UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated March 31, 2011

Commission File Number 1-14846

AngloGold Ashanti Limited

(Name of registrant)

76 Jeppe Street

Newtown, 2001

(P.O. Box 62117, Marshalltown, 2107)

South Africa

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F or Form 40-F.

Form 20-F X             Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):

Yes          No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):

Yes          No X

Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.

Yes          No X

Enclosure: Press release

ANGLOGOLD ASHANTI ANNUAL REPORT 2010 PREPARED IN
ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING
STANDARDS

Annual Financial Statements 2010

pure

gold

Forward-looking statements

Certain statements contained in this document, including, without limitation,

those concerning the economic outlook for the gold mining industry,

expectations regarding gold prices, production, cash costs and other

operating results, growth prospects and outlook of AngloGold Ashanti’s

operations, individually or in the aggregate, including the completion and

commencement of commercial operations of certain of AngloGold Ashanti’s

exploration and production projects and completion of acquisitions and

dispositions, AngloGold Ashanti’s liquidity and capital resources and capital

expenditure, and the outcome and consequence of any pending litigation

proceedings, 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, amongst 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. For a discussion of such risk factors, refer to

the section titled “Risk management and internal controls” in these annual

financial statements. 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 these annual financial

statements 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.

TT Mboweni

Chairman

TJ Motlatsi

Deputy Chairman

FB Arisman

Non-executive director

M Cutifani

Chief executive officer

R Gasant

Non-executive director

WA Nairn

Non-executive director

LW Nkuhlu

Non-executive director

F Ohene-Kena

Non-executive director

SM Pityana

Non-executive director

S Venkatakrishnan

Chief financial officer

AngloGold Ashanti board of directors

as at 31 December 2010

P

1

Contents

Areas of focus in this report

Introduction

Vision, mission and values

P2

Scope of the report

P4

Corporate profile

P6

Strategy

P10

Group overview 2010

P12

Review

of the year

Chairman’s statement

P14

CEO’s review

P16

Review by the Chairman of the Audit and Corporate Governance Committee

P22

CFO’s report

P32

Scorecard 2010

P44

Project ONE

P46

Five-year summaries

P50

Operations at a glance

P54

Review of operations

P56

Greenfield projects

P121

Global exploration

P128

Mineral Resource and Ore Reserve – a summary

P134

Gold, uranium and silver markets

P142

Governance

Board of directors and executive management

P146

Group information

P150

The regulatory environment enabling AngloGold Ashanti to mine

P153

Mine site rehabilitation and closure

P163

Gold production

P164

Sustainable development – a summary

P167

Corporate governance

P174

Risk management and internal controls

P194

Directors’ approval

P212

Secretary’s certificate

P212

Report of the independent auditors

P213

Directors’ report

P214

Remuneration report

P226

Financial

statements

Group financial statements

P236

Company financial statements

P338

Principal subsidiaries and operating entities

P371

Other

Non-GAAP disclosures

P372

Glossary of terms and Non-GAAP metrics

P379

Shareholder information

P385

Administrative information

P390

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2

AngloGold Ashanti Annual Financial Statements 2010

Vision, mission and values

Our

vision

Our

mission

to bethe leading

mining company

Tocreate value for our shareholders, our employees and our business and social
partners through safely and responsibly exploring, mining and marketing our
products. Our primary focus is gold and we will pursue value creating
opportunities in other minerals where we can leverage our existing assets, skills
and experience to enhance the delivery of value.

P

3

Safety is our first value.

We place people first and correspondingly put the highest

priority on safe and healthy practices and systems of work. We

are responsible for seeking out new and innovative ways to

ensure that our workplaces are free of occupational injury and

illness. We live each day for each other and use our collective

commitment, talents, resources and systems to deliver on our

most important commitment ... to care.

We treat each other with dignity
and respect.

We believe that individuals who are treated with respect and

who are entrusted to take responsibility respond by giving

their best. We seek to preserve people's dignity, their sense of

self-worth in all our interactions, respecting them for who they

are and valuing the unique contribution that they can make to

our business success. We are honest with ourselves and

others, and we deal ethically with all of our business and

social partners.

We value diversity.

We aim to be a global leader with the right people for the right

jobs. We promote inclusion and team work, deriving benefit from

the rich diversity of the cultures, ideas, experiences and skills that

each employee brings to the business.

We are accountable for our actions
and undertake to deliver on our
commitments.

We are focused on delivering results and we do what we say

we will do. We accept responsibility and hold ourselves

accountable for our work, our behaviour, our ethics and our

actions. We aim to deliver high performance outcomes and

undertake to deliver on our commitments to our colleagues,

business and social partners, and our investors.

The communities and societies in
which we operate will be better off for
AngloGold Ashanti having been there.

We uphold and promote fundamental human rights where we

do business. We contribute to building productive, respectful

and mutually beneficial partnerships in the communities in

which we operate. We aim to leave host communities with a

sustainable future.

We respect the environment.

We are committed to continually improving our processes in

order to prevent pollution, minimise waste, increase our

carbon efficiency and make efficient use of natural resources.

We will develop innovative solutions to mitigate environmental

and climate risks.

Our

values

These reports and documents communicate all relevant

aspects of AngloGold Ashanti’s operating, sustainability and

financial performance for the 2010 financial year, from

1 January 2010 to 31 December 2010. Those to whom the

company seeks to communicate include: shareholders;

investors; employees and their representatives; the

communities within which AngloGold Ashanti operates; and

regional and national governments.

The Annual Financial Statements 2010 presents an

extensive review of the year in both web-based and printed

formats, and was prepared in accordance with: International

Financial Reporting Standards (IFRS); the South African

Companies Act, 61 of 1973 (as amended); and the Listings

Requirements of the JSE Limited (JSE). In compiling the

Annual Financial Statements 2010 and the Sustainability

Report 2010, the guidelines on integrated reporting of the King

P

4

AngloGold Ashanti Annual Financial Statements 2010Scope of the report

Scope of the report

AngloGold Ashanti

best practice

in line with

global

reports

AngloGold Ashanti’s suite of 2010 annual reports includes:

·Annual Financial Statements 2010
·Mineral Resource and Ore Reserve Report 2010
·Sustainability Report 2010
·Annual Review 2010

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5

Report on Governance for South Africa 2009 (King III) were
taken into account. This report, which includes a separate
Notice of Meeting, is submitted to the JSE in South Africa, as
well as the stock exchanges in London, New York, Ghana,
Australia, Paris and Brussels. It is also submitted the United
States Securities and Exchange Commission (SEC) on a Form
6-K. In compliance with the rules governing its listing on the
New York Stock Exchange and in accordance with the
accounting principles generally accepted in the US,
AngloGold Ashanti prepares an annual report on Form 20-F.
The Form 20-F for the 2010 financial year must be filed with
the SEC by no later than 30 June 2011.

In the Mineral Resource and Ore Reserve Report 2010,
AngloGold Ashanti's Mineral Resources and Ore Reserves are
reported in accordance with the South African Code for
Reporting of Exploration Results, Mineral Reserves and
Mineral Resources (SAMREC 2007 Edition) and the
Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (JORC 2004).
Competent persons in terms of these codes have prepared,
reviewed and confirmed the Mineral Resources and Ore
Reserves reported. The Annual Financial Statements 2010
contains a summary of the group’s Mineral Resource and Ore
Reserve as detailed in the Mineral Resource and Ore Reserve
Report 2010. These Ore Reserves are used in the preparation
of the annual financial statements in accordance with IFRS.

The Sustainability Report 2010, Sustainable Gold, provides
an account of AngloGold Ashanti’s sustainability performance
in 2010. It covers six key focus areas for 2010:

· Improving operational safety performance;
· Managing health impacts that arise at our operations and in
our communities;
· Operating with due respect for human rights;
· Delivering sustainable economic benefits, including to the
communities which host our operations;
· Recognising and reporting explicitly on exploration and closure
in the life cycle of our operations; and
· Conducting effective stewardship of the environment and
of the natural resources that we use, primarily land, water
and energy.

The report gives context and outlines the approach for each
area. It also provides particulars of the work that has been
undertaken in that area, targets that have been set and
performance against these targets. Supplementary information
on our website presents more detailed disclosure on
performance against relevant Global Reporting Initiative (GRI)
indicators, the sustainable development framework of the
International Council on Metals and Mining (ICMM) and the
principles of the UN Global Compact (UNGC).

A separate summary report, the Annual Review 2010, which
contains extracts of key information from the Annual Financial
Statements 2010, the Sustainability Report 2010 as well as the
notice of meeting to shareholders and the form of proxy, has
been produced for distribution to all shareholders.

A compact disc, containing the web-based versions and
downloadable pdfs of these reports, will be distributed to all
shareholders together with the Annual Review 2010.

Hard copies of all these reports, which are integral to
AngloGold Ashanti’s communication programme with its
shareholders and business partners, may be requested from
the contacts listed at the end of this report.

Note:

· Unless otherwise stated, $ or dollar refers to US dollars
throughout this suite of reports.
· References to “group” and “company” are used
interchangeably in the narrative of this report, except in the
financial statements of the group and company.
· “Statement of financial position” and “balance sheet” are
used interchangeably in the narrative of this report.
· To familiarise yourself with the terminology used in this
report, please refer to Non-GAAP disclosures and the
Glossary of terms and Non-GAAP metrics.
· Locations on maps are for indication purposes only.

P

6

AngloGold Ashanti Annual Financial Statements 2010

Corporate profile

Corporate profile

We truly cover the world

producer

A truly

global

gold

of

Headquartered in Johannesburg, South Africa, AngloGold

Ashanti has 20 operations on four continents and several

exploration programmes in both the established and new gold-

producing regions of the world.

AngloGold Ashanti employed 62,046 people, including contractors,

in 2010 and produced 4.52Moz of gold (2009: 4.60Moz),

generating $5.3bn in gold income (2009: $3.8bn). Capital

expenditure in 2010 amounted to $1,015m (2009: $1,027m).

As at 31 December 2010, AngloGold Ashanti’s Ore Reserve

totalled 71.2Moz.

Focused on returns

AngloGold Ashanti endeavours to maximise the returns

delivered to shareholders throughout the economic cycle, by

producing gold safely, responsibly and efficiently.

Our business

Exploration

The group’s exploration programme, which covers greenfield,

brownfield, and more recently, marine exploration, is

conducted either directly or in collaboration with partners.

The group’s foremost recent greenfield discovery is the La

Colosa deposit in Colombia (see map for regions of active

greenfield exploration). Brownfield exploration is conducted

around existing operations. In October 2009, the group

established a joint venture to explore for marine mineral

deposits on the continental shelf. This complements

AngloGold Ashanti’s existing terrestrial exploration and

mining activities.

Operations

In addition to the six deep-level mines and one surface

operation in South Africa, AngloGold Ashanti has surface and

underground mining operations in the Americas, Australia and

elsewhere on the African continent. The Tau Lekoa mine in

South Africa was sold during 2010. In addition to gold,

valuable by-products – silver, sulphuric acid and uranium – are

produced in the process of recovering the gold mined at

certain operations.

Marketing

Once processed to the doré (unrefined gold bar) stage at

AngloGold Ashanti’s operations, this product is dispatched to

various precious metal refineries where the gold is refined to a

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7

Q4 2010

Fatality-free

quarter

Index of AngloGold Ashanti share price on NYSE

Philadelphia Stock Exchange Gold & Silver Index

July 2008

Restructuring of hedge

book begins

20 May 2009

Issue of 3.5% convertible

bonds of $732.5m, due 2014

29 June 2009

Sale of interest in

Boddington completed

31 July 2009

Hedge book reduced by 1.4Moz

to 3.9Moz, which is less

than one year’s production

21 April 2010

$1bn, four-year revolving

credit facility secured

14 September 2010

Launch of concurrent equity and

mandatory convertible subordinated

bond offerings

7 October 2010

Hedge book eliminated

7 July 2008

Rights offer raises $1.7bn

6 May 2008

Announcement of significant

exploration results at La Colosa

21 November 2008

$1bn syndicated loan with Standard

Chartered announced

-80

-60

-40

-20

0

20

40

60

Q2 08

Q3 08

Relative share price performance

(%)

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

purity of at least 99.5%, in accordance with the standards of

‘good delivery’ as determined by the London Bullion Market

Association. It is then sold to bullion banks or refiners. Gold

has been a much sought after source of wealth over the

centuries, be it as an investment, a store of value, or as

jewellery. AngloGold Ashanti campaigns actively to promote

the demand for gold.

Built for purpose

Since launching its new business strategy at the end of March

2008, AngloGold Ashanti has significantly restructured its

portfolio and rebuilt its balance sheet to create the operating

and financial foundation to achieve production growth from

5.4Moz to 5.6Moz by 2014. Operating cash flow has

increased markedly following the elimination of the hedge

book, as well as the implementation of Project ONE, the

business improvement intervention, and the higher gold price.

AngloGold Ashanti has also continued to invest in its industry-

leading exploration team to build on its unmatched record of

new gold discoveries and to grow its world-class gold

endowment. Longer-term debt has also been introduced into

the balance sheet, thereby greatly enhancing the capacity to

fund a significant project pipeline, while maintaining strict

capital discipline and driving shareholder returns.

United States

52.60%

South Africa

22.54%

United Kingdom

11.73%

Ghana

2.95%

France

2.35%

Rest of Europe

2.56%

Rest of Americas

1.20%

Rest of the world

4.07%

Geographic distribution of shareholders

as at 31 December 2010

United States

Cripple Creek & Victor 233,000oz

Colombia

La Colosa

Gramalote

Brazil

Serra Grande

77,000oz

AGA Mineração

338,000oz

Operations

Projects

Argentina

Cerro Vanguardia

194,000oz

Location of AngloGold Ashanti operations and major greenfield projects

P

8

AngloGold Ashanti Annual Financial Statements 2010

Corporate profile

Corporate profile

We truly cover the world

gold

Our primary

focus

is

Mali

Morila

95,000oz

Sadiola

118,000oz

Yatela

60,000oz

Guinea

Siguiri

273,000oz

Ghana

Iduapriem

185,000oz

Obuasi

317,000oz

DRC

Mongbwalu
Kibali

Namibia

Navachab

86,000oz

Tanzania

Geita

357,000oz

Australia

Sunrise Dam

396,000oz

Tropicana

South Africa

Vaal River
Great Noligwa

132,000oz

Kopanang

305,000oz

Moab Khotsong

292,000oz

Tau Lekoa

63,000oz

Surface operations

179,000oz

West Wits
Mponeng

532,000oz

Savuka

22,000oz

TauTona

259,000oz

(1)

(1)

Sold effective 1 August 2010

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9

P

10

AngloGold Ashanti Annual Financial Statements 2010

Strategy

AngloGold Ashanti’s business strategy is reviewed regularly to

determine progress in its implementation against the backdrop

of a dynamic operating and regulatory environment. These

evaluations allow for tactical adjustments necessary to achieve

the ultimate goal of becoming “the leading mining company”.

AngloGold Ashanti has defined its strategic focus in five parts:

· Recognise that “People are the business” – organisational

development is a strategic value driver for the group;

· Maximise margins – manage both revenue and costs to

ensure delivery and protection of returns throughout the

economic cycle;

· Manage the business as an asset portfolio – use capital

deployment optimisation approaches to support delivery of

return targets;

· Grow the business – have a definite strategy for both organic

growth and growth by acquisition and be opportunistic in

seeking value accretive targets; and

· Embrace sustainability principles – understand and focus

on creating value for both business and social partners to

manage risk and opportunity.

The key components of each of the strategy points are as follows:

People are the business

AngloGold Ashanti recognises that “People are the business”

and through its:

·Mission, defines a clear view of the organisation;

·Vision, reflects a clear and consistent view of the

organisation’s future;

· Values, recognises that the process used to achieve results

is as important as the results themselves;

· Business Process Framework, defines the policy,

standards and operating framework necessary to establish

a flexible and responsive work model within which people

have the opportunity to be creative and realise their

potential; and

· Organisational model, ensures that the right person, does

the right work, in the right way and at the right time.

Maximise margins

AngloGold Ashanti seeks to ensure sustainable value and

maximise returns by:

·Managing revenues to ensure that full value is realised from
its products by: 
· managing product sales to realise premiums for the
delivery of a superior quality product and by exploring
other value adding initiatives;
· delivering products of a consistent quality, on time; and
· offering exposure to spot prices.

· Managing costs to protect margins and returns on capital
employed by:

· applying resource development stratagies to maintain 
operating margins over the life cycle of the assets;

· protecting critical margins where appropriate;

· maintaining costs below the industry's mean in order to 
minimise risks to cash flow and returns in a volatile price
environment; and

· Optimising capital deployment by investing only in assets 
and growth opportunities which offer superior returns.

Strategy

Striving to be the

leading

mining

company

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11

Manage the business

Meeting commitments is a critical objective and includes:

·ensuring safe work practices and a healthy workforce;
·generating returns on capital of more than 15% through
the cycle;
·meeting production and cost targets;
·managing costs to maximise margins and return on capital
employed over the life cycle of all operations and projects;
·maximising revenues; and
·implementing Project ONE (refer page 46) to standardise all
operating procedures and achieve key five-year goals. The
five-year goals agreed in 2008 were:
· a 70% reduction in accident rates;
· a 30% inprovement in overall productivity (in terms of 
ounces of gold produced per employee);
· a 60% reduction in reportable environmental incidents;
· a 20% increase in gold production;
· a 25% reduction in real IFRS total cash costs per ounce; and
· to deliver an average return on captital of above 15%.

Given the progress achieved to date, the board reviewed
and amended the following key five-year goals in late 2010
for the period 2011-2015 as follows:
·Safety – an all injury frequency rate of less than 9 per million
hours worked by 2015;
·Productivity – 20% improvement in oz/TEC by 2015;
·Environment – 30% reduction in reportable incidents
by 2015;
·Production (attributable ounces produced) – between
5.4Moz and 5.6Moz, an improvement of 20% on base;
·Total cash cost per ounce – a 20% improvement in real unit
costs by 2015 (adjusted for mining inflation); and
·Return on shareholders’ equity (%) – 15% through the cycle
to 2015.

Manage the business as an asset portfolio
AngloGold Ashanti regularly reviews and ranks each asset and
project as part of its annual business planning process. This
ranking is both absolute and relative to its peer group, with the
aim of:

·ensuring that individual assets and projects meet or exceed
specified risk-adjusted rates of return;
·identifying the strengths and weaknesses of the portfolio,
with particular focus on portfolio risk;
·implementing strategies to identify optimal orebody
capability;
·applying methods and design to ensure optimal operating
performance;

·ensuring the application of detailed planning and scheduling,
together with the use of best-practice operating methods
associated with each asset;
·optimising returns from existing assets and growth
opportunities; and
·selling those assets that no longer meet the company’s
criteria at attractive valuations.

Grow the business

AngloGold Ashanti seeks to further enhance shareholder value
through:

·Exploration – leveraging its asset portfolio and landholdings
through greenfield and brownfield exploration and
development while targeting new opportunities;
·Brownfield development – the development portfolio
comprises board approved projects including: the Tropicana
gold project in Australia; the Córrego do Sítio and Lamego
projects in Brazil; the Mine Life Extension project at Cripple
Creek & Victor in the United States; the Ventersdorp Contact
Reef project at the Mponeng mine in South Africa; and
others undergoing feasibility studies in Argentina, Brazil,
Colombia, the Democratic Republic of the Congo, Mali,
Namibia, South Africa and the United States;
·New projects – by promoting organic growth and
leveraging current positions;
·Mergers and acquisitions – by selectively pursuing value
accretive merger and acquisition opportunities; and
·Logical incrementalism – by maximising the value of other
commodities within an existing and developing asset portfolio.

Embrace sustainability principles

AngloGold Ashanti seeks to embrace sustainability principles
to create business and social partnerships based on mutual
value creation. This approach includes:

·Safety and health – ensuring that commitment to the welfare
of people remains the company’s most important value;
·Environment – by managing the impact on the environment,
meeting commitments made to host communities and
ensuring AngloGold Ashanti is the preferred development
partner for mining projects;
·Community relations – establishing relationships and
developing strategies that support the creation of unique
value for various community partners;
·Institutional relations – working through the respective
government and other local institutions, while respecting the
values and traditions of each jurisdiction; and
·Political relationships – managing relationships in a
manner consistent with the company’s values.

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12

AngloGold Ashanti Annual Financial Statements 2010

Group overview 2010

Key features 2010

·All injury frequency rate (AIFR) improved by
11% to 11.50 per million hours worked;
·Record adjusted headline earnings
(excluding the impact of accelerated hedge
buy-backs) of $787m, a result of improved
margins due to higher received prices;
·Production of 4.52Moz at a total cash
cost of $638/oz, within exchange-rate
adjusted guidance;
·Geita, Cripple Creek & Victor and South
Africa turnarounds successfully executed;
·Complete elimination of the hedge book,
thus providing full exposure to the
prevailing gold spot price;

·Securing AngloGold Ashanti’s international
investment grade credit ratings;
·Introduction of long-term tenor to the
statement of financial position with the
issue of two rated bonds maturing in 10 and
30 years and mandatory convertible bonds
due in 2013; and
·A full year dividend of 145 South African
cents per share (approximately 20 US
cents per share), 12% higher than the
previous year of 130 South African cents
(17 US cents per share).

Group overview 2010

06

07

08

Gold production

(000oz)

09

10

5,477

4,982

5,635

4,599

4,515

06

07

08

Cash flow from operating activities*

($m)

09

10

866

584

1,106

1,299

1,669

* Excludes hedge buy-back costs

4,515 000oz

$1,669 m

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13

06

07

08

All injury frequency rate

(per million hours worked)

20.95

16.66

22.83

09

10

12.88

11.50

06

07

08

Market capitalisation

($bn)

09

10

11.9

9.8

13.2

14.6

18.8

$18.8

bn

11.50

Group overview 2010 – key data

2010

2009

% change

Gold produced

(000oz)

4,515

4,599

(2)

Average gold spot price

($/oz)

1,227

974

26

Average received gold price

($/oz)

561

751

(25)

Average received gold price excluding hedge buy-back costs

(1)

($/oz)

1,159

925

25

Total cash costs

($/oz)

638

514

24

Total production costs

($/oz)

816

646

26

Ore Reserve

(2)

(Moz)

71

71

1

Revenue

($m)

5,514

3,916

41

Gold income

($m)

5,334

3,768

42

Adjusted headline loss

(3)

($m)

(1,758)

(50)

3,416

Adjusted headline earnings excluding hedge buy-back costs

(4)

($m)

787

708

11

Adjusted headline earnings excluding hedge buy-back costs

(US cents/share)

212

196

8

Dividends per ordinary share

(SA cents/share)

145

130

12

Average exchange rate

(R/$)

7.30

8.39

(13)

Exchange rate at year-end

(R/$)

6.57

7.44

(12)

Share price at year-end:

JSE

(R/share)

326.90

306.29

7

NYSE

($/share)

49.23

40.18

23

Market capitalisation at year-end

($m)

18,767

14,555

29

Note:

(1)

Average received gold price during 2010 excluding the effects of hedge buy-back costs at $1,159/oz is 25% higher than 2009, 5.5% discount to the spot gold

price and better than the guidance of 8% to 10%.

(2)

After adjusting for the Tau Lekoa sale, Ore Reserve increased by 1% from 70.6Moz to 71.2Moz.

(3)

Headline loss adjusted for unrealised non-hedge derivatives, fair value adjustments on the option component of the convertible and mandatory convertible

bonds, adjustments to other commodity contracts and deferred tax thereon. Refer to Non-GAAP disclosure note 1 on page 372.

(4)

Refer to Non-GAAP disclosure note 1 on page 372.

per million
hours worked

It is my pleasure and privilege to address to you my first

chairman’s statement since taking office during 2010.

When I was approached for discussion about the position,

there were two matters about which I felt I had to satisfy

myself. The first one was that I wanted to see the company

showing, practically, that they were serious about curbing

injuries and deaths in mine accidents. The second was their

intention in relation to the closing out of the hedge book.

On the first, I was very pleased to be assured that, led by Mark

Cutifani, the executives at AngloGold Ashanti work very hard at

ensuring that safety is indeed our first priority. The improvement

in the fatal accident rate of close to 70% since 2007, is

evidence of these efforts. Yet we are aware that the rate of

improvement has slowed somewhat in recent years, and we

look forward to the next step change on the way to achieving

our goal of making employee fatalities a thing of the past.

I would like to convey my and the company’s condolences to

the families and friends of the fifteen employees who died in

mining accidents during the course of 2010, and give my

assurances to them, and to all employees and their loved

ones, that safety is a priority that will remain in place.

On the matter of the hedge book, the wish became reality

within just a few months. During October, we were able to

announce the achievement of that goal, opening up to

shareholders the benefits of full exposure to the spot gold price.

That occurred shortly after two leading credit rating

agencies affirmed the company’s international investment

grade credit ratings.

The unhedged position and strong balance sheet leave the

company extremely well placed to pursue our substantial

project pipeline, assisted further by a gold price that appears

likely, at the very least, to sustain itself within the range

experienced in the year under review.

Continuing uncertainty about the prospects for economic

recovery in the US, Europe and Japan, and the fiscal measures

implemented to mitigate the economic difficulties, have

underpinned the role of gold as an investment commodity, and

hence the gold price rise of the past two years or so.

Notwithstanding the higher gold price, fabrication demand for

gold grew by 13.4% in 2010, though admittedly off a relatively

low base. Most of the growth was thanks to increased

demand for gold jewellery in India and, to a lesser extent,

China. In both markets AngloGold Ashanti expends much

energy in gold marketing activities.

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14

AngloGold Ashanti Annual Financial Statements 2010

Chairman’s statement

Podcast available at www.aga-reports.com/10/podcasts.htm

Tito Mboweni discusses his thoughts on the
way forward for AngloGold Ashanti

Chairman’s statement

A company with

to excellence

committed

vision,

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15

However, it is not the bullish gold market that distinguishes this

company. What has encouraged me the most in my short time

on the board of AngloGold Ashanti is the company’s vision and

commitment to excellence. The elimination of the 11.3Moz gold

hedge since 2008, during a period of unprecedented

international economic and financial distress, is, in my view, but

one illustration of these attributes.

Equally illuminating are the methodical efforts incorporated in

Project ONE to enhance efficiencies at our operations and

throughout the business. Particularly pleasing is the turnaround

at the Geita Gold Mine in Tanzania, while notable progress has

also been made at the Mponeng Plant in South Africa and the

South American operations.

It is important to emphasise the holistic nature of Project ONE.

In addition to operating efficiencies, it incorporates a range of

targets related to both our people and sustainability issues, such

as safety and environmental management, all of which are key

components of AngloGold Ashanti’s strategic drive.

As a mining company committed to responsible corporate

citizenship, operating around the world is becoming

increasingly complex. From government attempts to impose

punitive taxes in Australia to the instability prior to the welcome

advent of democracy in Guinea, AngloGold Ashanti has been

challenged to play a responsible role.

The value of high-quality social dialogue is best illustrated in

South Africa, where the Mining Charter was reviewed during

the course of the year and a new version published in

September. This compact between government, business and

labour seeks to set out processes and targets aimed at

gradually eliminating the country’s and the industry’s apartheid

legacy without damaging the industry’s competitiveness. We

are of the view that the outcome effectively achieved these

dual goals.

As was the case with the initial 2004 charter, AngloGold

Ashanti again played an important role in this achievement

through our CEO Mark Cutifani’s senior leadership position in

the South African Chamber of Mines.

As a mining company, we have an obligation to the societies in

which we operate to ensure, as our values state, that they are

better off for our having been there. Naturally mining, as with

all economic activity, will have an impact on the social and

physical environment. Not all of that will be immediately

positive. However, AngloGold Ashanti is committed to

ensuring that, on balance, the positive consequences

significantly outweigh the negative. We accept, further, that our

responsibility as a good corporate citizen is not only to ensure

that that is the case, but also to be open and responsive to

those who would want to express their concerns. The board

will continue to encourage the executive to sharpen its focus

in this regard.

I would like to thank my fellow board members, management

and staff at AngloGold Ashanti for all they have done to

welcome me to the company and for the support given to me

in exercising my responsibilities as chairman.

I would like to welcome Rhidwaan Gasant, who joined the

board in August, bringing in additional financial expertise and

experience in the resources sector. The wisdom in appointing

him is already apparent. We also welcome Fred Ohene-Kena

who brings his extensive knowledge of the Ghanaian society,

and its mining sector in particular.

I would like to pay tribute to my predecessor Russell Edey.

During Russell’s tenure, AngloGold Ashanti was transformed

from a leading South African corporation into a leading

international one. I can only hope to be able to emulate the

wisdom he showed in so doing.

Finally, James Motlatsi announced his retirement from the

board, with effect from 17 February 2011. As one of the original

directors of AngloGold Ashanti when it was formed in 1998,

James provided both continuity and critical leadership during

the changing times and has served all AngloGold Ashanti

stakeholders with great distinction. His retirement allows him

the opportunity to pursue new interests. On behalf of the board

and management, and indeed on my own behalf, I extend our

thanks and best wishes to James for the future. Rea leboga

Ntate! (Thank you, Sir).

The board will, in the coming months, be taking action to

replace the expertise lost and, generally, work towards building

an even better balance of knowledge, experience and skill.

TT Mboweni

Chairman

11 March 2011

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16

AngloGold Ashanti Annual Financial Statements 2010

CEO’s review

In putting pen to paper to share with you my thoughts on

2010, I must first make a very simple observation. The

elimination of the hedge book, the rebuilding of our financial

foundations through the reconstruction of the balance sheet,

and the progress on improving operational performance all

point to 2010 being a landmark year for AngloGold Ashanti.

Combined with a steadily strengthening market and price for

our product, we see a bright future for the company, our

shareholders, our employees and all our business partners.

Gold chalked up its 10th consecutive annual increase in 2010

as investors looked for a safe haven from countless economic

disruptions and potential dislocations across the globe.

The second major round of quantitative easing began in the US

as the Federal Reserve used an already-extended balance

sheet to kick start meaningful growth in the economy, raising

renewed concern over the long-term health of the dollar and

the rising spectre of inflation. Japan moved aggressively to

devalue its currency in order to fan demand for its exports and

revive a flagging economy.

Being

unhedged,

we can better leverage

a rising
gold price

CEO’s review

Podcast available at www.aga-reports.com/10/podcasts.htm

Mark Cutifani discusses his views on the
outlook for AngloGold Ashanti

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17

A booming economy in China brought the threat of runaway

consumer price increases ever closer. In Europe, intensifying

sovereign debt concerns deepened economic and political fault

lines between euro members, raising doubts over the future of

the common currency. A conflagration on the Korean peninsula

once again threatened to tip the region into crisis. Against this

heightened risk backdrop it was hardly surprising that gold

reached a high for the year of $1,431/oz in early December.

Notwithstanding the strong price rally, consumer demand

increased, with the world jewellery sector rising an estimated

16% in 2010.

All the while, there remained a dearth of large, new discoveries

to replace gold production. Depletion of the world’s major

orebodies continued, cost pressures mounted as currencies of

commodity producing nations strengthened against the dollar,

and higher labour costs and metal prices spurred input costs

of everything from power to drill steels, reagents and grinding

media. Despite a decade of higher prices, the supply response

from the gold industry remained muted. It has perhaps never

been clearer that, with the average, all-inclusive cost of

production for the industry at more than $1,000/oz, the

fundamentals remain supportive of the gold price. Once the

gloomy and somewhat uncertain macroeconomic picture is

factored in, it is our view that the gold price remains well

supported, with a bias to the upside.

It was in this context that your board took the decision in

September to eliminate the hedge book, once and for all

ending the forced sale of our production at discounts to

market prices. This was made possible by the reconstruction

of the company’s balance sheet over the past two years.

Investment grade debt ratings awarded in April by both

Moody’s and S&P paved the way for the issue of $700m,

10-year bonds and $300m, 30-year bonds, the latter being a

first for a South African corporate. A syndicate of 16 banks

also provided a renewed, four-year revolving credit facility.

With that balance sheet structure in place, the difficult call

was made in September to issue new equity and a

mandatory convertible bond, together totalling almost

$1.6bn, to provide the final financing – over and above cash

and existing debt of about $1bn – to eliminate the remaining

3.0Moz of gold committed under hedge contracts.

The final hedge contract was eliminated on 7 October, not

only achieving a key strategic objective but also enhancing

cash flow generation capacity and AngloGold Ashanti’s ability

to finance an unmatched slate of growth projects across our

global operations and development portfolio.

Now the hard work really begins, to consistently achieve our

goal of earning a return of at least 15% on invested capital,

throughout the investment and commodity price cycles. Our

teams worked diligently during the year to set the foundation

for growth and improved operating performance across our

global suite of 20 gold-producing assets.

Project ONE, the change model designed to modernise and

improve operating practices and reduce volatility across the

business, thereby increasing productivity, while at the same

time better clarifying role accountability, was implemented at

an additional 15 sites (mines and processing plants) in 2010,

adding to the eight that went live in 2009. All in all,

145 employees are engaged full-time in ensuring that this

revolutionary operating framework is embedded across the

business to achieve an ambitious set of safety, environmental,

operating and financial targets. While this is undoubtedly a

time-consuming and complex endeavour, our collective

commitment to Project ONE deepened further during the year

as we saw significant successes achieved at the Mponeng

plant, at Geita and also the South American operations.

The early roll-out at the more complex and labour intensive

South African underground mines also yielded positive early

results and showed the benefit to be gleaned from

increasing the focus on planning and organisation and

ensuring that the right person does the right job, at the right

time, in the right way.

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18

AngloGold Ashanti Annual Financial Statements 2010

CEO’s review

In line with my commitment made in 2009, we cemented the

hard won improvements in Brazil and Argentina, which now

boast the company’s lowest-cost assets. Crucially, AGA

Mineração and Cerro Vanguardia both have exciting – and

board approved – growth prospects ahead of them. At

Cripple Creek & Victor, in the US, the much needed operating

turnaround was flawlessly executed by the team, who are

now looking to further production expansions with the

installation of a high-grade milling circuit.

The Americas region, a strong business in its own right under

Ron Largent’s leadership, now has plans in place to grow

production over the next five years from the 842,000oz

achieved in 2010, to around 1.2Moz by 2013. In addition,

exploration drilling restarted at La Colosa, in Colombia, after a

hiatus of more than two years due to permitting constraints,

and prefeasibility work commenced at the Gramalote joint

venture, raising the prospect of significant additional growth

over the medium term from the world’s most prospective new

goldfield. We will continue to be cautious and diligent in

moving ahead in Colombia, where we have an enviable

position in the world’s most exciting new gold district, at an

entry cost of almost zero, once the proceeds from farm-ins,

joint ventures, asset sales and spin-offs are taken into account.

In Continental Africa, Geita was clearly the standout, closing

the chapter on a difficult four-year period in which it missed

operating targets. Compared to the 272,000oz achieved at

the end of 2009, this asset delivered 357,000oz from the plant

in 2010 and is set to produce 500,000oz in 2011, returning

this mine to its rightful place near the top of the production

pecking order. Unit costs, meanwhile, have almost halved

from their peak as significant improvements were made to

plant availability and the fleet was reduced from 48 trucks in

2009 to 34 trucks in 2010, while the quantity of ore

transported increased.

With Guinea emerging tentatively from a successful election,

the scope to realise the potential from Siguiri’s world-class

orebody is now potentially enhanced and work is under way to

investigate the best possible ways of delivering on this growth

potential. In the Democratic Republic of the Congo (DRC), work

continued in parallel to complete the feasibility studies on the

Mongbwalu and Kibali projects, the latter with our partner

Randgold Resources. In both cases, our emphasis is on

bringing our technical and planning expertise to bear on these

projects to ensure they are completed safely, on time, within

budget and in line with their envisaged operating parameters.

The DRC is poised to be a significant contributor to our

production profile beyond 2014, with expansion potentially

providing valuable optionality given the geological endowment

of the country’s northeastern region. Mali, one of our more

mature operating regions in Africa, continues to generate

significant cash flow and we are working closely with IAMGold,

our partner at Sadiola, to formulate the final plan needed to tap

the promising deep sulphide Mineral Resource as well as

extensions to the shallower oxide ore.

Ghana remains the biggest challenge for the Continental Africa

region. Decisions were taken during the first half of the year to

suspend both operations in order to affect sustainable and

long-lasting solutions to water-balance issues which, in

Obuasi’s case, follow almost a century of intensive mining

across a vast footprint. While this had a significant impact on

production, it reinforced our commitment to ensuring

environmentally responsible mining and to improving our

performance in this regard in all jurisdictions. There remains

work to do, particularly at Obuasi, where the operation was

also dogged by operating problems, most notably ore-pass

hang-ups and below-par development rates.

Following our success at Geita, a senior, multi-disciplinary team

led by Richard Duffy and supported by myself and Tony O’Neill,

CEO’s review

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19

our Executive Vice President of Technical and Business

Development, has been appointed to design and execute a

strategy that will ensure that this gold orebody, undoubtedly

one of the world’s largest at almost 30Moz, performs to its full

potential. This is a key challenge for the year ahead.

In Australia, Sunrise Dam delivered another solid performance,

although it’s worth pointing out that the cash cost line of

$957/oz is distorted by the $259/oz non-cash, deferred-

stripping charge. This is simply an accounting entry and

obscures the significant cash generation ability of this mine.

The transition to underground ore continued during 2010, as

did work to understand the true nature and extent of the

orebody. This has prompted a decision to test the potential

during 2011 for a bulk-cave operation to more efficiently

extract underground ore over an extended life of mine.

We also passed a significant milestone in 2010 with the

approval in November of the development of the Tropicana

gold deposit in Western Australia. This is not only a virgin

discovery by AngloGold Ashanti’s own exploration team in a

large, untouched new gold belt, but also the first true

greenfield project undertaken by the company in more than a

decade. What’s more encouraging to us is that an extensive

exploration campaign along the Tropicana belt, which

extends along a strike of some 600km, is yielding good

results. I’m confident that the original scope of this project,

which calls for total production of 330,000oz to 350,000oz a

year over 10 years, is only the beginning of the productive life

of this district and that strong production levels anticipated in

the initial three years of the mine’s life, will be sustained as

new Mineral Resources are discovered by our world-class

exploration team.

At the beginning of 2010, the South Africa region was the

source of significant concern. Safety stoppages were the

hallmark of 2009’s performance as severe disruptions were

caused by our own decision to halt certain operations in order

to improve operating conditions and by government-enforced

Section 54 stoppages. This was compounded by a lack of

flexibility on key assets. While we saw production take a hit at

key operations, rising power and labour costs threatened a

damaging margin squeeze.

As I write this review, the situation is much improved.

Following his appointment as Executive Vice President –

South Africa, in February, Robbie Lazare set about making the

crucial changes required to improve safety and ensure these

large, deep mines return to their cash generation potential.

His `three-horizon’ strategy – to rapidly improve safety,

production and costs, to optimise the configuration of the

assets, and to design a far-reaching technology innovation

plan to ensure their long-term survival – has already yielded

impressive results.

Excluding Tau Lekoa, which was sold to Simmer & Jack

during the year, production from South Africa was largely

unchanged, while the cost increase (in US dollar terms) was

contained at 31% to $586/oz, despite a 26% power-price

hike, a near double-digit payroll increase, the impact of input

inflation across all consumables and significant strengthening

of operating currencies throughout the year. A look behind

these impressive results shows increases across key

production metrics.

New management appointments have energised operating

teams and the renewed focus on planning, following the

enthusiastic embrace of Project ONE, promises further

improvements going forward.

Robbie has also spearheaded the formation of The

Technological Innovation Consortium to investigate ways to

tap the deeper reaches of the extensive Witwatersrand

orebody in a safe and profitable way. This is an ambitious

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20

AngloGold Ashanti Annual Financial Statements 2010

CEO’s review

endeavour that some have likened to the Manhattan Project,

for the sheer quality and breadth of the global expertise

harnessed to achieve a single goal. This project has potentially

far-reaching benefits and brings together an unparalleled

group of the world’s finest innovators who are – at the time this

report is distributed – already a year into finding a resolution to

the ultra-deep mining conundrum: to safely and profitably mine

what remains the world’s largest and most consistent gold

resource. The group includes a range of universities, research

institutes and industrial luminaries such as General Electric,

3M, Atlas Copco, Bateman, Sandvik, SNC-Lavalin and many

more. This is not simply a vague, conceptual study, but a hard-

nosed commercial endeavour that could put AngloGold

Ashanti far ahead of its rivals in pioneering real intellectual

property to unlock untold mineral wealth at depth, across the

world. We will keep you updated as this project progresses.

While we’re studying all the angles to ensure a profitable long-

term future for South Africa’s deep mines, our attention will

also be focused on some near-term objectives in 2011. Chief

among these will be navigating the next round of biennial

wage talks with South Africa’s labour unions. It is not merely

lip service to say that we view organised labour as a partner

in building our business in South Africa. While the National

Union of Mineworkers and others representing miners,

artisans and tradesman in South Africa have proved their

mettle over several years as tough negotiators, they have also

shown time and again that they are a responsible partner

which does not take lightly any decision to disrupt production.

We will enter this round of negotiations with a mandate to

pursue open and frank dialogue and to reach a fair agreement

that benefits all sides and ensures a healthy and sustainable

industry for all stakeholders.

Turning to the nationalisation debate in South Africa, we are

comforted by the fact that the government is well aware of the

negative consequences that would follow nationalisation of

South Africa’s mines, a view unequivocally expressed by

senior leaders of the governing African National Congress on

several occasions. The government has also shown itself to

be sensitive to the negative impact this debate has on the

perceptions of some investors less familiar with the robust

nature of South African political discourse. Nonetheless,

AngloGold Ashanti looks forward to this discussion reaching a

conclusion as soon as possible to further improve South

Africa’s overall investment climate.

It is with deep sadness that I reflect on the tragic deaths of

15 of our colleagues in accidents at our operations during the

year. One fatality in the workplace is one too many and each

one of these is keenly felt by every member of this

organisation. We are working hard to bring the behavioural and

technical changes to all levels of work that we undertake every

day to improve this safety performance. While safety

performance suffered during the second and third quarters, a

fatality-free fourth quarter showed what we are capable of. The

long-term trends also provide sight of how far we’ve come. All

told, the all injury frequency rate improved by 11% from 2009

and by 49% since 2006. An encouraging performance, but I

firmly believe there remains much room for improvement.

Achieving that remains our primary operational aim as Project

ONE – with its attendant focus on detailed planning and

execution of work – translates to improved safety.

So, with the financial foundation laid and the engine room

starting to work toward its potential (though with much room

for improvement), the third leg of our strategy is aimed at

ensuring the long-term future of this company through a world-

beating exploration effort. This is a team that made virgin

discoveries in Colombia, the Tropicana belt in Australia and the

DRC; successes we are confident of repeating. Following the

consolidation of our global footprint in 2009, 2010 was the

year for moving this effort forward.

CEO’s review

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21

Drilling resumed in Colombia, accelerated in the DRC and

Australia, and was initiated in new areas in which AngloGold

Ashanti once again has first-mover advantage and the

potential to dominate. These include the Solomon Islands, the

extensive Cornelia Range in the northwest of West Australia,

the Middle East and North Africa, Gabon and Baffin Island, in

Canada’s Arctic.

We will continue to invest heavily in exploration to add to our

resource inventory at a fraction of the cost that many of our

rivals – faced with a dearth of growth opportunities – are

forced to pay in acquiring new ounces. In fact, the last three

years has seen AngloGold Ashanti add roughly 40Moz at

about $600m, through exploration and targeted, value-

adding strategic acquisitions.

Our strategic focus on value has positioned AngloGold Ashanti

with a range of development opportunities that will deliver real

returns to our shareholders. The options we have created,

working through our “value lens”, will ensure we are not forced

to jeopardise our capital base by overpaying for assets in order

to ensure a sustainable future. With the hedge book now well

and truly behind us, we will remain focused on adding

profitable ounces to our production base and to our resource

inventory. As ever, capital discipline will be the watchword as

we drive toward real returns while growing our company. I am

pleased to note that we achieved a return on net capital

employed of 16% in 2010, sharply up from our single-digit

returns of just two years ago.

Production in 2011 is forecast at between 4.55Moz and

4.75Moz, at a total cash cost ranging from $660/oz to

$685/oz

(1)

. As we push toward our medium-term growth

objectives, capital expenditure is estimated to be between

$1.5bn and $1.6bn for the year.

Importantly, during 2010, we reviewed and updated our Code

of Business Principles and Ethics (Our Code). I launched Our

Code on 25 November 2010, along with the chairman of the

Audit and Corporate Governance Committee. The roll-out of

Our Code, which commenced during 2010, has an 18-month

implementation and training plan across the group’s

operations globally.

Lastly, I would like to once again thank my colleagues at

AngloGold Ashanti. At every level, they are driven and hard

working, and have shown a single-minded focus to create

the world’s leading mining company. I’m grateful for this effort

and look forward to 2011 as a year in which we return to

growth and redouble our focus on driving shareholder value

and improved safety, in order to realise the great potential of

AngloGold Ashanti.

Mark Cutifani

Chief executive officer

11 March 2011

(1)

Based on the following assumptions: average exchange rates against the

US dollar of R7.11 for the South African rand, 1.70 for the Brazilian real,

0.98 for the Australian dollar and 4.12 for the Argentinean peso. Oil is at

$95 per barrel.

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22

AngloGold Ashanti Annual Financial Statements 2010

Review by the Chairman of the Audit and Corporate Governance Committee

AngloGold Ashanti is committed to best practice in
corporate governance, ensuring compliance with legislation,
regulations and requirements in the jurisdictions in which the
company operates and adhering to the principles of
sustainable business.

The Audit and Corporate Governance Committee of
AngloGold Ashanti is tasked with ensuringeffective
governance and international best practice as directed by the
committee’s terms of reference, which is reviewed on an
annual basis.

The company is committed to ensuring that changes in
legislation and best practice are embraced. Following the
launch of the South African Code on Corporate Governance
2009 (King III) on 1 March 2010, a detailed analysis of the
extent to which the company’s governance practices meet
these requirements was completed. Where compliance with
the recommendations is not being met to the extent required,
processes and time frames have been agreed for full
compliance and in those instances where the company will not
comply, for practical reasons, disclosure of such non-
compliance is disclosed in this report.

Full details of the company’s corporate governance can be found
from page 174 of this report. Briefly, since the implementation of
King III, the company, as overseen by the Audit and Corporate
Governance Committee, has, amongst others:

·addressed the composition of the Audit and Corporate
Governance Committee, which now consists of only
independent non-executive directors. The chairman of the
board is not a member of this committee;
·had the election of the members of the committee approved
by shareholders at the Annual General meeting held in May
2010. The election of the members of the committee will be
put before the shareholders annually;
·established a separate committee dealing with issues
pertaining to risk and information technology governance,
the Risk and Information Integrity Committee, which is now
functional, and had approved its terms of reference by the
board of AngloGold Ashanti;
·reviewed and revamped the company’s ethics policy and
launched the Code of Business Principles and Ethics (Our
Code) on 26 October 2010. Roll-out of and training in Our
Code commenced in November 2010 and will continue
throughout the organisation over an 18-month period. Our
Code is a public statement of how AngloGold Ashanti does

Review by the Chairman of the Audit and
Corporate Governance Committee

Aligning our

with

King III

governance

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23

business. It clarifies the expectations and accountabilities for
the conduct of AngloGold Ashanti’s business;

·moved towards integrating sustainability with the annual
report;
·implemented procedures towards combined assurance with
full compliance by 2011 year-end;
·reviewed and approved the plans for both internal and
external audits; and
·implemented the performance review of the Head of Internal
Audit by the Audit and Corporate Governance Committee.

2010 suite of annual reports

The committee has:

· reviewed and discussed the audited Annual Financial
Statements as included in this document with the external
auditors, the Chief Executive Officer, the Chief Financial
Officer and the Chief Accounting Officer;
· reviewed significant adjustments resulting from external audit
queries and approved any unadjusted audit differences;
· received and considered reports from the internal
auditors; and
· reviewed the contents of the Annual Review to be posted
to shareholders.

In addition the committee evaluated:

·the capacity and performance of the financial management
team;
·the independence and performance of the Internal Audit;
and
·the independence of the external auditors and were satisfied
that they were independent.

The committee concurs with and accepts the external auditors’
report on the annual financial statements and has recommended
the approval thereof to the board. The board has subsequently
approved the financial statements, which will be open for
discussion at the forthcoming annual general meeting.

In addition, the committee has:

·reviewed the separately prepared Sustainability Report;
and
·reviewed the separately prepared Mineral Resource and
Ore Reserve Report.

The committee has taken all actions necessary to ensure the
accuracy of the information and after due consideration
recommended the approval of both the Sustainability Report and
the Mineral Resource and Ore Reserve Report to the board. The
board has subsequently approved these documents, which are
available in hard copy format on request from the contact
persons as detailed on the inside back cover or electronically
from the company’s website at www.anglogoldashanti.com.

Further to overseeing the publication of the above reports, the
Audit and Corporate Governance Committee reviews and
recommends the following reports, prepared in accordance
with US GAAP, to the board for approval as well as for
submission to the United States Securities and Exchange
Commission (SEC):

·the annual report on Form 20-F. The 2010 annual report on
Form 20-F will be filed with the SEC by no later than 30 June
2011; and
·the Form 6-K quarterly reports.

The company is putting in place the processes necessary to
ensure that an integrated report will be available for distribution
to shareholders for the 2011 financial year.

Overleaf is a detailed description of the status of AngloGold
Ashanti’s compliance with King III.

Prof. L W Nkuhlu
Chairman: Audit and Corporate Governance Committee
11 March 2011

This table details the key areas which have been addressed or which will be addressed during 2011.

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 1 – ethical leadership and corporate citizenship

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24

AngloGold Ashanti Annual Financial Statements 2010

Review by the Chairman of the Audit and Corporate Governance Committee

Has the company

established a code of

conduct and related

policies which set out

the core ethical values

to which the company

will adhere?

Even though the company had in

place a Code of Business Principles

and Ethics, it required revision as

some of its principles were not aligned

to developments in corporate

governance and to some of the

company’s key ethical policies.

A new Code of Business Principles

and Ethics was approved by the board

on 10 August 2010 following its review

and approval by the Executive and the

Audit and Corporate Governance

committees. The Code was released

electronically to all employees and the

public on 26 October 2010 and

formally launched by the Chief

Executive Officer on 25 November.

Awareness creation and training has

been carried out at the Ghana

operations and workshops were held

at the Corporate Office during

November 2010. Training at all

operations will be conducted over an

18-month period from date

of launch.

During 2011, a

number of the internal

policies that underpin

and are the bedrock of

the company’s ethical

values will be revised

to ensure that they

align with the new

Code. These include:

conflicts of interest,

gifts, sponsorship and

hospitality, fraud and

corruption, delegation

of authority and insider

trading.

Have ethical standards

been incorporated into

the strategy and

operations of the

company, for example,

has the code of

conduct been

incorporated into

employment and

supplier contracts?

The ethical standards set in the Code

of Business Principles and Ethics

should be incorporated into

employees’ contract of employment

and supplier contracts to create

awareness and bind individuals in

terms of compliance to the standards.

Following approval of the Code of

Business Principles and Ethics a

steering committee was formed to

co-ordinate the implementation of an

18-month roll out plan. The first phase

of the plan has been implemented.

See details under Compliance Section

on page 178.

Copies of the Code will be appended

to the employment contracts issued

to new employees and made available

to suppliers, contractors and other

business parties.

The second phase of

the implementation

plan will be continued

in 2011 to ensure that

the ethical principles

are embedded in the

day-to-day behaviours

and actions of

employees and other

stakeholders. In

addition, the Code will

be incorporated as an

addendum to existing

employment and

supplier contracts by

mutual consent.

Review by the Chairman of the Audit and
Corporate Governance Committee

King III compliance

P

25

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 2 – Boards and directors

Is the chairman

appointed by the

board every year (after

an assessment of his

independence)?

The independence of all non-

executive directors, including the

board chairman, is assessed by the

board annually and the outcomes

announced in the annual report. The

chairman is however not appointed to

the position annually.

The board chairman was appointed

by the directors on 1 June 2010 and

will stand for election by the

shareholders at the annual general

meeting to be held on 11 May 2011.

Once elected by the shareholders, the

board will continue to assess the

independence of and appoint the

chairman to this position annually.

Fully applied.

Is there a formal

agreement between

the company and the

non-executive

directors detailing their

terms of

appointment?

The terms of appointment of non-

executive directors are contained in

a letter of appointment. This should

be included in a formal agreement

between the director and the

company.

Formal agreements are being drafted

in respect of each non-executive

director and AngloGold Ashanti.

The process will be

completed during

2011.

If an independent

service provider is not

used, does the board

appoint an

independent non-

executive from within

its ranks, or the lead

independent director,

to lead the process of

the evaluation of the

chairman’s

performance?

AngloGold Ashanti complies with all

the recommendations of King III

regarding the annual performance

evaluation of the board and its

committees. However, these

evaluations have always been

conducted internally.

The evaluation of the board chairman

is led by the Deputy Chairman and

not the Nominations Committee as

recommended by King III.

In respect of the 2010 financial year,

board evaluations will be done

internally, however an independent

body will facilitate the board and

committees’ performance evaluations

for the 2011 financial year.

Consideration is being given to an

evaluation of the board chairman. Led

by the Nominations Committee, it will

include an assessment of his

independence.

To be completed by

end 2011.

The chairman of the

board is not a member

of the Audit

Committee

The former chairman of the board

was a member of the Audit and

Corporate Governance Committee

because the board thought it prudent

to benefit from his wealth of financial

skills and knowledge.

The former board chairman retired on

7 May 2010 and his successor is not

a member of the Audit and Corporate

Governance Committee.

Fully applied.

Have the chairman’s

roles been

formalised?

The roles of the chairman are

described in the board charter, articles

of association and in the board

induction pack. These roles should be

consolidated into a single document

and approved by the board.

A formal role description for the

chairman of the board is being drafted

by the company secretary and Senior

Vice President – Human Resources

for approval by the board.

To be completed in

May 2011.

P

26

AngloGold Ashanti Annual Financial Statements 2010

Review by the Chairman of the Audit and Corporate Governance Committee

Review by the Chairman of the Audit and
Corporate Governance Committee

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 2 – Boards and directors (continued)

Is the company’s

remuneration policy

tabled to shareholders

for a non-binding

advisory vote at the

annual general

meeting?

The company’s remuneration report
complied with all the
recommendations of King III regarding
content and completeness of
remuneration reports. Shareholders
should be given an opportunity to
have a say on the remuneration policy.

The company has previously
disclosed the remuneration of its
executive members in an aggregate
format. King III has recommended
that the three most highly paid
employees who are not directors of
the company should be disclosed.

At the annual general meeting held on
7 May 2010, the company’s
remuneration policy was detailed in
the notice of meeting and
shareholders voted on the policy, as a
non-binding resolution. This vote was
passed with a majority of 96.5%.

In addition to the remuneration of the
two executive directors which
continues to be disclosed, details of
the remuneration of the three most
highly paid employees have also been
disclosed in the remuneration section
of this report. The remuneration of the
remaining members of the Executive
Committee has been shown in the
aggregate.

Fully applied.

Chapter 3 – Audit Committee

Does the Audit

Committee understand

how the board and the

external auditor (and

any other relevant

external assurance

provider) evaluate

materiality for

integrated reporting

purposes?

The Audit and Corporate Governance

Committee oversees the company’s

reporting and provide assurance to

the board as to the accuracy and

reliability of information provided in the

reports as well as ensuring

consistency of the information

included in the two reports.

In order to ensure that information

provided in the integrated report is

material and relevant to the needs of

shareholders a formal process should

be put in place to determine

materiality on an annual basis.

The committee should also approve

the external assurance provider over

material elements of the sustainable

report.

To further strengthen its oversight role

the chairman of the committee should

be a member of the Safety, Health and

Sustainable Development Committee.

During 2010, this committee
established a process to determine
materiality for the sustainability report.
A presentation on the materiality
process was made to the committee
on 11 February 2010.

The committee also approved the
establishment of an independent
external review panel to provide
qualitative assurance on materiality for
the company’s sustainability reporting
with effect from the 2011 financial year.

At its meeting held on 5 November
2010 the committee approved Ernst &
Young as the external assurance
provider for the sustainability report.

The chairman of the Audit and
Corporate Governance Committee was
appointed a member of the Safety,
Health and Sustainable Development
Committee on 27 October 2009 to
enhance the committee’s oversight role
on sustainability reporting.

Fully applied.

Materiality will be

reviewed and

determined annually.

P

27

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 3 – Audit committee (continued)

Does the Audit

Committee monitor the

appropriateness of the

company’s combined

assurance framework

and ensure that

significant risks facing

the company are

adequately

addressed?

A combined assurance framework

must be developed and reported on

quarterly to the Audit and Corporate

Governance Committee. This

framework should provide assurance

to the committee that the significant

risks facing the company are being

adequately managed.

A maiden integrated audit plan, the

first to be fully integrated and fully

linked to the group’s risk management

process and which forms part of a

combined assurance framework was

approved by the committee on

5 November 2010.

A combined assurance framework is

being developed for the committee’s

consideration during 2011.

The combined

assurance framework

will be fully implemented

during 2011.

Does the Audit

Committee report to

the shareholders at

the annual general

meeting on how it has

fulfilled its duties in

terms of the Act during

the financial year?

A report on the Audit and Corporate

Governance Committee and other

board committees is included in the

annual report to shareholders. Given

the important role it plays in the

corporate governance environment of

the company, the board deems it

appropriate to comply with the

recommendation of King III to submit

a report to the shareholders on the

activities of the Audit and Corporate

Governance Committee annually.

A separate report from the chairman

of the Audit and Corporate

Governance Committee to

shareholders addressing the

committee’s activities is included in

this report on page 22 and will be

included in all future reports.

Fully applied.

Does the board

consider risk factors in

both internal and

external business

environments in

determining risk

tolerance?

The company has been transparent

as to its risk profile. For several years,

the board has approved the inclusion

of risk factors as part of the annual

report process. The risks considered

by the board address those risks of

both an internal and external nature,

those risks specific to the company,

those risks that are industry specific

and those risks which affect the

company directly or indirectly.

Risk management structures however

need to be strengthened.

A separate committee – the Risk and

Information Integrity Committee – was

established on 10 August 2010 to

oversee the governance of risk. The

inaugural meeting of the committee

was held on 8 November 2010.

This area will continue

to receive increased

focus in 2011.

Chapter 4 – The governance of risk

P

28

AngloGold Ashanti Annual Financial Statements 2010

Review by the Chairman of the Audit and Corporate Governance Committee

Review by the Chairman of the Audit and
Corporate Governance Committee

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 4 – The governance of risk (continued)

Does internal audit

provide the board with

a written assessment

of the effectiveness of

internal controls and

risk management on

an annual basis?

The board should disclose its views

on the effectiveness of the company’s

risk management in the integrated

report. The board is informed by

internal audit’s assessment of risk

management.

Internal audit should provide a report

annually on the company’s system of

internal controls and risk management

to the board, through the Audit and

Corporate Governance Committee.

In addition to the group being fully

compliant with the Sarbanes-Oxley

legislation since its implementation,

the group internal audit department is

in the process of developing a

framework for reporting and this will

enable it to report annually on the

company’s system of internal controls

and risk management to the board.

To be completed in

February 2011.

Is IT governance on

the board’s agenda?

The board recognises the important

role that IT governance plays in the

management of risks and the

achievement of company objectives.

IT governance structures should

therefore be strengthened.

IT governance is now firmly on the

AngloGold Ashanti board’s agenda.

With assistance of the Audit and

Corporate Governance Committee a

new committee, the Risk and

Information Integrity Committee has

been established by the board to

oversee risk and information

technology matters.

The committee will report quarterly to

the board on the discharge of its

mandate.

Fully applied.

Has the board

established and

implemented an IT

governance charter

and policies?

An IT governance framework for the

group should be developed and

approved by the Board with

assistance of the Risks and

Information Integrity Committee.

A draft IT governance framework,

which includes an IT charter and

policy, has been developed and will

be presented to the board through

the Risk and Information Integrity

Committee for review and approval

for implementation by the second

quarter of 2011.

Partially applied.

The governance of IT

is expected to be

entrenched in 2011.

Chapter 5 – The governance of information technology

P

29

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 5 – The governance of information technology (continued)

Does the IT

governance framework

include the relevant

structures i.e.

appointment of an IT

steering committee /

similar function / forum

to assist with IT

governance?

The IT governance framework should

include governance structures to

facilitate an effective IT governance

system.

Regional IT audit and compliance
committees have been established.

The regional committees report to a
Global IT Governance, Risk and
Compliance Committee located at
corporate office. This committee will
report directly to the Risk and
Information Integrity Committee.

The charters of these committees are
aligned with those of the Risk and
Information Integrity Committee.

In addition, management
accountability for IT at a group level
now resides with the Executive Vice
President – Business and Technical
Development.

The various IT

governance structures

will become fully

operational in 2011.

Does the board take

the necessary steps to

identify all laws, rules

codes and standards

applicable to the

company including any

changes thereto?

All laws, rules, codes and standards

which are applicable to AngloGold

Ashanti in the various jurisdictions

should be identified, a compliance

system put in place and continuously

monitored.

Laws, rules, codes and standards

should be risk rated to identify the

key issues.

At present monitoring of compliance
with local laws largely resides at local
and business segment levels, e.g.
South Africa, Continental Africa,
Americas and Australasia. The group
compliance department is in the
process of identifying laws, rules,
codes and standards applicable to the
company in the various jurisdictions
and this will be submitted to the Audit
and Corporate Governance Committee
in 2011. A compliance system will be
developed, monitored and reported
to the committee quarterly.

Partially applied.

Full application

expected in 2011.

Has the board

established the

compliance universe

for the company?

A compliance universe should be

drawn up for the group.

Being a global company, a

compliance universe should be put in

place to effectively monitor

compliance with relevant legislation.

Implementation to be

completed before end

2011.

Chapter 6 – Compliance with laws, rules, codes and standards

P

30

AngloGold Ashanti Annual Financial Statements 2010

Review by the Chairman of the Audit and Corporate Governance Committee

Review by the Chairman of the Audit and
Corporate Governance Committee

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 6 – Compliance with laws, rules, codes and standards (continued)

Is compliance with all

applicable rules, codes

and standards

included as a regular

item on the agenda of

the board even if this

responsibility has been

delegated to a

separate committee?

Compliance matters are a regular

agenda item for meetings of the Audit

and Corporate Governance

Committee which reports quarterly to

the board.

The structure whereby compliance

matters are considered by the Audit

and Corporate Governance

Committee quarterly with feedback to

the board has worked adequately.

Matters that require the board’s

approval are reviewed by the

committee which then makes a

recommendation to the board.

Fully applied.

Has the board ensured

that the company has

a compliance

framework and

processes?

A detailed compliance Framework

should be drawn up. This should

include an assessment of how

compliance needs to be assured.

The compliance framework should be

presented to the Audit and Corporate

Governance Committee with quarterly

reports submitted to the committee,

dealing with the following:

Compliance with laws, rules, codes

and standards;

Completeness and accuracy;

Actions to ensure compliance;

Identification of new laws, rules,

codes and standards; and

IT related laws and regulations.

This is in progress and will be

completed in 2011.

Once the framework is established,

monitoring of compliance with laws

and regulations in all jurisdictions will

be done on a quarterly basis and

reported to the board through the

Audit and Corporate Governance

Committee.

Partially applied.

Implementation to be

completed during

2011.

Does the board

receive assurance

regarding the

effectiveness of the

compliance framework

and processes?

Group internal audit should provide

assurance annually to the Audit and

Corporate Governance Committee

that the compliance function is

operating adequately and effectively.

An audit of the compliance function

by the group internal audit function

took place in the fourth quarter of

2010. The outcome of the audit

was submitted to the Audit and

Corporate Governance Committee

in February 2011.

Partially applied.

P

31

Compliance status

Assessment point

and planned

as detailed in code

Gap identified

Action taken during 2010

future action

Chapter 6 – Compliance with laws, rules, codes and standards (continued)

Does the Chief Audit

Executive confirm the

independence of the

internal audit function

to the audit committee

at least once a year?

The Vice President – Group Internal

Audit (who is the group’s Chief Audit

Executive) should prepare written

confirmation of the independence of

the internal audit function annually

for the Audit and Corporate

Governance Committee.

This was implemented in February

2010 and will be repeated annually.

Fully applied.

Does the Chief Audit

Executive have a

standing invitation to

attend, as an invitee,

any of the executive

committee or other

committee meetings?

The Vice President – Group Internal

Audit, should receive a standing

invitation to meetings of the executive

committee meetings that precede the

Audit and Corporate Governance

Committee meetings.

This was implemented in February

2010.

Fully applied.

Has the board

assessed the

effectiveness of its

compliance function?

Group internal audit should provide

assurance annually to the Audit and

Corporate Governance Committee

that the compliance function is

operating adequately and effectively.

To ensure its effectiveness, the

compliance department’s staffing

levels were increased in 2010. An

audit of the compliance function was

completed during the last quarter of

2010 and the results presented to the

board through the Audit and

Corporate Governance Committee in

February 2011.

This will be done

annually.

Chapter 7 – Internal audit

Has the board

adopted formal

dispute resolution

processes for internal

and external

disputes?

The board should adopt a formal

dispute resolution process dealing

both with internal and external

disputes. This process should define

what is meant by dispute resolution,

identify the various methods of

dispute resolution and the areas within

the company that will be affected.

The Legal Department is establishing

structures and procedures for

alternative dispute resolution as

recommended by the Code. This is

expected to be completed during

2011.

To be fully applied by

the second half of

2011.

Chapter 8 – Governing stakeholder relationships

P

32

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

Executive summary

The financial objectives for 2010 as included in the 2009 CFO’s

report were:

· maximising margins and cash generation in the business;

· continuing with opportunistic reductions to the hedge

book to further improve participation in a gold price rally; and

· introducing more tenor into the statement of financial

position whilst refinancing the group’s $1.15bn revolving

credit facility before December 2010.

We are pleased to report that all three of the above financial

objectives were successfully met in 2010, thereby ensuring

that AngloGold Ashanti finished the year 2010 in a stronger

financial position.

First, starting with maximising margins and cash generation

in the business - stronger gold prices, (albeit partially mitigated

by cost pressures and stronger local currencies), steady

production performance, greater exposure to spot prices,

elimination of the hedge-book during the last quarter of 2010

and a lower than anticipated capital spend, helped us deliver

on this objective. The operating cash flow (a measure to show

funds available to meet capital expenditure, financing and

dividend requirements) amounted to $1.7bn for the year. Free

cash flow (a measure to show funds available to meet

dividends) amounted to $525m for the year. These measures

increased by 28% and 169% respectively on 2009 levels. In

addition $134m was realised from the sale of non-core assets

– Tau Lekoa and a 10% equity stake held in B2Gold

Corporation. Our adjusted headline earnings for 2010 rose to

$787m from $708m in 2009, an increase of $79m or 11%. Our

returns on net capital employed and on equity for 2010 were

16.0% and 19.9% respectively, above the group’s strategic

target of delivering a 15% return through the cycle. All of the

above numbers exclude the cost of the accelerated hedge

buy-back that was completed in 2010 and which is dealt with

separately below.

Turning to the second objective of hedge book reduction,

we completed the final phase of the hedge buy-back

programme in the third and fourth quarter of 2010, which saw

the elimination of the residual 3.0Moz at an after tax impact of

$2.5bn. With this elimination, AngloGold Ashanti is no longer

obliged to deliver a significant portion of its annual production

for years 2011 to 2014 at deep discounted prices and will now

enjoy full exposure to spot gold prices going forward, with

consequential benefits of improved earnings, cash flow and

debt carrying capacity. In order to ensure that the group’s

financial position is not constrained, the hedge take-out was

funded with an optimum balance of equity, mandatory

convertible bonds and debt. Approximately 60% ($1.5bn) of the

cost of the hedge take-out was funded using equity and

mandatory convertible bonds, with approval from shareholders.

The balance of 40% was funded from a combination of cash

and debt facilities.

In addition to the equity raisings referred to above, we
implemented a comprehensive refinancing plan in March and
April of 2010, to address the tenor and mix of our debt, in
order to meet the third and final financial objective,
as follows:

· Secured international investment grade credit ratings from
both Moody’s Investors Service and Standard and Poors
(Moody’s and S&P);

Successfully

our financial

objectives

meeting

P

33

·Raised $1.0bn of long-term money in the form of two rated

international bonds at competitive rates – 30-year $300m

and 10-year $700m, and applied the proceeds to eliminate

the amounts drawn under the $1.15bn revolving credit

facility; and

·Obtained a new four year $1.0bn revolving credit facility from

a syndicate of international banks at competitive rates, in

order to provide the group with liquidity.

The group’s debt profile now comprises an optimum mix of

both sources (bank facilities, rated bonds and convertible

bonds) and tenor (short-, medium- and long-term money)

whilst providing sufficient liquidity and flexibility that is

required in order to ensure that the project pipeline is

not compromised.

Now turning to the 2010 performance, some of the key

financial performance metrics include:

·Gold production: 4.52Moz (within guidance provided at the

start of 2010 of 4.5Moz – 4.7Moz);

·Average US dollar spot price: $1,227/oz (26% higher than

previous year, but partly eroded in the case of AngloGold

Ashanti by a 5.5% discount to spot, until elimination of the

hedge book);

·Total cash costs: $638/oz (within exchange rate adjusted

guidance). Given the relationship between US dollar gold

prices and US dollar-denominated costs, unit costs were

24% higher than last year, due to inflation, currency strength,

higher royalties and deferred stripping costs;

·Adjusted headline earnings (excluding accelerated

hedge buy backs): $787m or 212 US cents per share;

·Adjusted headline loss (including cost of accelerated

hedge buy backs): loss of $1.76bn or loss of 473 US cents

per share;

·Net profit attributable to equity shareholders: $76m

(2009: net loss of $320m);

·Operating cash flow: $1.7bn;

·Free cash flow (pre-dividends to shareholders): $525m plus

$134m from non-core asset sales;

·Hedge book remaining as at 31 December 2010: Nil;

·Net debt (excluding mandatory convertible bonds) as at

31 December 2010: $1.3bn, despite funding 40% of the

accelerated hedge take out;

·Return on net capital employed: 16.0%;

·Return on shareholder’s equity: 19.9%; and

·Dividend declared per ordinary share: 145 South African

cents (approximately 20 US cents per share), 12% higher

than the previous year.

Looking ahead to 2011, our three key financial objectives are:

·Ensuring that the benefits of the hedge book elimination

are captured in improved earnings and cash generation;

·Maintaining our international investment grade credit

ratings, and

·Maintaining a prudent statement of financial position,

whilst at the same time not compromising the project

pipeline of the group and returns to shareholders.

Production

Gold production of 4.52Moz for the year was within the market

guided range of 4.5Moz to 4.7Moz, but 2% or 84,000 ounces

lower than that of 2009, primarily due to lower production from

Continental Africa.

South Africa’s production decreased by 1% or 12,000oz to

1.79Moz. Production was down at Great Noligwa, in line with a

planned downscaling of that operation, at Tau Lekoa following

the transfer of the mining rights on 1 August 2010 on completion

of the sale, at Kopanang due to lower volumes mined at a lower

grade, and at Savuka where production remained constrained

following the seismic event on 22 May 2009. In addition, there

were delays to the shaft infrastructure repair programme at

Savuka. These decreases in production were partly offset by

production increases at TauTona owing to the higher volumes

mined, at Moab Khotsong where improved reef hoisting

performance combined with fewer safety stoppages, and at

Mponeng due to the mining of higher grade areas.

Production during the year from Continental Africa fell by 6%

or 93,000oz to 1.49Moz as lower grades were mined across

most of the mines, most notably at Siguiri, Morila and Yatela.

At Obuasi, production was lower owing to the upgrading of the

water management facilities, blasting fragmentation and

restricted ore passes. At Iduapriem, inadequate tailings

storage facilities on site resulted in operational stoppages

which were recovered by re-planning operations and mining,

thus minimising the impact on production. Decreases at these

operations were partly offset by increased production at Geita

and Navachab where higher grades and volumes were mined.

In the Americas, production increased by 3% or 26,000oz to

842,000oz. This increase was due mainly to the implementation

of the Lamego project at AngloGold Ashanti Córrego do Sítio

Mineração and better ounce recovery from the heap leach pad

at Cripple Creek & Victor, which benefitted from better pad pH

chemistry and the strategy of stacking higher grade ore closer

to the pad liner.

P

34

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

Australasia’s production decreased by 1% or 5,000oz to

396,000oz due to the lower volumes mined at Sunrise Dam and

marginally lower grade of ore processed in line with the mine plan.

Uranium production of 1.46Mlbs was 15% ahead of mine plan

due to better grades and recoveries. Year-on-year, uranium

production was 1% or 21,000lbs higher than in 2009.

Income statement

An analysis of the abridged income statement for the year, with comments on significant variances is presented as follows:

Figures in $ million

Notes

2010

2009

Gold income

1

5,334

3,768

Cost of sales

2

(3,550)

(2,813)

Loss on non-hedge derivatives and other commodity contracts

3

(702)

(1,533)

Gross profit (loss)

1,082

(578)

Corporate, marketing, exploration and other operating expenditure

4

(438)

(322)

Special items

5

(126)

691

Operating profit (loss)

518

(209)

Net interest paid

6

(123)

(85)

Exchange gains and fair value adjustments on convertible bonds

7

(53)

79

Share of equity accounted investments' profit

63

94

Profit (loss) before taxation

405

(121)

Taxation

8

(276)

(147)

Profit (loss) for the year

129

(268)

Other financial data

EBITDA (excluding hedge buy-back costs)

1,897

1,663

Adjusted headline earnings (excluding hedge buy-back costs)

787

708

Income statement commentary

The increase in profits for the year to $129m from a loss of

$268m in 2009 was mainly a result of the higher received gold

price and the reduced loss on the non-hedge derivatives as

outlined in note 3 below.

1. Gold income

Despite the lower gold production, gold income at $5,334m

was 42% higher than in 2009. This was due to the increase in

the average gold price received (excluding hedge buy-back

costs) which rose from $925/oz to $1,159/oz, in line with the

higher spot gold price. In addition, included in the 2009 gold

income, were normal purchase and sale exempted (NPSE)

contract losses of $292m, which from July 2009 onwards

were redesignated at fair value on the balance sheet and

reported in the loss from non-hedge derivatives. The price

received (excluding the cost of the hedge buy-backs) was at a

5.5% discount to the average spot gold price, similar to the

5% discount in 2009 and better than the guidance of 8% to

10% due to the early elimination of the hedge book.

2. Cost of sales

Cost of sales increased by 26% from $2,813m to $3,550m

in 2010.

Components of cost of sales are:

· Total cash costs increased by 22% from $2,283m in 2009

to $2,778m in 2010. In unit cash cost terms, total cash

costs increased from $514/oz to $638/oz (refer to graph).

P

35

Figures in $ million

2010

2009

Loss on hedge buy-back costs

(2,698)

(797)

(Loss) gain on realised non-hedge derivatives

(277)

254

Gain (loss) on unrealised non-hedge derivatives and other commodity contracts

2,273

(990)

(702)

(1,533)

This was due mainly to:

· stronger local operating currencies, all except the 
Argentinean peso, appreciating between 1% to 8%;
· inflation related increases in salaries and consumables
including power;
·higher royalties paid related to the higher gold price and 
the new profit based royalty introduced in South Africa
from 1 March 2010;
· deffered stripping cost reversals during 2010 compared 
to deferrals in 2009; and
·higher infrastructure maintenanceand labour costs;

Partially offset by:
· stockpile inventory credits
·higher income from by-products, mainly price related, and 
higher sales of silver and sulphuric acid; and
· insurance refunds relating mainly to the Savuka 
seismic event.
·Rehabilitation costs increased from $22m to $109m,
owing mainly to changes and reviews in estimates

resulting from the changes to the life of mine profiles and
  additional environmental damage incurred, legislation,
  discount and inflation rate assumptions as well as
  stronger local currencies.
· Retrenchment costs of $23m occurred mainly at the South
  African operations.
· Amortisation of tangible and intangible assets increased
  from $557m to $692m in 2010. This increase is attributable
  to the reassessment of the useful lives of assets and the
  components of property, plant and equipment in accordance
  with revisions to the business plans, the higher tangible asset
  base and the impact of stronger local currencies.

3. Loss on non-hedge derivatives and other
commodity contracts

The decrease in the loss on non-hedge derivative contracts
from $1,533m in 2009 to $702m in 2010 is attributable to
the following:

Analysis of total cash cost

2010 vs 2009 ($/oz)

$/oz

514

2009

605

Total

45

Exchange

700

650

600

550

500

450

400

6

Volume

(5)

Grade

(18)
Ore

stockpile

(3)

Insurance

refunds

(7)

By-

products

13

Royalty

37

Deferred
stripping

12

Maintenance

and labour

(2)

Acq/

disposal

638

2010

46

Inflation

Change

P

36

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

With the July 2009 hedge buy-back, NPSE contracts were

cash settled, resulting in the remaining NPSE contracts being

re-designated as non-hedge derivatives and reflected in the

statement of financial position. Fair value changes of these

historical NPSE contracts were accounted for in the income

statement, thus increasing the loss on non-hedge derivative

contracts substantially when compared with 2010. The total

loss in the income statement of the 2009 hedge buy-back and

the related re-designation of the historical NPSE contracts

amounted to $1,028m.

The loss on the 2009 hedge buy-back of $797m was made up

of $580m previously designated as NPSE contracts and held

off the statement of financial position and a further $217m of

existing non-hedge derivative contracts.

With the elimination of the gold hedge book, the company

and its shareholders will now have full exposure to the gold

spot price.

4. Corporate, marketing, exploration and other

operating expenditure

Corporate and other administration expenses increased from

$154m to $206m in 2010 and included additional costs

associated with the business improvement initiative, Project

ONE, implementation of the global security framework,

inflation-related increases and costs associated with capacity

building activities. In addition, the strengthening of the South

African rand relative to the US dollar also contributed to

increased costs.

Marketing costs of $14m are $4m higher than 2009.

Membership fees paid to the World Gold Council in 2010 and

2009 were $9m, and the remaining expenditure relates to

other marketing initiatives.

Expensed exploration costs increased from $150m in 2009 to

$198m in 2010, a function of higher prefeasibility expenditure

at La Colosa in Colombia, Tropicana in Australia and

Mongbwalu in the Democratic Republic of the Congo. The

expensed exploration costs consisted of greenfield

expenditure of $85m, brownfield expenditure of $50m and

prefeasibility expenditure of $63m.

Other operating expenses increased from $8m in 2009 to

$20m in 2010. The increase of $12m was due to the higher

level of claims filed by former employees in respect of loss of

employment, work-related accident injuries and diseases and

governmental fiscal claims. In addition, the 2009 year

included a non-recurring $6m rebate relating to governmental

fiscal claims.

5. Special items

Special items in 2010 amounted to an expense of $126m

compared to an income in 2009 of $691m and is made up

as follows:

Figures in $ millions

2010

2009

Income items

Impairment reversals

–

717

Losses recovered through insurance claims

24

7

Profit on disposal of assets and investments

43

49

Royalties received

8

–

75

773

Expense items

Impairment of assets, investments and receivables

(102)

(41)

Loss on sale of assets

(25)

–

Indirect taxes and legal claims

(17)

(29)

Mandatory convertible bond transaction costs

(56)

–

Other

(1)

(12)

(201)

(82)

Total special items

(126)

691

P

37

In 2010, impairment charges of $102m were recorded,

primarily in relation to South Africa (at TauTona and Savuka).

Transaction costs on the mandatory convertible bonds of

$56m was also incurred in 2010.

In 2009, asset impairments of $717m, raised initially in 2008,

were partially reversed due to the increase in the long-term real

gold price and improved mine plans, occurring at Obuasi of

$373m, Geita of $261m, and Iduapriem of $83m.

6. Net interest paid

Net interest paid increased from $85m to $123m in 2010. This

was due to the higher interest and fees paid on the rated and

mandatory convertible bonds, the accelerated amortisation of

fees on debt facilities repaid and cancelled, and reduced

interest capitalised related to the Boddington joint venture

asset disposed of during 2009.

7. Exchange gains and fair value adjustments on

convertible bonds

The 2010 exchange gain of $3m relates to the translation on

monetary items, net exchange differences on receivables and

payables, and realised exchange gains. In 2009, an exchange

gain of $121m arose when part of the proceeds from the sale

of the Boddington joint venture was used to repay borrowings.

In 2010, the fair value loss of $1m on the option component of

the convertible bonds was due to the substantial drop in

volatilities which decreased the option value significantly. In

2009, the fair value loss of $33m on the option component

was mainly due to an increase in volatilities and the share price

underlying the $732.5m convertible bond.

In 2010, the fair value loss of $55m on the mandatory

convertible bonds was a result of the movement in the listing

price of the bonds on the New York Stock Exchange between

15 September 2010 and 31 December 2010. The mandatory

convertible bonds are carried at fair value as they will be settled

by the issue of equity.

8. Taxation

The taxation charge was substantially higher in 2010 at

$276m compared with the $147m in 2009. The 2009 taxation

charge included a non-recurring tax credit of $246m on

impairment reversals. In addition, the year-on-year increase

was due to higher earnings, the reversal of the deferred

taxation assets on unrealised non-hedge derivative losses of

$558m, which was partly mitigated by the higher tax benefits

arising from the hedge book settlement of $174m and a once-

off tax credit in 2010.

Other financial data

EBITDA (excluding the cost of hedge buy-backs) increased

from $1,663m in 2009 to $1,897m in 2010. The year-on-year

increase of $234m is illustrated in the graph below.

EBITDA

2010 vs 2009 ($m)

$m

1,663

2009

2,900

2,700

2,500

2,300

2,100

1,900

1,700

1,500

1,300

1,897

2010

Change

1,000

Gold income

including realised

gains

(495)

Total

cash costs

(96)

Retrenchment and
rehabilitation costs

(109)

Corporate,

marketing and

exploration

(17)

Other operating

expenses

(38)

Associates

share of

EBITDA

(11)

Inventory

P

38

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

Adjusted headline earnings (excluding hedge buy-back costs)

2010 vs 2009 ($m)

$m

708

2009

1,300

1,100

900

700

500

787

2010

Change

299

Adjusted

gross

profit

(103)

Corporate, marketing

and exploration

(38)

Net interest

21

Taxation

26

Abnormal

items

(126)

Other

Adjusted headline earnings (excluding the cost of hedge buy-

backs) increased from $708m in 2009 to $787m in 2010. The

year-on-year increase of $79m is illustrated in the graph above:

·The increase in adjusted gross profit was due to the improved

margins resulting from the higher received gold price partly

offset by higher operating costs and lower production.

·Corporate and marketing costs increased by $55m and

exploration by $48m (refer note 4 to the income statement

commentary).

·Net interest paid is $38m higher due to additional

borrowings (the rated bonds, mandatory convertible bonds

and the R1.5bn revolving credit facility), increased costs and

discounts on the unwinding provisions, and a non-recurring

benefit arising from the unwinding of the Boddington joint

venture deferred debtor in 2009.

·Taxation is lower due to the higher tax benefit of the hedge

buy-backs and a once-off tax credit in 2010 of $84m, partly

offset by higher earnings.

·Abnormal items relates to the Savuka business interruption

insurance payout and a recovery of funds pertaining to the

loss of consignment inventory.

·Other relates mainly to a non-recurring exchange gain on a

loan repayment in 2009 (refer note 7 to the income

statement commentary).

Statement of financial position

An analysis of the abridged statement of financial position as at 31 December is presented, with comments on significant variations

as follows:

Figures in $ millions

Notes

2010

2009

Tangible and intangible assets

1

6,374

5,996

Cash and cash equivalents

575

1,100

Other assets

2

2,583

2,691

Total assets

9,532

9,787

Total equity

3

4,113

3,030

Borrowings

4

2,704

1,931

Deferred taxation

900

753

Other liabilities

5

1,815

4,073

Total equity and liabilities

9,532

9,787

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39

Statement of financial position commentary

The statement of financial position has improved significantly

during the 2010 and 2009 years. Equity of approximately

$1bn has been injected, hedge contracts of $3.5bn before

taxation were accelerated and cash settled. Long-term tenor

has been introduced onto the balance sheet through the

issuing of a convertible bond in 2009 for $0.7bn, the issue of

two rated bonds totalling $1bn and mandatory convertible

bonds of $0.8bn.

Significant events that impacted the statement of financial

position were:

1. Tangible and intangible assets

The increase in the tangible and intangible assets from

$5,996m to $6,374m was mainly due to the capital

expenditure incurred during the year amounting to $973m

(excluding that of joint ventures), the effects of stronger closing

positions of local currencies against the US dollar of $314m, all

of which was partly offset by an amortisation and depreciation

charge of $692m, deferred stripping costs of $126m, and

impairments of $83m. The balance of movements included

changes in estimates of decommissioning assets and

asset reclassifications.

2. Other assets

Other assets consists mainly of investments, inventories,

financial derivatives, trade and other receivables, non-current

assets, deferred tax assets, and cash restricted for use. Other

assets decreased from $2,691m in 2009 to $2,583m in 2010.

Significant movements included:

·a decrease of $71m in assets held for sale owing mainly to

the sale of the Tau Lekoa mine together with the adjacent

properties of Weltevreden, Jonkerskraal and Goedgenoeg

(Tau Lekoa) to Simmer & Jack Mines Limited (Simmers). The

sale was concluded effective 1 August 2010;

·a reduction of $334m in financial derivative assets as a

consequence mainly of the accelerated settlement of the

final close-out of the hedge book;

·a decrease of $18m in investments in associates and equity

accounted joint ventures given the higher dividends paid at

the Malian operations; and

·decreases of $41m in deferred tax assets following the

reorganisation of the operations in Brazil;

all of which were partly offset by:

·an increase of $62m in other investments due primarily to

movements in rehabilitation trust funds, the addition of the

Simmers shares following the sale of Tau Lekoa, which was

partly offset by the disposal of the investment in Vancouver-

based gold producer B2Gold Corp;

·an increase of $212m in inventories due to the timing of gold

dispatches, higher production costs and uranium inventory

levels, and in North America, the heap leach inventory

increased as a result of the higher levels of cost ounces that

were placed on the leach pad and the slower percolation

rates of the gold-bearing solution through the leach pad; and

·a rise of $102m in trade and other receivables owing to

increases in recoverable taxes and duties and the timing of

payments received.

3. Total equity

Total equity increased from $3,030m in 2009 to $4,113m

in 2010.

Significant movements included:

·an equity offering during September 2010 raised gross

proceeds of $789m;

·profit for the year of $129m was mainly a function of the

higher gold price received, the decline in the loss on non-

hedge derivatives and the elimination of the remaining hedge

book at a cost of $2.5bn;

·an increase in other comprehensive income of $250m

included foreign currency translation reserves, cash flow

hedge reserves, available-for-sale reserves and actuarial

gains and losses; and

·Dividends paid to equity shareholders of $67m and to

minorities of $64m.

P

40

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

4. Borrowings

Total long- and short-term borrowings increased from $1,931m in 2009 to $2,704m in 2010. The borrowings and related facilities

can be summarised as follows:

Facility status at

Facility status at

Figures in $ millions

Notes

31 December 2010

2010

2009

Mandatory convertible bonds

1

Refer group note 26 page 299

for conversion features

874

–

Rated bonds

2

$700m 10-year bonds and

$300m 30-year bonds

995

–

3.5% Convertible bonds

Refer group note 26 on page 299

for conversion features

623

596

FirstRand Bank Limited loan

3

R1.5bn ($222m)

107

–

Syndicated loan facility

4

$1.0bn

38

–

Syndicated loan facility

2

Repaid and cancelled

–

1,024

Standard Chartered term facility

5

Repaid and cancelled

–

238

2,637

1,858

Other loans and finance leases

67

73

2,704

1,931

Notes:

1. During September 2010, the company issued $789m worth of mandatory convertible subordinated bonds due on 15 September 2013.

The proceeds were also applied to part fund the hedge close-out. Both the Moody’s and S&P ratings agencies have confirmed that they

regard the bonds as equity in determining their ratings, and have reaffirmed AngloGold Ashanti’s international investment grade credit

ratings. These instruments have therefore been treated as equity and excluded from borrowings in the Non-GAAP debt metrics.

2. During April 2010, two rated bonds, maturing in 10 and 30 years, were issued and aggregated $1.0bn. The proceeds were applied

to repay and cancel amounts drawn under the $1.15bn syndicated loan facility and the Standard Chartered term facility.

3. During September 2010, the short-term local facility of R1.5bn with FirstRand Bank Limited was drawn to part fund the South

African hedge close-out.

4. During May 2010, the company entered into a four-year unsecured syndicated revolving credit facility for $1.0bn, of which $170m

was drawn to part fund the hedge close-out.

5. During May 2010, the company repaid and cancelled the Standard Chartered term facility.

5. Other liabilities

Other liabilities consist mainly of provisions such as the

environmental rehabilitation liability, retirement defined benefit

plans, liabilities held for sale, trade, other payables and deferred

income, financial derivatives and taxation payable. The

decrease from $4,073m to $1,815m in 2010 was mainly due to

the decrease in financial derivative liabilities of $2,525m, the

result of the accelerated settlement of the hedge book.

Other movements included:

· Increases in environmental rehabilitation and other

provisions of $138m owing to changes and reviews in

estimates, legislation, discount and inflation rate

assumptions as well as stronger local currencies. The

changes in estimates result from changes to the life of mine

profiles and additional environmental damage incurred;

· Increases in the provision for pension and post-retirement

benefits of $32m due largely to stronger local currencies

against the US dollar, which were partly offset by the effect

of changes to discount and inflation rate assumptions; and

· An increase in trade, other payables and deferred income of

$126m owing mainly to the timing of payments, increased

payroll, power and electricity accruals, and social security

and other tax provisions.

P

41

The reduced closing cash position was mainly a result of the

hedge buy-back cash outflow of $2.6bn, which was partly

funded from proceeds arising from debt and the issue of equity.

Operating activities

1. Cash generated from operations increased by $369m from

$1,345m in 2009 to $1,714m in 2010 mainly due to the

higher received gold price, the benefits of which were

partly negated by the decline in ounces sold and the rise in

total cash costs. Movements in working capital resulted in

a net outflow of $299m in 2010 compared with $50m the

prior year. The increased level of cash locked up in working

capital was mainly due to an increase in inventories and

trade and other receivables. Inventories increased mainly

due to higher ore stockpile and uranium inventory levels,

and in North America the heap leach inventory increased

as a result of the higher cost ounces that were placed on

the leach pad and the slower percolation rate of the gold-

bearing solution through the leach pad. Trade and other

receivables increased owing to the timing of receipts, the

rise in recoverable taxes, and the over payment of

provisional taxes in South Africa.

2. The higher dividends received in 2010 from equity

accounted investments was due to the higher distribution

of $44m from Sadiola.

3. Cash utilised for hedge buy-back costs increased from

$797m in 2009 to $2,611m in 2010, reflecting the final

tranche of 3.0Moz that was bought back in 2010.

Statement of cash flows

An analysis of the abridged cash flow statement is presented and significant variations in balances are commented upon below.

Figures in $ millions

Notes

2010

2009

Cash generated from operations

1

1,714

1,345

Dividends received from equity accounted investments

2

143

101

Taxation paid

(188)

(147)

Cash utilised for hedge buy-back costs

3

(2,611)

(797)

Net cash (outflow) inflow from operating activities

(942)

502

Capital expenditure

4

(973)

(1,019)

Net proceeds from the acquisition and disposal of tangible assets,

investments, associate and joint venture loans

5

51

778

Interest received

32

55

Other investing activities

19

(9)

Net cash outflow from investing activities

(871)

(195)

Net proceeds from share issues

6

778

295

Net borrowings proceeds

7

648

43

Dividends and finance costs paid

(232)

(167)

Net cash inflow from financing activities

1,194

171

Net (decrease) increase in cash and cash equivalents

(619)

478

Translation

105

47

Cash and cash equivalents at beginning of year

1,100

575

Cash and cash equivalents at end of year

(1)

586

1,100

(1)

The cash and cash equivalents balance at 31 December 2010 includes cash and cash equivalents included in the statement of financial position as part of

non-current assets held for sale of $11m.

P

42

AngloGold Ashanti Annual Financial Statements 2010

CFO’s report

CFO’s report

The elimination of the hedge book fulfils a crucial strategic

objective by ending the practice of selling gold at a

discount to current market prices, thus improving cash

flows and earnings.

Investing activities

4. Capital expenditure decreased by $46m from $1,019m to

$973m in 2010. Capital expenditure during 2010 consisted

of $250m relating to project capital, $352m for Ore Reserve

development and $371m for stay-in-business capital.

Excluding expenditure of $145m on the Boddington joint

venture in 2009, project capital expenditure year-on-year

reduced by $18m. Ore Reserve development expenditure

increased by $5m and mainly arose at the Americas, in line

with increased Ore Reserve development meters. Stay-in-

business expenditure increased by $113m and was mainly

driven by increased capital requirements at Obuasi of

$27m, AngloGold Ashanti Córrego do Sítio Mineração of

$24m, Geita of $22m, Mponeng of $17m, Moab Khotsong

of $13m and Cerro Vanguardia of $7m.

5. Net proceeds from the sale of assets decreased from

$778m to $51m in 2010. During 2010, the B2Gold and

Red 5 investments were sold for $68m and $9m

respectively, and additional shares were acquired in

International Tower Hill for $11m and XDM Resources for

$6m. During 2009, $990m was received from the sale of

the Boddington joint venture and $145m was reimbursed

for the capital expenditure incurred. In addition, $344m

was spent on acquiring the 45% effective interest in the

Kibali gold project and $6m on the additional 3% holding

in Sadiola. The balance of the proceeds related mainly to

real estate activities in Brazil, investments in environmental

rehabilitation trust funds established by AngloGold Ashanti

in compliance with regulatory requirements and other

sundry investment purchases.

Financing activities

6. The net proceeds from the issue of shares increased from

$295m in 2009 to $778m in 2010. The most significant

movement relates to an equity offering which resulted in

the issue of 18,140,000 ordinary shares at an issue price

of R308.37, raising $773m (net of share issue costs). In

2009, an equity offering resulted in the issuing of

7,624,162 ordinary shares at an issue price of R288.32 per

ordinary share. Net proceeds of $280m were raised. The

balance of the proceeds relate to the normal issue of

shares related to the employee share scheme.

7. Net borrowing proceeds increased from $43m in 2009 to

$648m in 2010. The 2010 year includes proceeds of

$983m from the $700m and $300m rated bonds, $819m

from the mandatory convertible bonds, $307m from

FirstRand Bank Limited and $170m from the $1bn

syndicated loan. This was partly offset by repayments of

$1,060m on the $1.15bn syndicated loan facility, $250m

on the Standard Chartered term facility, $120m on the

$1bn syndicated loan facility and $200m to FirstRand

Bank Limited.

The 2009 year included proceeds of $732.5m from the

3.5% convertible bonds, $1bn from the term facility and

$985m from the $1.15bn syndicated loan facility. This was

partly offset by repayments of $1bn on the 2.375%

convertible bonds, $750m on the term facility and $899m

on the $1.15bn syndicated loan facility. The balance of the

movements related to proceeds and repayments in terms

of other loan agreements.

Other developments

·During the first half of the year, some of the Brazilian wholly-

owned operations were restructured to capitalise on

operating and financial synergies. A new company was

formed and named AngloGold Ashanti Córrego do Sítio

Mineracão S.A.

·AngloGold Ashanti is in the process of filing its US GAAP

financials in XBRL (eXtensible Business Reporting Language)

format in accordance with the United States Securities and

Exchange Commission regulations. In South Africa, XBRL filing

for the IFRS financials is presently a voluntary filing programme.

The company is considering this method of presenting

financial information in South Africa, upon successful

implementation of the current XBRL filing.

One-year forecast – 2011

AngloGold Ashanti’s annual production guidance for 2011 is

4.55Moz to 4.75Moz.

Capital expenditure for 2011 is estimated to range between

$1.5bn and $1.6bn.

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43

Expected

Forecast

Forecast total

cash

capital

For the year ended 31 December 2011

production

cost expenditure

000oz

$/oz

(1)

$m

(2)

South Africa

(3)

1,717 – 1,792

624 – 647

600

Ghana

490 – 511

783 – 813

176

Guinea

270 – 281

693 – 719

36

Mali

236 – 246

784 – 814

25

Namibia

83 – 87

921 – 955

10

Tanzania

485 – 506

631 – 655

66

Australia

344 – 360

881 – 914

158

Argentina

190 – 198

536 – 556

66

Brazil

435 – 455

515 – 535

279

United States

300 – 314

547 – 567

72

Democratic Republic of the Congo

–

–

84

Other

–

–

27

AngloGold Ashanti

4,550 – 4,750

660 – 685

1,599

(1)

Based on the following assumptions: R7.11/$, A$/$0.98, BRL1.70/$ and Argentinean peso 4.12/$; Brent crude at $95 per barrel.

(2)

Capital expenditure is managed in line with earnings and cash flows and may fluctuate accordingly. Forecast capital expenditure for operations with minorities

is reported at 100%. For entities which are equity accounted, the forecast capital spend is the attributable share.

(3)

In South Africa, production assumes stable power supply from Eskom at 48c/Kwh.

Other illustrative estimates

Outlook 2011

Depreciation and amortisation

$810m

Corporate, marketing, Project ONE and capacity building costs

$275m

Expensed exploration and prefeasibility costs (including equity accounted associates and joint ventures of $30m)

$325m

Interest and finance costs (income statement)

$205m

Interest and finance costs (cash flow)

$145m

Srinivasan Venkatakrishnan

Chief Financial Officer

11 March 2011

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44

AngloGold Ashanti Annual Financial Statements 2010

Scorecard 2010

Objectives – 2009

Progress – 2010

Achieve longer-term tenor in the

Received international investment-grade credit ratings from Moody’s and S&P

balance sheet

in April 2010 which allowed the issue of $700m 10-year bonds and $300m

30-year bonds. Three-year mandatory convertible bonds for $789m issued

in September.

Refinance revolving credit facility

Four-year, $1bn revolving credit facility secured with syndicate of 16 banks

in April.

Opportunistically reduce hedge book

Hedge book eliminated on 7 October 2010, thus providing full exposure to the

gold price for AngloGold Ashanti shareholders, and enhancing profitability and

cash flow by ending discounted gold sales.

Roll-out Safety Transformation Project

Safety Transformation Project launched in Johannesburg in May, outlining the

AngloGold Ashanti Safety Blueprint and Safety Framework. Twenty two Global

Safety Standards have been signed off by the business, and the development

of guidelines to support their implementation is under way. Concepts from the

guidelines on Hazard and Risk Management and Incident Management have

been embedded into the design of the Business Process Framework.

Scorecard 2010

Delivering

on our

commitments

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45

Accelerate Project ONE roll-out

Implemented at an additional 15 sites (mines and processing plants) in 2010,

adding to the eight that went live in 2009. There are currently 145 people

engaged in the roll-out of the programme and early successes at Geita and the

Mponeng Plant were followed with encouraging initial successes at the more

complex South African underground operations.

Reposition South African operations

Robbie Lazare appointed Executive Vice President: South Africa to lead the

repositioning of those assets. A `three-horizon’ strategy was adopted to ensure

their immediate turnaround, to optimise operating processes and the

configuration of the assets; and to look to technological breakthroughs to

secure their long-term future.

Continue operational recoveries at

Geita continued on its upward trajectory, improving production by 31% and

Geita, Obuasi

reducing costs by 19%. The platform has been set for further gains in 2011.

Obuasi remains a challenge, with below-par development rates and ore-pass

hang-ups affecting production and costs. Production was also affected by the

suspension of operations in the first quarter in order to address water balance

issues. Learning from the experience at Geita, a multi-disciplinary task team

has been appointed to lead the recovery at Obuasi and create a strong

foundation for this large, world-class gold deposit.

Entrench recoveries in Brazil

AGA Mineração and Cerro Vanguardia entrenched their position as AngloGold

and Argentina

Ashanti’s lowest-cost mines. Their expansions progressed after receiving

approval from the board.

