discontinued
operations 9 (9) (3) - (11)
26 38 21 127
Allocated as
follows
Equity
Shareholders 22 34 16 108
Minority interest 4 4 5 19
26 38 21 127
Headline earnings 4 31 41 22 141
Earnings per
ordinary share
(cents)
- Basic 1 8 13 7 43
- Diluted 8 13 7 43
- Headline 1 12 16 10 56
Gross profit
adjusted for
the effect of
unrealised
non-hedge
derivatives 5 112 101 131 441
Headline
earnings
adjusted for
the effect
of unrealised
non-hedge
derivatives 4 77 135 35 298
Dividends 2
- $m 148
- cents per share 56
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS).
1 Calculated on the basic weighted average number of ordinary shares.
2 Dividends are translated at actual rates on date of payment.
Group balance sheet
As at As at As at
March December March
2005 2004 2004
Restated Restated
SA Rand million Unaudited Audited Unaudited
ASSETS
Non-current assets
Tangible assets 35,634 33,195 18,082
Intangible assets 2,569 2,347 2,545
Investments in associates 43 43 47
Other investments 241 223 125
Inventories 677 124 156
Derivatives 458 1,055 696
Other non-current assets 637 601 964
40,259 37,588 22,615
Current assets
Inventories 2,365 2,363 1,697
Trade and other receivables 1,726 1,747 1,542
Derivatives 3,512 2,767 2,062
Current portion of other non-current
assets 5 5 103
Cash and cash equivalents 1,744 1,758 5,868
9,352 8,640 11,272
TOTAL ASSETS 49,611 46,228 33,887
EQUITY AND LIABILITIES
Equity
Shareholders" equity 18,927 17,912 10,083
Minority interests 367 327 363
19,294 18,239 10,446
Non-current liabilities
Borrowings 9,934 7,262 7,977
Provisions 2,473 2,265 1,808
Derivatives 2,191 3,032 2,744
Deferred taxation 7,948 7,605 4,091
22,546 20,164 16,620
Current liabilities
Trade and other payables 2,580 2,650 1,971
Current portion of borrowings 889 1,800 2,151
Derivatives 3,948 3,007 2,558
Taxation 354 368 141
7,771 7,825 6,821
TOTAL EQUITY AND LIABILITIES 49,611 46,228 33,887
The results have been prepared
in accordance with International
Financial Reporting Standards (IFRS).
Net asset value - cents per share 7,155 6,773 4,519
Group balance sheet
As at As at As at
March December March
2005 2004 2004
Restated Restated
US Dollar million Unaudited Audited Unaudited
ASSETS
Non-current assets
Tangible assets 5,727 5,880 2,877
Intangible assets 413 416 405
Investments in associates 7 8 7
Other investments 39 40 20
Inventories 109 22 25
Derivatives 74 187 111
Other non-current assets 102 106 153
6,471 6,659 3,598
Current assets
Inventories 380 419 270
Trade and other receivables 277 309 245
Derivatives 564 490 328
Current portion of other non-current
assets 1 1 16
Cash and cash equivalents 280 312 934
1,502 1,531 1,793
7,973 8,190 5,391
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Shareholders" equity 3,042 3,173 1,604
Minority interests 59 58 58
3,101 3,231 1,662
Non-current liabilities
Borrowings 1,597 1,286 1,269
Provisions 397 402 288
Derivatives 352 537 437
Deferred taxation 1,277 1,347 651
3,623 3,572 2,645
Current liabilities
Trade and other payables 415 470 313
Current portion of borrowings 143 319 342
Derivatives 634 533 407
Taxation 57 65 22
1,249 1,387 1,084
TOTAL EQUITY AND LIABILITIES 7,973 8,190 5,391
The results have been prepared
in accordance with International
Financial Reporting Standards (IFRS).