Ensure Cripple Creek & Victor recovery

A revised pad-stacking strategy, which saw higher-grade ore placed closer to

the pad lining to improve production, yielded good results with the mine posting

a strong recovery. As in South America, the base is set for expansion with

studies under way to test the viability of installing a high-grade milling circuit to

further boost production.

Progress projects through

The board approved its first greenfield project in more than a decade with the

development pipeline

go-ahead for the development of the Tropicana deposit in Australia. The

development of the Córrego do Sítio deposit, in Brazil, was also approved,

while prefeasibility studies progressed for the Gramalote project in Colombia,

and feasibility studies for the Kibali and Mongbwalu projects in the Democratic

Republic of the Congo were advanced.

Advance exploration targets

Conceptual studies and resource definition are under way at Boston Shaker

and Havana Deeps targets in the Tropicana belt, La Colosa, Quebredona,

Rio Dulce and Salvajina in Colombia, as well as Hutite in North Africa.

Drill testing is under way at Malrok and Kanosak in Canada, LaMbouli in Gabon

and at the Vulu and Tango sites in the Solomon Islands.

Build Colombia’s resource potential

Drilling resumed at the La Colosa site in Colombia in August, bringing welcome

progress to the gold industry’s most significant virgin discovery of recent times.

P

46

AngloGold Ashanti Annual Financial Statements 2010

Project ONE

Project ONE, AngloGold Ashanti’s all-encompassing change

programme, gained increased traction across the organisation

during 2010 as its teams moved aggressively to progress

implementation. The model was rolled out at 15 sites during

the year, adding to the eight that went live in 2009. Originally

designed to facilitate delivery of the company’s five-year

business objectives, which encompass an ambitious set of

financial operating and sustainability targets, Project ONE has

secured tangible operating and cost efficiencies which

together have helped unlock almost $500m in operating cash

flow improvements across the business, with potential to

improve significantly on that figure in coming years. The

implementation of the model has also resulted in

improvements in managerial effectiveness and accountability,

both crucial to ensuring the improvements are sustained and

enhanced. Project ONE is composed of two integrated

initiatives – the System for People (SP) and the Business

Process Framework (BPF) – which together promote

standard business processes across every area of the

company in order to ensure that the right people are in the right

roles and are working to ensure stable processes that deliver

consistently excellent results. The greatest advantage of

Project ONE is that it engages employees as active

participants in the design and the detail of their work, while

leaders play a significant role in creating and sustaining a

values-based culture that prioritises safety, diversity, mutual

respect for colleagues, the environment and communities in

which AngloGold Ashanti operates. Ultimately, Project ONE

demands strict accountability at every level of the organisation

as it strives toward achieving those five-year goals that were

set in 2008 of: reducing accident rates by 70%; increasing

overall productivity by 30%; cutting reportable environmental

incidents by 60%; increasing production by 20%; achieving a

25% real reduction in costs; and earning a return of at least

15% on capital employed, through the commodity and

investment cycle.

The SP is a managerial effectiveness system focused on

ensuring that those at each level in the organisation are held

directly accountable for their work responsibilities. This

component of Project ONE was designed to create the most

effective organisational design possible, in which a culture of

mutual trust is fostered in order to facilitate the efficient execution

of work. A core team has been established to enhance the

design and development of the SP and to provide ongoing

internal support during its continued implementation. This

process will be led by Charles Carter, Executive Vice President –

Business Strategy and Organisational Effectiveness.

The BPF is the second component of Project ONE. This is a

scientifically rigorous system focused heavily on short- and

long-term planning and execution of work. The BPF clearly

defines business expectations and sets operational targets

while also seeking continuous improvement once operational

volatility has been eliminated. The BPF was launched in August

Project ONE

Holistic

goals

plan to achieve

strategic

transformation

P

47

2008 under the direction of Tony O’Neill, Executive Vice

President: Business and Technical Development and has seen

a string of positive results across various mines, plants, shafts

and corporate structures, where well-planned operating

methodologies have reduced volatility and increased average

productivity. While great progress was made in the

implementation of BPF, the process is still in its formative stages

and is expected to yield sustained productivity improvements in

coming years as it is bedded down across the business.

The Mponeng plant in South Africa, at the outset one of

AngloGold Ashanti’s most efficient operating units, was

chosen as a pilot site for the project’s implementation to

showcase its effectiveness. Throughput improvements of 15%

achieved during 2009 demonstrated the potential that the

process can unlock. Before the implementation of the BPF, ore

from the Mponeng mine would regularly be trucked to

neighbouring plants for processing, as the mill struggled to

cope with volumes from AngloGold Ashanti’s largest mine.

Since implementation of BPF, however, the plant has improved

productivity to the point that it now has spare capacity, leaving

the challenge now squarely with the mining operation to

improve tonnage to fill the gap. The early signs of the

implementation of BPF at the more extensive and complex

underground mines in South Africa toward the end of 2010

have been enormously encouraging. At the Mponeng plant,

meanwhile, the management team is applying additional

Project ONE business process elements to further improve

metallurgical performance. Emphasis on stabilised processes

has also resulted in a 20% reduction in sodium cyanide

consumption. Crucially, these improved processes and the

lessons from their development can be rapidly extended

throughout the company, a key benefit of the uniform

operating model.

Improvements at Geita in Tanzania, are also emblematic of the

potential that BPF can unlock. Implementation of the change

model saw management’s focus shift to improved planning,

1,600

1,400

1,200

1,000

800

600

400

200

0

LCL

LCL

UCL

LCL

UCL

UCL

BPF start – 02/11/2009

Stabilisation – 08/09/2011

Go live – 01/04/2011

Mean

Mean

Mean

Aug

09

Dec

09

Mar

10

Jun

10

Sep

10

Sep

09

Dec

10

Mponeng mine – daily stoping

(m

2

)

Set 3: UCL = 1,612.03 Mean = 1,136.22 LCL = 660.39 (267 – 365) (mR = 2)

UCL = upper control limit

LCL= lower control limit

P

48

AngloGold Ashanti Annual Financial Statements 2010

Project ONE

scheduling and resourcing of maintenance work, in order to

limit operational interruptions in the plant. This led to improved

recoveries and a 30% increase in plant throughput. This

performance has held since 2009, demonstrating the

sustainability of the process. The BPF was also applied to the

maintenance of the heavy mobile equipment fleet. Truck

availability has soared following improvements to the service

strategy and the establishment of a separate work crew to

attend to unexpected breakdowns in order not to disrupt

essential scheduled work. These improvements, coupled with

improvements to utilisation through more efficient scheduling

of driver shifts and improved road conditions in the pit,

contributed towards Geita’s truck fleet reducing from 48 trucks

in 2009 to 34 at the end of 2010, while moving more tons.

Further fleet reductions are planned in 2011. The implications

for fleet replacement and overall capital efficiency are

significant and demonstrate how BPF supports the overall

objective of achieving returns on capital of more than 15%,

throughout the cycle.

Geita’s Project ONE implementation teams have since been

repatriated to their home regions in Australia, West Africa and

Brazil, where similar improvements are becoming evident.

Most encouraging is the application of the improved planning,

scheduling and resourcing of work to AngloGold Ashanti’s

mining operations. The first pilot mining site, Lamego in Brazil,

reported significant improvements in jumbo drilling advances

as well as drilling and blasting cycles as a direct consequence

of enhanced planning and scheduling. A similar focus is being

applied at Sunrise Dam in Australia, Iduapriem in Ghana and

the deep-level underground mines in South Africa.

Integrating the SP and the BPF was a priority in 2010. The

systems are hugely complementary in delivering rigorous

approaches to planning, scheduling, resourcing and execution

of work. The resultant creation of cooperative processes,

employee engagement and teamwork is a primary Project

ONE objective that furthers a range of other initiatives

intrinsically linked to AngloGold Ashanti’s organisational values.

Safety Transformation, an initiative developed to underpin

safety improvements, outlines AngloGold Ashanti’s strategy to

create workplaces free of occupational injury and illness.

Embedding specific safety elements and concepts which

Project ONE

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

LCL

LCL

UCL

LCL

UCL

UCL

BPF start – 30/12/2009

Stabilisation – 18/01/2011

Go live – 15/08/2010

Mean

Mean

Mean

Mar

10

Jun

10

Sep

10

Dec

09

Dec

10

Iduapriem mine – daily milled

(tonnes)

Set 6: UCL = 17,306.83 Mean = 12,541.93 LCL = 7,777.04 (267 – 365) (mR = 2) (Lloyd Nelson option)

18,000

UCL

LCL

Mean

UCL = upper control limit

LCL= lower control limit

P

49

define our new approach, into both components of Project

ONE, will ensure sustainability of the overall safety effort. In the

first quarter of 2011, specific safety training will commence,

focused on Incident Management and supporting integrated

Project ONE delivery.

‘We value diversity’ and ‘We treat each other with dignity and

respect’, are two specific values that guide AngloGold

Ashanti’s efforts toward transformation or employment

equity. Achieving these goals requires the transformation

strategy be an integral part of Project ONE. A policy for the

transformation and localisation of labour was approved by the

board of directors in November 2010 and will serve as a

framework within which the regions will develop their own

strategies. The policy is an expansion of AngloGold Ashanti’s

previous approach to legal transformation requirements in

South Africa which were focused on redressing past

employment inequities by enhancing the representation of

historically disadvantaged groups. With the full commitment

from the board of directors and the executive team in October

2008, the policy was developed to include the elimination of

local barriers to skills development and upward mobility, and

to progressively recruit local talent into technical and

managerial roles in host countries. The policy aims to take into

account the legislative frameworks of these countries, as well

as the company’s own values, in order to redress historical

imbalances, promote gender equality and employment of

local citizens at all levels, as well as the equitable employment

of people with disabilities.

Project ONE has a significant role to play in creating and

driving a values-based organisational culture. The programme

is closely aligned to our overarching philosophy that People are

the Business. This philosophy is testament to AngloGold

Ashanti’s firmly held conviction that people working in the

organisation are the key to its success.

1,000

900

700

800

600

500

400

300

200

100

0

LCL

LCL

UCL

LCL

UCL

UCL

BPF start – 12/07/2010

Stabilisation – 26/01/2012

Go live – 29/08/2011

Mean

Mean

Mean

Jul

09

Dec

09

Mar

10

Jun

10

Sep

10

Sep

09

Dec

10

TauTona – daily stoping

(m

2

)

Set 3: UCL = 921.07 Mean = 578.29 LCL = 235.50 (285 – 364) (mR = 2)

UCL = upper control limit

LCL= lower control limit

Podcast available at www.aga-reports.com/10/podcasts.htm

Charles Carter, Executive Vice President –
Business Strategy and Organisational
Effectiveness outlines progress made
with Project ONE

P

50

AngloGold Ashanti Annual Financial Statements 2010

Five-year summaries

Summarised group financial results – income statement

US Dollar million

2010

2009

2008

2007

2006

Gold income

5,334

3,768 3,619 3,002 2,646

Cost of sales

(3,550)

(2,813)

(2,728)

(2,458)

(2,138)

Loss on non-hedge derivatives and other commodity contracts

(1)

(702)

(1,533)

(297)

(792)

(231)

Gross profit (loss)

1,082

(578)

594 (248)

277

Corporate administration, marketing and other expenses

(220)

(164)

(144)

(144)

(100)

Exploration costs

(198)

(150)

(126)

(117)

(58)

Other operating expenses

(20)

(8)

(6)

(20)

(20)

Special items

(126)

691 (1,538)

(13)

(7)

Operating profit (loss)

518

(209)

(1,220)

(542)

92

Dividend received from other investments

–

– – 2 –

Interest received

43

54 66 43 31

Exchange gain (loss)

3

112 4 (1)

(5)

Fair value adjustment on option component of convertible bonds

(1)

(33)

25 47 16

Fair value loss on mandatory convertible bonds

(55)

– – – –

Finance costs and unwinding of obligations

(166)

(139)

(114)

(120)

(116)

Share of equity accounted investments’ profit (loss)

63

94 (138)

35 115

Profit (loss) before taxation

405

(121)

(1,377)

(536)

133

Taxation

(276)

(147)

197 (101)

(146)

Profit (loss) after taxation from continuing operations

129

(268)

(1,180)

(637)

(13)

Discontinued operations
Profit (loss) from discontinued operations

–

– 25 1 (2)

Profit (loss) for the year

129

(268)

(1,155)

(636)

(15)

Allocated as follows
Equity shareholders

76

(320)

(1,195)

(668)

(45)

Non-controlling interests

53

52 40 32 30

129

(268)

(1,155)

(636)

(15)

Other financial data
Adjusted gross (loss) profit

(1)

$m

(1,191)

412 (384)

835 884

Adjusted gross margin

%

(51)

13 (16)

25 29

Headline earnings (loss)

$m

122

(852)

(30)

(648)

(82)

Adjusted headline (loss) earnings

(1)

$m

(1,758)

(50)

(897)

278 411

Adjusted headline earnings excluding hedge buy-back costs

(1)

$m

787

708 19

278

411

EBITDA excluding hedge buy-back costs

(1)

$m

1,897

1,663 1,131 1,224 1,409

EBITDA margin excluding hedge buy-back costs

%

38

41 33

37 47

Interest cover

(1)

times

16

14 10 11 13

Profit (loss) per ordinary share
Basic

US cents

20

(89)

(377)

(237)

(16)

Diluted

US cents

20

(89)

(377)

(237)

(16)

Headline

US cents

33

(236)

(9)

(230)

(30)

Adjusted headline (loss) earnings per ordinary share

(1)

US cents

(473)

(14)

(283)

99 151

Dividends per ordinary share

US cents

20

17 11 19 62

Weighted average number of shares

million

372

361 317 281 273

Issued shares at year-end

million

384

366 357 282 280

(1)

Refer to Non-GAAP disclosure notes from page 372.

Five-year summaries

For the year ended 31 December

P

51

Summarised group financial results – statement of financial position

US Dollar million

2010

2009

2008

2007

2006

Assets

Tangible and intangible assets

6,374

5,996

4,493

7,041

6,329

Cash and cash equivalents

575

1,100

575

477

471

Other assets

2,583

2,691

2,992

2,190

2,022

Total assets

9,532

9,787

8,060

9,708

8,822

Equity and liabilities

Total equity

4,113

3,030

2,511

2,442

3,047

Borrowings

2,704

1,931

1,933

1,848

1,448

Deferred taxation

900

753

617

1,042

1,093

Other liabilities

1,815

4,073

2,999

4,376

3,234

Total equity and liabilities

9,532

9,787

8,060

9,708

8,822

Non-GAAP financial data

Equity

(1)

4,987

3,030

2,511

2,442

3,047

Net debt

(1)

1,288

868

1,283

1,318

1,015

Net asset value – per share

(1)

US cents

1,299

828

702

867

1,087

Net tangible asset value – per share

(1)

US cents

1,248

779

661

718

946

Market capitalisation

(1)

18,767

14,555

9,795

11,878

13,008

Financial ratios

Return on equity excluding hedge buy-back costs

(1)

%

20

26

1

10

14

Net debt to equity

%

26

29

51

54

33

Exchange rates

Rand/dollar average exchange rate

7.30

8.39

8.25

7.03

6.77

Rand/dollar closing exchange rate

6.57

7.44

9.46

6.81

7.00

Australian dollar/dollar average exchange rate

1.09

1.26

1.17

1.19

1.33

Australian dollar/dollar closing exchange rate

0.98

1.12

1.44

1.14

1.27

Brazilian real/dollar average exchange rate

1.76

2.00

1.84

1.95

2.18

Brazilian real/dollar closing exchange rate

1.67

1.75

2.34

1.78

2.14

(1)

Refer to Non-GAAP disclosure notes from page 372.

As at 31 December

P

52

AngloGold Ashanti Annual Financial Statements 2010

Five-year summaries

Summarised group financial results – statement of cash flows

US Dollar million

2010

2009

2008

2007

2006

Cash flows from operating activities

Cash generated from operations

1,714

1,345

632

983

1,132

Cash utilised by discontinued operations

–

–

(1)

(2)

(1)

Dividends received from equity accounted investments

143

101

78

65

85

Taxation paid

(188)

(147)

(125)

(180)

(110)

Cash utilised for hedge buy-back costs

(2,611)

(797)

(1,113)

–

–

Net cash (outflow) inflow from operating activities

(942)

502

(529)

866

1,106

Cash flows from investing activities

Capital expenditure

(973)

(1,019)

(1,194)

(1,015)

(811)

Net (payments) proceeds from acquisition and disposal

of mines, subsidiaries, associates and joint ventures

(44)

(354)

10

1

9

Net proceeds (payments) from disposal and acquisition of

investments, associate loans, and acquisition

and disposal of tangible assets

95

1,132

82

(13)

46

Interest received

32

55

67

35

24

Net loans (advanced) repaid

(6)

1

–

–

5

Decrease (increase) in cash restricted for use

25

(10)

(6)

(25)

(3)

Other investing activities

–

–

–

2

1

Net cash outflow from investing activities

(871)

(195)

(1,041)

(1,015)

(729)

Cash flows from financing activities

Net proceeds from share issues

778

295

1,668

34

507

Net borrowings proceeds (repaid)

648

43

239

323

(394)

Finance costs paid

(115)

(111)

(93)

(72)

(82)

Dividends paid

(117)

(56)

(58)

(144)

(132)

Net cash inflow (outflow) from financing activities

1,194

171

1,756

141

(101)

Net (decrease) increase in cash and cash equivalents

(619)

478

186

(8)

276

Translation

105

47

(88)

14

(2)

Cash and cash equivalents at beginning of year

1,100

575

477

471

197

Cash and cash equivalents at end of year

(1)

586

1,100

575

477

471

Other financial data

Operating cash flow

(2) (3)

(1,665)

(104)

(1,069)

336

633

Cash generated to cash invested

(2)

times

1.2

2.3

0.6

0.7

1.6

(1)

The cash and cash equivalents balance at 31 December 2010 includes cash and cash equivalents included in the statement of financial position as part of

non-current assets held for sale of $11m.

(2)

Refer to Non-GAAP disclosure notes from page 372.

(3)

Includes hedge buy-back costs (2008 to 2010).

Five-year summaries

For the year ended 31 December

P

53

Summarised group operating results

2010

2009

2008

2007

2006

Underground operations

Metric tonnes milled

000

11,092

11,944

12,335

13,112

13,489

Yield

g/t

6.66

6.41

6.89

6.99

7.20

Gold produced

000 oz

2,374

2,461

2,734

2,948

3,123

Surface and dump reclamation

Metric tonnes treated

000

11,081

12,779

11,870

12,429

12,414

Yield

g/t

0.55

0.51

0.42

0.49

0.50

Gold produced

000 oz

196

208

161

197

201

Open-pit operations

Metric tonnes mined

000

159,352

167,000

175,999

172,487

173,178

Stripping ratio

(1)

5.02

5.58

5.24

4.48

4.82

Metric tonnes treated

000

26,028

25,582

25,388

25,312

26,739

Yield

g/t

1.95

1.96

2.12

2.34

2.14

Gold produced

000 oz

1,631

1,609

1,734

1,904

1,843

Heap-leach operations

Metric tonnes mined

000

67,194

57,456

54,754

59,720

63,519

Metric tonnes placed

(2)

000

21,963

19,887

23,462

22,341

23,329

Stripping ratio

(1)

2.17

1.94

1.43

1.77

1.83

Recoverable gold placed

(3)

kg

10,949

12,958

14,496

16,242

18,162

Yield

(4)

g/t

0.50

0.65

0.62

0.73

0.78

Gold produced

000 oz

314

321

353

428

468

Total gold produced

000 oz

4,515

4,599

4,982

5,477

5,635

– South Africa

1,785

1,797

2,099

2,328

2,554

– Continental Africa

1,492

1,585

1,631

1,655

1,779

– Australasia

396

401

433

600

465

– Americas

842

816

819

894

837

Average price received

(5)

$/oz sold

561

751

485

629

577

Total cash costs

$/oz produced

638

514

444

357

308

Total production costs

$/oz produced

816

646

567

476

414

Capital expenditure

$m

1,015

1,027

1,201

1,059

817

Monthly average number of employees

62,046

63,364

62,895

61,522

61,453

AIFR

11.50

12.88

16.66

20.95

22.83

FIFR

0.10

0.09

0.09

0.21

0.22

Definitions

(1)

Stripping ratio = (total tonnes mined – ore tonnes mined)/ore tonnes mined.

(2)

Tonnes placed onto leach pad.

(3)

Recoverable gold placed onto leach pad inventory.

(4)

Recoverable gold placed/tonnes placed.

Comments

(5)

Average gold price received negatively impacted by the reduction of the hedge book in the three years from 2008 to 2010.

For the year ended 31 December

P

54

AngloGold Ashanti Annual Financial Statements 2010

Operations at a glance

Attributable tonnes

Average

Attributable

treated/milled

grade recovered

gold production

(Mt)

(g/t)

(000oz)

Operation

2010

2009

2008

2010

2009

2008

2010

2009

2008

South Africa

1,785

1,797

2,099

Vaal River

Great Noligwa

0.7

0.9

1.4

5.99

5.73

7.33

132

158

330

Kopanang

1.6

1.6

1.6

6.13

6.74

6.82

305

336

362

Moab Khotsong

1.0

0.8

0.6

9.03

9.36

9.31

292

247

192

Tau Lekoa

0.6

1.2

1.2

3.32

3.32

3.58

63

124

143

Surface operations

10.2

9.7

7.9

0.54

0.53

0.36

179

164

92

West Wits

Mponeng

1.7

1.9

1.9

9.48

8.66

10.02

532

520

600

Savuka

0.1

0.2

0.3

5.30

5.45

6.28

22

30

66

TauTona

(1)

1.1

1.5

1.6

7.01

7.29

8.66

259

218

314

Continental Africa

1,492

1,585

1,631

Ghana

Iduapriem

3.4

3.4

3.5

1.70

1.72

1.76

185

190

200

Obuasi

(1)

2.6

4.6

5.6

5.16

5.18

4.37

317

381

357

Guinea

Siguiri (85%)

8.8

8.8

8.6

0.97

1.11

1.20

273

316

333

Mali

Morila (40%)

1.7

1.7

1.7

1.70

2.47

3.08

95

137

170

Sadiola (41%)

(2)

1.8

1.7

1.6

2.04

2.52

3.42

118

135

172

Yatela (40%)

(3)

1.2

1.1

1.1

1.23

3.62

2.66

60

89

66

Namibia

Navachab

1.5

1.3

1.5

1.80

1.58

1.43

86

65

68

Tanzania

Geita

4.7

4.5

4.3

2.36

1.89

1.92

357

272

264

Australasia

396

401

433

Australia

Sunrise Dam

(4)

3.6

3.9

3.8

3.22

2.87

3.46

396

401

433

Americas

842

816

819

Argentina

Cerro Vanguardia (92.5%)

1.0

0.9

0.9

6.11

6.51

5.44

194

192

154

Brazil

AGA Mineração

(1)

1.6

1.5

1.4

7.21

7.02

7.62

338

329

320

Serra Grande (50%)

0.6

0.5

0.4

4.05

4.52

6.85

77

77

87

United States

Cripple Creek & Victor

(3)

20.6

18.7

22.1

0.43

0.46

0.49

233

218

258

AngloGold Ashanti

4,515

4,599

4,982

(1)

The yields of TauTona, Obuasi and AGA Mineração represent underground operations.

(2)

Prior to 29 December 2009, AngloGold Ashanti’s shareholding in Sadiola was 38%.

(3)

The yields of Yatela and Cripple Creek & Victor reflect recoverable gold placed/tonnes placed from heap leach operations.

(4)

The yield of Sunrise Dam represents open-pit operations.

Operations at a glance

For the year ended 31 December

P

55

Attributable capital

Total cash costs

expenditure

($/oz)

($m)

Operation

2010

2009

2008

2010

2009

2008

South Africa

598

466

362

424

385

337

Vaal River
Great Noligwa

884

794

458

24

24

26

Kopanang

613

406

348

61

58

47

Moab Khotsong

588

424

379

120

104

89

Tau Lekoa

921

718

533

10

17

18

Surface operations

485

341

440

3

3

–

West Wits
Mponeng

453

329

249

122

109

86

Savuka

1,100

1,115

411

9

13

11

TauTona

700

559

374

75

57

60

Continental Africa

712

608

543

234

198

262

Ghana
Iduapriem

666

516

525

17

28

54

Obuasi

744

630

633

109

94

112

Non-controlling interests and exploration

–

–

–

1

2

2

Guinea
Siguiri (85%)

643

519

466

10

22

18

Non-controlling interests and exploration

–

–

–

2

4

4

Mali
Morila (40%)

(1)

715

527

419

1

4

1

Sadiola (41%)

(1) (2)

650

488

399

8

4

3

Yatela (40%)

(1)

807

368

572

2

1

3

Namibia
Navachab

727

622

534

14

20

12

Tanzania
Geita

777

954

728

38

19

53

Democratic Republic of the Congo
Kibali (45%)

(1)

–

–

–

30

–

–

Other

–

–

–

2

–

–

Australasia

982

662

552

40

177

439

Boddington (33.33%)

–

–

–

–

146

419

Sunrise Dam

957

646

531

29

31

19

Tropicana (70%)

–

–

–

10

–

–

Exploration and other

–

–

–

1

–

1

Americas

432

362

381

311

258

154

Argentina
Cerro Vanguardia (92.5%)

366

355

608

38

17

15

Non-controlling interests and exploration

–

–

–

3

1

1

Brazil
AGA Mineração

407

339

300

142

84

69

Serra Grande (50%)

481

406

294

26

33

20

Non-controlling interests and exploration

–

–

–

29

36

22

United States
Cripple Creek & Victor

493

376

309

73

87

27

Other

–

–

–

6

9

9

Sub-total

1,015

1,027

1,201

Equity accounted investments included above

(42)

(8)

(8)

AngloGold Ashanti

638

514

444

973

1,019

1,193

(1)

Equity-accounted investments

(2)

Prior to 29 December 2009, AngloGold Ashanti’s shareholding in Sadiola was 38%.

United States

Cripple Creek & Victor 233,000oz

Brazil

Serra Grande

77,000oz

AGA Mineração

338,000oz

Mali

Morila

95,000oz

Sadiola

118,000oz

Yatela

60,000oz

Guinea

Siguiri

273,000oz

Ghana

Iduapriem

185,000oz

Obuasi

317,000oz

Namibia

Navachab

86,000oz

Tanzania

Geita

357,000oz

South Africa

Vaal River
Great Noligwa

132,000oz

Kopanang

305,000oz

Moab Khotsong

292,000oz

Tau Lekoa

(1)

63,000oz

Surface operations

179,000oz

West Wits

z

o

0

0

0

,

2

3

5

g

n

e

n

o

p

M

z

o

0

0

0

,

2

2

a

k

u

v

a

S

z

o

0

0

0

,

9

5

2

a

n

o

T

u

a

T

Australia

Sunrise Dam

396,000oz

Operations

Argentina

Cerro Vanguardia

194,000oz

(1)

Sold effective 1 August 2010.

P

56

AngloGold Ashanti Annual Financial Statements 2010

Review of operations

Review of operations

AngloGold Ashanti –

growth options

unparalleled

diversity,

unmatched

P

57

Introduction

AngloGold Ashanti, a global gold mining company with

20 operations on four continents, employed 62,046 people,

including contractors, and produced 4.52Moz of gold in 2010.

The group’s operations are divided into the following regions:

·South Africa – includes operations in South Africa;

·Continental Africa – includes operations in Ghana, Guinea,

Mali, Namibia and Tanzania;

·Australasia – includes the operation in Australia; and

·Americas – includes operations in Argentina, Brazil and the

United States.

In addition, the company conducts a focused worldwide

exploration programme. In the course of mining and

processing the ore mined, by-products such as silver, uranium

oxide and sulphuric acid occur at the Argentinean, South

African and Brazilian operations respectively.

08

09

10

4,982

4,599

4,515

Group gold production (000oz)

08

09

10

444

514

638

Group cash costs ($/oz)

08

09

10

Group production costs ($/oz)

567

646

816

08

09

10

1,201

1,027

1,015

Group capital expenditure ($m)

$816 /oz

$638 /oz

$1,015 m

4,515 000oz

South Africa

39%

Continental Africa

33%

Americas

19%

Australasia

9%

Gold production by region

Underground

53%

Open pit

36%

Heap leach

7%

Surface

4%

Group production by mining type

P

58

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Review of operations – South Africa

Ensuring a

future

profitable

South Africa

West Wits operations
Mponeng
Savuka
TauTona

Vaal River operations
Great Noligwa
Kopanang
Moab Khotsong
Surface operations

Podcast available at www.aga-reports.com/10/podcasts.htm

Robbie Lazare, Executive Vice President –
South Africa, discusses AngloGold Ashanti’s
operations in South Africa

for deep-level mining

P

59

08

09

10

Gold production (000oz)

2,099

1,797

1,785

08

09

10

362

466

598

Total cash cost ($/oz)

08

09

10

Capital expenditure ($m)

337

385

424

08

09

10

37,127

37,425

35,660

* including contractors

Total number of employees*

$598/oz

$424m

35,660people

1,785000oz

South Africa

39.5%

Rest of AngloGold Ashanti

60.5%

Contribution to group production

Mponeng

29.8%

Kopanang

17.1%

Moab Khotsong

16.4%

TauTona

14.5%

Surface operations

10.1%

Great Noligwa

7.4%

Tau Lekoa

3.5%

Savuka

1.2%

Contribution to South Africa production

– by operation

AngloGold Ashanti’s South African operations comprise six

deep-level mines and one surface operation. They are:

· The Vaal River operations – Great Noligwa, Kopanang,

Moab Khotsong and the surface sources operations. The

fourth deep-level mine in this region, Tau Lekoa, was sold

during the course of the year; and

· The West Wits operations – Mponeng, Savuka and TauTona.

Together, these operations produced 1.78Moz of gold in 2010,

or 39% of group production, and 1.46Mlbs of uranium as a by-

product. The South African operations employed 35,660

people in 2010. Total cash costs in US dollar terms increased

by 28% to $598/oz.

Total capital expenditure for the region was $424m, an increase

of 10% on the $385m spent in 2009.

The Mineral Resource in South Africa totalled 97.90Moz at

year-end, including Ore Reserve of 30.38Moz.

P

60

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Vaal River – Great Noligwa

Key statistics

Great Noligwa

2010

2009

2008

Pay limit

(oz/t)

0.36

0.43

0.29

(g/t)

11.69

14.90

10.07

Recovered grade

(oz/t)

0.175

0.167

0.214

(g/t)

5.99

5.73

7.33

Gold production

(000oz)

132

158

330

Total cash costs

($/oz)

884

794

458

Total production costs

($/oz)

1,129

990

557

Capital expenditure

($m)

24

24

26

Total number of employees

3,315

4,739

5,743

Employees

3,225

4,612

5,472

Contractors

90

127

271

All injury frequency rate

(per million hours worked)

21.63

17.51

28.54

Outlook for 2011

Production

(000oz)

144 – 150

Total cash costs

($/oz)

756 – 784

Capital expenditure

($m)

29

Review of operations – South Africa

08

09

10

Gold production (000oz)

330

158

132

08

09

10

Total cash cost ($/oz)

794

884

458

08

09

10

Capital expenditure ($m)

26

24

24

08

09

10

Total number of employees*

5,743

* including contractors

4,739

3,315

P

61

Description

Great Noligwa adjoins Kopanang and Moab Khotsong and is

located close to the town of Orkney near the Vaal River. The

Vaal Reef, the primary reef, and the Crystalkop Reef, a

secondary reef, are mined here.

This mining operation consists of a twin-shaft system and

operates over eight main levels at an average depth of 2,400m

below surface.

Given the geological complexity of the orebody at Great

Noligwa, a scattered mining method is employed. The mine

shares a milling and treatment circuit with Moab Khotsong and

Kopanang, which applies conventional crushing, screening,

SAG grinding and carbon-in-leach (CIL) processes to treat the

ore and extract gold.

Operating performance

Gold production declined by 16% as planned to 132,000oz,

from 158,000oz in 2009. This was largely as a result of the

redesign of the mine plan and layout, and a shift in operational

focus to pillar extraction. This redesign resulted in a reduction

in the extent of underground resources and in lower volumes

being mined. Consequently, tonnages milled fell by 20% and

reef development by 85%. The latter was also affected by the

complex geological structures encountered. Yield rose by 5%

with the mining of higher grade areas and an increase in gold

produced from vamping operations.

Total cash costs increased by 11% to $884/oz from $794/oz

the previous year, due mainly to the mine redesign,

inflationary pressure on labour, power and stores, royalty

payments which came into effect on 1 March 2010, and a

stronger currency.

Capital expenditure of R173m ($24m) was split between R96m

($13m) for Ore Reserve development, stay-in-business capital

of R71m ($10m) for upgrades to both horizontal and vertical

transport, accessing old pillar areas and the upgrade of plant

infrastructure, and R6m ($1m) on growth initiatives.

Growth prospects

As a mature operation, Great Noligwa has converted from

conventional scattered mining to pillar mining for the

remainder of its operational life. The Vaal Reef, which has

been the most economically viable reef at Great Noligwa, is

mined extensively. The less economically viable Crystalkop

Reef is also being exploited, together with viable pillars

containing the Vaal Reef. Hence, the life extension opportunity

is limited to the inclusion of a few Vaal and Crystalkop Reef

haulage pillars that were previously not part of the Ore

Reserve. A feasibility study was conducted to determine the

viability of establishing alternate routes for men, material, ore

and ventilation to replace these haulages. This study showed

that portions of these pillars can be mined and they have thus

been included in the business plan.

Outlook for 2011

Production in 2011 is projected to increase to between

144,000oz and 150,000oz. Total unit cash costs are

expected to improve to between $756/oz and $784/oz,

largely due to the higher gold production planned, an

increase in the by-product contribution from uranium

production and other associated benefits following the

restructuring of the operation in 2010.

Capital expenditure is forecast at R210m ($29m), with R97m

($13m) earmarked for Ore Reserve development and R113m

($15m) for stay-in-business capital covering upgrades to plant

infrastructure, transport systems, staff accommodation and

creating access to old pillar areas.

The rise in production in 2011 is based on increasing the gold

recovered from vamping operations in old areas, as well as the

mining of higher grade pillars. Mining during 2010 continued to

expose complex geological structures, necessitating additional

P

62

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

development in order to re-establish access and make areas

available for further mining. Mining has almost progressed to

the boundary limits, hence the increased dependency on

pillars to maintain a reasonable level of production. These

pillars require capital and a re-establishment programme to

make them available for mining. Strict safety rules are in place

to ensure safe extraction of the ore.

Project ONE was launched on 27 October 2010.

Sustainability

Great Noligwa was restructured during the year with the aim of

reducing its overall operational footprint and to return it to

profitability. Employees were offered the opportunity to apply

for voluntary severance packages or transfer to other business

units within the company. Labour unions were consulted on

strategic matters throughout the process.

Transformation remains a strategic thrust of the mine and will

receive continued attention during 2011.

Safety

There were no fatalities during 2010, with the mine achieving

1 million fatality-free shifts on 5 November 2010. The mine

also achieved 269 white flag days, signifying the number of

full days without a lost-time injury being reported on site.

The all injury frequency rate deteriorated to 21.63 per million

hours worked recorded for the year (2009: 17.51).

The “White Flag Day Every Day”, “It’s OK to Stop” and “United

for Safe Gold” were the major safety campaigns undertaken

during the year. Other initiatives included daily shaft-based

communication and a continuation of tours by management

and union leadership to increase visibility. Safety stoppages

initiated by management also had a positive impact on

physical conditions underground. A safety workshop was held

at which three strategic safety pillars were identified. Plans

were made to address these issues and dates set for

their implementation.

Great Noligwa maintained its OHSAS 18001 and ISO 14001

certification in 2010.

Community

Great Noligwa remained active in the community with various

outreach projects. Donations were made to the following

organisations:

· Triest Training Centre;

· Matlosana Hospice;

· Evannah Old Age Home;

· Dipapeng Disability Centre;

· Klerksdorp Baby House; and

· Stilfontein Welfare.

Environment

Great Noligwa retained its ISO 14001 certificate during the

first advanced DQS audit conducted in August 2010. No

environmental incidents were reported during the year.

New projects

The water separation project at Great Noligwa, aims to reduce

the inflow of dirty water into the Great Noligwa gold plant

process-water tank.

Review of operations – South Africa

P

63

Vaal River – Kopanang

Key statistics

Kopanang

2010

2009

2008

Pay limit

(oz/t)

0.41

0.40

0.32

(g/t)

13.08

13.85

11.07

Recovered grade

(oz/t)

0.179

0.197

0.199

(g/t)

6.13

6.74

6.82

Gold production

(000oz)

305

336

362

Total cash costs

($/oz)

613

406

348

Total production costs

($/oz)

867

586

492

Capital expenditure

($m)

61

58

47

Total number of employees

5,938

6,059

6,031

Employees

5,484

5,612

5,620

Contractors

454

447

411

All injury frequency rate

(per million hours worked)

21.86

22.71

25.29

Outlook for 2011

Production

(000oz)

326 – 340

Total cash costs

($/oz)

599 – 622

Capital expenditure

($m)

107

08

09

10

Gold production (000oz)

362

336

305

08

09

10

Capital expenditure ($m)

61

47

58

08

09

10

Total cash cost ($/oz)

613

348

406

08

09

10

Total number of employees*

6,031

6,059

5,938

* including contractors

P

64

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Description

The Kopanang mine, located in the Free State province

roughly 170km southwest of Johannesburg, has been in

production since 1984. Kopanang’s current mine lease

incorporates an area of 35km

2

, directly west of neighbouring

Great Noligwa and bound to the south by the Jersey Fault.

Kopanang exploits gold- and uranium-bearing conglomerates

of the Central Rand Group of the Witwatersrand, the most

important being the Vaal Reef. Gold is the primary commodity

extracted with uranium oxide as a by-product. The Vaal Reef,

the primary reef mined, is exploited at depths of between

1,300m and 2,600m below surface. Minor amounts of gold are

also extracted from the secondary Crystalkop Reef, located

about 250m above the Vaal Reef.

Given the complexity of the geology, scattered mining is

employed and the orebody accessed mainly via footwall

tunnelling, raised on dip of the reef and stoped on strike.

Kopanang uses conventional semi-autogenously grinding and

carbon-in-pulp (CIP) technology to process gold. There are

two streams of ore into the plant, one comprised mainly of

Vaal Reef ore and the other fed exclusively with marginal ore-

dump material. Roughly 60% of Kopanang’s ore is treated in

this plant. The balance is sent to the Noligwa Gold Plant and

South Uranium plant by rail for gold and uranium extraction.

Operating performance

Gold production fell 9% to 305,000oz in 2010, from

336,000oz in 2009. Total cash costs increased 51% to

$613/oz as a result of the stronger currency, lower production,

inflationary pressures on labour, power and stores, and royalty

payments which came into effect on 1 March 2010.

A 13% decline in volumes mined was the major contributor to

the drop in production, as were safety-related work stoppages,

and lower-than-anticipated mining grades. The 9% decline in

recovered grade was a function of the lower-grade areas

mined, and the increase in dilution from tonnages treated at the

waste washing plant. A waste washing plant to reduce dust by

washing the fines from waste rock was commissioned.

Additional labour was recruited during the second quarter to

make up production lost owing to safety-related stoppages

during the first half of the year. While these stoppages

continued in the second half of the year, this initiative

contributed 19,300oz towards the year’s total production.

Capital expenditure totalled R443m ($61m) for the year. This

included R340m ($47m) on Ore Reserve development and

stay-in-business capital of R103m ($14m).

Growth prospects

Life extension projects identified in 2010 were De Pont

Landing and Altona, Gencor 1 East extension, Crystalkop Reef

(C-Reef) Below 68 level, the Shaft Fault area and pillars.

Additional information will be obtained from ongoing

exploration to generate Mineral Resources for conversion to

Ore Reserves. The mother hole drilled at the Gencor 1E area

had intersected the reef which will be sampled early in 2011.

Two more long inclined boreholes are planned from the same

site for 2011.

Electro-hydraulic drilling, originally scheduled to commence in

August 2010 in the De Pont Landing and Altona exploration

areas, has been postponed to early 2011 due to ventilation

requirements and the delay in the issuing of the prospecting

rights for De Pont Landing. The Below 68 level project was

also delayed due to ventilation requirements which affected

electro-hydraulic drilling, while limited pneumatic drilling was

done from the 68 DW4 8 crosscut. The bulk of the exploration

programme has been deferred to 2011.

As a result of the C-Reef exploration programme, the Mineral

Resource confidence increased and added 129,164oz to the

planned Mineral Resource during 2010. The programme will

continue into 2011.

The Shaft Fault drilling added 8,179oz to the Mineral Resource

during 2010. This remains a very prospective target area for new

Mineral Resource ounces and exploration here will continue

during 2011.

Outlook

Gold production for 2011 is forecast at between 326,000oz and

340,000oz at a total cash cost of between $599/oz and

$622/oz. The higher level of production relates to an overall

increase in volumes mined which is expected to result from the

implementation of Project ONE initiatives.

Understanding of the orebody ahead of the mining face will

improve following an increase in geological drilling, as well as

the assessment of true grade estimates of the orebody to the

West through Long-Incline-Borehole (LIB) drilling, revised

evaluation modelling and the introduction of ‘coffin sampling’

Review of operations – South Africa

P

65

methodology. Improved drilling efficiencies are anticipated,

following the change of drilling contractor in 2010. Project ONE

will be implemented in 2011.

Total capital expenditure of R767m ($107m) will be spent on Ore

Reserve development to improve and create mining flexibility, as

well as stay-in-business capital related to the Kopanang plant.

Ore Reserve development for 2011 remains a key focus in re-

establishing the operation’s available Ore Reserves.

Sustainability

Safety and health

Regrettably, there were two fatal accidents – one each in

March and September. This overshadowed a strong safety

performance in the preceding months with the mine having

achieved 1 million fatality-free shifts in February 2010. The all

injury frequency rate improved from 22.71 per million hours

worked in 2009 to 21.86 in 2010. Mitigation strategies were

implemented, including improved support standards for

development areas, to reduce the risks associated with

horizontal transport and falls of ground.

Strategies for 2011 include improved dust management

systems through a centralised blasting system, improved

footwall and dust filtration systems and experimentation with

intake ‘air scrubbing’ systems. Following the noise baseline

risk assessment to be conducted in February 2011, the

current hearing protection device system will be revised to

ensure optimum protection from noise, based on occupational

exposures.

The mine successfully achieved recertification for both

ISO 14001 and OHSAS 18001.

More than 60% of employees, including contractors,

underwent voluntary HIV testing during the year following a

concerted effort by AngloGold Ashanti’s wellness counsellors,

peer educators and its programmes.

Kopanang, Great Noligwa and Moab Khotsong, in conjunction

with other mines in the region, regularly interact with the

Department of Mineral Resources at a tripartite forum to

discuss topical issues related to mining operations in North

West Province.

General managers, safety managers, health and safety

representatives, as well as unions and association

representatives, meet with the state mine inspectors to

discuss topical issues including regional health and safety

statistics, focus areas and legislation trends.

Community

The mine hosted a number of underground visits from

interested parties in the community, organised by Kopanang’s

social committee, in partnership with a local non-governmental

organisation.

A mathematics and science competition was launched for

surrounding secondary schools with the aim of identifying and

recognising students who excel in these subjects. Twenty-six

children from five schools participated in this competition,

which will be repeated. Kopanang is also represented in

various activities in the surrounding area through the

AngloGold Ashanti Fund’s Local Area Committee. These

initiatives include the Winter Warming Project, which

distributes blankets to the surrounding communities.

During 2010, the mine started its programme to accelerate

the conversion of communal rooms in the Kopanang

residence to single room accommodation – 198 single rooms

were completed, compared to 54 in 2009. Capital has been

approved to convert 208 rooms in 2011. Another 1,819

rooms are scheduled for conversion over the next three years.

Environment

An environmental management system (EMS) is in place to

address the environmental impacts of the operation,

including water and energy consumption, dust levels and

potential groundwater pollution from the waste rock dump.

To address the dust issue, a waste washing plant was

installed and will be fully commissioned in 2011, along with

additional dust suppression systems. Storm-water

catchment facilities will be put in place and 20ha of phyto-

remediation woodlands planted in 2011. Numerous projects

resulted in reduced energy consumption from 32Gwh per

month in 2003 to 24.5Gwh per month in 2010. Additional

projects to reduce consumption to 23.4Gwh per month are

planned in 2011 and 2012.

Kopanang retained its ISO 14001 certificate following an audit

conducted in August 2010. No environmental incidents were

reported during the year.

P

66

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Vaal River – Moab Khotsong

Key statistics

Moab Khotsong

2010

2009

2008

Pay limit

(oz/t)

0.49

0.60

0.69

(g/t)

15.87

20.57

23.51

Recovered grade

(oz/t)

0.263

0.273

0.271

(g/t)

9.03

9.36

9.31

Gold production

(000oz)

292

247

192

Total cash costs

($/oz)

588

424

379

Total production costs

($/oz)

982

737

632

Capital expenditure

($m)

120

104

89

Total number of employees

6,452

6,069

4,737

Employees

4,651

4,334

2,914

Contractors

1,801

1,735

1,823

All injury frequency rate

(per million hours worked)

19.72

28.82

38.24

Outlook for 2011

Production

(000oz)

296 – 310

Total cash costs

($/oz)

597 – 620

Capital expenditure

($m)

162

Review of operations – South Africa

08

09

10

Gold production (000oz)

292

192

247

08

09

10

Total cash cost ($/oz)

588

379

424

08

09

10

Capital expenditure ($m)

89

104

120

08

09

10

Total number of employees*

6,452

* including contractors

4,737

6,069

P

67

Description

Moab Khotsong is the newest deep-level gold mine in South

Africa. It is situated near Orkney, Klerksdorp and Viljoenskroon,

about 180km southwest of Johannesburg.

Following the successful exploration of the Vaal Reef in the

Moab lease area, which lies to the south and is contiguous

with Great Noligwa, a decision was taken in late 1989 to

exploit the Moab Mineral Resource. Shaft sinking started in

1991 and stoping operations in November 2003. The mine is

scheduled to reach full production in 2013.

A feasibility study of the lower mine (Zaaiplaats) was recently

completed. The project will exploit the reef to depths of

3,455m below collar.

The main shaft was commissioned in June 2002 and the rock

ventilation shaft in March 2003. Ore Reserve development on

85, 88, 92, 95, 98 and 101 levels is progressing to plan.

Given the geological complexity of the Vaal Reef, scattered

mining is employed.

Operating performance

Moab Khotsong continued to ramp-up its output. Production

increased by 18% to 292,000oz in 2010, compared to

247,000oz the previous year. The operation is scheduled to

reach full annual production of 368,000oz in 2013.

Total cash costs increased by 39%, as expected, to $588/oz,

due mainly to inflationary pressures on the cost of labour, power

and stores, royalty payments which came into effect on 1 March

2010 and the stronger currency.

Capital expenditure for the year totalled R879m ($120m),

spent mainly on Ore Reserve development R593m ($81m),

with the balance for stay-in-business capital R242m ($33m),

Project Zaaiplaats phase 1 R23m ($3m) and exploration drilling

R20m ($3m).

Mined grade decreased by 4% as mining took place in lower-

grade areas in the older northern part of the mine. Volumes

treated increased by 22%, mainly due to ramp-up activities.

Production, however, was hampered by safety- and mining-

related stoppages as well as complex geological structures.

These issues are being reviewed. In order to obtain critical

information timeously, a comprehensive risk-drilling programme

was revised to include macro drilling up to three cross-cuts

ahead of the current development ends, thus improving grade

prediction and development planning. This allowed more

proactive mine design and the opening up of reef, while the

development of new raises provided additional grade

information. Ore Reserve development and LIB drilling

proceeded according to plan in 2010. The active drilling

programme employs a minimum of five LIB machines to

ameliorate the risk of intersecting dip features within the

12-month mining plan. There was also a focus on critical-path

scheduling and increased development to open up Ore

Reserves and create flexibility.

Project ONE was launched on 27 October 2010.

Growth prospects

The initial development of Moab Khotsong included the

exploitation of adjacent ore blocks, including Zaaiplaats to the

southwest and some 400m deeper than the existing mine. The

first phase of Moab Khotsong’s business plan, excluding

growth projects, sees the mine producing 3Moz of gold over

the life of mine. The Zaaiplaats project provides an additional

5Moz (164t) and a life extension of some 15 years, as well as

the potential to include additional blocks that rely on the new

project infrastructure.

Study work on Project Zaaiplaats began in 2003 and was

completed in 2006, following successful scoping and

prefeasibility phases. The subsequent feasibility study was

completed at the end of 2008 and showed competitive returns

following several technical changes, such as flatter declines to

be excavated by trackless machinery.

The intersection of geological structures in the current newer

eastern portion of the mine, however, was more complex than

originally understood, with a consequent impact on safety, the

location of infrastructure and production and cost estimates.

Accordingly, additional work was undertaken to gain a higher

level of confidence in the geological structural setting.

As Moab itself has achieved a stable operating base, Project

Zaaiplaats is set to get under way. The project will utilise a

modified approach to pre-development in order to facilitate

drilling platforms for gathering orebody and structural information,

together with the possibility of earlier gold production given the

anticipated drilling outcomes. This pre-development also retains

the option to fundamentally change the orebody extraction

approach by applying different technologies.

P

68

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Outlook for 2011

Production in 2011 is projected to range between 296,000oz

to 310,000oz at a total cash cost of between $597/oz and

$620/oz. Capital expenditure of R1,160m ($162m) is planned,

with R667m ($94m) allocated for Ore Reserve development,

R273m ($38m) as stay-in-business expenditure and R220m

($31m) for growth projects, comprising mainly Project

Zaaiplaats, and the exploration drilling programme.

Sustainability

The labour relations climate at the mine was stable during the

year, with unions actively consulted on matters affecting their

members and wherever possible involved in strategic issues

affecting the operation. National Union of Mineworkers’

representatives hold monthly meetings with management

while ad hoc engagements are expedited quickly to discuss

issues of immediate concern.

Workforce transformation in line with South Africa’s

employment equity goals remains a strategic thrust for the

mine and the company as a whole and will receive continued

attention during 2011.

Safety

The mine achieved one million fatality free shifts in January

2010. Tragically, however, two fatalities were recorded in

March and June, following incidents involving a fall-of-ground

and horizontal transport.

The all injury frequency rate improved 32% year-on-year, to

19.72 per million hours worked (2009: 28.82).

An interpersonal communication strategy yielded improvements

in personal safety during the second half of 2010, while an

aggressive and rigorous audit protocol further improved safety in

individual workplaces.

A safety workshop was held and three strategic safety pillars

identified. Action plans to address these were devised with the

related implementation dates being the focus of 2011. These

pillars include:

· removing people from risk;

·planning work; and

·behaviour.

OHSAS 18001 and ISO 14001 accreditation were received

during 2010 following external audits.

Community

As part of AngloGold Ashanti’s policy of anticipating and

responding quickly and efficiently to immediate community

needs, Moab Khotsong has a management representative on

the local area committee (LAC). This committee was

established by the AngloGold Ashanti Fund to disburse

charitable donations to communities neighbouring the

company’s operations. In addition to LAC funding, Moab

Khotsong made donations during the year to:

·Stilfontein and Jouberton Anglican Church, specifically for

the care of the elderly;

·Kanana soup kitchen;

·Bosasa Youth Development Centre;

·Hoërskool Schoonspruit, a local high school;

·SPCA;

·Triest Training Centre; and

·Youth Eagle Christian United Movement.

In order to improve the literacy of its workforce and those living

in areas nearby, AngloGold Ashanti provides transport for

students from neighbouring communities who undertake

evening classes in adult basic education and training.

Environment

Moab Khotsong retained its ISO 14001 certification during the

first advanced DQS audit conducted in July 2010. No reportable

environmental incidents were recorded during the year.

Environmental projects

An Environmental Impact Assessment of the new chilled-water

reservoir is in progress and is expected to be completed by the

end of February 2011.

The clean and dirty water separation project was completed. This

project aimed to reduce dirty water inflows into the dam and

determine the ultimate volumes required for the second dam.

Review of operations – South Africa

P

69

Vaal River and West Wits – Surface operations

Key statistics – Surface sources – Gold

Surface operations

2010

2009

(1)

2008

(1)

Pay limit

(oz/t)

0.010

0.007

0.007

(g/t)

0.290

0.225

0.206

Recovered grade

(oz/t)

0.016

0.015

0.011

(g/t)

0.54

0.53

0.36

Gold production

(000oz)

179

164

92

Total cash costs

($/oz)

485

341

440

Total production costs

($/oz)

516

355

469

Capital expenditure

($m)

3

3

1

Total number of employees

(2)

374

234

234

Employees

374

228

227

Contractors

–

6

7

All injury frequency rate

(per million hours worked)

5.99

9.10

11.80

(1 )

For the 2009 and 2008 years, the West Wits surface operations were included in TauTona.

(2 )

The number of employees increased from 2009 to 2010 as the West Gold Plant was classified as a dedicated Surface Sources Plant and consequently all its

employees were costed to Surface Sources.

Outlook for 2011

Production – gold

(000oz)

155 – 162

– uranium

(Mlbs)

1.26

Total cash costs

($/oz)

625 – 648

Capital expenditure

($m)

7

08

09

10

Gold production (000oz)

164

179

92

08

09

10

Total cash cost ($/oz)

485

440

341

08

09

10

Capital expenditure ($m)

1

3

3

08

09

10

Total number of employees*

374

* including contractors

234

234

P

70

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Key statistics – Surface sources – Uranium

Surface operations

2010

2009

2008

Pay limit

(lb/t)

0.316

0.362

0.331

(g/t)

0.143

0.164

0.150

Recovered grade

(lb/t)

0.622

0.584

0.508

(g/t)

0.282

0.265

0.231

Uranium production

(000lb)

1,462

1,442

1,283

Capital expenditure

($m)

12

5

6

Total number of employees

213

221

229

Employees

185

194

193

Contractors

28

27

36

Description

South Africa Metallurgy encompasses AngloGold Ashanti’s

portfolio of gold and uranium processing plants in South Africa,

as well as its Surface Operations, which extract gold and

uranium from tailings and rock dumps at surface. This operating

unit also produces backfill essential for mining operations. The

producing divisions include:

·Vaal River Gold: Kopanang Gold Plant, West Gold Plant,

East Gold and Archive Plant and Vaal River Tailings;

·Vaal River Uranium: Noligwa Gold Plant, Mispah Plant,

South Uranium Plant and Nufcor;

·West Wits Metallurgy: Mponeng Plant (including a backfill

plant), Savuka Plant, West Wits Tailings; and

·Vaal River and West Wits Chemical Laboratories.

Operating performance

Gold production increased by 9% to 179,000oz, compared

with 164,000oz in 2009.

Total cash costs increased by 42% to $485/oz, from $341/oz

the previous year, due mainly to increased electricity tariffs,

higher contractors costs and the stronger rand.

Uranium production increased 1% to 1.46Mlbs in 2010,

compared with 1.44Mlbs in 2009. A 6% increase in grade,

improved recovery and steady plant operations offset a 6%

drop in tonnages treated from the previous year.

Sulphuric acid

Both the East and South Flotation Plants, as well as the East

Acid Plant were shut during the year as a cheaper product was

available from external suppliers.

The BPF component of Project ONE was successfully

implemented at the Savuka and Mponeng Gold Plants, with

partial implementation during 2010 at the Noligwa Gold Plant

and South Uranium Plant. Implementation of BPF will take

place at West Kopanang and East Gold Plants during 2011.

Other aspects of Project ONE, namely SP and the Safety

Framework and Engagement Process, have been initiated and

are scheduled for implementation during 2011 and 2012.

Growth prospects

South Africa Metallurgy’s project pipeline:

Uranium is perceived as a growing opportunity within the

South Africa region. The application of new technology has the

potential to increase both the gold and uranium reserves.

Review of operations – South Africa

P

71

Uranium Expansion Project:

An alternative strategy has been identified to increase uranium

production, premised on improved utilisation of the uranium

recovery process-plant stream. Processing of the highest-

grade material will be prioritised and the process plants will be

modified to remove throughput restrictions to increase capacity.

Higher utilisation will be realised by providing ore-surge

capacity on surface and improving rail-network capacity to

increase surface tramming tonnages. The surge storage will

provide material for processing during weekends when no

hoisting takes place from underground. Plant modifications

will improve the processing efficiency of the Noligwa plant’s

thickening circuit and ore reception areas. A feasibility study

has identified that an additional 3.2Mlbs of uranium can be

produced over the life of mine of Kopanang. Capital

investment has been estimated at $27m. Detailed design will

commence in 2011, ramping up to full production from the

second quarter of 2012.

New acid storage section at South Uranium Plant:

Construction of a new acid storage section at the South

Uranium Plant is in progress to take advantage of low acid

prices during periods of market surplus. Mechanical

installation is nearing completion and the tanks will be

commissioned in the first quarter of 2011.

Kopanang waste washing plant:

The objective of this project is to recover extra gold from the

Kopanang waste rock and to eliminate fine dust from the

waste rock dump, which imposes an environmental liability on

the mine. Construction was completed in the second quarter

of 2010.

Mponeng feeder upgrades:

The Langlaagte chutes on the mill-feed belts are to be

replaced with Weba chutes. An installation on one of the mills

showed reduced occurrence of chokes giving more consistent

mill feed and improved mill throughput. Installation of the

second chute was completed in the fourth quarter of 2010 and

the third chute will be installed in 2011.

Outlook for 2011

Gold:

Gold production from surface sources during 2011 is estimated

at between 155,000oz and 162,000oz. This is dependent on

reef deliveries from underground operations which will determine

the volume of marginal ore-dump material processed.

Total cash costs of between $625/oz and $648/oz are expected.

Uranium:

Uranium production in 2011 is estimated to be about

1.26Mlbs, based on planned deliveries from Great Noligwa,

Moab Khotsong and Kopanang mines.

Sustainability

Initiatives to improve the relationship with organised labour,

particularly in West Wits, have begun with a focus on capacity

building and roll-out of the company’s values.

Meeting employment equity targets remained key, with

significant progress achieved during 2010. Historically

disadvantaged South Africans accounted for 41.21% of all

management roles, compared to 38.4% in 2009, while female

representation across the workforce was 16.8% compared to

16% in 2009.

P

72

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Safety

South Africa Metallurgy achieved a remarkable 12 million fatality-

free shifts during 2010. The all injury frequency rate improved

from 9.10 per million hours worked in 2009 to 5.99 in 2010 and

the total number of ‘white flag days’, signifying days on which no

injury occurred, increased from 307 in 2009 to 326 in 2010.

Eight plants achieved more than 100 consecutive ‘white flag

days’. OHSAS 18001 certification was maintained, ICMI

compliance was re-certified and industry milestones for silica

dust and noise were achieved.

Environment

As part of the phytoremediation programme, a total of 10ha

was planted on the footprint of the East Pay Dam.

Various environmental projects were successfully implemented

during the year, including:

·relining the No.2 Barren dam at South Uranium plant;

· construction of lined areas and bund walls at Noligwa Gold

plant to manage clean and dirty water;

· construction of lined areas and bund walls at East Gold Acid

Float (EGAF) plant to manage clean and dirty water;

· lining of the process water trench from EGAF plant to

Central Spillage; and

· cleaning historical pyrite spills outside the Noligwa Gold plant.

ISO 14001 accreditation was successfully maintained during

2010.

A total of eight pre-closure sites were rehabilitated during the

year. During the clean-up of the East Pay Dam footprint,

260,392t from the East Pay Dam, 2,101t from the site adjacent

to EGAF and 3,522t from the black-reef area were loaded and

transported to the screening plant for processing via the

Archive mill. In addition, 29,126t of silt material was loaded and

transported from the upper residence dam and 19,000t from

the lower residence dam to the bunkers built on the old North

Tailings Storage Facility.

A total of 51,408t of contaminated gold-bearing material was

sold to a third party for processing.

An aggressive invader-plant eradication programme was

undertaken in 2010. Independent consultants measured a

significant reduction in the prevalence of the three invader

plant species targeted.

There were 10 reportable environmental incidents, a marked

decline from 2009 when there were 35 incidents. All of the 2010

incidents involved water dam overflows. Dam capacity has

been increased and is in the process of being expanded further.

Dam level alarms have also been installed to prevent

recurrence. The programme to replace pipelines has borne fruit,

with no incidents involving pipeline failures occurring during the

year. The closure of the acid plant at the EGAF plant meant that

there were also no reportable air emission incidents.

Bokkamp water management project:

Construction was undertaken of a storm water dam and

pipeline system to eliminate the environmental impact of

overflowing dams in the Vaal River area. The dam was

completed during the third quarter of 2010 and is operational.

Plant demolition:

Demolition of redundant sections have been scheduled to

reduce future environmental liability, with revenue from scrap

sales to subsidise dismantling costs.

Review of operations – South Africa

P

73

West Wits – Mponeng

Key statistics

Mponeng

2010

2009

2008

Pay limit

(oz/t)

0.28

0.25

0.22

(g/t)

9.14

8.53

7.61

Recovered grade

(oz/t)

0.276

0.253

0.292

(g/t)

9.48

8.66

10.02

Gold production

(000oz)

532

520

600

Total cash costs

($/oz)

453

329

249

Total production costs

($/oz)

576

399

323

Capital expenditure

($m)

122

109

86

Total number of employees

5,778

6,029

5,685

Employees

5,732

5,926

5,482

Contractors

46

103

203

All injury frequency rate

(per million hours worked)

15.93

14.31

14.29

Outlook for 2011

Production

(000oz)

513 – 535

Total cash costs

($/oz)

486 – 504

Capital expenditure

($m)

210

08

09

10

Gold production (000oz)

600

520

532

08

09

10

Capital expenditure ($m)

122

86

109

08

09

10

Total cash cost ($/oz)

453

249

329

08

09

10

Total number of employees*

* including contractors

5,685

6,029

5,778

P

74

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

Description

Mponeng is located between the towns of Carletonville and

Fochville on the border between Gauteng and the North West

Province, southwest of Johannesburg. The operation mines the

Ventersdorp Contact Reef (VCR) at depths between 2,400m

and 3,900m. A sequential-grid mining method is employed.

Access to the reef is from the main haulage and return airway

development, with cross-cuts developed every 212m to the reef

horizon. Raises are then developed on-reef to the level above

and the reef is stoped-out on strike.

The Mponeng lease area is constrained to the north by the

TauTona and Savuka mines, to the east by Gold Fields Limited’s

Driefontein mine and to the west by Harmony Gold Mining

Limited’s Kusasalethu mine.

Mponeng comprises a twin-shaft system housing two

vertical shafts and two service shafts. Ore is treated and

smelted at the mine’s gold plant which has a monthly

capacity of 160,000t. The plant uses two semi-autogenous

(SAG) mills to process ore and the gold is extracted by

means of CIP technology.

Operating performance

Mponeng’s gold production increased by 2% to 532,000oz in

2010, compared to 520,000oz in 2009. A 9% increase in

grade contributed to the rise in production.

Total cash costs rose by 38% to $453/oz, due to the impact of

the stronger currency, inflationary pressure on labour, power

and stores and royalty payments which came into effect on

1 March 2010.

Capital expenditure for the year totalled R891m ($122m) and

was primarily spent on the VCR Below 120 project R339m

($46m). In addition, capital of R330m ($45m) was spent on

Ore Reserve development and R222m ($31m) on stay-in-

business activities.

Growth prospects

Ventersdorp Contact Reef (VCR) Below 120 Project:

Development is ahead of schedule and in line with the project

plan. The estimated completion date is 2013 and full

production is scheduled for 2016. The project is anticipated to

recover 2Moz of gold at a cost of R2bn.

Carbon Leader Reef (CLR) Below 120 Project: A feasibility
study currently under way indicates that this project, which
targets the mining area from 120 to 141 levels of the Carbon
Leader Reef horizon, has the potential to yield 11.3Moz of
recovered gold. This project can be undertaken in a phased
approach, accessing 123 and 126 levels first in order to bring
gold forward. This initial phase could potentially recover
3.5Moz of gold. The feasibility study for this first phase will be
completed in February 2012. Construction of the refrigeration
infrastructure to enable an early start of the first phase will
begin in the latter half of 2011. Feasibility studies for
subsequent phases will be completed by December 2012.

Outlook for 2011

Production is forecast at between 513,000oz and 535,000oz
at a total cash cost of between $486/oz and $504/oz.

Capital expenditure in 2011 is estimated at R1,493m ($210m),
with R825m ($116m) designated for growth, including the VCR
and CLR Below 120 projects and the balance for stay-in-
business and Ore Reserve development activities.

Sustainability

Safety

Tragically, there were four fatalities at Mponeng during 2010.
Two of the fatalities were of undetermined causes and are still
pending classification upon completion of the DMR enquiry.
The all injury frequency rate deteriorated to 15.93 per million
hours worked from a rate of 14.31 in 2009.

The mine embarked on a number of safety initiatives in 2010.
These included the introduction of detailed work packages in
line with the implementation of BPF; the roll-out of the Safety
Transformation programme; promotion of consecutive injury-
free days; miner, artisan, team-leader and safety representative
meetings; empowering of safety representatives and finally the
application of the SANDLA safety system, which focuses
on procedures, personal protective equipment and tools
and equipment.

The Inspector of Mines issued Mponeng with 10 Section 54
directives during the year. Each directive resulted in Mponeng
suspending operations fully or partially in order to comply with
the inspector’s recommendations on safety aspects. In each
case, the suspension order was lifted following investigation
and consultation between management, organised labour and
the DMR.

Review of operations – South Africa

P

75

Occupational health and safety assessments for OHSAS

18001 first and second advance assessments were

conducted in January and July 2010, with Mponeng retaining

accreditation on both occasions.

Health

During 2010, some 111 new cases of occupational

tuberculosis (TB) were diagnosed at Mponeng, at an annual

incidence of 2%. By year-end, 58 employees were still

receiving daily treatment for TB. In addition, 852 Mponeng

employees were seen at the Wellness Clinic in the six-month

period to December 2010, representing approximately 19% of

the group 3-8 workforce. A total of 512 employees had

received anti-retroviral therapy by the end of the year.

Training

Key successes of AngloGold Ashanti’s adult basic education

and training (ABET) initiative at Mponeng included:

·Co-ordinating and hosting International Literacy Day with

partners including the Mining Qualification Authority, the

National Union of Mineworkers and other mining companies

in the region. The event included more than 3,000 ABET

learners, staff, representatives from the Department of

Labour and other stakeholders;

·Providing learners with the opportunity to study for the

national diploma (N1 and N2) courses at Wescol College;

and

·Planning a library and resource centre for both AngloGold

Ashanti’s ABET learners and members of the general

community. This library will be an electronic learning centre.

Skills training opportunities were provided to employees and

the community. Training opportunities exist in boiler-making,

wiring, plumbing, carpentry, welding and computer training.

Fifty-nine employees and 52 community members participated

during the year.

Community

Mponeng’s ‘We Care Committee’, has formed partnerships in

the host communities of Kokosi, Greenspark and Fochville,

and is making a concerted effort to understand their

environment, traditions and values.

Projects undertaken during 2010 included:

·Winnie the Pooh Nursery School, Greenspark: shelter for the

school’s sandpit, provision of storage space, new tables,

chairs and mattresses, a sustainable vegetable garden to

feed children and sell surplus produce to the community to

supplement funds;

·Old age centre, Greenspark: construction of shaded areas

and provision of food parcels;

·Nursery School, Kokosi: provision of coats for school

children during the winter months;

·Fochville Service centre: provision of food parcels;

·Welfare, Fochville: hosting a Christmas party and presents;

and

·Fochville and Losberg Primary Schools, Fochville: provision

of stationery for learners and other outreach projects.

Environment

In order to prevent the mine from impacting surface and

ground water, a number of risk assessments and

environmental investigations were conducted during the year.

Most of these studies have been completed and the planning

and execution of mitigation projects are under way. These

include:

·Hydrological and waste assessments – the purchasing and

installation of flumes and flow meters in the east and west

trenches to measure clean storm water discharge;

·Completion of a legal compliance audit and a

polychlorinated biphenyls (PCB) assessment. (PCBs are a

group of synthetic oil-like chemicals of the organochlorine

family which have been shown to possess carcinogenic

properties and damage reproductive, neurological and

immune systems of wildlife and humans);

·Coating and sealing of concrete-lined washing bays and

waste transferring stations;

·Collection and disposal of asbestos waste;

·Eradication of alien and invader vegetation;

·Purchasing of high pressure cleaners; and

·Sampling and analysis of water discharge to demonstrate

continual improvement in monitoring and managing

process water.

An ISO 14001 first advancement assessment audit was

conducted at Mponeng in August 2010, with the mine

retaining its accreditation.

No reportable environmental incidents were recorded during

the year.

P

76

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

West Wits – Savuka

Key statistics

Savuka

2010

2009

2008

Pay limit

(oz/t)

0.56

0.78

0.43

(g/t)

17.86

26.74

14.91

Recovered grade

(oz/t)

0.155

0.159

0.183

(g/t)

5.30

5.45

6.28

Gold production

(000oz)

22

30

66

Total cash costs

($/oz)

1,100

1,115

411

Total production costs

($/oz)

1,387

1,387

518

Capital expenditure

($m)

9

13

11

Total number of employees

981

1,054

1,224

Employees

952

1,019

1,179

Contractors

29

35

45

All injury frequency rate

(per million hours worked)

7.69

13.23

19.82

Outlook for 2011

Production (000oz)

24 – 25

Total cash costs

($/oz)

1,098 – 1,139

Capital expenditure

($m)

3

Review of operations – South Africa

08

09

10

Gold production (000oz)

66

30

22

08

09

10

Capital expenditure ($m)

11

13

9

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77

Description

Savuka is situated on the West Wits line in the province of

Gauteng, approximately 70km southwest of Johannesburg.

Savuka is close to the town of Carletonville. The Carbon

Leader Reef (CLR) is mined at depths varying between 3,137m

and 3,457m below surface and the Ventersdorp Contact Reef

(VCR) at a depth of 1,808m below surface.

The Savuka lease area is constrained to the north and north-

west by DRDGOLD Limited’s Blyvooruitzicht Mine, to the east

by TauTona, to the west by Harmony’s Kusasalethu mine, and

to the south by Mponeng.

Operating performance

Savuka produced 22,000oz of gold during 2010, compared

with 30,000oz the previous year. Total cash costs decreased

by 1% to $1,100/oz, from $1,115/oz in 2009, due primarily to

insurance recoveries.

Savuka’s operations continued to bear the impact of the

seismic event that occurred in May 2009 as rehabilitation work

continued during 2010. This resulted in production taking

place in the VCR upper level in the first half of the year due to

limited access to the CLR. In the interests of capital efficiency,

a decision was made in late 2010 to place the mine on care

and maintenance and to access its Ore Reserves from the

larger, neighbouring Mponeng operation in future.

An insurance claim, covering normal business interruption and

material damage was lodged. The payments received and

credited to working costs, were R85m ($11m) in June and

R37m ($5m) in September.

Capital expenditure declined to R69m ($9m) in 2010, and

was spent on sustaining infrastructure. All Ore Reserve

development was halted as the mine prepared for transition

to care and maintenance.

Outlook for 2011

Several strategic options are currently being considered for

Savuka. These options vary from placing the operation on care

and maintenance to a continuation of mining activities.

It is anticipated that a formal decision on the future of Savuka

will be made by the end of March 2011.

Sustainability

Safety

The all injury frequency rate improved from 13.23 in 2009 to

7.69 per million hours worked in 2010. There were no fatalities

during 2010.

Savuka also retained its OHSAS 18001 certification

following an audit that was conducted during the course of

the year.

The mine continued implementation of the parallel safety

initiatives initiated in 2008, including Goldsafe days; the

promotion of team-based processes, mass open-air

08

09

10

Total cash cost ($/oz)

411

1,115

1,100

08

09

10

Total number of employees*

1,224

* including contractors

1,054

981

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

meetings and monthly miner, artisan, team leader and safety

representative meetings.

Savuka also participated in AngloGold Ashanti’s successful roll-out

of the ‘It’s OK to stop’ campaign. In addition, various internal safety

audits were conducted to enable management to address and

mitigate the risks identified in the process. The AuRisk system was

implemented to address risks at the mine.

Community

Savuka‘s community programme is managed in tandem with

that of the TauTona mine. (See TauTona community initiatives

on page 81).

Environment

An ISO 14001 first advance assessment audit was conducted

at Savuka in September 2010, with the operation retaining its

accreditation.

The environmental closure plan has been assessed.

Pumping will be dealt with through Mponeng and TauTona.

Environment-related projects for TauTona/Savuka include the

establishment of a centralised oil store and the construction of

a storm-water channel at the internal mine store yard.

No reportable environmental incidents were recorded during

the year.

West Wits – TauTona

Key statistics

TauTona

2010

2009

(1)

2008

(1)

Pay limit

(oz/t)

0.60

0.74

0.44

(g/t)

19.27

25.33

15.05

Recovered grade*

(oz/t)

0.204

0.213

0.253

(g/t)

7.01

7.29

8.66

Gold production

(000oz)

259

218

314

Total cash costs

($/oz)

700

559

374

Total production costs

($/oz)

980

797

509

Capital expenditure

($m)

75

57

60

Total number of employees

4,609

4,293

4,623

Employees

4,137

3,842

3,849

Contractors

472

451

774

All injury frequency rate

(per million hours worked)

19.03

15.84

19.00

*

Underground operation.

(1)

The 2009 and 2008 years include the results of the West Wits Surface operations.

Review of operations – South Africa

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79

Description

TauTona lies on the West Wits Line, just south of Carletonville

in Gauteng and about 70km southwest of Johannesburg.

Mining at TauTona takes place at depths of 1,850m to

3,450m. The mine has a three-shaft system, supported by

secondary and tertiary shafts and is in the process of

converting from longwall mining to scattered-grid mining. This

change in mining method was necessitated by the increased

incidence of complex geology and the unsuitability of the

current method for mining through the Pretorius fault. The

change will also lead to improved safety.

TauTona shares a processing plant with Savuka. The facility

currently has a monthly capacity of 180,000t and uses

conventional milling to crush the ore and a CIP plant to treat it.

Once the carbon has been removed from the ore, it is

transported to the gold plant at Mponeng for elution electro-

winning, smelting and the final recovery of the gold.

Operating performance

Production at TauTona rose 19% to 259,000oz during 2010,

compared with 218,000oz the previous year. Cash costs rose

25% to $700/oz, from $559/oz in 2009, due mainly to

inflationary pressure on the cost of labour, power and stores,

royalty payments which came into effect on 1 March 2010 and

a stronger currency.

Capital expenditure totalled R545m ($75m), which included

R162m ($22m) in stay-in-business expenditure and R371m

($51m) on Ore Reserve development. Additional expenditure

was required for the steelwork to complete shaft rehabilitation.

Outlook for 2011

Production

(000oz)

259 – 270

Total cash costs

($/oz)

718 – 745

Capital expenditure

($m)

82

08

09

10

Gold production (000oz)

314

259

218

08

09

10

Total cash cost ($/oz)

700

374

559

08

09

10

Capital expenditure ($m)

60

75

57

08

09

10

Total number of employees*

4,623

4,609

* including contractors

4,293

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – South Africa

The improvement in production was due largely to the

successful resumption of mining in January 2010 following

closure of the shaft in October 2009. The positive production

performance was, however, affected by a Section 54 stoppage

imposed on all tramming activities during September by the

Department of Mineral Resources.

Project ONE was officially launched on 26 October 2010. A

project support team was established and trained. Site

configuration and employee training have commenced with full

implementation scheduled for the end of September 2011.

Growth projects

CLR Below 120 project: The original project scope was to

develop a twin-shaft system – one for men and material and

the other a rock decline – to access and mine below the

120 level. Initial production targets were around 46.3t or

1.5Moz of recovered gold, including 42.9t or 1.4Moz directly

from the project and the balance from tailings, which would

contribute significantly to TauTona’s gold production. Following

a major seismic event which closed off one of the two access

routes, the project was reviewed and impaired in January

2009. A decision was made to limit the scope of the project to

the development of the rock decline to 123 level. As a result of

unfavourable geological drilling results and a significant

increase in the latest cost estimate, the project has been

suspended. The project area may be accessed at a later date

from Mponeng.

CLR Shaft Pillar Extraction Project: The project was

designed to enable stoping operations to be conducted up

to an infrastructural zone of influence. However, given the

safety and fall-of-ground risks, a decision was made to halt

mining of this pillar. Only 65% (434,000oz) of the targeted

production was achieved from this project. Capital

expenditure on the project was R281m ($34m).

VCR Pillar Project: The aim of this project is to provide the

necessary infrastructure to access the VCR pillar area.

Production began in 2005 and development was scheduled

to have been completed in 2010. Total production was

estimated at almost 200,000oz in all at a capital cost of

R123m ($14m), most of which has been spent. Following a

seismic event in the shaft and after further modelling done by

the Rock Mechanics Department, it was decided to stop

mining the VCR pillar. As at December 2010, 141,000oz had

been produced from this project.

Outlook for 2011

Production in 2011 is projected to be between 259,000oz

and 270,000oz. The higher production output relates to an

overall increase in yield to an average 7.6g/t. Total cash costs

of between $718/oz and $745/oz are forecast.

Capital expenditure totalling R586m ($82m) is planned for

2011 and will be spent mostly on Ore Reserve development

and stay-in-business projects.

Sustainability

Safety

Tragically, two fatalities occurred at TauTona during 2010

resulting from accidents related to winches and horizontal

transport. The all injury frequency rate per million hours worked

deteriorated from 15.84 in 2009 to 19.03 per million hours

worked in 2010.

TauTona retained its OHSAS 18001 certification following an

audit conducted during the second quarter of 2010 as the

mine implemented the behaviour based safety observations

programme to audit the behaviour of the mine’s workforce and

adopted the MOSH system to further enhance the mine’s

safety performance. Shaft infrastructure upgrades continued

into 2010 following an incident in the fourth quarter of 2009,

Review of operations – South Africa

P

81

when a length of penthouse steel fell down the sub-shaft,

damaging infrastructure and prompting the suspension of

operations while a full inspection was undertaken.

Mining through complex geology, including the Pretorius fault

zone, represented one of the chief safety challenges during

the year. TauTona continued with the implementation of

parallel safety initiatives which begun in 2008, including, the

ongoing roll-out of the ‘It is OK to Stop’ principle to all

employees, the White Flag drive and the Laduma for Safety

and wellness days. The monitoring of emergency escape

routes was improved.

On 2 October 2010, TauTona achieved two years without a

fall-of-ground fatality, demonstrating the significant progress

made in mitigating one of the most important risks related to

deep-level, underground mining. The AuRisk system was

implemented to address risk at the mine.

Community

TauTona plays an active role in supporting various community

projects in the Merofong district. AngloGold Ashanti made

donations to local organisations during the year, including:

·Carletonville Home Based Centre;

·Avondgloor Old Age Home;

·Suid-Afrikaanse Vroue Federasie (SAVF); and

·Timber Twig Pre-Primary School.

Environment

An ISO 14001 first advancement assessment audit was

conducted at TauTona in September 2010, with the operation

retaining its accreditation.

Additional projects undertaken during the year to minimise the

operation’s environmental impacts included:

·Upgrading of the waste separation area to improve waste

handling and storage, thereby improving recycling capacity;

·The cleanup and removal of steel and redundant equipment

which formed part of the backfill testing plant, in order to

reduce the size of the mine’s footprint; and

·Relocation of the internal mine store and equipment from the

ESKOM servitude, bringing TauTona in line with safety and

legal requirements on power cabling running through the

mine area.

Additional focus areas with regard to environmental aspects

included:

·Minimising refrigeration gasses (R134a and R11) that are

used in the refrigeration plants as refrigerant to supply

cooling power to underground workings;

·Management of hazardous material and waste, specifically

hydrocarbons, chemicals and flourescent tube light bulbs;

·The management of clean and dirty water at TauTona; and

·Water and electricity usage.

No reportable environmental incidents were recorded during

the year.

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Review of operations – Continental Africa

Challenges in

being met

head on

Africa

Podcast available at www.aga-reports.com/10/podcasts.htm

Richard Duffy, Executive Vice President –
Continental Africa, discusses AngloGold
Ashanti’s operations in the region

Tanzania

Geita

Namibia

Navachab

Iduapriem

Mali

Morila

Guinea

Siguiri

Ghana

Obuasi

Yatela

Sadiola

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83

$712/oz

$234m

15,761people

1,492000oz

08

09

10

Attributable gold production (000oz)

1,631

1,585

1,492

08

09

10

Total cash cost ($/oz)

608

712

543

08

09

10

Attributable capital expenditure ($m)

262

198

234

08

09

10

Total number of employees*

15,644

15,267

15,761

* including contractors

AngloGold Ashanti has eight mining operations in its Continental

Africa region:

· Iduapriem and Obuasi in Ghana;

· Siguiri in Guinea;

· Morila, Sadiola and Yatela in Mali;

· Navachab in Namibia; and

· Geita in Tanzania.

Combined production from these operations declined by 6% to

1.49Moz of gold in 2010, equivalent to 33% of group production.

Total cash costs increased by 17% to $712/oz. In all, they

employed 15,761 people, including contractors, 494 more than

in 2009. Total attributable capital expenditure for the region was

$234m, an increase of 18% on the $198m spent in 2009. The

bulk of this was spent at the Obuasi and Geita operations.

The Mineral Resource of the mining operations in Continental

Africa, attributable to AngloGold Ashanti, totalled 60.99Moz at

year-end, including an attributable Ore Reserve of 22.46Moz.

AngloGold Ashanti also conducts an active greenfield

exploration programme, principally in the Democratic

Republic of the Congo (DRC), focused on the Mongbwalu

concession and the Kibali joint venture with Randgold

Resources and the DRC government. This is in addition to

brownfield exploration being conducted in and around its

existing operations. For further information on the group’s

exploration programme in Continental Africa, see the Global

exploration section of this report.

Geita

23.9%

Obuasi

21.3%

Siguiri

18.3%

Iduapriem

12.4%

Sadiola

7.9%

Morila

6.4%

Navachab

5.8%

Yatela

4.0%

Contribution to Continental
Africa production

– by operation

P

84

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Ghana – Iduapriem

Key statistics

Iduapriem

2010

2009

2008

Pay limits

(oz/t)

0.04

0.04

0.04

(g/t)

1.47

1.45

1.43

Recovered grade

(oz/t)

0.050

0.050

0.051

(g/t)

1.70

1.72

1.76

Gold production

(000oz)

185

190

200

Total cash costs

($/oz)

666

516

525

Total production costs

($/oz)

868

579

611

Capital expenditure

($m)

17

28

54

Total number of employees

1,483

1,447

1,780

Employees

729

727

732

Contractors

754

720

1,048

All injury frequency rate

(per million hours worked)

9.73

12.26

13.95

Outlook for 2011

Production

(000oz)

188 – 199

Total cash costs

($/oz)

773 – 802

Capital expenditure

($m)

51

Review of operations – Continental Africa

08

09

10

Gold production (000oz)

200

190

185

08

09

10

Total cash cost ($/oz)

525

516

666

08

09

10

Capital expenditure ($m)

54

28

17

08

09

10

Total number of employees*

1,780

* including contractors

1,447

1,483

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85

Description

Iduapriem, wholly owned by AngloGold Ashanti since

September 2007, comprises the Iduapriem and Teberebie

properties on a 110km

2

concession. The mine is situated in the

western region of Ghana, some 70km north of the coastal city

of Takoradi and 10km southwest of Tarkwa.

Iduapriem is an open-pit mine and its processing facilities

include a CIP plant.

Operating performance

Gold production declined by 3% to 185,000oz in 2010. The

decline in production was mainly due to a stoppage from

11 February to 20 April to improve and increase the capacity

of the site’s tailings storage facilities (TSF). However, a

significant portion of production lost due to the stoppage was

recovered by re-planning mining operations and achieving

designed plant throughput.

Total cash costs increased by 29% from the previous year to

$666/oz, due primarily to higher fuel and power prices as well

as increased employee and maintenance related costs.

The launch of Project ONE in August 2010 has improved

overall mill throughput, which reached a record of 423,000t

in December 2010, in line with the upgraded plant design

specification.

Capital expenditure for the year was $17m, including $9m for

the new TSF, $5m for the water treatment plant upgrade and

$3m for other stay-in-business capital. Owing to the operational

stoppage between February and April 2010 and based on a

review of capital spend, the initial amount of $31m budgeted for

the Ajopa project and other projects was deferred.

Growth prospects

While the mine has limited growth prospects on surface, the

higher gold price led to renewed interest in evaluating the

considerable low-grade Mineral Resources in the Tarkwaian

conglomerates that extend below the economic limits of the

existing pits. Work is planned in 2011 to determine if there is an

economic resource sufficient to support underground mining.

In addition, the Ajopa project, which was anticipated to start in

2010, is to be developed over the next two to three years.

Ajopa contains an estimated Ore Reserve of 5.2Mt at a grade

of 1.83g/t, equivalent to around 341,000oz of gold. This

project is expected to yield approximately 324,000oz over 24

months. The change in projected Ajopa ounces is due to

change in planning parameters leading to increased volume to

be mined.

Outlook for 2011

Gold production at Iduapriem in 2011 is expected to increase

between 188,000oz and 199,000oz. Total cash costs are

estimated to range between $773/oz and $802/oz.

Capital expenditure of $51m is planned primarily for the

completion of the greenfield TSF $42m, stay-in-business

projects $7m and other projects $2m.

Sustainability

Safety

The all injury frequency rate of 9.73 per million hours worked

improved from 12.26 reported in 2009.

Reducing the number of safety-related incidents remains a key

focus for management, with a number of interventions already in

place. These include hazard identification and risk assessment;

incident reporting and investigation; employee engagement and

communication; contractor safety management; and more

visible leadership inspections by management.

Iduapriem maintained its OHSAS 18001 certification.

Environmental

Permitting issues had a significant impact on operations in

2010, following a shut-down while Block 2 and TSF 3 were

closed and the interim TSF built with permission from the

Ghana Environmental Protection Agency. In the meantime,

construction of a TSF to cater for life of mine tailings deposition

is in progress. It is anticipated that tailings deposition in the new

facility will start in the first half of 2011.

In addition to this shut-down, four reportable environmental

incidents, all related to pipeline failures, took place in 2010.

P

86

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

The online Sustainability Report 2010: Supplementary

Information provides details of these incidents and the

corrective action taken.

In 2009, the mine applied for temporary withdrawal from the

certification to the cyanide code due to the non-compliance

of its existing cyanide mixing and storage facility.

Construction of the new cyanide storage facility is in

progress and a new application will be made to the

International Cyanide Management Institute (ICMI) during

2011. During 2010, the original water treatment plant

installed in 2009 was upgraded. This work was undertaken

to ensure full treatment of contaminants in process water in

order to achieve the discharge standard for release of

excess water from the operations.

Iduapriem achieved its ISO 14001 certification following a

surveillance audit completed in November 2010.

Community

Iduapriem’s alternative livelihood programme continued in

2010, with strong support from the communities, local chiefs

and local authorities. The programme includes crop, fish and

palm farming and processing. In addition, a mushroom

farming project is being piloted as part of a broader

economic development strategy. Women from local

communities will operate the mushroom farms as stand-

alone businesses, selling and marketing their produce in and

around the Tarkwa region.

Key outstanding issues from previous years, in particular

cracks in houses in Teberebie village, were addressed in 2010.

Work is still in progress to finalise land-for-land compensation.

This would improve an already strong relationship with the

mine’s surrounding communities.

Ghana – Obuasi

Key statistics

Obuasi

2010

2009

2008

Pay limits*

(oz/t)

0.19

0.21

0.29

(g/t)

6.60

7.26

9.35

Recovered grade*

(oz/t)

0.150

0.151

0.127

(g/t)

5.16

5.18

4.37

Gold production

(000oz)

317

381

357

Total cash costs

($/oz)

744

630

633

Total production costs

($/oz)

945

796

834

Capital expenditure

($m)

109

94

112

Total number of employees

5,722

5,759

5,722

Employees

4,225

4,408

4,259

Contractors

1,497

1,351

1,463

All injury frequency rate

(per million hours worked)

2.86

4.73

6.36

*

Underground operation

Outlook for 2011

Production

(000oz)

302 – 312

Total cash costs

($/oz)

790 – 820

Capital expenditure

($m)

125

Review of operations – Continental Africa

P

87

Description

Obuasi is located in the Ashanti Region of southern Ghana,

approximately 60km south of Kumasi. It is primarily an

underground mine operating at depths of up to 1.5km, though

some surface mining in the form of open pit and tailings

reclamation occurs. Two treatment plants processed ore this

year: the South Treatment Plant, which is a Float-BIOX-CIL plant

for treating hard rock sulphides and tailings; and a tailings

treatment plant using CIL to treat only tailings. The tailings

treatment plant was shut down in October. Tailings will be treated

through the South Treatment Plant to increase gold recovery.

Operating performance

Gold production decreased by 17% to 317,000oz in 2010.

The reduced gold production was mainly attributable to

underground tonnages declining by 8% as a result of reduced

flexibility in developed Ore Reserves. Total development

metres were 19% lower, due largely to the poorer-than-

expected performance of the contractor.

The South Treatment Plant was stopped twice during 2010 – for

five days in March and 12 days in October, due to excess water

on the TSF at Sansu. The tailings treatment plant was then shut

down permanently in October as capacity on the Pompora

tailings dam had been exhausted.

The mine also suffered blocked and collapsed ore passes and

delays in ore-pass relocation. In order to increase the overall

efficiency of the operation in the long term, the number of

mining areas at Obuasi was consolidated from 13 to nine as

planned. Changes to the mining method included elimination

of certain waste footwall drives used for access, definition

drilling in all newly designed narrow reef stopes and an

increase in stope length to 150m. The transverse open stoping

mining method will be applied to widen sections of the reef.

AngloGold Ashanti has appointed a high-level, multi-

disciplinary taskforce to address the operating problems at

Obuasi. This team, comprising senior management, will

analyse the recent underperformance and design a

turnaround plan that will touch all aspects of the operation,

from mining and processing to a holistic approach in

addressing legacy sustainability issues resulting from a

century of mining. Peter Anderton, a seasoned engineer with

several years experience, will lead the rapid turnaround effort;

Toby Bradbury will lead the sustainability effort; and Keith

Faulkner, the former AngloGold Ashanti (Ghana) managing

director, will oversee the planning of Obuasi’s long-term

future. This team will report its findings to the board and table

a detailed plan for Obuasi’s sustained turnaround.

Total cash costs increased by 18% to $744/oz from $630/oz

in 2009. The increase was mainly attributable to the decline in

production, an increase in the power tariff and the once-off

settlement of historical worker claims. These negative factors

were partially offset by a reduction in the cost of consumables,

which were sourced via a focused procurement strategy.

The Sulphide Treatment Plant metallurgical recovery rate was

86% against the target of 82% set during 2009.

Capital expenditure amounted to $109m for the year. Of this

$11m was spent on projects; $36m on Ore Reserve

development, and $62m on stay-in-business activities.

Growth prospects

Ore production from underground activity is planned at 1.82Mt

in 2011, compared to 1.85Mt achieved in 2010.

Obuasi has a Mineral Resource base of approximately

30Moz. Within the task force structure implemented to

manage the mine, one of the three elements is to identify

08

09

10

Gold production (000oz)

357

381

317

08

09

10

Total cash cost ($/oz)

744

633

630

08

09

10

Capital expenditure ($m)

112

109

94

08

09

10

Total number of employees*

5,722

5,759

5,722

* including contractors

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

the level and methods of production best suited to exploiting

the deposit at Obuasi, given advances made in modern

mining technology.

Development at Obuasi Deeps on level 50 for both the Kwesi

Mensah Shaft and Brown Sub-Vertical Shaft, as well as

exploration drilling on the level 50 platform, were suspended

because of flooding in July 2009. Development was restarted

in the fourth quarter of 2010 and exploration drilling is planned

from the first quarter of 2011.

Outlook for 2011

Production at Obuasi in 2011 is projected to be between

302,000oz and 312,000oz, at an estimated total cash cost

ranging from $790/oz to $820/oz as the taskforce undertakes

planning for the mine’s future.

Planned capital expenditure is expected to be approximately

$125m, with $10m allocated to projects, $80m to stay-in

business activities and $35m to Ore Reserve development.

Sustainability

Safety

The safety performance at Obuasi improved significantly

compared to 2009 with an all injury frequency rate of 2.86 per

million hours worked recorded in 2010 compared with

4.73 per million hours worked in 2009. There were no fatalities

during the year.

The safety strategy drawn up in 2009 and implemented in

2010 contributed significantly to this performance. It focused

on four interlinked goals: processes that assign accountability

and drive performance; effective employee dialogue and

engagement; improving health and safety systems and

establishing a health and safety support function that suits the

operation’s needs.

Community

The implementation of the recommendations of the 2009

Social Study report on Obuasi communities continues to

receive attention.

The mine site continued to engage with surrounding

communities including the Artisanal Miners Association. There

was an increase in the number of communities covered under

the stakeholder engagement plan from 48 in 2009 to 58 in 2010.

On legacy issues, farms impacted by mining activities have been

assessed and some compensation paid. Grievances have been

investigated and documented, and proactive engagement
through regular meetings with communities has been instituted.

Regarding economic development, three projects are being

piloted at Obuasi to create employment opportunities for the

communities, namely a piggery, aqua culture and a

garment factory.

AngloGold Ashanti’s staffing needs in the community and social

development spheres have been expanded and training is

being provided to environment and community staff.

Implementation of management standards to prevent or avoid

the creation of additional legacy issues has commenced.

The occasional chemical treatment of process water for

discharge in positive water balance situations to streams and

rivers has been curtailed and rehabilitation of mined-out pits

has commenced at Adubriem and Sansu. The road to Sansu

village is being resurfaced by the company.

The mine continued to fund and operate its Malaria Control

Programme, which has successfully reduced the incidence of

malaria in the community, of more than 250,000 people, by more

than 75%. The programme is a world benchmark and has been

selected by the United Nation’s Global Fund with AngloGold

Ashanti as the principal recipient to expand the Obuasi model to

40 districts around Ghana. Funding of $130m will be provided

over five years at which time the Obuasi programme will be

included in the Global Fund programme. The programme awaits

government tax exemption on the Global Fund donor funds,

which should be forthcoming in 2011.

In addition, Obuasi continues its support of the municipality on

waste and hygiene management, education, HIV/Aids

awareness and treatment.

Environment

Six reportable environmental incidents, two of which were

related to tailings management, took place in 2010. Details of

the incidents and the corrective action taken are available in the

online Sustainability Report 2010: Supplementary Information.

A tailings retreatment project is under way to retreat tailings in

the facilities at the northern end of the mine and simultaneously

address stability and drainage issues as part of Obuasi’s mine

closure obligations.

Construction of two process water treatment plants to mitigate

the positive water balances to the north and south of the mine is

scheduled for completion by the second quarter of 2011.

Review of operations – Continental Africa

P

89

Guinea – Siguiri

Key statistics

Siguiri

2010

2009

2008

Pay limit

(oz/t)

0.02

0.02

0.03

(g/t)

0.66

0.71

0.93

Recovered grade

(oz/t)

0.028

0.032 0.035

(g/t)

0.97

1.11

1.20

Gold production

– 100%

(000oz)

321

372

392

– 85%

273

316

333

Total cash costs

($/oz)

643

519

466

Total production costs

($/oz)

701

595

542

Capital expenditure

– 100%

($m)

12

26

22

– 85%

10

22

18

Total number of employees

3,170

2,973

2,933

Employees

1,531

1,492

1,489

Contractors

1,639

1,481

1,444

All injury frequency rate

(per million hours worked)

6.15

5.54

9.42

Outlook for 2011 (attributable)

Production

(000oz)

270 – 281

Total cash costs

($/oz)

693 – 719

Capital expenditure

($m)

30

08

09

10

Attributable gold production (000oz)

333

316

273

08

09

10

Total cash cost ($/oz)

643

466

519

08

09

10

Attributable capital expenditure ($m)

18

22

10

08

09

10

Total number of employees*

2,933

2,973

3,170

* including contractors

Permitting processes are also under way ahead of the
construction of a return water dam to be commissioned by 2012,
to enhance the stability of the south tailings storage facility.

The mine underwent its ISO 14001 surveillance audit in
November after successfully completing a certification audit in
December 2009.

P

90

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Description

AngloGold Ashanti has an 85% interest in Siguiri and the

government of Guinea owns the balance. Siguiri is a multiple

open-pit, oxide gold mine situated in the Siguiri district in

northeast of the Republic of Guinea, about 850km northeast of

the capital, Conakry. Siguiri’s open pits are operated by mining

contractors using conventional techniques. Mineralisation at

Siguiri is hosted within the Birimian System. The plant

processes at a rate of about 30,000t of ore a day.

Operating performance

Attributable gold production declined by 14% to 273,000oz,

due mainly to the mining of lower grade ore. The decline in

grade was a result of lower overall grades mined in the Sintroko

and Tubani pits. Production was also affected by lower

drawdown rates, which affected geotechnical stability and

caused the failure of the main ramp of Sintroko pushback 1.

This delayed mining operations in the affected area from August

to November.

The mine implemented the BPF component of the Project

ONE business improvement initiative during 2010. It is

anticipated that plant efficiencies will improve as a result of

increased throughput as new initiatives are introduced.

Total cash costs increased by 24% to $643/oz, from $519/oz

in 2009, due to higher fuel prices and costs related to labour

and mining contractors.

Capital expenditure totalled $12m ($10m attributable) with

$6m spent on brownfield exploration and $6m on stay-in-

business projects.

Growth prospects

Scoping studies are being undertaken on the mining

optimisations and expanded metallurgical processing

capability of the mine. These studies are expected to:

· provide direction for the short- and long-term development of

the mine;

·address the 30Mt a year treatment of saprolite ore from areas

to the northwest and southeast of the current pits, as well as

the overlying cap rock in those areas and the transitional and

hard oxide deposits below the existing pits; and

·conduct mining scenarios to provide cut-off grades that will

feed into blue sky exploration drilling programmes.

Successful completion of the studies will provide direction

on the expected increase in throughput over the life of mine.

Current Proved and Probable oxide Ore Reserves at Siguiri are

around 2Moz of gold at 1.28g/t from the operation’s pits and

1.77 Moz at 0.55g/t from stockpiles and spent heaps. This is

sufficient to feed the plant at a rate of 10.2Mt a year for three

to four years. Studies are planned for 2011 to determine

options available to improve plant throughput.

There remains potential for additional sulphide and low-

grade oxide Mineral Resources in the regional gold belt,

which remains very prospective and under explored.

Support for this view is based on gold showings in surface

geochemistry and on interpretations based on geophysical

and geological understanding. Fast-tracking of drilling is

required to upgrade ‘blue sky’ estimates into Proved and

Probable Ore Reserves.

Outlook for 2011

Attributable gold production for 2011 is projected at between

270,000oz and 281,000oz at a total cash cost of between

$693/oz and $719/oz.

Capital expenditure of $36m (attributable $30m) is scheduled

for 2011, comprising project capital of $12m, $21m of stay-in-

business capital and $3m for exploration.

Review of operations – Continental Africa

P

91

Sustainability

Safety

Siguiri had one fatality in January 2010 when a collision

occurred between two trucks. Management implemented an

action plan whereby contractors are closely managed and

monitored with regards to safety. The all injury frequency rate

for the year was 6.15 per million hours worked (2009: 5.54).

Management identified the need to entrench the view that safety

remains more important than production goals. To achieve this,

improvements are to be made to enforce basic safety rules and

standards in contractor management, management visibility at

the workplace, and operator training and awareness.

Preparations for continuous occupational hygiene measurement

have been completed and this will be fully operational from

January 2011.

The mine maintained its OHSAS 18001 certification.

Community

Siguiri continued its engagement with stakeholders to assure

adoption of strategies to achieve common goals. An annual

forum was initiated and held to solicit recommendations from

interested stakeholders with a view to strengthening

relationships with these groups. Long- and short-term

community infrastructure projects were undertaken, including:

· health post (Kourouda);

· Great Mosque of Kintinian;

· Arabic school of Kintinian;

· upgrading of rural roads within and between villages;

· water drainage systems;

· water boreholes; and

· renovation of Siguiri Central police station and the airport.

The second round of the year’s malaria control initiative for

the mine village and six major surrounding communities

progressed steadily and was identified as the main reason for

the reduction in malaria-related illnesses reported at the new

medical centre. The challenge for the malaria control

programme is how to attend to the larger community in the

town of Siguiri, where about 70% of mine employees currently

reside. It appears that the Global Fund is in the process of

funding malaria projects in Guinea’s mining industry.

Environment

Three reportable environmental incidents occurred during

the year, all involving tailings spillages. High density

polyethylene pipelines are being replaced by steel pipes on

an ongoing basis. The frequency of pipeline inspections has

been increased in order to minimise the volume of material

spilled should a leak occur. One incident was as a result of

sabotage by community members. Community engagement

including local and regional authorities was stepped up to

prevent a recurrence.

Dust control on haul and access roads and at the ROM1

stockpile was satisfactory, but remains a challenge in the dry

months. The operations relied heavily on recirculation of

process water and extracted less than a third of its annual

water allocation from Tinkinsso River.

The land management programme was well executed during the

year, with no land-use conflicts with neighbouring communities.

Mine closure planning remained high on the agenda, resulting

in a closure gap analysis being carried out and measures put

in place to close the identified shortfalls.

Siguiri was certified to be in full compliance with the

International Cyanide Management Code in March 2010.

Certification is valid for three years. A successful ISO 14001

surveillance audit was conducted during the year.

P

92

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Mali – Morila

Key statistics

Morila

2010

2009

2008

Pay limit

(oz/t)

0.02

0.04

0.06

(g/t)

0.67

1.21

2.17

Recovered grade*

(oz/t)

0.050

0.072

0.090

(g/t)

1.70

2.47

3.08

Gold production

– 100%

(000oz)

238

342

425

– 40%

95

137

170

Total cash costs

($/oz)

715

527

419

Total production costs

($/oz)

766

583

495

Capital expenditure

– 100%

($m)

3

10

3

– 40%

1

4

1

Total number of employees

– 100%

891

1,053

1,703

Employees

476

518

605

Contractors

415

535

1,098

*

Open-pit operation

Outlook for 2011 (attributable)

Production

(000oz)

82 – 85

Total cash costs

($/oz)

838 – 869

Capital expenditure

($m)

1

Review of operations – Continental Africa

08

09

10

Attributable gold production (000oz)

170

137

95

08

09

10

Total cash cost ($/oz)

715

419

527

08

09

10

Attributable capital expenditure ($m)

1

4

1

08

09

10

Total number of employees*

1,703

* including contractors

1,053

891

P

93

Description

The Morila mine is situated some 180km southeast of

Bamako, the capital of Mali. The operation currently treats low-

grade stockpiles. The plant at Morila, which incorporates a

conventional CIL process with an upfront gravity section to

extract the free gold, has an annual throughput capacity of

4.3Mtpa.

Morila is 80% owned by Morila Limited, a joint venture in which

AngloGold Ashanti and Randgold Resources Limited each have

a 50% stake, giving AngloGold Ashanti an effective interest of

40% in Morila. The government of Mali owns the remaining

20%. Randgold Resources manages the mine.

Operating performance

Attributable gold production declined by 31% to 95,000oz,

mainly due to a 30% drop in head grade as a result of the

treatment of low-grade stockpiles.

Total cash costs increased by 36% to $715/oz as a result of

the lower production and higher costs for reagent and also for

fuel burnt in power generation.

Morila spent stay-in-business capital of $3m in 2010, of which

$1m was attributable. The major elements of this were the

SAG and ball mill main gearbox, conveyor belting and the

replacement of the Knelson concentrators.

Morila will continue the current process of treating low-grade ore

stockpiles until 2013. Attributable production is therefore

expected to decrease further as Morila reaches the end of its life.

Outlook for 2011

Attributable gold production for 2011 is projected to be in a

range of 82,000oz to 85,000oz at a total cash cost of between

$838/oz and $869/oz. Attributable capital expenditure is

estimated at $1m.

Sustainability

Safety

The safety statistics for Morila are reported by Randgold

Resources, the operator, and are not included in AngloGold

Ashanti’s statistics.

Environment

No significant environmental incidents were reported during

the year. ISO 14001 certification was maintained after an

external assessment audit was completed during 2010. No

non-conformance issues were raised.

Community

The mine maintained a good relationship with communities

and regular meetings were held. All community development

projects planned for the year were completed. The mine

continued to provide malaria spraying services and treated five

villages during 2010, through three spraying cycles.

Morila’s closure committee is operational and meets quarterly.

A sustainable agribusiness project is being developed to

continue wealth creation after closure of the mine, with

1,270ha having been identified for agriculture. Plans are in

place to convert the bulk mining yard and the batch plant into

an area for poultry farming and animal husbandry.

The micro-finance project (CAMIDE) has funded 20 undertakings

for former staff members. Morila’s management and unions

are formulating a social plan for employees. The ongoing

closure process focuses on the social plan submitted by

labour unions and the closure coordinator, as well as

engagement with government agencies to provide training

assistance to affected employees.

The New Mine Collective Convention was implemented in

September 2010, with no major issues identified. Compulsory

health insurance and the payment of the related subscription

came into effect in November 2010.

P

94

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Mali – Sadiola

Key statistics

Sadiola

2010

2009

2008

Pay limit

(oz/t)

0.04

0.04

0.07

(g/t)

1.28

1.46

2.18

Recovered grade*

(oz/t)

0.060

0.074

0.100

(g/t)

2.04

2.52

3.42

Gold production

– 100%

(000oz)

287

354

453

– 41%

(1)

118

135

172

Total cash costs

($/oz)

650

488

399

Total production costs

($/oz)

698

571

554

Capital expenditure

– 100%

($m)

20

10

8

– 41%

(1)

8

4

3

Total number of employees

– 100%

1,771

1,532

1,510

Employees

790

705

634

Contractors

981

827

876

All injury frequency rate

(per million hours worked)

1.65

2.31

4.37

*

Open-pit operation

(1)

Effective 29 December 2009, AngloGold Ashanti increased its interest from 38% to 41%.

Outlook for 2011 (attributable)

Production

(000oz)

123 – 129

Total cash costs

($/oz)

699 – 725

Capital expenditure

($m)

23

Review of operations – Continental Africa

08

09

10

Attributable gold production (000oz)

172

135

118

08

09

10

Attributable capital expenditure ($m)

3

4

8

P

95

Description

Sadiola is situated in the far southwest of Mali, 77km south of

the regional capital, Kayes. Sadiola is a joint venture in which

AngloGold Ashanti and IAMGOLD each have a 41% interest

and the government of Mali 18%.

Mining at Sadiola takes place in five open pits. Ore is treated

and processed in a CIL gold plant with a monthly capacity of

364,000t.

Operating performance

Attributable production decreased by 13% to 118,000oz,

from 135,000oz in 2009, mainly as a result of a 12% decline

in head grade.

The decline in grade is as a result of the depletion of the

Sadiola main pit Ore Reserves and a change in the mining

focus to the lower-grade satellite pits.

A new gravity circuit was introduced in the plant and aided

recovery in the processing of oxide and sulphide feed

materials. Advance crushing and screening of both ore types

significantly improved plant throughput in the latter part of the

year by minimising the introduction of large rocks and

associated blockages early in the process.

Total cash costs increased by 33% to $650/oz, owing mainly

to the lower-grade feed supplied to the priority plant. In

addition, mining contractor costs were higher as a result of the

longer haulage distance, higher maintenance costs and

increases in the fuel price.

The BPF component of the Project ONE initiative was

introduced during 2010 and is expected to be fully entrenched

during 2011. Initial BPF work will be directed at optimising

processing activities so as to increase availability, utilisation

and throughput of the plant.

Total capital expenditure for the year was $20m ($8m attributable).

Of the total, $10m was spent on projects, $7m was stay-in-

business capital and $3m was spent on exploration projects.

Growth prospects

Sadiola is currently investigating two expansion opportunities,

namely the Deep Sulphide project, which is in feasibility stage,

and the Oxide Expansion project, which is currently undergoing

a prefeasibility study.

The Deep Sulphide project will treat both oxide (5Mt per

year) and sulphide (3.6Mt per year) ores. Initial waste

stripping at Sadiola’s main pit and the commissioning of the

sulphide plant is expected to commence in 2012. Once

current oxide Ore Reserves are depleted, the plant will be

modified to treat only sulphide material at a capacity of

7.2Mt per year. The Deep Sulphide project will extend the

mine’s life and add 4.2Moz to Sadiola’s current life of mine

production profile. The feasibility study is expected to be

completed early in 2011.

The oxide expansion project is based on exploration results

that indicate additional oxide potential in the Sadiola area.

Current work includes expediting the exploration programme

to better define the potential of all existing targets and profile

new target areas.

Outlook for 2011

Attributable production is expected to be between 123,000oz

and 129,000oz. The increase will be mainly driven by

improved throughput following the introduction of the new

screening plant.

Total cash costs are expected to increase to between $699/oz

and $725/oz.

Capital expenditure of $54m ($23m attributable) is planned.

08

09

10

Total cash cost ($/oz)

399

488

650

08

09

10

Total number of employees*

1,771

* including contractors

1,510

1,532

P

96

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Sustainability

Safety

Sadiola had one fatality in August 2010. Whilst positioning a

submersible de-watering pump, the supervisor fell into a

temporary sump following the collapse of the area. All the

recommendations arising from the investigation into the

incident have been implemented. The all injury frequency

rate for the year improved to 1.65 per million hours worked

(2009: 2.31).

As contractor-related incidents were the major source of injury,

contractor management received concerted attention to

ensure alignment and compliance with AngloGold Ashanti’s

standards and practices.

Other safety-related programmes and initiatives are directed at

pre-work planning, hazard analysis, vehicle safety and training

focused on crisis and emergency plans.

The mine maintained its OHSAS 18001 certification in 2010.

Community (including Yatela)*

Annual workshops comprising government, national and

regional authorities, local communities, media,Non-

Governmental Organisations (NGOs) and other associations

have been held since 2003. These workshops provide a

forum to communicate the activities planned by Sadiola and

Yatela, while providing an opportunity for the relevant

stakeholders to comment and make recommendations.

The Integrated Development Action Plan (IDAP) has been in

place since 2004. Covering villages located around the Sadiola

and Yatela mines, it focuses on agricultural capacity-building

and micro-financing activities. The plan is managed by the

communities themselves and includes a general assembly with

representatives from each village. The IDAP has received

funding from Sadiola and Yatela which enables it to function

successfully and independently.

Community members from the villages surrounding Sadiola

and Yatela have been trained in malaria mitigating techniques,

which has aided a decline in the incidence of the illness since

the implementation of the programme in 2005.

It is the responsibility of both Sadiola and Yatela to contribute

to an HIV/AIDS programme. Initiatives focus specifically on

awareness, testing and peer educators in the workplace. The

company partnered with NGOs during the soccer World Cup

2010 to attract villagers to central locations to watch games

and participate in voluntary testing.

Environment

One reportable environmental incident occurred on 26 April

2010 when the incorrect disposal of 75 litres of a pesticide

into drains led to contamination of the final effluent from the

sewage treatment plant, resulting in the death of more than

200 birds. This incident resulted in a fine levied by local

authorities. Management implemented measures to prevent

a repeat of the incident by including regular inspections of the

site and the education of employees on the importance of

adhering to the correct disposal procedures.

The environmental impact assessment for the Sekokoto road

diversion was completed and approved by government. ISO

14001 certification was maintained following an external

surveillance audit.

Review of operations – Continental Africa

*

Given their proximity to each other, Sadiola and Yatela conduct their local

community initiatives jointly.

P

97

Mali – Yatela

Key statistics

Yatela

2010

2009

2008

Pay limit

(oz/t)

0.01

0.04

0.04

(g/t)

0.45

1.52

1.34

Recovered grade*

(oz/t)

0.036

0.106

0.078

(g/t)

1.23

3.62

2.66

Gold production

– 100%

(000oz)

150

222

165

– 40%

60

89

66

Total cash costs

($/oz)

807

368

572

Total production costs

($/oz)

883

455

591

Capital expenditure

– 100%

($m)

5

2

8

– 40%

2

1

3

Total number of employees

– 100%

878

803

888

Employees

308

298

305

Contractors

570

505

583

All injury frequency rate

(per million hours worked)

2.28

5.54

6.13

*

Open-pit operation

Outlook for 2011 (attributable)

Production

(000oz)

31 – 32

Total cash costs

($/oz)

977 – 1,014

Capital expenditure

($m)

1

08

09

10

Attributable gold production (000oz)

89

60

66

08

09

10

Attributable capital expenditure ($m)

3

1

2

P

98

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Description

The Yatela mine is situated some 25km north of Sadiola and

approximately 50km south-southwest of Kayes. Ore extraction

is conducted from the Yatela main pit as well as the satellite pit

at Alamoutala. The ore mined is treated at a heap-leach pad

together with carbon loading. The carbon is then eluted and

the gold smelted at nearby Sadiola.

Yatela is 80% owned by the Sadiola Exploration Company

Limited, a joint venture in which AngloGold Ashanti and

IAMGOLD each have an interest of 50%, giving AngloGold

Ashanti an effective stake of 40% in Yatela. The government of

Mali owns the remaining 20% stake in the mine.

Operating performance

Yatela was originally scheduled for closure in 2010, though

the life has since been extended. Attributable gold

production at Yatela dropped by 33% from 2009 levels to

60,000oz in 2010. The decline in production was due mainly

to a decrease in the head grade of the ore stacked as a

result of non-conformity at the bottom of mineralised

structures in Alamoutala.

Total cash costs increased by 119% to $807/oz, due to the

significant decrease in production coupled with higher

stripping costs to access the Alamoutala ore and an increase

in contract mining costs.

Capital expenditure for the year of $6m ($2m attributable) was

spent mostly on exploration $4m and stay-in-business capital

$2m to support the extended mine life.

Growth prospects

The current life of mine is based on the successful conversion

of the Inferred Mineral Resource in Yatela North, where the

opportunity lies in the northeast and northwest extensions.

Furthermore, a focused exploration programme will be

undertaken over the next year to ensure continuation of the

mining operation.

Outlook for 2011

Attributable production at Yatela is projected to be between

31,000oz and 32,000oz for the year at a total cash cost of

between $977/oz and $1,014/oz. Capital expenditure of $2m

($1m attributable) is planned.

Sustainability

Safety

The all injury frequency rate for the year improved to 2.28 per

million hours worked (2009: 5.54).

Programmes which enabled this improvement included pre-

work planning, hazard analysis and also vehicle safety and

training directed at crisis and emergency plans.

Management identified effective contractor management as a

key area for safety improvement and contractor alignment with

group safety standards as a priority.

The mine maintained its OHSAS 18001 certification in 2010.

Community

See Sadiola.

Review of operations – Continental Africa

08

09

10

Total cash cost ($/oz)

807

572

368

08

09

10

Total number of employees*

888

803

* including contractors

878

P

99

Environment

There were no reportable environmental incidents at Yatela

during 2010. This was as a result of increased inspection and

regular interaction with site personnel and management on

accident prevention.

The mine rehabilitated 19.5ha of waste dumps and heap

leach pads during the year. The rehabilitation of a further

160ha has been built into the current business plan and will

be accelerated.

Furthermore, a closure manager has been appointed by

Yatela to ensure that all requirements are fulfilled. The

closed Obotan mine in Ghana was visited jointly with the

National Closure Commission to better understand closure-

related issues and help in the development of a formal

closure plan for Yatela that considers the physical

environment, social issues and worker development.

ISO 14001 recertification of Yatela was achieved following an

audit. An external surveillance audit will be undertaken

in 2011.

Namibia – Navachab

Key statistics

Navachab

2010

2009

2008

Pay limit

(oz/t)

0.07

0.05

0.04

(g/t)

2.53

1.55

1.29

Recovered grade

(oz/t)

0.052

0.046

0.042

(g/t)

1.80

1.58

1.43

Gold production

(000oz)

86

65

68

Total cash costs

($/oz)

727

622

534

Total production costs

($/oz)

786

663

601

Capital expenditure

($m)

14

20

12

Total number of employees

687

578

482

Employees

687

578

482

Contractors

–

–

–

All injury frequency rate

(per million hours worked)

25.60

26.30

20.63

Outlook for 2011

Production

(000oz)

83 – 87

Total cash costs

($/oz)

921 – 955

Capital expenditure

($m)

10

P

100

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Description

The Navachab gold mine is situated near the town of Karibib,

some 170km northwest of the capital Windhoek and 171km

inland on the southwest coast of Africa.

Navachab, which began operations in 1989, is an open-pit

mine with a processing plant which includes a mill as well as

CIP and electro-winning facilities, all with a monthly capacity of

120,000t.

In addition to the current operation, a Dense Media Separation

(DMS) plant with a monthly capacity of 120,000t was

commissioned during 2010.

Operating performance

Gold production increased by 32% to 86,000oz in 2010, due

to greater volumes mined from the bottom of the pit and the

treatment of high-grade concentrate from the DMS plant.

Total cash costs rose by 17% to $727/oz as a result of higher

labour and power costs and rising contractor fees, though this

was partly offset by an increase in production.

Capital expenditure for the year was $14m, which included

$9m spent on stay-in-business projects, $3m to complete

construction of the DMS plant and $2m on exploration.

Growth prospects

The optimisation process at Navachab indicated that the

main pit will be expanded to the east from 2011 to access

footwall mineralisation north of the current east pushback.

The west cut is expected to be mined from 2013 to access

the hanging wall mineralisation. Exploration during 2011 will

focus on the down plunge extension of the existing orebody

of the main pit. Drilling will focus on the North Pit 2 and the

down plunge extension, while also exploring the strike extent

of the satellite target areas where previous exploration

indicated potential, as well as the western limb of the fold

hinge at anomaly 16. This campaign has the potential to add

approximately 450,000oz to the Mineral Resource at a cost

of approximately $7/oz.

Outlook for 2011

Gold production for 2011 is expected to be between 83,000oz

and 87,000oz, at a total cash cost of between $921/oz and

$955/oz.

Capital expenditure of $10m is forecast for 2011, of which

$7m is stay-in-business expenditure primarily to be spent on

the water filtration plant and heavy mining equipment.

Sustainability

Safety

The all injury frequency rate per million hours worked improved

from 26.30 in 2009 to 25.60 in 2010.

Navachab complied with OHSAS 18001 assessments

conducted in March and October 2010.

Safety interventions include ongoing speed surveillance on

the access roads in the mine, quarterly vehicle safety audits,

regular safety representative meetings and quarterly safety

steering-committee meetings. The behavioural safety

initiative, known as Ostrich, is ongoing and has begun to

produce results.

Review of operations – Continental Africa

08

09

10

Gold production (000oz)

86

68

65

08

09

10

Total cash cost

($/oz)

727

534

622

08

09

10

Capital expenditure ($m)

12

20

14

08

09

10

Total number of employees*

687

* including contractors

482

578

P

101

Community

Navachab made contributions to educational projects,

including the ‘Spell it Right’ competition, spring school for

grade 12 learners and prize giving ceremonies at local and

regional schools. Navachab also sponsored the building of

a house for volunteer teachers at the local government

school, contributed to the young scientist exhibition and

made its annual donation to the private school in the town

of Karibib.

A pool of 100 unemployed women was identified in Karibib in

order to create ad-hoc employment on a short-term basis

where possible.

Environment

No reportable environmental incidents occurred during 2010.

The construction of the water filtration plant commenced in

2010 with commissioning planned to be complete by the third

quarter of 2011. This facility will ensure additional recovery of

water from the plant to eliminate the need for a third TSF and

also negate the inherent safety, health and environment risk

associated with a TSF.

ISO 14001 environment certification was maintained during

the year. Navachab further received a formal notification of

compliance with the Cyanide Code from the Code Secretariat.

Tanzania – Geita

Key statistics

Geita

2010

2009

2008

Pay limit

(oz/t)

0.07

0.09

0.10

(g/t)

2.38

3.08

3.10

Recovered grade*

(oz/t)

0.069

0.055

0.056

(g/t)

2.36

1.89

1.92

Gold production

(000oz)

357

272

264

Total cash costs

($/oz)

777

954

728

Total production costs

($/oz)

981

1,121

929

Capital expenditure

($m)

38

19

53

Total number of employees

3,265

3,186

3,116

Employees

1,874

1,990

2,130

Contractors

1,391

1,196

986

All injury frequency rate

(per million hours worked)

5.38

5.56

8.52

*

Open-pit operation

Outlook for 2011

Production

(000oz)

485 – 506

Total cash costs

($/oz)

631 – 655

Capital expenditure

($m)

66

P

102

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Continental Africa

Description

The Geita gold mine is located in the Lake Victoria goldfields of

the Mwanza region of Tanzania, about 120km from Mwanza

and 4km west of the town of Geita. The mine is wholly owned

and managed by AngloGold Ashanti.

The Geita gold deposit is an Archaean mesothermal orebody,

largely hosted in a banded ironstone formation. It is a multiple

open pit operation with underground potential and is currently

serviced by a 5.2Mt per annum CIL processing plant.

Operating performance

The turnaround at Geita resulted in gold production increasing

by 31% to 357,000oz in 2010. Significant quarterly

improvements were achieved during the first half of the year,

with gold production rising from 84,000oz in the first quarter to

90,000oz in the second quarter. Output was hampered during

the third quarter as a result of a major planned plant shutdown

to replace the SAG mill discharge end-plate and to rebuild the

crusher dump-pocket. Production was also supported by

improved grades from Nyankanga pit, which delivered an

average grade of 3g/t.

Total cash cost for the year improved by 19% to $777/oz,

mainly as a result of lower reagent costs, as well as a reduction

in general and engineering stores. The favourable movement in

costs was partially offset by the deferred stripping charge.

In addition, other initiatives included the start, in 2010, of the

construction of a re-designed run-of-mine pad to improve the

ore-blending capability of the plant. All planned performance

parameters were achieved.

The fleet rationalisation strategy also saw the number of trucks

used during the year reduce from 48 to 34. This, in conjunction

with improved operating practices, resulted in significant

productivity gains as the same volume of material was moved

with fewer haul trucks. Fleet rationalisation will continue

through 2011 as truck productivity is expected to improve by

an additional 10% to 20%, as a result of the new larger,

lightweight trays.

Geita’s turnaround and the implementation of Project ONE

initiatives which include the BPF and SP, continued

throughout 2010. The work management aspect of BPF was

successfully implemented in the mining maintenance and

processing divisions, resulting in continued improvements.

Under the SP component, the Geita organisational structure

was re-designed. Managerial Leadership Practices (MLP)

training is being delivered to senior management and is due to

be completed by 2011.

Capital expenditure for 2010 totalled $38m and was

spent on stay-in-business projects $35m and exploration

activities $3m.

Review of operations – Continental Africa

08

09

10

Gold production (000oz)

357

264

272

08

09

10

Total cash cost ($/oz)

954

728

777

08

09

10

Capital expenditure ($m)

53

19

38

08

09

10

Total number of employees*

3,116

3,186

3,265

* including contractors

P

103

Growth prospects

Exploration drilling was undertaken to increase confidence in

the Nyankanga Cut 9 volumes, Cut 6 volumes behind the

2007 failure zone, and in the near-surface volume of Block 1

in the Nyankanga underground. Results confirmed current

mineralisation and the Nyankanga Mineral Resource model

will be updated to incorporate additional drilling and mapping

data in 2011.

Both the Nyankanga and Geita Hill Mineral Resource models

were updated in April 2010. The Geita Hill Mineral Resource

decreased by 2% and the Nyankanga Mineral Resource by 1%.

Both reductions resulted from decreased mineralised volumes.

Exploration activities outside of the active mining areas

comprised IP-surveying and geological mapping of five targets:

Nyakabale, Mgusu, Nyankumbu, Kukuluma A and Kukuluma B.

Except for Kukuluma B, all targets revealed promising

combined chargeability and resistivity signatures indicative of

disseminated sulphides and potentially associated with gold

mineralisation. Drill testing of these anomalies is ongoing.

Outlook for 2011

Gold production for 2011 is forecast to increase to between

485,000oz and 506,000oz at a total cash cost ranging from

$631/oz to $655/oz.

Capital expenditure of $66m is planned and will be spent on

ensuring the integrity of the process plant and on further

rationalisation of the mining fleet. This figure includes drilling

expenditure of $2m, project capital of approximately $30m and

stay-in-business capital of some $34m.

Sustainability issues

Safety

Geita achieved 11.5 million hours free of lost-time injuries

before two tragic fatalities in May 2010, resulting from a

collision between two trucks on one of the haul roads during

the night shift. The all injury frequency rate for 2010 was

5.38 per million hours worked (2009: 5.56).

Fatigue continues to pose a major threat to Geita’s safety

record, making it a priority for safety management. The safety

management programme in 2010 included the completion of a

hazard identification and reporting course, plan task

observation training to all frontline managers and rescue team

refresher courses.

Geita was second runner-up in the country OHSAS competition.

Community

Resolution of land compensation claims progressed well

during the year, with the completion of the Nyamatagata and

Katoma claims. Phase 5 of Nyankumbu Girls Secondary

School started in 2010 and construction of the school will be

completed in 2011.

Design work was completed on the Geita Town Water Supply

Project, which will be built in 2011. This project, which will

draw water from the Nyankanga dam on the mine’s lease

area, will include transfer pumping, a treatment and storage

system and will deliver water at a rate of 4,800 cubic metres

per day to the town.

Environment

One reportable environmental incident took place in 2010,

following the death of two birds.

Cyanide management has been enhanced with the completion

of the plant tailings dilution circuit. Improved control may be

expected once the second oxygen injection system on the

conditioning tanks is satisfactorily commissioned at the

beginning of 2011.

The key requirements of the cyanide code have now been met

and the main remaining objective is to achieve compliance with

the code requirement that weak acid dissociable (WAD)

cyanide levels in the tailings slurry should not exceed 50 parts

per million for a period of three to six months. This will be the

objective for the first two quarters of 2011.

ISO 14001 environment certification was maintained during

the year.

Australia

Western Australia

Sunrise Dam

P

104

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Australasia

Review of operations – Australasia

performance

Solid

operational

Podcast available at www.aga-reports.com/10/podcasts.htm

Graham Ehm, Executive Vice President –
Australasia, discusses AngloGold Ashanti’s
operation and project in the region

P

105

AngloGold Ashanti’s sole operating mine in Australasia is

Sunrise Dam.

Production from Australasia declined by 1% to 396,000oz in

2010, equivalent to 8.8% of group production. Total cash

costs increased by 48% to $982/oz, whilst in local currency,

total cash costs rose 29% to A$1,070/oz, due primarily to the

increase in the unwinding of deferred stripping costs. In all,

494 people, including contractors were employed, 39 more

than in 2009. Total attributable capital expenditure for the

region, including Tropicana, was $40m, a decrease of 77% on

the $177m spent in 2009, which included the Boddington

project that was sold. The bulk of this was spent on Ore

Reserve development at Sunrise Dam and at Tropicana.

The group is also developing the new Tropicana gold mine in

Western Australia, along with joint venture partner

Independence Group Ltd. (30%). Tropicana, a greenfield

discovery made by AngloGold Ashanti, is expected to deliver

its first production in 2013. AngloGold Ashanti is managing the

project along with a vast exploration programme in the area

that covers some 13,500km

2

of tenements along a 600km

strike length, considered one of the most prospective regions

for new gold discoveries in Australia.

The Mineral Resource for Australasia, attributable to

AngloGold Ashanti, totalled 7.05Moz at year-end, including an

attributable Ore Reserve of 3.74Moz.

Exploration in the Australasia region was conducted in the

Cornelia Range, in Western Australia, and in the Solomon

Islands. For further information on the group’s exploration

programme in Australasia, see the Global exploration section of

this report.

Australia – Sunrise Dam

Key statistics

Sunrise Dam

2010

2009

2008

Pay limit

(oz/t)

0.14

0.08

0.09

(g/t)

4.32

2.45

2.79

Recovered grade*

(oz/t)

0.094

0.084

0.101

(g/t)

3.22

2.87

3.46

Gold production

(000oz)

396

401

433

Total cash costs

($/oz)

957

646

531

Total production costs

($/oz)

1,038

751

635

Capital expenditure

($m)

29

31

19

Total number of employees

494

455

410

Employees

93

99

77

Contractors

401

356

333

All injury frequency rate

(per million hours worked)

13.65

8.94

15.85

*

Open-pit operation

Outlook for 2011

Production

(000oz)

344 – 360

Total cash costs

($/oz)

852 – 883

Capital expenditure

($m)

34

Australasia

8.8%

Rest of AngloGold Ashanti 91.2%

Contribution to group production

P

106

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Australasia

Description

The Sunrise Dam gold mine is located in the northern

goldfields of Western Australia, 220km northeast of Kalgoorlie

and 55km south of Laverton.

The mine consists of a large open pit which is now in its

fourteenth year of operation, and an underground mine which

began in 2004. Mining is conducted by contractors and the

ore is treated in a conventional gravity and CIL processing

plant, which is owner-managed.

Operating performance

Production in 2010 decreased by 1% to 396,000oz, from

401,000oz the previous year. This was equivalent to 9% of

group gold production. The decline reflects the marginally

lower average grade of ore processed as anticipated in the

mine plan. Open-pit mining continued in the North Wall

Cutback providing over 80% of production. Ore continued to

be sourced from a combination of underground and open pit

operations with the use of lower-grade stockpiles to

supplement the ore feed to the plant.

Underground tonnage decreased by 12%, or 94,000t, to

686,000t. Underground ore yielded approximately 75,000oz,

contributing 19% to total mine production compared with

28%, or 111,000oz, the previous year.

Total cash costs increased by 48% to $957/oz, from $646/oz in

2009. In local currency terms, costs rose by 29% to A$1,043/oz.

The higher costs were in line with expectations and primarily due

to the accounting effects of deferred stripping costs of A$285/oz.

Deferred stripping costs for the open-pit will continue to impact

upon cash costs until the end of 2013. The lower production

base also placed upward pressure on unit costs.

Capital expenditure for the year was $29m (A$30m), a

decrease of 6% on the previous year. Stay-in-business capital

increased by 86% to $13m (A$14m), due to the completion of

planned projects relating to asset integrity, the pastefill plant

and power upgrades. Ore Reserve development expenditure

was $16m (A$16m).

Growth prospects

The North Wall Cutback will continue to supply ore to the plant

until the second half of 2012, which is a year longer than

originally planned. Ore from the cutback will be blended with

ore from stockpiles and from the underground mine.

The contribution from the underground mine is planned to

increase substantially in 2011. As a result, a paste fill plant has

been constructed to enable larger orebodies to be fully

extracted. Continued exploration and advances in geological

understanding have also resulted in further growth of

underground Mineral Resources.

Review of operations – Australasia

08

09

10

Gold production (000oz)

433

401

396

08

09

10

Total cash cost ($/oz)

531

646

957

08

09

10

Capital expenditure ($m)

31

19

29

08

09

10

Total number of employees*

455

494

* including contractors

410

P

107

Underground Ore Reserves decreased to 0.85Moz after

depletion. Due to the time required to convert Mineral

Resources to Ore Reserves, it is anticipated that Ore Reserves

will increase significantly in 2011. The underground Mineral

Resource at year-end was 2.39Moz. The mine’s total Ore

Reserve at year-end was 1.38Moz and the total Mineral

Resource 3.35Moz. Both figures account for depletion.

Outlook for 2011

Gold production in 2011 is projected at between 344,000oz

and 360,000oz, with more than 200,000oz sourced

from underground.

Total cash costs are forecast to decline to between $852/oz

(A$845/oz) and $883/oz (A$885/oz), as a result of the

reduction in the impact of deferred stripping costs. Capital

expenditure is anticipated to be $34m (A$36m), with Ore

Reserve development expenditure of $18m (A$19m) and

stay-in-business expenditure of $16m (A$17m).

Sustainability

Sunrise Dam maintained its OHSAS 18001 and ISO 14001

certification. Recertification with the International Cyanide

Code was approved by the ICMI.

Safety

Safety performance at Sunrise Dam reached a plateau during

2010 with an all injury frequency rate of 13.65 per million hours

worked (2009: 8.94). There were no fatalities during the year.

Training in hazard identification and risk assessment was the

focus at Sunrise Dam over the course of 2010. In addition,

training aimed at providing an open, transparent culture of

safety and safety systems, was undertaken in: risk

management; values-based safety leadership; role clarity and

personal accountability, open, transparent and learning safety

culture; and safety systems.

In May, the Sunrise Dam team won the 2010 Chamber of

Minerals and Energy Surface Emergency Response competition

for the second year in a row. In addition, the Emergency

Response Team went on to win the Underground Emergency

Response competition in November.

Community

Sunrise Dam continues to support the Laverton community

through its involvement with the Laverton Mining Liaison

Committee and Shire Council. AngloGold Ashanti also has

representation on the Laverton Leonora Cross Cultural

Association (LLCCA) and contributes to the Mt Margaret

Mission and Laverton School lunch programmes. An

Indigenous People’s Engagement strategy is being progressed

by the company’s cross functional team with support from an

external representative.

Environment

A mine closure plan is in place and progressive rehabilitation in

line with this plan is being undertaken. Governance reporting

for Energy Efficiency Opportunity, National Greenhouse and

Energy Reporting, and National Pollutant Inventory is being

maintained and is in compliance with government regulations.

No reportable environmental incidents took place in 2010.

United States

Cripple Creek & Victor

Brazil

Serra Grande

AGA Mineração

Argentina

Cerro Vanguardia

P

108

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

Review of operations – Americas

Hard-won

in Brazil and Argentina

cemented

improvements

Podcast available at www.aga-reports.com/10/podcasts.htm

Ron Largent, Executive Vice President –
Americas, discusses AngloGold Ashanti’s
operations in this region

P

109

AngloGold Ashanti has the Cripple Creek & Victor mine in the

United States, the Cerro Vanguardia mine in Argentina, the

AngloGold Ashanti Córrego do Sítio Mineração (AGA

Mineração) and Serra Grande operations, both in Brazil. The

Americas represents one of the most important growth regions

for AngloGold Ashanti.

Combined production from these operations increased by

3% to 842,000oz of gold in 2010. This was equivalent to

18.7% of group production. Total cash costs increased by

19% to $432/oz. In all, 6,582 people including contractors,

were employed, 698 more than in 2009. Total capital

expenditure for the region was $311m, an increase of 21%

on the $258m spent in 2009. The bulk of this, 50%, was

spent on projects, 32% stay-in-business capital, and the

balance on Ore Reserve development.

The total Mineral Resource across the Americas, attributable

to AngloGold Ashanti, was 44Moz at the end of 2010 and the

attributable Ore Reserve was 10Moz.

AngloGold Ashanti also conducts an extensive greenfield

programme across the Americas, most notably in Colombia,

where it holds a significant land position and has made two

greenfield discoveries – Gramalote and La Colosa – which

together account for 13.5Moz of the Americas Mineral

Resource. The company also has exploration activities, either

conducted by its own teams or with joint venture partners, in

Canada, Brazil and Argentina, among others. See Global

exploration on page 128 of this report.

AngloGold Ashanti’s Americas region fully endorses the

company’s objective to eliminate workplace injuries, incidents

and illnesses across its operations. As in the previous year,

no fatal injuries occurred in 2010. Underpinning this

performance has been a significant reduction in the total

number of safety-related incidents, where an all injury

frequency rate of 5.66 per million hours worked was

achieved during the year. This represents a 21% reduction

when compared with 2009 and a 43% improvement since

2008 (2009: 7.12 and 2008: 9.92).

08

09

10

Gold production (000oz)

819

816

842

08

09

10

Total cash cost ($/oz)

432

381

362

08

09

10

Attributable capital expenditure ($m)

154

258

311

08

09

10

Total number of employees*

5,588

5,884

6,582

* including contractors

$432/oz

$311m

6,582people

842000oz

AGA Mineração

40.1%

CC&V

27.7%

Cerro Vanguardia

23.1%

Serra Grande

9.1%

Contribution to Americas production

P

110

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

United States – Cripple Creek & Victor (CC&V)

Key statistics

Cripple Creek & Victor

2010

2009

2008

Pay limit*

(oz/t)

0.007

0.008

0.008

(g/t)

0.23

0.28

0.27

Recovered grade

(oz/t)

0.013

0.013

0.014

(g/t)

0.43

0.46

0.49

Gold production

(000oz)

233

218

258

Total cash costs

($/oz)

493

376

309

Total production costs

($/oz)

610

475

413

Capital expenditure

($m)

73

87

27

Total number of employees

646

562

421

Employees

403

367

350

Contractors

243

195

71

All injury frequency rate

(per million hours worked)

12.26

15.80

30.19

*

Recoverable pay limit based on recovered grade.

Outlook for 2011

Production

(000oz)

300 – 314

Total cash costs

($/oz)

541 – 561

Capital expenditure

($m)

72

Description

Located in the state of Colorado in the United States, CC&V's

Cresson Project is an open-pit operation which treats

extracted ore through a heap-leach pad, and is one of the

largest in the world. Production at this operation began in

1994. AngloGold Ashanti holds a 100% interest in CC&V.

In 2009, construction began on the mine life extension (MLE1)

project. The project will provide four additional years of

production capacity to the heap-leach pad. Production from

the expanded heap-leach pad area is expected to begin in

2011 and proceed through to 2016 at current mine

production rates.

Review of operations – Americas

08

09

10

Gold production (000oz)

258

218

233

08

09

10

Total cash cost ($/oz)

493

309

376

08

09

10

Capital expenditure ($m)

87

27

73

08

09

10

Total number of employees*

* including contractors

421

562

646

P

111

Operating performance

Production increased by 7% to 233,000oz from 218,000oz in

2009. A total of 20.7Mt of ore was placed on the heap-leach

pad, compared with 18.7Mt in 2009.

The increase in production resulted from the greater

availability of the pad area near the liner following the removal

of a truck load-out bin to another location. This change

shortened the percolation time of the gold-bearing solution

from the ore placed in this small, newly-lined area. In

addition, successful test programmes were undertaken to

improve leach conditions at depth via deep injection into the

pad to remediate an issue identified during the 2008 pad

drilling programme. The injected solution improves alkalinity

and cyanide availability at depth to allow favourable

conditions for leaching residual gold into solution. The

injection programmes are to be expanded, given their early

success. Given the size of the pad, recovery of residual gold

is expected to continue for several years.

Total cash costs increased 31% to $493/oz, due primarily to

the higher unit cost for the new ounces placed, rising

commodity prices (diesel fuel in particular), and increased

royalty costs, driven by higher gold prices.

Capital expenditure for the year amounted to $73m

(2009: $87m), spent mainly on equipment and pad facilities for

the implementation of the MLE1 project.

Growth prospects

In 2008, CC&V was granted permits from the State of

Colorado and Teller County for a mine-life extension (MLE1)

that includes the development of new sources of ore and an

extension to the heap-leach facility. The permits extend the

operation of the expanded valley leach facility and closure and

reclamation activities. Development drilling continues to further

define areas of interest. Engineering analysis and permitting

requirements were evaluated as part of a prefeasibility study

for a second mine-life extension (MLE2) completed in late

2010. This new project will involve milling the higher-grade ores

and heap-leaching the lower-grade ores in a new valley leach

facility. The MLE2 project will, after receiving all required

approvals, extend the mine life to 2025 and possibly beyond.

Outlook for 2011

Gold production is expected to increase to between

300,000oz and 314,000oz, at a total cash cost ranging from

$541/oz to $561/oz as MLE1 implementation places new ore

on the new pad space near the liner. Capital expenditure of

$72m is scheduled for the year, to be spent mostly on major

mine equipment purchases and the implementation of the

MLE1 project.

Sustainability

Safety

CC&V continued to report a strong safety performance. The all

injury frequency rate for 2010 improved to 12.26 per million hours

worked (2009: 15.80). There were no fatalities during the year.

CC&V has implemented various safety programmes in recent

years, including the Safety Transformation Programme in

2009. In 2010, the mine developed and implemented its own

Safety & Environmental Observation Programme where all

employees provide written observations on best practices, as

well as on deficiencies at the operation. In addition to

immediate responses to these deficiencies, the employees’

observations are reviewed and acted on by the management

team at weekly meetings. The programmes have been

implemented to ensure continued improvement in the safety

performance at CC&V. Project ONE was rolled out in 2009

and further positive results are expected over the two-year

implementation process.

Community and environment

CC&V and the Victor Lowell Thomas Museum finished a

successful season of mine site tours. The museum managed

reservations, safety training and advertising while CC&V provided

tour guides and buses. Tour fees collected were donated to the

museum. The 2010 tours were 96% full, doubling revenues and

visitation for the museum. The greater number of visitors to the

museum has increased Victor’s foot traffic, leading to increased

sales for local businesses. This initiative by CC&V contributes to

the town’s viability and sustainability.

CC&V continued to be recognised as a Gold Leader in the

State of Colorado’s Environmental Leadership Programme,

the first mine in Colorado to attain that level of recognition. In

addition, CC&V’s Environmental Management System was

again recommended for continued certification under the ISO

14001 standard. In September 2010, the operation was

recognised by the International Cyanide Management

Institute (ICMI) to be recertified “In Full Compliance” on all

nine principles of the International Cyanide Management

Code (ICMC). No reportable environmental incidents took

place in 2010.

P

112

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

Argentina – Cerro Vanguardia

Key statistics

Cerro Vanguardia

2010

2009

2008

Pay limit

(oz/t)

0.13

0.15

0.22

(g/t)

4.36

5.02

7.50

Recovered grade

(oz/t)

0.178

0.190

0.159

(g/t)

6.11

6.51

5.44

Gold production

– 100%

(000oz)

209

208

166

– 92.5%

194

192

154

Silver production

– 100%

(Moz)

2.8

2.2

1.7

– 92.5%

2.6

2.0

1.6

Total cash costs

($/oz)

366

355

608

Total production costs

($/oz)

517

487

757

Capital expenditure

– 100%

($m)

41

18

16

– 92.5%

38

17

15

Total number of employees

1,242

1,069

1,072

Employees

883

753

756

Contractors

359

316

316

All injury frequency rate

(per million hours worked)

8.08

9.34

9.72

Outlook for 2011 (attributable)

Production

(000oz)

190 – 198

Total cash costs

($/oz)

536 – 556

Capital expenditure

($m)

61

Review of operations – Americas

08

09

10

Attributable gold production (000oz)

192

194

154

08

09

10

Total cash cost ($/oz)

608

355

366

08

09

10

Attributable capital expenditure ($m)

15

17

38

08

09

10

Total number of employees*

1,242

* including contractors

1,072

1,069

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113

Description

AngloGold Ashanti has a 92.5% interest in Cerro Vanguardia

with Fomicruz (the province of Santa Cruz) owning the remaining

7.5%. Located to the northwest of Puerto San Julian in the

province of Santa Cruz, Cerro Vanguardia consists of multiple

small open pits with high stripping ratios. The orebodies

comprise a series of hydrothermal vein deposits containing gold

and large quantities of silver, which is mined as a by-product.

Ore is processed at the metallurgical plant which has a

capacity of 3,000t per day and includes a cyanide recovery

facility. Technology at the plant is based on a conventional

leaching process in tanks and carbon-in-leach with a tailings

dam incorporated in a closed circuit. The final recovery of gold

and silver is achieved through a Merryl Crowe method with

metallic zinc.

Operating performance

Attributable gold production of 194,000oz was marginally up

on the previous year. The mine’s production strategy focused

on ensuring 100% supply of plant feed.

Cerro Vanguardia was the group’s lowest cost producer in 2010.

Cash costs of $366/oz were 3% higher than the $355/oz in

2009, chiefly reflecting increased labour costs and the impact

of local inflationary pressures. Higher spot prices and

increased royalties also contributed to the higher costs but

were partially offset by higher silver credits. The stockpile

movement was favourable as a consequence of higher ore

tonnes mined compared with last year.

Capital expenditure of $41m (attributable $38m) included $21m

for stay-in-business activities and $20m for expansion projects.

Capital expenditure focused primarily on underground

development, heap leach construction and exploration activities,

all of which will have a beneficial impact on Cerro Vanguardia’s

life and add ounces to the operation’s production profile.

Growth prospects

The 2010 brownfield exploration programme added vein

Mineral Resources of 0.45Moz of gold and 10.4Moz of silver.

The underground mine project was launched in July.

Underground development excavation reached 3,800m at the

end of 2010. Three mine portals were opened in Mangas

Norte, Osvaldo CB4 and Osvaldo CB9.

The implementation of the heap leach project will enable Cerro

Vanguardia’s annual gold production to increase by 20,000oz,

maintaining total production at around 200,000oz by enabling

the processing of low-grade material. Cerro Vanguardia’s

marginal-grade ores, below the cut-off grade of the current

plant process, range from 0.35g/t to 1.5g/t. Project

implementation will start in mid 2011.

The 2011 exploration programme is based on 31,000m of

diamond drillholes and 17,000m of reverse circulation holes.

The programme aims to expand the mine’s Mineral Resource

at depth and to the north and west of the concession.

The 2011 budget allocated to brownfield exploration is $9m.

Outlook for 2011

Attributable gold production for 2011 is projected to be

between 190,000oz and 198,000oz. Additionally, underground

operations will maintain their share of the mine’s production.

Total cash costs are expected to increase to between $536/oz

and $556/oz, due mainly to rising inflation expected in

Argentina, lower grades from open pit operations, as well as

higher unit costs from the heap leach and underground. Capital

expenditure is forecast at $66m ($61m attributable) for 2011

and includes $25m for the heap leach project implementation.

Sustainability

Cerro Vanguardia’s sustainability programme aims primarily to

implement the Safety Transformation programme in order to

eliminate lost-time incidents.

Safety

Cerro Vanguardia’s safety performance improved during the

year under review. For the eighth consecutive year no fatalities

were recorded, while the all injury frequency rate improved to

8.08 per million hours worked (2009: 9.34), the best

performance ever for the mine.

The Safety Transformation Programme is to be implemented

during the first quarter of 2011.

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114

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

Cerro Vanguardia’s brigade members received theoretical and

practical training on underground mining rescue procedures at

a training course in Copiapo, Chile.

Community

The Development Agency is one of the major programmes the

mine shares with the local community of Puerto San Julian.

This year it was agreed that the funds to sponsor these

activities will be revised in line with the mine’s profitability. The

application of these funds will be agreed between the

Development Agency representatives, the mayor and a

representative from the mine.

Environment

All of Cerro Vanguardia’s environmental initiatives and ISO

14001 certification were maintained. One reportable

environmental incident took place during 2010. An

excavator ruptured a buried tailings pipeline, spilling 10m

3

of

tailings containing cyanide solution. The spillage was

cleaned up and measures implemented to prevent

a recurrence.

Cerro Vanguardia will apply for Cyanide Code certification

during the first half of 2011.

Brazil – AngloGold Ashanti Córrego do Sítio Mineração (AGA Mineração)

Key statistics

AGA Mineração

2010

2009

2008

Pay limit

(oz/t)

0.13

0.11

0.12

(g/t)

4.40

3.82

4.16

Recovered grade*

(oz/t)

0.210

0.205

0.222

(g/t)

7.21

7.02

7.62

Gold production

(000oz)

338

329

320

Total cash costs

($/oz)

407

339

300

Total production costs

($/oz)

651

486

432

Capital expenditure

($m)

142

84

69

Total number of employees

3,426

2,964

2,987

Employees

2,486

2,249

1,954

Contractors

940

715

1,033

All injury frequency rate

(per million hours worked)

2.62

4.19

5.79

*

Underground operation

Outlook for 2011

Production

(000oz)

361 – 378

Total cash costs

($/oz)

497 – 516

Capital expenditure

($m)

234

Review of operations – Americas

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Description

Reorganisation of the corporate structure was completed

during the first half of the year, combining the

Cuiabá/Lamego/Queiroz and the Córrego do Sítio and São

Bento operations to capture operating and financial synergies.

The new company is called AngloGold Ashanti Córrego do

Sítio Mineração (AGA Mineração).

The wholly owned AGA Mineração mining complex is located

in southeastern Brazil, in the state of Minas Gerais, close to the

city of Belo Horizonte, with operations in the municipalities of

Nova Lima, Sabará and Santa Bárbara.

Ore is sourced from the Cuiabá and Lamego underground

mines and processed at the Cuiabá and Queiroz plants, while

the Córrego do Sítio open pit mine has a heap-leaching facility.

Operating performance

Gold production increased by 3% to 338,000oz from 329,000oz

in 2009, due mainly to the implementation of the Lamego

project. Total cash costs increased by 20% to $407/oz, driven

largely by higher maintenance costs. These effects were partially

offset, however, by higher revenue from the sale of sulphuric

acid, a by-product of the Cuiabá mining operation.

Capital expenditure was $142m, of which $73m related to

expansion projects, $25m to Ore Reserve development and

$44m to stay-in-business activities.

As part of the conceptual study for the Cuiabá Future Project,

which is investigating ways of sustaining performance in the

longer term, actions were taken to enhance production from

underground ore and waste transport logistics and to

investigate alternative mining methods. A study was conducted

in support of this initiative to define the best technical

approaches regarding transport logistics (large truck capacity,

conveyor and new shaft) that will be detailed throughout 2011,

in parallel with the conceptual mining methods study.

The management maintenance programme continued its

focus on the optimisation of costs and also on improving fleet

availability. Efforts have been made since January 2010 to

improve the maintenance management process for heavy

mobile equipment at Cuiabá. In addition to the implementation

of Project ONE, an integrated maintenance management

system is ongoing and all efforts are organised into two

strategies: short-term results focused on costs and equipment

availability and medium- to long-term results focused on SIGM

Pyramid (maintenance management process). These initiatives

resulted in a 7% improvement in the performance of

sponsored heavy mobile equipment during the year.

Further productivity improvements are expected from Project

ONE. Previous implementation experiences show that the

successful stabilisation of the work management portion can

help operations to improve key parameters from the historical

average to the 75th percentile of production rate.

Growth prospect

An exploration programme is currently under way on the former

São Bento property, acquired in December 2008 from Eldorado

Gold. The property adjoins AngloGold Ashanti’s existing

Córrego do Sítio mine which, together with São Bento, has

been renamed Córrego do Sítio Mineração. Phase 1 of the

Córrego do Sítio project, approved by the board in May 2010

08

09

10

Gold production (000oz)

320

329

338

08

09

10

Total cash cost ($/oz)

407

300

339

08

09

10

Capital expenditure ($m)

142

69

84

08

09

10

Total number of employees*

2,987

2,964

3,426

* including contractors

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

with estimated capital expenditure of $195m, covers the

Laranjeiras, Carvoaria Velha and Cachorro Bravo orebodies

with trial mining at the latter already completed. The capital

project is proceeding according to schedule. The initial focus of

the project team is on the refurbishment of the São Bento plant,

the ramp-up in mine production and construction of

infrastructure, including the new road to transport ore and

waste. Annual production from Phase 1 is planned to start in

2011, following a mine and plant ramp up and will continue at

an average of 140,000oz a year for the initial 11-year life of

mine. The second phase of this project has the potential to

increase production through the addition of Mineral Resources

and the expansion of the plant. The scope and size of the

expansion will depend on the results of exploration drilling

currently under way.

The Lamego project, approved in September 2009, is currently

being implemented. Production from the mine rose from

18,000oz in 2009 to 35,000oz in 2010, with full production of

47,000oz scheduled for 2011. Lamego is expected to produce

approximately 469,000oz of gold over nine years from 3.2Mt of

milled ore.

A feasibility study on the Nova Lima Sul Project, which involves

the restart of the mothballed Raposos mine, is being prepared

for submission to the board in mid 2011. If approved, the

implementation will start late in 2011, with refurbishment of the

underground infrastructure and construction of a new

ventilation system. Mine development will take place in 2012

and 2013 with production scheduled to begin in 2014.

Outlook for 2011

Production for 2011 is planned to increase to between

361,000oz and 378,000oz. This figure includes initial

production of 21,000oz from the Córrego do Sítio phase

1 project.

Total cash costs are expected to rise to between $497/oz and

$516/oz, reflecting the continued strength of the real, the

impact of inflation and the additional ounces coming from the

projects at a higher unit cost.

Total capital expenditure expected for 2011 is around $234m,

of which $100m relates to expansion projects, $47m to Ore

Reserve development, $81m to stay-in-business activities and

$6m to capitalised exploration.

Sustainability

Safety

A vastly improved safety performance during 2010 resulted in

an all injury frequency rate of 2.62 per million hours worked for

the year (2009: 4.19). There were no fatalities.

After taking into account the results of a survey conducted

during December 2009 to assess attitudes toward safety, an

integrated strategic safety programme was designed to

address deficiencies, drive further improvements and reinforce

awareness of the importance of working safely. The plan is

based on optimising technology to reduce workers’ exposure

to risks in the production process and on introducing controls

that account for human fallibility in overall safety performance.

Cuiabá completed construction of the refrigeration plant on

surface with zero lost-time injuries.

AngloGold Ashanti accepted an invitation to participate in

the Brazilian Mining Association’s Safety and Health

Strategic Group, which aims to promote institutional actions

to ensure improved competitive conditions for Brazilian

mining companies.

Community

AngloGold Ashanti is the first mining company in Brazil to

receive Social Responsibility (NBR 16001) certification

according to the Brazilian Association of Technical Standards

(ABTN). ABTN is a private non-profit organisation and a

founding member of the International Organisation for

Review of operations – Americas

P

117

Standardisation, the Pan-American Standards Commission

and the Asociación Mercosur de Normalización.

A Portuguese-language website was developed and launched

in 2010 to aid AngloGold Ashanti’s communication efforts with

its Brazilian stakeholders.

The company signed contracts with 25 beneficiary institutions

on the First Public Call for Projects Subscription. According to

the project timetable, AngloGold Ashanti provided the funds in

parallel with meetings and visits to follow up on project

implementation. These projects are focused on education, job

and income generation and health, and have been run in

communities surrounding the group’s operations. This is a

voluntary company initiative focused on local development.

Preparations for the local sustainability report in May included

a poll of stakeholder expectations. A multi-stakeholder forum

included 42 participants from a variety of sectors (e.g.

communities, NGOs, clients, suppliers, employees,

academies, etc.) and was well received. Participants were

invited to provide a critique of AngloGold Ashanti’s Social

Responsibility Policy in practice. Responses included an

acknowledgement that while the intentions of the policy

appear favourable, it requires clarification in certain activities

with regard to its local priorities, specifically: health, education,

entrepreneurship and socio-economic empowerment, as well

as the long-term sustainability of communities. It was also

recommended that the company detail its efforts around

mitigation and compensation strategies for certain key issues,

including greenhouse gas emissions, mine tailings, water

usage, closure, economic diversification and community

empowerment. Respondents further suggested the company

explicitly highlight past, present and future impacts and

continue to improve and update its understanding of local

social and cultural issues.

Environment

ISO 14001 environment certification was maintained during

the year.

Córrego do Sítio II, the former São Bento mine, has a forest

reserve which may have to be relocated in order to receive

permission from the authorities to conduct exploration work on

surface. A request has been submitted to the authorities and is

under review.

New regulations have increased the management and cost in

respect of the mine closure plan, land impacted by mining,

disturbed land, taxes for water consumption, environmental

compensation for the new project and especially for the impact

of land clearance.

The necessary permits for the underground mine expansion at

Córrego do Sítio and the licence for the raising of the wall of

the Cuiabá dam were granted by the Environmental Agency.

It was announced in November 2010 that AngloGold Ashanti

would receive an environmental award from the Minas Gerais

state government at a ceremony in February 2011. This award

reflects the alignment of the company’s environmental goals

and initiatives with those of the government.

No reportable environmental incidents occurred in 2010.

P

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AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

Brazil – Serra Grande

Key statistics

Serra Grande

2010

2009

2008

Pay limit

(oz/t)

0.09

0.11

0.11

(g/t)

3.20

3.92

3.91

Recovered grade

(oz/t)

0.118

0.132

0.200

(g/t)

4.05

4.52

6.85

Gold production

– 100%

(000oz)

155

154

174

– 50%

77

77

87

Total cash costs

($/oz)

481

406

294

Total production costs

($/oz)

690

542

394

Capital expenditure

– 100%

($m)

52

67

41

– 50%

26

33

20

Total number of employees

1,268

1,289

1,108

Employees

965

864

725

Contractors

303

425

383

All injury frequency rate

(per million hours worked)

7.22

8.99

13.34

Outlook for 2011 (attributable)

Production

(000oz)

74 – 77

Total cash costs

($/oz)

601 – 624

Capital expenditure

($m)

23

Review of operations – Americas

08

09

10

Attributable gold production (000oz)

87

77

77

08

09

10

Attributable capital expenditure ($m)

20

33

26

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119

Description

Serra Grande is located in central Brazil, in the state of Goiás,

5km from the city of Crixás. AngloGold Ashanti and Kinross

Gold Corporation are equal partners in this operation. In

terms of the shareholders’ agreement, AngloGold Ashanti

manages the operation and has the right to access a

maximum of 50% of the earnings accrued and dividends

paid by Serra Grande.

Serra Grande currently comprises three mechanised

underground mines, Mina III, Mina Nova – which includes the

Pequizão orebody and Palmeiras – and an open pit above

Mina III.

The Palmeiras mine, where development began in May 2008,

started production in 2009 from the primary development

works. Annual capacity of the processing circuit, which has

grinding, leaching, filtration, precipitation and smelting facilities,

was expanded from about 0.8Mt to 1.15Mt. This expansion

was completed in February 2009.

Operating performance

Attributable production of 77,000oz was unchanged from the

previous year.

Total cash costs increased 18% to $481/oz, due mainly to

local currency appreciation and inflationary pressure.

In May, Serra Grande underwent re-evaluation of its Mineral

Resources and Ore Reserves and the production programme

was revised. The tonnages mined remained unchanged, while

plant throughput exceeded the 30,000t initially planned. The

feed grade was 13% lower than expected for the year. Despite

these challenges, the total cash cost for the year was only 2%

higher than forecast.

Growth prospects

A total of 32,447m was drilled in the 2010 exploration

programme, which focused on Pequizão, Palmeiras and

Cajueiros targets at a cost of more than $5m. The exploration

team has reviewed both geological mapping and the

database, including agreements with joint venture partners, in

order to assist in new target generation.

The Pequizão orebody has shown potential for increased

Mineral Resource both down plunge and along strike. The infill

drilling campaign confirmed previous results and the deepest

hole showed a high-grade intersection 850m deep, keeping

the down plunge potential totally open. At the Cajueiro target,

drilling was undertaken to understand mineralised structure

controls. Preliminary results have confirmed the low-grade

potential. During the third quarter of 2010, the Magnetoteluric

geophysical method was tested at Mina III, aiming to define the

structure III geometry below level 1,000. The preliminary results

are being evaluated by specialists.

In 2011, a fast-track exploration programme is planned to

define and evaluate the complete potential of mine targets at

Pequizão, Palmeiras, Orebody IV and Mina Nova and also to

generate new targets in the northwest structure and joint

venture partner areas. More than 70,000m of drilling is planned

in this programme, including underground and surface drilling

as well as geochemical and geophysical surveys to support

target generation.

08

09

10

Total cash cost ($/oz)

481

294

406

08

09

10

Total number of employees*

1,289

1,268

* including contractors

1,108

P

120

AngloGold Ashanti Annual Financial Statements 2010

Review of operations – Americas

Outlook for 2011

Attributable production for 2011 is forecast to be between

74,000oz and 77,000oz at a total cash cost of between

$601/oz and $624/oz.

Capital expenditure of $45m ($23m attributable) is anticipated

for 2011, with the main items being primary development,

mine infrastructure, mobile equipment and the fast-track

exploration programme.

Sustainability

The company retained its safety, health and environmental

certifications, including ISO 14001, OHSAS 18001 and ISO

9001. It is fully compliant with the Cyanide Code.

Safety

Safety performance at Serra Grande improved in 2010 with an

all injury frequency rate of 7.22 per million hours worked

(2009: 8.99) recorded for the year. There were no fatalities

recorded for the second consecutive year.

Continuous investments were made during the year in the

development of a safety culture across the workforce. All

leadership at site underwent seven modules of training with

specialist consultants about the nature of human behaviour,

how to enhance safety awareness in the workplace and a one-

on-one safety approach to work on a daily basis.

Significant investments in technology for safety were made in

2010 and a second scaler to remove rock from the roof and

galleries was acquired.

There was increased use of sub-level mining methods during

the year in order to minimise the exposure of people at the

stope face. Serra Grande currently uses four remote-controlled

loaders and Simbas for longer drilling. The ventilation system

at the mine was upgraded using raise borer drilling.

Radio communication was installed in every piece of mobile

equipment and a dispatch system implemented in all Serra

Grande’s mines.

Community

Continuous support was given to local social institutions that

assist people, especially children and those with special

needs. Support was also given to cultural and religious

celebrations and to the restoration of historical buildings to

protect the city’s heritage, including an old house dating from

the 1700s when the first miners arrived in the area. Donations

were made to: the Association of Parents and Friends of

Disabled Children; an amateur acting school for youngsters;

free soccer lessons for 102 children; and the support of a day

care centre that caters for 165 children every day.

Environment

Reviews were undertaken of all safety, health and

environmental-related measurements such as water, air, dust,

noise and vibration after blasting to ensure compliance with

international standards.

Improvements in water usage controls across all industrial

processes were developed and locations for all meters were

identified with several having been installed by year-end. This

will allow improved control of water usage. About 80% of all

water used in the production process is currently recycled.

No reportable environmental incidents occurred in 2010.

Review of operations – Americas

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121

AngloGold Ashanti’s investment in greenfield exploration and

projects in recent years is beginning to bear fruit. To date, five

greenfield projects are being advanced and developed further.

They are:

·In Colombia, in the Americas region: 
· Gramalote; and 
· La Colosa.

·In the DRC, in the Continental Africa region: 
· Kibali; and 
·Mongbwalu.

·In Australia, in the Australasia region: 
· Tropicana.

Of these, Tropicana is the most advanced. Together these

greenfield projects have Mineral Resources totalling 27.42Moz,

of which Ore Reserves account for 6.88Moz.

Americas – Colombia

Gramalote

Description

The Gramalote project is a joint venture owned by AngloGold

Ashanti (51% and operator) and B2Gold Inc. (49%). The

project is located in the rural Antioquia Department,

approximately 110km northeast of the city of Medellin and

220km northwest of Bogota, Colombia. Basic infrastructure

consisting of roads, power and water currently serve the site.

The deposit lies in modestly hilly terrain at an elevation of 900m

and is characterised as a bulk tonnage, low-grade, intrusive-

hosted and structurally-controlled quartz stockwork system

within the Cretaceous Antioquia Batholith. Gold mineralisation

is associated with stockwork veining and in particular quartz,

quartz-pyrite and quartz-carbonate veins.

Greenfield projects

Ensuring AngloGold Ashanti’s

growth

future

P

122

AngloGold Ashanti Annual Financial Statements 2010

Greenfield projects

Surface exploration and mapping of the region indicates these

gold-bearing structures have strike lengths of up to 1.5 km and

depths of up to 450m. Mineral Resources are currently 37.7Mt

at an average grade of 0.90g/t (at 0.4g/t cut-off), for contained

gold of 1.09Moz.

Growth prospects

A prefeasibility study of the project is currently under way and

is expected to be concluded at the end of 2011. A key aim of

the prefeasibility study will be to increase the Mineral Resource

by an additional 35Mt of ore at a similar gold grade in order to

achieve what is believed to be the deposit’s potential of 86Mt

of ore yielding 3.1Moz of gold.

Assuming positive results from the prefeasibility work,

progression of project development would include a

bankable feasibility study in 2012, after which Gramalote

would again be evaluated. Assuming continued positive

results, the project would proceed to full construction in

2013. This schedule would see operations and first gold

production by around late 2015.

Outlook for 2011

Prefeasibility study work, scheduled to be completed by April

2012, is aimed at expanding the Mineral Resource; purchasing

additional land for the project’s development; confirming

mining and processing options, facilities and infrastructure

requirements and locations; engagement of environmental,

social and sustainability programmes; and validation of the

project’s economic viability.

The 2011 attributable budget to perform all activities according

to schedule is $15m.

Sustainability

Some future sustainability work requires discussions with

authorities to reduce the environmental impact caused by

artisanal miners who have been operating in the region for

several years.

Community

Working relationships with the local authorities have been

positive. The project is located in the municipality of San

Roque (roughly 20,000 inhabitants), with the Providencia

section of about 1,500 inhabitants being closest. The main

issue to be dealt with by the project teams involves the

formulation and conclusion of agreements with artisanal

miners working in the project area. Such agreements will be

negotiated during the prefeasibility phase.

Environment

Compliance with the obligations of the licence already issued for

the core project tenement is required, while the potential for a

larger project is defined and application has been made for a

revised licence. Baseline studies will accompany this process

during the prefeasibility and feasibility phases of the project.

Application for the final licence will follow the environmental

impact study, which will include the mitigation and compensation

schemes required by law and international best practice.

La Colosa

Description

The La Colosa project is a 100% AngloGold Ashanti-owned

development project located approximately 150km west of

Bogota, Colombia, in the rural Tolima Department. The project

is located near the major regional city of Ibague and is

reasonably served by road, power, and water infrastructure.

The deposit lies in mountainous terrain at a mean elevation of

2,800m and is characterised as a copper-poor porphyry gold

system, genetically associated with the evolution of a Miocene

porphyritic intrusive centre, intruded in Paleozoic schist.

The Mineral Resource at La Colosa currently stands at 392Mt

at an average gold grade of 0.99g/t for contained gold of

12.4Moz. The deposit remains open in several directions and

at depth. Current exploration activities seek to expand

confidence in the resource extensions and obtain metallurgical

test samples.

Greenfield projects

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123

Growth prospects

AngloGold Ashanti secured the necessary permit

authorisations from the national authorities to resume

exploration activities in August 2010, thereby allowing

resumption of the project prefeasibility study. This work will be

conducted through to 2014/2015 when the feasibility study is

expected to be finalised.

Surface mapping and sampling in the La Colosa region have

continued to reveal strong mineral exploration opportunities

with additional porphyry systems having been discovered.

Given the potential to significantly increase the Mineral

Resource at La Colosa and also to make additional discoveries

in the broader region, La Colosa remains a leading growth

project in the medium to long term for both AngloGold Ashanti

and Colombia as a whole.

Outlook for 2011

The project is currently undergoing a prefeasibility study,

which is expected to be concluded in 2013, during which time

several key objectives are to be attained, namely: to close off

Mineral Resource projections in order to better define the size

of the project; to define higher grade Mineral Resources in

order to advance gold production during early years of

operation; to purchase remaining lands for project

development and exploitation; to confirm mining and

processing options as well as the facilities and infrastructure

requirements and locations; to engage environmental and

sustainability programmes; and to validate the project’s

economic, social and environmental viability.

Greenfield exploration activities will also be initiated on several

of the regional targets while this prefeasibility study is under

way. If successful, expansion of the project could well occur, at

which time the prefeasibility timeline may be reviewed.

Assuming no further changes to the scope of the project

resulting from exploration, and that the prefeasibility is

successful in all respects, a bankable feasibility study is

planned for 2014/2015, followed by construction of the project

once the economic viability of the project is established.

Expenditure of $70m has been budgeted for all activities

scheduled for 2011.

Sustainability

Anglogold Ashanti engaged actively in the creation of the

‘Water Roundtable’ in Tolima to discuss and implement

possible solutions to water management issues. In addition,

the company has initiated several biodiversity campaigns in

the region, with the support of non-governmental

organisations, aimed at protecting certain species indigenous

to the Tolima region.

Community

Community sentiment toward the project in Cajamarca

province, where the project is located, improved during 2010

as the company worked to demonstrate the benefits of the

undertaking and its ability to execute the development for the

benefit of all stakeholders. Rice growers and environmental

organisations in the region, however, continued to express

concerns over the use and quality of the region’s water.

AngloGold Ashanti will continue to provide information on its

strategies for water management in order to address these

concerns from one of the region’s most important

constituencies. Multi-partite social programmes and projects

accompany the exploration phase and are based on long-term

sustainability considerations for the region, which include

improvements in agricultural productivity, the elimination of

sicknesses currently affecting cattle in the region and several

educational programmes.

Environment

A monitoring programme, undertaken in conjunction with local

universities, will accompany the exploration phase of the

project and be designed to provide data on the potential

impact of mining activities on the region’s flora, fauna and

water resources. The company is working with Conservation

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AngloGold Ashanti Annual Financial Statements 2010

Greenfield projects

International and a number of other NGOs to address

biodiversity issues.

Continental Africa – Democratic
Republic of the Congo

Kibali

Description

The Kibali Gold Project is a joint venture between AngloGold

Ashanti and Randgold Resources, which together hold an

effective 90% stake, with the remaining 10% held by OKIMO,

the state-owned gold company of the Democratic Republic of

the Congo (DRC). The project, operated by Randgold

Resources, has the potential to become one of the world’s

largest gold mines. Located in the northeast DRC, near the

village of Doko, some 560km northeast of the city of Kisangani

and 150km west of the Ugandan border, the project is

currently undergoing an updated feasibility study, the results of

which are expected in the second quarter of 2011.

The orebody is hosted within the Moto Greenstone Belt, which

is comprised of the Archaean Kibalian volcano-sedimentary

rock and ironstone chert horizons that have been

metamorphosed to greenschist facies.

An updated Mineral Resource and Ore Reserve model has been

completed for the main KCD (previously referred to as the

Karagba, Chauffer and Durba orebody), Sessenge, Pakaka and

Pamao orebodies, which represent 83% of the declared Mineral

Resource and 93% of the declared Ore Reserve. A total Mineral

Resource of 8.3Moz of gold exists between the planned open pit

and underground operations.

Pre-construction activities are scheduled to commence in early

2011 with the establishment of civil engineering and

construction teams, coupled with design and engineering of

the metallurgical plant and mine infrastructure. Erection of the

construction camp began in January 2011 and first gold

production remains on schedule for 2014.

Growth prospects

An active greenfield exploration campaign is under way,

including an extensive sampling campaign.

Outlook for 2011

During the course of 2011, main activities will include

infrastructure development as well as establishment of the site

for civil and construction teams to allow completion of bulk

earthworks for mining, infrastructure and the metallurgical plant.

In addition, long lead items will be ordered including mills,

crushers and power generation equipment.

Expenditure of $42m (attributable) is anticipated for 2011.

Sustainability

Safety

No fatalities occurred during 2010.

Community

The project teams continue to engage extensively with the

community and stakeholders. Several engineering projects

that will benefit both the Kibali project and community were

completed, including construction of a new road between Aru

and the village of Doko, a key staging point for the project,

reducing travel times from several days – particularly during

rainy weather – to three hours.

Ongoing work with both the community and Okimo has led to

cessation of illegal mining activities within a defined exclusion

zone. Alternate work programmes have been introduced

following extensive negotiations, to compensate for the

resultant loss in income to the community.

Public participation engagements with the community

continued throughout the year, focusing on critical issues

including the relocation of some 3,700 dwellings from the

defined exclusion zone. A memorandum of understanding,

regarding relocation of the local church, was agreed with the

Catholic Church.

Greenfield projects

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Environment

A full environmental study is being undertaken as part of the

ongoing updated feasibility study.

Mongbwalu

Description

The Mongbwalu project, currently undergoing a fast tracked

feasibility study, is located within the 5,487km

2

tenement

package held by AngloGold Ashanti and its joint venture

partner Okimo, the state-owned gold company of the DRC,

which owns a 13.8% stake. The Mongbwalu licence areas are

northwest of Lake Albert in the Ituri province of the north

eastern DRC. The Archaean granites and greenstones of the

Kilo Moto belt extend some 850km west-northwest of the lake.

Ongoing feasibility work is focused on the former Adidi

underground mine workings, close to the village of

Mongbwalu. The study calls for a 60,000t a month

underground operation producing approximately 120,000oz of

gold a year when in full production.

An updated Mineral Resource of 1.90Moz was declared in

2010 following an infill-drilling campaign. A further Mineral

Resource update is expected midway through 2011.

Data collection work undertaken during 2010 in support of the

feasibility study included environmental, geotechnical, ground

water and engineering information. The feasibility report is due

for completion in the first quarter of 2011 and, subject to

approval, first gold production is scheduled for late 2014.

Growth prospects

There is considerable opportunity for growth both in the vicinity

of the current Mongbwalu feasibility study area and in the area

covered by the greater Kilo Regional Exploration campaign.

Drilling and trenching is now under way at the Mont Tsi project

and at other sites in the concession area and will continue

throughout 2011.

Drilling is continuing at the Mongbwalu feasibility study area to

further upgrade and expand the Mineral Resource base.

The greater Kilo exploration project (including Mongbwalu) has

the potential to form a major growth centre for the company

and country in the coming years.

Outlook for 2011

The main activities planned in the Mongbwalu project area

during 2011 include continued drilling and a preconstruction

phase involving road development and other infrastructure

projects. Planned operating costs for 2011, excluding

greenfield exploration, are budgeted at $36m.

Sustainability

Safety

Tragically, a fatality occurred at the Mongbwalu camp in 2010

when an employee slipped and fell while working on a

stationary bulldozer. Safety measures have been improved to

prevent a recurrence of this accident and a dedicated safety

manager is to be appointed in 2011.

A major upgrade of the camp electrical reticulation is

scheduled for early 2011 in order to improve work and living

conditions. An on-site clinic was established in 2010 and is

manned by a senior nurse and paramedic. This clinic operates

in conjunction with the local hospital and in consultation with

the regional health authorities.

Community

The company has engaged stakeholders at all levels, from

local communities to provincial and state entities, in order to

ensure sustainable development in the area. Early planning

work is also focusing on critical infrastructure to facilitate

economic development in the region, including power

generation and road construction.

A number of initiatives have been initiated in the local

communities, including refurbishment of the Ecole Primaire 3

local school in Mongbwalu and the establishment of literacy

and finance programmes under the auspices of the ‘Washa

Washa’ community development programme.

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126

AngloGold Ashanti Annual Financial Statements 2010

Greenfield projects

Support has also been given to local vaccination campaigns

and malaria prevention. These are to be expanded in the

coming year.

A major study has been undertaken to understand the impact

of any future mine development on the economic activity in the

region. Consultative and information sharing forums are

regularly held with the local community and include

participation by artisanal and small-scale mining operators.

Environment

Environmental studies have been commissioned both as part

of the feasibility study and also to determine broader regional

biodiversity, water quality and land-use, which in many areas

have been heavily impacted by previous formal and informal

mining activity. An audit of existing disturbance to the

environment is being compiled as part of the feasibility study.

Australasia – Australia

Tropicana

Description

The Tropicana Gold Project (TGP) is part of a joint venture

between AngloGold Ashanti (70% interest and manager) and

Independence Group (30%). The project is located 330km

east-northeast of the mining service centre, Kalgoorlie, in

Western Australia and 200km east of AngloGold Ashanti’s

Sunrise Dam Gold Mine. The area is remote and infrastructure

is limited.

The boards of AngloGold Ashanti and Independence approved

development of the TGP in November 2010.

Tropicana was discovered in 2005 in an area not previously

thought to be prospective for gold, and represents the most

significant gold discovery in Australia for more than a decade.

The Tropicana joint venture’s first mover advantage has

enabled it to peg tenements over the bulk of what is now

recognised as a major new gold province, whilst ownership of

the first processing plant in the Tropicana Belt will put the joint

venture in a strong strategic position to leverage value from

future discoveries.

The approved project will utilise conventional open-cut mining

methods to mine the Tropicana and Havana deposits and

conventional carbon-in-leach processing technology to

process the ore at a rate of 5.8m tonnes per annum.

Besides the processing plant and mining area, project

infrastructure will include 220km of new road, a water bore

field, a sealed airstrip and an accommodation village.

Average annual gold production is anticipated to be 330,000oz

to 350,000oz (100% project) over the life of the mine and

470,000oz to 490,000oz per annum over the first three years,

when higher grade ore will be processed.

Total cash costs are expected to be A$710/oz–A$730/oz (real)

over the life of the mine and A$580–A$600/oz over the first

three years.

Growth prospects

A feasibility study is under way to determine the viability of

open-cut mining of the Boston Shaker deposit, immediately

north of the proposed Tropicana pit, following encouraging

results from scoping studies. A prefeasibility study on

underground mining of the Havana Deeps mineralisation

beneath the proposed Havana pit, will commence in 2011.

Outlook for 2011

Extensive exploration will continue in 2011 given the studies

being undertaken on the Boston Shaker and Havana Deeps

Greenfield projects

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127

prospects. Tendering of contracts, initially focused on

infrastructure requirements, will begin in January 2011.

Construction will start in the June quarter of 2011 and will

include construction of a new section of road, the airstrip and

the accommodation village.

Sustainability

The processing plant has been designed to be energy and

water efficient. The mine will utilise high pressure grinding rolls

which use less energy than conventional ball or SAG milling.

Leach and tailings thickeners will be used to recover and

recycle process water, and grey water from the village will be

recycled for use in the processing plant.

Community

The proposed project will provide employment in the local

community and goods and services will be procured from local

businesses wherever possible. Tropicana will also generate

royalties and taxes for the state and federal governments.

Consultation with key community groups has been under

way for several years. A full spectrum of stakeholder

consultation commenced very early in 2008, well before the

project was referred to the Western Australian Environmental

Protection Agency later that year. The joint venture held

several public meetings in Perth, Kalgoorlie and Menzies

during the various phases of the approvals process to

address community concerns on an ongoing basis. Regular

meetings are also held through the joint venture's Indigenous

Reference Group to keep members of the Aboriginal

community informed about the development of the project,

including heritage matters and employment and contracting

opportunities when they arise.

Environment

Significant environmental baseline surveys were conducted

between 2006 and 2009 to understand key environmental and

heritage values. This information was used to design a project

that avoids all known populations of Declared Rare Flora and

Archaeological Heritage Sites and minimises impacts on

priority and threatened flora and fauna habitats. The project

was referred to the Western Australia Environmental Protection

Authority and the Commonwealth government in the first half

of 2008. The project underwent a public environmental impact

assessment in the second half of 2009 and received state and

Commonwealth approval towards the end of 2010.

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AngloGold Ashanti Annual Financial Statements 2010

Global exploration

Total exploration expenditure in 2010 amounted to $198m, of

which $89m was spent on greenfield exploration, $51m on

brownfield exploration and the balance of $58m on

prefeasibility studies. The main aim of AngloGold Ashanti’s

greenfield team is to make significant, high-value gold

discoveries in new and existing regions, while brownfield

exploration focuses on incremental additions to known

orebodies and new discoveries in defined areas around

existing operations.

Greenfield exploration

An expansive greenfield exploration programme was undertaken

during 2010 in Australia, China, North and South America, the

Middle East and North Africa (MENA), Sub-Saharan Africa and

South East Asia. A total of 276,346m of diamond, reverse

circulation, and aircore drilling was completed in testing existing

priority targets and in the delineation of new targets in Australia,

Colombia, the Solomon Islands, Gabon, Guinea, Egypt, the

Democratic Republic of the Congo (DRC) and Canada. This

compares to 183,481m drilled the previous year.

Greenfield activities were undertaken through joint ventures,

strategic alliances and on wholly owned ground holdings. The

principal objective of the greenfield exploration team is value

creation through the discovery of new long-life, low-cost mines

that maximise shareholder value. Discoveries and ground

positions that do not meet certain investment criteria are joint-

ventured or divested to maximise AngloGold Ashanti’s return

on its exploration investment.

In 2011, total exploration expenditure of some $375m is

planned, with $100m to be spent on greenfield exploration and

$111m allocated to prefeasibility studies at the La Colosa and

Gramalote projects in Colombia, as well as feasibility studies at

the Central Mongbwalu deposit in the DRC and associated

expenditures. Of the balance, $143m is earmarked for

brownfield exploration inclusive of $50m of capitalised

expenditure and $21m for the De Beers joint venture focusing

on marine exploration on the continental shelf.

Strategic context

AngloGold Ashanti’s greenfield exploration strategy maintains

a balanced portfolio and a pipeline of projects at various

stages of exploration. Importantly, this requires diversification

across new frontiers, emerging regions and known terranes.

The range of ownership and partnership structures employed

by AngloGold Ashanti helps to achieve the desired variety of

targets envisaged in this strategy. Important components for

new discoveries and effective resource targeting include

securing new search spaces and strategic land holdings while

maintaining a balanced portfolio.

AngloGold Ashanti’s global exploration portfolio includes

strategic world-class holdings in Colombia and Australia,

where the company has progressed frontier exploration from

broad geological concepts to major discoveries of the La

Colosa and Tropicana-Havana deposits, two of the worlds’

largest virgin gold finds of recent times. In addition, the

Global exploration

Delivering

shareholder

value

real

through greenfield exploration

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129

Greenfield exploration countries

Greenfield strategic alliances

Pre 2010 100% AngloGold Ashanti

Pre 2010 JVs

New 2010 JVs

2010 100% AngloGold Ashanti

AngloGold Ashanti/ De Beers
marine exploration JV

Argentina

Santa Cruz (El Volcan)

Brazil

Falcão JV
Juruena
Santana JV

Colombia

Gramalote JV
Western Cordillera JV
Rio Dulce
Quebradona JV
La Colosa
Chaparral JV
Salvajina
La Llanada

Canada

Melville Project
Superior JV
Baffin Is JV

Egypt

Wadi Kareem
Hodine

Eritrea

Akordat North
Kerkasha

Guinea

Siguiri Blocks 2-4

Gabon

Dome JV
Ogooue
Amiga JV

Tanzania

Oryx JV
Mkurumu JV

DRC

Kibali
Kilo Project
(Mongbwalu)

China

Yili Yunhai CJV
Jinchanggou CJV

Australia

Cornelia Range
Tropicana JV
Viking
Saxby JV
Gawler JV

Solomon Islands

Kele & Mase JV
New Georgia &
Vangunu JV

Djibouti

Stratex Afar JV

Ethiopia

Stratex Afar JV

South
Africa

SASA*

New Zealand

Seafield JV

* South African sea areas

Greenfield exploration

Podcast available at www.aga-reports.com/10/podcasts.htm

Tony O’Neill , Executive Vice
President – Business and Technical
Development, discusses the group’s
exploration programme

dominant strategic land holdings of some 44,838km

2

in

Australia and 15,815km

2

in Colombia have the potential to

yield further significant new discoveries.

In the Middle East and North Africa, AngloGold Ashanti and its

strategic alliance partner, Thani Investments, have made

significant progress in building a regional tenement portfolio in

Egypt and Eritrea. The Thani Ashanti Alliance Company is also

conducting project generation in Saudi Arabia and has entered

into an exploration joint venture with Stratex International in

Ethiopia and Djibouti. Once again, AngloGold Ashanti has

been ahead of the curve in anticipating the importance of

these regions, allowing it to gain early mover advantage ahead

of several of its peers.

In Sub-Saharan Africa, the focus is on new opportunities in

Gabon and Tanzania, in addition to the Kilo project in the DRC

and regional exploration around Siguiri in Guinea.

Work undertaken in 2008 and 2009 to rebuild a balanced

exploration portfolio is starting to produce the desired results.

In 2009, drilling activities were restricted to three countries as

a result of changes in legislation and evolving risk profiles in the

remaining countries in AngloGold Ashanti’s exploration

portfolio. In 2010, however, a total of 276,346m was drilled in

nine countries, including, Argentina, Colombia, Canada, DRC,

Guinea, Gabon, Australia, Solomon Islands and Egypt, as the

company began to leverage its exploration land holdings to

greater effect.

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AngloGold Ashanti Annual Financial Statements 2010

Global exploration

Achievements

Significant achievements for 2010 included the successful

completion of the scoping study of the Boston Shaker and

Havana Deeps extensions to the Tropicana-Havana trend in

Australia and resumption of drilling at the La Colosa project in

Colombia to delineate additional pre-inferred gold ounces (see

table above.

Considerable progress was also made in advancing AngloGold

Ashanti’s greenfield exploration portfolio elsewhere in 2010.

Following the company’s entry into four new regions in 2009,

2010 saw rapid progress in the delineation of exploration

targets, licence applications and associated approvals and

exploration activities including drilling, airborne and ground

geophysics and diamond drilling. Encouraging drilling and

trench results have been received from Gabon, Canada, Egypt

and the Solomon Islands.

Expansion

During the course of 2010, AngloGold Ashanti entered into a

number of new joint ventures and strategic alliances in Brazil,

Australia and the Middle East and North Africa, while

downsizing in China and exiting Russia altogether. These new

ventures include the Falcão joint venture in Brazil with

Horizonte Minerals; the Stratex joint venture in Ethiopia/Djibouti

with Stratex International; the Lusahunga joint venture in

Tanzania with Oryx Mining; the Gawler joint venture in Australia

with Stellar Resources; and the New Georgia and Vangunu

joint ventures with XDM Resources in the Solomon Islands.

AngloGold Ashanti has also applied for wholly-owned tenure in

Canada known as the Melville Project and in Australia at the

Cornelia Range Project. In Eritrea, two tenements known as

Kerkasha and Akordat North were granted and are included in

the Thani Ashanti Alliance.

Impediments

A number of targets for greenfield exploration were missed

in 2010, especially those relating to resource drilling and

prefeasibility studies at La Colosa and Gramalote in

Colombia and at Central Mongbwalu in the DRC. The total

number of metres drilled in Colombia was significantly lower

than expected due to delays in the approval of the

necessary environmental (water use) and access permits.

Contractual and legal issues delayed the start of regional

exploration drilling on the Kilo joint venture in the DRC until

the quarter ended December 2010.

Project pipeline

AngloGold Ashanti holds a total of 122,286km

2

of high-priority

Greenfield tenements globally from which there is a robust

project pipeline. This is illustrated in the graph alongside for a

number of key regions, but does not reflect AngloGold

Ashanti’s full project pipeline.

2010 initiatives

Initiatives to enhance the success of the greenfield exploration

team included a rigorous assessment of the existing

exploration portfolio. The work focused on establishing the

appropriate split between frontier, emerging and known

geological terranes. As a consequence the team is well

positioned to increase drilling on both existing and new

projects that were at or near drill-ready stage in 2010.

To further improve decision-making processes in project and

portfolio management, a global portfolio management process

is being implemented to encompass both technical and

commercial gating elements.

Colombia

Exploration in Colombia focused upon quantifying the potential

of the identified La Colosa and Gramalote gold projects by

dedicated multidisciplinary brownfield project feasibility study

teams, and advancing exploration for further world-class

Greenfield discoveries of Miocene aged gold-rich porphyry

systems in the wider La Colosa region, Quebradona, Rio

Dulce, Chaparral, Salvajina and the La Llanada mineral fields.

Global exploration

Project

Tonnage (Mt)

Grade (g/t Au)

Ounces (Moz Au)

Lower cut-off (g/t Au)

Havana Deeps*

2.376

3.60

0.275

2.8

Boston Shaker*

4.236

2.46

0.335

0.5 (oxide)

/ 0.6 (fresh)

Total**

6.612

2.87

0.61

*

Assumed gold price of $1,100 at an A$:$ exchange rate of 0.84:1

**

Attributable ounces Au only (AngloGold Ashanti – 70%)

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The synthesis of proprietary airborne and ground geophysical

and geochemical data sets built up over the last decade of

AngloGold Ashanti’s involvement in Colombia has facilitated

consolidation of a world-class tenement portfolio with a robust

project pipeline.

Systematic regional greenfield exploration was undertaken by

AngloGold Ashanti and its joint venture partners B2Gold,

Glencore International and Mineros S.A. in Colombia.

AngloGold Ashanti has consolidated the tenement position

from roughly 100,000km

2

in 2009, to 15,815km

2

at the end of

2010 through a variety of structures including joint ventures

and the relinquishment of non-prospective areas.

At the wholly owned La Colosa project, brownfield exploration

led drilling and prefeasibility development resumed during the

third quarter. AngloGold Ashanti secured regional opportunities

surrounding La Colosa and exploration of the greater La

Colosa area is continuing with the objective of discovering and

quantifying similar gold-rich porphyry mineralisation styles.

At Gramalote (51% AngloGold Ashanti, 49% B2Gold), the joint

venture partners renegotiated their agreement, resulting in

AngloGold Ashanti assuming management of the project via a

designated brownfield-exploration-led project feasibility study

team. Feasibility drilling began during the last quarter of 2010,

after a hiatus of more than 12 months.

In all, a number of targets were generated by systematic

exploration of an area covering 15,815km

2

of mineral tenement

contracts and applications in 2010. Two targets were drilled

and four remain to be drill tested in Colombia. AngloGold

Ashanti will continue to push its first-mover advantage and

dominant land position, particularly as major competitors

realise the potential of Colombia, which has not seen a major

gold mine development for decades.

Canada

AngloGold Ashanti continued greenfield exploration in several

areas of Canada in 2010, both on its own at the Melville Project

and in joint venture with Laurentian Goldfields and

Commander Resources.

Superior joint venture (Laurentian Goldfields) – the Laurentian

Goldfields Superior Province alliance is active in several areas

of eastern Canada. Some 669km

2

of tenements considered

prospective for gold mineralisation have been pegged in the

Goldpines South joint venture.

Baffin Island joint venture (Commander Resources) – AngloGold

Ashanti is earning into a joint venture on Commander’s Baffin

Island properties. Field work completed during 2010 included

5,500m of diamond drilling at the Kanosak and Malrok

prospects. The gold occurrences on Baffin Island are hosted by

a package of gently dipping rocks in a fold and thrust belt.

Prefeasibility

Resource definition/

conceptual studies

Drill

testing

Drill target

definition

Target

generation

Project

generation

Early-stage exploration

Mid-stage exploration

Late-stage exploration

4-5 yrs

3-4 yrs

2-3 yrs

1-2 yrs

LaMbouli

Ndjole

Mevang

Gabon Regional

Hutite

Hodine

Egypt

Malrok, Kanosak

Baffin Island

Superior JV

Arctic Canada

Vulu, Tango

Mase/Kele JV

New Georgia JV

Soloman Is.

La Colosa Regional, Salvajina,

Quebradona, Rio Dulce

Colombia Regional

Havana Deeps
Boston Shaker

Tumbleweed,

Black Dragon, Dragonfly

Tropicana Regional

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132

AngloGold Ashanti Annual Financial Statements 2010

Global exploration

The gold event appears to be relatively late and is associated

with arsenopyrite. Significant drill results from the Malrok

prospect include 3.24m @ 7.65g/t Au and 0.50m @ 14.4g/t Au.

High-grade intersections such as 0.51m @ 31.38g/t Au and

1.45m @ 7.48g/t Au were returned from the Kanosak prospect.

Brazil

AngloGold Ashanti completed the first year of greenfield

exploration at the Santana joint venture with Horizonte

Minerals and has signed a new joint venture agreement with

the same partner over the advanced Falcão project, where infill

soil sampling over the 6km x 2km, gold-in-soil anomaly was

completed, along with detailed geological surface mapping.

Ground gradient array induced polarisation and airborne

magnetic-radiometric geophysical surveys were also

conducted to assist with the definition of drill targets.

Encouraging results were received for the Santana joint

venture and work will continue in 2011.

Democratic Republic of the Congo

AngloGold Ashanti owns an 86.22% stake in Ashanti

Goldfields Kilo (AGK), the joint venture company, while the

remaining 13.78% is held by OKIMO, the country’s state-

owned gold company. Of the 7,443km

2

previously held under

exploitation licences by OKIMO, 5,447km

2

has been

transferred to AGK under the terms of the agreement, with

399km

2

pending transfer. A feasibility study on the 1.90Moz

Central Mongbwalu project is scheduled for completion in the

first half of 2011.

Regional drilling programmes recommenced during the fourth

quarter of 2010 and a total of 139m in one diamond hole was

completed at the Mont Tsi prospect. Soil and stream

sediment sampling and reconnaissance mapping of the

tenement is ongoing.

A total of 7,729 soil, 408 stream sediment, 1,600 trench and

pit samples were collected for the year.

Gabon

In Gabon, AngloGold Ashanti and its joint venture partners

advanced exploration over 16,248km

2

of tenements, using

geological mapping, soil sampling, channel sampling and

drilling. Some 1,223m of diamond drilling were completed at

the LaMboumi prospect, with a best result returned of 3m @

0.72g/t Au. Further work will be undertaken in 2011 to test a

number of well defined gold in soil anomalies.

Russia

During the year, AngloGold Ashanti developed a plan to monetise

its assets and withdrew from greenfield exploration in Russia.

Middle East and North Africa

The Thani Ashanti strategic alliance with Thani Investments

significantly increased its presence in the Arabian Nubian

Shield and other parts of the Middle East and North Africa

during 2010.

Active exploration in Egypt returned significant trench results

(33m @ 4.37g/t Au) at the Hutite prospect of the Hodine

concession, where drilling commenced in late 2010. Two

licences, were applied for and granted to the Thani Ashanti

joint venture in Eritrea during 2010 and a further two

applications were made late in the year. A new joint venture

was formed in Ethiopia/Djibouti with Stratex International to

explore for epithermal mineralisation in the Afar Depression.

Extensive project generation activities were also conducted in

Saudi Arabia.

South East Asia

In the Solomon Islands, AngloGold Ashanti signed two new

joint venture agreements with XDM Resources – New Georgia

and Vangunu – following the two joint ventures initiated the

previous year. These new joint ventures cover an additional

1,171km

2

in the New Georgia Belt, effectively consolidating the

greenfield exploration potential of the entire island chain. The

potential to host high-grade, gold-silver bearing low

sulphidation epithermal veins and gold-copper porphyry

systems has been demonstrated during 2010.

The Kele and Mase joint venture agreements, formed in 2009

and covering 738km

2

, have been the focus of exploration

efforts. Exploration activities in 2010 included drilling (8,747m),

trenching, field mapping, soil and rock chip sampling, spectral

studies and airborne electromagnetic surveying. Best results

from drilling at Kele include 15.5m @ 7.89g/t Au, 30.2m @

2.74g/t Au and 6.2m @ 8.63g/t from argillic alteration zones.

Best results from trenching include 25m @ 3.1g/t, 8m @ 3.5g/t

Global exploration

P

133

and 13m @ 1.61g/t Au. Mase exploration is at an earlier stage,

trench results from 2010 include 57m @ 0.51g/t Au, 83m @

0.19g/t Au, 25m @ 0.47g/t Au and 37m @ 0.51g/t Au.

Mineralisation is associated with stockworking and

overlapping epithermal veining.

China

AngloGold Ashanti’s exploration activity in China declined

during 2010 and is now restricted to opportunity-based

business development and exploration. AngloGold Ashanti

retained its 70% interest in the Gansu Longxin Minerals co-

operative joint venture over the Jinchanggou group of

properties in the province of Gansu, located in western China.

Australia

The Tropicana joint venture (AngloGold Ashanti 70%,

Independence Group NL 30%) is systematically targeting a

belt of tectonically reworked Archaean (c. 2640 Ma) rocks that

form the eastern margin of the Yilgarn Craton, Western

Australia. The +3.7Moz (attributable) Tropicana gold discovery

is a new mineral deposit style in this previously unrecognised

and unexplored gold province. Exploration in the “Tropicana

Belt” has primarily focused on reverse circulation (RC) and

diamond drill testing of targets in support of the Tropicana

Gold Project resource development, with regional exploration

predominantly in early stages of work to advance about 50 key

prospects to drill testing stages.

In 2010, the region’s exploration potential was further realised

with the discovery of the Boston Shaker deposit, about 360m

north of the Tropicana open pit, and underground resource

extensions down plunge of the Havana deposit (Havana

Deeps). Scoping level studies for Boston Shaker and Havana

Deeps were completed in December 2010 and have defined a

total of 1.1Moz Mineral Resource. The potential for further

Mineral Resource growth is highlighted by a recent step-out

exploration drill hole which intercepted mineralisation 1.2km

down plunge of the Havana open pit design at vertical depth

of 1km.

During the year, a total of 2,889 aircore holes were drilled for

123,973 metres, 552 reverse circulation holes for 76,802.3m

and 137 diamond holes for 41,094m. In addition, 3,194

surface auger samples were collected, 32,962 line kilometres

of aeromagnetic and radiometric surveys flown, and 200 line

kilometres of EM data were acquired.

The best results for the year came from diamond drilling

intercepts at Boston Shaker, including 32m @ 3.7g/t Au from

181m and 18m @ 4.3g/t Au from 34m. The best results from

Havana Deeps include 35m @ 5.0g/t Au from 514m and 16m

@ 9.7g/t Au from 369m.

In regional exploration, significant aircore results were returned

from a number of prospects. At Black Dragon, 30km north-

east of Tropicana, results included 6m @ 1.66g/t Au from 12m

and 4m @ 0.54g/t Au from 30m. At Springbok, 5km north of

Tropicana, results included 12m @ 0.53g/t Au from 32m. At

Iceberg, 30km south of Tropicana, results included 3m @

0.61g/t Au from 53m, 2m @ 0.82g/t Au from 50m and 1m @

1.45g/t Au from 66m in the same hole, and 1m @ 1.03g/t Au

from 39m.

In addition to the 16,104km

2

of the Tropicana joint venture, the

company holds a 100% interest in the 12,949km

2

Viking

project to the southwest, including 9,313km

2

of granted

exploration licences. Surface geochemical sampling continued

at Viking throughout the year, resulting in the definition of a

pipeline of geochemical targets for follow-up exploration. First-

pass aircore drilling began in the fourth quarter and with

11,437m of drilling having been completed, geochemical

results are awaited. The two strongest gold-in-soil anomalies

tested by aircore drilling are of similar dimensions and gold

tenor as the original geochemical anomaly that delineated the

Tropicana deposit.

AngloGold Ashanti completed five diamond drill holes, for

4,044m at the Saxby (815km

2

) joint venture with Falcon

Minerals Limited in northwest Queensland. Results include

15m @ 9.09 g/t Au from 701m. Further work is required to

understand the significance and access the full potential of

this system. Subsequent to year-end, AngloGold Ashanti

withdrew from exploring in Saxby.

AngloGold Ashanti entered into two new projects in Australia in

2010. The first of these is the wholly-owned Cornelia Range

project covering 13,780km

2

of exploration licence applications

made over the eastern Capricorn Orogen and adjacent

Paterson Orogen in central Western Australia. The project is

500km north of Sunrise Dam and 300km from each of the

major gold mining centres of Telfer (Paterson Orogen), Jundee

and Plutonic (Yilgarn Craton). The second project is the Gawler

joint venture with Stellar Resources Limited (1,190km

2

) to

explore for iron oxide-copper-gold (IOCG) deposits in the

Gawler Craton of South Australia.

P

134

AngloGold Ashanti Annual Financial Statements 2010

Mineral Resource and Ore Reserve – a summary

Mineral Resource and Ore Reserve

– a summary

Mineral Resources and Ore Reserves are reported in

accordance with the minimum standards described by the

Australasian Code for Reporting of Exploration Results,

Mineral Resources and Ore Reserves (JORC Code, 2004

Edition), and also conform to the standards set out in the

South African Code for the Reporting of Exploration Results,

Mineral Resources and Mineral Reserves (The SAMREC Code,

2007 edition). Mineral Resources are inclusive of the Ore

Reserve component unless otherwise stated.

Mineral Resources

When the 2009 Mineral Resource is restated to exclude the

sale of Tau Lekoa (6.2Moz), the Mineral Resource is reduced

from 226.7Moz to 220.5Moz. The total Mineral Resource

remained steady, dropping slightly from 220.5Moz in 2009 to

220.0Moz in December 2010. A year-on-year increase of

5.8Moz occurred before depletion is taken into account and a

decrease of 0.5Moz after depletion. It should be noted that

changes in economic assumptions from 2009 to 2010 resulted

in the Mineral Resource increasing by 3.5Moz whilst

exploration and modelling resulted in an increase of 0.7Moz.

The remaining increase of 1.6Moz resulted from various other

factors. Depletions from the Mineral Resource for 2009 totalled

6.3Moz.

Mineral Resources have been estimated using a gold price of

$1,100/oz (2009: $1,025/oz).