Net asset value - cents per share 1,150 1,200 719
Group cash flow statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2005 2004 2004 2004
Restated Restated Restated
SA Rand million Unaudited Unaudited Unaudited Audited
Cash flows from
operating activities
Cash generated from
operations 825 895 536 3,517
Cash utilised from
discontinued operations (51) (16) 13 (12)
Interest received 45 50 72 236
Environmental and other
expenditure (12) (80) (17) (148)
Finance costs (221) (23) (175) (465)
Taxation paid (61) (25) (105) (218)
Net cash inflow from
operating activities 525 801 324 2,910
Cash flows from
investing activities
Capital expenditure (864) (1,181) (567) (3,764)
Proceeds from disposal
of tangible assets - 20 26 69
Investments acquired - (26) - (127)
Acquisition of
subsidiary net of cash - (40) - (1,139)
Net loans (advanced)
repaid (1) 399 2 526
Utilised in hedge
restructure (415) (703) - (703)
Net cash outflow from
investing activities (1,280) (1,531) (539) (5,138)
Cash flows from
financing activities
Proceeds from issue of
share capital 8 6 11 22
Share issue expenses - - - (1)
Proceeds from borrowings 2,568 90 6,737 7,236
Repayment of borrowings (1,488) (477) (3,192) (5,348)
Dividends paid (488) (52) (758) (1,322)
Proceeds from hedge
restructure - 228 - 228
Net cash inflow
(outflow) from financing
activities 600 (205) 2,798 815
Net (decrease) increase
in cash and cash
equivalents (155) (935) 2,583 (1,413)
Translation 141 (153) (82) (196)
Opening cash and cash
equivalents 1,758 2,846 3,367 3,367
Closing cash and cash
equivalents 1,744 1,758 5,868 1,758
Cash generated from
operations
Profit (loss) before
taxation 68 (48) 286 746
Adjusted for:
Non-cash movements (40) 90 22 (27)
Movement on non-hedge
derivatives 427 440 182 1,055
Deferred stripping costs 8 (14) (74) (144)
Amortisation of tangible
assets 732 718 446 2,423
Amortisation of
intangible assets 3 54 52 208
Impairment of tangible
assets - - - 8
Interest receivable (46) (66) (83) (285)
Loss (profit) on
disposal of assets and
subsidiaries 1 (23) (20) (88)
Finance costs and
unwinding of
decommissioning and
restoration obligation 148 144 158 563
Fair value adjustment on
option component of
convertible bond (115) (94) 148 (161)
Movement in working
capital (361) (306) (581) (781)
825 895 536 3,517
Movement in working
capital
(Increase) decrease in
inventories (567) 122 197 (1)
(Increase) decrease in
trade and other
receivables - (22) (57) 26
Increase (decrease) in
trade and other payables 206 (406) (721) (806)
(361) (306) (581) (781)
The results have been prepared in accordance with International
Financial Reporting Standards (IFRS).
Group cash flow statement
Quarter Quarter Quarter Year
ended ended ended ended
March December March December
2005 2004 2004 2004
Restated Restated Restated
US Dollar million Unaudited Unaudited Unaudited Audited
Cash flows from
operating activities
Cash generated from
operations 136 171 118 587
Cash utilised from
discontinued operations (8) (3) 2 (2)
Interest received 7 9 11 37
Environmental and other
expenditure (2) (14) (3) (24)
Finance costs (37) (5) (26) (72)
Taxation paid (10) (5) (15) (34)
Net cash inflow from
operating activities 86 153 87 492
Cash flows from
investing activities
Capital expenditure (144) (192) (84) (585)
Proceeds from disposal
of tangible assets - 3 4 10
Investments acquired - (5) - (20)
Acquisition of
subsidiary net of cash - (6) - (171)
Net loans repaid - 64 - 83
Utilised in hedge
restructure (69) (123) - (123)
Net cash outflow from
investing activities (213) (259) (80) (806)
Cash flows from
financing activities
Proceeds from issue of
share capital 1 - 2 3
Share issue expenses - - - -
Proceeds from borrowings 458 16 997 1,077
Repayment of borrowings (278) (82) (472) (818)
Dividends paid (82) (8) (113) (198)
Proceeds from hedge
restructure - 40 - 40
Net cash inflow
(outflow) from financing
activities 99 (34) 414 104
Net (decrease) increase
in cash and cash
equivalents (28) (140) 421 (210)
Translation (4) 12 8 17
Opening cash and cash
equivalents 312 440 505 505
Closing cash and cash
equivalents 280 312 934 312
Cash generated from
operations
Profit (loss) before
taxation 26 (21) 43 97
Adjusted for:
Non-cash movements (6) 12 4 (1)
Movement on non-hedge
derivatives 57 85 26 181
Deferred stripping costs 1 (2) (11) (22)
Amortisation of tangible
assets 122 120 66 380
Amortisation of
intangible assets - 8 8 32
Impairment of tangible
assets - - - 1
Interest receivable (8) (11) (12) (44)
Profit on disposal of
assets and subsidiaries - (4) (3) (13)
Finance costs and
unwinding of
decommissioning and
restoration obligation 24 24 23 87
Fair value adjustment on
option component of
convertible bond (19) (17) 22 (26)
Movement in working
capital (61) (23) (48) (85)
136 171 118 587
Movement in working
capital
(Increase) decrease in
inventories (50) (27) 13 (56)
Decrease (increase) in
trade and other
receivables 29 (36) (23) (35)
(Decrease) increase in
trade and other payables (40) 40 (38) 6
(61) (23) (48) (85)
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS).