Ore Reserves

When the 2009 Ore Reserve is restated to exclude Tau Lekoa

(0.8Moz), the 2009 Ore Reserve is reduced from 71.4Moz to

70.6Moz. Using the restated figure, the AngloGold Ashanti Ore

Reserve increased from 70.6Moz in 2009 to 71.2Moz in

December 2010. A year-on-year increase of 6.2Moz occurred

before depletion of 5.6Moz, resulting in an increase of 0.6Moz

after depletion. It should be noted that changes in the

economic assumptions from 2009 to 2010 resulted in the Ore

Reserve increasing by 2.4Moz while exploration and modelling

resulted in a further increase of 3.8Moz.

Ore Reserves were estimated using a conservative gold price

of $850/oz (2009: $800/oz).

Mineral Resources and Ore Reserves

growth

underpin

P

135

Mineral Resource

Moz

Mineral Resource as at 31 December 2009

226.7

Sale of Tau Lekoa

(6.2)

Restated 2009 Mineral Resource

220.5

Reductions

Great Noligwa

Due to economics and depletion

(2.4)

TauTona

Transfers to Mponeng to improve change of mining

(1.3)

Siguiri

Revision to modelling procedures and increased costs

(1.0)

Other

Total of non-significant changes

(3.6)

Additions

Vaal River Surface

An economic study demonstrated that these tailings can

3.0

West Wits Surface

be economically reworked to recover uranium

1.3

Other

Total of non-significant changes

3.5

Mineral Resource as at 31 December 2010

220.0

Rounding of numbers may result in computational discrepancies

{

Ore Reserve reconciliation

2010 vs 2009 (Moz)

Moz

(3)

Reductions

73

71

69

67

65

63

61

59

57

55

71.2

2010

Change

(1.2)

Other

4.7

Additions

70.6

2009*

* Restated to exclude Tau Lekoa

Mineral Resource reconciliation

2010 vs 2009 (Moz)

Moz

(4.7)

Reductions

225

220

215

210

205

200

220

2010

Change

(3.6)

Other

7.8

Additions

220.5
2009*

* Restated to exclude Tau Lekoa

P

136

AngloGold Ashanti Annual Financial Statements 2010

Mineral Resource and Ore Reserve – a summary

Mineral Resource and Ore Reserve

– a summary

Ore Reserve

Moz

Ore Reserve as at 31 December 2009

71.4

Sale of Tau Lekoa

(0.8)

Restated 2009 Ore Reserve

70.6

Reductions

Geita

Depletions and model changes

(0.9)

Obuasi

Depletions and refinements to Ore Reserve estimation

(0.7)

Siguiri

Remodelling in accordance with reconciliation and depletion

(0.7)

TauTona

Depletion and transfers to Mponeng, minor model changes

(0.7)

Other

Total of non-significant changes

(1.2)

Additions

Cripple Creek & Victor

MLE2 project study incorporated

1.4

Mponeng

Successful conversion drilling and minor transfers from TauTona and Savuka

1.2

Sadiola

Additions from Deep Sulphide project

0.8

Other

Total of non-significant changes

1.3

Ore Reserve as at 31 December 2010

71.2

Rounding of numbers may result in computational discrepancies

By-products

Several by-products are recovered as a result of the

processing of gold Ore Reserves. These include 21,591t of

uranium oxide from the South African operations, 443,761t of

sulphur from Brazil and 34.6Moz of silver from Argentina.

Details of by-product Mineral Resources and Ore Reserves

are given in the Mineral Resource and Ore Reserve

Report 2010*.

External audit of Mineral Resource

During the course of the year and as part of the rolling audit

programme, AngloGold Ashanti’s 2010 Mineral Resources at

the following operations were submitted for external audit by

the Australian-based company Quantitative Group (QG):

·Vaal Reef at Great Noligwa, Kopanang and Moab Khotsong

mines;

· Cerro Vanguardia;

· Serra Grande;

· Cripple Creek & Victor; and

· Mongbwalu.

AngloGold Ashanti’s 2010 Ore Reserves at the following

operations were submitted for external audit by a number of

international consulting companies, namely:

·Geita

AMC

· Obuasi

AMC

· Siguiri

AMC

· Sunrise Dam: Underground

Optiro

· Cripple Creek & Victor

Pincock Allen and Holt

· Cerro Vanguardia

Xstract

· Serra Grande

Xstract

· AGA Mineração-Cuiabá

Xstract

The company has been informed that the audits identified no

material shortcomings in the process by which AngloGold

Ashanti's Mineral Resources and Ore Reserves were

evaluated. It is the company's intention to continue this

process so that each of its operations will be audited, on

average, every three years.

P

137

Competent persons

The information in this report relating to exploration results,

Mineral Resources and Ore Reserves is based on information

compiled by the Competent Persons. These individuals are

identified in the expanded Mineral Resource and Ore Reserve

Report 2010*. The Competent Persons consent to the

inclusion of Exploration Results, Mineral Resource and Ore

Reserve information in this report, in the form and context in

which it appears.

During the past decade, the company has developed and

implemented a rigorous system of internal and external

reviews of Exploration Results, Mineral Resources or Ore

Reserves. A documented chain of responsibility exists from the

Competent Persons at the operations to the company's

Mineral Resource and Ore Reserve Steering Committee.

Accordingly, the Chairman of the Mineral Resource and Ore

Reserve Steering Committee, VA Chamberlain, MSc (Mining

Engineering), BSc (Hons) (Geology), MGSSA, MAusIMM,

assumes responsibility for the Mineral Resource and Ore

Reserve processes for AngloGold Ashanti and is satisfied that

the Competent Persons have fulfilled their responsibilities.

*

A detailed breakdown of Mineral Resources and Ore Reserves is

provided in the Mineral Resource and Ore Reserve Report 2010, which is

available on or about 26 March 2011 on the AngloGold Ashanti website

(www.anglogoldashanti.com), from where it may be downloaded as a

PDF file using Adobe Acrobat Reader. The report is also available in

printed format on request from the AngloGold Ashanti offices at the

addresses given at the back of the Annual Financial Statements.

Inclusive Mineral Resource – attributable

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

South Africa

Measured

26.51

15.30

405.52

13.04

Indicated

753.04

2.76

2,075.87

66.74

Inferred

40.82

13.81

563.55

18.12

Total

(1)

820.38

3.71

3,044.94

97.90

Democratic Republic of

Measured

–

–

–

–

the Congo

Indicated

59.67

3.64

217.41

6.99

Inferred

30.54

3.27

99.94

3.21

Total

90.21

3.52

317.35

10.20

Ghana

Measured

77.12

4.83

372.49

11.98

Indicated

83.38

3.82

318.84

10.25

Inferred

105.26

3.71

390.99

12.57

Total

265.76

4.07

1,082.33

34.80

Guinea

Measured

43.18

0.65

28.28

0.91

Indicated

101.78

0.77

78.19

2.51

Inferred

77.77

0.85

66.11

2.13

Total

222.73

0.77

172.58

5.55

Mali

Measured

15.52

1.36

21.17

0.68

Indicated

54.86

1.79

98.07

3.15

Inferred

19.87

1.66

32.98

1.06

Total

90.24

1.69

152.22

4.89

P

138

AngloGold Ashanti Annual Financial Statements 2010

Mineral Resource and Ore Reserve – a summary

Mineral Resource and Ore Reserve

– a summary

Inclusive Mineral Resource – attributable (continued)

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

Namibia

Measured

23.30

0.86

20.09

0.65

Indicated

72.57

1.28

92.78

2.98

Inferred

23.33

1.13

26.41

0.85

Total

119.20

1.17

139.28

4.48

Tanzania

Measured

–

– –

–

Indicated

80.32

3.37

270.88

8.71

Inferred

21.95

3.62

79.57

2.56

Total

102.27

3.43

350.46

11.27

Australia

Measured

34.88

1.74

60.55

1.95

Indicated

35.49

2.85

101.12

3.25

Inferred

19.84

2.90

57.63

1.85

Total

90.21

2.43

219.30

7.05

Argentina

Measured

11.12

1.50

16.63

0.53

Indicated

20.86

3.82

79.69

2.56

Inferred

10.20

3.19

32.55

1.05

Total

42.18

3.06

128.87

4.14

Brazil

Measured

11.18

6.39

71.43

2.30

Indicated

15.60

6.10

95.14

3.06

Inferred

30.80

6.81

209.73

6.74

Total

57.57

6.54

376.31

12.10

Colombia

Measured

–

– –

–

Indicated

15.78

0.93

14.75

0.47

Inferred

414.06

0.98

406.06

13.06

Total

429.85

0.98

420.81

13.53

United States

Measured

283.04

0.78

221.76

7.13

Indicated

216.53

0.73

157.18

5.05

Inferred

79.61

0.75

59.66

1.92

Total

579.18

0.76

438.60

14.10

Total

Measured

525.84

2.32

1,217.92

39.16

Indicated

1,509.88

2.38

3,599.94

115.74

Inferred

874.07

2.32

2,025.18

65.11

Total

2,909.79

2.35

6,843.04

220.01

(1)

The reduction in grade relative to the Measured and Inferred Mineral Resource is due to the inclusion of 505Mt at 0.28g/t of tailings and rock dump

Mineral Resource.

P

139

Exclusive Mineral Resource – attributable

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

South Africa

Measured

15.29

17.73

271.14

8.72

Indicated

563.41

1.65

927.58

29.82

Inferred

19.64

18.69

367.04

11.80

Total

(1)

598.34

2.62

1,565.75

50.34

Democratic Republic of

Measured

–

–

–

–

the Congo

Indicated

26.23

2.93

76.72

2.47

Inferred

30.54

3.27

99.94

3.21

Total

56.77

3.11

176.66

5.68

Ghana

Measured

29.69

6.96

206.52

6.64

Indicated

34.46

2.45

84.26

2.71

Inferred

105.26

3.71

391.01

12.57

Total

169.41

4.02

681.79

21.92

Guinea

Measured

4.46

0.80

3.59

0.12

Indicated

34.07

0.77

26.22

0.84

Inferred

77.77

0.85

66.11

2.13

Total

116.30

0.82

95.91

3.08

Mali

Measured

4.69

0.75

3.50

0.11

Indicated

18.27

1.69

30.79

0.99

Inferred

19.09

1.70

32.37

1.04

Total

42.05

1.59

66.66

2.14

Namibia

Measured

9.03

0.58

5.24

0.17

Indicated

42.83

1.11

47.50

1.53

Inferred

23.33

1.13

26.41

0.85

Total

75.20

1.05

79.15

2.54

Tanzania

Measured

–

– –

–

Indicated

41.62

2.93

121.83

3.92

Inferred

21.95

3.62

79.57

2.56

Total

63.57

3.17

201.40

6.48

Australia

Measured

10.83

0.93

10.10

0.32

Indicated

12.10

2.92

35.29

1.13

Inferred

19.84

2.90

57.63

1.85

Total

42.77

2.41

103.02

3.31

P

140

AngloGold Ashanti Annual Financial Statements 2010

Mineral Resource and Ore Reserve – a summary

Mineral Resource and Ore Reserve

– a summary

Exclusive Mineral Resource – attributable (continued)

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

Argentina

Measured

1.36

3.61

4.91

0.16

Indicated

16.70

2.20

36.72

1.18

Inferred

9.95

2.97

29.56

0.95

Total

28.01

2.54

71.18

2.29

Brazil

Measured

6.37

6.15

39.19

1.26

Indicated

8.35

6.10

50.93

1.64

Inferred

28.08

6.78

190.31

6.12

Total

42.81

6.55

280.44

9.02

Colombia

Measured

–

– –

–

Indicated

15.78

0.93

14.75

0.47

Inferred

414.06

0.98

406.06

13.06

Total

429.85

0.98

420.81

13.53

United States

Measured

135.85

0.75

102.38

3.29

Indicated

137.77

0.71

98.42

3.16

Inferred

69.52

0.77

53.85

1.73

Total

343.14

0.74

254.66

8.19

Total

Measured

217.57

2.97

646.57

20.79

Indicated

951.59

1.63

1,551.01

49.87

Inferred

839.05

2.15

1,799.86

57.87

Total

2,008.21

1.99

3,997.44

128.52

(1)

The reduction in grade relative to the Measured and Inferred Mineral Resource is due to the inclusion of 505Mt at 0.28g/t of tailings and rock dump

Mineral Resource.

Ore Reserves by country – attributable

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

South Africa

Proved

12.03

8.24

99.07

3.19

Probable

191.99

4.41

845.74

27.19

Total

(2)

204.02

4.63

944.81

30.38

Democratic Republic of

Proved

–

–

–

–

the Congo

Probable

33.44

4.21

140.69

4.52

Total

33.44

4.21

140.69

4.52

P

141

Ore Reserves by country – attributable (continued)

Tonnes

Grade

Contained gold

As at 31 December 2010

Category

million

g/t

Tonnes

Moz

Ghana

Proved

44.01

3.13

137.85

4.43

Probable

49.30

4.41

217.28

6.99

Total

93.31

3.81

355.13

11.42

Guinea

Proved

39.05

0.62

24.38

0.78

Probable

67.44

0.74

49.71

1.60

Total

106.49

0.70

74.08

2.38

Mali

Proved

4.96

2.23

11.03

0.35

Probable

39.18

1.78

69.82

2.24

Total

44.14

1.83

80.86

2.60

Namibia

Proved

14.27

1.02

14.49

0.47

Probable

29.74

1.45

42.99

1.38

Total

44.01

1.31

57.48

1.85

Tanzania

Proved

–

– –

–

Probable

40.92

3.20

131.06

4.21

Total

40.92

3.20

131.06

4.21

Australia

Proved

24.05

2.10

50.45

1.62

Probable

23.39

2.81

65.83

2.12

Total

47.44

2.45

116.28

3.74

Argentina

Proved

9.54

1.22

11.63

0.37

Probable

8.57

5.32

45.62

1.47

Total

18.10

3.16

57.25

1.84

Brazil

Proved

6.91

5.80

40.06

1.29

Probable

7.40

5.26

38.88

1.25

Total

14.30

5.52

78.94

2.54

United States

Proved

147.19

0.81

119.37

3.84

Probable

78.76

0.75

58.76

1.89

Total

225.95

0.79

178.13

5.73

Total

Proved

302.00

1.68

508.32

16.34

Probable

570.12

2.99

1,706.39

54.86

Total

872.12

2.54

2,214.71

71.20

(2)

The reduction in grade relative to the Proved Ore Reserve is due to the inclusion of 111Mt at 0.49g/t of tailings and rock dump Ore Reserve.

P

142

AngloGold Ashanti Annual Financial Statements 2010

Gold, uranium and silver markets

Gold market in 2010

Product and marketing channels

Gold accounts for 98% of AngloGold Ashanti's revenue, with

the balance derived from sales of silver, uranium oxide and

sulphuric acid. These products are sold on international

markets.

Gold produced by AngloGold Ashanti's mining operations is

processed to saleable form at various precious metals

refineries. Once gold is refined to this marketable form

(normally large bars weighing about 12.5kg and containing

99.5% gold, or smaller bars of equal or greater purity weighing

1kg or less) the metal is sold through refineries or directly to

bullion banks.

Bullion banks are registered commercial banks that deal in

gold, distributing bullion bought from mining companies and

refineries to markets worldwide. These banks hold

consignment stocks in all major physical markets and

finance these inventories from the margins they charge

physical buyers.

Gold market characteristics

Gold price movements are largely driven by macroeconomic

factors such as inflation expectations, currency and interest

rate fluctuations or global and regional political events that are

judged to affect the world economy. For millennia, gold has

been a store of value in times of price inflation and economic

uncertainty. This attribute, together with the presence of

significant gold stocks held above ground, has at times

dampened the impact of supply and demand fundamentals on

the market. Trade in physical gold, however, remains an

important factor in determining a price floor. Gold bars and

high-caratage jewellery remain a major investment vehicle in

the emerging markets of India, China and the Middle East.

The gold market is relatively liquid compared to those for many

other commodities, with deep and established markets for

gold futures and forward sales on the various exchanges, as

well as in over-the-counter markets.

Gold, uranium and silver markets

Commodities buoyant in 2010

as gold price reaches an

high

all-time

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143

Physical gold demand

The physical gold market is dominated by the jewellery and

investment sectors, which together account for some 90% of

total demand. The balance of gold supply is used in dentistry

and electronics.

While the quantity of gold used in jewellery consumption has

decreased over the last decade, the investment market has

largely absorbed available supply. Investment in physical gold

includes bar hoarding, coins, medals and other retail

investment instruments as well as a burgeoning market for

exchange traded funds (ETFs). The latter have, since their

inception in 2002, entrenched their position as a vehicle for

retail and institutional investors. ETF investment activity was

once again strong during 2010, with overall holdings

continuing to grow, albeit at a slower rate than in 2009.

Newly mined gold accounts for just over 60% of total supply.

Due to its high value, gold is rarely destroyed and some

161,000t of the metal, the equivalent of about 65 years of newly

mined supply at current levels, is estimated to exist in the form

of jewellery, central bank gold reserves and private investment.

Gold demand by sector

Jewellery demand

The jewellery market improved in 2010 from the previous year,

with a welcome return to form for the vital Indian jewellery

market. China, the only major gold jewellery market to grow in

2009, showed further growth in 2010. These two countries are

the world’s largest gold consumers with high-caratage

jewellery (22 carat in India and 24 carat in China) serving an

important investment purpose. In fact, jewellery demand

significantly exceeds investment demand in the form of ETFs,

coins and bar hoarding in both nations.

In India, over 750t of gold were imported in 2010, a new

record, and up from 557t the previous year. Indian consumers

view gold jewellery as a form of savings and so do not readily

sell their jewellery. Gold reached record prices in rupee terms

and still consumers did not cash-out en masse, with so-called

´recycling´ of jewellery remaining around the longer-term

average levels of 25%. Unlike 2009, the record gold price has

been accepted by Indian consumers who continued a long

tradition of buying the precious metal as insurance against

inflation and economic shock.

Chinese jewellery demand in 2010 rose some 10% over 2009.

Most of this increase took the form of pure gold jewellery, which

holds superior investment appeal to the 18 carat variety known

in China as K Gold. Nevertheless, the K Gold market also

showed a welcome gain of 5%, following a 10% decline in

2009. Consumer psychology in 2010 was marked by the

growing perception that gold is an important component of any

asset portfolio. This view was previously the domain of wealthy

Chinese, but encouragingly, the middle class began to exhibit a

similar tendency. Chinese consumers showed little aversion to

the higher price of gold, given the investment appeal of pure

gold jewellery and a bullish outlook on the gold price.

The Middle Eastern market improved from 2009 levels, but the

recovery was patchy and less substantial than the Indian

resurgence. In the United Arab Emirates, the jewellery sector

experienced a strong rebound in the second half of the year as

consumer confidence returned to the local economy. The 22

carat segment remained the category leader thanks to heavy

buying from expatriates from the Asian subcontinent. Turkey

experienced a moderate increase in jewellery sales and

exhibited a promising trend for most of the year. In dollar

terms, gold jewellery exports from the region increased by

22%. In the Kingdom of Saudi Arabia, each quarter saw a

year-on-year increase in gold demand but consumers

remained cautious given the rising price. Elevated prices,

however, kept recycling at customary levels.

Investment demand

ETF holdings experienced mixed fortunes in 2010, after

registering net disinvestment in the first quarter. This trend

reversed in the second and third quarters before stagnating in

the final three months of the year at approximately 2,100t, or

around 68Moz.

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AngloGold Ashanti Annual Financial Statements 2010

Gold, uranium and silver markets

The cumulative growth in ETFs for 2010 was around 330

tonnes, in line with annual average growth rates since 2003.

In 2009, however, ETF holdings grew by 617 tonnes in a year

that saw a 24% rise in the gold price. In 2010, ETF growth

was significantly slower despite a 30% rise in the price of the

metal. However, the value of the gold ETF market grew by

55% to $34bn.

The universe of gold ETFs has grown steadily since inception,

with 16 products now spanning global financial exchanges

from New York to Johannesburg and Istanbul to Dubai, among

others. In the second half of 2010, China permitted domestic

institutional investors to invest in international ETFs,

broadening global investment channels for gold and – given

the Chinese appetite for gold – generating significant potential

for a fresh, largely untapped demand source. In India, the ETF

market doubled in volume to around 16 tonnes.

Coin and bar markets in most major markets saw continued

firm demand in 2010. In China, investment demand grew to

35% of total demand. China Gold Corporation reported

remarkable sales of 45t, while ICBC bank sold 27t of the

yellow metal. In the US, several reports chronicled the US

Mint’s inability to keep pace with gold coin demand. The

Middle Eastern market saw sustained interest in large

denomination bullion bars from high-net-worth individuals.

Central bank holdings, sales and purchases

Central banks periodically sell or add to their gold reserves.

Most central bank sales take place under so-called Central

Bank Gold Agreements (CBGA), which compel signatories to

sell in a stable and responsible fashion to minimise the impact

on the global market. The third of these agreements, in effect

since 27 September 2009, limits signatories to annual sales of

20% less than the previous agreement.

Given the turmoil in global financial markets and the strong

performance of gold, it is unsurprising that there was little

central bank selling in 2010. In the first full year of the third

CBGA, just 6t of sales were reported against the annual

quota of 400t excluding sales by the International Monetary

Fund (IMF).

Official sector activity in 2010 was dominated by sales of a

portion of the IMF inventory announced in late 2009. In

addition to the purchase by the Reserve Bank of India in 2009

of roughly half the 403t offered, Mauritius, Sri Lanka and

Bangladesh made their own acquisitions from the IMF. These

four countries account for roughly 55% of the gold the IMF had

to sell, with the balance sold on the open market.

AngloGold Ashanti’s marketing spend

AngloGold Ashanti has remained committed to growing the

gold market.

Gold, uranium and silver markets

Growth in gold holdings held by ETFs

2009 vs 2010 (indexed)

Ind points

Jan

Aug

Apr

Mar

Feb

1.60

1.50

1.40

1.30

1.20

1.10

1.00

0.90

0.80

2009 ETF growth

2010 ETF growth

May

Jul

Jun

Sep

Oct

Nov

Dec

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145

The company is an active member of the World Gold Council,

and subscriptions to this industry body account for the bulk

of marketing expenditure. AngloGold Ashanti also remains

involved in independent projects to grow jewellery demand in

partnership with companies including Tanishq, a subsidiary of

the TATA Group. AuDITIONS, the company's own global gold

jewellery design competition, promotes improved gold

jewellery design and has become a well-recognised

corporate marketing tool. See the competition website at

www.goldauditions.com.

Uranium market in 2010

AngloGold Ashanti's uranium production is sold via a

combination of spot sales and residual legacy agreements

expiring in 2013.

After languishing between $40/lb to $50/lb for more than a

year, the spot price of uranium began to rise sharply toward

the end of October and ended 2010 at $61.50/lb, the highest

price since the onset of the global financial crisis in September

2008. The move appears to have been caused by a

combination of a production shortfall, restocking by utilities

and the launch of a physically backed ETF for uranium.

Demand is likely to remain robust as the number of nuclear

reactors increases globally – there are currently 441 reactors in

operation and a further 58 under construction. This number is

likely to increase as global emphasis shifts towards greener,

more environmentally friendly energy sources.

At the moment current demand can be met from existing mine

production and stockpiles, however within the next two to

three years the market is likely to move to a deficit.

Silver market in 2010

AngloGold Ashanti produces silver as a by-product of gold at

a number of its global operations and principally at its Cerro

Vanguardia mine in Argentina.

The silver price rallied more than 80% over the course of the

year, ending at almost $31/oz from the year’s opening levels of

$17/oz. The gold/silver ratio, which measures how many

ounces of silver can be bought with an ounce of gold, ended

the year well below its five-year average at 47. In addition to

robust investor demand, industrial and retail offtake helped

improve fundamentals for the white metal.

Although COMEX investors sold silver rather aggressively

during the latter part of the year, global silver ETF holdings

continued to climb throughout 2010, exceeding 500Moz at

year end. This represents an increase of some 100Moz. In

addition to the significant ETF boost, GFMS estimated that

silver coin minting rose 23% in 2010 and reports suggest

continued robust physical demand for silver bars and coins in

North America.

Gold-silver ratio

2006 - 2010

02 Jan 06

90

80

70

60

50

40

30

20

10

Five-year average = 59

02 Mar 06

02 May 06

02 Jul 06

02 Sep 06

02 Nov 06

02 Jan 07

02 Mar 07

02 May 07

02 Jul 07

02 Sep 07

02 Nov 07

02 Jan 08

02 Mar 08

02 May 08

02 Jul 08

02 Sep 08

02 Nov 08

02 Jan 09

02 Mar 09

02 May 09

02 Jul 09

02 Sep 09

02 Nov 09

02 Jan 10

02 Mar 10

02 May 10

02 Jul 10

02 Sep 10

02 Nov 10

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146

AngloGold Ashanti Annual Financial Statements 2010

Board of directors and executive management

Executive directors

Mr M Cutifani (52) (Australian), BE (Min. Eng)

Chief executive officer

Mark Cutifani was appointed to the board of AngloGold

Ashanti on 17 September 2007 and as chief executive officer

on 1 October 2007. He is chairman of the Executive

Committee and a member of the Transformation and Human

Resources Development, Safety, Health and Sustainable

Development, Investment, Party Political Donations, Risk and

Information Integrity committees. He attends Audit and

Corporate Governance Committee meetings as an invitee.

Mark has considerable experience across several mining

sectors and operating jurisdictions, having worked extensively in

the gold, coal and base metals industries since 1976 in the

Americas, Africa, Australia and the Asia Pacific regions. Prior to

joining AngloGold Ashanti, he held the position of chief operating

officer at CVRD Inco, a Toronto-based company, where he was

responsible for Inco's global nickel business. He is currently

Vice-President of the South African Chamber of Mines.

Mr S Venkatakrishnan (Venkat) (45) (British),
BCom, ACA (ICAI)

Chief financial officer

Venkat joined AngloGold Ashanti on 1 July 2004 from Ashanti

Goldfields Company Limited (Ashanti) where he was Chief

Financial Officer until that company's merger with AngloGold

Limited in May 2004. He was appointed to the board on

1 August 2005, is a member of the Executive, Investment and

Risk and Information Integrity committees and is invited to attend

meetings of the Audit and Corporate Governance Committee.

Venkat has extensive financial experience, having been a

director in the reorganisation services division of Deloitte &

Touche in London prior to joining Ashanti in 2000.

Non-executive directors

Mr TT Mboweni (51) (South African), BA, MA,
(Development Economics)

Chairman and independent non-executive

Tito Mboweni was appointed to the board and as chairman of

AngloGold Ashanti on 1 June 2010. Mr Mboweni has a long

and outstanding record of public service. As Labour Minister

from 1994 to 1998, he was the architect of South Africa’s post-

apartheid labour legislation which today continues to provide

the basis for the mutually respectful labour relationships central

to AngloGold Ashanti’s operational approach in South Africa.

The past ten years have cemented his reputation as one of the

world’s foremost and highly respected Central Bank governors.

He is chairman of the Nominations Committee and is a member

of the Investment, Financial Analysis and Party Political

Donations committees.

Dr TJ Motlatsi (59) (South African),
Hon DSoc Sc (Lesotho)

Deputy chairman and independent non-executive

James Motlatsi was appointed to the board of AngloGold

Ashanti on 1 April 1998 and deputy chairman on 1 May 2002.

Board of directors and executive management

Directors and management noted for their

experience

expertise

and

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He is chairman of the Transformation and Human Resources

Development and the Party Political Donations committees

and a member of the Safety, Health and Sustainable

Development, Nominations and Remuneration committees.

James has substantial experience in and knowledge of the

mining industry in general and of South Africa in particular. His

association with the industry in South Africa spans more than

30 years in various positions including that of past president of

the National Union of Mineworkers. He is the executive

chairman of TEBA Limited, a service organisation primarily

responsible for the recruitment of mineworkers for the South

African mining industry.

James retired from the board on 17 February 2011.

Mr FB Arisman (66) (American), MSc (Finance)

Independent non-executive

Frank Arisman joined the board of AngloGold Ashanti on 1 April

1998. He serves on six board committees: Audit and Corporate

Governance, Safety, Health and Sustainable Development,

Nominations, Remuneration, Risk and Information Integrity

committees and chairs the Investment and the Financial

Analysis committees.

Frank, who resides in the USA, has a rich background in

management and finance through his experiences at JP

Morgan where he held various positions prior to his retirement.

Mr R Gasant (51) (South African), CA (SA), ACIMA

Independent non-executive

Rhidwaan Gasant was appointed to the board of AngloGold

Ashanti on 12 August 2010 and is chairman of the Risk and

Information Integrity Committee, as well as a member of the

Audit and Corporate Governance, Nominations and Financial

Analysis Committees. He is the former Chief Executive Officer

of Energy Africa Limited and a former finance director of Engen

Ltd and sits on the board of South African and international

non-public companies in the MTN Group.

Mr F Ohene-Kena (74) (Ghanaian), MSc
Engineering, DIC, ACSM

Independent non-executive

Ferdinand (Fred) Ohene-Kena was appointed to the board of

AngloGold Ashanti on 1 June 2010. He is the former

Ghanaian Minister of Mines and Energy and is currently a

member of the Ghana Judicial Council. He is the Chairman of

the Ghana Minerals Commission and is a member of the

President’s Economic Advisory Council. Mr Ohene-Kena is a

member of the Safety, Health and Sustainable Development,

Transformation and Human Resources Development and

Nominations Committees.

Mr WA Nairn (66) (South African), BSc (Mining
Engineering)

Independent non-executive

Bill Nairn has been a member of the board of AngloGold Ashanti

since 1 January 2000 and chairs the Safety, Health and

Sustainable Development Committee. He is a member of five

other committees: Transformation and Human Resources

Development, Investment, Party Political Donations, Nominations

and Risk and Information Integrity committees. Bill, a mining

engineer, has considerable technical experience, having been the

group technical director of Anglo American plc until 2004 when

he retired from the company.

Prof LW Nkuhlu (66) (South African), BCom, CA
(SA), MBA (New York University)

Independent non-executive

Wiseman Nkuhlu was appointed to the board on 4 August

2006. He has been the chairman of the Audit and Corporate

Governance Committee since 5 May 2007, having served

as deputy chairman of the committee from 4 August 2006. He

also serves as a member of the Nominations, Party Political

Donations, Remuneration, Safety, Health and Sustainable

Development and Risk and Information Integrity, and the

Financial Analysis committees.

Wiseman, a respected South African academic, educationist,

professional and business leader, served as Economic

Adviser to the former President of South Africa, Mr Thabo

Mbeki, and as Chief Executive of the Secretariat of the New

Partnership for Africa's Development (NEPAD) from 2000 to

2005. From 1989 to 2000, he served as a director on a

number of major South African companies, including

Standard Bank, South African Breweries, Old Mutual, Tongaat

Hulett, BMW and JCI. Wiseman was President of the South

African Institute of Chartered Accountants from 1998 to 2000

and Principal and Vice Chancellor of the University of Transkei

from 1987 to 1991. He is also a member of the board of

Datatec Limited. He was elected President of the Geneva

based International Organisation of Employers (IOE) in May

2008 for a period of two years. He is a member of the

Financial Crisis Advisory Group of the International

Accounting Standards Board (IASB) and the Financial

Accounting Standards Board (FASB).

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AngloGold Ashanti Annual Financial Statements 2010

Board of directors and executive management

Mr SM Pityana (51) (South African), BA (Hons)
(Essex), MSc (London), Dtech (Honoris) (Vaal
University of Technology)

Independent non-executive

Sipho Pityana joined the board of AngloGold Ashanti on

13 February 2007 and assumed the chairmanship of the

Remuneration Committee on 1 August 2008. He is a member

of the Safety, Health and Sustainable Development, Party

Political Donations, Investment, Nominations, Transformation

and Human Resources Development, Risk and Information

Integrity and the Financial Analysis committees. Sipho has

extensive experience in management and finance, and has

occupied strategic roles in both the public and private sectors,

including that of Director General of the national departments

of both labour and foreign affairs. He was formerly a senior

executive of Nedbank Limited and is currently the executive

chairman of Izingwe Holdings (Proprietary) Limited, a local

empowerment group and a significant investor in mining,

engineering, infrastructure and logistics, and AngloGold

Ashanti’s BEE partner. He serves as a non-executive director

on the boards of several other South African companies.

Executive management

In addition to Mr M Cutifani and Mr S Venkatakrishnan, the two

executive directors, the following make up the Executive

Committee:

Dr CE Carter (48), BA (Hons), DPhil, EDP

Executive Vice President – Business Strategy and

Organisational Effectiveness

Charles Carter has worked in the mining industry in South

Africa and the US since 1991, in a range of corporate roles

with Anglo American Corporation, RFC Corporate Finance and

AngloGold Ashanti. He was appointed Executive Vice

President – Business Strategy in December 2007 and is

responsible for corporate strategy and business planning, risk

management and investor relations. In late 2009, he assumed

additional responsibility for the group’s Human Resources

function, and now also has oversight of Project ONE’s ongoing

implementation and integration into the business.

Mr RN Duffy (47), BCom, MBA

Executive Vice President – Continental Africa

Richard Duffy joined Anglo American in 1987 and in 1998 was

appointed executive officer and managing secretary of

AngloGold. In November 2000, he was appointed head of

business planning and in 2004 assumed responsibility for all

new business opportunities globally. In April 2005, this role was

expanded to include Greenfield exploration. He was appointed

to the Executive Committee in August 2005. Richard was

appointed as Executive Vice President – Continental Africa in

July 2008.

Mr GJ Ehm (54), BSc Hons, MAusIMM, MAICD

Executive Vice President – Australasia

Graham Ehm has, since 1979, gained diverse experience in

mine operations and project management, covering the nickel,

phosphate, copper, uranium and gold sectors. He was

appointed General Manager Sunrise Dam Gold Mine in 2000,

Regional Head – Australia in 2006 and Executive Vice

President – Australasia in December 2007. He assumed the

role of Executive Vice President – Tanzania on 1 June 2009

where he led a successful implementation of a turnaround

strategy for the Geita mine. In August 2010 he resumed the

position of Executive Vice President – Australasia.

Mr RW Largent (50), BSc (Min. Eng), MBA

Executive Vice President – Americas

Ron Largent has been with AngloGold Ashanti since 1994. He

has served on the board of directors for the Colorado Mining

Association, California Mining Association and Nevada Mining

Board of directors and executive management

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149

Association. In 2001, he was appointed general manager of the

Cripple Creek & Victor Gold Mine and took up his current role

as Executive Vice President – Americas in December 2007.

Mr RL Lazare (54), BA, HED, DPLR, SMP

Executive Vice President – South Africa

Robbie Lazare joined Anglo American Gold and Uranium

Division in 1982, working in a variety of management posts

until 1999 when he was appointed general manager of

TauTona. In December 2004, he was appointed an executive

officer with responsibility for South African operations and in

July 2008, Executive Vice President – Human Resources.

From 17 November 2009, Robbie was assigned to lead a

strategy review of the South African operations and is now

responsible for the South Africa region as Executive Vice

President – South Africa Region.

Mr AM O'Neill (53), BSc (Mining Engineering),
MBA

Executive Vice President – Business and Technical

Development

Tony O’Neill joined AngloGold Ashanti in July 2008 as

Executive Vice President – Business and Technical

Development, having consulted to the company prior to this on

its asset portfolio strategy. His extensive career in mining since

1978 included the roles of executive – operations at Newcrest

Mining Limited and executive general manager for gold at

Western Mining Corporation.

Mr TML Setiloane (51), FAE, BSc (Mech Eng)

Executive Vice President – Business Sustainability

Thero Setiloane joined AngloGold in May 2003 from Real Africa

Holdings, where he had been an executive director. He was

appointed an executive officer and a member of AngloGold

Ashanti's Executive Committee in February 2006 and as

Executive Vice President – Sustainability in December 2007.

Ms YZ Simelane (45), BA LLB, MAP, EXMPM

Senior Vice President – Corporate Affairs

Yedwa Simelane joined AngloGold in November 2000 from the

Mineworkers' Provident Fund where she was the senior

manager of the Fund. She was appointed an executive officer

in May 2004 and Vice President – Government Relations in

July 2008. In November 2009, she was appointed Senior Vice

President – Corporate Affairs.

Company secretary

Ms L Eatwell (56), FCIS, FCIBM

Lynda Eatwell joined AngloGold in 2000 as assistant company

secretary and was appointed company secretary in December

2006. She is responsible for ensuring compliance with

statutory and corporate governance requirements and the

regulations of the stock exchanges on which AngloGold

Ashanti is listed. She also advises members of the board on

their duties and responsibilities as directors.

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150

AngloGold Ashanti Annual Financial Statements 2010

Group information

AngloGold Limited was founded in June 1998 with the

consolidation of the gold mining interests of Anglo American.

The company, AngloGold Ashanti as it is now, was formed on

26 April 2004 following the business combination between

AngloGold and Ashanti Goldfields Company Limited.

AngloGold Ashanti is currently the third-largest gold producer

in the world.

Current profile

AngloGold Ashanti Limited, headquartered in Johannesburg,

South Africa, is a global gold company with a portfolio of long-

life, relatively low-cost assets and differing orebody types in

key gold producing regions. The company's 20 operations are

located in 10 countries (Argentina, Australia, Brazil, Ghana,

Guinea, Mali, Namibia, South Africa, Tanzania and the US), and

are supported by extensive exploration activities. The

combined Proved and Probable Ore Reserves of the group

amounted to 71.2Moz as at 31 December 2010.

The primary listing of the company's ordinary shares is on the

JSE in South Africa. Its ordinary shares are also listed on stock

exchanges in London, Paris and Ghana, as well as being

quoted in Brussels in the form of International Depositary

Receipts (IDRs), in New York in the form of American

Depositary Shares (ADSs), in Australia, in the form of Clearing

House Electronic Subregister System Depositary Interests

(CDIs) and in Ghana, in the form of Ghanaian Depositary

Shares (GhDSs).

AngloGold Ashanti Limited (Registration number 1944/017354/06)

was incorporated in the Republic of South Africa in 1944 under

the name of Vaal Reefs Exploration and Mining Company

Limited and operates under the South African Companies Act

61 of 1973, as amended.

History and significant developments
of the company

Below are highlights of key corporate activities from 1998:

1998

·Formation of AngloGold Limited through the consolidation of

East Rand Gold and Uranium Company Limited; Eastvaal

Gold Holdings Limited; Southvaal Holdings Limited; Free

State Consolidated Gold Mines Limited; Elandsrand Gold

Mining Company Limited; H.J. Joel Gold Mining Company

Limited and Western Deep Levels Limited into a single,

focused, independent, gold mining company. Vaal Reefs

Exploration and Mining Company Limited (Vaal Reefs), the

vehicle for the consolidation, changed its name to

AngloGold Limited and increased its authorised share

capital, effective 30 March 1998.

1999

·Acquisition of non-controlling shareholders interest in

Driefontein Consolidated Limited (17%); Anmercosa Mining

(West Africa) Limited (100%); Western Ultra Deep Levels

Group information

Founded in 1998, AngloGold Ashanti is the

producer in the world

gold

third-largest

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151

Limited (89%); Eastern Gold Holdings Limited (52%); Erongo

Mining and Exploration Company Limited (70%);

· Purchased Minorco's gold interests in North and South

America; and

· Acquisition of Acacia Resources in Australia.

2000

Acquired:

· a 40% interest in the Morila mine in Mali from Randgold

Resources Limited;

· a 50% interest in the Geita mine in Tanzania from Ashanti

Goldfields Company Limited (Ashanti); and

· a 25% interest in OroAfrica, South Africa's largest

manufacturer of gold jewellery.

2001

· AngloGold sold the Elandsrand and Deelkraal mines to

Harmony Gold Mining Company Limited (Harmony);

disposed of its interests in No. 2 Shaft Vaal River Operations

to African Rainbow Minerals (ARM) and made an

unsuccessful take-over bid for Normandy Mining Limited.

2002

· Sold the Free State assets to ARM and Harmony; and

· Acquired an additional 46.25% of the equity, as well as the

total loan assignment, of Cerro Vanguardia SA from Pérez

Companc International SA, thereby increasing its interest in

Cerro Vanguardia to 92.5%.

2003

· Disposed of its wholly owned Amapari project to Mineração

Pedra Branca do Amapari;

· Sold its 49% stake in the Gawler Craton joint venture,

including the Tunkillia project located in South Australia to

Helix Resources Limited;

· Sold its interest in the Jerritt Canyon joint venture to

Queenstake Resources USA Inc;

· Disposed of its entire investments in East African Gold Mines

Limited and in Randgold Resources Limited; and

· Purchased a portion of the Driefontein mining area in South

Africa from Gold Fields Limited.

2004

· Sold its Western Tanami project to Tanami Gold NL in Australia;

· Concluded the business combination with Ashanti

Goldfields Company Limited, at which time, the company

changed its name to AngloGold Ashanti Limited;

· Acquired the remaining 50% interest in Geita as a result of

the business combination;

· AngloGold Holdings plc, a subsidiary of AngloGold,

completed an offering of $1bn principal amount 2,375%

convertible bonds, due 2009, and guaranteed by

AngloGold Ashanti;

· Acquired a 29.8% stake in Trans-Siberian Gold plc;

· Sold its Union Reefs assets to the Burnside joint venture,

comprising subsidiaries of Northern Gold NL (50%) and

Harmony (50%);

· Sold its entire interest in Ashanti Goldfields Zimbabwe

Limited to Mwana Africa Holdings (Proprietary) Limited;

· Sold its 40% equity interest in Tameng Mining and

Exploration (Pty) Limited of South Africa (Tameng) to

Mahube Mining (Pty) Limited; and

· Subscribed for a 12.3% stake in the expanded issued

capital of Philippines explorer Red 5 Limited.

2005

· Substantially restructured its hedge book in January 2005;

· Signed a three-year $700m revolving credit facility;

· Disposed of exploration assets in the Laverton area in Australia;

· Disposed of its La Rescatada project to ARUNANI SAC, a

local Peruvian corporation;

· Acquired an effective 8.7% stake in China explorer, Dynasty

Gold Corporation; and

· The Director-General of Minerals and Energy notified

AngloGold Ashanti in August 2005 that its application for

the new order mining rights in terms of the South African

Mineral and Petroleum Resources Development Act had

been granted.

2006

· Raised $500m through an equity offering;

· Acquired two exploration companies, Amikan and AS APK,

from TSG as part of the company's initial contribution

towards its strategic alliance with Polymetal;

· Formed a new company with B2Gold (formerly Bema Gold)

to jointly explore a select group of mineral opportunities

located in northern Colombia, South America;

· AngloGold Ashanti (USA.) Exploration Inc, International

Tower Hill Mines Ltd (ITH) and Talon Gold Alaska, Inc.

(Talon), a wholly owned subsidiary of ITH, entered into an

Asset Purchase and Sale and Indemnity Agreement

whereby AngloGold Ashanti sold to Talon a 100% interest in

six Alaskan mineral exploration properties and associated

databases in return for an approximate 20% interest in ITH.

AngloGold Ashanti has the option to increase or dilute its

stake in these projects, subject to certain conditions;

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AngloGold Ashanti Annual Financial Statements 2010

Group information

· Disposed of its entire business undertaking related to the

Bibiani mine and Bibiani North prospecting permit to Central

African Gold plc;

·Entered into a 50:50 strategic alliance with Russian gold and

silver producer, OAO Inter-Regional Research and

Production Association Polymetal (Polymetal), in terms of

which Polymetal and AngloGold Ashanti would co-operate

in exploration and the acquisition and development of gold

mining opportunities within the Russian Federation; and

·Implemented an empowerment transaction with two

components: the development of an employee share

ownership plan (ESOP) and the acquisition by Izingwe

Holdings (Proprietary) Limited (an empowerment company)

of an equity interest in AngloGold Ashanti.

2007

·Acquired the non-controlling interests previously held by the

Government of Ghana (5%) and the International Finance

Corporation (10%) in the Iduapriem and Teberebie mines;

·Anglo American plc sold 69,100,000 ordinary shares of

AngloGold Ashanti, thereby reducing Anglo American's

shareholding in AngloGold Ashanti from 41.8% to 16.6%;

and

·Announced the successful closing of a $1.15bn syndicated

revolving credit facility.

2008

·Issued 69,470,442 ordinary shares in a fully subscribed

rights offer;

·Announced significant exploration results at the 100%

owned La Colosa;

·Acquired Golden Cycle Gold Corporation through the issue

of 3,181,198 ordinary shares, resulting in Cripple Creek &

·Victor becoming a wholly-owned subsidiary;

·Sold entire holding in Nufcor International Limited and

cancelled 1 million pounds of outstanding uranium contracts;

·Acquired São Bento Gold Company Limited through the

issue of 2,701,660 ordinary shares with the ultimate result of

doubling production from the Córrego do Sítio project;

·Entered into a $1bn term facility agreement to be used to

redeem the $1bn convertible bonds due February 2009; and

·AngloGold Ashanti implemented a hedge restructure

programme.

2009

·Sold its 33.33% joint venture interest in the Boddington Gold

Mine to Newmont Mining Corporation;

·Entered into an agreement with Simmer & Jack Mines Limited

to sell the Tau Lekoa Mine and adjacent project areas;

·AngloGold Ashanti repaid its $1bn convertible bonds issued

in 2004;

·Anglo American plc sells its remaining shareholding to

Paulson & Co. Inc.;

·Entered into a strategic alliance with Thani Dubai Mining

Limited to explore, develop and operate mines across the

Middle East and parts of North Africa;

·AngloGold Ashanti issues $732.5m, 3.5% convertible

bonds, due 2014;

·Issued 7,624,162 ordinary shares and raised a total of

$284m through an equity offering;

·Acquired an effective 45% interest in the Kibali gold project

in the Democratic Republic of the Congo;

·Entered into a joint venture with the De Beers Group of

Companies to explore for, and ultimately mine gold and other

minerals and metals, excluding diamonds, on marine deposits;

·Increased the holding in the Sadiola Gold Mine from 38% to

41%; and

·AngloGold Ashanti continued to manage its hedge book in

accordance with its hedge reduction programme.

2010

·Issued $700m 5.375% bonds due 2020 and $300m 6.5%

bonds due 2040;

·Finalised the sale of 100% interest in the Tau Lekoa mine

and adjacent properties in South Africa to Simmer & Jack

Mines Limited for R600m;

·Issued 18,140,000 ordinary shares and raised a total of

$789m through an equity offering;

·Issued $789m 6% mandatory convertible bonds, due 2013;

·Obtained a four-year syndicated revolving credit facility for

$1bn due 2014;

·AngloGold Ashanti eliminated its hedge book, thereby

gaining full exposure to spot gold price;

·Sold entire shareholding in B2Gold and realised net

proceeds of C$70m; and

·Obtained a short-term facility with FirstRand Bank Limited

of R1.5bn.

For full details of major corporate developments that occurred

during 2010 and subsequent to year-end, refer to ‘Significant

events during the year under review and subsequent to year-

end’ in the Directors' report on page 221.

Group information

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AngloGold Ashanti's rights to own and exploit Mineral

Reserves and deposits are governed by the laws and

regulations of the jurisdictions in which these mineral

properties lie.

There are in some cases, certain restrictions on AngloGold

Ashanti’s ability to independently move assets out of certain

countries in which it has operations, and/or transfer assets

within the group, without the prior consent of the local

government or minority shareholders involved.

South Africa

In October 2002, the President of South Africa assented to the

Mineral and Petroleum Resources Development Act (MPRDA),

which had been passed by the Parliament of South Africa in

June 2002 and came into effect on 1 May 2004. The

objectives of the MPRDA are, among other things, to allow for

state sovereignty over all mineral and petroleum resources in

the country, to promote economic growth and the

development of these resources and to expand opportunities

for the historically disadvantaged. Another objective of the

MPRDA is to ensure security of tenure for the respective

operations concerning prospecting, exploration, mining and

production. By virtue of the provisions of the MPRDA, the state

ensures that holders of mining and prospecting rights

contribute to the socio-economic development of the areas in

which they operate.

The Broad-Based Socio-Economic Empowerment Charter for

the South African Mining Industry (the Mining Charter) sprung

from the MPRDA. The Mining Charter committed all

stakeholders in the mining industry to transfer ownership of

26% of their assets to black or historically disadvantaged

South Africans (HDSAs) within 10 years. In addition, the

government indicated it would issue a Mining Charter

Scorecard (Scorecard) against which companies could gauge

their empowerment credentials. The fact that the Mining

Charter enjoyed the full support of the mining houses, South

Africa’s government and labour unions, gives it great credibility

and improves its chances for success in the long run.

The objectives of the Mining Charter are to:

·promote equitable access to the nation's mineral resources

by all the people of South Africa;

·substantially and meaningfully expand opportunities for

HDSAs, including women, to enter the mining and minerals

industry and to benefit from the exploitation of the nation's

Mineral Resources;

The regulatory environment enabling
AngloGold Ashanti to mine

Ownership and

of deposits

on regulations

dependent

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·use the industry’s existing skills base for the empowerment

of HDSAs;

·expand the skills base of HDSAs in order to serve the

community;

·promote employment and advance the social and economic

welfare of mining communities and the major labour-sending

areas; and

·promote beneficiation of South Africa's mineral commodities.

The Scorecard was designed to function as an

administrative and not a legislative tool. Its objective was to

find a practical framework for the Minister to assess whether

a company measured up to the intent of the MPRDA and

Mining Charter.

On 29 April 2009, as required by section 100(1)(b) of the

MPRDA, the Minister published the Codes of Good Practice

for the South African Mineral Industry (the Code). The purpose

of the Code was to set out administrative principles to enhance

implementation of the Mining Charter and the MPRDA. The

Code is to be read in combination with the Mining Charter and

other legislation relating to measurement of socio-economic

transformation in the South African mining industry.

AngloGold Ashanti holds 10 mining rights in South Africa, seven

of which have been successfully converted, executed and

registered as new order mining rights at the Mineral and

Petroleum Resources Titles Office (MPRTO). Two old order

mining rights are awaiting conversion by the Department of

Mineral Resources (DMR), and one has been executed,

awaiting registration in the MPRTO. The deadline for the

conversion process from old to new order rights was the end of

April 2009.

AngloGold Ashanti holds three prospecting rights and a mining

permit for the recovery of sand and clay. A new prospecting

right application for copper, lead and zinc will be submitted to

the DMR at the end of March 2011, when the moratorium on

the issuing of rights will be lifted.

A prospecting right will be granted to a successful applicant for

a period not exceeding five years, and may only be renewed

once for three years. The MPRDA also provides for a retention

period of up to three years after prospecting, with one renewal

up to two years, subject to certain conditions.

A mining right will be granted to a successful applicant for a

period not exceeding 30 years. Mining rights may be renewed

for additional periods not exceeding 30 years at a time.

The MPRDA Amendment Act has been signed by the State

President, and published, but is not yet in effect. Its purpose is

to amend the MPRDA in order to:

·make the Minister the responsible authority for implementing

environmental matters in terms of the National

Environmental Management Act, 1998 (NEMA) and specific

environmental legislation as it relates to prospecting, mining,

exploration, production and related activities incidental

thereto on the prospecting, mining, exploration or

production area;

·align the MPRDA with the NEMA in order to provide for one

environmental management system;

·remove ambiguities in certain definitions;

·add functions to the Regional Mining Development and

Environmental Committee;

·amend transitional arrangements so as to further afford

statutory protection to certain existing old order rights; and

·provide for matters connected therewith.

AngloGold Ashanti applied for and has been granted a

refining licence and an import and export permit by the South

African Diamond and Precious Metals Regulator.

Continental Africa

Democratic Republic of the Congo

The mining industry in the Democratic Republic of the Congo

(DRC) is regulated primarily by the Mining Code enacted in July

2002 and its ancillary regulations (the Mining Regulations

promulgated in March 2003). The Mining Code, which

repealed the Mining Code of April 1981, vests the Minister of

Mines with the authority for the granting, refusal, suspension

and termination of mineral rights. Mineral rights may be

granted in the form of exploration permits for an initial period of

four years and mining permits which are granted for an initial

period of 30 years. An exploration permit may, at any time

before expiry, be transformed partially into a mining licence or

a small-scale mining permit. Exploitation permits are granted

following successful completion of exploration and satisfaction

of the requirements necessary for the award of such permit

including approval of an environmental impact study and an

environmental management plan. The holder of a mining

permit is required to commence development and mine

construction within three years of the award of a mining permit.

Failure to do so may lead to forfeiture or payment of penalties.

A permit holder must comply with specific rules relating to,

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AngloGold Ashanti to mine

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among others, protection of the environment, cultural heritage,

health and safety, construction and infrastructure planning.

Mining and exploration activities are required to be undertaken

so as to affect as little as possible the interests of lawful

occupants of land and surface rights holders, including their

customary rights. The exercise of mineral rights by title holders

which effectively deprives and/or interferes with the rights of

occupants and surface rights holders, requires payment of fair

compensation by the mineral title holder.

The Mining Code provides for taxes, charges, royalties and

other fees payable to the treasury by a mining title holder in

respect of its activities. The Mining Code also provides for a

level of fiscal stability. Existing tax, customs, exchange and

benefits applicable to mining activities are guaranteed to

remain unchanged for a period of 10 years in favour of a

mining title holder in the event that amendment of the Mining

Code results in less favourable payment obligations.

Regarding protection and enforcement of rights acquired

under an exploration or mining permit, the Mining Code

provides, depending on the nature of a dispute or threat,

administrative, judicial and national or international arbitral

recourses. AngloGold Ashanti holds the majority stake and is

the operator of Ashanti Goldfields Kilo (AGK), an exploration

and mining joint venture with Offices des Mines d’or de Kilo-

Moto (OKIMO), a DRC governmental mining agency. AGK is

engaged in exploration activities in the north eastern DRC.

Following a review undertaken by a commission appointed by

the DRC government to review all mining contracts entered

into by mining companies with DRC parastatal mining

agencies. AngloGold Ashanti engaged in and finalised with

OKIMO the renegotiation of the mining joint venture and AGK

related agreements. AGK’s existing contractual arrangements,

which were concluded under the repealed 1981 legislation,

were replaced by new and restated agreements that conform

or reflect the provisions of the current Mining Code of the DRC.

AngloGold Ashanti also holds an effective 45% stake in the

Kibali gold project located in north eastern DRC. The Kibali

gold project, located in northeastern DRC, is operated by

Randgold Resources and owned by Randgold Resources

(45%), AngloGold Ashanti (45%) and OKIMO (10%), which

represents the interest of the DRC government in the Kibali

gold project.

Ghana

The Constitution of Ghana as well as the Minerals and Mining

Act, 2006 (Act 703) (the Act) provide that all minerals in Ghana

in their natural state are the property of the State and title to

them is vested in the President on behalf of and in trust for the

people of Ghana, with rights of prospecting, recovery and

associated land usage being granted under licence or lease.

The grant of a mining lease by the Minister of Mines is normally

subject to parliamentary ratification unless the mining lease

falls into a class of transactions exempted by Parliament.

Control of mining companies

The Minister of Mines has the power to object to a person

becoming or remaining a ‘shareholder controller’, a ‘majority

shareholder controller’ or an ‘indirect controller’ of a company

which has been granted a mining lease if he considers that the

public interest would be prejudiced by the person concerned

becoming or remaining such a controller.

Stability agreements

The Act provides for stability agreements as a mechanism to

ensure that the incentives and protection afforded by laws in

force at the time of the stability agreement are guaranteed

for 15 years. A stability agreement is subject to ratification

by Parliament.

Prior to the business combination between AngloGold and

Ashanti in April 2004, AngloGold and the government of

Ghana agreed the terms of a stability agreement to govern

certain aspects of the fiscal and regulatory framework under

which AngloGold Ashanti would operate in Ghana following

the implementation of the business combination. The stability

agreement necessitated the amendment of the Obuasi Mining

Lease which had been ratified by Parliament.

Under the stability agreement, the government of Ghana agreed:

·To extend the term of the mining lease relating to the Obuasi

mine until 2054 on terms existing prior to the business

combination;

·To maintain, for a period of 15 years, the royalties payable by

AngloGold Ashanti with respect to its mining operations in

Ghana at a rate of 3% per annum of the total revenue from

minerals obtained by AngloGold Ashanti from such mining

operations;

·To ensure the income tax rate would be 30% for a period of

15 years. The agreement was amended in December 2006

to make the tax rate equal to the prevailing corporate rate for

listed companies;

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Regulatory environment

·That a sale of AngloGold Ashanti's or any of its subsidiaries'

assets located in Ghana remains subject to the government's

approval;

·To permit AngloGold Ashanti and any or all of its subsidiaries in

Ghana to retain up to 80% of export proceeds in foreign

currencies offshore, or if such foreign currency is held in Ghana,

to guarantee the availability of such foreign currency; and

·To retain its special rights (Golden Share) under the provisions

of the Mining Act pertaining to the control of a mining

company, in respect of its assets and operations in Ghana.

Further, the Government of Ghana agreed that AngloGold

Ashanti's Ghanaian operations will not be adversely affected

by any new enactments or orders, or by changes to the level

of payments of any customs or other duties relating to mining

operations, taxes, fees and other fiscal imports or laws relating

to exchange control, transfer of capital and dividend

remittance for a period of 15 years after the completion of the

business combination. For fiscal years 2009 and 2010, the

government, through the National Fiscal Stabilisation Act 2009

(Act 785), imposed a 5% levy on all profits before tax for mining

companies as a temporary measure to raise additional revenue

to meet critical expenditures, while maintaining government’s

fiscal objectives. In the 2011 Budget Statement and Economic

Policy delivered on 18th November 2010, the Government

extended the application of the Act for another fiscal year.

Ashanti has however been exempted from the application of

this Act by virtue of its Stability Agreement. In March 2010, the

Parliament of Ghana passed an amendment to the Minerals &

Mining Act, 2006 (Act 703) namely the Minerals and Mining

(Amendment) Act, 2010 (Act 794) which amended section 25

of the Minerals & Mining Act, by fixing the royalty rate at 5%

instead of the previous provision which stated that royalty

payable shall not be more than 6% or less than 3% of the total

revenue of minerals obtained by the holder. By this, mining

companies are now to pay 5% of total revenue of minerals

obtained, as royalties. Again AngloGold Ashanti has been

exempted from the application of this amendment by virtue of

its Stability Agreement.

Retention of foreign earnings

AngloGold Ashanti's operations in Ghana are permitted to

retain 80% of their foreign exchange earnings in such an

account. In addition, the company has permission from the

Bank of Ghana to retain and use dollars, outside of Ghana,

required to meet payments to the company's hedge

counterparts which cannot be met from the cash resources of

its treasury company.

Localisation policy

A detailed programme must be submitted for the recruitment

and training of Ghanaians with a view to achieving

'localisation', which is the replacement of expatriate personnel

by Ghanaian personnel. In addition, the holder must give

preference to Ghanaian products and personnel, to the

maximum extent possible, consistent with safety, efficiency

and economies.

Except as otherwise provided in a specific mining lease, all

immovable assets of the holder under the mining lease vest in

the State on termination, as does all moveable property that is

fully depreciated for tax purposes. Moveable property that is

not fully depreciated is to be offered to the State at the

depreciated cost. The holder must exercise his rights subject

to such limitations relating to surface rights as the Minister of

Mines may prescribe.

Mining properties

Obuasi

The current mining lease for the Obuasi area was granted by

the Government of Ghana on 5 March 1994. It grants mining

rights to land with an area of approximately 334 square

kilometres in the Amansie East and Adansi West districts of

the Ashanti region for a term of 30 years from the date of the

agreement. In addition, the application for a mining lease

over the adjacent 140 square kilometres has also been

granted, resulting in the total area under mining lease

conditions increasing to 474 square kilometres, (the Lease

Area). The company is required to pay rent to the

Government of Ghana (subject to review every five years,

when the rent may be increased by up to 20%) at a rate of

approximately $5 per square kilometre and such royalties as

are prescribed by legislation, including royalties on timber

felled within the Lease Area. The Government of Ghana

agreed to extend the term of the mining lease relating to the

Obuasi mine until 2054. The mining lease was formally

ratified by Parliament on 23 October 2008.

Iduapriem and Teberebie

Iduapriem has title to a 33 square kilometre mining lease

granted on 19 April 1989 for a period of 30 years. The terms

The regulatory environment enabling
AngloGold Ashanti to mine

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and conditions of the lease are consistent with similar leases

granted in respect of the Obuasi mining lease. Teberebie has

two leases, one granted in February 1998 for a term of 30

years, and another granted in June 1992 for a term of 26

years. In January 2009 Iduapriem obtained a new mining

lease, the Ajopa Concession, for a period of 10 years. The

concession covers an area of 48.34m

2

.

Guinea

In Guinea, all mineral substances are the property of the state.

Mining activities are primarily regulated by the Mining Code,

1995. The right to undertake mining operations can only be

acquired by virtue of one of the following mining titles:

surveying permit, small-scale mining licence, mining

prospecting licence, mining licence or mining concession.

The holders of mining titles are guaranteed the right to dispose

freely of their assets, to organise their enterprises as they wish,

the freedom to engage and discharge staff in accordance with

the regulations in force, the free movement of their staff and

their products throughout Guinea and freedom to dispose of

their products in international markets.

The group's Guinea subsidiary, Société Anglogold Ashanti

Goldfields de Guinée SA (SAG), has title to the Siguiri mining

concession area which was granted on 11 November 1993 for

a period of 25 years. The agreement provides for an eventual

extension/renegotiation after 23 years for such periods as may

be required to exhaust the economic Ore Reserve.

At Siguiri, the original area granted of 8,384 square kilometres

was reduced to a concession area of four blocks totalling

1,495 square kilometres.

SAG has the exclusive right to explore and mine in the

remaining Siguiri concession area for an additional 22-year

period from 11 November 1996 under conditions detailed in

a Convention de Base which predates the new Guinea

Mining Code.

Key elements of the Convention de Base are that:

·The Government of Guinea holds a 15% free-carried or non-

contributory interest; a royalty of 3% based on a spot gold

price of less than $475/oz, and 5% based on a spot gold

price above $475/oz, as fixed on the London Gold Bullion

Market, is payable on the value of gold exported;

·A local development tax of 0.4% is payable on gross sales

revenue;

·Salaries of expatriate employees are subject to a 10%

income tax;

·Mining goods imported into Guinea are exempt from all

import taxes and duties for the first two years of commercial

production; and

·SAG is committed to adopt and progressively implement a

plan for the effective rehabilitation of the mining areas

disturbed or affected by operations.

The Convention de Base is subject to early termination if both

parties formally and expressly agree to do so, if all project

activities are voluntarily suspended for a continuous period of

eight months or are permanently abandoned by AngloGold

Ashanti’s subsidiary, or if SAG goes into voluntary liquidation or

is placed into liquidation by a court of competent jurisdiction.

In addition to the export tax payable to the Government of

Guinea, a royalty on production may be payable to the

International Finance Corporation (IFC) and to Umicore SA,

formerly Union Miniere (UM). Pursuant to the option agreement

between UM and Golden Shamrock Mines Limited (GSM), a

royalty on production may be payable to UM by Chevaning

Mining Company Limited (CMC) or GSM, which payment

obligation has been assigned to AngloGold Ashanti (Ghana)

Limited, on a sliding scale of between 2.5% and 7.5%, based

on the spot gold price per ounce of between $350 and

$475/oz, subject to indexing from 1 January 1995, to a

cumulative maximum of $60m. In addition, under the terms of

the restructuring agreement with the IFC, a sliding scale royalty

on production may be payable to the IFC, calculated on the

same basis but at half the rate payable to UM, to a maximum

of $7.8m. The royalty payable to the IFC was fully discharged

in January 2008, and the royalty payment payable to Umicore

was fully discharged in December 2010.

Mali

Mineral rights in Mali are governed by Ordinance No. 99-32/P-

RM of 19 August 1999 enacting the mining code, as amended

by No. 013/2000/P-RM of 10 February 2000 and ratified by

Law No. 00-011 of 30 May 2000 (the Mining Code), and

Decree No. 99-255/P-RM of 15 September 1999

implementing the Mining Code.

Prospecting activitiescarried out under prospecting

authorisations (autorisation de prospection), is an exclusive

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Regulatory environment

right for an individual or corporate entity to carry out

prospecting activities over a given area for a period of three

years renewable without a reduction in the area of the

authorisation. Research activities may be carried out under

research permits (permis de recherché). The latter are

granted to corporate entities only by order of the Minister in

charge of Mines. Research permits are granted for a period

of three years, renewable twice for additional three-year

periods. Each renewal of the research permit requires a

relinquishment of 50% of the area covered by such permit.

The entity applying for such a permit must provide proof of

technical and financial capabilities.

An exploitation permit (permis d'exploitation) is required to

mine a deposit located within the area of a prospecting

authorisation or a research permit. The exploitation permit

grants exclusive title to prospect, research and exploit the

named substances for a maximum period of 30 years

renewable three times for an additional 10 years. The

exploitation permit is granted only to the holder of an

exploration permit or of a prospecting authorisation and covers

only the area covered by the exploration permit or the

prospecting authorisation. An application must be submitted

to the Minister in charge of Mines and to the National Director

of Mines.

As soon as the exploitation permit is granted, the holder of the

exploitation permit must incorporate a company under the law

of Mali. The holder of the permit will assign the permit for free

to this company. The State will have a 10% free carried

interest. This interest will be converted into priority shares and

the State's participation will not be diluted in the case of

increasing the capital.

Applications for exploitation permits must contain various

documents attesting to the financial and technical capacity of

the applicant, a detailed environmental study in respect of the

impact of the project on the environment, a feasibility study and

a bank deposit. The permit is granted by decree of the Head of

Government. A refusal to grant a permit may only be based on

two grounds: insufficient evidence to support the exploitation of

the deposit and/ or a failure of the environmental study.

Applications for prospecting authorisations and research

permits must contain various documents attesting to the

financial and technical capacity of the applicant, a detailed

works and cost programme, a map defining the area which is

being requested and the geographical coordinates thereof, the

exact details relating to the identity of the applicant and

evidence of the authority of the signatory of the application.

Such titles are granted by ministerial order. Any refusal to grant

such titles shall be notified by letter from the Minister in charge

of Mines to the applicant.

The mining titles mentioned above all require an establishment

convention (convention d'etablissement) to be signed by the

State and the titleholder defining their rights and obligations. A

standard form of such establishment convention has been

approved by decree of the Head of Government.

AngloGold Ashanti has interests in Morila, Sadiola and Yatela,

all of which are governed by establishment conventions

covering exploration, mining, treatment and marketing in a

comprehensive document. These documents include the

general conditions with regard to exploration (work

programme, fiscal and customs regime) and exploitation

(formation of a local limited liability company and mining

company, state shareholdings, the fiscal and customs regime

during construction and exploitation phases, exchange

controls, marketing of the product, accounting regime, training

programmes for local labour, protection of the environment,

reclamation, safety, hygiene and settlement of disputes).

As the establishment conventions contain stabilisation

clauses, the mining operations carried out by the AngloGold

Ashanti entities in Mali are subjected to the provisions of the

previous mining codes of 1970 and 1991 but also, for residual

matters, to the provisions of the Mining Code of 1999.

AngloGold Ashanti has complied with all applicable

requirements and the relevant permits have been issued.

Morila, Sadiola and Yatela have 30-year permits which expire

in 2029, 2024 and 2030, respectively.

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Namibia

Mineral rights in Namibia vest in the State. In order to prospect

or mine, the Ministry of Mines and Energy initially grants an

exclusive prospecting licence and, on presentation of a

feasibility study, a mining licence is then granted, taking into

account the abilities of the company, including its mining,

financial and technical capabilities, rehabilitation programmes

and payment of royalties. The relevant licence was granted to

AngloGold Namibia (Pty) Ltd in respect of its mining and

prospecting activities in Namibia. The current 15-year mining

licence expires in October 2018. Application has been

submitted to the Ministry of Mines and Energy during 2010 for

the extension of the mining area to include anomaly 16 as well

as for an extension of the mining licence to 2030.

Tanzania

Mineral rights in the United Republic of Tanzania are governed

by the Mining Act of 1998 (the Act), and the Mining

Regulations, 1999 and property and control over minerals are

vested in the United Republic of Tanzania. Prospecting for the

mining of minerals, except petroleum, may only be conducted

under authority of a mineral right granted by the Ministry of

Energy and Minerals under this Act.

The three types of mineral rights most often encountered,

which are also those applicable to AngloGold Ashanti, are:

·Prospecting licences;

·Retention licences; and

·Mining licences.

A prospecting licence grants the holder the exclusive right to

prospect in the area covered by the licence for all minerals,

other than building materials and gemstones, for a period of

three years. Thereafter, the licence is renewable for two further

periods of two years each. On each renewal, 50% of the area

covered by the licence must be relinquished. Before

application is made for a prospecting licence with an initial

prospecting period (a prospecting licence), a prospecting

licence with a reconnaissance period (a prospecting

reconnaissance) may be applied for a maximum area of 5,000

square kilometres. This is issued for a period of two years after

which a three-year prospecting licence is applied for.

A company applying for a prospecting licence must, inter alia,

state the financial and technical resources available to it.

A retention licence can also be requested from the minister,

after the expiry of a prospecting licence period, for reasons

ranging from funds to technical considerations.

Mining is carried out through either a mining licence or a

special mining licence, both of which confer on the holder

thereof the exclusive right to conduct mining operations in or

on the area covered by the licence. A mining licence is granted

for a period of 10 years and is renewable for a further period of

10 years. A special mining licence is granted for a period of

25 years or for the estimated life of the orebody, whichever is

shorter, and is renewable for a further period of 25 years. If the

holder of a prospecting licence has identified a mineral deposit

within the prospecting area, which is potentially of commercial

significance but cannot be developed immediately for reasons

of technical constraints, adverse market conditions or other

economic factors of a temporary character, it can apply for a

retention licence which will entitle the holder thereof to apply

for a special mining licence when it sees fit to proceed with

mining operations.

A retention licence is valid for a period of five years and is

thereafter renewable for a single period of five years. A mineral

right may be freely assigned by the holder thereof to another

person or entity by notifying the Commissioner for Minerals,

except for a mining licence, which must have the approval of

the Ministry to be assigned. However, this approval

requirement for the assignment of a mining licence will not

apply if the mining licence is assigned to an affiliate company

of the holder or to a financial institution or bank as security for

any loan or guarantee in respect of mining operations.

A holder of a mineral right may enter into a development

agreement with the Ministry to guarantee the fiscal stability of

a long-term mining project and make special provision for the

payment of royalties, taxes, fees and other fiscal imposts.

AngloGold Ashanti has complied with all applicable

requirements and the relevant licences, which have been

issued for 25 years, expiring in 2023.

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Regulatory environment

The entire property and control over minerals on, in or under the

land is vested in the United Republic of Tanzania. No person is

allowed to prospect for minerals or carry on mining operations

except under the authority of a Mineral Right granted, or

deemed to have been granted under the Mining Act, 1998. In

order to prospect or mine, the Ministry of Minerals and Energy

initially grants an exclusive prospecting licence and on

presentation of a feasibility study, a mining licence is then

granted taking into account the ability of the company, including

its mining, financial and technical capabilities, rehabilitation

programmes and payment of royalties. The relevant licence was

granted to Geita Gold Mine Ltd in respect of its mining in

Tanzania. The current 25-year mining licence expires in 2023.

There is a new Mining Act which has been passed by

Parliament this year. The new Mining Act and its Regulations

came into force in November 2010.

Australasia

Australia

In Australia, with a few exceptions, all onshore minerals are

owned by the Crown (in right of the State). The respective

Minister for each State and Territory is responsible for

administering the relevant Mining legislation enacted by the

States and Territories.

Native Title legislation applies to certain mining tenure within

Australia. Australia recognises and protects a form of Native

Title which reflects the entitlement of Aboriginal people to their

traditional lands in accordance with their traditional custom

and laws. Should Native Title claims or determinations exist,

certain Native Title processes and procedures will apply under

the Native Title Act 1993 (Cth) before the tenure is granted.

Other Federal and State Aboriginal heritage legislation

operates in parallel to Native Title legislation, and are

predominantly for the purposes of protecting Aboriginal sites

and areas of significance from disturbance. To date, there has

not been any significant impact on any of AngloGold Ashanti’s

tenure due to Native Title or Aboriginal Heritage legislation.

AngloGold Ashanti's operating properties are located in the

state of Western Australia. The most common forms of tenure

are exploration and prospecting licences, mining leases,

miscellaneous licences and general purpose leases. In most

Australian states, if the holder of an exploration licence

establishes indications of an economic mineral deposit and

complies with the conditions of the grant, the holder of the

exploration licence has a priority right against all others to

apply for a mining lease which gives the holder exclusive

mining rights with respect to minerals on the property.

It is possible for an individual or entity to own the surface of the

property and for another individual or entity to own the mineral

rights. Typically, the maximum initial term of a mining lease is

21 years and the holder has the right to renew the lease for an

additional 21 years. Subsequent renewals are granted at the

discretion of the respective State or Territory's minister

responsible for mining rights. Mining leases can only be

assigned with the consent of the relevant minister.

Government royalties are payable as specified in the relevant

legislation in each State or territory. A general purpose lease

may also be granted for one or more of a number of permitted

purposes. These purposes include erecting, placing and

operating machinery and plant in connection with mining

operations, depositing or treating minerals or tailings and using

the land for any other specified purpose directly connected

with mining operations.

AngloGold Ashanti owns the mineral rights and has 21-year

term mining leases with rights of renewal to all of its mining

areas in Australia, including its proportionate share of joint

venture operations. Both the group and its joint venture

partners are fully authorised to conduct operations in

accordance with relevant laws and regulations. The mining

leases and rights of renewal cover the current life-of-mine at

AngloGold Ashanti's operations in Australia.

Americas

Argentina

According to Argentinian mining legislation, mines are the

private property of the nation or a province, depending on

where they are located. Individuals are empowered to explore

for and to exploit and dispose of mines as owners by means

of a legal licence granted by a competent authority under the

The regulatory environment enabling
AngloGold Ashanti to mine

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provisions of the Argentine Mining Code. The legal licences

granted for the exploitation of mines are valid for an

undetermined period, provided that the mining title holder

complies with the obligations settled in the Argentine Mining

Code. In Argentina, the usual ways of transferring a right over

a mining licence are: to sell the licence; to lease such a licence;

or to assign the right under such a licence by a beneficial

interest or Usufruct Agreement. In the case of Cerro

Vanguardia – AngloGold Ashanti's operation in Argentina – the

mining title holder is its partner, Fomicruz, and in terms of the

Usufruct Agreement signed between them and Cerro

Vanguardia SA on 27 December 1996, the latter has the

irrevocable right to the exploitation of the deposit for a period

of 40 years. This agreement expires on 27 December 2036.

Brazil

In Brazil, there are two basic mining rights:

· a licence for the exploration stage, valid for a period of up to

three years, renewable once; and

· a mining concession or mine manifest, valid for the life of the

deposit.

In general, exploration licences are granted on a first-come,

first-served basis. Mining concessions are granted to the

holders of exploration licences that manage to prove the

existence of a Mineral Resource and have been licensed by the

competent environmental authority.

Mine manifests (mining titles granted in 1936) and mining

concessions (mining titles presently granted through an order

signed by the Secretary of Mines of the Ministry of Mines and

Energy) are valid for an undetermined period until the depletion

of reserves, provided that the mining title holder complies with

current Brazilian mining and environmental legislation, as well

as with those requirements set out by the National Department

of Mineral Production (DNPM) which acts as the inspecting

entity for mining activities. Obligations of the titleholder include:

· The start of construction, as per an approved development

plan, within six months of the issuance of the concession;

· Extracting solely the substances indicated in the

concession;

· Communicating to the DNPM the discovery of a mineral

substance not included in the concession title;

· Complying with environmental requirements;

· Restoring the areas degraded by mining;

· Refraining from interrupting exploitation for more than six

months; and

· Reporting annually on operations.

The difference between a mine manifest and a mining

concession lies in the legal nature of these two mining titles,

since it is much more difficult and complicated for the public

administration to withdraw a mine manifest than a mining

concession. Although, in practice, it is possible for a manifest

to be cancelled or to become extinct if the abandonment of the

mining operation is formally proven. All of AngloGold Ashanti's

operations in Brazil have indefinite mining licences.

Colombia

In Colombia, all mineral substances are the property of the

State of Colombia. Mining activities are primarily regulated by

the Mining Code, Act 685, 2001 and Act 1382, 2010. The

underlying principle of Colombian mining legislation is: first in

time, first in right.

The process starts with a proposal, the presentation of which

gives a right of preference to obtain the area, provided it is

available. The maximum extent of an area covered by such a

proposal is 10,000 hectares. Once a proposal has been

received, the relevant government agency undertakes an

investigation to determine whether another proposal has been

received regarding the area concerned or whether an existing

contract for the area is already in place. The government

agency grants a “free zone” when the proposal made has a

right of preference.

The new law includes the possibility for the government to

reserve some areas to offer in a bidding process.

The concession contract

The government agency grants an exclusive concession

contract for exploration and exploitation. Such a concession

allows the concessionaire to conduct the studies, works and

installations necessary for establishing the existence of

minerals and their exploitation. The total term of such a

concession is 20 years. Following an amendment, the

extension of the concession contract for an additional 20-year

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Regulatory environment

period is no longer automatic. To receive the extension, the

concessionaire must request the extension two years before

the termination of the initial 20-year period, and must present

economic, environmental and technical information. Because

the extension is not automatic, the concessionaire must

renegotiate conditions of the extension.

According to the new law, the exploration period has been

extended until 11 years. To receive the extension, the

concessionaire must present a technical report every two

years and explain its proposed activities for the next two years.

Once the concessionaire has completed its exploration

programme, a proposed plan of works and installations and a

study of the environmental impact must be completed in order

to receive an environmental licence, without which the mining

project may not be developed.

The terms of the concession and all obligations relating to it,

start from the date of registration of the contract at the National

Mining Register. Once a mining concession has been

awarded, the operating entity must take out an insurance

policy to cover any possible environmental damage and its

mining obligations.

There are some areas where mining activity is prohibited.

These areas are:

a) national parks;

b) regional parks;

c) protected forest reserves;

d) paramus (included in the new law); and

e) wetlands, according to the Ramsar Convention (included in

the new laws).

For the forest reserves (these are not protected forest reserves

but rather land set aside for active forestry purposes), it is

necessary to extract this area to start activities after initial

prospection in the exploration phase (ie. drilling). This extraction

consists of a specific permit to partially and temporarily change

the use of the soil to permit such exploration activities.

Surface fee

After exploration and construction of the infrastructure for

the mine, royalty payments are due.

The new law changes the payments of the cannon fees.

Without taking into consideration the extension of the areas, as

it was before, the amount of the cannon is due from the

moment the area is declared available for the company (rather

than from signature of the concession contract) and changes

according to the number of years:

·From 1 to 5 years: approximately $9.00 per hectare

per year.

·For years 6 and after, approximately $11.00 per hectare

per year.

Royalty

The royalty paid to the Colombian government is equivalent to

a percentage of the exploited primary product, the object of

the mining title, and its sub-products. For gold, the percentage

of the royalty to be paid is 4%.

United States of America

Mineral rights, as well as surface rights, in the US are owned

by private parties, state governments or the federal

government. Most land prospective for precious metals

exploration, development and mining is owned by the federal

government and is obtained through a system of self-initiated

location of mining claims pursuant to the General Mining Law

of 1872, as amended. Individual states typically follow a lease

system for state-owned minerals. Private parties have the

right to sell, lease or enter into other agreements, such as

joint ventures, with respect to minerals that they own or

control. All mining activities, regardless of whether they are

situated on privately- or publicly-owned lands, are regulated

by a myriad of federal, state and local laws, regulations, rules

and ordinances, which address various matters including

environmental protection, mitigation and rehabilitation.

Authorisations and permits setting forth the activities and

restrictions pertaining thereto are issued by the responsible

governmental agencies for all phases of mining activities.

Cripple Creek & Victor Gold Mining Company’s Cresson

Project consists almost entirely of owned, patented mining

claims from former public lands, with a small percentage of

private and state lands being leased. The total area of control

is approximately 7,100 acres. Patented claims vest ownership

in the holder, including the right to mine for an indefinite tenure.

All life-of-mine reserves are within these property controls. The

mining and rehabilitation permits issued by the State of

Colorado are life-of-mine permits.

The regulatory environment enabling
AngloGold Ashanti to mine

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Mine site rehabilitation and closure

All mining operations will eventually cease. For AngloGold

Ashanti, an integral aspect of operating its mines is ongoing

mine closure planning, together with the associated estimates

of liability costs and the assurance of adequate financial

provisions to cover these costs. An estimate of future liabilities

is given in the provisions note to the annual financial

statements, note 34 on page 318.

The company’s Environment and Community Policy commits

the company, amongst others, to ensuring that “financial

resources are available to meet its closure obligations”. One of

the company's values is that “the communities and societies in

which we operate will be better off for AngloGold Ashanti

having been there”.

In order to ensure that operating staff and the company’s

stakeholders understand clearly what these statements mean

in practice and to set a common benchmark across the

company, a closure and rehabilitation management standard

was finalised during 2009. Operations have been given two

years (ie. end 2011) to achieve full compliance with the

standard. Guidelines to assist operations to implement the

standard were developed during 2009/10. A workshop was

held in December 2010 to ensure alignment amongst

environmental, social and accounting professionals within the

company and to share best practices across the group.

The evaluation of new projects takes into account closure

and associated costs in a conceptual closure plan. The

AngloGold Ashanti standard requires that an interim closure

plan be prepared within three years of commissioning an

operation, or earlier if required by legislation. This plan is

reviewed and updated every three years (annually in the final

three years of a mine’s life) or whenever significant changes

are made, and take into account operational conditions,

planning and legislative requirements, international protocols,

technological developments and advances in practice. The

interim plan becomes a final plan at least three years before

closure is anticipated.

For many of the older mines, closure planning and the

evaluation of environmental liabilities is a complex process. This

is particularly the case in Brazil, Ghana and South Africa, where

many of the long-life operations present environmental legacies

that may have developed over a century or more. A particular

challenge is concurrent rehabilitation, which is carried out while

a mine is still operating. This practice serves to decrease the

current liability and reduces the final rehabilitation and closure

work that must be undertaken, but has the potential to sterilise

reserves, which the company might wish to exploit should

conditions, such as the gold price, change.

An assessment of closure liabilities is undertaken annually.

Ongoing

planning

to mining operations

integral

mine closure

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AngloGold Ashanti Annual Financial Statements 2010

Gold production

Gold production

1. Exploration

2. Creating
    access

3. Removing
     the ore

4. Transportation

5. Processing

6. Refining

AngloGold Ashanti’s

core

business

is the production of gold

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Gold production can be divided into six main activities

supported by mine planning, engineering services, ventilation,

rock engineering, procurement, finance, social and

environmental services and human resources, among others.

The six core production processes are:

1. Exploration – Finding the orebody

AngloGold Ashanti’s exploration work is split into two

functions. The company’s greenfield exploration team identifies

and evaluates targets on its own or in conjunction with joint

venture partners. The brownfield exploration team is

responsible for identifying the limits of known deposits or

finding additional deposits close to existing operations to

facilitate organic growth. All discoveries undergo a well

structured and intensive evaluation process aimed at

improving confidence in the Mineral Resource and Ore

Reserve estimates before developing or expanding the mine.

2. Development – Creating access to

the orebody

Two types of mining are used to access orebodies:

·Underground mining: a vertical or decline (inclined) shaft is

sunk deep into the ground to transport people and mining

materials to underground levels from which the orebody is

accessed through horizontal tunnels known as haulages

and cross-cuts. Further development is then undertaken to

open the orebody so mining can take place; and

·Open-pit mining: this method is employed when ore lies

close to surface and can be exposed for mining by stripping

overlying, barren material.

3. Mining – Removing the ore

In underground mining, holes are first drilled into the orebody,

filled with explosives and blasted. The blasted ‘stopes’ or

‘faces’ are then cleaned and the ore released by blasting is

then ready to be transported to surface.

In open-pit mining, the material may be ‘free digging,’ although

drilling and blasting is usually necessary to break the ore and

waste prior to transportation. Excavators then load the

material onto haul trucks which transport the material to the

plant, ore stockpiles or waste dump facility.

4. Transportation – Moving broken material

from mining face to the plant

Underground material is brought to surface by a combination

of horizontal and vertical transport systems. Once on surface,

ore is transported to the processing facilities by surface rail or

overland conveyors and waste material is deposited on low

grade dumps.

In open-pit operations, haul trucks deliver ore directly to the

processing facilities.

5. Processing – Treating the ore to recover

the gold

Liberation is the first step in processing and involves breaking

up ore, which is delivered as large rocks, into small particles so

contained gold minerals are exposed and available for

recovery. This is usually undertaken by a combination of multi-

stage crushing and milling circuits with associated screening

and classification processes to ensure that material of the

correct size is removed promptly from the milling circuit.

Coarse, liberated gold particles, which may not dissolve fully

during the cyanide leach process, are removed by gravity

concentration during milling with the resultant concentrate

undergoing separate processing.

Recovery of gold can then commence, depending on the

nature of the gold contained in the ore.

There are two basic classes of ore:

·Free-milling: where gold is readily available for recovery by

the cyanide leaching process; and

·Refractory ores: where gold is not readily available for

leaching because it is locked within a sulphide mineral matrix

(e.g. pyrite), extremely finely dispersed within the host rock

(not yet exposed), or alloyed with other elements which

retard or prevent leaching (e.g. tellurides).

Free milling and oxidised refractory ores are processed for gold

recovery by leaching ore in agitated tanks in an alkaline

cyanide leach solution which dissolves the gold. This is

generally followed by adsorption of the dissolved gold cyanide

complex onto activated carbon at a significantly higher

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AngloGold Ashanti Annual Financial Statements 2010

Gold production

concentration. In some operations, the gold bearing solution is

filtered from the pulp and gold is then precipitated by the

addition of zinc dust.

Refractory ores undergo pre-treatment to make them more

amenable to cyanide leaching. This commonly takes the form

of separating the gold-bearing sulphide materials from the

barren gangue material by using flotation to produce a high-

grade sulphide concentrate. The sulphide concentrate is then

oxidised by either roasting – as at AngloGold Ashanti Córrego

Do Sítio Mineração; bacterial oxidation (BIOX) – as at Obuasi;

or in pressure oxidation units. This oxidation destroys the

sulphide matrix and exposes the gold particles thereby making

them amenable to recovery by the cyanidation process.

An alternative to the milling and leaching process is the heap

leach process, generally applicable to high-tonnage,

low-grade ore deposits. It can, however, also be successfully

applied to medium-grade deposits where smaller ore deposit

tonnages cannot economically justify a capital-intensive

milling and leaching plant. In this process, ore is simply

crushed to a coarse size and heaped on a lined leach pad.

Low-strength alkaline cyanide solution is dripped onto the

heap for periods of up to three months. The gold dissolves

and the gold bearing solution is collected from the base of the

heap and transferred to carbon-in-solution (CIS) columns,

where the gold cyanide complex is adsorbed onto activated

carbon. The barren solution is refreshed and recycled to the

top of the heap.

Gold which has loaded (adsorbed) onto activated carbon is

recovered by a process of re-dissolving it from the activated

carbon (elution), followed by precipitation in electro-winning

cells and subsequent smelting of the precipitate into doré bars,

which have a gold content of between 85% and 95%. These

bars are shipped to gold refineries for further processing.

Valuable by-products are generated during the gold recovery

process at certain AngloGold Ashanti operations. These by

products are:

·Silver, which is associated with the gold at some of our

operations;

·Sulphuric acid, which is produced from the gases generated

during sulphide roasting; and

·Uranium, which is recovered in a process which involves

sulphuric acid leaching, followed by recovery of the leached

uranium onto resin and subsequent stripping of the resin by

sulphuric acid and precipitation of ammonium diurinate

(yellow cake) using ammonia. Uranium oxide is then

produced by calcination (heating) of the yellow cake.

Residue from processing is pumped to well-designed tailings-

storage facilities, where the solids settle to form a beach, while

the water is reused.

6. Refining – Preparing the gold for market

The doré bars are transported to a precious metal refinery,

where the gold is upgraded to a purity of 99.5% or greater, for

sale to a range of final users. High-purity gold is referred to as

‘good delivery’, which means it meets the quality standards set

by the London Bullion Market Association and gives the buyer

assurance of its gold content and purity.

Gold production

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Business sustainability

AngloGold Ashanti has reported on social investment and

sustainability issues since 2002. In 2009 the reporting

approach used by the company was reviewed, taking into

account leading international practice, and the company

moved towards the production of a more focused report,

which clearly identifies the issues that are important in making

the business viable over the longer term.

Six focus areas were identified for sustainability reporting in

2010, and are summarised in the table below.

This table sets out the context for each issue. More detail on

our performance can be found in the company’s sustainability

report for 2010 – Sustainable gold.

Sustainable development – a summary

gold

Sustainable

Key focus areas

Our context

Improving operational

Safety is our first value and the most important business consideration. We are

safety performance

committed to creating the safest possible environment for our employees and, over

the longer term, to operating an injury-free business.

Managing health impacts that

We do not accept ill health as a natural consequence of our business and believe

arise at our operations and in

that employees must be able to go home fit and well at the end of each working day.

our communities

Our most material health risks relate to silicosis, noise-induced hearing loss,

HIV/AIDS and malaria.

Operating with respect for

Our concern for operating with respect for human rights stems from our aim to

human rights

place people first in all aspects of the business. Human rights considerations cut

across a range of disciplines at AngloGold Ashanti, including health, safety, security,

community, environmental, human resources, legal and regulatory, governance and

labour relations. Human rights considerations have been considered in developing

policies in these areas, and we have focused in particular on embedding the

Voluntary Principles on Security and Human Rights (VPSHR) into our security

practices. We have not, however, had a company-wide human rights policy in place.

This is an area of work which was initiated in 2010 and will be developed further in

2011, in alignment with progress that has been made in the UN in defining the

responsibilities of business to respect human rights.

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AngloGold Ashanti Annual Financial Statements 2010

Sustainable development – a summary

Key focus areas

Our context

Relationships with the

AngloGold Ashanti is developing a global sustainability strategy which aims to

communities which host

create value for all of its business and social partners. We operate in

our operations

regions where communities are vulnerable. Transparency is therefore important in our
interactions with governments and communities, and essential if they are to derive
sustainable economic benefit from our operations.

A lifecycle approach -

We aim to leave host communities better off for our presence, which implies that,

exploration and closure

even at the exploration phase of a project, we need to take into account the fact that
our mines will eventually close. Communities which have hosted our operations must
be consulted on what we leave behind in terms of infrastructure and impacts.

Effective stewardship of the

Mining operations use increasingly scarce resources such as energy, water and

environment and of the natural

land and can have substantial impacts on the environment, both positive and negative.

resources that we use, primarily

Key concerns in this area relate to water, energy and greenhouse

land, water and energy

gas emissions, land, climate change, hazardous materials and air quality. In February
2010, operations at Iduapriem in Ghana were suspended for a period of two and a
half months due to potentially adverse environmental impacts arising from the tailings
storage facility at the operation. In conjunction with the Environmental Protection
Agency of Ghana (EPA), an interim location for tailings storage was identified.
Construction of a new storage facility to cater for life of mine tailings deposition is in
progress and this new facility will become operational in the first half of 2011.

Our sustainability commitments

In the pages which follow, we set out our future commitments on each of these focus areas, as well as our performance against
commitments made in our 2009 reporting cycle. We will report back on our progress against these commitments in our 2011 report.
The commitments listed below are based on the key focus areas currently identified. They will be reviewed in light of the strategy
process that is underway.

Sustainable development – a summary

Improving operational safety performance

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

In 2011, we aim to achieve continued improvement in safety performance towards our 2015 business goal of an all injury frequency
rate of less than 9 per million hours worked. Our target to reduce fatalities by 70% by 2012 (from a 2007 baseline) remains intact.

Work is under way to continue implementation of safety transformation within Project ONE in 2011 through:

·completion of guidelines by mid-2011 to support roll out of the global safety standards;
·implementation of a new model and process for accident investigation;
·a review of organisational safety capabilities; and
·development of operational safety plans to business unit teams.

Achieving a further 20% reduction in

the all injury frequency rate with the

long-term objective of operating an

accident-free business

We achieved a reduction of 11% in our all injury frequency rate in 2010. Although this

is short of our target for the year, we are pleased to be able to report a 45%

improvement in the all injury frequency rate since 2007, from 20.95 in 2007 to 11.50

in 2010. Due to the transformational nature of our safety interventions, our expectation

was that improvements would be achieved through a series of step changes.

Begin implementation of the Safety

Transformation project

Implementation of the Safety Transformation project has begun – the project was

launched in May 2010. Significant work was undertaken on integrating the project

into the operating framework of the business.

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Managing health issues

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

To progress our health strategy, we intend to undertake health risk assessments and health system audits at our operations in
Continental Africa by the end of 2011 and complete health risk assessments and health system audits for the balance of our
operations by the end of 2012.

We have set the following goals relating to wellness and occupational environment:

·continue progress towards the industry milestone of no new cases of silicosis among previously unexposed employees in South
Africa (2008 onwards) after December 2013;
· meet the industry milestone of no deterioration in hearing greater than 10% among occupationally-exposed individuals at South
African operations;
·roll out integrated malaria programmes, drawing on the model implemented at Obuasi in Ghana, at operations in Mali, Tanzania
and Guinea; and
·in South Africa, continue efforts to reduce occupational tuberculosis (TB) incidence to 2.25% of all South African employees by
2015 and successfully cure 85% of new cases (our long-term target is the reduction of TB incidence to 1.5% of all South African
employees by 2029).

We are working towards achievement of this industry milestone. It is still too early to

provide a meaningful assessment of this group of employees due to the latent nature

of this disability.

We have been in compliance with the 2013 industry noise targets since 2008 and

have now set lower internal benchmarks.

Intensify hearing conservation
programmes and continue to silence –
to acceptable levels – all identified
noise equipment in order to achieve
the industry milestone of no
deterioration in hearing greater than
10% among occupationally-exposed
individuals at South African operations

Elimination of new cases of silicosis

after December 2013 among

employees in South Africa with no

occupational exposure prior to 2008

We are working towards achievement of this industry milestone. Due to the latency
period of the disease we are not yet able to provide a meaningful assessment of this
group of employees. We have, however, met and exceeded industry milestones on
silica dust exposure as one of the measures in place to combat this disease and
have set lower internal benchmarks for exposure.

Maintain a rate of 80% of South

African employees attending voluntary

counselling and testing for HIV (VCT)

during 2010, excluding current

wellness clinic attendees

74% of South African employees attended VCT during 2010. The uptake of VCT
programmes has been falling since 2008. Programmes relating to the prevention of
HIV/AIDS have been in place at AngloGold Ashanti since 2000 and numbers of
employees presenting themselves for VCT are declining. Communications and
awareness efforts continue, as does the provision of anti-retroviral therapy (ART) and
wellness programmes to affected employees.

Reduce by 50% the number of

avoidable drop-outs from wellness

programmes in 2010

Over 4,000 employees attended wellness programmes in 2010 and ART continues
to be supplied to approximately 2,500 employees for whom this treatment is
clinically indicated. We have not been able to measure the number of drop-outs from
wellness programmes accurately, due to the difficulty of establishing the cause of an
employee discontinuing treatment.

Reduce occupational tuberculosis (TB)

incidence to 3% of all South African

employees by 2010

We have achieved this target. The incidence of TB among South African employees

was reduced to 2.64% in 2010.

Successfully cure 85% of new TB

cases in 2010

Over 90% of new cases were successfully cured in 2009. Data for 2010 is not yet

available as treatment programmes for TB last between six and eight months.

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AngloGold Ashanti Annual Financial Statements 2010

Sustainable development – a summary

Sustainable development – a summary

Human rights and business

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

In 2011, we aim to develop a more effective approach to human rights issues by putting in place a company-wide policy, framework

and procedures.

In the area of security and human rights, we continue to target zero incidents under the Voluntary Principles on Security Human Rights

(VPSHR) and aim to reduce the number of allegations of VPSHR incidents that are made. To support achievement of this target,

we will:

·complete implementation of the global security framework by the end of 2011; and

·review all contracts with private and public security services worldwide in order to standardise contract requirements by the end

of 2011.

Zero violations of the Voluntary

Principles on Security and Human

Rights (VPSHR) in 2010

In 2010, two violations of the VPSHR were recorded, details are provided in the

group-level Sustainability Report. We are continuing efforts to embed the VPSHR

into our security management systems and practices in order to effect the

continuous improvement necessary to reach our target of zero VPSHR violations.

We continue to encourage self reporting by security personnel of potential violations.

Develop a standard approach for all

contracts with private and public security

A review of all contracts with private and public security is under way in order to

achieve this target and is scheduled for completion by the end of 2011.

AngloGold Ashanti and communities

Our 2009 commitments

Our progress in 2010

Final approval of management

standards and associated guidance

material that govern how the company

interacts with communities

Standards have been developed and are scheduled for approval by the executive

committee of the company in 2011. Work to develop guidance material will follow

shortly after approval.

Incorporate community aspects into

each operation’s ISO 14001

management system by 2012

The ISO 14001 management system is in place at all operations and progress has

been made towards incorporating community aspects. Further work is being done

to support sites to meet the target date which is three years following approval of

the management standards by the board.

Continue to embed the government

relations function into decision-making

processes, including through

development of a management

standard by 2011

In 2010 progress was made in incorporating the government relations function into

broader AngloGold Ashanti decision-making processes. The need for a

management standard will be reviewed.

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AngloGold Ashanti and communities (continued)

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

In 2011, we aim to better define expectations for performance with regard to community and social performance. This will be done

through community-focused management standards which are currently at the latest stages of finalisation and review and are

expected to be approved by the Executive Committee of the company in 2011.

Work to support and give effect to the standards will begin in 2011, after their approval, and will include the development of guidelines

to aid in implementation of the standard and the allocation of appropriate resources.

To ensure an integrated approach to managing community and environmental aspects in line with the integration of the two

functions, we aim to integrate community aspects into the ISO 14001 management system. Work towards this is already in

progress; however, a specific work plan has been developed for 2011 to accelerate efforts such that sites will be ready to undergo

certification audits by 2014.

Roll-out of a pilot government

engagement strategy model in South

African and in a minimum of two other

jurisdictions in 2011

This pilot programme remains work in progress in South Africa in 2011. Following its

successful completion, we aim to extend the model to two other jurisdictions.

In South Africa, participate in the

Mining Charter review

We participated actively in the Mining Charter review, including through the relevant

industry structures. The reviewed Mining Charter was agreed and published.

Exploration and closure

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

In 2011 and 2012, assess compliance with the closure standard. Work to achieve compliance with the closure standard at all

operations by the end of 2011 will continue. A corporate-led assurance and operations review will assess closure plans to ensure

compliance and efficiency.

During 2011, the greenfield exploration business unit will be working to formalise and improve a process which will ensure that an

appropriate level of community and environmental oversight is completed at each stage of exploration.

Work on findings of review conducted

in 2009 to address any site-level

deficiencies in closure plans and

ensure alignment with company

management standard by 2011

An internal multi-disciplinary committee continued to guide site-level closure

planning to ensure alignment with the company standard by the end of 2011. A

workshop was held in December 2010 to ensure alignment amongst environmental,

social and accounting professionals within the company and to share best practices

across the group.

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AngloGold Ashanti Annual Financial Statements 2010

Sustainable development – a summary

Sustainable development – a summary

Environmental and natural resource stewardship

Our 2009 commitments

Our progress in 2010

Our 2011 commitments

Improve energy performance by:

· developing site-based targets and action plans from 2012 onwards;

· continuing to refine energy metrics, performance measurement and reporting during 2011; and

· quantifying the energy benefits of business improvement initiatives.

Improve energy security at our operations by:

· finalising high-level reviews of site energy security arrangements during 2011; and

· commencing the development of site-based energy security strategies for life of mine.

Improve water performance by:

· developing site-based targets and action plans from 2012 onwards;

· continuing to refine key performance indicators, performance measurement and reporting during 2011; and

· quantifying the water benefits of business improvement initiatives.

Continue work to improve energy and

water performance including through

the development of site-level

objectives

Comprehensive energy maps have been developed for South Africa and are being

progressed for all other operations. A more complete range of water performance

indicators is being developed for key aspects of water performance. Site water

balances are being refined. A global approach for quantifying the energy and water

benefits from business improvement projects is also being progressed.

Audit the global energy and water

security position for all operations

High level energy and water security reviews have been completed at 15 of our

19 relevant operations and the balance will be completed in 2011. Strategic

frameworks have been developed for energy and water management.

Continue to address key climate

change opportunities and risks

Preliminary preparations to understand site-specific climate change risks in greater

detail have commenced. A project to install heat pumps at high-density residences

in South Africa is almost complete and is expected to earn carbon credits. We are

continuing to assess other opportunities for generating carbon credits, especially in

the South Africa region where our energy consumption is 40% of the group total.

Final approval or development of

management standards and

associated guidance material that

govern how the company interacts

with the environment

Progress was made in agreeing a biodiversity management standard, which will be

finalised in 2011. Guidance for the closure and rehabilitation management standard

was finalised.

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People

The following commitments were made in our 2009 report and progress against these commitments is reported below:

Our 2009 commitments

Our progress in 2010

Continue with the roll out of the

System for People (SP), including the

global values survey

Significant progress was made during the year on implementation of the SP, with the

development of a new delivery framework clearly defining corporate and regional roles.

The global values survey was completed in 2010 and the results reviewed by the

Executive Committee. The results will be fed back into the business in early 2011.

Review the wage negotiations strategy

in Continental Africa and develop a

model for conducting wage

negotiations which can be applied

throughout the company’s Continental

African operations

A labour engagement model was developed and successful collective bargaining

processes were concluded at the Siguiri mine in Guinea and Sadiola/Yatela mines

in Mali.

Standardise, to the extent possible,

the conditions of employment of senior

managers to facilitate mobility within

the company

A survey of conditions of employment with respect to senior and executive

management was conducted by PwC on behalf of the company and the report

submitted to the Remuneration Committee. This survey covered all the countries in

which the company operates. The findings of this survey resulted in the formulation

of the company’s Remuneration Policy that was approved by the shareholders at the

annual general meeting held in May 2010.

Podcast available at www.aga-reports.com/10/podcasts.htm

Thero Setiloane, Executive Vice President –
Business Sustainability, AngloGold Ashanti

Our 2011 commitments (continued)

Improve water security at our operations by:

· finalising high-level reviews of water security arrangements during 2011;

· commencing the development of site-based water security strategies for life of mine; and

· embedding integrated water management at all sites, and recognising the value of managing water performance across entire site

operations in a planned and coordinated manner.

Continue to address key climate change opportunities and risks, by specifying life-of-mine climate change risks in more detail for

priority operations, starting in 2011 with those at greatest risk.

Over 2011 and 2012 a programme of assessing compliance with the environment-focussed management standards approved during

2009 will commence in the form of the biennial Community and Environment Review Programme (CERP). Concurrently, a roll out

phase to socialise finalised community-focussed standards will commence, also as part of the CERP.

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AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

AngloGold Ashanti’s mission is to create value for all those

who have a stake in the company’s business. In order to

achieve this, the company has been and continues to be

committed to the highest standards of corporate governance,

guided by the principles of sustainable business, by engaging

in business practices that will enable the company to safely

and responsibly explore, mine and market gold and

associated products. The description of the corporate

governance systems and practices in the pages that follow

explains how the company has lived up to that commitment

during the 2010 financial period.

Corporate governance achievements
during 2010 and targets for 2011

In line with its commitment to maintain the highest standards

in corporate governance and to achieve compliance with new

principles recommended in the King III Code (King III), certain

corporate governance targets were set and communicated to

shareholders in the Annual Financial Statements 2009. Below

are the targets set for and those achieved in 2010, as well as

explanations for the non-achievement of targets:

Corporate governance

AngloGold Ashanti

committed to

in corporate governance

practice

best

Targets set at the end of 2009

Achievements/reasons for

No. to be achieved in 2010

non-achievement

Targets for 2011

1

Update board charter to incorporate

The implementation of the Companies

The board charter will be updated in 2011,

new requirements of the Companies

Act 71 of 2008 has been delayed.

as soon as the Act becomes effective,

Act 71 of 2008 and recommendations

to bring its contents in line with other

of King III.

developments in corporate governance and

internal changes within AngloGold Ashanti.

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175

Targets set at the end of 2009

Achievements/reasons for

No. to be achieved in 2010

non-achievement

Targets for 2011

2

Update the board induction pack to

The board induction pack was updated

Undertake further changes and updates to

include developments in legislation

to include certain developments in

the information contained in the induction

and corporate governance.

corporate governance, legislation and

pack, as required.

internal changes within AngloGold

Ashanti. The induction pack served

as a guide to the induction of

non-executive directors appointed

during 2010 and also as a reference

document for the directors.

3

Update the terms of reference of

The terms of reference were updated

Further revisions will be effected to the

the Audit and Corporate Governance

to include provisions of King III that

terms of reference once the Companies

Committee to include new

were new to the company’s corporate

Act comes into effect and as and when

requirements of the Companies

governance practices. Most of the new

other developments in corporate

Act 71 of 2008 and the new

principles in King III were premised on

governance are effective.

requirements of King III.

the coming into effect of the
Companies Act in 2010. To that
extent, certain provisions of the Act
have been complied with ahead of the
effective date.

4

Complete the process of restructuring Restructuring of the board continued

Further restructuring of the board and its

the board and certain committees,

in 2010. The former board chairman

committees to achieve the desired

including succession planning to

retired at the annual general meeting

balance in skills and knowledge is

achieve a better balance in skills and

held on 7 May 2010 and three new

expected in 2011.

knowledge to improve directors, including a new chairman
board performance.

were appointed to the board during
the year. A number of changes were
made to the membership of
board committees during the year.

5

Update board and committee annual

The forms were updated and applied in

Further amendments may be made in line

appraisal forms to ensure that key

the board and committees’ self-

with new corporate governance

performance indicators are in line

performance evaluations to be

regulations and the company’s own

with the company’s strategic

finalised in March 2011.

performance expectations.

objectives. This is expected to
improve assessment outcomes
and board delivery.

6

Review of risk management and

A new board committee, the Risk

The Risk and Information Integrity

information technology governance

and Information Integrity Committee

Committee will become fully functional

by putting in place improved

was established during the year. Details

in 2011 and is expected to put in

structures to oversee these

of developments on this subject can

place further structures, systems and

functions in line with recommendations

be found under “Board Committees”

procedures to strengthen risk and

of King III and the group’s

from page 185.

information technology governance

strategic objectives.

within the group.

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176

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

Targets set at the end of 2009

Achievements/reasons for

No. to be achieved in 2010

non-achievement

Targets for 2011

7

Continue with initiatives being

Project ONE gained increased traction

The integration of the SP, BPF and

undertaken under Project ONE,

across the organisation during 2010

discipline frameworks will continue during

a group-wide improvement project

as its Systems for People (SP) and

2011 along with the design of appropriate

started in 2008.

Business Process Framework (BPF)

mechanisms to engage employees in the

teams moved aggressively to progress

implementation of Project ONE, thereby

implementation. The global values

helping to create sustainable growth in

survey, designed to identify value-based

the business. Also of importance for

behaviours and to gauge employee

2011 is a renewed focus on the

engagement, was completed and

organisational values programme, using

analysed. Significant progress was made          the results of the survey, and on the

during the year, with the development of

change management work that informs

a new delivery framework, with clearer

the ongoing successful roll-out and

corporate and regional roles and

implementation of Project ONE.

accountabilities, which link the SP, BPF

and discipline frameworks, including

Transformation (or employee equity)

and Safety Transformation.

Additional significant corporate governance achievements during the year

1

Southern Africa Institute of Chartered

AngloGold Ashanti received one of the two merit awards in the Top 40 Category.

Secretaries and the JSE’s Annual

Report Award.

2

Ernst & Young Excellence in Reporting.       Awarded 5th place in the Ernst & Young Excellence in Reporting for Sustainability.

3

The terms of reference of other

The terms of reference of the following committees were revised and approved

committees were revised.

by the board during 2010: Safety, Health and Sustainable Development and

Transformation and Human Resources Development.

4

Anti-corruption workshop organised.

An anti-corruption workshop was held at corporate office as part of the programme

to promote compliance with regulations and to sensitise employees regarding the

importance of anti-corruption to the company’s governance environment.

5

Launch and roll-out of revised

A revised Code of Business Principles and Ethics was approved by the board,

Code of Business Principles

launched on 25 November and an 18-month roll-out plan commenced. A

and Ethics.

detailed write-up is provided on page 178 of this report.

Corporate governance

Responsibility and accountability for
corporate governance

The board of directors of AngloGold Ashanti is ultimately

responsible for ensuring that an adequate and effective process of

corporate governance is established and maintained. In executing

this mandate, the board has set up a corporate governance

system that is guided by the company’s internal policies and

standards and external legislation and regulations as outlined in

the following paragraphs. Corporate governance is constantly

evolving and AngloGold Ashanti is continuously seeking ways to

improve on its corporate governance standards.

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177

Day-to-day responsibility for corporate governance is

overseen by AngloGold Ashanti’s management, which

regularly reports to the various committees of the board. The

board chairman and the chairman of the Audit and

Corporate Governance Committee play an active role in the

corporate governance issues faced by the company through

regular interaction with executive directors, senior

management and other stakeholders and interested parties,

where necessary.

In the paragraphs that follow, a description of the company’s

corporate governance systems is provided.

Group internal audit

External audit

Risk management

Finance Committee

Disclosures Committee

Board committees

Board of directors

JSE Listings Requirements
Companies Act 61, of 1973
US Securities Act 1933 and 1934
Sarbanes-Oxley Act, 2002
King Report on Corporate Governance
(King III)
Employment Equity Act of South Africa
Labour Law
Corrupt Practices Act
Local legislation for companies where the
company has operations

Laws/regulations/codes

Board charter
Directors’ induction
Directors’ independence
Conflict of interests
Board committees
Terms of reference
Delegation of authority
Insider trading
Compliance
Gifts, hospitality and Disclosures
Code of ethics for senior financial officers
HIV AIDS
Directors’ dealings in company securities
Human Resource

Policies/guidelines

*Committee chairman

Independent
non-executive directors
TT Mboweni
TJ Motlatsi (Dr)
FB Arisman
R Gasant
WA Nairn
LW Nkuhlu (Prof)
F Ohene-Kena
S Pityana

Chairman: TT Mboweni (Independent non-executive director)
Deputy chairman: TJ Motlatsi (Dr) (Independent non-executive director)
Chief executive officer: M Cutifani (Executive director)

Executive directors
Chief executive officer:
M Cutifani
Chief financial officer:
S Venkatakrishnan

Global IT Steering

Committee

Audit and Corporate
Governance
Committee

LW Nkuhlu (Prof.)*
FB Arisman
R Gasant

Safety, Health and
Sustainable
Development
Committee

WA Nairn*
FB Arisman
M Cutifani
TJ Motlatsi (Dr)
LW Nkuhlu (Prof)
F Ohene-Kena
SM Pityana

Risk and Information
Integrity Committee

R Gasant*
FB Arisman
M Cutifani
WA Nairn
LW Nkuhlu (Prof)
SM Pityana
S Venkatakrishnan

Nominations
Committee

TT Mboweni*
FB Arisman
R Gasant
TJ Motlatsi (Dr)
WA Nairn
LW Nkuhlu (Prof)
F Ohene-Kena
SM Pityana

Executive Committee

M Cutifani*
CE Carter
RN Duffy
GJ Ehm
R Largent
RR Lazare
AM O’Neill
TML Setiloane
YZ Simelane
S Venkatakrishnan

Transformation and
Human Resources
Development
Committee

TJ Motlatsi (Dr)*
M Cutifani
WA Nairn
F Ohene-Kena
SM Pityana

Investment
Committee

FB Arisman*
S Venkatakrishnan
M Cutifani
TT Mboweni
WA Nairn
SM Pityana

Remuneration
Committee

SM Pityana*
FB Arisman
TJ Motlatsi (Dr)
LW Nkuhlu (Prof)

Party Political
Donations Committee

TJ Motlatsi (Dr)*
M Cutifani
TT Mboweni
WA Nairn
LW Nkuhlu (Prof)
SM Pityana

Financial Analysis
Committee

FB Arisman*

R Gasant

TT Mboweni
LW Nkuhlu (Prof)
SM Pityana

AngloGold Ashanti’s corporate governance structure – as at 31 December 2010

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178

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

External legislation, regulations
and requirements

These include the South African Companies Act 61 of 1973,

as amended, the US Sarbanes-Oxley Act of 2002 and the

Securities Act 1933 and 1934, the Listings Requirements of

the Johannesburg Stock Exchange (JSE) and other stock

exchanges on which the company’s stocks are listed,

applicable legislation and regulations in the jurisdictions in

which the company has operations, as well as various

corporate governance guidelines, key among which are those

provided by the South African Code on Corporate

Governance (King III) and the Global Reporting Initiative.

Various other pieces of legislation and governance standards,

both local and international, further guide the company's legal

and disclosure obligations.

The JSE Listings Requirements require the company to

disclose its compliance with the King Code and explain any

areas where the recommendations are not applied. AngloGold

Ashanti complied with the previous Code, King II, in all material

respects, except for one, in that the former board chairman

was a member of the Audit and Corporate Governance

Committee. The non-compliance was adequately explained in

the company’s previous annual reports. With the retirement of

the former board chairman, the company is now fully

compliant as explained within this report.

On 1 March 2010, the King Report on Corporate Governance

in South Africa 2009 (King III) became effective. King III

introduced a number of new principles on an “apply or explain”

basis. Due to the listing of AngloGold Ashanti’s stock on the

New York Stock Exchange which requires it to comply with

Sarbanes-Oxley Act and the company’s own good

governance practices, several of the new principles introduced

in King III were already being complied with by the company.

In line with its stated principle to uphold the highest standards

of corporate governance, AngloGold Ashanti, with the

approval of its board, conducted a gap analysis based on the

King III checklist to measure the corporate governance

practices within AngloGold Ashanti against the new corporate

governance principles recommended in the Code. Areas that

required action to be taken to achieve full compliance were

identified and ranked in order of importance to the company’s

governance principles. Action plans were put in place, with

approval of the board, to achieve full compliance within set

time frames and responsibilities for achievement of targets

were allocated to specific executives.

For an update on AngloGold Ashanti’s compliance with King III,

refer from page 24.

Internal policies

Internal policies include the board charter, terms of references

of board committees and other policies as listed in the

corporate governance framework.

Key features of some internal policies that enhance the

corporate governance of AngloGold Ashanti are provided below.

Code of Business Principles and Ethics (Our Code): A new

Code, which was approved by the board on 10 August 2010,

provides a framework and sets out the requirements for

implementation of the company’s key corporate policies

and guidelines.

The provisions of Our Code apply to all directors, employees

(both full and part time) of AngloGold Ashanti, all companies

within the AngloGold Ashanti group including service

organisations, managed joint ventures, representatives and to

the extent reasonable and practicable, the company’s

business and social partners, agents and consultants.

Our Code contains standards, provides direction and sets

forth principles that must guide the company’s conduct

internally and its interactions with business partners, the

communities in which it operates as well as with the general

public. It also summarises important company policies and

procedures, focuses attention on key ethical considerations,

spells out prohibited conduct and is intended to foster a

culture of high performance, with integrity.

Some of the key policies set forth in Our Code as explained

below include insider trading, conflicts of interest, gifts,

hospitality and sponsorship, use of company assets, whistle-

blowing, delegation of authority and bribery and corruption. It

provides detailed guidance on ensuring safety at the workplace.

Our Code is available on the company’s website.

Insider trading: This policy prohibits any person deemed as

an insider from trading in the securities (shares, warrants,

derivative instruments) of AngloGold Ashanti on the basis of

material non-public information or during closed periods or to

communicate such information to others who may trade in the

securities based on that information which, if it were made

public, would likely have a material effect on the price of the

company’s securities. Insiders include directors, employees,

Corporate governance

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179

immediate family members of employees or any person who

might have obtained information from an insider.

The policy provides guidelines to employees who are not in

possession of non-public price-sensitive information, who wish

to trade in the company’s securities during closed periods.

AngloGold Ashanti regards compliance with securities laws in

the jurisdictions in which it operates as an important aspect of

its corporate governance principles. Disciplinary action, up to

and including termination of employment will be taken against

insiders who violate this policy.

Conflicts of interest policy: The policy provides guidance to

employees to enable them to avoid and recognise actions and

practices that are incompatible with the interests of the

company or that may make it difficult for them to perform their

work effectively and objectively. The basic principle is to avoid

profiting from one’s official position.

Gifts, hospitality and sponsorship: AngloGold Ashanti

recognises the negative effects that the giving and receiving of

gifts can have on its business and has therefore put in place

this policy to guide stakeholders on this important aspect of

the company’s corporate governance principles. The policy

clearly defines a gift, when employees can and cannot receive

a gift and what to do when faced with difficult scenarios in that

regard. It also outlines the consequences of contravening the

policy. The policy further explains the relationship of gifts,

hospitality and sponsorship to bribery and corruption.

Directors’ fit and proper standards policy: Being the

primary executors of AngloGold Ashanti’s corporate

governance agenda, the calibre of the directors appointed to

the board is of great importance to the company. This policy

therefore seeks to establish criteria to assist the process of

selecting persons considered fit and proper to assume the

position of a director of the company. The policy is also applied

in the selection of the company secretary.

Directors’ induction policy: Under this policy, new directors

are provided with the opportunity to attend an orientation

programme where they are made aware of their rights, duties

and responsibilities and familiarised with the operations and

business environment of AngloGold Ashanti and the legal and

ethical framework in which they must conduct themselves. The

objectives of the programme are to maximise individual

director’s contributions to the board’s deliberations, to enable

directors to make informed decisions with regard to matters of

the company. In line with best practice and to meet the ever

changing corporate governance landscape, the company

continuously updates directors on developments in this area.

Directors’ professional advice policy: In order to enhance

directors’ contributions to board deliberations and to enable

them to make informed decisions, AngloGold Ashanti has

adopted this policy which provides for individual directors to

seek external independent advice when necessary, at the

company’s expense.

Confidential reporting/whistle blowing: In line with its

corporate governance principles and in terms of the guidelines

of the King Code on Corporate Governance, the Sarbanes-

Oxley Act of the United States and the Protected Disclosure Act

26 of 2000, South Africa, the board of directors of AngloGold

Ashanti has put in place a confidential reporting process. The

whistle-blowing policy applies to all companies in the

AngloGold Ashanti group and provides a channel for

shareholders, employees and the general public to report acts

and practices that are in conflict with the company’s business

principles, are unlawful, constitute financial malpractice or

endanger the public or the environment. Reports are made

through several mediums including the intranet, internet,

telephone, fax and post. A short messaging system (sms) has

been implemented in South Africa.

All anonymous reports made in terms of the whistle-blowing

policy are administered by a third party, Tip-Offs Anonymous, to

ensure confidentiality and independence of the process.

Reported cases are relayed to management through internal

audit. A report is provided to the Executive Committee and the

Audit and Corporate Governance Committee on a quarterly

basis. The process encourages reports to be made in good

faith in a responsible and ethical manner and employees are

encouraged to first seek resolution of alleged malpractices

through discussion with their direct managers, if appropriate, or,

if unresolved, they should then report these through the whistle-

blowing line or directly to internal audit or the legal department.

Reporters have the option to request feedback on the

outcomes of investigations into reported cases.

Whistle-blowing issues are categorised on the basis of

information that is made available regarding the alleged

offence. The category “irregularities” pertains to issues where

a specific categorisation of the offence has not been made in

the report received and/or possible transgressions of policy

and procedures have been reported.

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AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

Since its introduction in February 2004, 320 cases have been

reported, of which 280 cases had been successfully investigated

and closed by 31 December 2010.

Achievements in 2010

Increased reporting of activity has occurred and certain regions

have taken initiatives to ensure that communication of the

whistle-blowing process is done on a continuous basis.

Management embarked on a governance training programme

in 2010 which includes whistle-blowing.

There were 58 reports received in 2009, all of which have been

investigated and concluded. In 2010, 62 new reports were

received of which investigations into 18 reports are still in progress.

Corporate governance

Cases reported during the period 1 January 2010 to 31 December 2010

2010 reports

Completed

In progress

Grand total

Bribery and corruption

2

4

6

Concern

3

3

Conflict of interest

1

1

2

Environmental

1

1

Fraud

9

2

11

Grievance

7

1

8

Irregularities

7

3

10

Misconduct

3

1

4

Nepotism

1

1

Safety and health

1

1

Sexual harassment

2

2

Theft

1

6

7

Unethical behaviour

3

3

Unfair labour practice

2

2

Victimisation

1

1

Grand total

44

18

62

Results of the cases concluded in 2010

Bribery and corruption

1

1

2

Concern

1

2

3

Conflict of interest

1

1

Environmental

1

1

Fraud

1

6

1

1

9

Grievance

1

2

1

2

1

7

Irregularities

2

1

4

7

Misconduct

1

2

3

Nepotism

1

1

Safety and health

1

1

Allegations 
could 
not be 
proven

Allegations 
unfounded

Criminally 
reported

Disciplinary 
hearing 
held

Disciplined

Employee 
resigned

Insufficient 
information

Non AngloGold 
Ashanti issue, 
forwarded

Resolved with 
department

Supplier 
contract 
terminated

Grand
 total

Employee 
contract 
terminated

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Results of the cases concluded in 2010 (continued)

Sexual harassment

1

1

2

Theft

1

1

Unethical behaviour

2

1

3

Unfair labour practice

1

1

2

Victimisation

1

1

Grand total

6

1

6

1

5

5

2

1

2

13

2

44

Plans for 2011

Testing of existing mechanisms will continue to be done on a

regular basis to ensure that the mechanisms in place are working

effectively. Further to the testing, awareness and training,

inculcated in the Code of Business Principles and Ethics training

programme will continue to be rolled out. The training programme

is being rolled out to all locations over an 18-month period.

Stakeholder communication: Communication with various

stakeholders has always been an important feature of

AngloGold Ashanti’s corporate governance practices. To this

end, various communication channels have been utilised to

engage employees and other stakeholders. During 2010, the

Chief Executive Officer continued his quarterly briefing sessions

with employees on the company’s operational results, as well

as other important corporate events and developments. These

briefings were held in the corporate office and distributed

group-wide via the intranet. Briefs were also issued to

employees by the corporate affairs department to keep them

abreast of major developments within the company.

Meaningful engagement with shareholders is considered a

centre-piece of accountability and good governance by

AngloGold Ashanti’s board. In that regard, the Chief Executive

Officer, the Chief Financial Officer, senior management, the

Investor Relations Department and the Company Secretarial

Department continued to engage with the investor public

through various forums and the media.

At the annual general meeting of shareholders held on 7 May

2010, the board outlined the company’s performance and

achievements in the previous year and the strategy to be

implemented to ensure achievement of its prime objective of

creating value for the business in the coming year.

The board sought and obtained a non-binding advisory vote

from shareholders on the company’s remuneration policy and

also put the appointment of the membership of the Audit and

Corporate Governance Committee before the shareholders at

that meeting; these actions were in compliance with

recommendations of King III.

Government relations: AngloGold Ashanti views good

relations with governments in jurisdictions in which it operates

as a crucial aspect of its corporate governance. As regulators

and custodians of the natural resources of their countries,

protectors of their people and their communities,

governments are important stakeholders in business,

especially in the mining industry. As such, creating the right

structures and procedures for effective communication with

them was one of the important agendas of the board’s

governance initiatives in 2010. A model to guide AngloGold

Ashanti’s engagement with governments was developed by

the Government Relations Department and was piloted in

South Africa during 2010 and will be rolled out to other

countries in due course.

Allegations 
could not be 
proven

Allegations
unfounded

Criminally
reported

Disciplinary
hearing held

Disciplined

Employee
resigned

Insufficient
information

Non AngloGoldAshanti issue,
forwarded

Resolved withdepartment

Supplier 
contract
terminated

Grand 
total

Employee 
contractterminated

P

182

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

AngloGold Ashanti fully subscribes to the South African

government’s initiatives on social transformation. In line with

this, the company has established employment equity and

governance structures and monitors progress at company and

business unit levels. Each business unit in South Africa and the

corporate office has an Employment Equity Committee,

comprising employee representatives. The role of these

committees is to liaise with employees, discuss issues relevant

to the company’s employment equity programmes and provide

essential feedback to the board through the Transformation

and Human Resources Development Committee. AngloGold

Ashanti’s five year Employment Equity Plan in terms of Section

44 of the Employment Equity Act was approved on 30 June

2010. The company submitted its ninth employment equity

report as at 1 August 2010 to the South African Department of

Labour in October 2010.

The company has also put in place policies to guide the

promotion, recruitment and development of local talent in all

countries in which it has operations.

The board of directors

The Articles of Association of AngloGold Ashanti requires the

board to be composed of a minimum of four directors. The

company is governed by a unitary board, comprising of two

executive directors: the Chief Executive Officer and the Chief

Financial Officer and eight independent non-executive directors

who all meet the board’s independence criteria.

There is no mandatory retirement age for non-executive

directors; however, in line with best practice in corporate

governance and in accordance with the Sarbanes-Oxley

Act, directors are required to step down from the board after

nine consecutive years of service. The nine-year tenure

could be extended at the board’s discretion and with the

individual director’s consent. Mr RP Edey, the former

chairman of the board retired at the annual general meeting

held on 7 May 2010 after serving the board for twelve years,

eight of which were as board chairman. The independence

of Mr FB Arisman, who joined the board in 1998 was

evaluated by the board in February 2010. The board

concluded that, his performance, skills and knowledge and

his contribution to the board’s performance are of a high

standard and that his independence of character and

judgement are not in any way affected or impaired by the

length of his service as a director. This decision was ratified

at the annual general meeting held on 7 May 2010, when an

extension of tenure for a further three years was approved

by shareholders.

During the year, a number of changes to the board

membership occurred: Mr TT Mboweni was appointed to the

board and as chairman with effect from 1 June 2010 and

Mr F Ohene-Kena joined the board on the same date.

Mr R Gasant was appointed to the board and the Audit and

Corporate Governance Committee with effect from 12 August

2010. Relevant information about the three appointees is

provided under Directors and Executive Management from

page 146 of this report.

Non-executive directors provide the board with advice and

experience that is independent of management and the

executive. The presence of independent directors on the

board, and the critical role they play as board representatives

on key committees such as the Audit and Corporate

Governance, Nominations, Remuneration and Party Political

Donations, ensures that the company's interests are served by

impartial and independent views that are separate from those

of management and shareholders.

The board’s charter sets out the powers, responsibilities,

functions and delegation of authority, and the areas of

responsibility expressly reserved for the board. The charter

covers, among others, the following key areas:

· authority of the board;

·composition of the board;

·membership and appointment to the board;

·role and responsibility of the board;

·procedures of the board;

·board committees;

·matters reserved for board decision;

·the board’s relationship with shareholders;

·meeting procedures and proceedings;

·share dealings by directors;

·management of risks;

·corporate governance;

·remuneration issues;

·evaluation of board performance and induction of new

directors; and

·declaration of interests.

Appointment of directors

The board is authorised by the company's Articles of

Association to appoint new directors, based on

recommendations by the Nominations Committee, provided

such appointees retire at the next annual general meeting and

Corporate governance

P

183

stand for election by shareholders. Retirement of non-

executive directors by rotation follows a staggered process

with one-third of non-executive directors retiring at least every

three years at the annual general meeting. The curriculum vitae

of each director standing for election or re-election is made

available to shareholders in the notice of meeting circulated to

shareholders prior to the annual general meeting to assist in

their decision-making.

Executive directors are not subject to the retirement by rotation

process as they oversee the day-to-day running of the

company and are held accountable for the operational and

management performance of the company by regularly

reporting to the board. Their performance is measured and

remunerated annually against pre-determined criteria.

Executive directors have contracts of employment with the

company. Details on the remuneration of executive and non-

executive directors are presented in the Remuneration Report

from page 226.

Non-executive directors do not have contracts of service with

the company.

All non-executive members of the board have access to

management and the records of the company, as well as to

external professional advisers should the need arise.

The fees of non-executive directors, including the fees

received for membership of committees, are fixed by

shareholders at the annual general meeting. Other than these

fees and an allowance for travelling internationally to attend

board meetings, non-executive directors receive no further

payments from the company. The most recent approval of

such fees took place at the annual general meeting held on

7 May 2010.

Non-executive directors are precluded from participation in the

company's share incentive scheme.

Determination of director independence

Determination of independence is guided by King III, the

Companies Act and international best practice. Where the

board, exercising its discretion and having considered all

relevant facts, determines that a director is independent

despite not meeting the set criteria, the board will fully and

publicly disclose its reasoning.

The policy and independence of individual non-executive

directors are reviewed annually as part of the annual board

evaluation process. The performance evaluation tools are also

reviewed as and when necessary to ensure that changes in the

corporate governance environment as well as the company’s

strategic needs are well catered for. During 2010, the policy

was reviewed and its contents maintained. The policy

determining the independence of directors can be found at the

company’s website at www.anglogoldashanti.com.

In compliance with King III, an assessment of the

independence of the chairman by the non-executive directors

on the board will form part of the 2010 performance evaluation

of the board.

Directors’ performance evaluation

An annual self-evaluation is undertaken to determine that the

board and its committees are effective in the performance of

their duties and to facilitate board development. Depending on

the results of the evaluation, appropriate action is taken to

achieve the desired results. The board is also cognisant of the

opportunity the evaluation process affords it in improving

communication among its members and between the board

and management and to fine-tune its role in the overall

governance of the company.

The most recent self-evaluation of the performance of the

board, its committees and its chairman took place in

February 2010. The chairman of the board and the chairman

of each committee of the board led the processes to evaluate

the board and the committees respectively. Led by the

deputy chairman, each director evaluated the performance of

the chairman.

The evaluation for the 2010 financial year is being done as a

self-assessment, and will be finalised by end-March 2011. The

external audit firm and the Internal Audit Department will also

be evaluated. Additionally, the evaluation of the board

chairman will be undertaken by the Nominations Committee

and will become the standard procedure for future evaluations.

The evaluation process for the 2011 financial year will be

facilitated by an independent third party.

The performance evaluation of executive directors is conducted

by the Remuneration Committee. For full details, see

Remuneration Committee report from page 188.

P

184

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

Topics covered in the board’s effectiveness evaluation include

the following:

·composition of the board

·setting of performance objectives;

·board contribution to development of strategy;

·board response to crisis;

·board awareness of developments in regulatory and market

environments;

·composition of board committees;

·effectiveness of board committees in fulfilling the mandate;

·evaluation of the relationship between the board and

management, shareholders and among members of the

·board itself;

·board meetings and their effectiveness;

·board succession; and

·corporate governance and legal issues facing the

board/company.

Board meetings

The board holds six scheduled meetings annually: four quarterly,

a strategy review session and a budget review meeting.

All documents submitted to the board for its discussions or

approval are reviewed and approved by the Executive

Committee to ensure completeness and relevance. Non-

executive directors have unfettered access to the executive

team and any other employee of the company to seek

explanations and clarification on any matter prior to or following

board meetings. This facilitates the board’s discussions and

assists it in reaching speedy but informed decisions.

All members of the Executive Committee are regular attendees

at board meetings and report to the board on their respective

operational areas.

During 2010 the board held its six scheduled meetings and

three special meetings to consider the appointment of a new

board chairman and to approve various financial transactions

that were undertaken by the company. In addition, two sub-

committee meetings were held to approve various corporate

reports including the 2009 annual financial statements and the

annual report on Form 20-F (US-GAAP Report for 2009).

The following symbols are used to describe various aspects of

board and committee meeting attendance:

Corporate governance

Symbol Meaning

»Director attended meeting.
X Apologies received from director prior to meeting and leave of absence granted.
–Attendance not required as director was not a member of the board or committee at the time of the meeting.
¤ Recused from meeting due to conflict of interest

Board meeting attendance for 2010

16 Feb

22 Feb

20 Apr

5 May

6 May

10 Aug

9 Sep

9 Nov

17 Nov

(quarterly

(special

(special (quarterly

(strategy (quarterly

(special (quarterly

(budget

Members

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

Mr TT Mboweni (1)

(Chairman)

––––»»»»»

(6)

Mr RP Edey

(2)

(Chairman)

»»»»»–

–

–

–

Dr TJ Motlatsi X » X »»»X»»

(3)

Mr FB Arisman »»»»»»»»»

Mr R Gasant

(4)––––––»»»

Mr M Cutifani                               » »                X »»»»»»
Mr WA Nairn »X»»»»»»»
Prof LW Nkuhlu                           »                  »                  »                »                   »                 »                  »                 »                »

P

185

Board meeting attendance for 2010 (continued)

16 Feb

22 Feb

20 Apr

5 May

6 May

10 Aug

9 Sep

9 Nov

17 Nov

(quarterly

(special

(special (quarterly

(strategy (quarterly

(special (quarterly

(budget

Members

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

meeting)

Mr F Ohene-Kena

(5)

–

–

–

–

– » X » »

Mr SM Pityana » ¤ » »»» X »»

Mr S Venkatakrishnan »»»»»»»»»

(1)

Appointed to the board as chairman on 1 June 2010

(2)

Retired from the board and as chairman on 7 May 2010

(3)

Retired from the board on 17 February 2011

(4)

Appointed to the board on 12 August 2010

(5)

Appointed to the board on 1 June 2010

(6)

Attended by invitation

Board committees

The board has established and delegated specific roles and

responsibilities to nine standing committees and one

management committee (the Executive Committee) to assist it

in the execution of its mandate. All standing committees are

chaired by independent non-executive directors and the

following committees are composed of only independent non-

executive directors – Audit and Corporate Governance,

Remuneration, Nominations, Party Political Donations and

Financial Analysis. The Executive Committee is chaired by the

Chief Executive Officer.

Each committee’s role and responsibilities and membership

are spelt out in its terms of reference, approved by the board

and reviewed regularly to ensure that they remain in line with

relevant regulations, the company’s needs and business

climate and with best practice in corporate governance.

During 2010, a new committee, Risk and Information Integrity

Committee was established. The Treasury Committee, which

was a sub-committee of the Audit and Corporate Governance

Committee, was dissolved on 9 November 2010 following the

elimination of the company’s hedge book, which substantially

reduced the functions of that committee. Residual duties of the

committee were transferred to the Audit and Corporate

Governance Committee. As and when required, the board

may establish ad hoc committees to address specific issues.

Meetings of the board committees are held quarterly except

for the Party Political Donations, Nominations and Financial

Analysis committees which only meet on a need basis.

Members of the Executive Committee are regular attendees at

board and committee meetings. Several members of the

management team attend meetings of committees whose

roles and responsibilities are relevant to their job functions.

In order to keep the board abreast with activities of the

committees, the chairman of each committee reports on a

quarterly basis to the board on the committee’s deliberations,

including decisions taken on behalf of the board. In addition,

approved minutes of committee meetings are included in the

board’s meeting packs for information.

The board encourages and has put in place a procedure to

enable directors to attend the meetings of committees of

which they are not members to enable them gain information

and achieve a better knowledge and understanding of the

company’s operations. During 2010, Messrs Arisman, Edey,

Mboweni, Cutifani and Venkatakrishnan attended the

meetings of other committees as detailed in the committee

attendance details.

Relevant information on each board committee is provided

below.

Audit and Corporate Governance Committee

Membership of the Audit and Corporate Governance

Committee, including its chairman, comprises only

independent non-executive directors, in compliance with the

Sarbanes-Oxley Act of the United States and the guidelines of

King III. All three members of the committee have considerable

financial knowledge and experience to help oversee and guide

the board and the company in respect of the audit and

corporate governance functions.

At its meeting held on 15 February 2010, the board re-

appointed the members of the Audit and Corporate

Governance Committee to serve as members of the

committee for the next financial year. In line with

recommendations of King III, their appointment was put before

shareholders on 7 May 2010 for the first time and the

resolutions for each member was duly passed by about 98%

of shareholders who participated in and voted at the annual

general meeting. Their next re-appointments will be

considered and voted on at the annual general meeting to be

held on 11 May 2011.

P

186

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

In 2010 one member of the committee, former board

chairman, Mr RP Edey, resigned following his retirement from

the board. Mr R Gasant was appointed as a member of the

committee on 12 August 2010. The background of Mr Gasant

can be found under board of directors from page 146 and in

the notice of annual general meeting.

The US Sarbanes-Oxley Act requires the board, on an annual

basis, to identify a financial expert from within its ranks. At its

meeting held on 16 February 2011, the board resolved that the

committee's chairman, Prof Wiseman Nkuhlu, is the board's

financial expert.

The NYSE listing rules require that the board determine whether

a member of the committee's simultaneous service on the audit

committees of more than three public companies impairs the

ability of such a member to effectively serve on a listed

company's audit committee. Professor Nkuhlu, the chairman of

the committee, is a member of one (2009: one) other public

company’s audit committee but is not its chairman.

Mr Gasant is the chairman of the audit and risk committees of

three non-public companies and Mr Arisman does not serve on

any other public company’s audit committee.

After due consideration of all relevant facts, and given his

professional knowledge and skills, the board concluded that

the simultaneous service on three other non-public company’s

audit committees by Mr Gasant has not and is not likely to

impair his ability to diligently execute his responsibilities to the

committee and the board of AngloGold Ashanti.

The committee is guided by its terms of reference which were

updated in February 2010 to incorporate relevant new

principles of King III. The committee’s mandate as delegated

by the board is ensuring the integrity of financial reporting and

adequacy of governance, internal control and risk

management policies and processes throughout the group.

The roles and responsibilities of the committee include the

following:

· selection and evaluation of external auditors and

recommendation of their appointment to shareholders;

· determination of the terms of engagement of the external

auditor;

· determination of the external auditors remuneration on an

annual basis;

· approval and implementation of policy procedures for

approving the performance of non-audit work by the

external auditors and the remuneration thereof;

· ensuring the independence of the external auditors by

putting in place measures to that effect and conducting an

annual assessment of their independence;

· reviewing the performance and independence of the internal

auditor;

· approving the internal audit charter;

· approving the internal audit plan;

· reviewing management’s half year and full year going

concern statement;

· submitting a report on its activities on an annual basis to

shareholders;

· overseeing the company’s integrated reporting and

providing assurance to the board as to the integrity of

information provided in the report. It also provides assurance

to the board that the non-financial aspects of the

sustainability review conforms to the financial information in

terms of accuracy and consistency;

· reviewing fraud prevention policies and processes. The

investigations of the reports made through the “whistle

blowing” process and the actions taken are reviewed and

monitored by the committee on at least a quarterly basis;

· ensuring a smooth and cordial working relationship between

management and the external audit team;

· ensuring that the compliance function is adequately

resourced and is performing its functions adequately;

· conducting an annual self-evaluation of its performance;

· providing oversight role of the financial performance of

relevant subsidiaries;

· reporting annually to the stakeholders and the board as to

the effectiveness of the company’s internal financial

controls; and

· reviews the annual financial statements and the integrated

report of the company and recommends them to the board

for approval.

In relation to risk management, the committee reviews the risk

policies of the company with respect to risk identification and

the risk management process, ensuring that the guidelines of

the King Code and the requirements of the Sarbanes-Oxley

Act are met, as well as advising the board on the effectiveness

of the risk management system. The committee’s role with

respect to risk management has now been vested in the Risk

and Information Integrity Committee. All members of the

committee are also members of the Risk and Information

Integrity Committee.

The committee meets regularly with the external audit

partner, the group's internal auditor and the Chief Financial

Corporate governance

P

187

Officer to review the audit plans of the internal and external

auditors and ascertain the scope of the audits, and to review

the quarterly financial results, significant legal matters

affecting the company, the preliminary announcement of the

annual results and the annual financial statements, as well as

all statutory submissions of a financial nature, prior to

approval by the board.

To facilitate the committee’s role in relation to integrated

reporting, the chairman was appointed to the Safety, Health

and Sustainable Development Committee with effect from

27 October 2009.

Audit fees approved by the committee and paid to the external

auditors in respect of the audit of the 2010 financial statements

amounted to $8m and $2m in respect of other assurance

services. The percentage of non-audit fees as a portion of total

fees paid to the external auditors for 2010 was about 20%.

Meetings of the committee

The committee’s terms of reference stipulates that it holds at

least four meetings in any particular year. The committee has

established an annual work plan to ensure that all relevant

matters are covered by the agendas of the meetings planned

for the year and to ensure adequate coverage of the matters

laid out in the terms of reference.

Permanent attendees to the committee’s meetings include the

Chief Financial Officer, who is also an executive director, the

Vice President: Group Internal Audit, the Executive Vice

President: Business Strategy who is responsible for risk

management, executives responsible for the company’s

operations, the financial controllers of the various regions, the

Group Compliance Manager, head of legal, and the Sarbanes-

Oxley Compliance Manager. The board chairman and the chief

executive officer are also invited to the committees meetings.

At meetings of the committee, the committee fulfilled its

responsibilities set out in this report.

It held four scheduled quarterly meetings during 2010 as

detailed above. In addition, two sub-committee meetings

were held.

Internal audit

The company’s internal audit function plays a critical role in the

functioning of the Audit and Corporate Governance

Committee. The group’s internal audit function is headed by

the Vice President: Group Internal Audit who reports directly to

the committee and also has an administrative reporting line to

the Chief Financial Officer. The group’s internal control

processes and systems are monitored by the group’s internal

audit function.

The Vice President: Internal Audit attends all meetings of the

Audit and Corporate Governance Committee and all Executive

Committee meetings that precede board meetings. He reports

on the group internal control environment, highlighting major

audit findings and remedial measures to address adverse

findings. The committee contributes to the setting of key

performance targets of the internal auditor and evaluates his

performance annually.

As part of processes being put in place to conduct its first

combined assurance, the Group Internal Audit presented a risk

based audit plan to the committee in November 2010, which

was reviewed and approved. The internal auditor has

unrestricted access to both the chief executive officer and the

Attendance at Audit and Corporate Governance Committee meetings – 2010

Members

11 February

3 May

10 August

5 November

Prof LW Nkuhlu (Chairman) » »»»

Mr FB Arisman »»»»

Mr RP Edey

(1)

»»–

–

Mr R Gasant

(2)

–

–

– »

By invitation

Mr M Cutifani »»» X

Mr S Venkatakrishnan »»»»

(1)

Retired on 7 May 2010

(2)

Appointed on 12 August 2010

P

188

AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

chief financial officer, the board chairman and the chairman of

this committee, and is invited to attend and report on his

department's activities at all meetings of the committee. The

board is confident that the unfettered access of the group

internal audit manager to key board members, and the direct

and regular reporting to the committee, enables him to

discharge his duties as required by law and in fulfilment of his

obligations to the company.

In addition, the committee meets quarterly with the internal

and external auditors without the presence of management.

Safety, Health and Sustainable Development
Committee

The Safety, Health and Sustainable Development Committee

oversees the company’s performance on sustainable issues

including safety, health and the environment, and its social

interaction with the communities in which it operates, as well

as the security discipline. The committee ensures that the

company conducts its operations in an economically and

socially responsible manner and in accordance with

sustainable business practices and with due regard to the

safety and health of its employees, communities and the

protection of the natural environment. The committee is also

responsible for establishing targets in relation to each of these

areas. Safety, health and environmental performance and

relations with government, community members and other

stakeholders, form an integral part of operational

management.

Membership of the committee comprises non-executive

directors and the Chief Executive Officer. Its meetings are

attended by several members of the executive team and other

officers of the company whose roles and duties are relevant to

the committee’s mandate. During 2010, the committee

deliberated on the strategies and methodologies that will

enhance the safety and security of all company employees,

and in particular deliberated on the safety concerns faced by

the company's South African mines.

Four scheduled quarterly meetings were held during 2010 as

detailed below:

Corporate governance

Attendance at Safety, Health and Sustainable Development Committee meetings – 2010

Members

15 February

4 May

5 August

8 November

Mr WA Nairn (Chairman) »»»»

Mr FB Arisman

(1)

–

–»»

Mr M Cutifani»»»»

Dr TJ Motlatsi X » »»

Prof LW Nkuhlu »»»»

Mr F Ohene-Kena

(1)

–

–»»

Mr SM Pityana »»»»

By invitation

Mr FB Arisman»»

–

–

Mr RP Edey

(2)

»»–

–

(1)

Appointed on 1 August 2010

(2)

Retired on 7 May 2010

Remuneration Committee

The Remuneration Committee comprises only independent

non-executive directors and is responsible for evaluating the

performance of executive directors and executive management,

and for setting appropriate remuneration for such officers of

the company.

The performance of each executive director is assessed relative to

the prevailing business climate and market conditions, as well as

to annual evaluations of the achievement of key predetermined

targets. Bonuses paid to executive directors are a reflection of the

performance of each of the directors and the company as a whole.

Full details of the company's remuneration philosophy, matters

deliberated on by the committee during 2010, remuneration

payments for all directors and information on the Share Incentive

Scheme are available in the Remuneration Report from page 226

of this report.

P

189

Attendance at Remuneration Committee meetings – 2010

Members

11 February

9 March

4 May

5 August

8 November

Mr SM Pityana (Chairman)»»»»»

Mr FB Arisman »»»»»

Mr RP Edey

(1)

»»»–

–

Dr TJ Motlatsi X»»»»

Prof LW Nkuhlu »»»»»

By invitation

Mr M Cutifani »»»»»

Mr TT Mboweni

(2)

–

–

– »»

(1)

Retired on 7 May 2010

(2)

Appointed on 1 August 2010

Nominations Committee

The appointment of directors is a matter for the board as a

whole but the Nominations Committee, whose membership

comprises of only independent non-executive directors, is

responsible for identifying, assessing and recommending

suitable candidates for appointment to the board. The fit and

proper standards policy for directors guides this process. The

committee is also responsible for establishing and reviewing

succession plans for members of the board, particularly those

of the chief executive officer and the board chairman.

During the year the committee conducted several interviews

with potential candidates for the position of chairman of the

board and other independent non-executive directors. Four

meetings were held in addition to the interview sessions.

Attendance at Nominations Committee meetings – 2010

Members

12 February 15 February

22 February

5 August

Mr RP Edey (Chairman)

(1)

»»»–

Mr TT Mboweni (Chairman)

(2)

–

–

–»

Mr FB Arisman»»»»

Mr R Gasant

(3)

–

–

–

–

Dr JT Motlatsi»»»»

Mr WA Nairn»»»»

Prof LW Nkuhlu»»»»

Mr F Ohene-Kena

(2)

–

–

–»

Mr SM Pityana»» ¤ »

By invitation

Mr M Cutifani

–

–»»

Mr S Venkatakrishnan

–»»»

(1)

Retired on 7 May 2010

(2)

Appointed on 1 August 2010

(3)

Appointed on 12 August 2010

Risk and Information Integrity Committee

In February 2009, the board approved a comprehensive Group

Risk and Opportunity Report and Framework that marked a

new approach to risk management in the company. The main

aim was to ensure that risk management became embedded

into all the company’s business practices and processes, as

well as policy and strategic planning. This approach would

ensure that risk was regarded as one of the key tools for the

achievement of business objectives and not only a compliance

issue. Implementation of the new risk management framework

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AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

commenced in the second half of 2009 and has achieved

significant successes.

Risk management, together with information technology

management, has assumed greater importance in corporate

governance in South Africa as evidenced by recommendations

in King III. The board of AngloGold Ashanti, was cognisant of

the fact that information plays a key role in the operations of the

company, and resolved to establish the Risk and Information

Integrity committee to oversee Risk Management and

Information Technology Governance and as required by King III,

the board has developed a framework for IT governance.

The board approved the terms of reference as well as the

membership of the committee on 10 August 2010. Members of

the committee comprise both executive and non-executive

directors as follows: Messrs R Gasant, M Cutifani, FB Arisman,

WA Nairn, SM Pityana, S Venkatakrishnan and Prof LW Nkuhlu.

The committee held its first meeting on 5 November 2010

during which it reviewed its terms of reference, membership

and meeting procedures. The meeting was chaired by the Chief

Executive Officer and all members, except Mr R Gasant, were

present. At its meeting held on 9 November, the board

appointed Mr Gasant as chairman of the committee.

The main function of the committee as outlined in its terms of

reference is to assist the board in carrying out its risk

responsibilities and to advise the board on the effectiveness of

the risk and information integrity management processes and

to ensure that information technology and compliance risk are

integral parts of risk management.

In February 2011, the board approved the following

documents:

a. Risk Management Policy;

b. Risk Management Plan; and

c. Risk Management Standard.

The board reviewed the ten most important risks facing the

company. In addition, a risk register is being reviewed by the

committee at least twice a year and for 2011, Internal Audit

will give assurance on the effectiveness of implementation of

risk management.

Transformation and Human Resources

Development Committee

The committee is responsible for overseeing the company's

performance in respect of employment equity, transformation

and staff development by taking into account the legal

requirements of applicable legislation and the monitoring of

targets set by the company, including the monitoring of the

Mining Charter in its entirety and all legislative requirements

impacting on the company's right to mine at all its operations.

The committee is also responsible for employee skills

development in a manner that seeks to develop and retain

talent, and to provide employees with the opportunity to

enhance their skills and knowledge. Details of the company's

employment equity practices and performance during the year,

as well as the challenges the company faces in this regard are

provided in the Sustainability Review 2010 which is available

on the company’s website. The committee held four scheduled

quarterly meetings in 2010.

Corporate governance

Attendance at Transformation and Human Resources Development Committee meetings – 2010

Members

15 February

4 May

5 August

8 November

Dr TJ Motlatsi (Chairman) X »»»

Mr FB Arisman

(1)

»»–

–

Mr M Cutifani»»»»

Mr WA Nairn»»»»

Mr F Ohene-Kena

(2)

–

–»»

Mr SM Pityana »»»»

(1)

Resigned from committee on 1 August 2010

(2)

Appointed on 1 August 2010

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Investment Committee

This committee is responsible for overseeing and reviewing AngloGold Ashanti's strategic investments which includes the acquisition

and disposal of assets, capital expenditure and projects.

Attendance at Investment Committee meetings – 2010

Members

11 February

3 May

6 August

5 November

Mr RP Edey (Chairman)

(1)

»» –

–

Mr FB Arisman (Chairman)

(2)

–

–»»

Mr M Cutifani »»»»

Mr TT Mboweni

(3)

–

–»»

Mr WA Nairn»»»»

Mr SM Pityana» X » X

Mr S Venkatakrishnan X »»»

By invitation

Mr FB Arisman

»»–

–

(1)

Retired on 7 May 2010

(2)

Appointed chairman on 1 August 2010

(3)

Appointed 1 August 2010

Financial Analysis Committee

The Financial Analysis Committee is composed of only non-

executive directors, but its meetings are attended by the Chief

Executive Officer and the Chief Financial Officer. Other

attendees to the committee’s meetings include the Executive

Vice President, Business Strategy and Organisational

Effectiveness and members of the finance and treasury

management teams. Mr Arisman assumed the chairmanship

of the committee with effect from 1 August 2010 following the

resignation of Mr Edey from the committee on 7 May 2010.

It is authorised by the board of the company to review and

analyse issues and matters relating to aspects of the

company’s financial management, including exchange and

commodities markets, the hedge book management and its

reduction strategies, operations cash flow requirements and

asset sales.

The committee meets on a needs basis. In 2010, it met four

times to deliberate on various transactions that were

undertaken by the company relating to debt financing and the

management of the hedge book.

Attendance at Financial Analysis Committee meetings – 2010

Members

28 January

20 April 9 September

5 November

Mr FB Arisman (Chairman) »»»»

Mr RP Edey

(1)

»»–

–

Mr R Gasant

(2)

–

–»»

Mr TT Mboweni

(3)

–

–»»

Prof LW Nkuhlu»»»»

Mr SM Pityana»» X ¤

(1)

Retired on 7 May 2010

(2)

Appointed on 12 August 2010

(3)

Appointed on 1 August 2010

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AngloGold Ashanti Annual Financial Statements 2010

Corporate governance

Party Political Donations Committee

The membership of the Party Political Donations Committee

comprises the South African resident independent non-executive

directors and the Chief Executive Officer, namely Messrs

M Cutifani, R Gasant, TT Mboweni, WA Nairn, SM Pityana and

Prof LW Nkuhlu and is chaired by the deputy chairman of the

board, Dr TJ Motlatsi. No meeting was held in 2010.

The committee determines the funding of political parties

in South Africa in accordance with principles set out in

the political donations policy adopted by the board on

29 April 2003.

Executive Committee

This committee is chaired by Mr Mark Cutifani, the Chief

Executive Officer and comprises members of the executive

team as detailed from page 148. The committee is

responsible for overseeing the day-to-day management of

the company's affairs and for executing the decisions of the

board. It meets at least monthly and is actively involved in the

strategy development, review of the company's values,

safety performance, operations and exploration profiles and

financial affairs.

Disclosures Committee

AngloGold Ashanti believes in the dissemination of credible,

accurate and verifiable information. Accordingly, a Disclosures

Committee, comprising senior management, has been

established to manage compliance with the company’s

continuous disclosure obligations and communications policy.

In accordance with the updated Disclosures Policy approved

by the board on 5 May 2010, the committee ensures that

adequate guidelines are put in place to facilitate the process of

material disclosure of company information, and bears

responsibility for certain categories of information gathering

and processes.

Company secretary

The company secretary assists the board in its deliberations,

drawing the attention of members to their duties and ensuring,

together with the executive directors and senior management,

that decisions of the board are properly recorded, appropriately

communicated and implemented. The company secretary, in

collaboration with the Group Compliance Manager, is

responsible for ensuring that new directors are effectively

inducted in terms of their duties and responsibilities. Together

with the investor relations department, the company secretary

provides a direct communication link with investors and liaises

with the company's share registrars on all issues affecting

shareholders. The company secretarial function, in consultation

with other departments, provides mandatory information

required by various regulatory bodies and stock exchanges on

which the company is listed. The company secretary ensures

compliance with all the statutory requirements relating to the

administration of the company’s share incentive scheme. She

also ensures that minutes of meetings of shareholders, board

and board committees are properly recorded in accordance

with the South African Companies Act 61 of 1973, as

amended. The company secretarial function coordinates the

board’s annual evaluation process.

Legal and regulatory compliance

Legal and regulatory compliance forms an important

component of AngloGold Ashanti’s corporate governance

structure given the company’s geographic spread.

AngloGold Ashanti recognises that compliance with laws and

regulations of the jurisdictions in which the company has

operations promotes and sustains the reputation and standing

of the company and meets the expectations of the market and

society while assisting in building and maintaining a

sustainable business. In this regard, the board has established

Corporate governance

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193

the Compliance Department, headed by the Group

Compliance Manager. The compliance function has the

responsibility for advising and assisting the board of directors

and management in designing and implementing appropriate

compliance management policies and procedures; in

awareness training; in assessing, monitoring and reporting on

the company’s compliance programmes and practices; in

implementing strategies that reinforce a safe, transparent and

ethical working environment; and in ensuring consistent

enforcement of policies, standards and procedures.

In furtherance of its commitment to legal and regulatory

compliance, the board of directors approved a Compliance

Policy Statement in October 2009. The policy seeks to

establish, promote and maintain values based on compliance

and an ethical culture within the spirit of the laws, regulations,

codes and standards applicable in the company’s operating

jurisdictions, and in the context of the company’s values,

internal policies and procedures.

Compliance activities in 2010

In line with its commitment to develop and adhere to value-

based principles, policies and procedures to guide its

employees in the performance of their duties and conduct of

internal relationships and interactions with external

stakeholders, a new Code of Business Principles and Ethics

was approved by the board on 10 August 2010.

Following the approval of the Code, a steering committee was

formed comprising members of the following department:

Compliance, Company Secretarial, Information Technology,

Corporate Communication, Human Resources, Internal Audit

and other relevant departments to coordinate the

implementation of the Code. This was partly in fulfilment of

regulations of the US Securities and Exchange Commission

which require companies listed on the New York Stock

Exchange to demonstrate the existence of an effective

compliance programme which should include the distribution

of a code of ethics to all employees and relevant third parties

and the company’s commitment to embedding ethical

behaviour among its employees and other stakeholders.

An 18-month implementation programme was developed to

guide the implementation of the Code. The roll-out will

encompass communication and awareness raising

campaigns, training in various forms and documented

guidance for managing unethical situations.

To further demonstrate the importance of ethics in the

company’s governance practices and the board’s commitment

to the promotion of ethical conduct, the Code was formally

launched by the chief executive officer on 25 November 2010.

The launch was attended by the chairman of the Audit and

Corporate Governance Committee, several members of

management and a cross section of corporate office employees.

Given its geographic spread and the diverse nature of

legislations and statutes, country representatives are being

identified to oversee local compliance programmes, especially

as they relate to the implementation plan for the code.

As part of efforts to inculcate ethical conduct among its

employees, an anti-corruption workshop was facilitated by the

Ethics Institute of South Africa on 23 November 2010 and

attended by the Chairman of the Audit and Corporate

Governance Committee, who presented the key note address.

The Chief Executive Officer and other senior managers, as well

corporate office employees participated in the workshop.

Three workshops on King III, facilitated by corporate

governance experts, also took place at the corporate office to

educate employees on the requirements of the code.

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

AngloGold Ashanti has in place the systems necessary to

assist management and the board to effectively manage

the wide range of risks faced by the group's operations

so as to promote the creation and preservation of

shareholder wealth.

The board is satisfied that there is an ongoing process to

identify, evaluate and manage significant risks and establish

internal controls. Weaknesses identified within the company

are promptly addressed given that risk mitigation processes

are part of its overall risk management framework. The group

has a sound system of internal controls, based on policies and

guidelines, in all material subsidiaries and joint ventures under

its control.

The board reviews and approves the risk strategy and policies

formulated by executive directors and senior management.

Management is accountable to the board and has established

a system of internal controls to manage significant group risk.

This system assists the board in discharging its responsibility

to ensure that the wide range of risks associated with the

group's global operations are effectively managed in support

of the goal to create and preserve shareholder wealth. Full

reviews of risk controls and disclosure processes are

undertaken regularly.

AngloGold Ashanti has established a group risk management

policy with supporting standards that provide an overarching

and consistent framework to assess and manage risks, which

are ranked using a common methodology. Risks assessed as

material are reported and reviewed by senior management.

The company’s risk management systems meet the

requirements of the King Committee on Governance: Code of

Governance Principles for South Africa (King III) and the United

States Sarbanes-Oxley Act (SOX).

In conducting its annual review of the effectiveness of

AngloGold Ashanti’s risk management practices, the board

considers the key findings from the ongoing monitoring and

reporting process, management assertions and independent

assurance reports. The board also takes account of material

changes and trends in the risk profile, and considers whether

the control system, including reporting, adequately supports

the board’s risk management objectives. The board also

receives assurance from the Audit and Corporate Governance

Committee, which derives information from regular internal and

external audit reports and other reports on financial risk and

internal control throughout the group. The Risk and Information

Integrity Committee was constituted in accordance with the

South African Company’s Act 2008 and King III.

The Chief Executive Officer and Chief Financial Officer are both

required by SOX to certify on Form 20-F that group financial

statements present a true and fair view of the group's financial

position, cash flows and operational results, in accordance

with US (GAAP). Both officers are also responsible for

establishing and maintaining disclosure, internal controls and

procedures for financial reporting. The certification process is

pre-approved by the board of directors prior to filing Form 20-

F with the Securities and Exchange Commission (SEC).

All key components of the 'Enterprise Risk Management –

Integrated Framework' issued by the Committee of

Sponsoring Organisations of the Treadway Commission

Risk management and internal controls

Systems in place to

and manage

risks

assess

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195

(COSO) have been incorporated into the group's process to

comply with SOX section 404 dealing with the group’s internal

control system. Requirements of King III and International

Standard ISO/DIS 31000 ‘Risk Management – Principles and

Guidelines on Implementation’ are also included.

In respect of those entities in which AngloGold Ashanti does

not have a controlling interest, its representatives on the

boards of these entities seek assurance that significant risks

are being managed.

Risk factors

This section describes many of the risks that could affect

AngloGold Ashanti. However, there may be additional risks

unknown to AngloGold Ashanti and other risks, currently

believed to be immaterial, that could turn out to be material.

These risks, either individually or simultaneously, could

significantly affect the group’s business, financial results and

the price of its securities.

Risks related to AngloGold Ashanti’s results of
operations and its financial condition as a result
of factors that impact the gold mining industry
generally

Commodity market price fluctuations could adversely

affect the profitability of AngloGold Ashanti’s operations.

AngloGold Ashanti’s revenues are primarily derived from the

sale of gold and, to a lesser extent, uranium, silver and

sulphuric acid. The market prices for these commodities

fluctuate widely. These fluctuations are caused by numerous

factors beyond the company’s control. For example, the market

price of gold may fluctuate for a variety of reasons, including:

· Speculative positions taken by investors or traders in gold;

·Changes in the demand for gold as an investment;

·Changes in the demand for gold used in jewellery and for

other industrial uses, including as a result of prevailing

economic conditions;

·Changes in the supply of gold from production,

disinvestment, scrap and hedging;

·Financial market expectations regarding the rate of inflation;

·Strength of the US dollar (the currency in which the gold

price trades internationally) relative to other currencies;

·Changes in interest rates;

·Actual or expected sales or purchases of gold by central

banks and the International Monetary Fund;

·Gold hedging and de-hedging by gold producers;

·Global or regional political or economic events; and

·The cost of gold production in major gold producing countries.

The market price of gold has experienced significant volatility.

During 2010, the gold price traded from a high of $1,431 per

ounce to a low of $1,044 per ounce. On 10 March 2011, the

afternoon fixing price of gold on the London Bullion Market

was $1,413.25 per ounce.

The price of gold is often subject to sharp, short-term changes

resulting from speculative activities. While the overall supply of

and demand for gold can affect its market price, because of

the considerable size of above-ground stocks of the metal in

comparison to other commodities, these factors typically do

not affect the gold price in the same manner or degree that the

supply of and demand for other commodities tends to affect

their market price. In addition, the shift in gold demand from

physical demand to investment and speculative demand may

exacerbate the volatility of gold prices.

A sustained period of significant gold price volatility may

adversely affect the company’s ability to evaluate the feasibility

of undertaking new capital projects or continuing existing

operations or to make other long-term strategic decisions.

If revenue from gold sales falls below the cost of production for

an extended period, AngloGold Ashanti may experience losses

and be forced to change its dividend payment policies and/or

curtail or suspend some or all of its capital projects and/or

existing operations.

Foreign exchange fluctuations could have a material

adverse effect on AngloGold Ashanti’s operational results

and financial condition.

Gold is principally a dollar-priced commodity, and most of the

company’s revenues are realised in, or linked to, dollars while

production costs are largely incurred in the local currency

where the relevant operation is located. As a result of the

company’s global operations and local foreign exchange

regulations, some of its funds are held in local currencies such

as the South African rand and the Australian dollar. The

weakening of the dollar, without a corresponding increase in

the dollar price of gold against these local currencies, results in

higher production costs in dollar terms. Conversely, the

strengthening of the dollar, without a corresponding decrease

in the dollar price of gold against these local currencies, yields

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

lower production costs in dollar terms. Exchange rate

movements may have a material impact on AngloGold

Ashanti’s operating results. For example, a 1% strengthening

of the South African rand, Brazilian real, the Argentinean peso

and the Australian dollar against the US dollar will, other

factors remaining equal, result in an increase in total cash

costs under IFRS of nearly $5 per ounce or approximately 1%

of the company’s total cash costs. The impact on cash costs

determined under US GAAP may be different.

The profitability of AngloGold Ashanti’s operations, and the

cash flows generated by these operations, are significantly

affected by fluctuations in input production prices, many of

which are linked to the prices of oil and steel.

Fuel, energy and consumables, including diesel, heavy fuel oil,

chemical reagents, explosives, tyres, steel and mining

equipment consumed in mining operations form a relatively

large part of the operating costs and/or capital expenditures of

any mining company.

AngloGold Ashanti has no influence over the cost of these

consumables, many of which are linked to some degree to the

price of oil and steel.

The price of oil has recently been volatile, fluctuating between

$65.99 and $95.12 per barrel of Brent crude in 2010.

AngloGold Ashanti estimates that for each $1 per barrel rise in

the oil price, other factors remaining equal, the average cash

costs under IFRS of all its operations increases by about $0.50

per ounce with the cash costs of certain of the company’s

mines, particularly Geita, Cripple Creek & Victor, Siguiri and

Sadiola, which, being more dependent on fuel, are more

sensitive to changes in the price of oil.

Furthermore, there has also been volatility recently in the price

of steel, used in the manufacture of most forms of fixed and

mobile mining equipment, which is a relatively large contributor

to the operating costs and capital expenditure of a mine. For

example, the price of flat Hot Rolled Coil (North American

Domestic FOB) steel traded between $557 per tonne and

$698 per tonne in 2010.

Fluctuations in oil and steel prices have a significant impact on

operating cost and capital expenditure estimates and, in the

absence of other economic fluctuations, could result in

significant changes in the total expenditure estimates for new

mining projects or render certain projects non-viable.

Energy cost increases, and power fluctuations and

stoppages, could adversely impact AngloGold Ashanti’s

results of operations and its financial condition.

AngloGold Ashanti’s mining operations are dependent upon

electrical power generated by local utilities or by power plants

situated at some of its operations.

In South Africa, the company’s operations are substantially

dependent on electricity supplied by Eskom, the state-owned

utility. Eskom and the National Energy Regulator of South

Africa, or NERSA, recognise the need to increase electricity

supply capacity and a series of tariff increases and proposals

have been tabled to assist in the funding of this expansion. On

24 February 2010, NERSA approved an annual increase of

about 25% for each of the next three years. As energy

represents a large proportion of the company’s operating

costs in South Africa, these increases have an adverse impact

on the cash costs of its South African operations. In 2008,

Eskom warned it could no longer guarantee electricity

availability to the South African mining industry. Consequently,

AngloGold Ashanti and other mining companies operating in

South Africa, were forced to temporarily suspend mining

operations at their mines. The company has since implemented

various initiatives at its South African mines to reduce electricity

consumption whilst operating at full capacity. AngloGold

Ashanti cannot assure that power supply to its South African

operations will not be curtailed or interrupted again.

In Ghana, the company’s operations depend on hydroelectric

power supplied by the state-controlled Volta River Authority

(VRA), which is supplemented by thermal power from the

Takoradi plant and a smaller unit at Tema. During periods of

below average inflows from the Volta reservoir, electricity

supplies from the Akosombo Dam, the VRA’s primary

generation source, may be curtailed; which occurred in 1998,

2006 and the first half of 2007. During periods of limited

electricity availability, the grid is subject to disturbances and

voltage fluctuations which can damage equipment. In the past,

the VRA has obtained power from neighbouring Côte d’Ivoire,

which has intermittently experienced political instability and

civil unrest. On 1 June 2010, the VRA increased Obuasi’s

electricity tariffs (excluding transmission charges and levies)

from 9.3 to 12.4 US cents per kilowatt hour through to the end

of 2010. According to the formula agreed with the

government, the rate is then anticipated to decline to 11.2 US

cents per kilowatt hour. These rates are expected to remain at

these levels in the short term, but could be impacted by a

significant spike in crude oil prices, given Ghana’s dependence

on light crude oil for thermal power plants. At Iduapriem,

Risk management and internal controls

P

197

negotiations regarding the increased power tariff (currently

10.2 cents per kilowatt hour) are still to be concluded.

Increased power prices could negatively impact operating

costs and cash flow of AngloGold Ashanti’s Ghanaian

operations.

The company’s mining operations in Guinea, Tanzania and Mali

are dependent on power supplied by outside contractors and

supplies of fuel delivered by road. Power supplies have been

disrupted in the past, resulting in production losses due to

equipment failure.

Global economic conditions could adversely affect the

profitability of AngloGold Ashanti’s operations.

AngloGold Ashanti’s operations and performance depend

significantly on worldwide economic conditions.

A global economic downturn may have follow-on effects on

AngloGold Ashanti’s business. For example:

·The insolvency of key suppliers could result in a supply chain

break-down;

·Other income and expense could vary materially from

expectations depending on gains or losses realised on the

sale or exchange of financial instruments and impairment

charges may be incurred with respect to our investments;

·AngloGold Ashanti’s defined benefit pension fund may not

achieve expected returns on its investments, which could

require the company to make substantial cash payments to

fund any resulting deficits; and

·A reduction in the availability of credit may make it more

difficult for the company to obtain financing for its operations

and capital expenditures or make that financing more costly.

In addition, uncertainty regarding global economic conditions

may also increase the volatility or negatively impact the market

value of the company’s securities.

Inflation may have a material adverse effect on AngloGold

Ashanti’s operational results.

Most of AngloGold Ashanti’s operations are located in

countries that have experienced high rates of inflation during

certain periods.

Since the company is unable to influence the market price of

gold, it is possible that significantly higher future inflation in the

countries in which it operates may result in an increase in

future operational costs in local currencies (without a

concurrent devaluation of the local currency of operations

against the dollar or an increase in the dollar price of gold). This

could have a material adverse effect upon the company’s

results of operations and its financial condition.

While none of AngloGold Ashanti’s operations are currently

materially adversely affected by inflation, significantly higher

and sustained inflation in the future, with a consequent

increase in operational costs, could result in the rationalisation

of higher cost mines.

AngloGold Ashanti faces many risks related to the

development of its mining projects that may adversely

affect the company’s results of operations and profitability.

The profitability of mining companies depends partly on the

actual costs of developing and operating mines, which may

differ significantly from estimates determined at the time the

relevant project was approved following completion of its

feasibility study. Development of mining projects may also be

subject to unexpected problems and delays that could increase

the development and operating costs of the relevant project.

AngloGold Ashanti’s decision to develop a mineral property is

typically based on the results of a feasibility study, which

estimates anticipated economic returns from the project.

These estimates are based on assumptions regarding:

·future prices of gold, uranium, silver and other metals;

·future currency exchange rates;

·tonnage, grades and metallurgical characteristics of ore to

be mined and processed;

·anticipated recovery rates of gold, uranium, silver and other

metals extracted from the ore;

·anticipated capital expenditure and cash operating costs;

and

·the required return on investment.

Actual cash operating costs, production and economic returns

may differ significantly from those anticipated by such studies

and estimates. Operating costs and capital expenditure are to

a significant extent driven by the cost of commodity inputs

consumed in mining, including fuel, chemical reagents,

explosives, tyres and steel, and also by credits from by-

products, such as silver and uranium.

There are a number of uncertainties inherent in the

development and construction of a new mine or the extension

to an existing mine. In addition to those discussed above,

these uncertainties include the:

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

· timing and cost of construction of mining and processing

facilities, which can be considerable;

·availability and cost of skilled labour, power, water and

transportation;

·availability and cost of appropriate smelting and refining

arrangements;

·requirement and time needed to obtain necessary

environmental and other governmental permits; and

·availability of funds to finance construction and development

activities.

The remote location of many mining properties, permitting

delays, and/or social or political opposition to mining may

increase the cost, timing and complexity of mine development

and construction. New mining operations could experience

unexpected problems and delays during development,

construction, commissioning and/or commencement of

production. The global demand for mining and processing

equipment may result in long lead times for the supply of such

equipment. Finally, operating cost and capital expenditure

estimates could fluctuate considerably as a result of changes

in the prices of commodities consumed and mining equipment

used in the construction and operation of mining projects.

Accordingly, AngloGold Ashanti’s future development activities

may not result in the expansion or replacement of current

production, or one or more new production sites or facilities

may be less profitable than currently anticipated or may not be

profitable at all. The company’s operating results and financial

conditions are directly related to the success of its project

developments. A failure of the company’s ability to develop and

operate mining projects in accordance with, or in excess of,

expectations could negatively impact its results of operations,

as well as its financial condition and prospects.

AngloGold Ashanti faces uncertainty and risks in

exploration, feasibility studies and other project

evaluation activities.

Exploration activities are speculative in nature and feasibility

studies and other project evaluation activities necessary to

determine the current or future viability of a mining operation,

are often unproductive. These activities often require

substantial expenditure on exploration drilling to establish the

presence, extent and grade (metal content) of mineralised

material. AngloGold Ashanti undertakes feasibility studies to

estimate technical and economic viability of mining projects

and to determine appropriate mining methods and

metallurgical recovery processes. These activities are

undertaken to estimate the Ore Reserve.

Once mineralisation is discovered it may take several years

to determine whether adequate Ore Reserves exist, during

which time the economic feasibility of the project may

change due to fluctuations in factors that affect both

revenue and costs, including the:

·future prices of metals and other commodities;

·future foreign currency exchange rates; and

·required return on investment as based on the cost and

availability of capital.

Feasibility studies also include activities to estimate anticipated:

·tonnages, grades and metallurgical characteristics of the ore

to be mined and processed;

·recovery rates of gold, uranium and other metals from the

ore; and

·capital expenditure and cash operating costs.

These estimates depend on assumptions made on available

data. Ore Reserve estimates are not precise calculations and

depend on the interpretation of limited information on the

location, shape and continuity of the mineral occurrence and

on the available sampling results. Further exploration and

feasibility studies can result in new data becoming available

that may change previous Ore Reserve estimates which will

impact the technical and economic viability of production from

the project. Changes in the forecast prices of commodities,

exchange rates, production costs or recovery rates may

change the economic status of reserves resulting in revisions

to previous Ore Reserve estimates. These revisions could

impact depreciation and amortisation rates, asset-carrying

values, provisions for closedown, restoration and

environmental clean-up costs.

AngloGold Ashanti undertakes annual revisions to its Ore

Reserve estimates based upon actual exploration and

production results, depletion, new information on geology and

fluctuations in production, economic assumptions and

operating and other costs. These factors may result in

reductions in the Ore Reserve estimates, which could

adversely affect the life-of-mine plans and consequently the

total value of the company’s mining asset base. Ore Reserve

restatements could negatively affect the company’s results of

operations, as well as its financial condition and prospects.

The increased demand for gold and other commodities,

combined with a declining rate of discovery of new gold Ore

Reserves, has in recent years resulted in accelerated depletion

of existing Ore Reserves across the global gold sector.

AngloGold Ashanti therefore faces intense competition for the

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acquisition of attractive mining properties. From time to time,

the company evaluates the acquisition of Ore Reserves,

development properties and operating mines, either as stand-

alone assets or as part of companies. AngloGold Ashanti’s

decision to acquire these properties has been based on a

variety of factors including historical operating results, estimates

and assumptions regarding the extent of Ore Reserve, cash

and other operating costs, gold prices, projected economic

returns and evaluations of existing or potential liabilities

associated with the relevant property and its operations and

how these factors may change in future. Other than historical

operating results, these factors are uncertain and could have an

impact on revenue, cash and other operating costs, as well as

the process used to estimate Ore Reserves.

As a result of these uncertainties, exploration and acquisitions

by the company may not result in the expansion or

replacement of current production or a maintenance of its

existing Ore Reserves net of production or increase in Ore

Reserves. AngloGold Ashanti’s results of operations and its

financial condition are directly related to the success of its

exploration and acquisition efforts and its ability to replace or

increase existing Ore Reserves. If the company is not able to

maintain or increase its Ore Reserves, its results of operations,

as well as its financial condition and prospects could be

adversely affected.

AngloGold Ashanti faces many risks related to its

operations that may adversely impact cash flows and

overall profitability.

Gold mining is susceptible to events that may adversely impact

a mining company’s ability to produce gold and meet

production targets. These events include, but are not limited to:

· environmental hazards, including discharge of metals,

pollutants, radioactivity or hazardous chemicals; industrial

accidents or accidents during transportation;

· underground fires;

· labour disputes;

· loss of information integrity or data;

· activities of illegal or artisanal miners;

· mechanical breakdowns;

· electrical power interruptions;

· encountering unexpected geological formations;

· unanticipated ground conditions;

· water ingress;

· process water shortages;

· unanticipated increases in gold lock-up and inventory levels

at heap-leach operations;

· fall-of-ground accidents in underground operations;

· failure of mining pit slopes, heap-leach facilities, water dams,

waste stockpiles and tailings dam walls;

· legal and regulatory restrictions and changes to such

restrictions;

· safety-related stoppages;

· seismic activity; and

· other natural phenomena, such as floods, droughts or

inclement weather conditions, potentially exacerbated by

climate change.

Seismic activity is of particular concern in underground mining

operations, particularly in South Africa due to the extent and

extreme depth of mining, and also in Australia and Brazil due

to the depth of mining and residual tectonic stresses. Despite

modifications to mine layouts and support technology, as well

as other technological improvements employed with a view to

minimising incidence and impact of seismic activity, seismic

events have caused death and injury to employees and

contractors and may do so again in future.

Seismic activity may also cause the loss of mining equipment,

damage or destruction of mineral properties or production

facilities, monetary losses, environmental damage and

potential legal liabilities in South Africa and elsewhere where

seismic activity may be a factor. As a result, these events may

have a material adverse effect on AngloGold Ashanti’s results

of operations and financial condition.

AngloGold Ashanti is subject to extensive health and

safety laws and regulations.

Gold mining operations are subject to a variety of industry-

specific health and safety laws and regulations depending on

which jurisdiction they are located. These laws and

regulations are designed to protect and improve the safety

and health of employees.

From time to time, new or improved health and safety laws and

regulations are introduced in jurisdictions in which AngloGold

Ashanti operates. Should compliance with new standards

require a material increase in expenditure or material

interruptions to operations or production, including as a result

of any temporary failure to comply with applicable regulations,

the results of operations and the financial condition of the

company could be adversely affected. In South Africa, for

example, the government has introduced compulsory

shutdowns of operations to enable investigations into the

cause of accidents at those operations. Certain of the

company’s operations have been temporarily suspended for

this reason in the past.

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

AngloGold Ashanti’s reputation as a responsible company

and employer could be damaged by any significant

governmental investigation or enforcement of health and

safety standards. Any of these factors could have a material

adverse effect on the company’s results of operations and

financial condition.

Mining companies are increasingly required to consider and

ensure the sustainable development of, and provide benefits

to, the communities and countries in which they operate.

As a result of public concern about the perceived ill effects of

economic globalisation, businesses in general and large

multinational corporations such as AngloGold Ashanti, in

particular, face increasing public scrutiny of their activities.

These businesses are under pressure to demonstrate that

while companies seek a satisfactory return on investment for

shareholders, other stakeholders including employees,

communities surrounding operations and the countries in

which they operate, also benefit from their commercial

activities. Such pressures tend to be particularly focused on

companies whose activities are perceived to have a high

impact on their social and physical environment. The potential

consequences of these pressures include reputational

damage, legal suits and social spending obligations.

Existing and proposed mining operations are often located at or

near existing towns and villages, natural water courses and

other infrastructure. Mining operations must therefore be

designed to minimise their impact on such communities and the

environment, either by changing mining plans to avoid such

impact, by modifying mining plans and operations or by

relocating the affected people to an agreed location. These

measures may include agreed levels of compensation for any

adverse impact the mining operation may continue to have upon

the community. The cost of these measures could increase

capital and operating costs and therefore could have an adverse

impact upon AngloGold Ashanti’s results of operations and

financial condition.

Mining companies are subject to extensive environmental

laws and regulations.

Mining companies are subject to extensive environmental laws

and regulations in the various jurisdictions in which they

operate. These regulations establish limits and conditions on

producers’ ability to conduct their operations. The cost of

compliance with environmental laws and regulations is

expected to continue to be significant to AngloGold Ashanti.

Environmental laws and regulations are continually changing

and are generally becoming more restrictive. In particular, the

use of sodium cyanide in metallurgical processing is under

increasing environmental scrutiny and prohibited in certain

jurisdictions. Changes to AngloGold Ashanti’s environmental

compliance obligations or operating practices could adversely

affect the company’s rate of production and revenue.

Variations in laws and regulations, assumptions made to

estimate liabilities, standards or operating procedures, more

stringent emission or pollution thresholds or controls, or the

occurrence of unanticipated conditions, may require

operations to be suspended and could increase AngloGold

Ashanti’s expenses and provisions. These expenses and

provisions could adversely affect the company’s results of

operations and its financial condition.

Mining companies are required by law to close their operations

at the end of the mine life and rehabilitate the lands they mine.

Estimates of the total ultimate closure and rehabilitation costs

for gold mining operations are significant and based principally

on current legal and regulatory requirements that may change

materially. Environmental liabilities are accrued when they

become known, probable and can be reasonably estimated.

Increasingly, regulators are seeking security in the form of cash

collateral or bank guarantees in respect of environmental

obligations, which could have an adverse impact on

AngloGold Ashanti’s financial condition.

Costs associated with rehabilitating land disturbed by mining

processes and addressing the environmental, health and

community issues are estimated and financial provision made

based upon current available information. Estimates may,

however, be insufficient and further costs may be identified at

any stage. Any underestimated or unidentified rehabilitation

costs would reduce earnings and could materially and

adversely affect the company’s asset values, earnings and

cash flows.

Compliance with emerging climate change regulation

could result in significant costs to AngloGold Ashanti and

climate change may present physical risks to the

company’s operations.

Greenhouse gases, or GHGs, are emitted directly by

AngloGold Ashanti’s operations and indirectly as a result of the

consumption of electricity purchased from external utilities.

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Emissions from electricity consumption are indirectly

attributable to its operations. Currently, a number of

international and national measures to address or limit GHG

emissions, including the Kyoto Protocol and the Copenhagen

Accord, are in various phases of discussion or implementation

in the countries in which the company operates. These

measures could result in requirements for AngloGold Ashanti

to reduce its direct and indirect GHG emissions.

The Australian government, elected in late 2010, has

established an intensive process to gauge support and shape

debate on possible interventions, including introduction of a

carbon price, to address climate-change impacts in Australia.

Its stated intention is to achieve consensus and announce the

nature of key interventions by the end of parliament, which is

debating the introduction of the Carbon Pollution Reduction

Scheme, which would cap national emissions and require

certain companies whose emissions exceed the agreed

threshold to obtain allowances to emit GHGs. AngloGold

Ashanti may be required under this scheme to purchase

allowances for emissions starting in 2011. The company is

already required to report its GHG emissions to the Australian

government under the National Greenhouse and Energy

Reporting Act.

The South African government published a climate change

response green paper in November 2010 and a carbon tax

discussion paper in December 2010. The policy process,

culminating in the publication of a climate change response

white paper, is expected later in 2011, with GHG legislation

likely to be enacted thereafter. An emissions trading discussion

paper is expected during 2011. It is possible that legislation to

cap national emissions, introduce a trading scheme for GHG

emission allowances and/or extend the current carbon tax will

be enacted, though the timing of this is uncertain.

It is unclear how climate change bills will progress if introduced

in the US Congress. The likely impact on AngloGold Ashanti

also remains unclear, as legislation has yet to be finalised. In

May 2010, given the significant change in its composition

following the November 2010 elections, the US Environmental

Protection Agency continued to proceed on rules related to

greenhouse gas emissions under the existing US Clean Air Act

and Congress continued to evaluate whether or not to limit or

restrict these activities. In some instances these rules will

require installation of best available technology to control

GHGs from large emitters.

In October 2010, the then-President of Brazil announced that

sector-specific plans would be developed to meet a voluntary

reduction target of 1.2 billion tonnes of CO2 by 2020. Amongst

other plans, it is intended to reduce de-forestation in the

Cerrado biome, where AngloGold Ashanti operates, by 40%

and expand renewable energy production and energy

efficiency programs. The decree also provided for a Brazilian

GHG trading scheme, which is yet to be designed. In Brazil,

the National Plan for Climate Change was enacted in

December 2008 aiming to reduce de-forestation, which is the

main cause of Brazil’s GHG emissions. While Brazil is not yet

formally regulating GHG emissions at the national level, some

state environmental agencies have requested companies to

voluntarily submit GHG emissions management plans.

Some of these measures have resulted in increased

compliance costs for power suppliers and are passed through

to the company in the form of price increases. In South Africa,

for instance, AngloGold Ashanti has since 2009 paid a levy of

ZAR0.02 per kilowatt hour for electricity generated from fossil

fuels. These levies may increase over time and additional

levies may be introduced in future in South Africa or other

countries, which could result in a significant increase in costs

to the company.

In addition, AngloGold Ashanti’s operations could be exposed

to a number of physical risks from climate change, such as

increased rainfall, reduced water availability, higher

temperatures and extreme weather events. Events or

conditions such as flooding or inadequate water supplies

could disrupt mining and transport operations, mineral

processing and rehabilitation efforts, and could increase health

and safety risks on site. In addition, such events or conditions

could have adverse effects, such as increased disease

prevalence in the company’s workforce and in communities in

close proximity to its operations.

Mining operations and projects are vulnerable to supply

chain disruption and AngloGold Ashanti’s operations and

development projects could be adversely affected by

shortages of, as well as lead times to deliver strategic

spares, critical consumables, mining equipment or

metallurgical plant.

AngloGold Ashanti’s operations and development projects

could be adversely affected by both shortages and long lead

times to deliver, strategic spares, critical consumables, mining

equipment and metallurgical plant. In the past, the company

and other gold mining companies experienced shortages in

critical consumables, particularly as production capacity in the

global mining industry expanded in response to increased

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

demand for commodities. AngloGold Ashanti has in the past

experienced increased delivery times for these items. These

shortages have also resulted in unanticipated increases in the

price of certain of these items. Shortages of strategic spares,

critical consumables, mining equipment or metallurgical plant,

which could occur in the future, could result in production

delays and production shortfalls and increases in prices

resulting in an increase in both operating costs and the capital

expenditure to maintain and develop mining operations.

Individually, AngloGold Ashanti and other gold mining

companies have limited influence over manufacturers and

suppliers of these items. In certain cases there are a limited

number of suppliers for certain strategic spares, critical

consumables, mining equipment or metallurgical plant who

command superior bargaining power relative to the company.

The company could at times face limited supply or increased

lead time in the delivery of such items.

The company’s procurement policy is to only source mining

and processing equipment and consumables from suppliers

that meet its corporate values and ethical standards. In certain

locations, where a limited number of suppliers meet these

standards, further strain is placed on the supply chain, thereby

increasing cost of supply and time of delivery.

If AngloGold Ashanti experiences shortages, or increased

lead times in delivery of strategic spares, critical

consumables, mining equipment or processing plant, the

company’s results of operations and its financial condition

could be adversely impacted.

Diversity in interpretation and application of accounting

literature in the mining industry may impact AngloGold

Ashanti’s reported financial results.

The mining industry has limited industry-specific accounting

literature. As a result, there is diverse interpretation and

application of accounting literature to mining specific issues.

AngloGold Ashanti, for example, capitalises drilling and costs

related to defining and delineating a residual mineral deposit

that has not been classified as a proved and probable reserve

at a development project or production stage mine. Some

companies, however, expense such costs. As and when this

diverse interpretation and application is addressed, the

company’s reported results could be adversely impacted

should the adopted interpretation differ from the position it

currently follows.

Risks related to AngloGold Ashanti’s results of
operations and its financial condition as a result
of factors specific to the company and its
operations

AngloGold Ashanti has removed the last of its gold

hedging instruments and long-term sales contracts, which

exposes the company to potential gains from subsequent

commodity price increases but exposes it entirely to

subsequent commodity price decreases.

AngloGold Ashanti removed the last of its gold hedging

instruments in October 2010 in order to provide greater

participation in a rising gold price environment. As a result,

AngloGold Ashanti no longer has any protection against declines

in the market price of gold compared with previous years. A

sustained decline in the price of gold could adversely impact the

company’s results of operations and its financial condition.

AngloGold Ashanti’s mining rights in the countries in which

it operates could be altered, suspended or cancelled for a

variety of reasons, including if the company breaches its

obligations in respect of its mining rights.

AngloGold Ashanti’s right to own and exploit mineral reserves

and deposits is governed by the laws and regulations of the

jurisdictions in which the mineral properties are located.

Currently, a significant portion of the company’s mineral

reserves and deposits are located in countries where mining

rights could be suspended or cancelled should it breach its

obligations in respect of the acquisition of these rights.

In all of the countries where AngloGold Ashanti operates, the

formulation or implementation of government policies may be

unpredictable on certain issues, including changes in laws

relating to mineral rights and ownership of mining assets and

the rights to prospect and mine and in extreme cases,

nationalisation. For example, the Guinean Government has

announced in media reports that it will seek to increase its

equity interest in mines and there is a call for a debate on

nationalisation and increased state ownership in South Africa.

Any existing and new mining and exploration operations and

projects are subject to various national and local laws, policies

and regulations governing the ownership and the right to

prospect or mine or develop proposed projects. If AngloGold

Ashanti is not able to obtain or maintain necessary permits,

authorisations or agreements to prospect or mine or to

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implement planned projects, or continue its operations under

conditions, or within time frames, that make such plans and

operations economically viable, or if the laws impacting the

company’s ownership of its mineral rights, or the right to

prospect or mine were to change materially, or should

Governments increase their ownership in the mines or

nationalise them, AngloGold Ashanti’s results of operations

and its financial condition could be adversely affected.

In South Africa, mining rights are linked to meeting various

obligations that include the Broad-Based Socio-Economic

Empowerment Charter for the South African Mining Industry,

referred to as the Mining Charter. Compliance with the Mining

Charter, measured using a designated scorecard, requires that

every mining company achieve 26% ownership by historically

disadvantaged South Africans (HDSAs) of its South African

mining assets by May 2014, and achieves participation by

HDSAs in various other aspects of management.

AngloGold Ashanti believes it has made significant progress

towards meeting the requirements of the Mining Charter, the

scorecard and its own undertakings in terms of human

resource development, employment equity, mine community

and rural development, housing and living conditions and

procurement and beneficiation. The company will incur

expenses in giving further effect to the Mining Charter and

the scorecard.

The Mining Charter provided for its review five years after

promulgation. The outcome of the first phase of the review was

made public in June 2010, while results from the final review

were made public in September 2010. According to these

reviews, AngloGold Ashanti is compliant with the Mining

Charter’s requirements relating to ownership of its assets by

HDSAs. The company is also currently compliant with the

Mining Charter’s requirements relating to, among others,

human resource development, mine community development,

and sustainable development and growth. Whilst AngloGold

Ashanti is compliant with the Mining Charter’s ownership

targets to be achieved by May 2014, it must make further

progress to achieve future targets set under the Mining

Charter, including further participation by HDSAs in various

aspects of management, the upgrade of housing and

accommodation at the company’s mines, further human

resource development, mine community development,

sustainable development and growth as well as procurement

and enterprise development, certain of which are also included

under the Code and Standard, as defined and discussed

below and which targets must also be achieved by May 2014.

AngloGold Ashanti expects to be compliant with these

provisions by May 2014.

As required by the South African Mineral and Petroleum

Resources Development Act (MPRDA), the Minister of Mineral

Resources published a Code of Good Practice for the Minerals

Industry (Code) and the Housing and Living Conditions

Standard (Standard) in April 2009. The Code was developed to

create principles to facilitate effective implementation of

minerals and mining legislation and enhance implementation of

the Mining Charter applicable to the mining industry. The

Standard aims to include the provision of housing as an

integral part of infrastructure during the development of a mine.

Both the Code and the Standard provide that non-compliance

equates to non-compliance with the MPRDA. It is unclear

whether non-compliance with the Code or the Standard would

lead to the cancellation or suspension of a mining right or

whether they would be considered legislation under the

MPRDA. Subsequent to the publication of the Code and the

Standard, representatives of the Department of Mineral

Resources, organised labour and the South African mining

industry have engaged in discussions in an effort to address

the concerns of the mining industry and to possibly amend the

Code and the Standard. Furthermore, discussions related to

the Code and Standard have also become related to the

review of the Mining Charter. It is anticipated that the contents

of the Code and Standard will ultimately be amended in line

with the amendments to the Mining Charter that have resulted

from its review. Details of the final Code and Standard are

currently uncertain.

AngloGold Ashanti’s mining rights in South Africa can be

suspended or cancelled by the Minister of Mineral Resources

if, upon notice of a breach from the Minister, the company

breaches its obligations in complying with the MPRDA. The

MPRDA also imposes additional responsibilities on mining

companies relating to environmental management and to

environmental damage, degradation or pollution resulting from

their prospecting or mining activities. AngloGold Ashanti has a

policy of evaluating, minimising and addressing the

environmental consequences of its activities and, consistent

with this policy and the MPRDA, conducts an annual review of

the environmental costs and liabilities associated with its South

African operations in light of applicable requirements.

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

AngloGold Ashanti may experience unforeseen difficulties,

delays or costs in successfully implementing its business

strategy and its strategy may not result in the anticipated

benefits.

The successful implementation of the company’s business

strategy depends upon a number of factors, including those

outside its control. For example: the successful management

of costs will depend on prevailing market prices for input costs;

the ability to grow the business will depend on the successful

implementation of the company’s existing and proposed

project development initiatives and continued exploration

success, as well as on the availability of attractive merger and

acquisition opportunities, all of which are subject to the

relevant mining and company specific risks as outlined in these

risk factors. AngloGold Ashanti cannot give assurance that

unforeseen difficulties, delays or costs will not adversely affect

the successful implementation of its business strategy, or that

the strategy will result in the anticipated benefits.

The level of AngloGold Ashanti’s indebtedness could

adversely impact its business.

As at 31 December 2010, AngloGold Ashanti had gross

borrowings (excluding the mandatory convertible bonds) of

approximately $1.9 billion.

AngloGold Ashanti’s indebtedness could have a material

adverse effect on its flexibility to conduct business. For

example, the company may be required to utilise a large

portion of its cash flow to pay the principal and interest on its

debt, which will reduce funds available to finance existing

operations, the development of new organic growth

opportunities and further acquisitions. In addition, under the

terms of the company’s borrowing facilities from its banks,

AngloGold Ashanti is obliged to meet certain financial and

other covenants. The company’s ability to continue to meet

these covenants will depend on its future financial performance

which will be affected by its operating performance as well as

by financial and other factors, certain of which are beyond the

control of the company.

Should the cash flow from operations be insufficient,

AngloGold Ashanti could breach its financial and other

covenants and may be required to refinance all or part of the

existing debt, use existing cash balances, issue additional

equity and/or sell assets. AngloGold Ashanti cannot be sure

that it will be able to do so on commercially reasonable terms,

if at all.

Certain factors may affect AngloGold Ashanti’s ability to

support the carrying amount of its property, plant and

equipment, acquired properties, investments and

goodwill on the balance sheet. If the carrying amount of

its assets is not recoverable, AngloGold Ashanti may be

required to recognise an impairment charge, which could

be significant.

AngloGold Ashanti reviews and tests the carrying value of its

assets when events or changes in circumstances suggest that

the carrying amount may not be recoverable. The company

values individual mining assets at the lowest level for which

cash flows are identifiable and independent of cash flows of

other mining assets and liabilities.

If there are indications that an impairment may have occurred,

AngloGold Ashanti prepares estimates of expected future

cash flows for each group of assets. Expected future cash

flows are inherently uncertain, and could materially change

over time. They are significantly affected by reserve and

production estimates, together with economic factors such as

spot and forward gold prices, discount rates, currency

exchange rates, estimates of costs to produce reserves and

future capital expenditure.

If any of these uncertainties occur either alone or in

combination, management could be required to recognise an

impairment, which could have a material adverse affect on the

company’s financial condition.

AngloGold Ashanti expects to have significant financing

requirements.

AngloGold Ashanti’s existing Board approved development

projects and exploration initiatives, including Tropicana in

Australia, the Cerro Vanguardia heap leach project in

Argentina, the Mponeng Ventersdorp Contact Reef Projects in

South Africa, Córrego do Sítio and Lamego in Brazil, the mine

life extension project (MLE1) at Cripple Creek & Victor in the US

will require significant funding.

Potential future development projects include the La Colosa

and Gramalote projects in Colombia, the Kibali and

Mongbwalu projects in the DRC, the Mponeng CLR and

Zaaiplaats projects in South Africa, the Cerro Vanguardia

underground mining project in Argentina, the Nova Lima Sul

project in Brazil, the Sadiola Deeps project in Mali, Cripple

Creek & Victor further mine life extension project (MLE2) in the

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US, as well as various other exploration projects and feasibility

studies, will also require significant funding if and when

approved by AngloGold Ashanti Board.

AngloGold Ashanti estimates that over the next three years,

these growth initiatives will require project capital expenditure

(excluding stay in business and Ore Reserve development

capital expenditure) of approximately $2.5bn (subject to

escalation). The company’s capital expenditure plans and

requirements are subject to a number of risks, contingencies

and other factors, some of which are beyond its control, and

therefore the actual future capital expenditure and investments

may differ significantly from their current planned amounts.

AngloGold Ashanti’s operating cash flow and credit facilities

may be insufficient to meet all of these expenditures,

depending on the timing and costs of development of these

and other projects as well as its operating performance and

available headroom under its credit facilities. As a result, new

sources of capital may be needed to meet the funding

requirements of these developments, to fund ongoing

business activities and to pay dividends. AngloGold Ashanti’s

ability to raise and service significant new sources of capital will

be a function of macroeconomic conditions, future gold prices,

the company’s operational performance and operating cash

flow and debt position, among other factors. The company’s

ability to raise further debt financing in the future and the cost

of such financing will depend on, among other factors, its

prevailing credit rating, which may be affected by the

company’s ability to maintain its outstanding debt and financial

ratios at levels acceptable to the credit ratings agencies, its

business prospects or other factors. As a result, in the event of

lower gold prices, unanticipated operating or financial

challenges, or new funding limitations, AngloGold Ashanti’s

ability to pursue new business opportunities, invest in existing

and new projects, fund its ongoing business activities and/or

retire or service outstanding debt and pay dividends could be

significantly constrained, all of which could adversely impact

the company’s results of operations and its financial condition.

AngloGold Ashanti does not operate some of its

significant joint venture projects and other interests. If the

operators of these projects do not perform effectively and

efficiently, the company’s investment in these projects

could be adversely affected and/or its reputation could

be harmed.

AngloGold Ashanti’s joint ventures at Morila in Mali and at

Kibali in the DRC are operated by the company’s joint venture

partners. In addition, certain of AngloGold Ashanti’s

exploration ventures are operated by the relevant joint venture

partner. AngloGold Ashanti’s marine gold joint venture with De

Beers is operated by an independent company jointly owned

by AngloGold Ashanti and De Beers, with a significant part of

the technical input subcontracted to De Beers or other marine

service providers.

In South Africa, AngloGold Ashanti’s Ergo operations are

currently operated by Ergo Mining, a subsidiary of DRDGOLD

Limited (DRDGOLD). The Ergo operations were sold in 2007 to

DRDGOLD and DRDGOLD has been managing and operating

the assets pending the transfer of the mining rights from

AngloGold Ashanti to DRDGOLD.

While AngloGold Ashanti provides strategic management and

operational advice to its joint venture partners in respect of

these projects, the company cannot ensure that these projects

are operated in compliance with the standards that AngloGold

Ashanti applies in its other operations. If these joint ventures

are not operated effectively or efficiently, including as a result of

weaknesses in the policies, procedures and controls

implemented by the joint venture partners, the company’s

investment in the relevant project could be adversely affected.

In addition, negative publicity associated with ineffective and

inefficient operatorship, particularly relating to any resulting

accidents or environmental incidents could harm the

company’s reputation and therefore its prospects and

potentially its financial condition. Further any failure of joint

venture partners to meet their obligations to AngloGold Ashanti

or to third parties, or any disputes with respect to the parties’

respective rights and obligations, could have a material

adverse impact on AngloGold Ashanti’s results of operations

and its financial condition.

AngloGold Ashanti’s mineral reserves, deposits and

mining operations are located in countries that face

political, economic and/or security risks.

Some of AngloGold Ashanti’s mineral deposits and mining and

exploration operations are located in countries that have

experienced political instability and economic uncertainty. In all

of the countries where the company operates, the formulation

or implementation of government policies may be unpredictable

on certain issues. These include regulations which impact its

operations and changes in laws relating to issues such as

mineral rights and asset ownership, taxation, royalties, import

and export duties, currency transfers, restrictions on foreign

currency holdings and repatriation of earnings.

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

Any existing and new mining and exploration operations and

projects that the company carries out in these countries will

continue to be subject to various national and local laws,

policies and regulations governing the ownership, prospecting,

development and mining of mineral reserves, taxation and

royalties, exchange controls, import and export duties and

restrictions, investment approvals, employee and social

community relations and other matters.