Statement of changes in equity
Attributable to equity holders of the group
Ordinary Foreign Other
share Non - currency compre-
capital and distributable translation hensive
premium reserves reserve income
Restated 1
SA Rand million
Balance at December 2003 9,668 138 (755) (2,047)
Profit attributable to equity
shareholders
Dividends paid
Ordinary shares issued 8
Transfer to reserves (8)
Net loss on cash flow hedges
removed from equity and
reported in income 146
Net gain on cash flow hedges 96
Deferred taxation on cash flow
hedges (72)
Net gain on available-for-sale
financial assets 15
Translation (397) 84
Balance at March 2004
(Restated) 9,676 130 (1,152) (1,778)
Balance at December 2004
(Restated) 18,987 138 (3,552) (1,040)
Profit attributable to equity
shareholders
Dividends paid
Ordinary shares issued 8
Net loss on cash flow hedges
removed from equity and
reported in income 96
Net loss on cash flow hedges (57)
Deferred taxation on cash flow
hedges 49
Net loss on available-for-sale
financial assets (16)
Translation 1,474 (112)
Balance at March 2005 18,995 138 (2,078) (1,080)
Attributable to equity holders of the group
Total
share-
Retained holders" Minority
earnings equity interests Equity
Restated 1
SA Rand million
Balance at December 2003 3,848 10,852 354 11,206
Profit attributable to equity
shareholders 99 99 36 135
Dividends paid (748) (748) (10) (758)
Ordinary shares issued 8 8
Transfer to reserves 8 - -
Net loss on cash flow hedges
removed from equity and
reported in income 146 1 147
Net gain on cash flow hedges 96 (1) 95
Deferred taxation on cash flow
hedges (72) (72)
Net gain on
available-for-sale
financial assets 15 15
Translation (313) (17) (330)
Balance at March 2004
(Restated) 3,207 10,083 363 10,446
Balance at December 2004
(Restated) 3,379 17,912 327 18,239
Profit attributable to equity
shareholders 50 50 26 76
Dividends paid (477) (477) (11) (488)
Ordinary shares issued 8 8
Net loss on cash flow hedges
removed from equity and
reported in income 96 1 97
Net loss on cash flow hedges (57) 1 (56)
Deferred taxation on cash
flow hedges 49 49
Net loss on
available-for-sale
financial assets (16) (16)
Translation 1,362 23 1,385
Balance at March 2005 2,952 18,927 367 19,294
1 The 2004 opening balances and comparative amounts have been restated in
terms of IAS21 (revised).
The group has changed its accounting policy for convertible bonds.
Refer to note 16.
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS).
Statement of changes in equity
Attributable to equity holders of the group
Ordinary Foreign Other
share Non- currency compre-
capital and distributable translation hensive
premium reserves reserve income
Restated 1
US Dollar million
Balance at December 2003 1,450 21 108 (307)
Profit attributable to equity
shareholders
Dividends paid
Ordinary shares issued 2
Transfer to reserves (1)
Net loss on cash flow hedges
removed from equity and
reported in 22
Net gain on cash flow hedges 15
Deferred taxation on cash flow
hedges (8)
Net gain on available-for-sale
financial assets 2
Translation 88 1 (44) (7)
Balance at March 2004
(Restated) 1,540 21 64 (283)
Balance at December 2004
(Restated) 3,364 24 (317) (184)
Profit attributable to equity
shareholders
Dividends paid
Ordinary shares issued 1
Net loss on cash flow hedges
removed from equity and
reported in income 15
Net loss on cash flow hedges (9)
Deferred taxation on cash flow
hedges 7
Net loss on available-for-sale
financial assets (3)
Translation (312) (2) 230 -
Balance at March 2005 3,053 22 (87) (174)
Total
share-
Retained holders" Minority
earnings equity interests Equity
Restated 1
US Dollar million
Balance at December 2003 356 1,628 53 1,681
Profit attributable to equity
shareholders 16 16 5 21
Dividends paid (111) (111) (2) (113)
Ordinary shares issued 2 2
Transfer to reserves 1 - -
Net loss on cash flow hedges
removed from equity and
reported in income 22 22
Net gain on cash flow hedges 15 15
Deferred taxation on cash
flow hedges (8) (8)
Net gain on
available-for-sale
financial assets 2 2
Translation 38 2 40
Balance at March 2004
(Restated) 262 1,604 58 1,662
Balance at December 2004
(Restated) 286 3,173 58 3,231
Profit attributable to equity
shareholders 22 22 4 26
Dividends paid (80) (80) (2) (82)
Ordinary shares issued 1 1
Net loss on cash flow hedges
removed from equity and
reported in income 15 15
Net loss on cash flow hedges (9) (9)
Deferred taxation on cash
flow hedges 7 7
Net loss on
available-for-sale
financial assets (3) (3)
Translation (84) (1) (85)
Balance at March 2005 228 3,042 59 3,101
1 The 2004 opening balances and comparative amounts have been restated in
terms of IAS21 (revised).
The group has changed its accounting policy for convertible bonds.
Refer to note 16.
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS).
Notes
for the quarter ended 31 March 2005
1. Basis of preparation
The financial statements have been prepared in accordance with the historic
cost convention except for certain financial instruments which are stated at
fair value. The group"s accounting policies used in the preparation of these
financial statements are consistent with those used in the annual financial
statements for the year ended 31 December 2004 and new International Financial
Reporting Standards (IFRS) statements which are effective 1 January 2005, where
applicable.
The financial statements of AngloGold Ashanti have been prepared in accordance
with IFRS (IAS34), in compliance with the JSE Securities Exchange South Africa
and in the manner required by the South African Companies Act, 1973 for the
preparation of financial information of the group for the quarter ended 31
March 2005.
Where the preparation or classification of an item has been amended,
comparative information has been reclassified to ensure comparability with the
current period. The amendments have been made to provide the users of the
financial statements with additional information. Refer to Note 9, discontinued
operations and Note 16, convertible bonds, and the statement of changes in
equity.
2. Cost of sales
Year
Quarter ended ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
SA Rand million
Cash operating costs 2,650 2,661 1,940 9,572
Other cash costs 100 108 58 343
Total cash costs 2,750 2,769 1,998 9,915
Retrenchment costs 14 11 24 52
Rehabilitation & other
non-cash costs 45 43 27 137
Production costs 2,809 2,823 2,049 10,104
Amortisation of tangible
assets 732 718 446 2,423
Amortisation of
intangible assets 3 8 - 8
Total production costs 3,544 3,549 2,495 12,535
Inventory change (129) (83) (83) (229)
3,415 3,466 2,412 12,306
Year
Quarter ended ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
US Dollar million
Cash operating costs 441 440 287 1,495
Other cash costs 17 18 9 54
Total cash costs 458 458 296 1,549
Retrenchment costs 2 2 4 8
Rehabilitation & other
non-cash costs 7 7 4 22
Production costs 467 467 304 1,579
Amortisation of tangible
assets 122 120 66 380
Amortisation of
intangible assets - 1 - 1
Total production costs 589 588 370 1,960
Inventory change (21) (13) (13) (35)
568 575 357 1,925
3. Taxation
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
SA Rand million
Current taxation (38) (51) (84) (169)
Under provision
prior year - (229) - (229)
Deferred taxation (34) 44 (131) (215)
Change in estimated
deferred taxation - 566 - 566
Deferred taxation on
change in tax rate 72 - - -
Deferred taxation on
unrealised non
hedge derivatives 59 (13) 64 226
59 317 (151) 179
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
US Dollar million
Current taxation (6) (8) (13) (27)
Under provision
prior year - (40) - (40)
Deferred taxation (6) 8 (20) (32)
Change in estimated
deferred taxation - 99 - 99
Deferred taxation on
change in tax rate 12 - - -
Deferred taxation on
unrealised non
hedge derivatives 9 3 11 41
9 62 (22) 41
4. Headline earnings and headline earnings adjusted for the effect of
unrealised non-hedge derivatives
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
SA Rand million
Profit attributable
to equity
shareholders 50 230 99 728
Amortisation of
intangible assets - 46 52 200
Impairment of
tangible assets - - - 8
Loss (profit) on
disposal of assets
and subsidiaries 1 (23) (20) (88)
Loss from
discontinued
operations (note 9) 51 16 - 73
Taxation on items
above - 6 6 16
Headline earnings 102 275 137 937
Unrealised non-hedge
derivatives 421 494 161 1,147
Deferred taxation on
unrealised non-
hedge derivatives
(note 3) (59) 13 (64) (226)
Headline earnings
adjusted for the
effect of unrealised
non-hedge
derivatives (1) 464 782 234 1,858
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
US Dollar million
Profit attributable
to equity
shareholders 22 34 16 108
Amortisation of