If, in one or more of these countries, AngloGold Ashanti were

not able to obtain or maintain necessary permits,

authorisations or agreements to implement planned projects or

continue its operations under conditions or within time frames

that make such plans and operations economic, or if legal,

ownership, fiscal (including all royalties and duties), exchange

control, employment, environmental and social laws and

regimes, or the governing political authorities change

materially, resulting in changes to such laws and regimes, this

could have a material adverse affect on AngloGold Ashanti’s

operating results and financial condition.

Certain of the countries in which AngloGold Ashanti has

mineral deposits or mining or exploration operations, including

the DRC, Guinea and Colombia, have in the past

experienced, and in certain cases continue to experience, a

difficult security environment as well as political instability. In

particular, various illegal groups active in regions in which the

company are present may pose a credible threat of terrorism,

extortion and kidnapping, which could have an adverse effect

on its operations in such regions. In the event that continued

operations in these countries compromise the company’s

security or business principles, AngloGold Ashanti may

withdraw from these countries on a temporary or permanent

basis. Furthermore, the company has at times experienced

strained relationships with some of the communities in which

it operates. This could have a material adverse impact on

AngloGold Ashanti’s results of operations.

In December 2008, the National Council for Democracy and

Development, led by Moussa Dadis Camara, seized power in

Guinea after the death of the country’s long-standing president

Lasana Conte. On 3 December 2009, President Camara was

shot and injured in an apparent assassination attempt and

subsequently signed a transition agreement allowing for

presidential elections and the transfer of Guinea back to civilian

rule. A new transitional government was appointed while

elections were held. The first round of elections was held but,

as a clear winner did not emerge, a second round of elections

took place after a prolonged delay on 7 November 2010 and

ultimately Alpha Conde, was sworn in as Guinea’s president on

21 December 2010. Some unrest and protest accompanied

and followed the elections. However, the elections were

deemed successful and Conde was installed as Guinea’s first

democratically elected president. Recently, Conde confirmed

his commitment to a review of all mining contracts under the

auspices of international law, indicating that Guinea would

seek to own a stake of at least a third of all mining projects

located in Guinea. Currently the Government of Guinea holds

a stake of 15% in the Siguiri Gold Mine. The review process

has not yet commenced and AngloGold Ashanti is currently

unable to predict the timing and outcome of such review.

In Guinea, Mali and Tanzania, AngloGold Ashanti is due

refunds of input tax and fuel duties which remain outstanding

for periods longer than those provided for in the respective

statutes. In addition, the company has other outstanding

assessments and unresolved tax disputes in a number of

countries, including Brazil, Argentina and Ghana. If the

outstanding VAT input taxes are not received, the tax disputes

are not resolved and assessments favourable to AngloGold

Ashanti are not made, there could be an adverse effect upon

the company’s results of operations and its financial condition.

AngloGold Ashanti may also be impacted by the outcome of

elections in jurisdictions in which it has operations and ancillary

political processes leading up to elections. The company

expects elections to occur in in the DRC in 2011 and in South

Africa in 2014.

In February 2010, AngloGold Ashanti and other mining

companies in Ghana received notice that the country’s

government was considering a review and amendments to its

fiscal mining regime. The government of Ghana has

subsequently amended its fiscal mining regime and should it

seek to impose this new increased royalty rate on the company,

AngloGold Ashanti may challenge it in light of the stability

agreement entered into by the company with the government

of Ghana in December 2003 and which was subsequently

ratified by the parliament of Ghana in early 2004. No assurance

can be given that should AngloGold Ashanti challenge this new

increased royalty rate that it would ultimately succeed in the

challenge or that any dispute with the government of Ghana

would not otherwise have a material impact on the company’s

financial condition or results of operations.

In May 2010, the government of Australia proposed a

Resource Super Profit Tax (RSPT), which would have required

extractive industries, including the gold mining industry, to pay

a tax of 40% on profits from Australian operations above

Risk management and internal controls

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certain levels determined by the government. Had the RSPT

been implemented as proposed it would have had an adverse

impact upon AngloGold Ashanti’s financial results from its

existing operations in Australia as well as from the Tropicana

project, once operational. However, in July 2010, the

government of Australia proposed to replace the RSPT with

the Mineral Resource Rent Tax (MRRT), which will require a tax

of 30% on profits above certain levels from coal and iron ore

mining starting 1 July 2010. Should the government of

Australia reintroduce the RSPT or extend the MRRT to the gold

mining industry, or if similar “super profit” taxes are introduced

in Australia or any other country in which the company

operates, by governments seeking to capture a greater share

of the economic benefits from their natural resources, this

could have a material adverse effect on AngloGold Ashanti’s

results of operations and its financial condition.

Labour disruptions and/or increased labour costs could

have an adverse effect on AngloGold Ashanti’s results of

operations and financial condition.

AngloGold Ashanti employees in South Africa, Ghana, Guinea

and some South American countries, are highly unionised.

Trade unions, therefore, have a significant impact on the

company’s labour relations climate, as well as on social and

political reforms, most notably in South Africa. There is a risk

that strikes or other types of conflict with unions or employees

may occur at any of the company’s operations, particularly

where the labour force is unionised. Labour disruptions may

be used to advocate labour, political or social goals in the

future. For example, labour disruptions may occur in

sympathy with strikes or labour unrest in other sectors of the

economy. Material labour disruptions could have an adverse

effect on AngloGold Ashanti’s results of operations and

financial condition.

As at 31 December 2010, approximately 65% of the

company’s workforce excluding contractors, or approximately

57% of its total workforce, was located in South Africa. In

South Africa, it has become established practice to negotiate

wages and conditions of employment with the unions every

two years through the Chamber of Mines of South Africa. An

agreement was signed with the unions in July 2009, following

negotiations between the Chamber of Mines and the National

Union of Mineworkers, the United Associations of South Africa,

(UASA) (on behalf of some clerical and junior management staff)

and Solidarity (on behalf of a small number of miners). The next

round of negotiations is expected to take place in 2011.

AngloGold Ashanti cannot give assurance that it will be able to

renegotiate this agreement on satisfactory terms when it

expires in July 2011.

As at 31 December 2010, approximately 10% of the

company’s workforce excluding contractors, or approximately

12% of the total workforce, was located in Ghana. In Ghana, a

three-year, wage agreement for the years 2009 to 2011,

effective from 1 January 2009, was reached towards the end

of 2009. The next round of negotiations is expected to take

place in 2011. AngloGold Ashanti cannot give assurance that

it will be able to renegotiate this agreement on satisfactory

terms when it expires at the end of December 2011.

Labour costs represent a substantial proportion of the

company’s total operating costs and in many operations,

including its South African, Ghanaian and Tanzanian operations,

is the company’s single largest component of operating costs.

Any increases in labour costs have to be offset by greater

productivity efforts by all operations and employees, failing

which such increase in labour cost could have a material

adverse effect on AngloGold Ashanti’s results of operations and

its financial condition.

The use of mining contractors at certain of the

company’s operations may expose AngloGold Ashanti to

delays or suspensions in mining activities and increases

in mining costs.

AngloGold Ashanti uses contractors at certain of its operations

to mine and deliver ore to processing plants. Consequently, at

these mines, contracting costs represent a significant

proportion of the total operating costs of these operations and

the company does not own all of the mining equipment.

AngloGold Ashanti’s operations could be disrupted, resulting in

additional costs and liabilities, if the mining contractors at

these mines have financial difficulties or if a dispute arises in

renegotiating a mining contract, or if there is a delay in

replacing an existing contractor. Increases in contract mining

rates, in the absence of associated productivity increases, will

also have an adverse impact on the company’s results of

operations and financial condition.

AngloGold Ashanti competes with mining and other

companies for key human resources.

AngloGold Ashanti competes on a global basis with mining

and other companies, to attract and retain key human

resources at all levels with the appropriate technical skills and

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

operating and managerial experience necessary to operate its

business. This is further exacerbated in the current

environment of increased mining activity across the globe,

combined with the global shortage of key mining skills,

including geologists, mining engineers, metallurgists and

skilled artisans.

The retention of staff is particularly challenging in South Africa,

where, in addition to the impacts of global industry shortages

of skilled labour, AngloGold Ashanti is required to achieve

employment equity targets of participation by HDSAs in

management and other positions.

AngloGold Ashanti competes with all companies in South

Africa to attract and retain a small but growing pool of HDSAs

with the necessary skills and experience.

There can be no assurance that the company will attract and

retain skilled and experienced employees. Should it fail to do so

or lose any of its key personnel, the business and growth

prospects may be harmed and this could have an adverse

impact on AngloGold Ashanti’s results of operations and its

financial condition.

The treatment of occupational health diseases and the

potential liabilities related thereto may have an adverse

effect upon the results of operations of AngloGold Ashanti

and its financial condition.

The primary areas of focus in respect of occupational health of

employees within the company’s operations are noise induced

hearing loss (NIHL), occupational lung diseases (OLD), which

includes pulmonary and tuberculosis (TB), in individuals

exposed to silica dust. AngloGold Ashanti provides

occupational health services to its employees at its

occupational health centres and continues to improve

preventative occupational hygiene initiatives. If the costs

associated with providing such occupational health services

increase, this could have an adverse effect on the results of

operations of AngloGold Ashanti and its financial condition.

The South African government, by way of a cabinet resolution

in 1999, proposed a possible combination and alignment of

benefits of the Occupational Diseases in Mines and Works Act

(ODMWA) that provides for compensation to miners who have

OLD and/or TB, and the Compensation for Occupational

Injuries and Diseases Act (COIDA), that provides for

compensation of non-miners who have OLD. It appears less

likely that the proposed combination of the two acts will occur

but some alignment of benefits may be considered. COIDA

provides for compensation payments to workers suffering

permanent disabilities from OLD, which are classified as

pension liabilities if the permanent disability is above a certain

threshold, or a lump sum compensation payment if the

permanent disability is below a certain threshold. ODMWA only

provides for a lump sum compensation payment to workers

suffering from OLD as well as the payment of medical

expenses over the claimant’s lifetime.

If the proposed combination of COIDA and ODMWA were to

occur, this could further increase the level of compensation

claims AngloGold Ashanti could be subject to and consequently

could have an adverse effect on its financial condition.

Mr. Thembekile Mankayi instituted legal action against AngloGold

Ashanti in October 2006 in the South Gauteng High Court.

Mr Mankayi, claimed approximately R2.6 million for damages

allegedly suffered by him as a result of silicosis allegedly

contracted while working on a mine of Vaal Reefs Mining and

Exploration Company Limited, which company was renamed

AngloGold Limited in 1998 and AngloGold Ashanti Limited in

2004. The case was heard and judgment in the exception

action was rendered on 26 June 2008 in the company’s favour

on the basis that mine employers are indemnified under

ODMWA and COIDA against claims by employees against

employers for damages relating to compensable diseases.

Mr. Mankayi’s appeal to the Supreme Court of Appeal of South

Africa was dismissed. On 17 August 2010, the Constitutional

Court of South Africa heard Mr. Mankayi’s application for leave

to appeal to the Constitutional Court. Judgement in the

Constitutional Court was handed down on 3 March 2011. The

Constitutional Court granted the application for leave to appeal

and dealt with the matter as a full appeal. Mr. Mankayi was

deceased prior to this judgement in the Constitutional Court

and following the judgement, Mr. Mankayi’s executor may

proceed with his case in the High Court and seek a claim for

damages under common law against AngloGold Ashanti. This

will comprise, amongst others, providing evidence that

Risk management and internal controls

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209

Mr. Mankayi contracted silicosis as a result of negligent conduct

on the part of AngloGold Ashanti.

AngloGold Ashanti is still studying the details of the

Constitutional Court judgement and will defend the case and

any subsequent claims on their merits. As a result of the

Constitutional Court decision, AngloGold Ashanti could be

subject to numerous similar claims, including potentially by

way of a class action or similar group claim. These too would

be defended by the company and adjudicated by the by the

Courts on their merits. In view of the limitation of current

information for the accurate estimation of a liability, no reliable

estimate can be made for this possible obligation. Should

AngloGold Ashanti be unsuccessful in defending the claim of

Mr. Mankayi’s executor and any other individuals or groups

that lodge similar claims this would have an adverse impact on

AngloGold Ashanti’s financial condition.

In response to the effects of silicosis in labour sending

communities, a number of mining companies (under the

auspices of the Chamber of Mines of South Africa) together

with the NUM, which is the largest union in the mining sector,

and the national and regional departments of health, have

embarked on a project to assist in delivering compensation

and relief by mining companies under the ODMWA to

affected communities.

AngloGold Ashanti faces certain risks in dealing with

HIV/AIDS, particularly at its South African operations and

with tropical disease outbreaks such as malaria, which

may have an adverse effect on the company’s results of

operations.

AIDS and associated diseases remain the major health care

challenges faced by AngloGold Ashanti’s South African

operations. Accurate prevalence data for AIDS is not available

owing to doctor-patient confidentiality. The South African

workforce prevalence studies, however, indicate that HIV

prevalence rates among AngloGold Ashanti’s South African

workforce may be as high as 30%. AngloGold Ashanti

continues to develop and implement programmes to help

those infected with HIV and prevent new infections from

spreading. Since 2001, the company has offered a voluntary

counselling and HIV testing programme for employees in

South Africa. In 2002, it began to offer anti-retroviral therapy,

or ART, to HIV positive employees who met the current

medical criteria for the initiation of ART. From April 2003,

AngloGold Ashanti commenced a roll-out of the treatment to

all eligible employees desiring it. As of December 2010,

approximately 2,500 employees were receiving treatment

using anti-retroviral drugs.

AngloGold Ashanti does not expect the cost that it will incur

related to the prevention of HIV infection and the treatment of

AIDS to materially and adversely affect its results of operations.

Nevertheless, it is not possible to determine with certainty the

costs that it may incur in the future in addressing this issue,

and consequently the company’s results of operations and its

financial condition could be adversely impacted.

Malaria and other tropical diseases pose significant health risks

at all of the company’s operations in Central, West and East

Africa where such diseases may assume epidemic proportions

because of ineffective national control programmes. Malaria is

a major cause of death in young children and pregnant women

but also gives rise to fatalities and absenteeism in adult men.

Consequently, if uncontrolled, the disease could have an

adverse impact upon productivity and profitability levels of

AngloGold Ashanti’s operations located in these regions.

The costs associated with the pumping of water inflows

from closed mines adjacent to the company’s operations

could have an adverse effect upon its results of operations.

Certain of AngloGold Ashanti’s mining operations are located

adjacent to the mining operations of other mining companies.

The closure of a mining operation may have an impact upon

continued operations at the adjacent mine if appropriate

preventative steps are not taken. In particular, this can include

the ingress of underground water where pumping operations

at the adjacent closed mine are suspended. Such ingress

could have an adverse effect upon any one of the company’s

mining operations as a result of property damage, disruption to

operations, additional pollution liabilities and pumping costs

and consequently could have an adverse impact upon its

results of operations and financial condition.

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AngloGold Ashanti Annual Financial Statements 2010

Risk management and internal controls

The potential costs associated with the remediation and/or

prevention of groundwater contamination from the

company’s operations or due to flooding from closed

mines adjacent to the company’s operations could have a

material adverse effect upon the results of operations of

AngloGold Ashanti and its financial condition.

AngloGold Ashanti has identified a flooding and future pollution

risk posed by deep groundwater in the Klerksdorp and Far

West Rand goldfields in South Africa. AngloGold Ashanti’s Vaal

River operations are part of the Klerksdorp goldfield and its

West Wits operations are part of the Far West Rand goldfield.

Various studies have been undertaken by AngloGold Ashanti

since 1999. Due to the interconnected nature of underground

mining operations in South Africa, any proposed solution

needs to be a combined one supported by all the companies

owning mines located in these goldfields. As a result, the

South African Department of Mineral Resources and affected

mining companies are now involved in the development of a

“Regional Mine Closure Strategy”. In view of the limitation of

current information for the accurate estimation of a liability, no

reliable estimate can be made for this possible obligation,

which could be material and have an adverse impact on

AngloGold Ashanti’s financial condition.

AngloGold Ashanti has identified groundwater contamination

plumes at certain of its operations. Numerous scientific,

technical and legal studies have been undertaken to assist in

determining the magnitude of the contamination and to find

sustainable remediation solutions and based thereon the

company has instituted processes to reduce seepage and/or

to reduce soil and groundwater contamination. It has been

demonstrated that certain techniques and/or technologies,

including monitored natural attenuation by the existing

environment and phyto-technologies, could reduce seepage

and/or address soil and groundwater contamination. Subject

to the completion of further trials and the technologies

becoming a proven remediation technique, no reliable estimate

can currently be made for the potential costs of remediation

and/or prevention of groundwater contamination at AngloGold

Ashanti’s operations. Should these costs be significant this

could have a material adverse impact upon AngloGold

Ashanti’s results of operations and its financial condition.

The occurrence of events for which AngloGold Ashanti is

not insured or for which its insurance is inadequate may

adversely affect cash flows and overall profitability.

AngloGold Ashanti maintains insurance to protect only against

catastrophic events which could have a significant adverse

effect on its operations and profitability. This insurance is

maintained in amounts that the company believes to be

reasonable depending upon the circumstances surrounding

each identified risk. However, AngloGold Ashanti’s insurance

does not cover all potential risks associated with its business.

In addition, AngloGold Ashanti may elect not to insure certain

risks due to the high premiums or for various other reasons,

including an assessment that the risks are remote.

The company may not be able to obtain insurance coverage at

acceptable premiums. The availability and cost of insurance

coverage can vary considerably from year to year as a result of

events beyond the company’s control or from claims, and this

can result in higher premiums and periodically being unable to

maintain the levels or types of insurance carried.

The occurrence of events for which AngloGold Ashanti is not

insured will adversely impact its cash flows, its results of

operations and its financial condition.

Sales of large quantities of AngloGold Ashanti‘s ordinary

shares and ADSs, the perception that these sales may

occur or other dilution of the company’s equity could

adversely affect the prevailing market price of

the company’s securities.

The market price of the company’s securities could fall if large

quantities of ordinary shares or ADSs are sold in the public

market, or there is the perception in the marketplace that such

sales could occur. Subject to applicable securities laws,

Risk management and internal controls

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211

holders of AngloGold Ashanti‘s ordinary shares or ADSs may

sell them at any time. The market price of the company’s

ordinary shares or ADSs could also fall as a result of any future

offerings AngloGold Ashanti makes of its ordinary shares,

ADSs, or securities exchangeable or exercisable for the

company’s ordinary shares or ADSs, or the perception in the

market place that these sales might occur. AngloGold Ashanti

may make such offerings, including offerings of additional ADS

rights, share rights or similar securities, at any time or from time

to time in the future.

Fluctuations in the exchange rate of currencies may

reduce the market value of AngloGold Ashanti’s securities,

as well as the market value of any dividends or

distributions paid by the company.

AngloGold Ashanti has historically declared all dividends in

South African rands. As a result, exchange rate movements

may have affected and may continue to affect the Australian

dollar, the British pound, the Ghanaian cedi and the US dollar

value of these dividends, as well as of any other distributions

paid by the relevant depositary to investors that hold the

company’s securities. This may reduce the value of these

securities to investors.

AngloGold Ashanti’s memorandum and articles of association

allows for dividends and distributions to be declared in any

currency at the discretion of the board of directors, or the

company’s shareholders at a general meeting. If and to the

extent that AngloGold Ashanti opts to declare dividends and

distributions in US dollars, exchange rate movements will not

affect the US dollar value of any dividends or distributions.

Nevertheless, the value of any dividend or distribution in

Australian dollars, British pounds, Ghanaian cedis or South

African rands will continue to be affected. If and to the extent

that dividends and distributions are declared in South African

rands, exchange rate movements will continue to affect the

Australian dollar, British pound, Ghanaian cedi and US dollar

value of these dividends and distributions. Furthermore, the

market value of AngloGold Ashanti’s securities as expressed in

Australian dollars, British pounds, Ghanaian cedis, US dollars

and South African rands will continue to fluctuate in part as a

result of foreign exchange fluctuations.

The announced proposal by the South African Government

to replace the Secondary Tax on Companies with a

withholding tax on dividends and other distributions may

impact the amount of dividends or other distributions

received by AngloGold Ashanti’s shareholders.

On 21 February 2007, the South African Government

announced a proposal to replace Secondary Tax on

Companies with a 10% withholding tax on dividends and

other distributions payable to shareholders. Although this

may reduce the tax payable by the company’s South African

operations, thereby increasing distributable earnings, the

withholding tax could generally reduce the amount of

dividends or other distributions received by its shareholders.

The proposal was expected to be implemented in 2010, but

its implementation has been delayed to 1 April 2012.

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ approval and Secretary’s certificate

The annual financial statements and group annual financial statements for the year ended 31 December 2010 were approved by the

board of directors on 11 March 2011 and are signed on its behalf by:

Directors

TT Mboweni, Chairman

M Cutifani, Chief Executive Officer

S Venkatakrishnan, Chief Financial Officer

LW Nkuhlu, Chairman, Audit and Corporate Governance Committee

Secretary’s certificate

In terms of Section 268G(d) of the Companies Act, 61 of 1973, I certify that the company has lodged with the Registrar of

Companies all such returns as are required of a widely held company in terms of the Act, and that all such returns are true, correct

and up to date.

L Eatwell

Company Secretary

Johannesburg

11 March 2011

Directors’ approval

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To the members of AngloGold Ashanti Limited

We have audited the accompanying financial statements of AngloGold Ashanti Limited group and company, which comprise the

statements of financial position as at 31 December 2010, the income statements, statements of comprehensive income, statements

of cash flows and statements of changes in equity for the year then ended, and a summary of significant accounting policies and

other explanatory information, as well as the Directors’ report, and Remuneration report as set out from pages 214 to 371.

Directors’ responsibility for the financial statements

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with

International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa, and for such internal

control as the directors determine is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform

the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The

procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant

to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the

directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of AngloGold Ashanti Limited group

and company as at 31 December 2010, and their financial performance and their cash flows for the year then ended in accordance

with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

Ernst & Young Inc.

Director – Lance Ian Neame Tomlinson

Registered Auditor

Chartered Accountant (SA)

Wanderers Office Park

52 Corlett Drive

Illovo, Johannesburg

South Africa

11 March 2011

Report of the independent auditors

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AngloGold Ashanti Annual Financial Statements 2010

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 41,000,000 AngloGold Ashanti ADRs or some
10.76% of the issued share capital.

Share capital

Authorised

The authorised share capital of AngloGold Ashanti as at 31 December 2010 was made up as follows:

· 600,000,000 ordinary shares of 25 South African cents each

R150,000,000

· 4,280,000 E ordinary shares of 25 South African cents each

R1,070,000

· 2,000,000 A redeemable preference shares of 50 South African cents each

R1,000,000

· 5,000,000 B redeemable preference shares of 1 South African cent each

R50,000

The following are the movements in the issued and unissued share capital from the beginning of the accounting period to the date

of this report:

Issued

Ordinary shares

Number

Number

of shares

Rand

of shares

Rand

2010

2009

At 1 January

362,240,669

90,560,167

353,483,410

88,370,853

Issued during year

– Equity offering to fund the initial effective 35% interest

in the Kibali gold project

–

–

7,624,162

1,906,041

– Equity raising – proceeds used to part fund the hedge elimination

18,140,000

4,535,000

– Bokamoso ESOP on conversion of E ordinary shares

–

–

1,181

295

– Exercise of options by participants in the AngloGold Share

Incentive Scheme

823,411

205,853

1,131,916

282,979

At 31 December

381,204,080

95,301,020

362,240,669

90,560,167

Issued subsequent to year-end

– Exercise of options by participants in the AngloGold Share

Incentive Scheme

2,812

703

At 31 January 2011

381,206,892

95,301,723

Directors’ report

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215

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

Number

of shares

Rand

of shares

Rand

2010

2009

At 1 January

3,794,998 948,749

3,966,941 991,735

Cancelled in exchange for ordinary shares in terms of the

cancellation formula

(988,872)

(247,218)

(171,943)

(42,986)

At 31 December

2,806,126

701,531

3,794,998 948,749

Cancelled subsequent to year-end

– Cancelled and exchanged for ordinary shares issued in

terms of the cancellation formula

(16,360)

(4,090)

At 31 January 2011

2,789,766 697,441

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, does not

form part of the unissued share capital of the company.

E ordinary share capital amounting to R89,954,970 in respect of 988,872 vested, unconverted and cancelled E ordinary shares, was

transferred to ordinary share premium during 2010. 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 on 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 and Izingwe, vesting was deferred to 1 May 2010 at

which time the E ordinary shares were cancelled without benefit.

On 1 November 2010, the second tranche of the E ordinary shares issued to the Bokamoso ESOP and to 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 has been deferred to 1 May 2011 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 has during the period 1 November 2010 to and including 1 May 2011

(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 cancellation formula. Any E ordinary shares that are unexercised during

the extended vesting period will be cancelled.

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ report

Redeemable preference shares

The A and B redeemable preference shares, all of which are held by 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 25 to the group’s financial statements.

Unissued

Ordinary number

of shares

2010

2009

At 1 January

237,759,331

46,516,590

Authorised during the year

–

200,000,000

Issued during year

(18,963,411)

(8,757,259)

At 31 December

218,795,920

237,759,331

Issues subsequent to year-end

(2,812)

At 31 January 2011

218,793,108

Ordinary shares under the control of directors

Pursuant to the authority granted by shareholders at the annual general meeting held on 7 May 2010, 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

11 May 2011.

At 31 December 2010, the total number of shares placed under the control of the directors was 19,060,204. In September 2010,

the directors issued 18,140,000 ordinary shares in an equity offering, the proceeds from which were applied to eliminate, in part, the

hedge book.

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 11 May 2011.

At the annual general meeting to be held on 11 May 2011, 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.

Directors’ report

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217

Depositary interests

American Depositary Shares

At 31 December 2010, the company had in issue, through The Bank of New York Mellon as Depositary and listed on the New York

Stock Exchange (NYSE), 182,168,922 (2009: 176,762,305) American Depositary Shares (ADSs). Each ADS is equal to one ordinary

share. At 31 January 2011, there were 182,168,922 ADSs in issue and listed on the NYSE.

CHESS Depositary Interests

At 31 December 2010 and 31 January 2011, the company had in issue through the Cleaning House Electronic Sub-register System

(CHESS), and listed on the Australian Securities Exchange (ASX), 91,144,165 (2009: 91,443,205) 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 2010 and 31 January 2011, the company had in issue, through NTHC Limited as Depositary and listed on the Ghana

Stock Exchange (GhSE), 11,496,018 and 6,612,642 (2009: 11,512,534) Ghanaian Depositary Shares (GhDSs) respectively. 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 vice presidents and management

groups 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.

At the annual general meeting held on 7 May 2010, shareholders authorised that 17,000,000 shares may be allocated for the

purposes of the scheme. Prior to this authorisation, the maximum number of shares attributable to the scheme was 2.75% of the

total number of ordinary shares in issue from time to time. The maximum aggregate number of shares which may be acquired by any

one participant in the scheme is 5% of the shares attributable to the scheme or 850,000 ordinary shares per employee could be

issued in aggregate (2009: 498,080).

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. These are 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.

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ report

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 performance related 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 vice presidents 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 vice presidents 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 period

1 January 2010 to 31 January 2011 is as follows:

Directors’ report

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219

Long-

Total

Perfor-

Bonus

Term

Share

Total

Time-

mance

Share

Incentive

Incentive

shares

Related

related

Plan

(1)

Plan

(1)

Scheme

issued

At 1 January 2010

28,252

639,975

1,295,708

1,263,749

3,227,684

6,100,420

Movement during year

– Granted

–

–

811,638

632,142

1,442,780

– Exercised

(27,611)

(242,551)

(468,327)

(84,922)

(823,411)

823,411

– Lapsed – terminations

–

(5,492)

(86,526)

(211,279)

(302,297)

At 31 December 2010

641

391,932

1,552,493

1,599,690

3,544,756

6,923,831

Average exercise/issue price per share

R194.00

R241.96

R283.39

R172.03

R241.96

Subsequent to year-end

– Granted

–

–

–

–

–

– Exercised

–

–

(2,362)

(450)

(2,812)

2,812

– Lapsed – terminations

–

–

–

–

–

At 31 January 2011

641

391,932

1,550,131

1,599,240

3,541,944

6,926,643

(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 had to be in place by 1 January 2011, AngloGold

Ashanti sought and obtained shareholder approval at the annual general meeting held on 7 May 2010 authorising the directors to

issue up to 17,000,000 shares which was management’s estimate of options/awards to be granted over the next three years,

including options/awards granted and outstanding as at 31 December 2010. 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 2010

17,000,000

Less:

– Total number of options/awards granted and outstanding at 31 December 2010

3,544,756

– 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)

– During the period 1 January to 31 December 2010

(823,411)

Total options/awards available but unissued at 31 December 2010

11,398,904

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ report

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 2010.

Review of operations

The performance of the various operations, which are unaudited, are comprehensively reviewed from page 56.

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 bonds and other factors.

Dividends declared since 1 January 2010:

Final dividend

Interim dividend

Final dividend

Number 107

Number 108

Number 109

Declaration date

16 February 2010

10 August 2010

15 February 2011

Last date to trade ordinary shares cum dividend

5 March 2010

27 August 2010

4 March 2011

Record date

12 March 2010

3 September 2010

11 March 2011

Amount paid per ordinary share

– South African currency (cents)

70

65

80

– United Kingdom currency (pence)

6.206

5.722

7.118

– Ghanaian currency (cedis)

13.220

12.668

17.384

Amount per CDI

(1)

– Australian currency (cents)

2.079

2.002

2.275

Payment date

19 March 2010

10 September 2010

18 March 2011

Amount per GhDS

(2)

– Ghanaian currency (cedis)

0.1322

0.1266

0.17384

Payment date

22 March 2010

13 September 2010

(4)

21 March 2011

Amount per ADS

(3)

– United States currency (cents)

9.495

9.003

11.000

Payment date

29 March 2010

20 September 2010

(4)

28 March 2011

Amount per E ordinary share South African currency (cents)

35

32.5

40

Payment date

19 March 2010

10 September 2010

18 March 2011

(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 ADS (American Depositary Share) is equal to one ordinary share.

(4)

Illustrative value assuming the following rates of exchange: R7.2728: $. 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. The date for the implementation of the withholding tax

on dividends has now been announced as 1 April 2012. Although this may reduce the tax payable by the South African operations

of the group, thereby increasing distributable earnings, the withholding tax on dividends will generally reduce the amount of dividends

or other distributions received by AngloGold Ashanti shareholders.

Directors’ report

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221

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 2010, the group’s gross borrowings (including the mandatory

convertible bonds) totalled $2,704m, R17,763m (2009: $1,931m, R14,355m).

Significant events during the year under review and subsequent to year-end

Appointment of chairman: Mr Tito Mboweni, the former Governor of the South African Reserve Bank was appointed to the board

and as chairman of the company with effect from 1 June 2010. He succeeded Mr Russell Edey, who retired as chairman and from

the board on 7 May 2010.

Joint venture in the Democratic Republic of the Congo: On 26 March 2010, AngloGold Ashanti announced that it has entered

into a definitive joint venture agreement (JVA) with l’Office des Mines d’Or de Kilo-Moto (OKIMO) relating to the development of the

Ashanti Goldfields Kilo (AGK) project in the Democratic Republic of the Congo (DRC) and the transfer of the exploitation permits to

AGK. Under the JVA, AngloGold Ashanti and OKIMO agree to jointly develop the AGK project through the joint company AGK, in

which AGA holds an 86.22% interest and OKIMO holds the remaining 13.78%. The JVA provides for the exploitation permits to be

transferred from OKIMO to AGK covering an area of approximately 6,000 km2 in the Ituri district in the northeastern DRC. This

includes the Mongbwalu project where a Mineral Resource of approximately 3Moz has been identified by previous exploration work

and where further exploration and feasibility studies are currently taking place.

Temporary suspension of operations at the Iduapriem and Obuasi mine: Following a temporary suspension of operations at the

Iduapriem mine, AngloGold Ashanti with the approval of the Ghana EPA, constructed an interim tailings storage facility (TSF) for tailings

deposition for a year while the greenfields tailings storage facility is being constructed. In addition, the water treatment plant on site was

upgraded. The interim TSF was commissioned in April 2010 and water treatment plant in November 2010.

AngloGold Ashanti’s Obuasi mine in Ghana suspended operation of gold processing for five days to implement a revised water

management strategy aimed at reducing contaminants contained in its discharge.

Investment grade ratings: On 9 April 2010 AngloGold Ashanti noted the following investment grade ratings assigned to it:

· Moody’s Investors Service :

Baa3, Outlook Stable

· Standard & Poor’s

:

BBB-, Outlook Stable

$1bn revolving credit facility: On 21 April 2010 AngloGold Ashanti secured a $1bn, four-year unsecured revolving credit facility,

due 2014.

Issue of $1bn unsecured notes: On 22 April 2010, AngloGold Ashanti announced the pricing of an offering of US$1bn of 10-year

and 30-year unsecured notes. The issue was significantly oversubscribed and the offering closed on 28 April 2010.

Cessation of services: On 1 June 2010, AngloGold Ashanti announced that it was halting the supply of services, including water,

compressed air, electricity and sewerage, to the mines in Orkney following the failure by the liquidators of Pamodzi Gold Orkney, to

settle debts owed for services supplied to the operations over the prior ten months. AngloGold Ashanti however would continue to

supply potable water and electrical power to Pamodzi’s mine residences for as long as these were occupied.

Sale of Tau Lekoa Mine: The terms of the sale of the Tau Lekoa Mine to Simmer & Jack Mines Limited (Simmers) were announced

on 17 February 2009. This sale was concluded effective 1 August 2010, following the transfer of the mining rights of the Tau Lekoa

Mine and the adjacent properties of Weltevreden, Jonkerskraal and Goedgenoeg to Buffelsfontein Gold Mines Limited, a wholly

owned subsidiary of Simmers on 20 July 2010.

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ report

Amendment to the joint venture agreement with B2Gold Corp: On 1 July 2010, AngloGold Ashanti increased its holding in the

Gramalote project from 49% to 51%. On 12 August 2010, AngloGold Ashanti announced that it has entered into an agreement with

B2Gold Corp. to amend the Gramalote Joint Venture Agreement. Under the amended terms, AngloGold retains its 51% interest in

the Gramalote Joint Venture and will become manager of the Gramalote Project in Colombia. The Gramalote Project to date was

managed by B2Gold, which will retain its 49% interest in the Gramalote Joint Venture.

Concurrent equity and mandatory convertible bond issue: On 15 September 2010, AngloGold Ashanti announced the launch

and pricing of a concurrent equity and mandatory convertible offering which was followed by an announcement on 16 September

2010 advising of the exercise of an over-allotment option. The concurrent offering resulted in the issue of 18,140,000 ordinary shares

or 5% of the ordinary issued share capital of the company at an issue price of R308.37 per share and an issue of $789,086,750

Mandatory Convertible Subordinated Bonds due 15 September 2013. On 26 October 2010, shareholders, by the requisite majority,

approved a special resolution placing up to a maximum of 18,140,000 ordinary shares under the control of the directors, deliverable

upon the conversion of the Mandatory Convertible Subordinated Bonds.

Elimination of hedge book: On 7 October 2010, AngloGold Ashanti completed the elimination of its gold hedge book, providing the

company and its shareholders with full exposure to the prevailing gold price. As a result, the company will sell the gold it produces

at market prices and therefore expects to enhance cash flow and profit margins as a result of removing hedge contracts with low

committed gold prices.

Sale of B2Gold Corp shares: AngloGold Ashanti realised net proceeds of C$70m from the sale of its entire holding of shares in

Vancouver-based gold producer B2Gold Corp. The stake, equivalent to about 10.17% of B2Gold's outstanding shares, was sold on

9 November 2010 in an orderly fashion, after the markets closed.

Development of the Tropicana Gold Project in Western Australia: On 11 November 2010, AngloGold Ashanti announced

that the development of the Tropicana Gold Project in Western Australia had been approved by the boards of AngloGold Ashanti

(70% interest) and Independence Group NL (30% interest).

Retirement of Deputy Chairman: Dr T J Motlatsi retired from the board of AngloGold Ashanti, effective from 17 February 2011.

Mankayi case – Constitutional Court ruling: On 3 March 2011, AngloGold Ashanti noted the decision of the Constitutional Court

to grant Mr Mankayi leave to appeal against the decision of the Supreme Court of Appeal, which itself upheld the June 2008

Johannesburg High Court decision that employees who qualify for benefits in respect of the Occupational Diseases in Mines and

Works Act (ODMWA) may not, in addition, lodge civil claims against their employers in respect of their relevant conditions.

The company is still studying the details of the judgement and its initial impression is that should the Executor of Mr Mankayi’s estate

wish to pursue his claim, he or she will now need to return to the High Court to continue with the litigation action. AngloGold Ashanti

will defend the case on its merits. Should other individuals lodge similar claims, these too would ultimately be defended by the

company and judged on their merits.

Investments

Particulars of the group’s principal subsidiaries and operating entities are presented on page 371.

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 2010, a material effect on the group’s financial position, other than those

disclosed in group note 34 of the financial statements.

Directors’ report

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223

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 2010.

Material resolutions

Details of special resolutions and other resolutions of a significant nature passed by the company 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 7 May 2010:

2 July 2010

Approval for the company or any of its subsidiaries to
acquire ordinary shares issued by the company.

AngloGold Ashanti Limited

Passed at the general meeting held on 26 October 2010:

2 November 2010

Approval to place 18,140,000 ordinary shares of
R0.25 each in the authorised but unissued share capital of
the company under the control of the directors of the
company, as a specific authority and approval, to allot and
issue for the purpose of the conversion of the
$789,086,750 6.00% mandatory convertible subordinated
bonds due 2013.

Annual general meetings

At the 66th annual general meeting held on 7 May 2010, shareholders passed ordinary resolutions relating to the:

· adoption of the financial statements for the year ended 31 December 2009;
· re-appointment of Ernst & Young Inc. as auditors of the company;
· re-election of Mr FB Arisman, as a director of the company;
· election of Prof LW Nkuhlu as a director;
· appointment of Mr FB Arisman as a member of the Audit and Corporate Governance Committee of the company;
· appointment of Prof LW Nkuhlu as a member of the Audit and Corporate Governance Committee of the company;
· renewal of a general authority placing 5% of the unissued ordinary shares of the company under the control of the directors;
· 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;
· an increase in non-executive directors’ fees;
· granting of a general authority to the directors to allot and issue convertible bonds which may be converted into ordinary shares
to a maximum, in aggregate of 5% of the company’s ordinary shares of R0.25 each in the issued share capital of the company
from time to time;
· increase in non-executive directors’ fees for board committee meetings;
· amendment to the AngloGold Ashanti Limited Share Incentive scheme;
amendment to the AngloGold Ashanti Limited Long Term Incentive Plan 2005;
· amendment to the AngloGold Ashanti Limited Bonus Share Plan 2005;
· the granting of a specific authority to the directors to issue ordinary shares for the purposes of the incentive schemes adopted
· by the company from time to time;
· approval of the AngloGold Ashanti remuneration policy and
approval for the company and its subsidiaries to acquire ordinary shares issued by the company.

Details concerning the special resolution passed by shareholders at this meeting are disclosed above.

Notice of the 67th annual general meeting, which is to be held in the Auditorium, 76 Jeppe Street, Newtown, Johannesburg
at 11:00 (South African time) on Wednesday, 11 May 2011, is enclosed as a separate document with the Annual Financial
Statements 2010. 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.

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AngloGold Ashanti Annual Financial Statements 2010

Directors’ report

Directorate and secretary

The following movements to the board of directors took place during the period from 1 January 2010 to 31 December 2010.

Executive directors

There were no changes to the executive directorate during the year under review.

Non-executive directors

Mr RP Edey retired as chairman and member of the board at the conclusion of the annual general meeting held on 7 May 2010.

Mr TT Mboweni was appointed as chairman and member of the board and Mr F Ohene-Kena was appointed as a member of the
board with effect from 1 June 2010.

Mr R Gasant was appointed as a member of the board and as a member of the Audit and Corporate Governance Committee with
effect from 12 August 2010.

The directors retiring by rotation at the forthcoming annual general meeting in terms of the articles of association are, Mr W A Nairn
and Mr S M Pityana. Messrs Nairn and Pityana have made themselves available for re-election,

Messrs TT Mboweni, F Ohene-Kena and R Gasant, who were appointed as directors during 2010, will retire at the annual general
meeting but will offer themselves for 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 from page 146.

There was no change in the office of the Company Secretary. The name, business and postal address of the Company Secretary are
set out on page 149 of this report.

Directors’ interests in shares

The interests of the directors in the ordinary shares of the company at 31 December 2010, which did not individually exceed 1% of
the company’s issued ordinary share capital, were:

Beneficial

Beneficial

Direct

Indirect

Direct

Indirect

31 December 2010

31 December 2009

Executive directors

M Cutifani

10,000

–

10,000

–

S Venkatakrishnan

10,351

–

10,351

–

Total

20,351

–

20,351

–

Non-executive directors

FB Arisman

–

4,984

–

4,984

RP Edey

–

–

–

3,063

LW Nkuhlu

–

800

–

800

Total

–

5,784

–

8,847

Grand total

20,351

5,784

20,351

8,847

There have been no changes in the above interests since 31 December 2010. A register detailing directors’ and officers’ interests in
contracts is available for inspection at the company’s registered and corporate office.

Directors’ report

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225

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, including the results of operations and cash flows for the year, in conformity with the Companies

Act, 61 of 1973 (as amended) and in terms of the JSE Listings Requirements.

In preparing the annual financial statements reflected in United States dollars and South African rands from page 236, 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 2010, and the results of their operations and cash flow information for the

year then ended.

AngloGold Ashanti, through its Executive Committee reviews its short-, medium- and long-term funding, treasury and liquidity

requirements and positions monthly. The board of directors also review these on a quarterly basis at its meetings.

Cash and cash equivalents at 31 December 2010 amounted to $586m (2009: $1,100m), and together with cash budgeted to be

generated from operations in 2011 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 2010, 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 on page 213.

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 2011. 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 on page 390 of this report.

Under the Sarbanes-Oxley Act, the Chief Executive Officer and Chief Financial Officer are required to complete a group certificate

stating that the US GAAP 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 this 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.

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226

AngloGold Ashanti Annual Financial Statements 2010

Remuneration report

Remuneration policy

AngloGold Ashanti aims to be the leading gold mining company in the medium-term and the leading mining company in the long-

term. This ambitious growth objective requires that the company’s remuneration strategies are sufficiently robust and innovative to

attract people with the requisite skills on a global basis. The remuneration policy is devised to support this business strategy.

The Remuneration Committee sets and monitors executive remuneration for the company, in line with the executive remuneration

policy. This policy has as its objectives to:

·attract, reward and retain executives of the highest calibre;

·align the behaviour and performance of executives with the company's strategic goals, in the overall interests of shareholders;

·ensure the appropriate balance between short-, medium- and long-term rewards and incentives, with the latter being closely linked

to structured company performance targets and strategic objectives that are in place from time to time; and

·ensure that senior regional management is competitively rewarded within a global remuneration policy, which recognises both local

and global market practice.

In particular, the Remuneration Committee is responsible for:

·the remuneration packages for executive directors of the company including, but not limited to, basic salary, performance-based

short- and long-term incentives, pensions, and other benefits; and

·the design and operation of the company's executive share option and other share incentive schemes.

The following principles are applied to give effect to the remuneration policy and in determining executive remuneration:

·To attract, reward and retain executives of the highest calibre, executive remuneration is benchmarked against a comparator group

of global and selected South African mining and multi-national companies. The most recent benchmarking exercise conducted by

independent consultants (PWC, formerly PriceWaterhouse Coopers) indicates that the total remuneration of the executive directors

is above the median of the comparator group, but the remuneration of the executive vice presidents (EVP) lags that of the peer

group. Specific cash-based retention plans (settled after a three-year period) have been put in place to address this issue. However,

a systemic adjustment of the remuneration levels for executives and senior management is required to ensure that the company’s

remuneration levels are consistent with global pay levels in the mining sector, and that the company can compete effectively in the

global market.

·To ensure the appropriate balance between short-, medium- and long-term incentives, annual remuneration is a combination of

base pay and short- and long-term incentives, with salary comprising about 35% – 45% of annual remuneration if the bonus and

LTIP targets are partially achieved. Full achievement of the BSP and LTIP targets results in salary comprising between 24% and

35% of total annual remuneration.

·To align the behaviour and performance of executives with the company’s strategic goals, all incentive plans align performance

targets with shareholder interests. The quantum of the short-term incentive and the related bonus shares are determined with

respect to current performance and the vesting of the LTIP awards is determined with respect to company performance over the

three years following the date of grant.

During 2010, the key remuneration decisions taken were as follows:

As a result of the benchmarking exercise comparing the EVP with the global comparator group, adjustments in excess of the South

African inflationary increases were made to close the gap between the EVP basic salaries and the comparator group median. The

outcome of this review, as it affects EVP basic salaries, is explained further in this report.

A decision was taken not to renew the retention scheme but to ensure that going forward, the salaries of senior management and

the executive are competitive against the local and international mining market.

Remuneration report

P

227

Some steps were taken in 2010 to align with the King III requirements. AngloGold Ashanti is not compliant with King III in the

following areas:

·Performance drivers on the STI scheme (BSP) and the LTI scheme (LTIP) are duplicated ie. EPS, resource to reserve conversion

and safety. The duplicated drivers are key to success of the company and therefore, at least for now, the drivers will remain as is.

·Executive contracts do not contain a shorter notice period in the event of dismissal.

·AngloGold Ashanti does have compensation for executives in the event of severance as a result of a change in control. This is felt

necessary in order to retain executives particularly during turbulent economic times and while the company undergoes significant

change in numerous areas.

·AngloGold Ashanti does, in some countries, pay salaries which are on average above the median of the market. This is also felt

necessary in order to retain the key skills already within the company and to attract talented individuals, particularly in those

countries where there are shortages of critical skills.

For full details on the Remuneration Committee, refer to the Corporate Governance section, from page 188.

Executive remuneration

Executive Remuneration takes into account remuneration paid to the members of the Executive Committee. For full details on the

Executive Committee, refer from page 148.

Executive directors’ remuneration and the remuneration paid to the other members of the Executive Committee currently comprise

the following elements:

·Basic salary;

·Pensions and risk benefits;

·Other benefits;

·Retention award;

·Short-term incentive; and

·Long-term incentive.

Each component is described in more detail below:

·Basic salary is subject to annual review by the Remuneration Committee and is reviewed with reference to market data of a group

of comparator companies in the South African and relevant international markets. The median of the comparator group is the

primary point of reference for the remuneration policy. However, the transition from a primarily South African company to a global

company has resulted in the actual remuneration of management below the executive director level, lagging significantly. The

individual salaries of the executive management are reviewed annually in accordance with their own performance, experience,

responsibility and company performance.

·Pensions and risk benefits: There are a range of retirement funds to which the executive management belong, which is

dependent on the country in which they work and the individual’s nationality. For example, the South African executive management

belong to either the AngloGold Ashanti Pension Fund or the Evergreen Provident Fund. Executive management who are non-South

African citizens but working in South Africa have the option of electing a retirement benefit in their country and currency of choice,

in which case, the company contributes an amount equal to the contribution made for other AngloGold Ashanti executives. Death

and disability cover reflects best practice amongst comparable employers in South Africa.

P

228

AngloGold Ashanti Annual Financial Statements 2010

Remuneration report

·Other benefits: Executive management are members of an external medical aid scheme, which covers the individual and his/her

immediate family.

·Bonus Share Plan (BSP) is a short-term incentive plan under which award levels are determined with reference to the achievement

of a set of stretched company and individual performance targets. For 2010, the company targets were based on performance

measures including:

·earnings per share (EPS);

·gold production;

·cost control; and

·resource to reserve conversion.

A safety multiplier/penalty was also applied so that the safety record could be taken into account when determining the extent to

which performance targets are achieved.

The weighting of the respective contribution of company and individual targets at the executive management level is 60% company

and 40% individual.

The bonus paid comprises two separate parts:

·a cash bonus, which may not exceed 50% of the maximum bonus allocated per level, is payable at the end of the relevant financial

year; and

·an equity bonus to the equivalent value of the cash bonus, settled by way of BSP share awards, which together with the cash

bonus, may not exceed the maximum bonus.

The BSP awards vest over a two-year period and vesting is subject to the individual being in the employ of the group at the date of

vesting. In respect of the BSP awards granted after 1 January 2008, 40% of the awards vest on the first anniversary from the date

of grant and the remaining 60% of awards vest on the second anniversary from the date of grant. Provided that the individual has

not exercised any BSP awards during the vesting period, he or she will be eligible to receive an additional 20% BSP awards on the

third anniversary from the date of grant.

The maximum bonus achievable under the BSP (expressed as a percentage of basic salary) is shown in the table below. For these

purposes, basic salary includes offshore payments:

On target

BSP award

(face value

Maximum

On target

On target

at date of

Position

bonus bonus

cash

bonus

grant)

Chief executive officer

160%

80%

40%

40%

Executive directors

140%

70%

35%

35%

Executive management

120%

60%

30%

30%

Other management

100%

50%

25%

25%

In respect of 2010, the performance targets imposed on BSP awards were achieved at a level of 62.3%. The payments made under

the BSP in respect of the 2010 financial year to executive management are disclosed in this Remuneration Report.

In respect of the 2011 BSP awards, the performance targets to be satisfied will be based on the targets summarised above and no

changes to the maximum bonuses or on-target bonuses are proposed.

Cash payments, equal in value to the dividends which would have been paid had actual shares been issued during the vesting period,

were made when the BSP awards granted in 2007, 2008 and 2009 vested during 2010.

Remuneration report

P

229

·Long-Term Incentive Plan (LTIP). The objective of the LTIP is to align the interests of the executive management with those of

the company and the shareholders over the medium- to long-term.

Under the LTIP, the executive management are granted a right to receive shares in the company, subject firstly to performance

conditions being achieved over the specified performance period and secondly to continued employment with the group.

The performance targets used for vesting of the LTIP awards are determined annually by the Remuneration Committee and link

directly to the company’s strategy. The LTIP awards are granted with a three-year vesting period. For awards granted in 2009, the

company targets were based on measures including:

·EPS;

·total shareholder return (TSR) against a comparator group of gold mining companies;

·safety; and

·resource generation.

LTIP awards will vest on the following basis for the 2009 and 2010 awards:

1

Earnings per share (30% weighting)

EPS growth of at least 2%, net of US inflation per year over the three-year vesting period. Partial vesting occurs at 2% growth

per year and full vesting at 5% growth per year.

2

Total shareholder returns (30% weighting)

TSR relative to a group of global peer gold mining companies. For vesting of the 2009 and 2010 LTIP awards to occur, the

company’s TSR has to be at least equal to the third place performer from the comparator group for partial vesting, and second

or better for full vesting.

3

Strategic target (40% weighting)

The strategic target is divided into two parts:

i) Safety performance (20% weighting)

The company’s safety performance has become the primary strategic target from an operating perspective and it is essential

that the company’s performance shows significant improvement. The target is a 20% year-on-year improvement in fatal injuries

(FIFR) and in lost-time injuries (LTIFR) during the period. For partial vesting a minimum of a 10% improvement per year must

be achieved.

ii) Reserve and resource ounce generation (20% weighting)

The target is at least 9Moz at the measured and indicated resource level, and 5Moz at the published reserves level for full

vesting, and 7Moz and 3Moz respectively for partial vesting.

In this context, partial vesting means that 50% of the weighted target is achieved (except in the case of TSR where partial

vesting means a 40% achievement of target) while full vesting results in a 100% achievement. Achievement between partial

and target results in vesting calculated on a straight line graph between these two points.

The value of awards which may be granted under the LTIP by reference to the face value of the awards as at the date of grant

and expressed as a percentage of basic salary, is shown in the table below. In this table, “face value” means the value of the

award at the current share price (i.e. share price x number of shares under award) assuming all performance criteria are met

and the awards vest in full. Since the introduction of the LTIP awards, vesting has ranged from between 40% and 82%.

In this context basic salary includes offshore payments:

Maximum

Position

face value

Chief executive officer

120%

Executive directors

100%

Executive management

80%

Other management

80%

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230

AngloGold Ashanti Annual Financial Statements 2010

Remuneration report

The LTIP awards granted in respect of the 2010 financial year, issued in 2011, to executive management are disclosed in this

Remuneration Report under the Share Incentive Scheme section.

In respect of the LTIP awards granted in 2008 which vested during 2011, 82% of the award vested following the testing of the

performance conditions. In making up the 82%, earnings per share with its 30% weighting and strategic targets with its 40%

weighting were 100% vested (safety, 20%, and reserve and resource ounce generation, 20%). Of the 30% weighting for total

shareholder return, only 12% vested.

In respect of the LTIP awards granted in 2011, the performance targets to be satisfied will be based on the targets summarised above

and no changes to the maximum face value or maximum expected value of awards are proposed.

At the discretion of the Remuneration Committee, a cash payment, equal in value to the dividends which would have been paid had

actual shares been issued during the vesting period, will be made to employees to whom LTIP awards were granted, to the extent

that these LTIP awards vest after the performance conditions have been tested.

Directors’ service contracts

Service contracts of executive directors are reviewed annually. Mark Cutifani, as chief executive officer, has a 12-month notice period

while the notice period for the chief financial officer Srinivasan Venkatakrishnan, is nine months. Executive vice presidents have a six-

month notice period while senior vice presidents and vice presidents have three-month notice periods. The contracts also provide for

a payment of 24 months’ salary in the case of the chief executive officer; 18 months in the case of the chief financial officer and

12 months in the case of other executive management in the event of a material change in role, responsibilities or remuneration,

including loss of employment, following a new shareholder assuming control of the company.

Non-executive directors’ remuneration

The following table details fees and allowances paid to non-executive directors:

Resigned/

Appointed retired

with

with

Com-

Com-

All figures stated

effect

effect

Directors’

mittee

Directors’

mittee

to the nearest R000

(1)

from

(2)

from

(2)

fees

(3)

fees Travel

(4)

Total

fees

(3)

fees Travel

(4)

Total

2010

2009

RP Edey (Chairman)

7 May 10

829

218

149

1,196

1,626

318

314

2,258

TT Mboweni (Chairman)

1 June 10

887

104

–

991

–

–

–

–

Dr TJ Motlatsi (Deputy chair)

(5)

629

369

–

998

560

273

–

833

FB Arisman

370

631

230

1,231

315

303

208

826

RE Bannerman

15 May 09

–

–

–

–

121

68

88

277

R Gasant

12 Aug 10

113

116

–

229

–

–

–

–

JH Mensah

15 May 09

–

–

–

–

121

100

38

259

WA Nairn

262

426

–

688

227

288

–

515

Prof LW Nkuhlu

262

489

–

751

240

260

–

500

F Ohene-Kena

1 June 10

138

110

83

331

–

–

–

–

SM Pityana

262

534

–

796

227

393

–

620

Total – non-executive directors

3,752

2,997

462

7,211

3,437

2,003

648

6,088

Rounding may result in computational differences

Remuneration report

P

231

(1)

Where directors' compensation is in dollars, the amounts reflected are the actual South African rand values paid calculated using

the R:$ rate of exchange at the time of payment.

(2)

Fees are disclosed only for the period from or to which, office is held.

(3)

At the annual general meeting of shareholders held on 7 May 2010 shareholders approved an increase in directors fees with effect

from 1 June 2010 as follows:

For six

Additional

meetings

per meeting

Travel

(4)

– Chairman

R1,520,300

R78,000

$10,000

– Deputy chairman

R650,000

R32,400

–

– South African resident directors

R270,000

R16,000

–

– Non-South African directors

– Living in Africa

$33,750

$2,000

$6,000

– Living other than Africa

$60,000

$3,000

$8,000

The fees payable in respect of committees as approved by shareholders at the annual general meeting held on 7 May 2010 are

as follows:

From 1 June 2010

Audit

and Corporate

Governance

Other

Ad hoc

committee

committees

committees

(per annum)

(per annum)

(per meeting)

– Chairman – South African resident

R160,000

R130,000

–

– Chairman – Living in Africa

–

$16,250

–

– Chairman – Living other than Africa

–

$25,000

–

– South African resident members

R135,000

R110,000

R16,200

– Non-South African members

– Living in Africa

$16,875

$13,750

$2,025

– Living other than Africa

$25,315

$20,000

$3,000

(4)

A payment of a travel allowance, per board meeting, is paid to non-executive directors who travel internationally to attend board

meetings. In addition, AngloGold Ashanti is liable for the payment of all travel costs.

(5)

Dr Motlatsi retired from the board effective 17 February 2011.

Executive directors do not receive payment of directors' fees or committee fees.

Non-executive directors are not eligible to participate in the Share Incentive Scheme.

P

232

AngloGold Ashanti Annual Financial Statements 2010

Remuneration report

Executive directors’ and executive management remuneration

Executive director and executive management remuneration is made up as follows:

Resigned/

Perfor-

Pension

Pre-tax

Appointed retired

mance

scheme

gains

on

with

with

related

contri-

En-

share

All figures

effect

effect

pay-

butions

Other

cashed

Sub

options

in R000

from

(1)

from

(1)

Salary

ments

(2)

benefits benefits

(3)

leave

(4)

total

exercised

Total

2010

Executive directors’ remuneration
M Cutifani

Full year

11,447

8,543

2,089

345

–

22,424

–

22,424

S Venkatakrishnan

Full year

7,015

4,972

1,310

2,216

–

15,513

–

15,513

Total executive directors

18,462

13,515

3,399

2,561

–

37,937

–

37,937

Executive management (non-directors) – top three earners
Top earner 1

Full year

8,831

3,981

1,964

857

–

15,633

–

15,633

Top earner 2

Full year

4,571

2,472

796

1,855

–

9,694

2,987

12,681

Top earner 3

Full year

3,999

1,702

420

1,182

–

7,303

3,328

10,631

Total top three earners

17,401

8,155

3,180

3,894

–

32,630

6,315

38,945

Remainder of executive management remuneration
Representing five
executive managers

Full year

19,183

10,958

2,631

5,261

137

38,170

2,841

41,011

Total top remaining executive management

19,183

10,958

2,631

5,261

137

38,170

2,841

41,011

Summary 2010 remuneration
Executive directors

18,462

13,515

3,399

2,561

–

37,937

–

37,937

Top three earners

17,401

8,155

3,180

3,894

–

32,630

6,315

38,945

Other executive management Full year

19,183

10,958

2,631

5,261

137

38,170

2,841

41,011

Total remuneration 2010

55,046

32,628

9,210

11,716

137 108,737

9,156 117,893

2009

Executive directors’ remuneration
M Cutifani

Full year

10,807

7,627

1,913

634

–

20,981

–

20,981

S Venkatakrishnan

Full year

6,552

4,297

1,199

1,948

–

13,996

2,621

16,617

17,359 11,924

3,112

2,582

–

34,977

2,621

37,598

Executive management remuneration
Representing 10
executive managers

Full year

37,635

17,002

4,510

10,135

394

69,676

20,370

90,046

Total executive directors,
and executive
management 2009

54,994

28,926

7,622

12,717

394 104,653

22,991 127,644

Rounding of figures may result in computational discrepancies.

(1)

Salaries are disclosed only for the period from or to which office was held.

(2)

In order to more accurately disclose remuneration received/receivable by executive directors and executive management, the
tables above include the performance-related payments calculated on the year's financial results.

(3)

Includes health care, retention payments and personal travel.

(4)

In 2005, AngloGold Ashanti altered its policy regarding the number of leave days that may be accrued. As a result surplus leave
days accrued are compulsorily encashed.

Remuneration report

P

233

Share incentive schemes

Details of the options and rights to subscribe for ordinary shares in the company granted to, and exercised by, executive directors,
executive management and other managers on an aggregate basis during the year to 31 December 2010 and subsequent to year-
end are set out in the table below.

Executive

Other

manage-

manage-

Total

M Cutifani

Venkat

(1)

ment

(2)

ment

(2)

scheme

(3)

Granted and outstanding at 1 January 2010

Number 100,127

82,184

394,814

2,650,559

3,227,684

Granted during the year

(4)

Number

77,694

40,617

142,873

1,181,596 1,442,780

Exercised during the year

Number 

– –

(28,241)

(795,170)

(823,411)

Pre-tax gain at date of exercise (value) – R

–

–

9,155,351

193,379,517

202,534,868

Lapsed during the year

Number –

(5,781)

(17,535)

(278,981)

(302,297)

Held at 31 December 2010

Number

177,821

117,020

491,911

2,758,004

3,544,756

Subsequent to year-end – to 31 January 2011
Granted

Number –

–

–

–

–

Exercised

Number –

–

–

(2,812)

(2,812)

Pre-tax gain at date of exercise (value) – R

–

–

–

878,142

878,142

Lapsed

Number –

–

–

–

–

Held at 31 January 2011

Number 177,821

117,020

491,911

2,755,192

3,541,944

Latest expiry date

23 Feb 2020

23 Feb 2020

23 Feb 2020

23 Feb 2020

23 Feb 2020

(1)

Venkat refers to S Venkatakrishnan

(2)

As a result of the change in status, the following movements to opening balances were made:

- From executive management status to other managers – 91,119 options/awards

(3)

Of the 3,544,756 options/awards granted and outstanding at 31 December 2010, 929,029 options/ awards are fully vested.

(4)

Awards granted since 2005 have been granted at NIL cost to participants;

Awards granted in 2011 to executive directors and executive management are as follows:

BSP

LTIP

(1)

M Cutifani

25,086

44,579

S Venkatakrishnan

14,462

22,284

Top 3 earners

23,734

20,420

Other executive management

31,962

52,362

(1)

The extent to which LTIPs vest is dependent upon performance criteria being met.

For full details of the AngloGold Ashanti Share Incentive Scheme, including the number of shares used in the scheme and dilution to
shareholders in this regard, refer to the Directors’ Report from page 214.

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234

AngloGold Ashanti Annual Financial Statements 2010

Financial statements

Financial statements

for the year ended 31 December

Financial

in line with

IFRS

reporting

P

235

Contents of the financial statements

Group financial statements

Income statement

P236

Statement of comprehensive income

P237

Statement of financial position

P238

Statement of cash flows

P240

Statement of changes in equity

P241

Notes to the group financial statements: notes 1 to 36

P243

Company financial statements

Income statement

P338

Statement of comprehensive income

P339

Statement of financial position

P340

Statement of cash flows

P341

Statement of changes in equity

P342

Notes to the company financial statements: notes 1 to 31

P343

Principal subsidiaries and operating entities

P371

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236

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Income statement

For the year ended 31 December

2009

2010

Figures in million Notes

2010

2009

SA Rands

US Dollars

31,961

40,135

Revenue

3

5,514

3,916

30,745

38,833

Gold income

2,3

5,334

3,768

(23,220)

(25,833)

Cost of sales

4

(3,550)

(2,813)

Loss on non-hedge derivatives and other commodity

(11,934)

(5,136)

contracts

35

(702)

(1,533)

(4,409)

7,864

Gross profit (loss)

1,082

(578)

(1,362)

(1,589)

Corporate administration, marketing and other expenses

(220)

(164)

(1,217)

(1,446)

Exploration costs

(198)

(150)

(80)

(149)

Other operating expenses

5

(20)

(8)

5,209

(894)

Special items

6

(126)

691

(1,859)

3,786

Operating profit (loss)

518

(209)

444

311

Interest received

3

43

54

852

18

Exchange gain

3

112

Fair value adjustment on option component of

(249)

39

convertible bonds

(1)

(33)

–

(382)

Fair value loss on mandatory convertible bonds

(55)

–

(1,146)

(1,203)

Finance costs and unwinding of obligations

7

(166)

(139)

785

467

Share of equity accounted investments’ profit

8

63

94

(1,173)

3,036

Profit (loss) before taxation

9

405

(121)

(1,172)

(2,018)

Taxation

12

(276)

(147)

(2,345)

1,018

Profit (loss) for the year

129

(268)

Allocated as follows

(2,762)

637

Equity shareholders

76

(320)

417

381

Non-controlling interests

53

52

(2,345)

1,018

129

(268)

Basic and diluted profit (loss) per ordinary share

(765)

171

(cents)

13

20

(89)

Group financial statements

P

237

Group – Statement of comprehensive income

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

(2,345)

1,018

Profit (loss) for the year

129

(268)

(2,645)

(1,766)

Exchange differences on translation of foreign operations

213

318

Share of equity accounted investments’ other comprehensive

–

(1)

expense

–

–

(132)

–

Net loss on cash flow hedges

–

(16)

Net loss on cash flow hedges removed from equity and

1,155

279

reported in gold income

38

138

40

–

Hedge ineffectiveness on cash flow hedges

–

5

(12)

3

Realised gain (loss) on hedges of capital items

–

(1)

(263)

(99)

Deferred taxation thereon

(13)

(35)

788

183

25

91

482

545

Net gain on available-for-sale financial assets

75

57

Release on disposal and impairment of available-for-sale

–

(340)

financial assets

(47)

–

(13)

13

Deferred taxation thereon

2

(2)

469

218

30

55

88

(175)

Actuarial (loss) gain recognised

(24)

10

(28)

47

Deferred taxation thereon

6

(3)

60

(128)

(18)

7

Other comprehensive income (expense) for the year net

(1,328)

(1,494)

of tax

250

471

Total comprehensive income (expense) for the year net

(3,673)

(476)

of tax

379

203

Allocated as follows

(4,099)

(857)

Equity shareholders

326

150

426

381

Non-controlling interests

53

53

(3,673)

(476)

379

203

Group financial statements

P

238

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Statement of financial position

As at 31 December

Figures in million Notes

2010

2009

2008

US Dollars

ASSETS
Non-current assets
Tangible assets

15

6,180

5,819 4,345

Intangible assets

16

194

177 148

Investments in associates and equity accounted joint ventures

17

622

640 298

Other investments

18

237

175 66

Inventories

19

345

337 287

Trade and other receivables

21

152

106 62

Derivatives

35

–

5 –

Deferred taxation

29

20

61 50

Cash restricted for use

22

33

53 34

Other non-current assets

20

9

8 3

7,792

7,381 5,293

Current assets
Inventories

19

890

686 599

Trade and other receivables

21

247

191 220

Derivatives

35

1

330 570

Current portion of other non-current assets

20

1

–

–

Cash restricted for use

22

10

12 10

Cash and cash equivalents

23

575

1,100 575

1,724

2,319 1,974

Non-current assets held for sale

24

16

87 793

1,740

2,406 2,767

Total assets

9,532

9,787 8,060

EQUITY AND LIABILITIES
Share capital and premium

25

6,627

5,805 5,485

Retained earnings and other reserves

(2,638)

(2,905)

(3,057)

Shareholders’ equity

3,989

2,900 2,428

Non-controlling interests

124

130 83

Total equity

4,113

3,030 2,511

Non-current liabilities
Borrowings

26

2,569

654 870

Environmental rehabilitation and other provisions

27

589

451 408

Provision for pension and post-retirement benefits

28

191

159 137

Trade, other payables and deferred income

30

17

14 11

Derivatives

35

176

176 25

Deferred taxation

29

900

753 617

4,442

2,207 2,068

Current liabilities
Current portion of borrowings

26

135

1,277 1,063

Trade, other payables and deferred income

30

705

582 524

Derivatives

35

–

2,525 1,737

Taxation

31

134

159 109

974

4,543 3,433

Non-current liabilities held for sale

24

3

7 48

977

4,550 3,481

Total liabilities

5,419

6,757 5,549

Total equity and liabilities

9,532

9,787 8,060

Group financial statements

P

239

Figures in million                                                                                          Notes

2010

2009

2008

SA Rands

ASSETS
Non-current assets
Tangible assets

15

40,600

43,263 41,081

Intangible assets

16

1,277

1,316 1,403

Investments in associates and equity accounted joint ventures

17

4,087

4,758 2,814

Other investments

18

1,555

1,302 625

Inventories

19

2,268

2,508 2,710

Trade and other receivables

21

1,000

788 585

Derivatives

35

–

40 –

Deferred taxation

29

131

451 475

Cash restricted for use

22

214

394 326

Other non-current assets

20

59

63 32

51,191

54,883 50,051

Current assets
Inventories

19

5,848

5,102 5,663

Trade and other receivables

21

1,625

1,419 2,076

Derivatives

35

6

2,450 5,386

Current portion of other non-current assets

20

4

3 2

Cash restricted for use

22

69

87 89

Cash and cash equivalents

23

3,776

8,176 5,438

11,328

17,237 18,654

Non-current assets held for sale

24

110

650 7,497

11,438

17,887 26,151

Total assets

62,629

72,770 76,202

EQUITY AND LIABILITIES
Share capital and premium

25

45,678

39,834 37,336

Retained earnings and other reserves

(19,470)

(18,276)

(14,380)

Shareholders’ equity

26,208

21,558 22,956

Non-controlling interests

815

966 790

Total equity

27,023

22,524 23,746

Non-current liabilities
Borrowings

26

16,877

4,862 8,224

Environmental rehabilitation and other provisions

27

3,873

3,351 3,860

Provision for pension and post-retirement benefits

28

1,258

1,179 1,293

Trade, other payables and deferred income

30

110

108 99

Derivatives

35

1,158

1,310 235

Deferred taxation

29

5,910

5,599 5,838

29,186

16,409 19,549

Current liabilities
Current portion of borrowings

26

886

9,493 10,046

Trade, other payables and deferred income

30

4,630

4,332 4,946

Derivatives

35

–

18,770 16,426

Taxation

31

882

1,186 1,033

6,398

33,781 32,451

Non-current liabilities held for sale

24

22

56 456

6,420

33,837 32,907

Total liabilities

35,606

50,246 52,456

Total equity and liabilities

62,629

72,770 76,202

Group financial statements

P

240

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Statement of cash flows

For the year ended 31 December

2009

2010

Figures in million Notes

2010

2009

SA Rands

US Dollars

Cash flows from operating activities

31,473

39,717

Receipts from customers

5,448

3,845

(20,896)

(26,682)

Payments to suppliers and employees

(3,734)

(2,500)

10,577

13,035

Cash generated from operations

32

1,714

1,345

751

939

Dividends received from equity accounted investments

143

101

(1,232)

(1,371)

Taxation paid

31

(188)

(147)

(6,315)

(18,333)

Cash utilised for hedge buy-back costs

(2,611)

(797)

3,781

(5,730)

Net cash (outflow) inflow from operating activities

(942)

502

Cash flows from investing activities

Capital expenditure

(3,578)

(1,829)

– project capital

(250)

(413)

(5,078)

(5,279)

– stay-in-business capital

(723)

(606)

9,029

500

Proceeds from disposal of tangible assets

69

1,142

(750)

(832)

Other investments acquired

(114)

(89)

Acquisition of associates and equity accounted joint

(2,646)

(319)

ventures

(44)

(354)

–

4

Proceeds on disposal of associate

1

–

Loans advanced to associates and equity accounted

(17)

(22)

joint ventures

(3)

(2)

Loans repaid by associates and equity accounted

3

–

joint ventures

–

–

680

1,039

Proceeds from disposal of investments

142

81

(91)

182

Decrease (increase) in cash restricted for use

25

(10)

445

232

Interest received

32

55

(1)

(41)

Loans advanced

(6)

–

4

3

Repayment of loans advanced

–

1

(2,000)

(6,362)

Net cash outflow from investing activities

(871)

(195)

Cash flows from financing activities

2,384

5,656

Proceeds from issue of share capital

798

306

(84)

(144)

Share issue expenses

(20)

(11)

24,901

16,666

Proceeds from borrowings

2,316

2,774

(24,152)

(12,326)

Repayment of borrowings

(1,642)

(2,731)

(946)

(821)

Finance costs paid

(115)

(111)

–

(184)

Mandatory convertible bond transaction costs

(26)

–

(474)

(846)

Dividends paid

(117)

(56)

1,629

8,001

Net cash inflow from financing activities

1,194

171

3,410

(4,091)

Net (decrease) increase in cash and cash equivalents

(619)

478

(672)

(236)

Translation

105

47

5,438

8,176

Cash and cash equivalents at beginning of year

1,100

575

8,176

3,849

Cash and cash equivalents at end of year

23

586

1,100

Group financial statements

P

241

Group – Statement of changes in equity

Equity holders of the parent

Share

Cash Available-

Foreign

capital

Other

flow

for-

Actuarial

currency

Non-

and

capital

Retained

hedge

sale

(losses) translation

controlling

Total

Figures in million

premium reserves

(1)

earnings

(2)

reserve

(3)

reserve

(4)

gains

reserve

Total

interests

equity

US Dollars

Balance at 31 December 2008

5,485 85

(2,361)

(107)

(2)

(37)

(635)

2,428 83

2,511

(Loss) profit for the year

(320)

(320)

52

(268)

Other

comprehensive

income

90 55

7 318 470

1 471

Total comprehensive (expense)

income

–

– (320)

90 55

7 318 150 53 203

Shares issued

331

331

331

Share issue expenses

(11)

(11)

(11)

Share-based payment for share

awards net of exercised

(1)

15 15

15

Dividends paid

(45)

(45)

(45)

Dividends of subsidiaries

– (11)

(11)

Equity transaction of joint

venture

(1)

37 37

37

Translation

24 (18)

(6)

3 (8)

(5)

5 –

Balance at 31 December 2009

5,805

161

(2,744)

(23)

56

(38)

(317)

2,900

130

3,030

Profit for the year

76

76

53

129

Other comprehensive income

(expense)

25

30

(18)

213

250

–

250

Total comprehensive income

(expense)

– – 76 25 30 (18)

213

326 53

379

Shares issued

842 842

842

Share issue expenses

(20) (20)

(20)

Share-based payment for share

awards net of exercised

(1)

13

13 13

Dividends paid

(67)

(67) (67)

Dividends of subsidiaries

–

(64) (64)

Transfers to other reserves

3

(3)

– –

Translation

17

(15)

(1) (6) (5)

5

–

Balance at 31 December 2010

6,627

194

(2,750)

(2)

86

(62)

(104)

3,989

124

4,113

(1)

Other capital reserves comprise a surplus on disposal of company shares, held by companies prior to the formation of AngloGold

Ashanti Limited of $21m (2009: $19m), surplus on equity transaction of joint venture of $37m (2009: $37m), equity items for

share-based payments and other transfers. The grant date fair values of share awards exercised are transferred from other capital

reserves to share premium when the ordinary shares are issued.

(2)

Retained earnings totalling $133m (2009: $254m) arising at the joint venture operations and certain subsidiaries may not be

remitted without third party consent.

(3)

Cash flow hedge reserve represents the effective portion of fair value gains or losses in respect of cash flow hedges.

(4)

Available-for-sale reserve represents fair value gains or losses on available-for-sale financial assets.

Group financial statements

P

242

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Statement of changes in equity

Equity holders of the parent

Share

Cash     Available-

Foreign

capital

Other

flow

for-

Actuarial

currency

Non-

and

capital

Retained

hedge

sale

(losses)   translation

controlling

Total

Figures in million

premium       reserves

(1)

earnings

(2)

reserve

(3)

reserve

(4)

gains

reserve

Total

interests

equity

SA Rands

Balance at 31 December 2008

37,336799

(22,765)

(1,008)

(18)

(347)

8,959

22,956 790

23,746

(Loss) profit for the year

(2,762)

(2,762)

417

(2,345)

Other comprehensive income

(expense)

779

469

60 (2,645)

(1,337)

9 (1,328)

Total comprehensive (expense)

income

–

– (2,762)

779

469

60 (2,645)

(4,099)

426 (3,673)

Shares issued

2,582

2,582

2,582

Share issue expenses

(84)

(84)

(84)

Share-based payment for share

awards net of exercised

(1)

122                                                                                                                              122

122

Dividends paid

(392)

(392)

(392)

Dividends of subsidiaries

–                (83)

(83)

Equity transaction of joint

venture

(1)

306                                                                                                                                  306

306

Translation

(33)

180                   55                (37)

2

167

(167)

–

Balance at 31 December 2009

39,834

1,194

(25,739)

(174)

414

(285)

6,314

21,558

966

22,524

Profit for the year

637                                                                                                           637

381

1,018

Other comprehensive (expense)

income

(1)                                   183

218

(128)

(1,766)

(1,494)

–

(1,494)

Total comprehensive (expense)

income

–

(1)

637

183

218

(128)

(1,766)

(857)

381

(476)

Shares issued

5,988

5,988

5,988

Share issue expenses

(144)

(144)

(144)

Share-based payment for share

awards net of exercised

(1)

92

92

92

Dividends paid

(492)

(492)

(492)

Dividends of subsidiaries

–

(469)

(469)

Transfers to other reserves

25

(25)

–

–

Translation

(35)

157

1

(64)

4

63

(63)

–

Balance at 31 December 2010

45,678

1,275

(25,437)

(15)

568

(409)

4,548

26,208

815

27,023

(1)

Other capital reserves comprise a surplus on disposal of company shares, held by companies prior to the formation of AngloGold

Ashanti Limited of R141m (2009: R141m), surplus on equity transaction of joint venture of R240m (2009: R306m), share of equity

accounted investments’ other comprehensive income of R1m (2009: nil), equity items for share-based payments and other

transfers. The grant date fair values of share awards exercised are transferred from other capital reserves to share premium when

the ordinary shares are issued.

(2)

Retained earnings totalling R874m (2009: R1,889m) arising at the joint venture operations and certain subsidiaries may not be

remitted without third party consent.

(3)

Cash flow hedge reserve represents the effective portion of fair value gains or losses in respect of cash flow hedges.

(4)

Available-for-sale reserve represents fair value gains or losses on available-for-sale financial assets.

Group financial statements

P

243

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies

Statement of compliance

The consolidated and company financial statements are prepared in compliance with International Financial Reporting

Standards (IFRS) and Interpretations of those standards, as adopted by the International Accounting Standards Board (IASB)

and applicable legislation.

During the current financial year, the following new or revised accounting standards, amendments to standards and new

interpretations were adopted or early adopted by AngloGold Ashanti Limited:

Standard or

Effective for annual periods

Interpretation

Title

beginning on or after

IFRS 2

Amendment – Group cash-settled and share-based payment

transactions

1 January 2010

IFRS 3

Business Combinations (revised)

1 July 2009

IFRS’s

Annual Improvement Project – May 2009

Mostly 1 January 2010

IAS 27

Amendment – Consolidated and Separate Financial Statements

1 July 2009

IAS 32

Amendment – Classification of Rights Issues

1 February 2010

IAS 39

Amendment – Eligible Hedged Items

1 July 2009

IFRIC 17

Distributions of Non-cash Assets to Owners

1 July 2009

IFRIC 18

Transfers of Assets from Customers

1 July 2009

IFRIC 19

Extinguishing Financial Liabilities with Equity Instruments

1 July 2010

The adoption of these new or revised standards, amendments to standards and interpretations did not have any effect on the

financial position or results of the group.

The following accounting standards, amendments to standards and new interpretations (as at 10 March 2011, the last

practicable date), which are not yet mandatory for AngloGold Ashanti Limited, have not been adopted in the current year:

Standard or

Effective for annual periods

Interpretation

Title

beginning on or after

IFRS 7

Amendment – Derecognition disclosures

1 July 2011

IFRS 9

Financial Instruments

1 January 2013

IFRS 9

Amendment – Accounting for financial liabilities

1 January 2013

IFRS’s

Annual Improvement Project – May 2010

Mostly 1 January 2011

IAS 24

Related Party Disclosures

1 January 2011

IFRIC 14

Prepayments of a minimum funding requirement – amendment

1 January 2011

IAS 12

Amendment – Deferred tax: Recovery of Underlying assets

1 January 2012

The group has assessed the significance of these new standards, amendments to standards and new interpretations, and

concluded that they will have no material financial impact.

1.1 Basis of preparation

The financial statements are prepared according to the historical cost accounting convention, except for the revaluation of

certain financial instruments to fair value. The group’s accounting policies as set out below are consistent in all material respects

with those applied in the previous year, except for the adoption of the new and revised standards and interpretations

mentioned above.

Group financial statements

P

244

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.1 Basis of preparation (continued)

AngloGold Ashanti Limited presents its consolidated financial statements in South African rands and US dollars for the benefit

of local and international investors. The functional currency of a significant portion of the group’s operations is the South African

rand. Other main subsidiaries have functional currencies of US dollars and Australian dollars.

The group financial statements incorporate the financial statements of the company, its subsidiaries and its equity accounted

interests in joint ventures and associates.

The financial statements of all material subsidiaries, the Environmental Rehabilitation Trust Fund and joint ventures, are prepared

for the same reporting period as the holding company, using the same accounting policies, except for Rand Refinery Limited

which reports on a three-month time lag. Adjustments are made to the subsidiary financial results for material transactions and

events in the intervening period.

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and

operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect

of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls

another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-

consolidated from the date on which control ceases.

The acquisition of non-controlling interests is reflected as an equity transaction. The entire difference between the cost of the

additional interest and the non-controlling interests’ share at the date of acquisition is reflected as a transaction between

owners.

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies, including any

resulting tax effect are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an

impairment of the asset transferred.

Subsidiaries are accounted for at cost and are adjusted for impairments where appropriate in the company financial

statements.

1.2 Significant accounting judgements and estimates

Use of estimates: The preparation of the financial statements requires the group’s management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The

determination of estimates requires the exercise of judgement based on various assumptions and other factors such as

historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results could

differ from those estimates.

The more significant areas requiring the use of management estimates and assumptions relate to Ore Reserve that are the basis

of future cash flow estimates and unit-of-production depreciation, depletion and amortisation calculations; environmental,

reclamation and closure obligations; estimates of recoverable gold and other materials in heap leach pads; asset

impairments/reversals (including impairments of goodwill); write-downs of inventory to net realisable value; post-employment,

post-retirement and other employee benefit liabilities; the fair value of financial instruments and deferred taxation.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances.

Group financial statements

P

245

1

Accounting policies (continued)

1.2 Significant accounting judgements and estimates (continued)

Use of estimates (continued)

As a global company, the group is exposed to numerous legal risks. The outcome of currently pending and future proceedings

cannot be predicted with certainty. Thus, an adverse decision in a lawsuit could result in additional costs that are not covered,

either wholly or partly, under insurance policies and that could significantly influence the business and results of operations.

The judgements that management have applied in the application of accounting policies, and the estimates and assumptions

that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

financial year, are discussed below.

Carrying value of goodwill and tangible assets

All mining assets are amortised using the units-of-production method where the mine operating plan calls for production from

well-defined Ore Reserve over proved and probable reserves.

For mobile and other equipment, the straight-line method is applied over the estimated useful life of the asset which does not

exceed the estimated mine life based on proved and probable Ore Reserve as the useful lives of these assets are considered

to be limited to the life of the relevant mine.

The calculation of the units-of-production rate of amortisation could be impacted to the extent that actual production in the

future is different from current forecast production based on proved and probable Ore Reserve. This would generally arise when

there are significant changes in any of the factors or assumptions used in estimating Ore Reserve.

These factors could include:

•

changes in proved and probable Ore Reserve;

•

the grade of Ore Reserve may vary significantly from time to time;

•

differences between actual commodity prices and commodity price assumptions;

•

unforeseen operational issues at mine sites;

•

changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates; and

•

changes in Ore Reserve could similarly impact the useful lives of assets depreciated on a straight-line basis, where those

lives are limited to the life of the mine.

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value

in use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is

reasonably possible that the gold price assumption may change which may then impact the estimated life of mine determinant

and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The group defers stripping costs incurred during the production stage of its open-pit operations, for those operations where

this is the most appropriate basis for matching the costs against the related economic benefits. This is generally the case where

there are fluctuations in stripping costs over the life of the mine.

In the production stage of some open-pit operations, further development of the mine requires a phase of unusually high

overburden removal activity that is similar in nature to preproduction mine development. The costs of such unusually high

overburden removal activity are deferred and charged against reported profits in subsequent periods on a units-of-production

basis. This accounting treatment is consistent with that for stripping costs incurred during the development phase of a mine,

before production commences.

If the group were to expense production stage stripping costs as incurred, this would result in volatility in the year to year results

from open-pit operations and excess stripping costs would be expensed at an earlier stage of a mine’s operation.

Group financial statements

P

246

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.2 Significant accounting judgements and estimates (continued)

Carrying value of goodwill and tangible assets (continued)

Deferred stripping costs are included in ‘Mine development costs’, within tangible assets. These form part of the total

investment in the relevant cash-generating unit, which is reviewed for impairment if events or a change in circumstances

indicate that the carrying value may not be recoverable. Amortisation of deferred stripping costs is included in operating costs,

or in the group’s share of the results of its equity accounted units, as appropriate.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying

amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the

lowest level for which identifiable cash flows are largely independent of cash flows of other assets. If there are indications that

impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future

cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially

change over time. They are significantly affected by a number of factors including published reserves, resources, exploration

potential and production estimates, together with economic factors such as spot and future gold prices, discount rates, foreign

currency exchange rates, estimates of costs to produce reserves and future capital expenditure.

An individual operating mine is not a typical going-concern business because of the finite life of its reserves. The allocation of

goodwill to an individual mine will result in an eventual goodwill impairment due to the wasting nature of the mine reporting unit.

In accordance with the provisions of IAS 36, the group performs its annual impairment review of assigned goodwill during the

fourth quarter of each year.

The carrying amount of goodwill in the consolidated financial statements at 31 December 2010 was $177m, R1,164m

(2009: $159m, R1,178m). The carrying amount of tangible assets at 31 December 2010 was $6,180m, R40,600m

(2009: $5,819m, R43,263m).

Production start date

The group assesses the stage of each mine construction project to determine when a mine moves into the production stage.

The criteria used to assess the start date are determined by the unique nature of each mine construction project and include

factors such as the complexity of a plant and its location. The group considers various relevant criteria to assess when the mine

is substantially complete and ready for its intended use and moves into the production stage. Some of the criteria would include

but are not limited to the following:

•

the level of capital expenditure compared to the construction cost estimates;

•

completion of a reasonable period of testing of the mine plant and equipment;

•

ability to produce gold in saleable form (within specifications and the de minimis rule); and

•

ability to sustain ongoing production of gold.

When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases

and costs are either regarded as inventory or expensed, except for capitalisable costs related to mining asset additions or

improvements, underground mine development or Ore Reserve development.

Income taxes

The group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide

provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the

ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated

tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is

different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions

in the period in which such determination is made.

Group financial statements

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Accounting policies (continued)

1.2 Significant accounting judgements and estimates (continued)

Income taxes (continued)

The group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the

deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax

assets requires the group to make significant estimates related to expectations of future taxable income. Estimates of future

taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction.

To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the group to realise the

net deferred tax assets recorded at the reporting date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the group operates could limit the ability of the group to

obtain tax deductions in future periods.

Carrying values of the group at 31 December 2010:

•

deferred tax asset: $20m, R131m (2009: $61m, R451m);

•

deferred tax liability: $900m, R5,910m (2009: $753m, R5,599m); and

•

taxation liability: $107m, R706m (2009: $142m, R1,059m).

Provision for environmental rehabilitation obligations

The group’s mining and exploration activities are subject to various laws and regulations governing the protection of the

environment. The group recognises management’s best estimate for decommissioning and restoration obligations in the period

in which they are incurred. Actual costs incurred in future periods could differ materially from the estimates. Additionally, future

changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of

this provision.

The carrying amount of the rehabilitation obligations for the group at 31 December 2010 was $551m, R3,623m (2009: $418m,

R3,109m).

Stockpiles, metals in process and ore on leach pad

Costs that are incurred in or benefit the production process are accumulated as stockpiles, metals in process and ore on leach

pads. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product,

based on prevailing and long-term metals prices, less estimated costs to complete production and bring the product to sale.

Stockpiles and underground metals in process are measured by estimating the number of tonnes added and removed from

the stockpile and from underground, the number of contained gold ounces based on assay data, and the estimated recovery

percentage based on the expected processing method. Stockpile and underground ore tonnages are verified by periodic

surveys.

Estimates of the recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads based on

measured tonnes added to the leach pads, the grade of ore placed on the leach pads based on assay data and a recovery

percentage based on metallurgical testing and ore type.

Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of gold actually

recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels.

As a result, the metallurgical balancing process is constantly monitored and engineering estimates are refined based on actual

results over time.

Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in

write-downs to net realisable value are accounted for on a prospective basis.

The carrying amount of inventories (excluding finished goods and mine operating supplies) for the group at 31 December 2010

was $860m, R5,651m (2009: $661m, R4,919m).

Group financial statements

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AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.2 Significant accounting judgements and estimates (continued)

Recoverable tax, rebates, levies and duties

In a number of countries, particularly in Africa, AngloGold Ashanti Limited is due refunds of input tax which remain outstanding

for periods longer than those provided for in the respective statutes.

In addition, AngloGold Ashanti Limited has unresolved tax disputes in a number of countries, particularly in Continental Africa.

If the outstanding input taxes are not received and the tax disputes are not resolved in a manner favourable to AngloGold

Ashanti Limited, it could have an adverse effect upon the carrying value of these assets.

The carrying value of recoverable tax, rebates, levies and duties for the group at 31 December 2010 was $188m, R1,235m

(2009: $138m, R1,025m).

Pension plans and post-retirement medical aid obligations

The determination of AngloGold Ashanti Limited’s obligation and expense for pension and provident funds, as well as post-

retirement health care liabilities, depends on the selection of certain assumptions used by actuaries to calculate amounts.

These assumptions include, among others, the discount rate, the expected long-term rate of return of plan assets, health care

inflation costs, rates of increase in compensation costs and the number of employees who reach retirement age before the

mine reaches the end of its life. While AngloGold Ashanti Limited believes that these assumptions are appropriate, significant

changes in the assumptions may materially affect pension and other post-retirement obligations as well as future expenses,

which may result in an impact on earnings in the periods that the changes in these assumptions occur.

The carrying value of the defined benefit plans (including the net asset position disclosed under non-current assets) at

31 December 2010 was $188m, R1,238m, (2009: $152m, R1,125m).

Ore Reserve estimates

An Ore Reserve estimate is an estimate of the amount of product that can be economically and legally extracted from the

group’s properties. In order to calculate Ore Reserve, estimates and assumptions are required about a range of geological,

technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs,

transport costs, commodity demand, commodity prices and exchange rates.

Estimating the quantity and/or grade of Ore Reserve requires the size, shape and depth of orebodies to be determined by

analysing geological data such as the logging and assaying of drill samples. This process may require complex and difficult

geological judgements and calculations to interpret the data.

The group is required to determine and report Ore Reserve in accordance with the SAMREC code.

Because the economic assumptions used to estimate Ore Reserve change from period to period, and because additional

geological data is generated during the course of operations, estimates of Ore Reserve may change from period to period.

Changes in reported Ore Reserve may affect the group’s financial results and financial position in a number of ways, including

the following:

•

asset carrying values may be affected due to changes in estimated future cash flows;

•

depreciation, depletion and amortisation charged in the income statement may change where such charges are determined

by the units-of-production basis, or where the useful economic lives of assets change;

•

overburden removal costs recorded on the statement of financial position or charged in the income statement may change

due to changes in stripping ratios or the units-of-production basis of depreciation;

•

decommissioning site restoration and environmental provisions may change where changes in estimated Ore Reserve affect

expectations about the timing or cost of these activities; and

•

the carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.

Group financial statements

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Accounting policies (continued)

1.2 Significant accounting judgements and estimates (continued)

Exploration and evaluation expenditure

The group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being

capitalised for an area of interest where it is considered likely to be recoverable by future exploitation. This policy requires

management to make certain estimates and assumptions as to future events and circumstances, in particular whether an

economically viable extraction operation can be established. Any such estimates and assumptions may change as new

information becomes available. If, after having capitalised the expenditure, a judgement is made that recovery of the

expenditure is unlikely, the relevant capitalised amount will be written off to the income statement.

The carrying value of capitalised exploration assets at 31 December 2010 was $3m, R17m (2009: $1m, R10m).

Development expenditure

Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by

management in determining when a project has reached a stage at which economically recoverable reserves exist such that

development may be sanctioned. In exercising this judgement, management is required to make certain estimates and

assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and

assumptions may change as new information becomes available. If, after having started the development activity, a judgement

is made that a development asset is impaired, the appropriate amount will be written off to the income statement.

Share-based payments

The group issues equity-settled share-based payments to certain employees and third parties outside the group. Equity-settled

share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of

grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed as services are

rendered over the vesting period, based on the group’s estimate of the shares that will eventually vest and adjusted for the

effect of non-market-based vesting conditions.

Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based

on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The income statement charge for the year was $59m, R434m (2009: $41m, R337m).

Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of

such contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.

In determining the threshold for disclosure, management considers the potential for a disruptive effect on the normal functioning

of the group and/or whether the contingency could impact investment decisions. Such qualitative matters considered are

reputational risks, regulatory compliance issues and reasonable investor considerations. For quantitative purposes an amount

of $5m, R33m has been considered.

Litigation and other judicial proceedings as a rule raise difficult and complex legal issues and are subject to uncertainties and

complexities including, but not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction

in which each suit is brought and differences in applicable law. Upon resolution of any pending legal matter, the group may be

forced to incur charges in excess of the presently established provisions and related insurance coverage. It is possible that the

financial position, results of operations or cash flows of the group could be materially affected by the unfavourable outcome

of litigation.

Group financial statements

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AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies

Equity accounted investments

Joint ventures

A joint venture is an entity in which the group holds a long-term interest and which the group and one or more other venturers

jointly control under a contractual arrangement, that provides for strategic, financial and operating policy decisions relating to

the activities requiring unanimous consent of the parties sharing control. The group’s interests in jointly controlled entities are

accounted for using the equity method.

Profits and losses realised in connection with transactions between the group and jointly controlled entities are eliminated in

proportion to share ownership. Such profits and losses are deducted from the group’s equity and related statement of financial

position amount and released in the group accounts when the assets are effectively realised outside the group.

Joint ventures are accounted for at cost and are adjusted for impairments where appropriate in the company financial

statements.

Associates

The equity method of accounting is used for an investment over which the group exercises significant influence and normally

owns between 20% and 50% of the voting equity. Associates are equity accounted from the effective date of acquisition to the

effective date of disposal. If necessary, impairment losses on the equity value are reported under share of profit and loss from

investments accounted for using the equity method.

Profits and losses realised in connection with transactions between the group and associated companies are eliminated in

proportion to share ownership. Such profits and losses are deducted from the group’s equity and related statement of financial

position amount and released in the group accounts when the assets are effectively realised outside the group.

As the group only has significant influence, it is unable to obtain reliable information at year-end on a timely basis. The results

of associates are equity accounted from their most recent audited annual financial statements or unaudited interim financial

statements, all within three months of the year-end of the group. Adjustments are made to the associates’ financial results for

material transactions and events in the intervening period.

Associates are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

Joint ventures and associates

Any losses of equity accounted investments are brought to account in the consolidated financial statements until the investment

in such investments is written down to zero. Thereafter, losses are accounted for only insofar as the group is committed to

providing financial support to such investees.

The carrying value of equity accounted investments represents the cost of each investment, including goodwill, balance

outstanding on loans advanced if the loan forms part of the net investment in the investee, any impairment losses recognised,

the share of post-acquisition retained earnings and losses, and any other movements in reserves. The carrying value of equity

accounted investments is reviewed when indicators arise and if any impairment in value has occurred; it is recognised in the

period in which the impairment arose.

Foreign currency translation

Functional currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary

economic environment in which the entity operates (the ‘functional currency’).

Group financial statements

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1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Foreign currency translation (continued)

Transactions and balances

Foreign currency transactions are translated into the functional currency using the approximate exchange rates prevailing at the

dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and

from the translation at the year-end exchange rate of monetary assets and liabilities denominated in foreign currencies are

recognised in the income statement, except for hedging derivative balances that are within the scope of IAS 39. Translation

differences on these balances are reported as part of their fair value gain or loss.

Translation differences on non–monetary items, such as equities classified as available-for-sale financial assets, are included in

other comprehensive income within equity.

Group companies

The results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have

a functional currency different from the presentation currency are translated into the presentation currency as follows:

•

share capital and premium are translated at historical rates of exchange at the reporting date;

•

retained earnings are converted at historical average exchange rates;

•

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that

statement of financial position;

•

income and expenses for each income statement presented are translated at monthly average exchange rates (unless this

average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which

case income and expenses are translated at the rates prevailing at the date of the transaction);

•

all resulting exchange differences are recognised in other comprehensive income and presented as a separate component

of equity (foreign currency translation); and

•

other reserves, other than those translated above, are converted at the closing rate at each reporting date. These resulting

exchange differences are recognised in retained earnings.

Exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other

currency instruments designated as hedges of such investments, are taken to other comprehensive income on consolidation.

For the company, the exchange differences on such monetary items are reported in the company income statement.

When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss

on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the

foreign operation and translated at the closing rate.

Segment reporting

An operating segment is a business activity, whose results are regularly reviewed by the chief operating decision maker in order

to make decisions about resources to be allocated to it and assess its performance and for which discrete financial information

is available. The chief operating decision maker has been determined to be the Executive Committee.

Tangible assets

Tangible assets are recorded at cost less accumulated amortisation and impairments/reversals. Cost includes pre-production

expenditure incurred during the development of a mine and the present value of related future decommissioning costs.

Interest on borrowings relating to the financing of major capital projects under construction is capitalised during the

construction phase as part of the cost of the project. Such borrowing costs are capitalised over the period during which the

asset is being acquired or constructed and borrowings have been incurred. Capitalisation ceases when construction is

interrupted for an extended period or when the asset is substantially complete. Other borrowing costs are expensed as

incurred.

Groupfinancialstatements

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AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Tangible assets (continued)

If there is an indication that the recoverable amount of any of the tangible assets is less than the carrying value, the recoverable

amount is estimated and an allowance is made for the impairment in value.

Subsequent costs are included in the asset’s carrying amount only when it is probable that future economic benefits associated

with the asset will flow to the group, and the cost of the addition can be measured reliably. All other repairs and maintenance

are charged to the income statement during the financial period in which they are incurred.

To the extent a legal or constructive obligation to a third party exists, the acquisition cost includes estimated costs of

dismantling and removing the asset and restoring the site. A change in estimated expenditures for dismantling, removal and

restoration is added to and/or deducted from the carrying value of the related asset. To the extent that the change would result

in a negative carrying amount, this effect is recognised as income. The change in depreciation charge is recognised

prospectively.

For those assets not amortised on the units-of-production method, amortisation of assets is calculated to allocate the cost of

each asset to its residual value over its estimated useful life as follows:

•

buildings up to life of mine;

•

plant and machinery up to life of mine;

•

equipment and motor vehicles up to five years;

•

computer equipment up to three years; and

•

leased assets over the shorter of the period of the lease and the useful life.

Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation,

whichever is sooner.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the beginning of each financial year.

Gains and losses on disposals are determined by comparing net sale proceeds with the carrying amount. These are included

in the income statement.

Mine development costs

Capitalised mine development costs include expenditure incurred to develop new orebodies, to define further mineralisation in

existing orebodies and, to expand the capacity of a mine. Where funds have been borrowed specifically to finance a project,

the amount of interest capitalised represents the actual borrowing costs incurred. Mine development costs include acquired

proved and probable Ore Reserve at cost at the acquisition date.

Depreciation, depletion and amortisation of mine development costs are computed by the units-of-production method based

on estimated proved and probable Ore Reserve. Proved and probable Ore Reserve reflects estimated quantities of

economically recoverable reserves which can be recovered in the future from known mineral deposits. These costs are

amortised from the date on which commercial production begins.

Stripping costs incurred in open-pit operations during the production phase to remove additional waste are charged to

operating costs on the basis of the average life of mine stripping ratio and the average life of mine costs per tonne. The average

stripping ratio is calculated as the number of tonnes of waste material expected to be removed during the life of mine per tonne

of ore mined. The average life of mine cost per tonne is calculated as the total expected costs to be incurred to mine the

orebody, divided by the number of tonnes expected to be mined. The average life of mine stripping ratio and the average life

of mine cost per tonne are recalculated annually in the light of additional knowledge and changes in estimates.