intangible assets - 7 8 31
Impairment of
tangible assets - - - 1
Loss (profit) on
disposal of assets
and subsidiaries - (4) (3) (13)
Loss from
discontinued
operations (note 9) 9 3 - 11
Taxation on items
above - 1 1 3
Headline earnings 31 41 22 141
Unrealised non-hedge
derivatives 55 97 24 198
Deferred taxation on
unrealised non-
hedge derivatives
(note 3) (9) (3) (11) (41)
Headline earnings
adjusted for the
effect of unrealised
non-hedge
derivatives (1) 77 135 35 298
(1) Non-hedge derivatives in the income statement comprise the change in fair
value of all non-hedge derivatives as follows:
- Open positions: The change in fair value from the previous reporting date
or date of recognition (if later) through to the current reporting date; and
- Settled positions: The change in fair value from the previous reporting
date or date of recognition (if later) through to the date of settlement.
Headline earnings adjusted for the effect of unrealised non-hedge derivatives,
is intended to illustrate earnings after adjusting for:
- The unrealised fair value change in contracts that are still open at the
reporting date, as well as, the unwinding of the historic marked-to-market
value of the positions settled in the period; and
- Investment in hedge restructure transaction: During the hedge restructure of
quarter 4, 2004 and quarter 1, 2005, $83m and $69m in cash was injected into
the hedge book in these quarters to increase the value of long-dated
contracts. The entire investment in short-dated derivatives (certain of
which have now matured) and investment in long-dated derivatives (all of
which have not yet matured), for the purposes of the adjustment to earnings,
will only be taken into account when the realised portion of long-dated non-
hedge derivatives are settled, and not when the short-term contracts are
settled.
5. Gross profit and gross profit adjusted for the effect of unrealised
non-hedge derivatives
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
SA Rand million
Reconciliation of
gross profit to
gross
profit adjusted for
the effect of
unrealised non-hedge
derivatives:
Gross profit 255 116 716 1,697
Unrealised non-hedge
derivatives 421 494 161 1,147
Gross profit
adjusted for the
effect of
unrealised non-hedge
derivatives (1) 676 610 877 2,844
Quarter ended Year
ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated Restated Restated
Unaudited Unaudited Unaudited Audited
US Dollar million
Reconciliation of
gross profit to
gross
profit adjusted for
the effect of
unrealised non-hedge
derivatives:
Gross profit 57 4 107 243
Unrealised non-hedge
derivatives 55 97 24 198
Gross profit
adjusted for the
effect of
unrealised non-hedge
derivatives (1) 112 101 131 441
(1) Non-hedge derivatives in the income statement comprise the change in fair
value of all non-hedge derivatives as follows:
- Open positions: The change in fair value from the previous reporting date
or date of recognition (if later) through to the current reporting date;
and
- Settled positions: The change in fair value from the previous reporting
date or date of recognition (if later) through to the date of settlement.
Gross profit adjusted for the effect of unrealised non-hedge derivatives, is
intended to illustrate earnings after adjusting for:
- The unrealised fair value change in contracts that are still open at the
reporting date, as well as, the unwinding of the historic marked-to-market
value of the positions settled in the period; and
- Investment in hedge restructure transaction: During the hedge restructure
of quarter 4, 2004 and quarter 1, 2005, $83m and $69m in cash was injected
into the hedge book in these quarters to increase the value of long-dated
contracts. The entire investment in short-dated derivatives (certain of
which have now matured) and investment in long-dated derivatives (all of
which have not yet matured), for the purposes of the adjustment to
earnings, will only be taken into account when the realised portion of
long-dated non- hedge derivatives are settled, and not when the short-term
contracts are settled.
6. Capital commitments
Mar Dec Mar Mar Dec Mar
2005 2004 2004 2005 2004 2004
SA Rand million US Dollar million
Orders placed and
outstanding on capital
contracts at the prevailing
rate of exchange 1,108 835 931 178 148 148
7. Shares
Quarter ended Year ended
Mar 2005 Dec 2004 Mar 2004 Dec 2004
Authorised
share capital:
Ordinary shares
of 25 SA cents
each 400,000,000 400,000,000 400,000,000 400,000,000
A redeemable
preference
shares of 50 SA
cents each 2,000,000 2,000,000 2,000,000 2,000,000
B redeemable
preference
shares of 1 SA
cent each 5,000,000 5,000,000 5,000,000 5,000,000
Issued share
capital:
Ordinary shares 264,527,794 264,462,894 223,136,342 264,462,894
A redeemable
preference
shares 2,000,000 2,000,000 2,000,000 2,000,000
B redeemable
preference shares 778,896 778,896 778,896 778,896
Weighted
average number
of ordinary
shares for the
period
Basic ordinary
shares 264,488,624 264,451,226 223,212,890 251,352,552
Diluted number
of ordinary
shares 265,024,329 265,085,959 224,180,742 252,048,301
During the quarter, 64,900 ordinary shares were allotted in terms of the
AngloGold Share Incentive Scheme. All the preference shares are held by a
wholly-owned subsidiary company.
8. Exchange rates
Mar 2005 Dec 2004 Mar 2004
Rand/US dollar average for the period 6.01 6.44 6.76
Rand/US dollar average for the quarter 6.01 6.05 6.76
Rand/US dollar closing 6.22 5.65 6.28
Rand/Australian dollar average for the
period 4.67 4.82 5.17
Rand/Australian dollar average for the
quarter 4.67 4.58 5.17
Rand/Australian dollar closing 4.81 4.42 4.79
9. Discontinued operations
The Ergo surface dump reclamation, which forms part of the South African
operations under the segmental analysis, has been discontinued as the operation
has reached the end of its useful life.
The results of Ergo for the period are presented below:
Year
Quarter ended ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated
Unaudited Unaudited Unaudited Audited
SA Rand million
Revenue 85 121 164 560
Operating and closure
expenses (136) (145) (168) (627)
Non-hedge derivatives - 18 4 -
Gross loss (51) (6) - (67)
Deferred taxation - (10) - (6)
Loss after tax
attributable to the
discontinued operation (51) (16) - (73)
Year
Quarter ended ended
Mar Dec Mar Dec
2005 2004 2004 2004
Restated
Unaudited Unaudited Unaudited Audited
US Dollar million
Revenue 14 20 24 87
Operating and closure
expenses (23) (24) (25) (97)
Non-hedge derivatives - 3 1 -
Gross loss (9) (1) - (10)
Deferred taxation - (2) - (1)
Loss after tax
attributable to the
discontinued operation (9) (3) - (11)
10. Contingent liabilities
AngloGold Ashanti acts as ultimate guarantor in respect of sureties provided to
bankers and other parties by its subsidiaries in respect of certain loans and
commitments. At 31 March 2005, the aggregate contingent liability is
approximately $57m. Discussions are continuing in respect of the class action
being brought against the former Ashanti Goldfields and it is anticipated that
the final outcome of this claim will have no material effect on the company.
11. Attributable interest
Although AngloGold Ashanti holds a 66.7% interest in Cripple Creek & Victor
Gold Mining Company Limited, it is currently entitled to receive 100% of the
cash flows from the operation until the loan, extended to the joint venture by
AngloGold Ashanti USA Inc., is repaid.
12. Borrowings
AngloGold Ashanti"s borrowings are interest bearing.
13. Announcements
13.1 On 27 January 2005, AngloGold Ashanti announced that the board of
directors had approved a $121m expansion project at the company"s CuiabA'
mine in south-eastern Brazil. It is anticipated that commissioning will
take place in December 2006, with full production by the end of the second
quarter of 2007. The expansion project would result in production
increasing from 190,000oz/year to 250,000oz/year at an estimated cost of
$169/oz over the life of the project and would extend the life of mine
profile by six years to 2019.
13.2 On 27 January 2005, AngloGold Ashanti announced that it had signed a new
three-year, $700m revolving credit facility, replacing the $600m facility
which matured in February 2005. The new facility has reduced the group"s
cost of borrowings from 70 basis points over Libor to 40 basis points.