Group financial statements

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1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Tangible assets (continued)

Mine development costs (continued)
The cost of the excess stripping is capitalised as mine development costs when the actual mining costs exceed the sum of the
adjusted tonnes mined, being the actual ore tonnes plus the product of the actual ore tonnes multiplied by the average life of
mine stripping ratio, multiplied by the life of mine cost per tonne. When the actual mining costs are below the sum of the
adjusted tonnes mined, being the actual ore tonnes plus the product of the actual ore tonne multiplied by the average life of
mine stripping ratio, multiplied by the life of mine cost per tonnes, previously capitalised costs are expensed to increase the
cost up to the average.

The cost of stripping in any period will be reflective of the average stripping rates for the orebody as a whole. Changes in the
life of mine stripping ratio are accounted for prospectively as a change in estimate.

Mine infrastructure
Mine plant facilities, including decommissioning assets, are amortised using the lesser of their useful life or units-of-production
method based on estimated proved and probable Ore Reserve. Other tangible assets comprising vehicles and computer
equipment are depreciated by the straight-line method over their estimated useful lives.

Land and assets under construction
Land and assets under construction are not depreciated and are measured at historical cost less impairments.

Mineral rights and dumps
Mineral rights are amortised using the units-of-production method based on estimated proved and probable Ore Reserve.
Dumps are amortised over the period of treatment.

Exploration and evaluation assets
All exploration costs are expensed until the directors conclude that a future economic benefit will more likely than not be
realised. In evaluating if expenditures meet this criterion to be capitalised, the directors use several different sources of
information depending on the level of exploration. While the criterion for concluding that expenditure should be capitalised is
always probable, the information that the directors use to make that determination depends on the level of exploration.

•

Costs on greenfields sites, being those where the group does not have any mineral deposits which are already being mined
or developed, are expensed as incurred until the directors are able to demonstrate that future economic benefits are
probable, which generally will be the establishment of proved and probable reserves at this location.

•

Costs on brownfields sites, being those adjacent to mineral deposits which are already being mined or developed, are
expensed as incurred until the directors are able to demonstrate that future economic benefits are probable, which generally
will be the establishment of increased proved and probable reserves after which the expenditure is capitalised as a mine
development cost.

•

Costs relating to extensions of mineral deposits, which are already being mined or developed, including expenditure on the
definition of mineralisation of such mineral deposits, is capitalised as a mine development cost.

Costs relating to property acquisitions are capitalised within development costs.

Intangible assets

Acquisition and goodwill arising thereon
Where an investment in a subsidiary, joint venture or an associate is made, any excess of the consideration transferred over
the fair value of the attributable Mineral Resource including value beyond proved and probable, exploration properties and net
assets is recognised as goodwill. Goodwill in respect of subsidiaries is disclosed as goodwill. Goodwill relating to equity
accounted joint ventures and associates is included within the carrying value of the investment and tested for impairment when
indicators exist.

Goodwill relating to subsidiaries is tested annually for impairment and carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is
allocated to cash-generating units for the purpose of impairment testing.

Group financial statements

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AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Intangible assets (continued)

Royalty rate concession

Royalty rate concession with the government of Ghana was capitalised at fair value at agreement date. Fair value represents a

present value of future royalty rate concessions over 15 years. The royalty rate concession has been assessed to have a finite

life and is amortised on a straight-line method over a period of 15 years, the period over which the concession runs. The related

amortisation expense is charged through the income statement. This intangible asset is tested for impairment when there is an

indicator of impairment.

Impairment of assets

Intangible assets that have an indefinite useful life and separately recognised goodwill are not subject to amortisation and are

tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be

recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance

indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value, less costs to sell and value in use. For the purposes of assessing

impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating

units).

Impairment calculation assumptions include life of mine plans based on prospective reserves and resources, management’s

estimate of the future gold price, based on current market price trends, foreign exchange rates, and a pre-tax discount rate

adjusted for country and project risk. It is therefore reasonably possible that changes could occur which may affect the

recoverability of tangible and intangible assets.

Leased assets

Assets subject to finance leases are capitalised at the lower of fair value or present value of minimum lease payments measured

at inception of the lease with the related lease obligation recognised at the same amount. Capitalised leased assets are

depreciated over the shorter of their estimated useful lives and the lease term. Finance lease payments are allocated using the

rate implicit in the lease, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor.

Operating lease rentals are charged against operating profits in a systematic manner related to the period the assets concerned

will be used.

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally

through a sale transaction rather than through continuing use. This condition is regarded as having been met only when the

sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management

must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from

the date of classification.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount

and fair value less costs to sell.

Exploration and research expenditure

Pre-licence costs are recognised in profit or loss as incurred. Exploration and research expenditure is expensed in the year in

which it is incurred. These expenses include: geological and geographical costs, labour, Mineral Resource and exploratory

drilling costs.

Group financial statements

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1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Inventories

Inventories are valued at the lower of cost and net realisable value after appropriate allowances for redundant and slow moving

items. Cost is determined on the following bases:

•

metals in process is valued at the average total production cost at the relevant stage of production;

•

gold doré/bullion is valued on an average total production cost method;

•

ore stockpiles are valued at the average moving cost of mining and stockpiling the ore. Stockpiles are classified as a

non-current asset where the stockpile exceeds current processing capacity;

•

by-products, which include uranium oxide and sulphuric acid, are valued on an average total production cost method.

By-products are classified as a non-current asset where the by-products on hand exceed current processing capacity;

•

mine operating supplies are valued at average cost; and

•

heap leach pad materials are measured on an average total production cost basis. The cost of materials on the leach pad

from which gold is expected to be recovered in a period longer than 12 months is classified as a non-current asset.

A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory.

Provisions

Provisions are recognised when the group has a present obligation, whether legal or constructive, because of a past event for

which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a

reliable estimate can be made of the amount of the obligation. Where some or all of the expenditure required to settle a

provision is expected to be reimbursed by another party, the reimbursement is recognised only when the reimbursement is

virtually certain. The amount to be reimbursed is recognised as a separate asset. Where the group has a joint and several

liability with one or more other parties, no provision is recognised to the extent that those other parties are expected to settle

part or all of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation

at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time

value of money and the risks specific to the liability.

Litigation and administrative proceedings are evaluated on a case-by-case basis considering the information available, including

that of legal counsel, to assess potential outcomes. Where it is considered probable that an obligation will result in an outflow

of resources, a provision is recorded for the present value of the expected cash outflows if these are reasonably measurable.

These provisions cover the estimated payments to plaintiffs, court fees and the cost of potential settlements.

AngloGold Ashanti Limited does not recognise a contingent liability on its statement of financial position except in a business

combination where the contingent liability represents a present obligation. A contingent liability is disclosed when the possibility

of an outflow of resources embodying economic benefits is not remote.

Borrowed commodities

When commodities are borrowed to meet contractual commitments, the fair value at inception is charged to the income

statement as cost of sales, and it is reflected as a liability on the statement of financial position. The liability is subsequently

measured at fair value with changes in fair value recorded through the income statement until settlement occurs.

Employee benefits

Pension obligations

Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or

trustee-administered funds, determined by periodic actuarial calculations. The group has both defined benefit and defined

contribution plans. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will

receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

Group financial statements

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256

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Employee benefits (continued)

Pension obligations (continued)

A defined contribution plan is a pension scheme under which the group pays fixed contributions into a separate entity. The

group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all

employees the benefits relating to employee service in current and prior periods. The contributions are recognised as employee

benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a

reduction in future contribution payments is available.

The asset/liability recognised in the statement of financial position in respect of defined benefit pension plans is the present

value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for past

service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit

method. The value of any defined benefit asset recognised is restricted to the sum of any past service cost and actuarial gains

and losses not yet recognised and the present value of any economic benefits available in the form of refunds from the plan or

reductions in future contributions to the plan.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are immediately recorded

in other comprehensive income.

Other post-employment benefit obligations

Some group companies provide post-retirement health care benefits to their retirees. The entitlement to these benefits is usually

conditional on the employee remaining in service up to retirement age and completion of a minimum service period. The

expected costs of these benefits are accrued over the period of employment using an accounting methodology on the same

basis as that used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and

changes in actuarial assumptions are recorded in other comprehensive income immediately. These obligations are valued

annually by independent qualified actuaries.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee

accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when it is

demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan

without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary

redundancy based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after

reporting date are discounted to present value.

Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into

consideration the profit attributable to the group’s shareholders after certain adjustments. The group recognises a provision

where contractually obliged or where there is a past practice that has created a constructive obligation.

Share-based payments

The group’s management awards certain employees bonuses in the form of equity-settled share-based payments on a

discretionary basis.

The fair value of the equity instruments granted is calculated at measurement date, for transactions with employees this is at

grant date. For transactions with employees, fair value is based on market prices of the equity instruments granted, if available,

taking into account the terms and conditions upon which those equity instruments were granted. If market prices of the equity

instruments granted are not available, the fair value of the equity instruments granted is estimated using an appropriate

valuation model. Vesting conditions, other than market conditions, are not taken into account when estimating the fair value of

shares or share options at measurement date.

Group financial statements

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257

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Employee benefits (continued)

Share-based payments (continued)

Over the vesting period, the fair value at measurement date is recognised as an employee benefit expense with a corresponding

increase in other capital reserves based on the group’s estimate of the number of instruments that will eventually vest. The

income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning

and end of that period. Vesting assumptions for non-market conditions are reviewed at each reporting date to ensure they

reflect current expectations.

When options are exercised or share awards vest, the proceeds received, net of any directly attributable transaction costs, are

credited to share capital (nominal value) and share premium.

Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been

modified. In addition, an expense is recognised for any modification which increases the total fair value of the share-based

payment arrangement, or is otherwise beneficial to the employee, as measured at the date of the modification.

In the company financial statements, share-based payment arrangements with employees of other group entities are

recognised by charging that entity its share of the expense and a corresponding increase in other capital reserves.

Environmental expenditure

The group has long-term remediation obligations comprising decommissioning and restoration liabilities relating to its past

operations which are based on the group’s environmental management plans, in compliance with current environmental and

regulatory requirements. Provisions for non-recurring remediation costs are made when there is a present obligation, it is

probable that expenditure on remediation work will be required and the cost can be estimated within a reasonable range of

possible outcomes. The costs are based on currently available facts, technology expected to be available at the time of the

clean up, laws and regulations presently or virtually certain to be enacted and prior experience in remediation of

contaminated sites.

Contributions for the South African operations are made to Environmental Rehabilitation Trust Funds, created in accordance

with local statutory requirements where applicable, to fund the estimated cost of rehabilitation during and at the end of the life

of a mine. The amounts contributed to the trust funds are accounted for as non-current assets in the company. Interest earned

on monies paid to rehabilitation trust funds is accrued on a time proportion basis and is recorded as interest income. For group

purposes the trusts are consolidated.

Decommissioning costs

The provision for decommissioning represents the cost that will arise from rectifying damage caused before production

commenced. Accordingly a provision is recognised and a decommissioning asset is recognised and included within mine

infrastructure.

Decommissioning costs are provided at the present value of the expenditures expected to settle the obligation, using estimated

cash flows based on current prices. The unwinding of the decommissioning obligation is included in the income statement.

Estimated future costs of decommissioning obligations are reviewed regularly and adjusted as appropriate for new

circumstances or changes in law or technology. Changes in estimates are capitalised or reversed against the relevant asset.

Estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.

Gains or losses from the expected disposal of assets are not taken into account when determining the provision.

Group financial statements

P

258

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Restoration costs

The provision for restoration represents the cost of restoring site damage after the start of production. Increases in the provision

are charged to the income statement as a cost of production.

Restoration costs are estimated at the present value of the expenditures expected to settle the obligation, using estimated cash

flows based on current prices and adjusted for risks specific to the liability. The estimates are discounted at a pre-tax rate that

reflects current market assessments of the time value of money.

Revenue recognition

Revenue is recognised at the fair value of the consideration received or receivable to the extent that it is probable that economic

benefits will flow to the group and revenue can be reliably measured. The following criteria must also be present:

•

the sale of mining products is recognised when the significant risks and rewards of ownership of the products are

transferred to the buyer;

•

dividends and royalties are recognised when the right to receive payment is established;

•

interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the

period to maturity, when it is determined that such income will accrue to the group; and

•

where a by-product is not regarded as significant, revenue is credited against cost of sales, when the significant risks and

rewards of ownership of the products are transferred to the buyer.

Taxation

Deferred taxation is provided on all qualifying temporary differences at the reporting date between the tax bases of assets and

liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are only recognised to the extent that it is probable that the deductible temporary differences will reverse

in the foreseeable future and future taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer

probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at future anticipated tax rates, which have been enacted or substantively

enacted at the reporting date.

Current and deferred tax is recognised as income or expense and included in profit or loss for the period, except to the extent

that the tax arises from a transaction or event which is recognised, in the same or a different period in other comprehensive

income or directly in equity, or a business combination that is an acquisition.

Current tax is measured on taxable income at the applicable statutory rate enacted or substantively enacted at the

reporting date.

Special items

Items of income and expense that are material and require separate disclosure, in accordance with IAS 1.97, are classified as

special items on the face of the income statement. Special items that relate to the underlying performance of the business are

classified as operating special items and include impairment charges and reversals. Special items that do not relate to

underlying business performance are classified as non-operating special items and are presented below operating profit (loss)

on the income statement.

Group financial statements

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259

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Dividend distribution

Dividend distribution to the group’s shareholders is recognised as a liability in the group’s financial statements in the period in

which the dividends are declared by the board of directors of AngloGold Ashanti Limited.

Financial instruments

Financial instruments are initially measured at fair value when the group becomes a party to their contractual arrangements.

Transaction costs are included in the initial measurement of financial instruments, except financial instruments classified as at

fair value through profit or loss. The subsequent measurement of financial instruments is dealt with below.

A financial asset is derecognised when the right to receive cash flows from the asset has expired or the group has transferred

its rights to receive cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither

transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

On derecognition of a financial asset, the difference between the proceeds received or receivable and the carrying amount of

the asset is included in profit or loss.

On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to

another party and the amount paid is included in profit or loss.

Regular way purchases and sales of all financial assets and liabilities are accounted for at settlement date.

Derivatives and hedge accounting

The group enters into derivatives to ensure a degree of price certainty and to guarantee a minimum revenue on a portion of

future planned gold production. In addition, the group enters into derivatives to manage interest rate and currency risk.

The method of recognising fair value gains and losses depends on whether derivatives are classified as held for trading or are

designated as hedging instruments, and if the latter, the nature of the risks being hedged. The group designates derivatives as

either, hedges of the variability in highly probable future cash flows attributable to a recognised asset or liability, or a

forecast transaction (cash flow hedges), or hedges of the fair value of recognised asset or liability or a firm commitment

(fair value hedges).

For cash flow hedges, the effective portions of fair value gains or losses are recognised in other comprehensive income until

the hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting or when the

hedge transactions affect earnings. Any cumulative gain or loss existing in equity at that time remains in equity until the forecast

transaction is recognised in the income statement. If a hedge of a forecast transaction subsequently results in the recognition

of a non-financial asset or liability, the associated cumulative gains and losses that were recognised directly in other

comprehensive income are reclassified into earnings in the same periods during which the asset acquired or the liability

assumed affects earnings for the period.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other

comprehensive income is immediately transferred to the income statement. The ineffective portion of fair value gains and losses

is reported in earnings in the period to which they relate. For fair value hedges, the gain or loss from changes in fair value of

the hedged item is reported in earnings, together with the offsetting gains and losses from changes in fair value of the hedging

instrument.

Group financial statements

P

260

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Financial instruments (continued)

Derivatives and hedge accounting (continued)

All other derivatives are classified as held for trading and are subsequently measured at their estimated fair value, with the

changes in estimated fair value in the statement of financial position as either a derivative asset or derivative liability, including

translation differences, at each reporting date being reported in earnings in the period to which it relates. Fair value gains and

losses on these derivatives are included in gross profit in the income statement.

Commodity based (normal purchase or normal sale) derivative contracts that meet the requirements of IAS 39 are recognised

in earnings when they are settled by physical delivery.

Hedge accounting is applied to derivatives designated as hedging instruments in a cash flow hedge provided certain criteria in

IAS 39 are met. At the inception of a hedging relationship, the relationship between the hedging instruments and the hedged

items, its risk management objective and its strategy for undertaking the hedge, is documented. A documented assessment,

both at hedge inception and on an ongoing basis, of whether or not the hedging instruments, primarily derivatives, that are

used in hedging transactions are highly effective in offsetting the changes attributable to the hedged risks in the cash flows of

the hedged items, is also prepared.

Hedge ineffectiveness is recognised in the income statement in “Loss on non-hedge derivatives and other commodity

contracts”.

The estimated fair values of derivatives are determined at discrete points in time based on the relevant market information.

These estimates are calculated with reference to the market rates using industry standard valuation techniques.

Unearned premiums

Call option premiums received are recorded as trade and other payables until the option matures at which time the premiums

are recorded in revenue. This only applies to normal sale exempt designated deliverable call options.

Other investments

Listed equity investments and unlisted equity investments, other than investments in subsidiaries, joint ventures, and

associates, are classified as available-for-sale financial assets and subsequently measured at fair value. Listed investments’ fair

values are calculated by reference to the quoted selling price at the close of business on the reporting date. Fair values for

unlisted equity investments are estimated using methods reflecting the economic circumstances of the investee. Equity

investments for which fair value cannot be measured reliably are recognised at cost less impairment. Changes in fair value are

recognised in other comprehensive income in the period in which they arise. These amounts are removed from equity and

reported in income when the asset is derecognised or when there is evidence that the asset is impaired.

Investments which management has the intention and ability to hold to maturity are classified as held-to-maturity financial

assets and are subsequently measured at amortised cost using the effective interest rate method. If there is evidence that held-

to-maturity financial assets are impaired, the carrying amount of the assets are reduced and the loss recognised in the income

statement.

Investments in subsidiaries, joint ventures, associates and the rehabilitation trusts are carried at cost less any accumulated

impairments in the company’s separate financial statements.

Other non-current assets

•

Loans and receivables are subsequently measured at amortised cost using the effective interest rate method. If there is

evidence that loans and receivables are impaired, the carrying amount of the assets is reduced and the loss recognised in

the income statement.

•

Post-retirement assets are measured according to the employee benefits policy.

Group financial statements

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261

1

Accounting policies (continued)

1.3 Summary of significant accounting policies (continued)

Financial instruments (continued)

Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less accumulated impairment. Impairment of trade and other receivables is established when there is objective
evidence as a result of a loss event that the group will not be able to collect all amounts due according to the original terms of
the receivables. Objective evidence includes failure by the counterparty to perform in terms of contractual arrangements and
agreed terms. The amount of the impairment is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Impairments relate to specific accounts whereby
the carrying amount is directly reduced. The impairment is recognised in the income statement.

Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments which are
readily convertible to known amounts of cash and subject to insignificant risk of changes in value. They are measured at
amortised cost which is deemed to be fair value as they have a short-term maturity.

Cash restricted for use
Cash which is subject to legal or contractual restrictions on use is classified separately as cash restricted for use.

Financial liabilities
Financial liabilities, other than derivatives and liabilities classified as at fair value through profit or loss, are subsequently
measured at amortised cost, using the effective interest rate method.

Financial liabilities designated on initial recognition as being at fair value through profit or loss are recognised at fair value, with
transaction costs being recognised in profit or loss, and are subsequently measured at fair value. Gains and losses on financial
liabilities that are designated as at fair value through profit or loss are recognised in profit or loss as they arise. Fair value of a
financial liability that is quoted in an active market is the current offer price times the number of units of the instrument held
or issued.

Financial guarantee contracts are accounted for as financial instruments and measured initially at estimated fair value. They are
subsequently measured at the higher of the amount determined in accordance with IAS 37 “Provisions, contingent liabilities
and contingent assets”, and the amount initially recognised less (when appropriate) cumulative amortisation recognised in
accordance with IAS 18 “Revenue”.

Convertible bonds
Convertible bonds (except equity components) are accounted for entirely as liabilities. Option components are treated as
derivative liabilities and carried at fair value, with changes in fair value recorded in the income statement as a separate
instrument where the host bond is carried at amortised cost and included within the carrying value where the host contract is
carried at fair value. The bond component is carried at amortised cost using the effective interest rate. Where the fair value
option is elected, the bonds are carried at fair value with changes in fair value recorded in the income statement.

Treasury shares
Own equity instruments which are reacquired or held by subsidiary companies (treasury shares) are deducted from equity. No
gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the group’s own equity instruments.

Accounting for BEE transactions

Where equity instruments are issued to a BEE party at less than fair value, these are accounted for as share-based payments.

Any difference between the fair value of the equity instrument issued and the consideration received is accounted for as an
expense in the income statement.

A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting condition,

but is factored into the fair value determination of the instrument.

Group financial statements

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262

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2

Segmental information

AngloGold Ashanti Limited’s operating segments are being reported based on the financial information provided to the chief

executive officer and the executive management team, collectively identified as the chief operating decision maker (CODM). As

a result of changes in management structure and reporting from 1 January 2010, the CODM has changed its reportable

segments. Individual members of the executive management team are responsible for geographic regions of the business.

Comparative information has been presented on a consistent basis. Navachab which was previously included in Southern

Africa now forms part of Continental Africa and North and South America has been combined into Americas. Southern Africa

has been renamed to South Africa. The Johannesburg corporate office was previously included in Southern Africa and now

forms part of “Other”. Where applicable, the corresponding items of segment information for prior periods presented have been

restated to reflect this.

Group analysis by origin is as follows:

Figures in million

Net operating assets

Total assets

Capital expenditure

US Dollars

2010

2009

2010

2009

2010

2009

South Africa

(1)

2,122

1,839

2,469

2,295

424

385

Continental Africa

(2) (3)

3,345

3,234

3,966

3,954

234

198

Australasia

(4)

281

342

555

604

40

177

Americas

(4)

1,653

1,474

2,109

1,970

311

258

Other, including non-gold

producing subsidiaries

(1)

63

60

515

1,041

6

9

7,464

6,949

9,614

9,864

1,015

1,027

Equity accounted investments

included above

(581)

(567)

(82)

(77)

(42)

(8)

6,883

6,382

9,532

9,787

973

1,019

SA Rands

South Africa

(1)

13,942

13,670

16,226

17,061

3,096

3,228

Continental Africa

(2) (3)

21,978

24,045

26,060

29,401

1,708

1,654

Australasia

(4)

1,848

2,542

3,644

4,494

290

1,599

Americas

(4)

10,860

10,958

13,855

14,642

2,270

2,157

Other, including non-gold

producing subsidiaries

(1)

411

449

3,384

7,739

49

88

49,039

51,664

63,169

73,337

7,413

8,726

Equity accounted investments

included above

(3,818)

(4,214)

(540)

(567)

(305)

(70)

45,221

47,450

62,629

72,770

7,108

8,656

Material non-current assets by foreign countries have not been disclosed as it is impracticable.

(1)

Assets held for sale in respect of Tau Lekoa nil (2009: $71m, R529m) are included in the South Africa segment. Assets held

for sale in respect of ISS International Limited of $15m, R100m (2009: nil), properties held for sale by Rand Refinery of $1m,

R10m (2009: $1m, R10m) and exploration interests held for sale in Amikan Holding Limited of nil (2009: $15m, R111m) are

included in the “Other” segment (note 24).

(2)

Includes equity accounted joint ventures.

(3)

Includes the acquisition during 2009 of an effective 45% interest in the Kibali gold project in the Democratic Republic of the

Congo (equity accounted investment).

(4)

Includes allocated goodwill of $154m, R1,018m (2009: $136m, R1,013m) for Australasia and $23m, R146m (2009: $23m,

R165m) for Americas (note 16).

Group financial statements

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263

2

Segmental information (continued)

Gold production

(000oz)

(kg)

2010

2009

2010

2009

South Africa

1,785

1,797

55,528

55,908

Continental Africa

1,492

1,585

46,390

49,292

Australasia

396

401

12,313

12,477

Americas

842

816

26,187

25,372

4,515

4,599

140,418

143,049

Figures in million

Gold income

2010

2009

2010

2009

US Dollars

SA Rands

Geographical analysis of gold income by origin is as follows:
South Africa

2,207

1,665

16,056

13,625

Continental Africa

1,868

1,435

13,604

11,723

Australasia

466

221

3,391

1,819

Americas

1,124

805

8,202

6,552

5,665

4,126

41,253

33,719

Equity accounted investments included above

(331)

(358)

(2,420)

(2,974)

(note 3)

5,334

3,768

38,833

30,745

Foreign countries included in the above and considered
material are:
Ghana

566

503

4,119

4,110

Brazil

599

437

4,361

3,560

Geographical analysis of gold income by destination is as follows:
South Africa

2,820

1,815

20,534

14,832

North America

609

719

4,438

5,878

Australia

273

84

1,988

690

Asia

647

373

4,708

3,047

Europe

511

447

3,721

3,652

United Kingdom

805

688

5,864

5,620

5,665

4,126

41,253

33,719

Equity accounted investments included above

(331)

(358)

(2,420)

(2,974)

(note 3)

5,334

3,768

38,833

30,745

Figures in million

Gross profit (loss)

2010

2009

2010

2009

US Dollars

SA Rands

South Africa

429

(255)

3,180

(1,778)

Continental Africa

604

(116)

4,219

(976)

Australasia

(206)

(168)

(1,452)

(1,325)

Americas

357

89

2,664

735

Other

23

28

171

244

1,207

(422)

8,782

(3,100)

Equity accounted investments included above

(125)

(156)

(918)

(1,309)

1,082

(578)

7,864

(4,409)

Group financial statements

P

264

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

3

Revenue

Revenue consists of the following principal categories:

30,745

38,833

Gold income (note 2)

5,334

3,768

772

935

By-products (note 4)

129

94

–

56

Royalties received (note 6)

8

–

Interest received (note 32)

112

86

– loans and receivables

(1)

12

14

50

41

– available-for-sale and held-to-maturity investments

6

6

282

184

– cash and cash equivalents

25

34

31,961

40,135

5,514

3,916

(1)

Interest received from loans and receivables

comprises:

–

2

– related parties

–

–

112

84

– other loans

12

14

112

86

12

14

4

Cost of sales

18,844

20,084

Cash operating costs

(1)

2,756

2,277

–

(123)

Insurance reimbursement

(16)

–

(772)

(935)

By-products revenue (note 3)

(129)

(94)

18,072

19,026

2,611

2,183

699

1,030

Royalties

142

84

134

182

Other cash costs

25

16

18,905

20,238

Total cash costs

2,778

2,283

110

166

Retrenchment costs (note 10)

23

14

182

756

Rehabilitation and other non-cash costs

109

22

19,197

21,160

Production costs

2,910

2,319

4,615

5,022

Amortisation of tangible assets (notes 9, 15 and 32)

690

555

18

18

Amortisation of intangible assets (notes 16 and 32)

2

2

23,830

26,200

Total production costs

3,602

2,876

(610)

(367)

Inventory change

(52)

(63)

23,220

25,833

3,550

2,813

(1)

Cash operating costs comprises:

6,747

6,882

– salaries and wages

944

815

5,316

4,688

– stores and other consumables

642

638

3,019

3,459

– fuel, power and water

475

363

2,971

3,128

– contractors

429

358

791

1,927

– services and other charges

266

103

18,844

20,084

2,756

2,277

Group financial statements

P

265

2009

2010

Figures in million                                                                                         2010

2009

SA Rands

US Dollars

5

Other operating expenses

44

28

Pension and medical defined benefit provisions

3

5

Claims filed by former employees in respect of loss of

employment, work-related accident injuries and

diseases, governmental fiscal claims and care and

31

121

maintenance of old tailings operations

17

3

5

–

Miscellaneous

–

–

80

149

20

8

6

Special items

Net impairments (reversals) of tangible assets (notes 13,

(5,115)

634

15 and 24)

91

(683)

Mandatory convertible bonds issue discount, underwriting

–

396

and professional fees

56

–

Net loss (profit) on disposal and derecognition of land,

mineral rights, tangible assets and exploration properties

(420)

191

(note 13)

(1)

25

(49)

219

125

Indirect tax expenses and legal claims

(2)

17

29

66

67

Impairment of other receivables

9

7

–

16

Impairment of investment (notes 13 and 18)

(3)

2

–

–

8

Contractor termination costs at Geita Gold Mining Limited

1

–

–

(314)

Profit on disposal of investments (note 13)

(4)

(43)

–

(54)

(134)

Insurance claim recovery

(19)

(7)

–

(56)

Royalties received (note 3)

(8)

–

95

(39)

(Recovery) loss on consignment inventory

(5)

12

(5,209)

894

126

(691)

(1)

The net loss (profit) on disposal and derecognition of land, mineral rights, tangible assets and exploration properties includes

amongst others the following:

•

on 1 August 2010, the sale of Tau Lekoa mine to Simmers & Jack Mines Limited was finalised, resulting in a loss on disposal

of $7m, R41m;

•

on 26 June 2009, AngloGold Ashanti Limited concluded the sale of its indirect 33.3% joint venture interest in the Boddington

Gold Mine in Western Australia to Newmont Mining Corporation, resulting in a profit on disposal of $62m, R523m; and

•

loss on disposal and derecognition of land, mineral rights, tangible assets and exploration properties amounted to $18m,

R150m (2009: $13m, R102m).

(2)

Indirect tax expenses and legal claims include the following:

•

provision for non-recovery of VAT and fuel duties in Tanzania and Guinea amounting to $13m, R95m (2009: $25m, R183m);

and

•

net provision for non-recovery of other indirect tax and legal claims of $4m, R30m (2009: $4m, R36m).

(3)

Impairment of Corvus Gold Inc. shares of $2m, R16m (2009: nil).

(4)

The profit on disposal of investments includes the following:

•

on 9 November 2010, AngloGold Ashanti Limited disposed of its entire holding of 31,556,650 shares in Vancouver-based

gold producer B2Gold Corp., resulting in a realised profit on disposal of $36m, R250m (2009: nil); and

•

profit on disposal of minor investments amounted to $7m, R64m (2009: nil).

Group financial statements

P

266

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

7

Finance costs and unwinding
of obligations

Finance costs

–

275

Finance costs on rated bonds

(1)

38

–

173

163

Finance costs on convertible bonds

(1)

22

22

471

135

Finance costs on bank loans and overdrafts

(1)

19

55

–

72

Finance costs on mandatory convertible bonds

(1)

10

–

260

146

Amortisation of fees

20

31

28

34

Finance lease charges

5

3

38

9

Other finance costs

1

5

970

834

115

116

(135)

–

Amounts capitalised (note 15)

–

(15)

835

834

Total finance costs

115

101

Unwinding of obligations, accretion of convertible

bonds and other discounts

59

62

Unwinding of decommissioning obligation (note 27)

9

7

60

65

Unwinding of restoration obligation (note 27)

9

7

1

–

Unwinding of other provisions (note 27)

–

–

44

45

Discounting of other long-term receivables

6

6

147

197

Accretion of convertible bonds discount

27

18

Total unwinding of obligations, accretion of convertible

311

369

bonds and other discounts

51

38

Total finance costs, unwinding of obligations, accretion

1,146

1,203

of convertible bonds and other discounts (note 32)

166

139

The disclosure in this note has been enhanced and

comparatives restated in line with requirements of the

credit rating agencies and other users of these financial

statements.

(1)

Finance costs have been determined using the

effective interest rate method.

Group financial statements

P

267

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

8

Share of equity accounted
investments’ profit

3,095

2,507

Revenue

343

372

(1,887)

(1,637)

Operating expenses

(225)

(229)

1,208

870

Gross profit

118

143

(12)

7

Special items (note 13)

(1)

1

(1)

–

8

Interest received

1

–

(7)

(9)

Finance costs

(1)

(1)

1,189

876

Profit before taxation

119

141

(403)

(378)

Taxation

(51)

(47)

786

498

Profit after taxation

68

94

(76)

(157)

Impairment (note 13)

(2)

(24)

(10)

75

126

Reversal of impairment (note 13)

(3)

19

10

785

467

(note 32)

63

94

(1)

During 2010, special items included the write down
of loans of $1m, R7m. During 2009, special items
included a profit on disposal of assets of $0.2m, R2m
and impairments of assets of $0.2m, R1m.

(2)

In 2010, the Margaret Water Company and the AGA-
Polymetal Strategic Alliance investments were
impaired. In 2009, Amikan Holding Limited, AS APK
Limited and Margaret Water Company investments
were impaired. Impairments of $24m, R157m
(2009: $10m, R76m) were recorded.

(3)

The Trans-Siberian Gold plc impairment of $19m,
R126m (2009: $10m, R75m) was reversed due to
the increase in the listed share price.

9

Profit (loss) before taxation

Profit (loss) before taxation is arrived at after taking

account of:

Auditors’ remuneration

61

61

– audit fees

8

7

(3)

(1)

– over provision prior year

–

–

8

11

– other assurance services

2

1

66

71

10

8

Amortisation of tangible assets

4,589

4,977

– owned assets

684

552

26

45

– leased assets

6

3

4,615

5,022

(notes 4, 15 and 32)

690

555

91

117

Community investment

16

11

280

170

Operating lease charges

23

33

Group financial statements

P

268

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

10 Employee benefits

Employee benefits including executive directors’ salaries

7,871

8,201

and other benefits

1,123

937

Health care and medical scheme costs

492

580

– current medical expenses

79

59

79

103

– defined benefit post-retirement medical expenses

14

10

Pension and provident plan costs

447

471

– defined contribution

64

53

25

20

– defined benefit pension plan

3

3

110

166

Retrenchment costs (note 4)

23

14

337

434

Share-based payment expense (note 11)

59

41

Included in cost of sales, other operating expenses,

special items and corporate administration, marketing

9,361

9,975

and other expenses

1,365

1,117

Actuarial defined benefit plan expense analysis

Defined benefit post-retirement medical

4

6

– current service cost

1

1

77

100

– interest cost

13

9

(2)

(3)

– expected return on plan assets

–

–

79

103

14

10

Defined benefit pension plan

51

50

– current service cost

7

6

141

182

– interest cost

25

17

(167)

(212)

– expected return on plan assets

(29)

(20)

25

20

3

3

Actual return on plan assets

265

298

– defined benefit pension and medical plans

42

32

Refer to the Remuneration report for details of directors’

emoluments.

Group financial statements

P

269

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

11 Share-based payments

Share incentive schemes

No new share incentive schemes were approved by the

shareholders of AngloGold Ashanti Limited during the

current financial year. New awards were made under the

existing BSP and LTIP plans. ESOP awards that were

surrendered by participants during the year were

allocated to employees who did not receive their full

allocation in 2008. On 28 April 2009, a cash-settled

share incentive scheme was implemented in Ghana

(Ghana ESOP). The total cost relating to share incentive

schemes was $59m, R434m (2009: $41m, R337m) and

is made up as follows:

49

48

Employee Share Ownership Plan (ESOP) – Free shares

6

6

Employee Share Ownership Plan (ESOP) – E ordinary

48

42

shares to employees

6

6

Ghana Employee Ownership Plan (Ghana ESOP)

16

11

– Share appreciation rights

2

2

174

221

Bonus Share Plan (BSP)

30

21

53

116

Long-Term Incentive Plan (LTIP)

16

6

340

438

Total employee compensation cost

60

41

Employee compensation cost related to equity

(3)

(4)

accounted joint ventures

(1)

–

Total employee compensation cost excluding equity

337

434

accounted joint ventures (note 10)

59

41

Included in:

236

276

– cost of sales

37

29

– corporate administration, marketing and other

101

158

expenses

22

12

337

434

59

41

Group financial statements

P

270

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

11 Share-based payments (continued)

Equity-settled share incentive schemes

Employee Share Ownership Plan (ESOP)

On 12 December 2006, AngloGold Ashanti Limited announced the finalisation of the Bokamoso Employee Share Ownership

Plan (Bokamoso ESOP) with the National Union of Mineworkers, Solidarity and United Association of South Africa. The

Bokamoso ESOP creates an opportunity for AngloGold Ashanti Limited and the unions to ensure a closer alignment of the

interest between South African-based employees and the company, and the seeking of shared growth solutions to build

partnerships in areas of shared interest. Participation is restricted to those employees not eligible for participation in any other

South African Share Incentive Plan.

The company also undertook an empowerment transaction with a black economic empowerment investment vehicle, Izingwe

in 2006.

In order to facilitate this transaction the company established a trust to acquire and administer the ESOP shares. AngloGold

Ashanti Limited allotted and issued free ordinary shares to the trust and also created, allotted and issued E ordinary shares to

the trust for the benefit of employees. The company also created, allotted and issued E ordinary shares to Izingwe. The key

terms of the E ordinary shares are:

•

AngloGold Ashanti Limited will have the right to cancel the E ordinary shares, or a portion of them, in accordance with the

ESOP and Izingwe cancellation formulae, respectively;

•

the E ordinary shares will not be listed;

•

the E ordinary shares which are not cancelled will be converted into ordinary shares; and

•

the E ordinary shares will each be entitled to receive a dividend equal to one-half of the dividend per ordinary share

declared by the company from time to time and a further one-half is included in the strike price calculation.

The award of free ordinary shares to employees

The fair value of each free share awarded on 1 November each year was as follows:

Award date

2006

2007

2008

Calculated fair value

R320.00

R305.99

R188.48

The fair value is equal to the market value at the date-of-grant. Dividends declared and paid to the trust will accrue and be paid

to ESOP members, pro rata to the number of shares allocated to them. An equal number of shares vests from 2009 and each

subsequent year up to the expiry date of 1 November 2013.

Accordingly, for the awards issued, the following information is available:

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

855,649

–

Awards outstanding at beginning of year

665,862

–

24,741

–

Awards reallocated during the year

21,004

–

(24,741)

–

Awards lapsed during the year

(21,004)

–

(189,787)

–

Awards exercised during the year

(230,921)

–

665,862

–

Awards outstanding at end of year

434,941

–

–

–

Awards exercisable at end of year

–

–

Group financial statements

P

271

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

The award of free ordinary shares to employees (continued)

Up to 31 December 2010, the rights to a total of 21,004 (2009: 24,741) shares were surrendered by the participants. A total

of 104,741 (2009: 56,443) shares were allotted to deceased, retired or retrenched employees. The income statement charge

for the year was $6m, R48m (2009: $6m, R49m).

The award of E ordinary shares to employees

The average fair value per share of the E ordinary shares awarded to employees on 1 November each year was as follows:

Award date

2006

2007

2008

Calculated fair value

R105.00

R79.00

R13.40

Dividends declared in respect of the E ordinary shares will firstly be allocated to cover administration expenses of the trust,

whereafter they will accrue and be paid to ESOP members, pro rata to the number of shares allocated to them. At each

anniversary over a five year period commencing on the third anniversary of the original 2006 award, the company will cancel

the relevant number of E ordinary shares as stipulated by a cancellation formula.

Any E ordinary shares remaining in that tranche will be converted to ordinary shares for the benefit of employees. All

unexercised awards will be cancelled on 1 May 2014.

Accordingly, for the E ordinary shares issued, the following information is available:

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

2,566,941

327.15

Awards outstanding at beginning of year

2,394,998

346.82

75,449

341.69

Awards reallocated during the year

69,146

361.16

(75,449)

334.81

Awards lapsed during the year

(69,146)

354.07

(138,059)

336.55

Awards cancelled during the year

(708,872)

354.35

(33,884)

333.39

Awards converted during the year

–

–

2,394,998

346.82

Awards outstanding at end of year

1,686,126

366.30

The weighted average exercise price is calculated as the initial grant price of R288.00 plus an interest factor less dividend

apportionment. This value will change on a monthly basis, to take account of employees leaving the company and those shares

being reissued to new employees. The income statement charge for the year was $6m, R42m (2009: $6m, R48m).

Up to 31 December 2010, the rights to a total of 69,146 (2009: 75,449) shares were surrendered by participants. No E ordinary

shares were converted into ordinary shares during the year. In 2009, a total of 33,884 E ordinary shares were converted into

1,181 ordinary shares and allotted to deceased, retired or retrenched employees. A total of 708,872 (2009: 138,059) shares

were cancelled as the result of the exercise price exceeding the share price on conversion date.

Group financial statements

P

272

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

The award of E ordinary shares to Izingwe

The average fair value of the E ordinary shares granted to Izingwe on 13 December 2006 was R90.00 per share. Dividends

declared in respect of the E ordinary shares will accrue and be paid to Izingwe, pro rata to the number of shares allocated to

them. At each anniversary over a five year period commencing on the third anniversary of the award, Izingwe has a six month

period to instruct the company to cancel the relevant number of E ordinary shares as stipulated by a cancellation formula. Any

E ordinary shares remaining in that tranche will be converted to ordinary shares for the benefit of Izingwe. If no instruction is

received at the end of the six month period, the cancellation formula will be applied automatically.

Accordingly, for the awards issued, the following information is available:

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

1,400,000

327.15

E ordinary shares outstanding at beginning of year

1,400,000

346.82

–

–

E ordinary shares granted during the year

–

–

–

–

E ordinary shares cancelled during the year

(280,000)

353.04

–

–

E ordinary shares converted during the year

–

–

1,400,000

346.82

E ordinary shares outstanding at end of year

1,120,000

366.30

The weighted average exercise price is calculated as the initial grant price of R288.00 per share plus an interest factor less

dividend apportionment. There was no income statement charge for the year as the full amount was expensed in 2006

(2006: $19m, R131m). A total of 280,000 (2009: nil) shares were cancelled as the result of the exercise price exceeding the

share price on conversion date.

The fair value of each share granted for the ESOP and Izingwe schemes was estimated on the date of grant using the Black-

Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including

the expected term of the option award and share price volatility. Expected volatility is based on the historical volatility of

AngloGold Ashanti Limited’s shares. These estimates involve inherent uncertainties and the application of management

judgment. In addition, the company is required to estimate the expected forfeiture rate and only recognise expenses for those

options expected to vest. As a result, if other assumptions had been used, the recorded share-based compensation expense

could have been different from that reported.

The Black-Scholes option-pricing model used the following assumptions, at grant date:

2006

2007

2008

Risk-free interest rate

7.00%

7.00%

7.00%

Dividend yield

2.30%

2.06%

1.39%

Volatility factor of market share price

36.00%

33.00%

35.00%

Group financial statements

P

273

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Bonus Share Plan (BSP)

The BSP is intended to provide effective incentives to eligible employees. An eligible employee is one who devotes substantially

the whole of his working time to the business of AngloGold Ashanti Limited, any subsidiary of AngloGold Ashanti Limited or a

company under the control of AngloGold Ashanti Limited, unless the board of directors (the board) excludes such a company.

An award in terms of the BSP may be made at any date at the discretion of the board, the only vesting condition being three

years’ service for awards granted prior to 2008. For all BSP awards granted from 2008, 40% will vest after one year and the

remaining 60% will vest after two years. An additional 20% of the original award will be granted to employees if the full award

remains unexercised after three years.

The board is required to determine a BSP award value and this will be converted to a share amount based on the closing price

of AngloGold Ashanti Limited’s shares on the JSE on the last business day prior to the date of grant. AngloGold Ashanti

Limited’s Remuneration Committee has at its discretion, the right to pay dividends, or dividend equivalents, to the participants

of the BSP. Having no history of any discretionary dividend payments, the fair value includes dividends and was used to

determine the income statement expense. The fair value is equal to the award value determined by the board.

Accordingly, for the awards issued, the following information is available:

Award date (unvested awards and awards vested during the year)

2007

2008

2009

2010

Calculated fair value

R322.00

R267.05

R293.99

R280.90

Vesting date (100%)

1 Jan 2010

–

–

–

Vesting date (40%)

–

1 Jan 2009

18 Feb 2010

24 Feb 2011

Vesting date (60%)

–

1 Jan 2010

18 Feb 2011

24 Feb 2012

Vesting date (conditional 20%)

–

1 Jan 2011

18 Feb 2012

24 Feb 2013

Expiry date

31 Dec 2016

31 Dec 2017

17 Feb 2019

23 Feb 2020

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

945,027

–

Awards outstanding at beginning of year

1,295,708 –

666,541

–

Awards granted during the year

811,638 –

(68,988)

–

Awards lapsed during the year

(86,526) –

(246,872)

–

Awards exercised during the year

(468,327) –

1,295,708

–

Awards outstanding at end of year

1,552,493 –

242,610

–

Awards exercisable at end of year

450,999 –

Up to 31 December 2010, the rights to a total of 86,526 (2009: 68,988) shares were surrendered by the participants. A total

of 43,394 (2009: 57,420) shares were allotted to deceased, retired or retrenched employees.

The income statement charge for the year was $30m, R221m (2009: $21m, R174m).

Group financial statements

P

274

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Long-Term Incentive Plan (LTIP)

The LTIP is an equity-settled share-based payment arrangement, intended to provide effective incentives for executives to earn

shares in the company based on the achievement of stretched company performance conditions. Participation in the LTIP will

be offered to executive directors, executive officers/management and selected members of senior management of participating

companies. Participating companies include AngloGold Ashanti Limited, any subsidiary of AngloGold Ashanti Limited or a

company under the control of AngloGold Ashanti Limited, unless the board excludes such a company.

An award in terms of the LTIP may be granted at any date during the year that the board of AngloGold Ashanti Limited

determine and may even occur more than once a year. The board is required to determine an LTIP award value and this will

be converted to a share amount based on the closing price of AngloGold Ashanti Limited’s shares on the JSE on the last

business day prior to the date of grant. AngloGold Ashanti Limited’s Remuneration Committee has at its discretion the right to

pay dividends, or dividend equivalents to the participants of the LTIP. Having no history of any discretionary dividend payments,

the fair value includes dividends and was used to determine the income statement expense. The fair value is equal to the award

value as determined by the board.

The main performance conditions in terms of the LTIP issued in 2007 and 2006 are:

•

up to 40% of an award will be determined by the performance of total shareholder returns (TSR) compared with that of a

group of comparative gold-producing companies;

•

up to 30% of an award will be determined by adjusted earnings per share compared to planned adjusted earnings per

share over the performance period;

•

up to 30% of an award will be dependent on the achievement of strategic performance measures which will be set by the

Remuneration Committee; and

•

three-years’ service is required.

The main performance conditions in terms of the LTIP issued in 2010, 2009 and 2008 are:

•

up to 30% of an award will be determined by the performance of total shareholder returns (TSR) compared with that of a

group of comparative gold-producing companies;

•

up to 30% of an award will be determined by real growth (above US inflation) in adjusted earnings per share over the

performance period;

•

up to 40% of an award will be dependent on the achievement of strategic performance measures which will be set by the

Remuneration Committee; and

•

three-years’ service is required.

Accordingly, for the awards made, the following information is available:

Award date (unvested awards and awards vested during the year)

2007

2008

2009

2010

Calculated fair value

R322.00

R267.05

R293.99

R280.90

Vesting date

1 Jan 2010

1 Jan 2011

18 Feb 2012

24 Feb 2013

Expiry date

31 Dec 2016

31 Dec 2017

17 Feb 2019

23 Feb 2020

Group financial statements

P

275

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Long-Term Incentive Plan (LTIP) (continued)

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

990,445

–

Awards outstanding at beginning of year

1,263,749

–

534,574

–

Awards granted during the year

632,142

–

(190,085)

–

Awards lapsed during the year

(211,279)

–

(71,185)

–

Awards exercised during the year

(84,922)

–

1,263,749

–

Awards outstanding at end of year

1,599,690

–

72,257

–

Awards exercisable at end of year

85,457

–

The income statement charge for the year was $16m, R116m (2009: $6m, R53m).

Performance-related share-based remuneration scheme – 1 May 2003

The options, if vested, may be exercised at the end of a three-year period commencing 1 May 2003. The share options were

granted at an exercise price of R221.90. The performance condition applicable to these options was that the US dollar EPS

must increase by at least 6% in real terms, after inflation, over the next three years, in order to vest. As none of the performance

criteria were met, in the initial three years, the grantor decided to roll the scheme forward on a ‘roll over reset’ basis, in February

2006, to be reviewed annually. The performance criteria of these options was achieved during 2006. The remaining weighted

average contractual life of the options granted is 2.33 years. An employee would only be able to exercise his options after the

date upon which he receives written notification from the directors that the previously specified performance criteria have

been fulfilled.

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

383,791

216.48

Options outstanding at beginning of year

178,471 216.87

(6,232)

216.38

Options lapsed during the year

– –

(199,088)

216.12

Options exercised during the year

(65,511)

215.81

–

–

Options expired during the year

– –

178,471

216.87

Options outstanding at end of year

112,960 217.49

178,471

216.87

Options exercisable at end of year

112,960 217.49

There was no income statement charge for the year, as the total compensation cost was expensed up to the date of vesting

in 2006 (2006: $10m, R69m).

Group financial statements

P

276

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Performance-related share-based remuneration scheme – 1 November 2004

The options, if vested, may be exercised at the end of a three-year period commencing 1 November 2004. The share options

were granted at an exercise price of R228.00. The performance condition applicable to these options was that US dollar EPS

must increase from the 2004 year by at least 6% in real terms, i.e. after inflation, over the following three years in order to vest.

The performance criteria was met during 2006. The remaining weighted average contractual life of options granted is

3.83 years. An employee would only be able to exercise his options after the date upon which he has received written

notification from the directors that the previously specified performance criteria have been fulfilled.

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

548,706

221.33

Options outstanding at beginning of year

242,807

221.25

(7,780)

222.41

Options lapsed during the year

–

–

(298,119)

221.36

Options exercised during the year

(92,037)

220.82

–

–

Options expired during the year

–

–

242,807

221.25

Options outstanding at end of year

150,770

221.51

242,807

221.25

Options exercisable at end of year

150,770

221.51

There was no income statement charge for the year as the total compensation cost was expensed up to the date of vesting

in 2007 (2007: $3m, R23m).

There are currently two equity-settled share incentive schemes that fall outside the transitional provisions of IFRS 2,

as the options were granted prior to 7 November 2002. The details of these schemes are as follows:

Performance-related share-based remuneration scheme – 1 May 2002

The share options were granted at an exercise price of R299.50 per share. The performance condition applicable to these

options was that US dollar EPS must increase by 7.5% for each of the three succeeding years. On 24 December 2002,

AngloGold Ashanti Limited underwent a share split on a 2:1 basis therefore the EPS target was reduced accordingly. As none

of the performance criteria was met, in the initial three years, the grantor decided to roll the scheme forward on a ‘roll over

reset’ basis, to be reviewed annually. The performance criteria of these options were achieved during 2006. The remaining

weighted average contractual life of options granted is 1.33 years. An employee would only be able to exercise his options after

the date upon which he receives written notification from the directors that the previously specified performance criteria have

been fulfilled.

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

457,336

279.64

Options outstanding at beginning of year

218,697

283.45

(10,226)

281.69

Options lapsed during the year

(4,492)

287.94

(228,413)

275.90

Options exercised during the year

(86,003)

279.13

–

–

Options expired during the year

–

–

218,697

283.45

Options outstanding at end of year

128,202

286.18

218,697

283.45

Options exercisable at end of year

128,202

286.18

Group financial statements

P

277

11 Share-based payments (continued)

Equity-settled share incentive schemes (continued)

Time-related share-based remuneration scheme – granted up to 30 April 2002

Except where the directors at their sole and absolute discretion decide otherwise, a grantee may not exercise his options until
after the lapse of a period calculated from the date on which the option was granted. The remaining weighted average
contractual life of options granted is 0.80 years. The period in which and the extent to which the options vest and may be
exercised are as follows:

•

after two years – up to 20% of options granted;

•

after three years – up to 40% of options granted;

•

after four years – up to 60% of options granted; and

•

after five years – up to 100% of options granted.

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

116,491

139.82

Options outstanding at beginning of year

28,252

146.28

–

–

Options lapsed during the year

–

–

(88,239)

137.75

Options exercised during the year

(27,611)

145.17

–

–

Options expired during the year

–

–

28,252

146.28

Options outstanding at end of year

641

194.00

28,252

146.28

Options exercisable at end of year

641

194.00

No grants were made with respect to the time related scheme options and performance related options since 2005. The value
of each option granted during 2002, 2003 and 2004 is estimated on the date of grant using the Black-Scholes option-pricing
model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of
the option award and share price volatility. The expected term of options granted is derived from historical data on employee
exercise and post-vesting employment termination behaviour. Expected volatility is based on the historical volatility of
AngloGold Ashanti Limited’s shares. These estimates involve inherent uncertainties and the application of management’s
judgment. In addition, the company is required to estimate the expected forfeiture rate and only recognise an expense for those
options expected to vest. As a result, if other assumptions had been used, the recorded share-based compensation expense
could have been different from that reported.

The Black-Scholes option-pricing model used the following assumptions, at grant date:

2002

2003

2004

Risk-free interest rate

11.00%

11.00%

8.18%

Dividend yield

4.27%

4.27%

2.27%

Volatility factor of market share price

0.390

0.390

0.300

Weighted average expected life

7 years

7 years

7 years

Calculated fair value

R100.20

R77.76

R94.65

Cash-settled share incentive scheme

Ghana Employee Share Ownership Plan (Ghana ESOP)

A memorandum of understanding was signed with the Ghanaian employees on 28 April 2009 to usher in the Ghana ESOP
under defined rules.

In terms of the rules of the scheme, every eligible employee is entitled to 20 AngloGold Ashanti Limited share appreciation rights
(phantom shares), which will be paid out in four equal tranches, commencing in May 2009 and ending in May 2012.

The value of the rights are equal to the value of AngloGold Ashanti Limited American Depositary Receipts (ADRs) as listed on
the New York Stock Exchange, converted into Ghanaian Cedis at the prevailing US dollar exchange rate.

Group financial statements

P

278

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

11 Share-based payments (continued)

Cash-settled share incentive scheme (continued)

Ghana Employee Share Ownership Plan (Ghana ESOP) (continued)

The share price on the day of issue as at 29 April 2009 was $32.15, whilst the share price used in the payment of the first
tranche was $28.46 per share. The share price used in the payment of the second tranche was $39.50 per share.

The award of share appreciation rights to employees

Accordingly, for the rights issued, the following information is available:

Weighted

Weighted

Number

average

Number

average

of

exercise

of

exercise

shares

price

shares

price

2009

2010

–

–

Rights outstanding at beginning of year

75,115 –

100,860

–

Rights granted during the year

– –

(455)

–

Rights lapsed during the year

(720) –

(25,290)

–

Rights exercised during the year

(25,270)

–

75,115

–

Rights outstanding at end of year

49,125

–

–

–

Rights exercisable at end of year

–

–

Up to 31 December 2010, a total of 720 (2009: 455) share appreciation rights were surrendered by the participants. The
income statement charge for the year was $2m, R11m (2009: $2m, R16m). The liability recognised in the statement of financial
position in respect of unexercised rights was $2m, R11m (2009: $1m, R9m).

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

12 Taxation

South African taxation

153

–

Mining tax

(1)

–

19

89

112

Non-mining tax

(2)

13

10

33

(628)

(Over) under provision prior year

(89)

4

Deferred taxation

535

(1,377)

Temporary differences

(3)

(195)

61

Unrealised non-hedge derivatives and other

(1,451)

2,353

commodity contracts

334

(181)

(156)

(39)

Change in estimated deferred tax rate

(4)

(6)

(21)

(797)

421

57

(108)

Foreign taxation

1,113

1,628

Normal taxation

(5)

226

138

(50)

(17)

Over provision prior year

(3)

(7)

Deferred taxation

1,220

(37)

Temporary differences

s(3)

(7)

164

Unrealised non-hedge derivatives and other

(314)

23

commodity contracts

3

(40)

1,969

1,597

219

255

1,172

2,018

276

147

Group financial statements

P

279

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

12 Taxation (continued)

Tax reconciliation

A reconciliation of the effective tax rate charged in the

income statement to the prevailing estimated corporate

tax rate is set out in the following table:

%

%

%

%

(100)

66

Effective tax rate

68

(121)

Disallowable items

204

(12)

Derivative losses

(12)

236

–

(20)

Transaction and finance costs

(20)

–

(23)

5

Share of equity accounted investments’ profit (loss)

5

(27)

(3)

(7)

Other

(7)

(3)

5

–

Foreign income tax allowances and rate differentials

(11)

31

(39)

–

Exchange variation and translation adjustments

9

(68)

10

(18)

Current unrecognised tax assets

(19)

12

(13)

1

Change in estimated deferred tax rate

(4)

1

(17)

(1)

20

Prior year’s provision

21

(3)

(5)

– Other

–

(5)

35

35

Estimated corporate tax rate

(6)

35

35

(1)

There was no mining tax charge in the current year as it was primarily offset by losses from the accelerated non-hedge derivative

buy-backs.

(2)

In South Africa, non-mining income is taxed at the higher non-mining tax rate of 35% (2009: 35%) as the company has elected

to be exempt from STC. Companies that elected to be subject to STC are taxed at the lower company tax rate, that of 28%

(2009: 28%) for non-mining taxation purposes.

(3)

Included in temporary differences in South African taxation is a tax credit on the impairment and disposal of tangible assets of

$28m, R193m (2009: tax credit $8m, R61m). Included in temporary differences of foreign taxation is a tax charge on the

impairment reversals and disposal of tangible assets of $5m, R37m (2009: tax charge of $190m, R1,421m) (note 13).

(4)

In South Africa the mining operations are taxed on a variable rate that increases as profitability increases. The tax rate used to

calculate deferred tax is based on the group’s current estimate of future profitability when temporary differences will reverse.

Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. The

change in the estimated deferred tax rate at which the temporary differences will reverse amounts to a credit of $6m, R39m

(2009: tax credit of $21m, R156m).

(5)

Included in normal foreign taxation is tax on the disposal of tangible assets of $nil, R4m (2009: $18m, R145m) (note 13).

(6)

Mining tax on mining income in South Africa is determined according to a formula based on profit and revenue from mining

operations. The company has elected to be exempt from STC and is taxed at a higher rate of company tax for mining and non-

mining income tax purposes.

Group financial statements

P

280

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

12 Taxation (continued)

All mining capital expenditure is deducted to the extent

that it does not result in an assessed loss and

depreciation is ignored when calculating the South

African mining income. Capital expenditure not

deducted from mining income is carried forward as

unredeemed capital to be deducted from future mining

income. South Africa operates under two tax paying

operations, Vaal River Operation and West Wits

Operation. Under ring-fencing legislation, each

operation is treated separately and deductions can only

be utilised against income generated by the relevant tax

operation.

The formula for determining the South African mining tax

rate is:

Y = 43 – 215/X (2009: Y = 43 – 215/X)

where Y is the percentage rate of tax payable and X is

the ratio of mining profit net of any redeemable capital

expenditure to mining revenue expressed as a

percentage.

Unrecognised tax losses

Unrecognised tax losses of the US operations which are

available for offset against future profits earned in

2,964

1,548

the US

236

399

Analysis of tax losses

Tax losses available to be used against future profits

943

–

– utilisation required within one year

–

127

36

32

– utilisation required between two and five years

5

5

1,985

1,516

– utilisation in excess of five years

231

267

2,964

1,548

236

399

Unrecognised tax losses utilised

1,741

1,416

Assessed losses utilised during the year

163

184

Group financial statements

P

281

2009

2010

2010

2009

SA cents

US cents

13 Earnings per ordinary share

Basic profit (loss) per ordinary share

The calculation of basic profit (loss) per ordinary share is

based on profits attributable to equity shareholders of

$76m, R637m (2009: losses of $320m, R2,762m)

and 371,870,821 (2009: 361,228,295) shares being

the weighted average number of ordinary shares in

(765)

171

issue during the financial year.

20

(89)

Diluted profit (loss) per ordinary share

The calculation of diluted profit (loss) per ordinary share is

based on profits attributable to equity shareholders of

$76m, R637m (2009: losses of $320m, R2,762m)

and 373,440,427 (2009: 361,228,295) shares being

the diluted number of ordinary shares. In 2009,

no adjustment was made since the effect is

(765)

171

anti-dilutive.

20

(89)

2010

2009

Number of shares

In calculating the basic and diluted number of ordinary shares outstanding for the year,

the following were taken into consideration:

Ordinary shares

367,664,700

356,563,773

E ordinary shares

(1)

3,182,662

3,873,169

Fully vested options

(2)

1,023,459

791,353

Weighted average number of shares

371,870,821

361,228,295

Dilutive potential of share options

(3)

1,569,606

–

Diluted number of ordinary shares

373,440,427

361,228,295

(1)

As E ordinary shares participate in the profit available to ordinary shareholders, these shares were included in basic earnings per

share.

(2)

Employee compensation awards, are included in basic earnings per share from the date that all necessary conditions have been

satisfied and it is virtually certain that shares will be issued as a result of employees exercising their options.

(3)

The calculation of diluted earnings per share in 2009 did not take into account the effect of 1,234,858 shares, issuable on share

awards as the effect of this was anti-dilutive for this period.

The calculation of diluted earnings per share did not take into account the effect of 33,524,615 (2009: 15,384,615) shares,

issuable upon the exercise of convertible bonds, as the effect of this was anti-dilutive for this period.

Group financial statements

P

282

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

13 Earnings per ordinary share

(continued)

Headline earnings (loss)

The profit (loss) attributable to equity shareholders was

adjusted by the following to arrive at headline earnings

(loss):

(2,762)

637

Profit (loss) attributable to equity shareholders

76

(320)

Net impairments (reversals) of tangible assets (notes 6,

(5,115)

634

15 and 24)

91

(683)

Net loss (profit) on disposal and derecognition of land,

mineral rights, tangible assets and exploration properties

(420)

191

(note 6)

25

(49)

–

16

Impairment of investment (notes 6 and 18)

2

–

Impairment of investment in associates and joint

76

157

ventures (note 8)

24

10

(75)

(126)

Reversal of impairment in associates (note 8)

(19)

(10)

1

(7)

Special items of associates (note 8)

(1)

–

–

(314)

Profit on disposal of investments (note 6)

(43)

–

Taxation on items above

145

4

– current portion (note 12)

–

18

1,360

(230)

– deferred portion (note 12)

(33)

182

(6,790)

962

122

(852)

Cents per share

Headline earnings (loss) removes items of a capital

nature from the calculation of earnings per share,

calculated in accordance with Circular 3/2009 issued by

the South African Institute of Chartered Accountants

(SAICA).

The calculation of headline earnings (loss) per ordinary

share is based on headline earnings of $122m, R962m

(2009: losses of $852m, R6,790m) and 371,870,821

(2009: 361,228,295) shares being the weighted average

(1,880)

259

number of ordinary shares in issue during the year.

33

(236)

Group financial statements

P

283

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

14 Dividends

Ordinary shares

No. 105 of 50 SA cents per ordinary share was

declared on 6 February 2009 and paid on 13 March

177

–

2009 (5 US cents per share).

–

18

No. 106 of 60 SA cents per ordinary share was

declared on 29 July 2009 and paid on 28 August 2009

213

–

(8 US cents per share).

–

27

No. 107 of 70 SA cents per ordinary share was

declared on 16 February 2010 and paid on 19 March

–

254

2010 (9 US cents per share).

34

–

No. 108 of 65 SA cents per ordinary share was

declared on 10 August 2010 and paid on

–

236

10 September 2010 (9 US cents per share).

33

–

No. E5 of 25 SA cents per E ordinary share was

declared on 6 February 2009 and paid on 13 March

1

–

2009 (2.5 US cents per share).

–

–

No. E6 of 30 SA cents per E ordinary share was

declared on 29 July 2009 and paid on 28 August 2009

1

–

(4 US cents per share).

–

–

No. E7 of 35 SA cents per E ordinary share was

declared on 16 February 2010 and paid on 19 March

–

1

2010 (4.5 US cents per share).

–

–

No. E8 of 32.5 SA cents per E ordinary share was

declared on 10 August 2010 and paid on

–

1

10 September 2010 (4.5 US cents per share).

–

–

392

492

67

45

No. 109 of 80 SA cents per ordinary share was declared

on 15 February 2011 and will be paid on 18 March 2011

(approximately 11 US cents per share). The actual rate

of payment will depend on the exchange rate on the

date of currency conversion.

No. E9 of 40 SA cents per E ordinary share was declared

on 15 February 2011 and will be paid on 18 March 2011

(approximately 5.5 US cents per share). The actual rate

of payment will depend on the exchange rate on the

date of currency conversion.

Group financial statements

P

284

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

15 Tangible assets

Mine

Mineral

Explora-

Assets

develop-

Mine

rights

tion and

under

Land

ment

infra-

and

evaluation

construc-

and

Figures in million

costs

structure

dumps

assets

tion

buildings

Total

US Dollars

Cost

Balance at 1 January 2009

5,323

2,495

1,064

30

229

50

9,191

Additions

– project

capital

122 5 – –

289 –

416

– stay-in-business capital

394

125

–

1

81

1

602

Disposals

(1)

(11)

– – – –

(12)

Transfers and other movements

(1)

(134)

161 (18)

– (373)

3 (361)

Finance costs capitalised (note 7)

4

–

–

–

11

–

15

Translation

737

148 32 – 14 8

939

Balance at 31 December 2009

6,445 2,923 1,078

31 251

62

10,790

Accumulated amortisation

Balance at 1 January 2009

2,726

1,227

860

30

–

3

4,846

Amortisation for the year (notes 4, 9 and 32)

366

177

10 – – 2

555

Impairments (notes 6, 13 and 24)

(2)

3 4 – – – – 7

Impairments reversal (notes 6, 13 and 24)

(3)

(348)

–

(369)

– – –

(717)

Disposals

(1)

(10)

– – – –

(11)

Transfers and other movements

(1)

(163)

(5)

(7)

– – –

(175)

Translation

373 76 16 – – 1

466

Balance at 31 December 2009

2,956 1,469 510

30

–

6 4,971

Net book value at 31 December 2009

3,489

1,454 568

1 251 56

5,819

Cost

Balance at 1 January 2010

6,445 2,923 1,078

31 251

62

10,790

Additions

– project capital

130

10

–

–

110

–

250

– stay-in-business capital

447

183

–

2

90

1

723

Disposals

–

(40)

–

–

–

–

(40)

Transfers and other movements

(1)

(203)

41

(31)

–

34

6

(153)

Translation

491

105

18

1

17

5

637

Balance at 31 December 2010

7,310

3,222

1,065

34

502

74

12,207

Accumulated amortisation

Balance at 1 January 2010

2,956 1,469 510

30

–

6 4,971

Amortisation for the year (notes 4, 9 and 32)

478

198

11

1

–

2

690

Impairments (notes 6, 13 and 24)

(2)

20

16

–

–

47

–

83

Disposals

–

(40)

–

–

–

–

(40)

Transfers and other movements

(1)

(8)

(18)

–

–

8

–

(18)

Translation

273

53

11

–

3

1

341

Balance at 31 December 2010

3,719

1,678

532

31

58

9

6,027

Net book value at 31 December 2010

3,591

1,544

533

3

444

65

6,180

Group financial statements

P

285

15  Tangible assets (continued)

Mine

Mineral

Explora-

Assets

develop-

Mine

rights

tion and

under

Land

ment

infra-

and

evaluation

construc-

and

Figures in million

costs

structure

dumps

assets

tion

buildings

Total

SA Rands

Cost

Balance at 1 January 2009

50,331

23,591

10,059

281

2,167

472

86,901

Additions

– project

capital

1,024

43 – –

2,424 –

3,491

– stay-in-business

capital

3,302 1,047

–

8 683

4 5,044

Disposals

(9)

(95)

–– – (1)

(105)

Transfers and other movements

(1)

(1,120)

1,349 (156)

– (3,245)

28 (3,144)

Finance

costs

capitalised

(note

7)

33 – – –

102 –

135

Translation

(5,644)

(4,199)

(1,891)

(60)

(267)

(41)

(12,102)

Balance at 31 December 2009

47,917

21,736 8,012 229 1,864 462

80,220

Accumulated amortisation

Balance at 1 January 2009

25,783

11,601

8,129

278

–

29

45,820

Amortisation for the year (notes 4, 9 and 32)

3,048

1,469

82 – –

16

4,615

Impairments (notes 6, 13 and 24)

(2)

22

28 – – – –

50

Impairments reversal (notes 6, 13 and 24)

(3)

(2,601)

–

(2,764)

– – –

(5,365)

Disposals

(7)

(85)

– – – –

(92)

Transfers and other movements

(1)

(1,363)

(44)

(56)

– – –

(1,463)

Translation (2,906)

(2,043)

(1,600)

(59)

–

–

(6,608)

Balance at 31 December 2009

21,976 10,926 3,791

219

–

45 36,957

Net book value at 31 December 2009

25,941

10,810 4,221

10 1,864 417

43,263

Cost

Balance at 1 January 2010

4

7,917

21,736 8,012 229 1,864 462

80,220

Additions

– project capital

950

72

1

–

806

–

1,829

– stay-in-business capital

3,267

1,333

–

17

657

4

5,278

Disposals

(3)

(294)

–

–

–

(1)

(298)

Transfers and other movements

(1)

(1,480)

303

(229)

–

246

45

(1,115)

Translation

(2,624)

(1,980)

(788)

(27)

(274)

(25)

(5,718)

Balance at 31 December 2010

48,027

21,170

6,996

219

3,299

485

80,196

Accumulated amortisation

Balance at 1 January 2010

21,976 10,926 3,791

219

–

45 36,957

Amortisation for the year (notes 4, 9 and 32)

3,481

1,437

78

9

–

17

5,022

Impairments (notes 6, 13 and 24)

(2)

136

111

–

–

329

–

576

Disposals

(3)

(291)

–

–

–

–

(294)

Transfers and other movements

(1)

(61)

(129)

–

–

62

–

(128)

Translation

(1,095)

(1,031)

(377)

(26)

(7)

(1)

(2,537)

Balance at 31 December 2010

24,434

11,023

3,492

202

384

61

39,596

Net book value at 31 December 2010

23,593

10,147

3,504

17

2,915

424

40,600

Group financial statements

P

286

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

15 Tangible assets (continued)

Included in the amounts for mine infrastructure are assets held under finance leases with a net book value of $20m, R134m
(2009: $17m, R126m). Included in land and buildings are assets held under finance leases with a net book value of $28m, R185m
(2009: $27m, R201m).

The majority of the leased assets are pledged as security for the related finance lease.

No assets are encumbered by project finance.

No borrowing costs were capitalised in 2010. The weighted average capitalisation rate used to determine the amount of borrowing
costs eligible for capitalisation in 2009 was 4.10%.

A register containing details of properties is available for inspection by shareholders or their duly authorised agents during business
hours at the registered office of the company.

(1)

Transfers and other movements comprise amounts from deferred stripping, change in estimates of decommissioning assets,
asset reclassifications and transfers to/from non-current assets held for sale.

In 2010 transfers to/from non-current assets held for sale comprise:

•

assets with a net book value of $10m, R74m relating to Tau Lekoa were transferred to non-current assets held for sale.

In 2009 transfers to/from non-current assets held for sale comprise:

•

assets with a net book value of $84m, R704m relating to Tau Lekoa were transferred to non-current assets held for sale.

•

assets with a net book value of $145m, R1,335m relating to the 33.33% joint venture interest in Boddington Gold Mine
were transferred to non-current assets held for sale.

(2)

Impairments include the following:

South Africa
Below 120 level at TauTona – assets under construction
Due to a change in the mine plan resulting from safety-related concerns following seismic activity, the below 120 level
development has been abandoned and will not generate future cash flows. An impairment loss of $47m, R329m, was
recognised in the income statement.

Savuka – mine development and mine infrastructure costs
Due to a change in the mine plan, the Savuka assets have been abandoned and will not generate future cash flows.
An impairment loss of $16m, R114m was recognised in the income statement.

Ghana
Induapriem – mine infrastructure costs
The use of a tailings storage facility was discontinued, resulting in an impairment loss of $8m, R61m.

Other
Impairment of various minor tangible assets and equipment $12m, R72m (2009: $7m, R50m).

(3)

Impairments of cash generating units recognised in 2008 were partially reversed during 2009. The impairment reversals were
largely due to increases in the long-term real gold price resulting in increased future discounted cash flows.

Tanzania

•

Geita mine
As a result, Geita’s recoverable amount exceeded its carrying value in 2009 and an impairment reversal was recognised
of $261m, R1,954m consisting of mine development of $106m, R793m and mineral rights and dumps of $155m,
R1,161m. The recoverable amount was determined using a real pre-tax discount rate of 13.6% and was based on the
impairment assumptions detailed below.

Ghana

•

Obuasi mine
As a result, Obuasi’s recoverable amount exceeded its carrying value in 2009 and an impairment reversal was recognised
of $373m, R2,790m consisting of mine development of $159m, R1,187m and mineral rights and dumps of $214m,
R1,603m. The recoverable amount was determined using a real pre-tax discount rate of 8.4% and was based on the
impairment assumptions detailed below.

•

Iduapriem mine
As a result, Iduapriem’s recoverable amount exceeded its carrying value in 2009 and an impairment reversal was
recognised of $83m, R621m consisting of mine development. The recoverable amount was determined using a real pre-
tax discount rate of 13.4% and was based on the impairment assumptions detailed below.

The impairments/reversals relate to mining properties, mine development costs and mine plant facilities, and have been
recognised in special items (note 6). The recoverable amount was determined by reference to value in use at an individual
mine level.

Group financial statements

P

287

15 Tangible assets (continued)

Impairment calculation assumptions – tangible assets and goodwill

Management assumptions for the value in use of tangible assets and goodwill include:

•

the gold price assumption represents management’s best estimate of the future price of gold. In arriving at the estimated
long-term gold price, management considered all available market information, including current prices, historical
averages, and forward-pricing curves. A long-term real gold price of $1,113/oz (2009: $906/oz) is based on a range of
economic and market conditions that will exist over the remaining useful life of the assets.

Annual life of mine plans take into account the following:

•

proved and probable Ore Reserve included from page 134;

•

value beyond proved and probable reserves (including exploration potential) determined using the gold price assumption
referred to above;

•

the real pre-tax discount rate is derived from the group’s weighted average cost of capital (WACC) and risk factors which
is consistent with the basis used in 2009. The WACC of 5.8% which is 60 basis points lower than in 2009 of 6.4%, is
based on the average capital structure of the group and three major gold companies considered to be appropriate peers.
The risk factors considered are country risk as well as project risk for cash flows relating to mines that are not yet in
production and deep level mining projects. The country risk factor is based on the group’s internal assessment of country
risk relative to the issues experienced in the countries in which it operates and explores;

•

foreign currency cash flows translated at estimated forward exchange rates and then discounted using appropriate
discount rates for that currency;

•

cash flows used in impairment calculations are based on life of mine plans which exceed five years for the majority of the
mines; and

•

variable operating cash flows are increased at local Consumer Price Index rates.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying
amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the
lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are
indications that impairment may have occurred, estimates are prepared of expected future cash flows for each cash generating
unit. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and
could materially change over time. The cash flows are significantly affected by a number of factors including reserves and
production estimates, together with economic factors such as spot gold prices, discount rates, foreign currency exchange
rates, estimates of costs to produce reserves and future capital expenditure.

Should management’s estimate of the future not reflect actual events, further impairments may be identified. Factors affecting
the estimates include:

•

changes in proved and probable Ore Reserve as well as value beyond proved and probable reserves;

•

the grade of Ore Reserve as well as value beyond proved and probable reserves may vary significantly from time to time;

•

differences between actual commodity prices and commodity price assumptions;

•

unforeseen operational issues at mine sites; and

•

changes in capital, operating mining, processing and reclamation costs and foreign exchange rates.

There were no impairment indicators or impairment reversal indicators for cash generating units during 2010. Based on an
analysis carried out by the group in 2009, the carrying value and value in use of cash generating units that were most sensitive
to a 5% movement in gold price, ounces, costs and discount rate assumptions are:

Carrying

Value

Carrying

Value

value

in use

Figures in million value

in use

SA Rands

2009

US Dollars

8,669 8,669 Obuasi

1,166 1,166

6,978

6,978

Geita Gold Mining Limited

939

939

2,126 2,126 Iduapriem

286 286

Should any of the assumptions used change adversely and the impact not be mitigated by a change in other factors, this could
result in an impairment of the above cash generating units.

It is impracticable to disclose the extent of the possible effects of changes in assumptions for the future gold price and hence
life of mine plans at 31 December 2010 because these assumptions and others used in impairment testing of tangible assets
and goodwill are inextricably linked. In addition, for those cash generating units with a functional currency other than the US
dollar, movements in the US dollar exchange rate will also be a critical factor in determining life of mine and production plans.

Therefore it is possible that outcomes within the next financial year that are different from the assumptions used in the
impairment testing process for goodwill and tangible assets could require a material adjustment to the carrying amounts
disclosed at 31 December 2010.

Group financial statements

2009

2010

Figures in million                   2010

2009

SA Rands

US Dollars

P

288

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

16 Intangible assets

Goodwill
Cost

3,461

3,029

Balance at beginning of year

408

366

(432)

(187)

Translation

25

42

3,029

2,842

Balance at end of year

433

408

Accumulated amortisation and impairment losses

2,253

1,851

Balance at beginning of year

249

238

(402)

(173)

Translation

7

11

1,851

1,678

Balance at end of year

256

249

1,178

1,164

Net book value

177

159

Net carrying amount allocated to each of the cash
generating units:

1,013

1,018

Sunrise Dam

154

136

106

94

AngloGold Ashanti Córrego do Sitío Mineração

15

15

59

52

Serra Grande

8

8

1,178

1,164

177

159

Real pre-tax discount rates applied in impairment
calculations on cash generating units (CGUs) for which
the carrying amount of goodwill is significant are as
follows:
Sunrise Dam

(1)

11.1%

9.9%

Royalty, tax rate concession and other
Cost

472

371

Balance at beginning of year

49

49

–

4

Additions

1

–

–

4

Transfers and other movements

–

–

(101)

(44)

Translation

–

–

371

335

Balance at end of year

50

49

Accumulated amortisation and impairment losses

277

233

Balance at beginning of year

31

29

18

18

Amortisation (notes 4 and 32)

2

2

(62)

(29)

Translation

–

–

233

222

Balance at end of year

33

31

138

113

Net book value

17

18

1,316

1,277

Total intangible assets

194

177

The government of Ghana agreed to a concession on the royalty payments by maintaining a rate of 3% for 15 years from 2004.

The tax rate concession was granted at a rate of 30% for the Ashanti business combination in 2004. During 2005, the corporate
tax rate in Ghana decreased to 25% and the tax rate concession, which expires in 2019, was fully impaired.

(1)

The discount rates for 2010 were determined on a basis consistent with the 2009 discount rates.

Group financial statements

P

289

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

17 Investments in associates and

equity accounted joint ventures

The carrying value of investments in associates and

equity accounted joint ventures can be analysed as

follows:

117

244

Carrying value of investments in associates

37

16

17

17

Loans advanced to associates

(1)

3

2

Carrying value of investments in equity accounted joint

4,587

3,791

ventures

577

617

37

35

Loans advanced to equity accounted joint ventures

(2)

5

5

Investments in associates and equity accounted joint

4,758

4,087

ventures

622

640

In 2010, the Margaret Water Company and AGA-Polymetal Strategic Alliance investments were impaired and the balance of the

Trans-Siberian Gold plc impairment was reversed. In 2009, the Amikan Holding Limited, AS APK Limited and Margaret Water

Company investments were impaired and part of the Trans-Siberian Gold plc impairment was reversed. The impairment tests

considered the investments fair value and anticipated future cash flows. Impairments of $24m, R157m (2009: $10m, R76m) were

recorded. An impairment reversal of $19m, R126m (2009: $10m, R75m) was recognised in the income statement.

Investments in associates comprises:

Name

Effective %

Description

2010

2009

Margaret Water Company

33.3

33.3

Pumping of underground water in the Vaal River

Region.

Oro Group (Pty) Limited

(3)

25

25

Manufacture and wholesale of jewellery.

Orpheo (Pty) Limited

(3)

50

33.3

Design, manufacture and wholesale of jewellery.

Trans-Siberian Gold plc

(3) (4) (5)

30.7

29.7

Exploration and development of gold mines.

Wonder Wise Holdings Limited

–

25

Marketing and wholesale of jewellery.

(1)

Loans advanced to associates consist of $1.8m, R12m (2009: $1.6m, R12m) to Oro Group (Pty) Limited and $0.7m, R5m

(2009: $0.6m, R5m) to Orpheo (Pty) Limited. The Oro loan bears interest at a rate determined by the Oro Group (Pty) Limited’s

board of directors and is repayable at its discretion. The Orpheo (Pty) Limited loan is unsecured, interest free and there are no

fixed terms of repayment.

(2)

Loans advanced to equity accounted joint ventures consist of $5m, R35m (2009: $2m, R12m) to AuruMar (Pty) Limited. The

AGA-Polymetal Strategic Alliance loan of $3m, R25m in 2009 was written off during the year. The loan to AuruMar (Pty) Limited

is interest free and has no fixed terms of repayment.

(3)

Equity accounting is based on results to 30 September 2010, adjusted for material transactions.

(4)

At 31 December 2010, the fair value of the group’s investment in Trans-Siberian Gold plc was $33m, R219m (2009: $12m, R89m).

(5)

Effective 23 March 2010, AngloGold Ashanti Limited increased its holding in Trans-Siberian Gold plc from 29.7% to 30.7%.

Group financial statements

P

290

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

17 Investments in associates and

equity accounted joint ventures
(continued)

Summarised financial information of equity accounted

associates is as follows (not attributable):

Statement of financial position

661

724

Non-current assets

110

89

328

301

Current assets

46

44

989

1,025

Total assets

156

133

129

260

Non-current liabilities

40

17

166

129

Current liabilities

20

23

295

389

Total liabilities

60

40

694

636

Net assets

96

93

Income statement

521

398

Revenue

56

62

(780)

(411)

Costs and expenses

(58)

(94)

(3)

(3)

Taxation

–

–

(262)

(16)

Loss after taxation

(2)

(32)

Investments in equity accounted joint ventures comprises:

2010

2009

Name

Effective %

Description

2010

2009

AGA-Polymetal Strategic Alliance

(6)

50

50

Exploration and development of gold mines.

AuruMar (Pty) Limited

50

50

Global exploration of marine deposits containing gold

as the primary mineral.

Kibali Goldmines s.p.r.l.

45

45

Exploration and development of gold mines.

Société des Mines de Morila S.A.

40

40

Commercial exploitation of gold.

Société d'Exploitation des Mines d'Or de

Sadiola S.A.

41

41

Commercial exploitation of gold.

Société d'Exploitation des Mines d'Or de

Yatela S.A.

40

40

Commercial exploitation of gold.

(6)

Equity accounting is based on results to 30 September 2010, adjusted for material transactions. The AGA-Polymetal Strategic

Alliance consists of the AGA-Polymetal Strategic Alliance Management Company, Amikan Holding Limited, AS APK Holdings

Limited, Imizoloto Holdings Limited and Yeniseiskaya Holdings Limited.

Group financial statements

P

291

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

17 Investments in associates and

equity accounted joint ventures
(continued)

Summarised financial information of equity accounted

joint ventures is as follows (not attributable):

Statement of financial position

4,428

3,837

Non-current assets

584

596

3,304

2,505

Current assets

381

445

7,732

6,342

Total assets

965

1,041

897

1,363

Non-current liabilities

207

121

806

874

Current liabilities

133

108

1,703

2,237

Total liabilities

340

229

6,029

4,105

Net assets

625

812

Income statement

7,367

5,985

Revenue

819

912

(4,284)

(3,816)

Costs and expenses

(525)

(534)

(998)

(933)

Taxation

(126)

(121)

2,085

1,236

Profit after taxation

168

257

18 Other investments

Listed investments

Available-for-sale

162

829

Balance at beginning of year

111

17

75

149

Additions

21

9

(14)

(587)

Disposals

(81)

(2)

Transfer of B2Gold Corporation from investment

221

–

in associates

–

26

482

529

Fair value adjustments

73

57

–

(16)

Impairment (notes 6 and 13)

(1)

(2)

–

(97)

(90)

Translation

2

4

829

814

Balance at end of year

124

111

(1)

Impairment of Corvus Gold Inc. shares of $2m, R16m (2009: nil).

Group financial statements

P

292

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

18 Other investments (continued)

Listed investments (continued)

The available-for-sale investments consist of ordinary

shares and primarily comprise:

407

640

International Tower Hill Mines Limited

98

55

Various listed investments held by Environmental

80

95

Rehabilitation Trust Fund

15

11

248

–

B2Gold Corporation

–

33

60

–

Red 5 Limited

–

8

34

79

Other

11

4

829

814

124

111

The group’s listed available-for-sale equity investments are susceptible to market price risk arising from uncertainties about the future

values of the investments.

At the reporting date, the majority of equity investments were listed on the Toronto Stock Exchange and the JSE.

Based on the share price of International Tower Hill Mines Limited (ITH) over the past year and carrying value at 31 December 2010

of $98m, R640m, if ITH achieved the high that it achieved during 2010 of C$10.49 per share, other comprehensive income (OCI)

would increase by $2m, R16m. If it achieved the low of C$5.67 per share, OCI would decrease by $43m, R286m.

The exposure to listed shares held by the Environmental Rehabilitation Trust Fund at fair value on the JSE was $15m, R95m.

An analysis based on the assumption that the equity index (ALSI on the JSE) had increased/decreased by 10% with all other variables

held constant and all the group’s JSE listed equity investments moved according to the ALSI, would impact OCI by $1.5m, R9.5m.

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

Held-to-maturity

104

74

Balance at beginning of year

10

11

58

20

Additions

3

7

(88)

(12)

Maturities

(2)

(11)

–

–

Translation

2

3

74

82

Balance at end of year

13

10

Rehabilitation Trust Fund administered by RMB Private

Bank comprising:

74

82

Government bonds

13

10

74

82

13

10

903

896

Book value of listed investments

137

121

906

907

Market value of listed investments

138

121

The market value of bonds held-to-maturity is $14m, R93m (2009: $10m, R77m). The market value has a sensitivity of R39m

(2009: R44m) for a 1% change in interest rates.

Group financial statements

P

293

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

18 Other investments (continued)

Unlisted investments

Available-for-sale

2

26

Balance at beginning of year

4

–

27

41

Additions

5

4

–

(1)

Disposals

–

–

(3)

(7)

Translation

–

–

26

59

Balance at end of year

9

4

The available-for-sale investments consist primarily of

XDM Resources Limited.

There is no active market for the unlisted equity

investments and fair value cannot be reliably measured.

The unlisted equity investments are carried at cost. The

group does not intend to sell the investments in the

foreseeable future.

Held-to-maturity

357

373

Balance at beginning of year

50

38

541

657

Additions

90

65

(525)

(430)

Maturities

(59)

(63)

–

–

Translation

10

10

373

600

Balance at end of year

91

50

The held-to-maturity investments include:

Negotiable Certificates of Deposit – Rehabilitation Trust

319

543

Fund administered by RMB Private Bank

83

43

36

39

Nufcor Uranium Trust Fund

6

5

18

18

Other

2

2

373

600

91

50

399

659

Book value of unlisted investments

100

54

399

659

Fair value of unlisted investments

100

54

1,302

1,555

Total book value of other investments (note 35)

237

175

1,305

1,566

Total fair value of other investments

238

175

Group financial statements

P

294

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

19Inventories

Non-current
Raw materials

2,356

2,137

– heap-leach inventory

325

317

144

131

– ore stockpiles

20

19

2,500

2,268

Total metal inventories

345

336

8

–

Mine operating supplies

–

1

2,508

2,268

345

337

Current
Raw materials

1,567

2,170

– ore stockpiles

331

211

300

601

– heap-leach inventory

91

40

Work in progress

552

612

– metals in process

93

74

Finished goods

556

506

– gold doré/bullion

77

75

255

281

– by-products

43

34

3,230

4,170

Total metal inventories

635

434

1,872

1,678

Mine operating supplies

255

252

5,102

5,848

890

686

7,610

8,116

Total inventories

(1)

1,235

1,023

(1)

The amount of the write-down of ore stockpiles,
metals in process, gold doré/bullion, by-products
and mine operating supplies to net realisable value,
and recognised as an expense is $21m, R151m
(2009: $48m, R412m). This expense is included in
cost of sales which is disclosed in note 4.

20 Other non-current assets

38

1

AngloGold Ashanti Limited Pension Fund (note 28)

–

5

Post-retirement medical scheme for Rand Refinery

16

17

employees (note 28)

3

2

–

1

Ashanti Retired Staff Pension Fund (note 28)

–

–

Retiree Medical Plan for Nufcor South Africa employees

–

1

(note 28)

–

–

Loans and receivables
Loan receivable at 31 December 2020 bearing interest

–

36

at 8% per annum

5

–

Loan receivable at 31 December 2011 bearing

5

4

interest at 3% per annum

1

1

Other interest-bearing loan – receivable monthly to
June 2010 at South African prime bank overdraft rate

2

–

less 2%

–

–

Other non-interest bearing loans and receivables –

5

3

receivable on various dates

1

–

66

63

10

8

Current portion of other non-current assets included in

(3)

(4)

current assets

(1)

–

63

59

9

8

Group financial statements

P

295

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

21 Trade and other receivables

Non-current

199

207

Prepayments and accrued income

31

27

417

538

Recoverable tax, rebates, levies and duties

(1)

82

56

172

255

Other receivables

39

23

788

1,000

152

106

Current

334

344

Trade receivables

53

45

384

393

Prepayments and accrued income

60

52

608

697

Recoverable tax, rebates, levies and duties

(1)

106

82

35

21

Amounts due from related parties

3

5

13

57

Interest receivable

9

2

45

113

Other receivables

16

5

1,419

1,625

247

191

2,207

2,625

Total trade and other receivables

399

297

Current trade receivables are non-interest bearing and are generally on terms less than 90 days.

There is no concentration of credit risk with respect to trade receivables, as the group has a large number of internationally dispersed

customers.

There is a concentration of risk in respect of recoverable value added tax and fuel duties from the Tanzanian government.

During the year, trade and other receivables were impaired by $8m, R21m (2009: $32m, R237m).

(1)

Recoverable tax, rebates, levies and duties includes the following:

Recoverable value added tax due from the Tanzanian government amounts to $49m, R322m at 31 December 2010 (2009: $36m,

R268m). The last audited value added tax return was for the period ended 31 October 2010. At 31 December 2010, $49m,

R320m (2009: $28m, R209m) was still outstanding and $nil, R2m (2009: $8m, R59m) is still subject to audit. The accounting

processes for the unaudited amounts are in accordance with the processes advised by the Tanzanian government in terms of

previous audits. The amounts outstanding have been discounted to their present value at a rate of 7.82% (2009: 7.82%).

Recoverable fuel duties from the Tanzanian government amount to $62m, R407m at 31 December 2010 (2009: $48m, R357m).

Fuel duty claims are required to be submitted after consumption of the related fuel and are subject to authorisation by the

Customs and Excise authorities. Claims for the refund of fuel duties amounting to $43m, R282m (2009: $44m, R327m) have been

lodged with the Customs and Excise authorities, which are still outstanding, whilst claims for a refund of $19m, R125m

(2009: $4m, R30m) have not yet been submitted. The accounting processes for the unauthorised amount are in accordance with

the processes advised by the Tanzanian government in terms of previous authorisations. The amounts outstanding have been

discounted to their present value at a rate of 7.82% (2009: 7.82%).

Group financial statements

P

296

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

22 Cash restricted for use

Non-current

(1)

3

5

Cash restricted by prudential solvency requirements

1

–

Cash balances held by Environmental Rehabilitation

391

209

Trust Funds

32

53

394

214

33

53

Current

(1)

57

52

Cash restricted by prudential solvency requirements

8

8

Cash balances held by an Employee Share Scheme

1

3

Trust Fund

–

–

21

5

Cash balances held by the Tropicana joint venture

1

3

8

9

Other

1

1

87

69

10

12

481

283

Total cash restricted for use (notes 35 and 36)

43

65

(1)

During 2010, management determined that certain
cash balances should be reclassified to non-current
as they are restricted beyond 12 months. The 2009
and 2008 financial statements were adjusted to
reflect this reclassification. Non-current and current
cash restricted for use in 2008 was $34m, R326m
and $10m, R89m respectively.

23 Cash and cash equivalents

2,535

3,036

Cash and deposits on call

462

341

5,641

740

Money market instruments

113

759

8,176

3,776

(notes 35 and 36)

575

1,100

For the purpose of the consolidated statement of cash
flows, cash and cash equivalents comprise the following:

2,535

3,036

Cash and deposits on call

462

341

5,641

740

Money market instruments

113

759

Cash and cash equivalents included in assets held for

–

73

sale

11

–

8,176

3,849

586

1,100

24 Non-current assets and liabilities held for sale

Effective 17 February 2009, the interest in the Tau Lekoa mine together with the adjacent Weltevreden, Jonkerskraal and
Goedgenoeg project areas in South Africa were classified as held for sale. Tau Lekoa was previously recognised as a
combination of tangible and current assets, and current and long-term liabilities.

The purchase consideration consists of two components: an initial cash payment or combination of cash payment and Simmer
& Jack Mines Limited (Simmers) shares together with future royalty payments.

The Department of Mineral Resources has transferred the mining rights for its Tau Lekoa mine to Buffelsfontein Gold Mines
Limited, a wholly owned subsidiary of Simmers. Full ownership of Tau Lekoa and the adjacent properties of Weltevreden,
Jonkerskraal and Goedgenoeg passed to Simmers on 1 August 2010.

Group financial statements

P

297

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

24 Non-current assets and liabilities

held for sale (continued)

Following the classification of Tau Lekoa as held for sale,

an impairment loss of $8m, R58m (2009: $27m, R200m)

was recognised to reduce the carrying amount of the

disposal group to fair value less costs to sell (notes

529

–

6 and 13).

–

71

Effective December 2007, Rand Refinery allocated parts

of its premises that were no longer utilised $1m, R10m

(previously recognised as tangible assets), to assets held

for sale. On 1 April 2008, a sale agreement was

concluded subject to the suspensive condition regarding

rezoning of the land and transfer of title deeds. Rand

Refinery currently awaits the rezoning transfer

notification from the municipal and deeds office in order

10

10

to conclude the sales transaction.

1

1

Effective 2 December 2009, Amikan Holding Limited

(Amikan) was classified as held for sale.

AngloGold Ashanti Holdings plc, a wholly owned

subsidiary entered into a memorandum of

understanding with Polyholding Limited relating to the

disposal of Amikan. Amikan was previously recognised

as an equity accounted investment. Completion was

expected to occur on or before 30 April 2010, but

agreement could not be reached and the transaction

111

–

was subsequently cancelled.

–

15

Effective 3 November 2010, ISS International Limited

(ISSI) was classified as held for sale. AngloGold Ashanti

Limited entered into a memorandum of understanding

with The Institute of Mine Seismology (IMS) relating to

the disposal of ISSI. The transaction was completed on

–

100

28 February 2011.

15

–

650

110

Total non-current assets held for sale

16

87

Non-current liabilities held for sale:

56

–

– Tau Lekoa mine

–

7

–

22

– ISSI

3

–

56

22

Total non-current liabilities held for sale

3

7

Group financial statements

P

298

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

25 Share capital and premium

Share capital
Authorised

150

150

600,000,000 ordinary shares of 25 SA cents each

23

23

1

1

4,280,000 E ordinary shares of 25 SA cents each

–

–

2,000,000 A redeemable preference shares of 50 SA

1

1

cents each

–

–

5,000,000 B redeemable preference shares of 1 SA

–

–

cent each

–

–

152

152

23

23

Issued and fully paid
381,204,080 (2009: 362,240,669) ordinary shares of

90

95

25 SA cents each

(1)

16

16

2,806,126 (2009: 3,794,998) E ordinary shares of

1

1

25 SA cents each

–

–

2,000,000 (2009: 2,000,000) A redeemable preference

1

1

shares of 50 SA cents each

–

–

778,896 (2009: 778,896) B redeemable preference

–

–

shares of 1 SA cent each

–

–

92

97

16

16

Treasury shares held within the group:
2,778,896 (2009: 2,778,896) A and B redeemable

(1)

(1)

preference shares held within the group

–

–

434,941 (2009: 665,862) ordinary shares held within the

–

–

group

(2)

–

–

1,686,126 (2009: 2,394,998) E ordinary shares held

(1)

(1)

within the group

(2)

–

–

90

95

16

16

Share premium

38,158

40,572

Balance at beginning of year

5,919

5,609

2,436

5,766

Ordinary shares issued

(1)

812

312

(22)

(90)

E ordinary shares cancelled

(13)

(2)

40,572

46,248

6,718

5,919

Less: held within the group

(313)

(313)

Redeemable preference shares

(53)

(53)

(212)

(139)

Ordinary shares

(22)

(32)

(303)

(213)

E ordinary shares

(32)

(45)

39,744

45,583

6,611

5,789

39,834

45,678

Share capital and premium

6,627

5,805

(1)

The most significant movement was the equity offering which resulted in the issue of 18,140,000 (2009: 7,624,162)

ordinary shares at an issue price of R308.37 (2009: R288.32) per share. Total proceeds of $789m, R5.6bn

(2009: $284m, R2.2bn) were received.

(2)

These shares relate to the black economic empowerment transactions more fully described in note 11 and as a result participate

in dividends declared by the company.

Group financial statements

P

299

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

25  Share capital and premium (continued)

The rights and restrictions applicable to the A and B redeemable preference shares:

A redeemable preference shares are entitled to:

•

an annual dividend, after payment in full of the annual dividend on the B preference shares, equivalent to the balance of

after tax profits from mining the Moab Mining Right Area; and

•

on redemption, the nominal value of the shares and a premium per share equal to the balance of the net proceeds from

disposal of assets relating to the Moab Mining Right Area, after redemption in full of the B preference shares and payments

of the nominal value of the A preference shares.

B redeemable preference shares are entitled to:

•

an annual dividend limited to a maximum of 5% of their issue price from the period that profits are generated from the Moab

Mining Right Area; and

•

on redemption, the nominal value of the shares and a premium of up to R249.99 per share provided by the net proceeds

from disposal of the assets relating to the Moab Mining Right Area.

The Moab Mining Right Area consists of the Moab Khotsong mine operations.

The B preference shares will only be redeemed from any net proceeds remaining after the disposal of the Moab Mining Right

Area following permanent cessation of mining activities. The maximum redemption price will be R250 per share.

In the event of any surplus remaining after the redemption in full of the B preference shares, the A preference shares will be

redeemable at such value as would cover the outstanding surplus.

Group financial statements

26 Borrowings

Unsecured

Debt carried at fair value

Mandatory convertible bonds – issued September

–

5,739

2010

(1)

874

–

Quarterly coupons are paid at 6% per annum and the

bonds are convertible into a variable number of shares

ranging from 18,140,000 shares at a price equal to or

less than $43.50 per share, to 14,511,937 shares at a

price equal to or greater than $54.375 per share, each

as calculated in accordance with the formula set forth in

the bond agreement. The bonds are US dollar-based

and are convertible into shares in September 2013.

The shareholders have authorised the convertible bonds

to be settled in equity and not have any cash settlement

potential except if a fundamental change or conversion

rate adjustment causes the number of shares deliverable

upon conversion to exceed the number of shares

reserved for such purpose, among other circumstances

provided for in the bond agreement.

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

26 Borrowings (continued)

Unsecured (continued)

Debt carried at amortised cost

–

6,537

Rated bonds – issued April 2010

(2)

995

–

Semi-annual coupons are paid at 5.375% per annum on

$700m 10-year bonds and at 6.5% on $300m 30-year

bonds. The $700m bonds are repayable in April 2020

and the $300m bonds are repayable in April 2040. The

bonds are US dollar-based.

4,433

4,089

3.5% Convertible bonds – issued May 2009

(3)

623

596

Semi-annual coupons are paid at 3.5% per annum. The

bonds issued on 22 May 2009, are convertible into

ADS’s up to May 2014 and are US dollar-based. The

bonds are convertible, at the holders option, at an initial

price of $47.6126 per ADS.

AngloGold Ashanti Limited may redeem the bonds by

giving between 30 and 90 days notice to the

bondholders at any time after 11 June 2012, if the price

of the ADS’s exceeds 130% of the conversion price for

more than 20 consecutive dealing days, five days prior

to notice or at any time if conversion rights have

been exercised or purchases effected on 85% of the

bonds issued.

–

701

FirstRand Bank Limited loan facility (R1.5bn)

(4)

107

–

Interest charged at JIBAR plus 0.95% per annum. Loan

is repayable in May 2011 and is SA rand-based, the loan

is subject to debt covenant arrangements for which no

default event occurred.