13.3 On 15 April 2005, the South African Department of Water Affairs and
Forestry issued a directive ordering three mining groups, DRDGold, Harmony
and AngloGold Ashanti to share equally, the costs of pumping water at some
shafts of DRDGold"s North West operations in South Africa.
This follows an interdict application made by AngloGold Ashanti in response to
DRDGold"s threat to cease funding the pumping of water at these shafts, after
placing its subsidiary Buffelsfontein into liquidation on 22 March 2005.
13.4 On 28 April 2005, the company announced that agreement had been reached
with Trans- Siberian Gold plc (TSG) on revised terms for the second
subscription of shares in TSG, and a revised subscription price of GBP1.30
per share, compared to GBP1.494 per share agreed between the parties on 30
June 2004. The subscription is conditional on TSG shareholders approval.
AngloGold Ashanti currently holds a 17.5% equity interest in TSG
that will increase to 29.9% upon completion of the second subscription.
This announcement followed that of 18 April 2005, in which AngloGold Ashanti
advised that the subscription date had been extended from 15 April 2005 to 29
April 2005.
14. Dividend
Final dividend No. 97 of 180 South African cents or 15.49 UK pence or 2,683.08
Ghanaian cedis per share was paid to shareholders on 25 February 2005, while a
dividend of 7.55 Australian cents per CHESS Depositary Interest (CDI) was paid
on the same day. A dividend was paid to holders of Ghanaian Depositary Shares
(GhDS) on 28 February 2005 at a rate of 26.83 Ghanaian cedis per GhDS. Each CDI
represents one-fifth of an ordinary share and 100 GhDSs represents one ordinary
share. A dividend was paid to holders of American Depositary Receipts (ADRs) on
7 March 2005 at a rate of 30.37 US cents per ADR. Each ADR represents one
ordinary share.
15. Group financial statements
The group financial statements for the quarter ended 31 March 2005 were
authorised for issue in accordance with a resolution of the directors passed on
28 April 2005. AngloGold Ashanti is a limited liability company incorporated in
the Republic of South Africa.
16. Convertible bonds
The group has changed its accounting policy for convertible bonds. Previously
convertible bonds were accounted for as compound financial instruments, part
equity and part liability. The equity component was not remeasured for changes
in fair value.
Convertible bonds will now be accounted for entirely as a liability, with the
option component disclosed as a derivative liability, carried at fair value.
Changes in such fair value will be recorded in the income statement.
This change was made in response to additional guidance becoming available on
the interpretation of International Financial Reporting Standards. This change
is applied retrospectively and comparative figures have been restated.
The impact on comparative figures is as follows:
Quarter to December 2004:
Profit attributable to equity shareholders increased by $17m;
Option component previously disclosed as equity ($82m) is removed from
shareholders equity, and replaced by a derivative liability of $56m.
Quarter to March 2004:
Profit attributable to equity shareholders decreased by $22m;
Option component previously disclosed as equity ($82m) is removed from
shareholders equity, and replaced by a derivative liability of $104m.
Year to December 2004:
Profit attributable to equity shareholders increased by $26m;
Option component previously disclosed as equity ($82m) is removed from
shareholders equity, and replaced by a derivative liability of $56m.
17. Detailed report
This report contains a summary of the results of AngloGold Ashanti"s
operations. A detailed report appears on the Internet and is obtainable in
printed format from the investor relations contacts, whose details, along with
the website address, appear at the end of this report.
By order of the Board
R P EDEY R M GODSELL
Chairman Chief Executive Officer
28 April 2005
Administrative information
ANGLOGOLD ASHANTI LIMITED
(formerly: AngloGold Limited)
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
ISIN: ZAE000043485
Share codes:
JSE: ANG
LSE: AGD
NYSE: AU
ASX: AGG
GSE (Shares): AGA
GSE (GhDS): AADA
Euronext Paris: VA
Euronext Brussels: ANG
JSE Sponsor: UBS
Auditors: Ernst & Young
Contacts
South Africa
Steve Lenahan
Telephone: +27 11 637 6248
Fax: +27 11 637 6400
E-mail:
slenahan@AngloGoldAshanti.com
Michael Clements
Telephone: +27 11 637 6647
Fax: +27 11 637 6400
E-mail:
mclements@AngloGoldAshanti.com
United States of America
Charles Carter
Telephone: (800) 417 9255 (toll free in
USA and Canada) or +1 212 750 7999
Fax: +1 212 750 5626
E-mail: cecarter@AngloGoldAshanti.com
Australia
Andrea Maxey
Telephone: +61 8 9425 4604
Fax: +61 8 9425 4662
E-mail:
amaxey@AngloGoldAshanti.com.au
General E-mail enquiries
investors@AngloGoldAshanti.com
AngloGold Ashanti website
http://www.AngloGoldAshanti.com
Directors
Executive
R M Godsell (Chief Executive Officer)
J G Best
D L Hodgson
Dr S E Jonah KBE'
K H Williams
Non-Executive
R P Edey * (Chairman)
Dr T J Motlatsi (Deputy Chairman)
F B Arisman #
Mrs E le R Bradley
C B Brayshaw
A W Lea (Alternate: P G Whitcutt)
W A Nairn (Alternate: A H Calver *)
S R Thompson *
A J Trahar
P L Zim (Alternate: D D Barber)
*British #American 'Ghanaian
Offices
Registered and Corporate
Managing Secretary: Ms Y Z Simelane
Company Secretary: C R Bull
11 Diagonal Street
Johannesburg 2001
(PO Box 62117, Marshalltown 2107)
South Africa
Telephone: +27 11 637 6000
Fax: +27 11 637 6624
Australia
Level 13, St Martins Tower
44 St George"s Terrace
Perth, WA 6000
(PO Box Z5046, Perth WA 6831)
Australia
Telephone: +61 8 9425 4604
Fax: +61 8 9425 4662
Ghana
Gold House
Patrice Lumumba Road
(P O Box 2665)
Accra
Ghana
Telephone: +233 21 772190
Fax: +233 21 778155
United Kingdom Secretaries
St James"s Corporate Services Limited
6 St James"s Place
London SW1A 1NP
England
Telephone: +44 20 7499 3916
Fax: +44 20 7491 1989
Share Registrars
South Africa
Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
South Africa
Telephone: 0861 100 724 (in SA)
Fax: +27 11 688 5222
web.queries@computershare.co.za
United Kingdom
Computershare Investor Services PLC
P O Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
England
Telephone: +44 870 702 0001
Fax: +44 870 703 6119
Australia
Computershare Investor Services Pty Limited
Level 2, 45 St George"s Terrace
Perth, WA 6000
(GPO Box D182 Perth, WA 6840)
Australia
Telephone: +61 8 9323 2000
Telephone: 1300 55 7010 (in Australia)
Fax: +61 8 9323 2033
Ghana
NTHC Limited
Martco House
Off Kwame Nkrumah Avenue
POBox K1A 9563 Airport
Accra
Ghana
Telephone: +233 21 238492-3
Fax: +233 21 229975
ADR Depositary
The Bank of New York ("BoNY")
Investor Services, P O Box 11258
Church Street Station
New York, NY 10286-1258
United States of America
Telephone: +1 888 269 2377 (Toll free
in USA) or +9 610 382 7836 outside USA)
E-mail: shareowners@bankofny.com
Website: http://www.stockbny.com
Global BuyDIRECTSM
BoNY maintains a direct share purchase
and dividend reinvestment plan for
ANGLOGOLD ASHANTI.
Telephone: +1-888-BNY-ADRS
Certain statements contained in this document, including, without limitation,
those concerning the economic outlook for the gold mining industry,
expectations regarding gold prices and production, the completion and
commencement of commercial operations of certain of AngloGold Ashanti"s
exploration and production projects, and its liquidity and capital resources
and expenditure, contain certain forward-looking statements regarding AngloGold
Ashanti"s operations, economic performance and financial condition. Although
AngloGold Ashanti believes that the expectations reflected in such forward
-looking statements 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,
among other factors, changes in economic and market conditions, success of
business and operating initiatives, changes in the regulatory environment and
other government actions, fluctuations in gold prices and exchange rates, and
business and operational risk management. AngloGold Ashanti undertakes no
obligation to update publicly or release any revisions to these forward
-looking statements to reflect events or circumstances after the date of the
annual report on Form 20-F or to reflect the occurrence of unanticipated
events. All subsequent written or oral forward-looking statements attributable
to AngloGold Ashanti or any person acting on its behalf are qualified by the
cautionary statements herein. For a discussion on such risk factors, refer to
AngloGold Ashanti"s annual report on Form 20-F for the year ended 31 December
2003, which was filed with the Securities and Exchange Commission (SEC) on 19
March 2004.
Date: 29/04/2005 08:04:34 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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