–

251

Syndicated loan facility ($1bn)

(5)

38

–

Interest charged at LIBOR plus 1.75% per annum. Loan

is repayable in April 2014 and is US dollar-based, the

loan is subject to debt covenant arrangements for which

no default event occurred.

58

29

Grupo Santander Brasil

5

8

Interest charged at LIBOR plus 1.45% per annum. Loan

is repayable in quarterly instalments terminating in

September 2011 and is US dollar-based.

48

28

Grupo Santander Brasil

4

6

Interest charged at 6% per annum. Loans are repayable

in monthly instalments terminating in November 2013

and April 2014 and are BRL-based.

P

300

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

Group financial statements

P

301

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

26 Borrowings (continued)

Unsecured (continued)

Debt carried at amortised cost (continued)
Syndicated loan facility ($1,150m) – Drawn down in

7,616

–

US dollars and Australian dollars

(6)

–

1,024

Interest charged at LIBOR plus 0.4% per annum. Loan
was repaid in June 2010 and was US dollar-based, the
loan was subject to debt covenant arrangements for
which no default event occurred.

1,772

–

Standard Chartered term facility

(7)

–

238

Interest charged at a margin of 4.25% over the lenders’
cost of funds (subject to a cap of 1.25% plus LIBOR).
Loan was repaid in May 2010 and was US dollar-based.

–

4

Brazilian Economic and Social Development Bank

–

–

Interest charged at a rate of 4.5% per annum. Loans are
repayable by June 2020 and are BRL-based.

13,927

17,378

Total unsecured borrowings

2,646

1,872

Secured

Finance leases

258

259

Turbine Square Two (Pty) Limited

39

35

The leases are capitalised at an implied interest rate of
9.8% per annum. Lease payments are due in monthly
instalments terminating in March 2022 and are SA rand-
based. The buildings financed are used as security for
these loans (note 36).

115

86

Caterpillar Financial Services Corporation

13

16

Interest charged at an average rate of 5.46% per
annum. Loans are repayable in monthly instalments
terminating in January 2015 and are US dollar-based.
The equipment financed is used as security for these
loans.

48

29

Mazuma Capital Corporation

4

7

Interest charged at an average rate of 5.6% per annum.
Loans are repayable in monthly instalments terminating
in November 2012 and are US dollar-based. The
equipment financed is used as security for these loans.

7

11

CSI Latina Arrendamento Mercantil S.A.

2

1

Interest charged at a rate of 3.3% per annum. Loans
are repayable by June 2013 and are BRL-based. The

equipment financed is used as security for these loans.

14,355

17,763

Total borrowings (notes 35 and 36)

2,704

1,931

Current portion of borrowings included in current

(9,493)

(886)

liabilities

(135)

(1,277)

4,862

16,877

Total long-term borrowings

2,569

654

Group financial statements

P

302

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

26 Borrowings (continued)

Amounts falling due

9,493

886

Within one year

135

1,277

79

50

Between one and two years

8

11

4,543

10,134

Between two and five years

1,542

611

240

6,693

After five years

1,019

32

14,355

17,763

(notes 35 and 36)

2,704

1,931

Currency

The currencies in which the borrowings are denominated

are as follows:

14,042

16,760

US dollar

2,552

1,889

258

960

SA rand

146

35

55

43

Brazilian real

6

7

14,355

17,763

(notes 35 and 36)

2,704

1,931

Undrawn facilities

Undrawn borrowing facilities as at 31 December are as

follows:

–

6,242

Syndicated loan ($1bn) – US dollar

950

–

1,859

–

Standard Chartered PLC – US dollar

–

250

929

–

Syndicated loan ($1,150m) – US dollar

–

125

372

329

FirstRand Bank Limited – US dollar

50

50

312

276

Absa Bank Limited – US dollar

42

42

15

–

Nedbank Limited – US dollar

–

2

220

913

FirstRand Bank Limited – SA rand

139

30

185

185

Standard Bank of SA Limited – SA rand

28

25

105

120

Nedbank Limited – SA rand

18

14

30

30

Absa Bank Limited – SA rand

5

4

4,027

8,095

1,232

542

(1)

Mandatory convertible bonds – issued

September 2010

–

5,729

Senior unsecured fixed-rate bonds

872

–

–

10

Accrued interest

2

–

–

5,739

874

–

Group financial statements

P

303

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

26 Borrowings (continued)

(2)

Rated bonds – issued April 2010

–

6,570

Senior unsecured fixed-rate bonds

1,000

–

–

(110)

Unamortised discount and bond issue costs

(17)

–

–

6,460

983

–

–

77

Accrued interest

12

–

–

6,537

995

–

(3)

3.5% Convertible bonds – issued May 2009

5,450

4,813

Senior unsecured fixed-rate bonds

733

733

(1,033)

(744)

Unamortised discount and bond issue costs

(113)

(139)

4,417

4,069

620

594

16

20

Accrued interest

3

2

4,433

4,089

623

596

(4)

FirstRand Bank Limited loan facility (R1.5bn)

–

700

Drawn down

107

–

–

1

Accrued interest

–

–

–

701

107

–

(5)

Syndicated loan facility ($1bn)

–

329

Drawn down

50

–

–

(79)

Unamortised loan issue costs

(12)

–

–

250

38

–

–

1

Accrued interest

–

–

–

251

38

–

(6)

Syndicated loan facility ($1,150m)

7,621

–

Drawn down in US dollars and Australian dollars

–

1,025

(9)

–

Unamortised loan issue costs

–

(1)

7,612

–

–

1,024

4

–

Accrued interest

–

–

7,616

–

–

1,024

(7)

Standard Chartered term facility

1,860

–

Drawn down

–

250

(103)

–

Unamortised loan issue costs

–

(14)

1,757

–

–

236

15

–

Accrued interest

–

2

1,772

–

–

238

Group financial statements

P

304

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

27 Environmental rehabilitation and

other provisions

Environmental rehabilitation obligations

Provision for decommissioning

1,525

1,345

Balance at beginning of year

181

161

(51)

86

Change in estimates

(1)

11

(6)

(21)

(1)

Transfer to assets held for sale

–

(2)

59

62

Unwinding of decommissioning obligation (note 7)

9

7

(167)

(89)

Translation

12

21

1,345

1,403

Balance at end of year

213

181

Provision for restoration

2,037

1,764

Balance at beginning of year

237

215

21

259

Charge to income statement

36

3

10

343

Change in estimates

(1)

47

1

(13)

–

Transfer to assets held for sale

–

(2)

60

78

Unwinding of restoration obligation (note 7)

(2)

11

7

(64)

(45)

Utilised during the year

(6)

(8)

(287)

(179)

Translation

13

21

1,764

2,220

Balance at end of year

338

237

Other provisions

298

242

Balance at beginning of year

33

32

23

128

Charge to income statement

17

3

3

–

Change in estimates

–

–

(22)

–

Transfer to trade and other payables

–

(3)

1

–

Unwinding of other provisions (note 7)

–

–

(84)

(98)

Utilised during the year

(13)

(10)

23

(22)

Translation

1

11

242

250

Balance at end of year

38

33

Other provisions comprise the following:
– provision for labour, environmental, tax and civil

232

245

court settlements in South America

(3)

37

32

– provision for employee compensation claims in

10

5

Australasia

(4)

1

1

242

250

38

33

3,351

3,873

Total environmental rehabilitation and other provisions

589

451

(1)

The change in estimates relates to changes in laws and regulations governing the protection of the environment and factors
relating to rehabilitation estimates and a change in the quantities of material in reserves and corresponding change in the life of
mine plan. These provisions are expected to unwind beyond the end of the life of mine.

(2)

Included in the unwinding of the restoration obligation is $2m, R13m (2009: nil) which is recoverable from a third party. The asset
is included in non-current debtors.

(3)

Comprises claims filed by former employees in respect of loss of employment, work-related accident injuries and diseases,
governmental fiscal claims relating to levies, surcharges and environmental legal disputes. The liability is expected to unwind over
the next two-to-five-year period.

(4)

Comprises an estimate of potential workers compensation liability in Australia based on claims with regard to work-related
incidents. The liability is expected to be settled in the next three-to-five-year period.

Group financial statements

P

305

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits

Defined benefit plans

The group has made provision for pension, provident and

medical schemes covering substantially all employees.

The retirement schemes consist of the following:

(38)

(1)

AngloGold Ashanti Limited Pension Fund asset

–

(5)

Post-retirement medical scheme for AngloGold Ashanti

1,095

1,161

Limited South African employees

176

147

68

78

Other defined benefit plans

(1)

12

10

1,125

1,238

Sub-total

188

152

Transferred to other non-current assets (note 20):

38

1

– AngloGold Ashanti Limited Pension Fund

–

5

– Post-retirement medical scheme for Rand Refinery

16

17

employees

3

2

–

1

– Ashanti Retired Staff Pension Plan

–

–

–

1

– Retiree Medical Plan for Nufcor South Africa employees

–

–

1,179

1,258

191

159

(1)

Other defined benefit plans comprise the following:

1

(1)

– Ashanti Retired Staff Pension Plan (asset) liability

–

–

59

74

– Obuasi Mines Staff Pension Scheme

11

9

– Post-retirement medical scheme for Rand Refinery

(16)

(17)

employees (asset)

(3)

(2)

17

17

– Retiree Medical Plan for North American employees

3

2

– Supplemental Employee Retirement Plan (SERP) for

7

6

North America (USA) Inc. employees

1

1

– Retiree Medical Plan for Nufcor South Africa

–

(1)

employees (asset)

–

–

68

78

12

10

AngloGold Ashanti Limited Pension Fund

The plan is evaluated by independent actuaries on an

annual basis as at 31 December of each year. The

valuation as at 31 December 2010 was completed at

the beginning of 2011 using the projected unit credit

method. In arriving at their conclusions, the actuaries

took into account reasonable long-term estimates of

inflation, increases in wages, salaries and pensions, as

well as returns on investments.

A formal regulatory valuation is required by legislation

every three years. The regulatory valuation effective

31 December 2008 was completed in March 2010. The

next regulatory valuation of the Fund will have an effective

date no later than 31 December 2011.

All South African pension funds are governed by the

Pension Funds Act of 1956 as amended.

Group financial statements

P

306

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

AngloGold Ashanti Limited Pension Fund (continued)

Information with respect to the AngloGold Ashanti

Limited Pension Fund is as follows:

Benefit obligation

1,885

1,998

Balance at beginning of year

269

199

51

50

Current service cost

7

6

137

179

Interest cost

25

16

13

13

Participants’ contributions

2

2

(20)

154

Actuarial loss (gain)

21

(2)

(68)

(203)

Benefits paid

(28)

(8)

–

–

Translation

38

56

1,998

2,191

Balance at end of year

334

269

Plan assets

1,785

2,036

Balance at beginning of year

274

188

165

209

Expected return on plan assets

29

20

99

81

Actuarial gain

11

12

42

56

Company contributions

8

5

13

13

Participants’ contributions

2

2

(68)

(203)

Benefits paid

(28)

(8)

–

–

Translation

38

55

2,036

2,192

Fair value of plan assets at end of year

334

274

38

1

Funded status at end of year

–

5

38

1

Net amount recognised

–

5

Components of net periodic benefit cost

137

179

Interest cost

25

16

51

50

Current service cost

7

6

(165)

(209)

Expected return on assets

(29)

(20)

23

20

Net periodic benefit cost

3

2

Group financial statements

P

307

2010

2009

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

AngloGold Ashanti Limited Pension Fund (continued)

Assumptions

Assumptions used to determine benefit obligations at

the end of the year are as follows:

Discount rate

8.50%

9.25%

Rate of compensation increase

(1)

7.25%

7.50%

Expected long-term return on plan assets

(2)

9.99%

10.63%

Pension increase

4.73%

4.95%

(1)

The short-term compensation rate increase is 7.5%

(2009: 7%) and the long-term compensation rate

increase is 7.25% (2009: 7.5%).

(2)

The expected long-term return on plan assets is

determined using the after tax yields of the various

asset classes as a guide.

Plan assets

AngloGold Ashanti Limited’s pension plan asset

allocations at the end of the year, by asset category, are

as follows:

Equity securities

60%

60%

Debt securities

36%

32%

Other

4%

8%

100%

100%

Investment policy

The Trustees have adopted a long-term horizon in formulating the Fund’s investment strategy, which is consistent with the term of

the Fund’s liabilities. The investment strategy aims to provide a reasonable return relative to inflation across a range of market

conditions.

The Trustees have adopted different strategic asset allocations for the assets backing pensioner and active member liabilities. The

strategic asset allocation defines what proportion of the Fund’s assets should be invested in each major asset class. The Trustees

have then selected specialist investment managers to manage the assets in each asset class according to specific performance

mandates instituted by the Trustees.

The Trustees have also put in place a detailed Statement of Investment Principles that sets out the Fund’s overall investment

philosophy and strategy.

Fund returns are calculated on a monthly basis, and the performance of the managers and Fund as a whole is formally reviewed by

the Fund’s Investment Sub-Committee at least every six months.

Group financial statements

P

308

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

28 Provision for pension and post-retirement benefits (continued)

AngloGold Ashanti Limited Pension Fund (continued)

Investment policy (continued)

Percentage

Percentage

Number

of total

Fair Number

of

total

Fair

of shares

assets

value

of shares

assets

value

US Dollars million

2010

2009

Related parties

Investments held in related parties

are summarised as follows:

Equity securities

AngloGold Ashanti Limited

119,758

1.8% 6

296,410 4.5%

12

Other investments exceeding 5%

of total plan assets

Equities

Sasol Limited

–

–

424,680 6.2%

17

SABMiller Plc

–

–

759,600 8.0%

22

Bonds

IFM Corporate Bond Unit Trust

267,975,059

12.2% 41 158,630,977 7.3%

20

Allan Gray Orbis Global

Equity Fund

243,210

9.0% 30

312,715 13.0%

36

71

95

SA Rands million

Related parties

Investments held in related parties

are summarised as follows:

Equity securities

AngloGold Ashanti Limited

119,758

1.8% 39

296,410 4.5%

91

Other investments exceeding 5%

of total plan assets

Equities

Sasol Limited

–

–

424,680 6.2%

127

SABMiller Plc

–

–

759,600 8.0%

164

Bonds

IFM Corporate Bond Unit Trust

267,975,059

12.2% 268 158,630,977 7.3%

148

Allan Gray Orbis Global

Equity Fund

243,210

9.0% 196

312,715 13.0%

264

464

703

Cash flows

Contributions

The company expects to contribute $7m, R44m (2010: $6m, R41m) to its pension plan in 2011.

Group financial statements

P

309

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

AngloGold Ashanti Limited Pension Fund (continued)

Estimated future benefit payments

The following pension benefit payments, which reflect

the expected future service, as appropriate, are

expected to be paid:

167

2011

25

167

2012

25

167

2013

25

168

2014

26

169

2015

26

1,353

Thereafter

207

Post-retirement medical scheme for AngloGold

Ashanti Limited South African employees

The provision for post-retirement medical funding

represents the provision for health care benefits for

employees and retired employees and their registered

dependants.

The post-retirement benefit costs are assessed in

accordance with the advice of independent

professionally qualified actuaries. The actuarial method

used is the projected unit credit funding method. This

scheme is unfunded. The last valuation was performed

as at 31 December 2010.

Information with respect to the defined benefit liability is

as follows:

Benefit obligation

1,070

1,095

Balance at beginning of year

147

113

4

6

Current service cost

1

1

75

97

Interest cost

13

9

(86)

(104)

Benefits paid

(14)

(10)

32

67

Actuarial loss

9

4

–

–

Translation

20

30

1,095

1,161

Balance at end of year

176

147

(1,095)

(1,161)

Unfunded status at end of year

(176)

(147)

(1,095)

(1,161)

Net amount recognised

(176)

(147)

Group financial statements

P

310

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

Post-retirement medical scheme for AngloGold

Ashanti Limited South African employees

(continued)

Components of net periodic benefit cost

4

6

Current service cost

1

1

75

97

Interest cost

13

9

79

103

Net periodic benefit cost

14

10

Assumptions

Assumptions used to determine benefit obligations at

the end of the year are as follows:

Discount rate

8.50%

9.25%

Expected increase in health care costs

7.60%

7.00%

Assumed health care cost trend rates at

31 December:

Health care cost trend assumed for next year

7.60%

7.00%

Rate to which the cost trend is assumed to decline

(the ultimate trend rate)

7.60%

7.00%

1% point

Assumed health care cost trend rates have a significant

1% point

increase

effect on the amounts reported for health care plans.

increase

A 1% point change in assumed health care cost trend

rates would have the following effect:

13

Effect on total service and interest cost

2

142

Effect on post-retirement benefit obligation

22

1% point

1% point

decrease

decrease

(11)

Effect on total service and interest cost

(2)

(120)

Effect on post-retirement benefit obligation

(18)

Cash flows

Contributions

AngloGold Ashanti Limited expects to contribute $14m,

R95m (2010: $14m, R104m) to the post-retirement

medical plan in 2011.

Group financial statements

P

311

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

Post-retirement medical scheme for AngloGold

Ashanti Limited South African employees

(continued)

Estimated future benefit payments

The following medical benefit payments, which reflect

the expected future service, as appropriate, are

expected to be paid:

95

2011

14

105

2012

16

107

2013

16

108

2014

16

107

2015

16

639

Thereafter

98

Other defined benefit plans

Other defined benefit plans include the Ashanti Retired

Staff Pension Plan, the Obuasi Mines Staff Pension

Scheme, the Post-retirement medical scheme for Rand

Refinery employees, the Retiree Medical Plan for North

American employees, the Supplemental Employee

Retirement Plan for North America (USA) Inc. employees

and the Nuclear Fuels South Africa (NUFCOR) – Retiree

Medical Plan for Nufcor South Africa employees.

Information in respect of other defined benefit plans for

the year ended 31 December 2010 has been

aggregated in the tables of change in benefit obligations,

change in plan assets and components of net periodic

benefit cost and is as follows:

Benefit obligation

166

131

Balance at beginning of year

18

17

6

6

Interest cost

1

–

(2)

35

Actuarial loss (gain)

5

–

(14)

(15)

Benefits paid

(2)

(1)

(25)

(14)

Translation

–

2

131

143

Balance at end of year

22

18

Group financial statements

P

312

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

28 Provision for pension and post-

retirement benefits (continued)

Other defined benefit plans (continued)

Plan assets

60

63

Fair value of plan assets at beginning of year

8

6

4

5

Expected return on plan assets

1

–

3

3

Actuarial gain

1

–

(3)

(4)

Benefits paid

(1)

–

(1)

(2)

Translation

1

2

63

65

Fair value of plan assets at end of year

10

8

(68)

(78)

Net amount recognised analysed as follows:

(12)

(10)

15

19

– funded plans

3

2

(83)

(97)

– unfunded plans

(15)

(12)

Components of net periodic benefit cost

6

6

Interest cost

1

–

(4)

(5)

Expected return on plan assets

(1)

–

2

1

Net periodic benefit cost

–

–

Cash flows

The other retirement defined benefit plans are all closed

to new members and current members are either retired

or deferred members. The companies do not make

contributions to these plans.

Estimated future benefit payments

The following pension benefit payments, which reflect

the expected future service, as appropriate, are

expected to be paid:

12

2011

2

11

2012

2

11

2013

2

11

2014

2

11

2015

2

87

Thereafter

12

Group financial statements

P

313

28 Provision for pension and post-retirement benefits (continued)

Five-year defined benefit plan disclosure

Figures in million 2010

2009

2008

2007

2006

US Dollars

AngloGold Ashanti Limited Pension Fund

Defined benefit obligation

334

269 199 257 224

Plan assets

(334)

(274)

(188)

(293)

(262)

Net (funded) unfunded

–

(5)

11 (36)

(38)

Experience adjustments on plan liabilities

–

3 17 3 14

Experience adjustments on plan assets

(11)

(12)

33 1

(40)

Post-retirement medical scheme for

AngloGold Ashanti Limited South African

employees

Defined benefit obligation

176

147 113 165 156

Unfunded

176

147 113 165 156

Experience adjustments on plan liabilities

1

16 6 (2)

(8)

Other defined benefit plans

Defined benefit obligation

22

18 17 18 19

Plan assets

(10)

(8)

(6)

(9)

(8)

Unfunded

12

10 11 9 11

Experience adjustments on plan liabilities

5

– 1 1 –

Experience adjustments on plan assets

–

– 1 – –

SA Rands

AngloGold Ashanti Limited Pension Fund

Defined benefit obligation

2,191

1,998 1,885 1,753 1,568

Plan assets

(2,192)

(2,036)

(1,785)

(1,997)

(1,835)

Net (funded) unfunded

(1)

(38)

100 (244)

(267)

Experience adjustments on plan liabilities

3

24

138 23 95

Experience adjustments on plan assets

(81)

(99)

276 6

(272)

Post-retirement medical scheme for

AngloGold Ashanti Limited South African

employees

Defined benefit obligation

1,161

1,095 1,070 1,121 1,094

Unfunded

1,161

1,095 1,070 1,121 1,094

Experience adjustments on plan liabilities

6

134 46 (13)

(57)

Other defined benefit plans

Defined benefit obligation

143

131 166 134 132

Plan assets

(65)

(63)

(60)

(67)

(63)

Unfunded

78

68

106 67 69

Experience adjustments on plan liabilities

31

(2)

10 5 3

Experience adjustments on plan assets

(3)

(3)

13 (2)

–

Group financial statements

P

314

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

28 Provision for pension and post-retirement benefits (continued)

Defined contribution funds

Contributions to the various retirement schemes are fully expensed during the year in which they are made and the cost of

contributing to retirement benefits for the year amounted to $64m, R471m (2009: $53m, R447m).

Australia (Sunrise Dam)

The region contributes to various approved superannuation funds for the provision of benefits to employees and their

dependants on retirement, disability or death. The fund is a multi-industry national fund with defined contribution arrangements.

Contribution rates by the operation on behalf of employees varies, with minimum contributions meeting compliance

requirements under the Superannuation Guarantee legislation. The contributions by the operation are legally enforceable to the

extent required by the Superannuation Guarantee legislation and relevant employment agreements. The cost to the group of

all these contributions amounted to $4m, R26m (2009: $4m, R34m).

Ghana and Guinea (Iduapriem, Obuasi and Siguiri)

AngloGold Ashanti Limited’s mines in Ghana and Guinea contribute to provident plans for their employees which are defined

contribution plans. The funds are administered by Boards of Trustees and invest mainly in Ghana and Guinea government

treasury instruments, fixed term deposits and other investments. The cost of these contributions was $5m, R38m (2009: $4m,

R34m).

Namibia (Navachab)

Navachab employees are members of a defined contribution provident fund. The fund is administered by the Old Mutual Life

Assurance Company (Namibia) Limited. Both the company and the employees contribute to this fund. The cost to the group

of all these contributions amounted to $1m, R11m (2009: $1m, R10m).

North America (Cripple Creek & Victor)

AngloGold Ashanti Limited US sponsors a 401(k) savings plan whereby employees may contribute up to 60% of their salary,

of which up to 5% is matched at a rate of 150% by AngloGold Ashanti Limited USA. AngloGold Ashanti Limited USA’s

contributions were $2m, R14m (2009: $2m, R14m).

South Africa (Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka and TauTona)

South Africa contributes to various industry-based pension and provident retirement plans which cover substantially all

employees and are defined contribution plans. These plans are all funded and the assets of the schemes are held in

administrated funds separately from the group’s assets. The cost of providing these benefits amounted to $48m, R353m

(2009: $41m, R344m).

South America (AngloGold Ashanti Córrego do Sitío Mineração, Cerro Vanguardia and Serra Grande)

AngloGold Ashanti in South America operates defined contribution arrangements for its employees. These arrangements are

funded by the operations (basic plan) and operations/employees (optional supplementary plan). A PGBL (Plano Gerador de

Beneficio Livre) fund, similar to the American 401(k) type of plan was started in December 2001. Administered by Bradesco

Previdencia e Seguros (which assumes the risk for any eventual actuarial liabilities), this is the only private pension plan

sponsored by the group. Employees in Argentina contribute 11% of their salaries towards the Argentinean pension fund. The

company makes a contribution of 17% of an employee’s salary on behalf of employees to the same fund. Contributions

amounted to $4m, R29m (2009: $1m, R11m).

Tanzania (Geita)

Geita does not have a retirement scheme for employees. Tanzanian nationals contribute to the National Social Security Fund

(NSSF) or the Parastatal Provident Fund (PPF), depending on the employee’s choice, and the company also makes a

contribution on the employee’s behalf to the same fund. On leaving the group, employees may withdraw their contribution from

the fund. From July 2005, the company has set up a supplemental provident fund which is administered by the PPF with

membership available to permanent national employees on a voluntary basis. The company makes no contribution towards

any retirement schemes for contracted expatriate employees. The company contributes to the NSSF on behalf of expatriate

employees. On termination of employment the company may apply for a refund of contributions from the NSSF.

Group financial statements

P

315

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

29 Deferred taxation

Deferred taxation relating to temporary differences is

made up as follows:

Liabilities

9,883

9,137

Tangible assets

1,391

1,329

85

67

Inventories

10

11

9

–

Derivatives

–

1

26

29

Other

4

4

10,003

9,233

1,405

1,345

Assets

1,326

1,672

Provisions

254

178

2,488

7

Derivatives

1

335

998

1,739

Tax losses

264

134

43

36

Other

6

6

4,855

3,454

525

653

5,148

5,779

Net deferred taxation liability

880

692

Included in the statement of financial position as

follows:

451

131

Deferred tax assets

20

61

5,599

5,910

Deferred tax liabilities

900

753

5,148

5,779

Net deferred taxation liability

880

692

The movement on the deferred tax balance is as

follows:

5,363

5,148

Balance at beginning of year

692

567

Taxation on items included in other comprehensive

304

39

income

5

40

(166)

923

Income statement movement

129

(17)

(353)

(331)

Translation

54

102

5,148

5,779

Balance at end of year

880

692

No provision has been made for South African income tax or foreign tax that may result from future remittances of undistributed

earnings of foreign subsidiaries or foreign corporate joint ventures because it is expected that such earnings will not be distributed

as a dividend in the foreseeable future. These foreign subsidiaries reinvest the undistributed earnings into future capital expansion

projects, maintenance capital and ongoing working capital funding requirements. Unrecognised taxable temporary differences

pertaining to undistributed earnings totalled $532m, R3,492m (2009: $409m, R3,045m).

Group financial statements

P

316

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

30 Trade, other payables and deferred

income

Non-current

58

58

Accruals

9

8

42

44

Deferred income

7

5

8

8

Other payables

1

1

108

110

17

14

Current

2,531

2,653

Trade payables

404

340

1,569

1,749

Accruals

266

211

93

69

Deferred income

10

13

139

159

Other payables

25

18

4,332

4,630

705

582

4,440

4,740

Total trade, other payables and deferred income

722

596

Current trade and other payables are non-interest

bearing and are normally settled within 60 days.

31 Taxation

1,033

1,059

Balance at beginning of year

142

109

(1,232)

(1,371)

Payments during the year

(188)

(147)

1,338

1,095

Provision during the year

147

164

Transfer to recoverable tax in non-current trade and

3

6

other receivables and assets held for sale

1

–

(83)

(83)

Translation

5

16

1,059

706

Balance at end of year

107

142

Included in the statement of financial position as follows:

127

176

Taxation asset included in trade and other receivables

27

17

1,186

882

Taxation liability

134

159

1,059

706

107

142

Group financial statements

P

317

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

32 Cash generated from operations

(1,173)

3,036

Profit (loss) before taxation

405

(121)

Adjusted for:

Movement on non-hedge derivatives and other

14,417

2,946

commodity contracts

408

1,787

4,615

5,022

Amortisation of tangible assets (notes 4, 9 and 15)

690

555

1,146

1,203

Finance costs and unwinding of obligations (note 7)

166

139

(47)

535

Environmental rehabilitation and other expenditure

78

(6)

(5,148)

1,076

Special items

152

(683)

18

18

Amortisation of intangible assets (notes 4 and 16)

2

2

(467)

921

Deferred stripping

125

(48)

Fair value adjustment on option component of

249

(39)

convertible bonds

1

33

–

382

Fair value loss on mandatory convertible bonds

55

–

(444)

(311)

Interest received (note 3)

(43)

(54)

(785)

(467)

Share of equity accounted investments’ profit (note 8)

(63)

(94)

(853)

250

Other non-cash movements

37

(115)

(951)

(1,537)

Movements in working capital

(299)

(50)

10,577

13,035

1,714

1,345

Movements in working capital:

634

(667)

(Increase) decrease in inventories

(236)

(155)

106

(781)

(Increase) decrease in trade and other receivables

(142)

(45)

(1,691)

(89)

Increase (decrease) in trade and other payables

79

150

(951)

(1,537)

(299)

(50)

33 Related parties

Material related party transactions were as follows

(not attributable):

Sales and services rendered to related parties

155

137

Joint ventures

19

19

(1)

(5)

Associates

(1)

–

Purchases and services acquired from related parties

16

20

Associates

3

2

Outstanding balances arising from sale of goods

and services and other loans due by related parties

34

56

Joint ventures

8

5

59

17

Associates

3

8

Group financial statements

P

318

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

33 Related parties (continued)

Amounts owed to/due by related parties are unsecured

and non-interest bearing. Terms relating to associate

and joint venture related parties are detailed in note 17.

Details of guarantees to related parties are included in

note 34.

Directors and other key management personnel

Details relating to directors’ emoluments and

shareholdings in the company are disclosed in the

Remuneration and Directors’ reports. (Detailed from

page 214).

Compensation to key management personnel includes

the following:

92

97

– short-term employee benefits

13

11

13

12

– post-employment benefits

2

1

23

9

– share-based payments

1

3

128

118

16

15

34 Contractual commitments and

contingencies

Operating leases

At 31 December 2010, the group was committed to

making the following payments in respect of operating

leases for amongst others, the hire of plant and

equipment and land and buildings. Certain contracts

contain renewal options and escalation clauses for

various periods of time.

Expiry:

70

116

– within one year

18

9

13

48

– between one and two years

7

2

28

12

– between two and five years

2

4

1

3

– after five years

–

–

112

179

27

15

Group financial statements

P

319

34 Contractual commitments and contingencies (continued)

Finance leases
The group has finance leases for plant and equipment, buildings and motor vehicles. The leases for plant and equipment and
buildings have terms of renewal but no purchase options. The motor vehicle leases have no purchase options. Renewals are
at the option of the specific entity that holds the lease. Future minimum lease payments under finance lease contracts together
with the present value of the net minimum lease payments are as follows:

Present

Present

value of

Minimum

Minimum

value of

payments

payments

Figures in million payments

payments

2010

2010

SA Rands

US Dollars

37

68

Within one year

10

6

118

222

After one year but not more than five years

34

17

228

314

More than five years

48

35

383

604

Total minimum lease payments

92

58

–

(221)

Amounts representing finance charges

(34)

–

383

383

Present value of minimum lease payments

58

58

2009

2009

40

73

Within one year

10

5

149

262

After one year but not more than five years

35

20

241

350

More than five years

48

34

430

685

Total minimum lease payments

93

59

–

(255)

Amounts representing finance charges

(34)

–

430

430

Present value of minimum lease payments

59

59

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

Capital commitments
Acquisition of tangible assets

976

1,156

Contracted for

176

131

12,515

6,494

Not contracted for

988

1,683

13,491

7,650

Authorised by the directors

1,164

1,814

Allocated to:
Project capital

1,965

2,841

– within one year

433

264

4,419

702

– thereafter

107

594

6,384

3,543

540

858

Stay-in-business capital

5,244

2,664

– within one year

404

705

1,863

1,443

– thereafter

220

251

7,107

4,107

624

956

42

81

Share of underlying capital commitments of joint ventures

12

6

Goup financial statements

P

320

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

34 Contractual commitments and contingencies (continued)

2009

2010

Figures in million 2010

2009

SA Rands

US Dollars

Purchase obligations

Contracted for

2,573

2,614

– within one year

398

346

713

922

– thereafter

140

96

3,286

3,536

538

442

Purchase obligations represent contractual obligations for the purchase of mining contract services, power, supplies,

consumables, inventories, explosives and activated carbon.

To service these capital commitments, purchase obligations and other operational requirements, the group is dependent on

existing cash resources, cash generated from operations and borrowing facilities.

Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject

to foreign investment, exchange control laws and regulations, and the quantity of foreign exchange available in offshore

countries. In addition, distributions from joint ventures are subject to the relevant board approval.

The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent

that external borrowings are required, the group’s covenant performance indicates that existing financing facilities will be

available to meet the commitments detailed above. To the extent that any of the financing facilities mature in the near future,

the group believes that sufficient measures are in place to ensure that these facilities can be refinanced.

Summary of contracted uranium sales as at 31 December 2010

The group had the following forward pricing uranium commitments:

Average

contracted

price

Year

000lbs

(1)

($/lbs)

(2)

2011

494

33.97

2012

494

34.35

2013

494

34.74

Great Noligwa, Kopanang and Moab Khotsong produced 1.46m pounds of uranium oxide in 2010 (2009: 1.44m pounds).

(1)

Certain contracts allow the buyer to adjust the purchase quantity within a specified range.

(2)

Certain contracts are subject to price adjustment mechanisms. In these cases the price disclosed indicates the previous

periodic price reset.

In addition, the group had gold sale commitments as disclosed in note 35.

Group financial statements

P

321

34 Contractual commitments and contingencies (continued)

Liabilities

Liabilities

Liabilities

Liabilities

included

Guaran-

included

Guaran-

Guaran-

included

Guaran-

included

in the

tees

in the

tees

tees

in the

tees

in the

statement

and

statement

and

and statement

and

statement

of financial

contin-

of financial

contin-

contin- of

financial

contin-

of financial

position

gencies

position

gencies

Figures in million gencies position

gencies

position

2009

2010

2010

2009

SA Rands

US Dollars

Contingent liabilities

– – – –

Groundwater pollution

(1)

– –

– –

Deep groundwater

– – –

–

pollution – South Africa

(2)

–

–

– –

Sales tax on gold

– 560

–

587

deliveries – Brazil

(3)

89 –

76 –

Other tax disputes

– 191

–

219

– Brazil

(4)

34 –

25 –

– 67 –

70

Indirect taxes – Ghana

(5)

11 –

9 –

– – –

–

ODMWA litigation

(6)

– –

– –

Contingent assets
Royalty – Boddington

– – –

–

Gold Mine

(7)

– –

– –

Royalty – Tau Lekoa Gold

– – –

–

Mine

(8)

– –

– –

Guarantees
Financial guarantees

– 100

–

100

Oro Group (Pty) Limited

(9)

15

–

13 –

Hedging guarantees
Ashanti Treasury

3,293 3,293

–

–

Services

(10) (13)

– –

443 443

Geita Management

3,213 3,213

–

–

Company

(11) (13)

– –

432 432

AngloGold South

1,071 1,071

–

–

America

(12) (13)

– –

144 144

AngloGold USA

1,679 1,679

–

–

Trading Company

(12) (13)

– –

226 226

– – –

–

Cerro Vanguardia S.A.

(12) (13)

– –

– –

9,256 10,174

– 976

149

–

1,368 1,245

Contingent liabilities

(1)

AngloGold Ashanti has identified groundwater contamination plumes at certain of its operations, which have occurred
primarily as a result of seepage from mine residue stockpiles. Numerous scientific, technical and legal studies have been
undertaken to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The
group has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural
Attenuation (MNA) by the existing environment will contribute to improvement in some instances. Furthermore, literature
reviews, field trials and base line modelling techniques suggest, but are not yet proven, that the use of phyto-technologies
can address the soil and groundwater contamination. Subject to the completion of trials and the technology being a proven
remediation technique, no reliable estimate can be made for the obligation.

(2)

The company has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West
Rand gold fields. Various studies have been undertaken by AngloGold Ashanti Limited since 1999. Due to the
interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines
located in these gold fields. As a result, the Department of Mineral Resources and affected mining companies are involved
in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the accurate
estimation of a liability, no reliable estimate can be made for the obligation.

Group financial statements

P

322

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

34 Contractual commitments and contingencies (continued)

Contingent liabilities (continued)

(3)

Mineração Serra Grande S.A. (MSG), received two tax assessments from the State of Goiás related to payments of sales
taxes on gold deliveries for export. AngloGold Ashanti Córrego do Sitío Mineração S.A. manages the operation and its
attributable share of the first assessment is approximately $55m, R363m (2009: $47m, R347m). In November 2006, the
administrative council’s second chamber ruled in favour of MSG and fully cancelled the tax liability related to the first period.
The State of Goiás has appealed to the full board of the State of Goiás tax administrative council. The second assessment
was issued by the State of Goiás in October 2006 on the same grounds as the first assessment, and the company’s
attributable share of the assessment is approximately $34m, R224m (2009: $29m, R213m). The company believes both
assessments are in violation of federal legislation on sales taxes.

(4)

MSG received a tax assessment in October 2003 from the State of Minas Gerais related to sales taxes on gold. The tax
administrators rejected the company’s appeal against the assessment. The company is now appealing the dismissal of the
case. The company’s attributable share of the assessment is approximately $10m, R64m (2009: $8m, R66m). AngloGold
Ashanti Limited subsidiaries in Brazil are involved in various disputes with tax authorities. These disputes involve federal tax
assessments including income tax, royalties, social contributions and annual property tax. The amount involved is
approximately $24m, R155m (2009: $17m, R125m).

(5)

AngloGold Ashanti (Ghana) Limited received a tax assessment for $11m, R70m (2009: $9m, R67m) during September 2009
in respect of the 2006, 2007 and 2008 tax years, following an audit by the tax authorities related to indirect taxes on various
items. Management is of the opinion that the indirect taxes are not payable and the company has lodged an objection.

(6)

The case of Mr Thembekile Mankayi was heard in the High Court of South Africa in June 2008, and an appeal heard in the
Supreme Court of Appeals in 2010. In both instances judgement was awarded in favour of AngloGold Ashanti Limited. A
further appeal that was lodged by Mr Mankayi was heard in the Constitutional Court in 2010. Judgement in the
Constitutional Court was handed down on 3 March 2011.

Following the judgement, Mr Mankayi’s executor may proceed with his case in the High Court. This will comprise, amongst
others, providing evidence showing that Mr Mankayi contracted silicosis as a result of negligent conduct on the part of
AngloGold Ashanti.

The company is still studying the details of the Constitutional Court judgement and will defend the case and any subsequent
claims on their merits. Should other individuals or groups lodge similar claims, these too would be defended by the company
and adjudicated by the Courts on their merits. In view of the limitation of current information for the accurate estimation of
a possible liability, no reliable estimate can be made for this possible obligation.

Contingent assets

(7)

As a result of the sale of the interest in the Boddington Gold Mine joint venture during 2009, the group is entitled to receive
a royalty on any gold recovered or produced by the Boddington Gold Mine, where the gold price is in excess of Boddington
Gold Mine’s cash cost plus $600/oz. The royalty commenced on 1 July 2010 and is capped at a total amount of $100m,
R657m. Royalties of $4m, R30m were received during the year.

(8)

As a result of the sale of the interest in the Tau Lekoa Gold Mine during 2010, the group is entitled to receive a royalty on
the production of a total of 1.5Moz by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of gold
exceeds R180,000/kg (subject to inflation adjustment). Where the average monthly rand price of gold does not exceed
R180,000/kg (subject to inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5Moz
upon which the royalty is payable. The royalty will be determined at 3% of the net revenue (being gross revenue less state
royalties) generated by the Tau Lekoa assets. Royalties of $3m, R21m were received during the year.

Guarantees

(9)

The company has provided sureties in favour of a lender on a gold loan facility with its affiliate Oro Group (Pty) Limited and
one of its subsidiaries to a maximum value of $15m, R100m (2009: $13m, R100m). The suretyship agreements have a
termination notice period of 90 days.

(10)

The group, together with its wholly owned subsidiary, AngloGold Ashanti Holdings plc, has provided guarantees to several
counterparty banks for the hedging commitments of its wholly owned subsidiary Ashanti Treasury Services Limited (ATS).

(11)

The group and its wholly owned subsidiary, AngloGold Ashanti Holdings plc, have issued hedging guarantees to several
counterparty banks in which they have guaranteed the due performance by the Geita Management Company Limited (GMC)
of its obligations under or pursuant to the hedging agreements entered into by GMC, and to the payment of all money owing
or incurred by GMC as and when due.

(12)

The group has issued gold delivery guarantees to several counterparty banks in which it guarantees the due performance
of its subsidiaries AngloGold USA Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under
their respective gold hedging agreements.

(13)

At 31 December 2010, the group had no open gold hedge contracts.

Group financial statements

P

323

35 Financial risk management activities

In the normal course of its operations, the group is exposed to gold price, other commodity price, foreign exchange, interest
rate, liquidity, equity price and credit risks. In order to manage these risks, the group may enter into transactions which make
use of both on- and off-balance sheet derivatives. The group does not acquire, hold or issue derivatives for speculative
purposes. The group has developed a comprehensive risk management process to facilitate, control and monitor these risks.
The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterparty
limits and controlling and reporting structures.

Managing risk in the group
Risk management activities within the group are the ultimate responsibility of the board of directors. The chief executive officer
is responsible to the board of directors for the design, implementation and monitoring of the risk management plan. The newly
formed Risk and Information Integrity Committee is responsible for overseeing risk management plans and systems, and the
Audit and Corporate Governance Committee oversees financial risks which include a review of treasury activities and the
group’s counterparties.

The financial risk management objectives of the group are defined as follows:

•

safeguarding the group’s core earnings stream from its major assets through the effective control and management of gold
price risk, other commodity risk, foreign exchange risk and interest rate risk;

•

effective and efficient usage of credit facilities in both the short and long term through the adoption of reliable liquidity
management planning and procedures;

•

ensuring that investment and hedging transactions are undertaken with creditworthy counterparties; and

•

ensuring that all contracts and agreements related to risk management activities are co-ordinated, consistent throughout
the group and that they comply where necessary with all relevant regulatory and statutory requirements.

Gold price and foreign exchange risk
Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of
gold. The group has transactional foreign exchange exposures, which arise from sales or purchases by an operating unit in
currencies other than the unit’s functional currency. The gold market is predominately priced in US dollars which exposes the
group to the risk that fluctuations in the SA rand/US dollar, Brazilian real/US dollar, Argentinean peso/US dollar and Australian
dollar/US dollar exchange rates may also have an adverse effect on current or future earnings. The group is also exposed to
certain by-product commodity price risk.

During the year, the group had utilised derivatives as part of its hedging of these risks. In order to provide financial exposure to the
rising spot price of gold and the potential for enhanced cash-flow generation the group completed its final tranche of the hedge
buy-back programme and settled all forward gold and foreign exchange contracts that had been used by the group in the past
to manage those risks. At year-end there were no net forward sales contracts (2009: 571kg), net call options sold
(2009: 120,594kg) and net put options sold (2009: 27,071kg) outstanding.

Cash flow hedges
The group’s cash flow hedges consist of commodity and foreign exchange forward contracts that are used to protect against
exposures to variability in future commodity, foreign exchange and capital expenditure cash flows. The amounts and timing of
future cash flows are projected for each portfolio of financial assets and liabilities on the basis of their contractual terms and
other relevant factors, including estimates of prepayments and defaults. The contractual cash flows across all portfolios over
time form the basis for identifying gains and losses on the effective portions of derivatives designated as cash flow hedges of
forecast transactions. Gains and losses are initially recognised directly in other comprehensive income and reclassified to
earnings as gold income or as an adjustment to depreciation expense pertaining to capital expenditure, when the forecast
transactions affect the income statement.

The group does not have any cash flow hedge contracts relating to product sales as at 31 December 2010. Cash flow hedge
losses pertaining to capital expenditure of $3m, R21m as at 31 December 2010 (2009: $4m, R27m) are expected to be
reclassified from accumulated other comprehensive income and recognised as an adjustment to depreciation expense until 2017.

The gains and losses on ineffective portions of such derivatives are recognised in the income statement. During the year to
31 December 2010, a loss of nil (2009: $5m, R40m) was recognised on non-hedge derivatives and other commodity contracts
in the income statement due to hedge ineffectiveness.

Group financial statements

P

324

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Non-hedge derivatives

Loss on non-hedge derivatives and other commodity contracts is summarised as follows:

Figures in million

2010

2009

US Dollars

Loss on hedge buy-back costs

(2,698)

(797)

(Loss) gain on realised non-hedge derivatives and other commodity contracts

(277)

254

Gain (loss) on unrealised non-hedge derivatives and other commodity contracts

2,273

(990)

Loss on non-hedge derivatives and other commodity contracts per the income statement

(702)

(1,533)

SA Rands

Loss on hedge buy-back costs

(18,954)

(6,315)

(Loss) gain on realised non-hedge derivatives and other commodity contracts

(2,073)

2,476

Gain (loss) on unrealised non-hedge derivatives and other commodity contracts

15,891

(8,095)

Loss on non-hedge derivatives and other commodity contracts per the income statement

(5,136)

(11,934)

The loss on non-hedge derivatives and other commodity contracts was $702m, R5,136m (2009: $1,533m, R11,934m).
This is as a result of the accelerated hedge book settlement, normal realised losses on non-hedge derivatives and the
revaluation of non-hedge derivatives resulting from changes in the prevailing spot gold price, exchange rates, interest rates and
volatilities. In 2009, forward gold contracts previously qualifying for the normal sale exemption were included in the statement
of financial position, with a change in fair value recognised in the income statement as a non-hedge derivative loss of $556m,
R4,144m.

During 2010, the group eliminated its gold hedge book resulting in full exposure to the prevailing gold price. The loss on
scheduled hedge book maturities during 2010 was $277m, R2,073m. The loss on non-hedge derivatives includes a realised loss
of $2,698m, R18,954m, relating to the final tranche of the accelerated hedge buy-back of approximately 3Moz that commenced
in September 2010 and was concluded on 7 October 2010 at an average price of $1,300/oz. The realised loss mainly consists
of accelerated cash settlement of non-hedge derivative positions of $2,611m, R18,333m. The final phase of hedge restructuring
was funded with proceeds from the equity offering and the mandatory convertible bonds issued in September, as well as cash
from internal sources and debt facilities.

During 2009, the company embarked on a hedge buy-back that resulted in the accelerated settlement of both non-hedge,
forward and option gold contracts qualifying for the normal sale exemption (which permits the group to not record such
amounts in its financial statements until the maturity date of the contract) under which the group had committed to deliver a
specified quantity of gold at a future date in exchange for an agreed price. As a result of the accelerated settlement of the
normal sale exempted contracts, all remaining contracts scheduled to mature in later periods had been determined to not meet
all of the requirements necessary for them to continue to qualify for the normal sales exemption in future periods and were
accounted for as non-hedge derivatives and recorded on the statement of financial position at fair value with fair value changes
recognised in the income statement.

The total realised loss before taxation as a result of the hedge elimination (hedge buy-back) effected during the year was
$2,698m, R18,954m (2009: $797m, R6,315m), of which $2,293m, R16,077m (2009: $217m, R1,719m) was due to the
accelerated settlement of non-hedge derivatives and $405m, R2,877m (2009: $580m, R4,596m) was due to the accelerated
settlement of forward gold contracts previously qualifying for the normal sale exemption.

Net open hedge position as at 31 December 2010
As at 31 December 2010, AngloGold Ashanti had no outstanding commitments against future production as a result of the
elimination of the hedge book. At 31 December 2009, the marked-to-market value of all derivatives, irrespective of accounting
designation, making up the hedge position was negative $2.18bn, negative R16.18bn based on a gold price of $1,102 per
ounce, exchange rates of $1 = R7.4350 and A$1 = $0.8967 and the market interest rates and volatilities prevailing at that date.

Group financial statements

P

325

35 Financial risk management activities (continued)

Net open hedge position as at 31 December 2010 (continued)
The table below reflects the hedge position as at 31 December 2010 and includes the effect of all accelerated non-hedge
settlements undertaken during the year.

Summary: All open contracts in the group’s commodity hedge position as at 31 December 2010

Year

2010

2009

US Dollars/Gold

Forward contracts
Amount (kg)

–

(1,295)

(1)

$/oz

–

$5,457

(1)

Put options sold
Amount (kg)

–

25,827

$/oz

–

$764

Call options sold
Amount (kg)

–

122,460

$/oz

–

$605

SA Rands/Gold

Rand/Gold
Forward contracts
Amount (kg)

–

(1,244)

(1)

R/kg

–

R232,225

(1)

Put options sold
Amount (kg)

–

1,244

R/kg

–

R240,354

Call options sold
Amount (kg)

–

1,244

R/kg

–

R262,862

Australian Dollars/Gold

Forward contracts
Amount (kg)

–

3,110

A$/oz

–

A$646

Call options purchased
Amount (kg)

–

3,110

A$/oz

–

A$712

Total net gold
Delta (kg)

–

(108,482)

(2)

Delta (oz)

–

(3,487,779)

(2)

The open delta hedge position of the group at 31 December 2010 was nil (31 December 2009: 3.49Moz or 108t).

(1)

Represents a net long gold position and net short US dollars/rands position resulting from both forward sales and purchases
for the period.

(2)

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 December 2009.

Group financial statements

P

326

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Net open hedge position as at 31 December 2010 (continued)
As at 31 December 2010, the group had no open forward exchange or option contracts in its currency and gold
hedge position.

The mix of hedging instruments, the volume of production hedged and the tenor of the hedge book is continually reviewed in
the light of changes in operational forecasts, market conditions and the group’s hedging policy.

Forward sales contracts require the future delivery of the underlying at a specified price.

A put option gives the put buyer the right, but not the obligation, to sell the underlying to the put seller at a predetermined price
on a predetermined date.

A call option gives the call buyer the right, but not the obligation, to buy the underlying from the call seller at a predetermined
price on a predetermined date.

Interest rate and liquidity risk
Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest
rate risk.

In the ordinary course of business, the group receives cash from the proceeds of its gold sales and is required to fund working
capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market-related returns
while minimising risks. The group is able to actively source financing at competitive rates. The counterparties are financial and
banking institutions and their credit ratings are regularly monitored.

The group has sufficient undrawn borrowing facilities available to fund working capital requirements (notes 26 and 36).

The following are the contractual maturities of financial liabilities, including interest payments.

Non-derivative financial liabilities

Between

Between

Within one year

one and two years two and five years

After five years

Effective

Effective

Effective

Effective

rate

rate

rate

rate

Total

Million

%

Million

%

Million

%

Million

%

Million

2010

Financial guarantees

(3)

15 –

– –

15

Borrowings

306 142 1,792 1,695 3,935

– In USD

190 5.2 136 5.2 1,775

5.2 1,647

5.7 3,748

– ZAR in USD equivalent

114 7.3 4

9.8 15 9.8 48 9.8 181

– BRL in USD equivalent

2 5.3 2

5.7 2

6.0 –

6

Trade and other payables

703 –

–

–

703

2009

Financial guarantees

(3)

– – –

13

13

Borrowings

1,332 41

826 47

2,246

– In

USD

1,327 2.3 35 3.5 810 3.5 –

2,172

– ZAR in USD equivalent

3

9.8 4 9.8 12 9.8 47 9.8 66

– BRL in USD equivalent

2

6.1 2

6.0 4

6.0 –

8

Trade and other payables

573 – – –

573

(3)

Not included in the statement of financial position.

Group financial statements

P

327

35 Financial risk management activities (continued)

Non-derivative financial liabilities (continued)
The contractual maturities of financial liabilities in SA rands can be calculated by applying the exchange rate in US dollars of
$1 = R6.5701 at 31 December 2010 (2009: $1 = R7.4350).

Derivative financial assets and (liabilities)
At 31 December 2010, the group had no open hedge and non-hedge contracts as a result of the hedge book elimination.
The following were the undiscounted forecast principal cash flows arising from all derivative contracts included in the statement
of financial position (cash flow hedges and non-hedges) as at 31 December 2009 based on scheduled maturity dates:

Between

Between

Within

one and

two and

After

Figures in million

one year

two years

five years

five years

Total

US Dollars

At 31 December 2009
Cash inflows from assets

277

46

13

–

336

Cash outflows from liabilities

(722)

(543)

(1,468)

(18)

(2,751)

Net cash outflows

(445)

(497)

(1,455)

(18)

(2,415)

SA Rands

At 31 December 2009
Cash inflows from assets

2,068

339

93

–

2,500

Cash outflows from liabilities

(5,367)

(4,038)

(10,915)

(136)

(20,456)

Net cash outflows

(3,299)

(3,699)

(10,822)

(136)

(17,956)

Credit risk
Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The group minimises credit
risk by ensuring that credit risk is spread over a number of counterparties. These counterparties are financial and banking
institutions. Counterparty credit limits and exposures are reviewed by the Executive Committee. Where possible, management
ensures that netting agreements are in place. No set-off is applied to the statement of financial position due to the different
maturity profiles of assets and liabilities. The combined maximum credit risk exposure at the reporting date by class of derivative
financial instrument is $1m, R6m (2009: $335m, R2,490m) on a contract-by-contract basis.

The combined maximum credit risk exposure of the group is as follows:

Figures in million

2010

2009

2010

2009

US Dollars

SA Rands

Commodity option contracts

–

47

–

351

Forward sale commodity contracts

–

283

–

2,099

Warrants on shares

1

5

6

40

Total derivatives

1

335

6

2,490

Other investments

104

60

682

447

Other non-current assets

7

1

43

12

Trade and other receivables

120

80

790

599

Cash restricted for use (note 22)

43

65

283

481

Cash and cash equivalents (note 23)

575

1,100

3,776

8,176

Total financial assets

850

1,641

5,580

12,205

Financial guarantees

15

13

100

100

Total

865

1,654

5,680

12,305

In addition, the group has also guaranteed the hedging commitments of several subsidiary companies as disclosed in note 34.

Group financial statements

P

328

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Credit risk (continued)

Credit risk exposure of all derivatives netted by counterparties amounts to nil (2009: $104m, R773m). Trade and other

receivables that are past due but not impaired totalled $85m, R556m (2009: $45m, R337m). Trade and other receivables that

are impaired totalled $8m, R21m (2009: $32m, R237m) and other investments that are impaired totalled $2m, R16m

(2009: nil). No other financial assets are past due but not impaired.

Trade receivables mainly comprise banking institutions purchasing gold bullion. Normal market settlement terms are two

working days. No impairment was recognised as the principal receivables continue to be in a sound financial position.

The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but

monitors the credit standing of counterparties.

Fair value of financial instruments

The estimated fair value of financial instruments are determined at discrete points in time based on relevant market information.

The estimated fair value of the group’s financial instruments as at 31 December are as follows:

Type of instrument

Carrying

Fair

Carrying

Fair

Figures in million

amount

value

amount

value

US Dollars

2010

2009

Financial assets

Other investments (note 18)

237 229 175 171

Other non-current assets

7 7 1 1

Trade and other receivables

120 120

80 80

Cash restricted for use (note 22)

43 43 65 65

Cash and cash equivalents (note 23)

575 575

1,100 1,100

Derivatives

1 1

335 335

Financial liabilities

Borrowings (note 26)

2,704 3,054 1,931 2,153

Trade and other payables

703 702 573 572

Derivatives

176 176

2,701 2,701

SA Rands

Financial assets

Other investments (note 18)

1,555 1,507 1,302 1,279

Other non-current assets

43 43 12 13

Trade and other receivables

790 790

599 599

Cash restricted for use (note 22)

283 283 481 481

Cash and cash equivalents (note 23)

3,776 3,776 8,176 8,176

Derivatives

6 6

2,490 2,490

Financial liabilities

Borrowings (note 26)

17,763 20,060 14,355 16,004

Trade and other payables

4,610 4,603 4,272 4,266

Derivatives

1,158 1,158

20,080 20,080

The amounts in the tables above do not necessarily agree with the totals in the notes as only financial assets and liabilities

are shown.

Group financial statements

P

329

35 Financial risk management activities (continued)

Fair value of financial instruments (continued)
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash restricted for use and cash and cash equivalents
The carrying amounts approximate fair value because of the short-term duration of these instruments.

Trade and other receivables and trade and other payables
The fair value of the non-current portion of trade and other receivables and trade and other payables has been calculated using
market interest rates.

Investments and other non-current assets
Listed equity investments classified as available-for-sale are carried at fair value while fixed income investments and other non-
current assets are carried at amortised cost. The fair value of fixed income investments and other non-current assets has been
calculated using market interest rates. The unlisted equity investment is carried at cost. There is no active market for the
unlisted equity investment and fair value cannot be reliably measured.

Borrowings
The mandatory convertible bonds are carried at fair value. The convertible and rated bonds are carried at amortised cost and
their fair values are their closing market value at the reporting date. The interest rate on the remaining borrowings is reset on a
short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value.

Mandatory convertible bonds carried at fair value
In September 2010, the group issued mandatory convertible bonds at a coupon rate of 6% due in September 2013. The
conversion of the mandatory convertible bonds into ADSs was subject to shareholder approval, which was granted in October
2010. These bonds are convertible into a variable number of shares ranging from 18,140,000 at a share price equal to or less
than $43.50, to 14,511,937 at a share price equal to or greater than $54.375, each as calculated in accordance with the
formula set forth in the indenture.

The mandatory convertible bonds contain certain embedded derivatives relating to change in control and anti-dilution
protection provisions. The shareholders have authorised that the convertible bonds will be settled in equity and not have any
cash settlement potential except if a fundamental change or conversion rate adjustment causes the number of ADSs
deliverable upon conversion to exceed the number of shares reserved for such purpose, among other circumstances provided
in the indenture, and therefore the group has chosen to recognise the instrument, in its entirety, at fair value. Depending on the
final calculated share price on the date of conversion, the liability recognised may differ from the principal amount.

Other convertible bonds that have been issued by the group will only be settled in equity if future events, outside the group's
control, result in equity settlement and thus have a potential cash settlement at maturity that will not exceed the principal
amount, in those circumstances the liabilities are recognised at amortised cost.

In determining the fair value liability of the mandatory convertible bonds, the group has measured the effect based on the ex
interest NYSE closing price on the reporting date. The ticker code used by the NYSE for the mandatory convertible bonds is
AUPRA. The accounting policy of the group is to recognise interest expense separately from fair value adjustments in the
income statement. Interest is recognised on the yield to maturity basis determined at the date of issue, which was 4.55%.

The contractual principal amount of the mandatory convertible bonds is $789m, provided the calculated share price of the
group is within the range of $43.50 to $54.375. If the calculated share price is below $43.50, the group will recognise a gain
on the principal amount and above $54.375 a loss. As at 31 December 2010, the actual share price was $49.23.

The total fair value of the mandatory convertible bonds on 15 September 2010 (date of issue) amounted to $819m. A bond
issue discount of $30m was recognised in special items in the income statement. The mandatory convertible bonds were
issued by AngloGold Ashanti Holdings Finance plc, a finance company wholly owned by AngloGold Ashanti Limited. AngloGold
Ashanti Limited has fully and unconditionally guaranteed the mandatory subordinated convertible bonds issued by AngloGold
Ashanti Holdings Finance plc. There are no significant restrictions on the ability of AngloGold Ashanti Limited to obtain funds
from its subsidiaries by dividend or loan.

Group financial statements

P

330

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Fair value of financial instruments (continued)

Derivatives

The fair value of derivatives are estimated based on ruling market prices, volatilities, interest rates and credit risk as at

31 December 2010 and includes all derivatives carried in the statement of financial position.

The group uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the level

of volatility. These volatility levels are themselves not exchange traded. The group uses volatility inputs supplied by leading

market participants (international banks).

Derivative assets (liabilities) comprise the following:

Assets

Liabilities

Cash flow

Non-

Cash flow

Non-

hedge

hedge

hedge

hedge

Figures in million

accounted

accounted

Total

accounted

accounted

Total

US Dollars

2010

Embedded derivative

– – – – – –

Warrants on shares

– 1 1 – – –

Option component of

convertible bonds

– – – –

(176)

(176)

Total derivatives

– 1 1 –

(176)

(176)

2009

Commodity option contracts

–

47

47

–

(2,034)

(2,034)

Forward sale commodity

contracts

– 283 283 (37)

(441)

(478)

Gold interest rate swaps

–

–

–

–

(13)

(13)

Sub-total

hedging

– 330 330 (37)

(2,488)

(2,525)

Embedded

derivative

– – – – (1)

(1)

Warrants

on

shares

– 5 5 – – –

Option component of

convertible

bonds

– – – –

(175)

(175)

Total

derivatives

– 335 335 (37)

(2,664)

(2,701)

Group financial statements

P

331

35 Financial risk management activities (continued)

Fair value of financial instruments (continued)

Derivative assets (liabilities) comprise the following: (continued)

Assets

Liabilities

Cash flow

Non-

Cash flow

Non-

hedge

hedge

hedge

hedge

Figures in million

accounted

accounted

Total

accounted

accounted

Total

SA Rands

2010

Embedded derivative

– – – – (2)

(2)

Warrants on shares

– 6 6 – – –

Option component of

convertible bonds

– – – –

(1,156)

(1,156)

Total derivatives

– 6

6 –

(1,158)

(1,158)

2009

Commodity option contracts

–

351

351

–

(15,122)

(15,122)

Forward sale commodity

contracts

– 2,099 2,099 (276)

(3,273)

(3,549)

Gold interest rate swaps

–

–

–

–

(99)

(99)

Sub-total

hedging

– 2,450 2,450 (276)

(18,494)

(18,770)

Embedded

derivative

– – – –

(10)

(10)

Warrants

on

shares

–

40

40 – – –

Option component of

convertible

bonds

– – – –

(1,300)

(1,300)

Total

derivatives

– 2,490 2,490 (276)

(19,804)

(20,080)

At 31 December 2010, the group had no open derivative positions in its hedge book. The impact of credit risk adjustment

totalled $150m, R1,113m at 31 December 2009.

The group uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices)

or indirectly (derived from prices); and

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Group financial statements

P

332

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Fair value of financial instruments (continued)

The following table sets out the group’s financial assets and liabilities measured at fair value by level within the fair value

hierarchy as at 31 December:

Type of instrument

Assets measured at fair value

Figures in million

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

US Dollars

2010

2009

Financial assets at fair

value through profit or loss

Commodity option contracts

– non-hedged

–

–

–

–

–

47 –

47

Forward sale commodity

contracts – non-hedged

–

–

–

–

–

283 –

283

Warrants on shares

– 1 – 1

–

5

–

5

Available-for-sale financial

assets

Equity securities

124 – –

124

111 –

–

111

SA Rands

Financial assets at fair

value through profit or loss

Commodity option contracts

– non-hedged

–

–

–

–

– 351

– 351

Forward sale commodity

contracts – non-hedged

–

–

–

–

– 2,099

– 2,099

Warrants on shares

– 6

– 6

– 40 – 40

Available-for-sale financial

assets

Equity securities

814

– –

814

829

– –

829

Group financial statements

P

333

35 Financial risk management activities (continued)

Type of instrument (continued)

Liabilities measured at fair value

Figures in million

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

US Dollars

2010

2009

Financial liabilities at fair

value through profit or loss

Commodity option contracts

– non-hedged

–

–

–

–

– 2,034

– 2,034

Forward sale commodity

contracts – non-hedged

–

–

–

–

– 441

– 441

Gold interest rate swaps

– non-hedged

–

–

–

–

– 13 – 13

Option component of

convertible bonds

– 176

–

176

– 175

– 175

Embedded derivatives

–

–

–

–

– 1 – 1

Mandatory convertible bonds

872

–

–

872

– – – –

Cash flow hedges

Forward sale commodity

contracts – cash flow hedged

–

–

–

–

– 37 – 37

SA Rands

Financial liabilities at fair

value through profit or loss

Commodity option contracts

– non-hedged

–

–

–

–

– 15,122

– 15,122

Forward sale commodity

contracts – non-hedged

–

–

–

–

–

3,273 –

3,273

Gold interest rate swaps

– non-hedged

–

–

–

–

– 99 – 99

Option component of

convertible bonds

– 1,156

–

1,156

– 1,300

– 1,300

Embedded derivatives

– 2

–

2

– 10 – 10

Mandatory convertible bonds 5,729

–

–

5,729

– – – –

Cash flow hedges

Forward sale commodity

contracts – cash flow hedged

–

–

–

–

– 276

– 276

Group financial statements

P

334

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Sensitivity analysis

Derivatives

A principal part of the group’s management of risk is to monitor the sensitivity of derivative positions in the hedge book to

changes in the underlying factors,viz. commodity price, foreign exchange rate and interest rates under varying scenarios. There

are no open hedge positions as a result of the hedge book elimination during 2010. Additionally, the group’s management of

risk is to monitor the sensitivity of the convertible bonds to changes in the AngloGold Ashanti Limited’s share price and warrants

on shares.

The following table discloses the approximate sensitivities of the US dollar’s marked-to-market value of the hedge book,

warrants on shares and the convertible bonds to key underlying factors at 31 December 2010 (actual changes in the timing

and amount of the following variables may differ from the assumed changes below).

Normal

Cash flow

Total

Total

Change in

sale

hedge

Non-hedge

change in

change in

underlying

exempted

accounted

accounted

fair value

fair value

factor (+)

million

million

million

million

million

US Dollars

2010

2009

Hedge book

Currency (R/$)

Spot(+R1) –

2

Currency (A$/$)

Spot(+A$0.25)

–

2

Currency (BRL/$)

Spot(+BRL0.25) –

–

Gold price ($/oz)

Spot(+$250) –

(915)

USD interest rate (%)

IR(+0.1%) –

(4)

AUD interest rate (%)

IR(+1.5%) –

–

Gold interest rate (%)

IR(+0.1%) –

11

Convertible bonds

AngloGold Ashanti Limited

share price (US$)

Spot(+$1) (10)

(10)

(9)

Warrants on shares

B2Gold Corporation

share price

Spot(+C$0.25) 1

1

1

(4)

Group financial statements

P

335

35 Financial risk management activities (continued)

Sensitivity analysis (continued)

Derivatives (continued)

Normal Cash flow

Total

Total

Normal

Cash flow

Total

Total

Change in

sale

hedge

Non-hedge

change in

change in

underlying

exempted

accounted

accounted

fair value

fair value

factor (-)

million

million

million

million

million

US Dollars

2010

2009

Hedge book

Currency (R/$)

Spot(-R1) –

(6)

Currency (A$/$)

Spot(-A$0.25) –

(2)

Currency (BRL/$)

Spot(-BRL0.25) –

–

Gold price ($/oz)

Spot(-$250) –

801

USD interest rate (%)

IR(-0.1%) –

4

AUD interest rate (%)

IR(-1.5%) –

–

Gold interest rate (%)

IR(-0.1%) –

(11)

Convertible bonds

AngloGold Ashanti Limited

share price (US$)

Spot(-$1) 9

9

9

Warrants on shares

B2Gold Corporation share

price

Spot(-C$0.25) –

(1)

(4)

IR represents interest rate.

(4)

Change in B2Gold Corporation share price (+) of spot (+C$0.1) and change in share price (–) of spot (–C$0.1).

The sensitivity analysis in SA rands can be calculated by applying the exchange rate in US dollars of $1 = R6.5701 at

31 December 2010 (2009: $1 = R7.4350).

Mandatory convertible bonds

The mandatory convertible bond valuation is primarily linked to the AngloGold Ashanti Limited share price traded on the NYSE

and fluctuates with reference to the NYSE share price and market interest rates. A change of $1 in the AngloGold Ashanti

Limited share price will generally impact the value of the mandatory convertible bond price in a stable interest environment

by $0.83.

Group financial statements

P

336

AngloGold Ashanti Annual Financial Statements 2010

Group financial statements

Group – Notes to the financial statements

For the year ended 31 December

35 Financial risk management activities (continued)

Sensitivity analysis (continued)

Interest rate risk on other financial assets and liabilities (excluding derivatives)

The group also monitors interest rate risk on other financial assets and liabilities.

The following table shows the approximate interest rate sensitivities of other financial assets and liabilities at 31 December 2010

(actual changes in the timing and amount of the following variables may differ from the assumed changes below). As the

sensitivity is the same (linear) for both increases and decreases in interest rates only absolute numbers are presented.

Change in

Change in

Change in

Change in

Change in

interest

interest

Change in

interest

interest

interest

amount

amount

interest

amount

amount

rate

in currency

US dollars

rate

in currency

US dollars

%

million

million

%

million

million

2010

2009

Financial assets

USD denominated (%)

1.00 2

2

1.00 2 2

ZAR denominated (%)

(5)

1.50 1

–

1.50 13 2

BRL denominated (%)

2.50 1

1

2.50 4 2

NAD denominated (%)

1.50 3

1

1.50 – –

Financial liabilities

USD denominated (%)

1.00 –

–

1.00 13 13

ZAR denominated (%)

1.50

2

–

1.50 – –

The sensitivity analysis in SA rands can be calculated by applying the exchange rate in US dollars of $1 = R6.5701 at

31 December 2010 (2009: $1 = R7.4350).

(5)

This is the only interest rate risk for the company.

Foreign exchange risk

Foreign exchange risk arises on financial instruments that are denominated in a foreign currency.

The following table discloses the approximate foreign exchange risk sensitivities of borrowings at 31 December 2010 (actual

changes in the timing and amount of the following variables may differ from the assumed changes below).

Change in

Change in

Change in

Change in

Change in

borrowings

borrowings

Change in

borrowings

borrowings

exchange

total

total

exchange

total

total

rate

US dollars

SA rands

rate

US dollars

SA rands

million

million

million

million

2010

2009

Borrowings

USD denominated (R/$)

Spot (+R1)

–

2,551

Spot (+R1)

–

1,889

ZAR denominated (R/$)

Spot (+R1)

(19)

–

Spot (+R1)

(4)

–

BRL denominated (BRL/$)

Spot

Spot

(+BRL0.25) (1)

(5)

(+BRL0.25)

(1) (7)

USD denominated (R/$)

Spot (-R1)

–

(2,551)

Spot (-R1)

–

(1,889)

ZAR denominated (R/$)

Spot (-R1)

26

–

Spot (-R1)

5

–

BRL denominated (BRL/$)

Spot

Spot

(-BRL0.25) 1

7

(-BRL0.25)

1 9

The borrowings total in the denominated currency will not be influenced by a movement in its exchange rate.

Group financial statements

P

337

36 Capital management

The primary objective of managing the group’s capital is to ensure that there is sufficient capital available to support the funding
requirements of the group, including capital expenditure, in a way that optimises the cost of capital, maximises shareholders’ returns
and ensures that the group remains in a sound financial position.

The group manages and makes adjustments to the capital structure as opportunities arise in the market place, as and when
borrowings mature or as and when funding is required. This may take the form of raising equity, market or bank debt or
hybrids thereof.

During May 2009, the group secured a successful five year convertible bond issue raising $732.5m. The instrument carries a
competitive coupon rate of 3.5% and a conversion price of $47.6126, a premium of 37.5% above the VWAP (volume weighted
average price) on the day of the issue. The financing extends the tenor for some of the debt and reduces borrowing costs on the term
facility. In July 2009, the group applied $797m to further reduce the hedge book and improve earnings leverage to a higher gold price.

During September 2009, $284m before underwriting discount and issue expenses was raised through an offering of 7,624,162
ordinary shares priced at $37.25 or R288.32 per ADS to partially finance the acquisition of an effective 45% interest in the Kibali
gold project for a total consideration including liabilities of approximately $344m. The second tranche of the Boddington sale of
$240m received towards the end of 2009 was applied to reduce debt.

During April 2010, the group completed the following key financing transactions:

•

the issue of $1bn of 10-year and 30-year unsecured notes. The net proceeds were applied to repay and cancel amounts drawn
under the $1,150m syndicated loan facility and the 2009 term facility. The offering consisted of $700m of 10-year unsecured
notes at a semi-annual coupon of 5.375% and $300m of 30-year unsecured notes at a semi-annual coupon of 6.5%; and

•

the entering of a four-year unsecured syndicated loan facility with a group of banks for $1bn which is charged at 175 basis
points above LIBOR. The 2009 revolving credit facility, which was undrawn, was cancelled.

During September 2010, the group issued equity and mandatory convertible bonds. The equity offering raised $789m via the issue
of 18,140,000 shares. The mandatory convertible bonds issued at a coupon rate of 6% raised a further $789m which will be settled
in September 2013 by the issue of shares. On 26 October 2010, shareholders, by the requisite majority, approved a special
resolution placing up to a maximum of 18,140,000 ordinary shares under the control of the directors, deliverable upon the
conversion of the mandatory convertible bonds. These proceeds along with existing bank balances and facilities were deployed to
eliminate all outstanding hedge commitments.

Gearing ratio (Net debt to EBITDA)

Figures in million

2010

2009

US Dollars

Borrowings (note 26)

2,704

1,931

Mandatory convertible bonds (note 26)

(1)

(874)

–

Corporate office finance lease (note 26)

(39)

(35)

Unamortised portion of the convertible and rated bonds

115

137

Cash restricted for use (note 22)

(43)

(65)

Cash and cash equivalents (note 23)

(575)

(1,100)

Net debt

1,288

868

EBITDA

(2)

1,897

1,663

Gearing ratio (Net debt to EBITDA)

0.68:1

0.52:1

SA Rands

Borrowings (note 26)

17,763

14,355

Mandatory convertible bonds (note 26)

(1)

(5,739)

–

Corporate office finance lease (note 26)

(259)

(258)

Unamortised portion of the convertible and rated bonds

757

1,019

Cash restricted for use (note 22)

(283)

(481)

Cash and cash equivalents (note 23)

(3,776)

(8,176)

Net debt

8,463

6,459

EBITDA

(2)

13,769

13,771

Gearing ratio (Net debt to EBITDA)

0.61:1

0.47:1

(1)

For the purposes of this note, the mandatory convertible bonds are treated as equity and excluded from borrowings.

(2)

Refer to Non-GAAP note 6 on page 375.

Group financial statements

P

338

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Company – Income statement

For the year ended 31 December

The company annual financial statements represent the South African operations and corporate office.

These company annual financial statements are a statutory requirement and are accordingly presented in South African rands only.

The functional currency of the company is South African rands.

Figures in million Notes

2010

2009

SA Rands

Revenue

1

34,634

13,525

Gold income

1

15,827

12,461

Cost of sales

2

(10,579)

(9,161)

Loss on non-hedge derivatives and other commodity contracts

30

(1,483)

(4,090)

Gross profit (loss)

3,765

(790)

Corporate administration, marketing and other expenses

(1,026)

(878)

Exploration costs

(99)

(52)

Other operating expenses

3

(29)

(41)

Special items

4

(592)

(303)

Operating profit (loss)

2,019

(2,064)

Dividends received from subsidiaries

1

18,304

543

Impairment of investments in subsidiaries

11

(13,788)

–

Impairment of investment in Margaret Water Company

10

(6)

(4)

Interest received

1

127

158

Net inter-company management fee and interest

35

35

Exchange gain

35

144

Finance costs and unwinding of obligations

5

(107)

(89)

Profit (loss) before taxation

6

6,619

(1,277)

Taxation

8

(344)

855

Profit (loss) for the year

6,275

(422)

P

339

Company – Statement of comprehensive income

For the year ended 31 December

Figures in million

2010

2009

SA Rands

Profit (loss) for the year

6,275

(422)

Net loss on cash flow hedges

– (92)

Net loss on cash flow hedges removed from equity and reported in gold income

279

699

Hedge ineffectiveness on cash flow hedges

–

22

Deferred taxation thereon

(98)

(220)

181

409

Net loss on available-for-sale financial assets

(1)

–

Actuarial (loss) gain recognised

(140)

87

Deferred taxation thereon

47

(28)

(93)

59

Other comprehensive income for the year net of tax

87

468

Total comprehensive income for the year net of tax

6,362

46

P

340

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Company – Statement of financial position

As at 31 December

Figures in million Notes

2010

2009

SA Rands

ASSETS
Non-current assets
Tangible assets

9

14,300

14,140

Investments in associates and joint venture

10

70

54

Investments in subsidiaries

11

41,213

32,697

Other investments

12

44

16

Investment in Environmental Rehabilitation Trust Fund

14

294

294

Intra-group balances

15

413

387

Trade and other receivables

17

230

140

Other non-current assets

16

1

44

56,565

47,772

Current assets
Inventories

13

671

674

Trade and other receivables

17

527

288

Derivatives

30

–

944

Current portion of other non-current assets

16

4

1

Cash restricted for use

9

8

Cash and cash equivalents

18

1,000

1,720

2,211

3,635

Non-current assets held for sale

19

1

529

2,212

4,164

Total assets

58,777

51,936

EQUITY AND LIABILITIES
Share capital and premium

20

46,345

40,664

Retained earnings and other reserves

1,000

(4,556)

Total equity

47,345

36,108

Non-current liabilities
Borrowings

21

257

256

Environmental rehabilitation provisions

22

1,205

769

Provision for pension and post-retirement benefits

23

1,161

1,095

Intra-group balances

15

1,316

1,448

Deferred taxation

24

2,821

1,818

6,760

5,386

Current liabilities
Current portion of borrowings

21

703

2

Trade and other payables

25

3,969

1,737

Derivatives

30

–

7,948

Taxation

26

–

699

4,672

10,386

Non-current liabilities held for sale

19

–

56

4,672

10,442

Total liabilities

11,432

15,828

Total equity and liabilities

58,777

51,936

P

341

Company financial statements

Company – Statement of cash flows

For the year ended 31 December

Figures in million Notes

2010

2009

SA Rands

Cash flows from operating activities

Receipts from customers

16,136

12,832

Payments to suppliers and employees

(10,346)

(8,133)

Cash generated from operations

27

5,790

4,699

Dividends received from subsidiaries

1

611

543

Taxation paid

26

(277)

(148)

Cash utilised for hedge buy-back costs

(7,250)

–

Net cash (outflow) inflow from operating activities

(1,126)

5,094

Cash flows from investing activities

Capital expenditure

– project capital

(409)

(566)

– stay-in-business capital

(2,694)

(2,669)

Proceeds from disposal of tangible assets

441

–

Proceeds on disposal of associate

4

–

Acquisition of associate and joint venture

(6)

(16)

Loans advanced to associate and joint venture

(22)

(17)

Loans repaid by associates

–

3

Increase in cash restricted for use

–

(1)

Additional investment in subsidiaries

(2,195)

(3,108)

Intra-group loans repaid

84

44

Interest received

76

157

Repayment of loans advanced

1

1

Net cash outflow from investing activities

(4,720)

(6,172)

Cash flows from financing activities

Proceeds from issue of share capital

5,656

2,384

Share issue expenses

(144)

(84)

Proceeds from borrowings

2,243

–

Repayment of borrowings

(1,543)

–

Finance costs paid

(46)

(31)

Dividends paid

Group 14

(492)

(392)

Intra-group preference dividends paid

(548)

(537)

Net cash inflow from financing activities

5,126

1,340

Net (decrease) increase in cash and cash equivalents

(720)

262

Cash and cash equivalents at beginning of year

1,720

1,458

Cash and cash equivalents at end of year

18

1,000

1,720

P

342

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Company – Statement of changes in equity

Share

Other

Cash flow Available-

Actuarial

capital and

capital

Retained

hedge

for-sale

(losses)

Total

Figures in million

premium reserves

(1)

earnings

reserve

(2)

reserve

(3)

gains

equity

SA Rands

Balance at 31 December 2008

38,248 301

(3,234)

(590)

–

(335)

34,390

Loss for the year

(422)

(422)

Other comprehensive income

409

59

468

Total comprehensive (expense)

income –

–

(422)

409

–

59

46

Shares issued

2,500

2,500

Share issue expenses

(84)

(84)

Share-based payments for share

awards net of exercised

(1)

204 204

Deferred taxation thereon (note 24)

(19)

(19)

Dividends (group note 14)

(392)

(392)

Preference dividends

(537)

(537)

Balance at 31 December 2009

40,664

486

(4,585)

(181)

–

(276)

36,108

Profit for the year

6,275

6,275

Other comprehensive income

(expense)

181

(1)

(93)

87

Total comprehensive income

(expense)

–

–

6,275

181

(1)

(93)

6,362

Shares issued

5,825

5,825

Share issue expenses

(144)

(144)

Share-based payments for share

awards net of exercised

(1)

257

257

Deferred taxation thereon (note 24)

(23)

(23)

Dividends (group note 14)

(492)

(492)

Preference dividends

(548)

(548)

Balance at 31 December 2010

46,345

720

650

–

(1)

(369)

47,345

(1)

Other capital reserves comprise a surplus on disposal of company shares, held by companies prior to the formation of

AngloGold Ashanti Limited of R141m (2009: R141m) and equity items for share-based payments. The grant date fair values

of share awards exercised are transferred from other capital reserves to share premium when the ordinary shares are issued.

(2)

Cash flow hedge reserve represents the effective portion of fair value gains or losses in respect of cash flow hedges.

(3)

Available-for-sale reserve represents fair value gains or losses on available-for-sale assets.

P

343

Company financial statements

Company – Notes to the financial statements

For the year ended 31 December

Figures in million

2010

2009

SA Rands

1

Revenue

Revenue consists of the following principal categories:

Gold income

15,827

12,461

By-products (note 2)

355

363

Dividends received from subsidiaries – in specie (notes 11 and 27)

17,693

–

Dividends received from subsidiaries – in cash (note 27)

611

543

Royalties received (note 4)

21

–

Interest received (note 27)

– loans and receivables

51

5

– cash and cash equivalents

76

153

34,634

13,525

2

Cost of sales

Cash operating costs

(1)

7,934

7,222

Insurance reimbursement

(123)

–

By-product revenue (note 1)

(355)

(363)

7,456

6,859

Other cash costs

322

40

Total cash costs

7,778

6,899

Retrenchment costs (note 7)

138

77

Rehabilitation and other non-cash costs

182

(3)

Production costs

8,098

6,973

Amortisation of tangible assets (notes 6, 9 and 27)

2,450

2,217

Total production costs

10,548

9,190

Inventory change

31

(29)

10,579

9,161

(1)

Cash operating costs comprises:

– salaries and wages

3,969

3,832

– stores and other consumables

1,789

1,876

– fuel, power and water

1,262

970

– contractors

85

107

– services and other charges

829

437

7,934

7,222

3

Other operating expenses

Pension and medical defined benefit provisions

29

41

P

344

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Company – Notes to the financial statements

For the year ended 31 December

Figures in million

2010

2009

SA Rands

4

Special items

Impairment of tangible assets (notes 9 and 19)

501

200

Loss on disposal and derecognition of land, mineral rights and tangible assets

196

113

Impairment of other receivables

44

66

Indirect tax expenses

7

–

Insurance claim recovery

(134)

(79)

Royalties received (note 1)

(21)

–

Profit on disposal of investment

(1)

–

Loan waived

–

3

592

303

5

Finance costs and unwinding of obligations

Finance costs
Finance lease charges

25

25

Finance costs on bank loans and overdrafts

(1)

23

–

Other

–

9

48

34

Unwinding of obligations
Unwinding of decommissioning obligation (note 22)

36

33

Unwinding of restoration obligation (note 22)

23

22

Total unwinding of obligation costs

59

55

Total finance costs and unwinding of obligations (note 27)

107

89

(1)

Finance costs have been determined using the effective interest rate method.

6

Profit (loss) before taxation

Profit (loss) before taxation is arrived at after taking account of:
Auditors’ remuneration
– audit fees

41

44

– over provision prior year

(1)

(3)

– other assurance services

9

4

49

45

Amortisation of tangible assets
– owned assets

2,433

2,200

– leased assets

17

17

(notes 2, 9 and 27)

2,450

2,217

Community investment

23

25

Operating lease charges

18

139

P

345

Company financial statements

Company – Notes to the financial statements

For the year ended 31 December

Figures in million

2010

2009

SA Rands

7

Employee benefits

Employee benefits including executive directors’ salaries and other benefits

5,049

4,785

Health care and medical scheme costs
– current medical expenses

447

362

– defined benefit post-retirement medical expenses

103

79

Pension and provident plan costs
– defined contribution

326

307

– defined benefit pension plan

20

23

Retrenchment costs (note 2)

138

77

Share-based payment expense

(1)

316

256

Included in cost of sales, other operating expenses, special items and corporate
administration, marketing and other expenses

6,399

5,889

Actuarial defined benefit plan expense analysis
Defined benefit post-retirement medical
– current service cost

6

4

– interest cost

97

75

103

79

Defined benefit pension plan
– current service cost

50

51

– interest cost

179

137

– expected return on plan assets

(209)

(165)

20

23

Actual return on plan assets
– South Africa defined benefit pension plan

290

264

Refer to the Remuneration report for details of directors’ emoluments.

(1)

Details of the equity-settled share-based payment arrangements of the group have

been disclosed in group note 11. These arrangements consist of awards by the

company to employees of various group companies. The income statement

expense of R316m (2009: R256m) for the company is only in respect of awards

made to employees of the company.

8

Taxation

Current taxation

Mining tax

(1)

–

153

Non-mining tax

(2)

43

33

(Over) under provision prior year

(629)

32

(note 26)

(586)

218

Deferred taxation

Temporary differences

(3)

(1,384)

534

Unrealised non-hedge derivatives and other commodity contracts

2,353

(1,451)

Change in estimated deferred tax rate

(4)

(39)

(156)

(note 24)

930

(1,073)

344

(855)

P

346

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

8

Taxation (continued)

Tax reconciliation

A reconciliation of the effective tax rate charged in the income statement to the

prevailing mining and non-mining tax rate is set out in the following table:

%

%

Effective tax rate

5

67

Disallowable items

(4)

(4)

Exchange variation and translation adjustments

–

(6)

Impairment of investment in subsidiaries

(73)

–

Dividends received

97

(15)

Prior year’s provision

10

2

Change in estimated deferred tax rate

(4)

1

(12)

Other

(1)

3

Estimated corporate tax rate

(5)

35

35

(1)

There was no mining tax charge in the current year as it was primarily offset by losses from the accelerated non-hedge

derivative buy-backs.

(2)

Non-mining income is taxed at the higher non-mining tax rate of 35% (2009: 35%) as the company has elected to be

exempt from STC. Companies that elected to be subject to STC are taxed at the lower company tax rate, that of 28%

(2009: 28%) for non-mining taxation purposes.

(3)

Included in temporary differences is a tax credit on the derecognition of tangible assets and impairments in respect of held

for sale assets of R193m (2009: R61m).

(4)

The mining operations are taxed on a variable rate that increases as profitability increases. The tax rate used to calculate

deferred tax is based on the company’s current estimate of future profitability when temporary differences will reverse.

Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year.

The change in the estimated deferred tax rate at which the temporary differences will reverse amounts to a tax credit of

R39m (2009: tax credit of R156m).

(5)

Mining tax on mining income is determined according to a formula based on profit and revenue from mining operations.

The company has elected to be exempt from STC and is taxed at a higher rate of company tax for mining and non-mining

income tax purposes.

All mining capital expenditure is deducted to the extent that it does not result in an assessed loss and depreciation is ignored

when calculating the mining income. Capital expenditure not deducted from mining income is carried forward as unredeemed

capital to be deducted from future mining income. The company operates under two tax paying operations, Vaal River

Operation and West Wits Operation. Under ring-fencing legislation, each operation is treated separately and deductions can

only be utilised against income generated by the relevant tax operation.

The formula for determining the mining tax rate is:

Y = 43 – 215/X (2009: Y = 43 – 215/X)

where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to

mining revenue expressed as a percentage.

The maximum statutory mining tax rate is 43% (2009: 43%), non-mining statutory tax rate 35% (2009: 35%) and statutory

company tax rate 28% (2009: 28%).

Company – Notes to the financial statements

For the year ended 31 December

P

347

Company financial statements

Mine

Mineral

Assets

development

Mine infra-

rights

under

Land and

Figures in million costs

structure

and

dumps construction

buildings

Total

SA Rands

9

Tangible assets

Cost

Balance at 1 January 2009

20,674

3,915

701

813

265

26,368

Additions

– project

capital

294 2 –

270 –

566

– stay-in-business capital

2,453

216

–

–

–

2,669

Transfers and other movements

(1)

(2,018)

(143)

(156)

–

–

(2,317)

Balance at 31 December 2009

21,403 3,990 545 1,083 265

27,286

Accumulated amortisation

Balance at 1 January 2009

10,042

2,009

275

–

29

12,355

Amortisation for the year

(notes 2, 6 and 27)

2,037

141

22

–

17

2,217

Transfers and other movements

(1)

(1,334)

(35)

(56)

–

(1)

(1,426)

Balance at 31 December 2009

10,745 2,115 241

–

45

13,146

Net book value at 31 December

2009

10,658 1,875 304 1,083 220

14,140

Cost

Balance at 1 January 2010

21,403 3,990 545 1,083 265

27,286

Additions

– project capital

340

(18)

–

87

–

409

– stay-in-business capital

2,389

305

–

–

–

2,694

Transfers and other movements

(1)

(214)

48

–

–

–

(166)

Balance at 31 December 2010

23,918

4,325

545

1,170

265

30,223

Accumulated amortisation

Balance at 1 January 2010

10,745 2,115 241

–

45

13,146

Amortisation for the year

(notes 2, 6 and 27)

2,221

186

26

–

17

2,450

Impairment (note 4)

(2)

117

(3)

–

329

–

443

Transfers and other movements

(1)

(57)

(59)

–

–

–

(116)

Balance at 31 December 2010

13,026

2,239

267

329

62

15,923

Net book value at 31 December

2010

10,892

2,086

278

841

203

14,300

Included in land and buildings are assets held under finance leases with a net book value of R185m (2009: R201m).

The majority of the leased assets are pledged as security for the related finance lease.

No assets are encumbered by project finance.

P

348

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

9

Tangible assets (continued)

A register containing details of properties is available for inspection by shareholders or their duly authorised agents during

business hours at the registered office of the company.

(1)

Transfers and other movements comprise amounts from changes in estimates of decommissioning assets, asset

reclassifications and transfers to/from non-current assets held for sale.

In 2010, transfers to non-current assets held for sale comprised:

•

assets with a net book value of R74m relating to Tau Lekoa which were transferred to non-current assets held for sale.

In 2009, transfers to non-current assets held for sale comprised:

•

assets with a net book value of R704m relating to Tau Lekoa which were transferred to non-current assets held for sale.

(2)

Impairments include the following:

Below 120 level at TauTona – assets under construction

Due to a change in the mine plan resulting from safety-related concerns following seismic activity, the below 120 level

development has been abandoned and will not generate future cash flows. An impairment loss of R329m (2009: nil) was

recognised in the income statement.

Savuka – mine development and mine infrastructure costs

Due to a change in the mine plan, the Savuka assets have been abandoned and will not generate future cash flows.

An impairment loss of R114m (2009: nil) was recognised in the income statement.

The impairment calculation methodology is included in group note 15.

Figures in million

2010

2009

SA Rands

10 Investments in associates and joint venture

The carrying value of investments in associates and joint venture can be

analysed as follows:

Carrying value of investments in associates

18

25

Loans advanced to associates

(1)

17

17

Loan advanced to joint venture

(2)

35

12

70

54

In 2010 and 2009, the Margaret Water Company investment was impaired. The impairment tests considered the investment’s

fair value and anticipated future cash flows. Impairments of R6m (2009: R4m) were recognised in the income statement.

(1)

Loans advanced to associates consist of R12m (2009: R12m) to Oro Group (Pty) Limited and R5m (2009: R5m) to Orpheo

(Pty) Limited. The Oro Group (Pty) Limited loan bears interest at a rate determined by the Oro Group (Pty) Limited’s board

of directors and is repayable at its discretion. The Orpheo (Pty) Limited loan is unsecured, interest free and there are no

fixed terms of repayment.

(2)

The loan advanced to AuruMar (Pty) Limited is interest free and there are no fixed terms of repayment.

Company – Notes to the financial statements

For the year ended 31 December

P

349

Company financial statements

10 Investments in associates and joint venture (continued)

Investments in associates comprises:

Name

Effective %

Description

2010

2009

Oro Group (Pty) Limited

(3)

25

25

Manufacture and wholesale of jewellery.

Margaret Water Company

33.3

33.3

Pumping of underground water in the Vaal River Region.

Orpheo (Pty) Limited

(3)

50

33.3

Design, manufacture and wholesale of jewellery.

Wonder Wise Holdings Limited

–

25

Marketing and wholesale of jewellery.

(3)

Equity accounting is based on results to 30 September 2010, adjusted for material transactions.

Investment in joint venture comprises:

Name

Effective %

Description

2010

2009

AuruMar (Pty) Limited

50

50

Global exploration of marine deposits containing gold as

the primary mineral.

Figures in million

2010

2009

SA Rands

11 Investment in subsidiaries

Shares at cost:

Advanced Mining Software Limited

2

2

AGA Zerps Holding Limited

5,028

–

AGRe Insurance Company Limited

14

14

AngloGold Ashanti Americas Investments Limited

–

849

AngloGold Ashanti Holdings plc

32,341

27,677

AngloGold Ashanti USA Incorporated

2,722

2,722

AngloGold Namibia (Pty) Limited

51

51

AngloGold Offshore Investments Limited

–

327

Eastvaal Gold Holdings Limited

917

917

Gansu Jinchanggou Mining Company Limited

15

15

Nuclear Fuels Corporation of SA (Pty) Limited

7

7

Rand Refinery Limited

116

116

41,213

32,697

During November 2010, a number of the dormant subsidiaries of the group unbundled their underlying assets as part of a

rationalisation process to consolidate cross shareholdings, simplify the corporate structure and eliminate unnecessary costs

relating to these entities.

As a result of the rationalisation, the company received dividends in specie of R17,693m (note 1). The accounting standards

do not allow the offset of the dividends in specie against the carrying values of the investments in subsidiaries and accordingly

the carrying values were subject to impairment testing. Impairments following the restructuring of R13,788m were recorded.

P

350

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

12 Other investments

Listed investment

Available-for-sale
Balance at beginning of year

–

–

Additions

30

–

Fair value adjustments

(1)

–

Balance at end of year

29

–

Market value of listed investment

29

–

The available-for-sale investment consists of ordinary shares in Simmer & Jack Mines
Limited received as consideration for the sale of Tau Lekoa mine.

The company's listed available-for-sale equity investment is susceptible to market price
risk arising from uncertainties about the future value of the investment.

Unlisted investments

Available-for-sale
Balance at beginning of year

2

2

Disposals

(1)

–

Balance at end of year

(1)

1

2

The available-for-sale investments consist primarily of the Chamber of Mines Building
Company Limited.

Held-to-maturity
Balance at beginning of year

14

14

Balance at end of year

14

14

Book value of unlisted investments

15

16

The investment held-to-maturity consists of the Gold of Africa Museum.

Total other investments (note 30)

44

16

(1)

There is no active market for the unlisted equity investments and fair value cannot
be reliably measured. The unlisted equity investments are carried at cost. The
company does not intend to sell the investments in the foreseeable future.

13 Inventories

Work in progress
– metals in process

288

253

Finished goods
– gold doré/bullion

1

33

– by-products

267

233

Total metal inventories

556

519

Mine operating supplies

115

155

Total inventories

(1)

671

674

(1)

The amount of the write-down of metals in process, by-products and mine
operating supplies to net realisable value, and recognised as an expense is R6m
(2009: R1m). This expense is included in cost of sales which is disclosed in note 2.

Company – Notes to the financial statements

For the year ended 31 December

P

351

Company financial statements

Figures in million

2010

2009

SA Rands

14 Investment in Environmental Rehabilitation Trust Fund

Balance at beginning of year

294

294

Balance at end of year

294

294

The fund is managed by Rand Merchant Bank and invested mainly in equities,

government long bonds and other fixed-term deposits.

15 Intra-group balances

Advanced Mining Software Limited

(9)

(10)

AngloGold Ashanti Americas Investments Limited

–

(52)

AngloGold Ashanti Australia Limited

19

13

AngloGold Ashanti Colombia SA

7

–

AngloGold Ashanti Córrego do Sitío Mineração S.A.

28

23

AngloGold Ashanti (Ghana) Limited

82

85

AngloGold Ashanti Health (Pty) Limited

(3)

3

AngloGold Ashanti Holdings plc

(505)

(556)

AngloGold Ashanti (Iduapriem) Limited

22

9

AngloGold Ashanti North America Inc

26

18

AngloGold Ashanti Senegal Investments Limited

8

–

AngloGold Namibia (Pty) Limited

10

4

AngloGold Offshore Investments Limited

–

(5)

AngloGold South America Limited

(192)

(202)

Ashanti Goldfields Kilo Scarl

7

6

Cerro Vanguardia S.A.

4

2

Eastvaal Gold Holdings Limited

(604)

(604)

Geita Gold Mining Limited

40

88

Mineração Serra Grande S.A.

5

3

Nuclear Fuels Corporation of SA (Pty) Limited

121

86

Société Ashanti Goldfields de Guinée S.A.

31

28

(903)

(1,061)

Included in the statement of financial position as follows:

Non-current assets

413

387

Non-current liabilities

(1,316)

(1,448)

(903)

(1,061)

During 2009 a loan to a joint venture of R4m was reclassified to trade and other
receivables (note 17).

P

352

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

16 Other non-current assets

AngloGold Ashanti Limited Pension Fund (note 23)

1

38

Loans and receivables

Loan receivable at 31 December 2011 bearing interest at 3% per annum

4

5

Other non-interest bearing loans and receivables – receivable on various dates

–

2

5

45

Current portion of other non-current assets included in current assets

(4)

(1)

1

44

17 Trade and other receivables

Non-current

Other receivables

(1)

230

136

Amounts due from related parties (note 15)

–

4

230

140

Current

Trade receivables

94

92

Prepayments and accrued income

18

15

Recoverable tax, rebates, levies and duties

326

111

Amounts due from related parties

21

35

Interest receivable

54

12

Other receivables

14

23

527

288

Total trade and other receivables

757

428

Current trade receivables are non-interest bearing and are generally on terms less than 90 days.

During the year, trade receivables were impaired by R44m (2009: R67m).

(1)

The amounts receivable have been discounted to their present value at a rate of 9.25%
(2009: 9.25%).

18 Cash and cash equivalents

Cash and deposits on call

851

715

Money market instruments

149

1,005

(note 30)

1,000

1,720

Company – Notes to the financial statements

For the year ended 31 December

P

353

Company financial statements

Figures in million

2010

2009

SA Rands

19 Non-current assets and liabilities held for sale

Effective 17 February 2009, the interest in the Tau Lekoa mine together with the

adjacent Weltevreden, Jonkerskraal and Goedgenoeg project areas in South Africa

were classified as held for sale. Tau Lekoa was previously recognised as a combination

of tangible and current assets, current and long-term liabilities.

The purchase consideration consists of two components: an initial cash payment or

combination of cash payments and Simmer & Jack Mines Limited (Simmers) shares

together with future royalty payments.

The Department of Mineral Resources has transferred the mining rights for its Tau Lekoa

mine to Buffelsfontein Gold Mines Limited, a wholly owned subsidiary of Simmers. Full

ownership of Tau Lekoa and the adjacent properties of Weltevreden, Jonkerskraal and

Goedgenoeg passed to Simmers on 1 August 2010.

Following the classification of Tau Lekoa as held for sale, an impairment loss of R58m

(2009: R200m) was recognised to reduce the carrying amount of the disposal group

to the fair value less costs to sell (note 4).

–

529

Effective 3 November 2010, ISS International Limited (ISSI) was classified as held for

sale. AngloGold Ashanti Limited entered into a memorandum of understanding with The

Institute of Mine Seismology (IMS) relating to the disposal of ISSI. The transaction

was completed on 28 February 2011.

1

–

1

529

Non-current liabilities held for sale relating to Tau Lekoa mine

–

56

–

56

20 Share capital and premium

Share capital

Authorised

600,000,000 ordinary shares of 25 SA cents each

150

150

4,280,000 E ordinary shares of 25 SA cents each

1

1

2,000,000 A redeemable preference shares of 50 SA cents each

1

1

5,000,000 B redeemable preference shares of 1 SA cent each

–

–

152

152

Issued and fully paid

381,204,080 (2009: 362,240,669) ordinary shares of 25 SA cents each

(1)

95

90

2,806,126 (2009: 3,794,998) E ordinary shares of 25 SA cents each

1

1

2,000,000 (2009: 2,000,000) A redeemable preference shares of 50 SA cents each

1

1

778,896 (2009: 778,896) B redeemable preference shares of 1 SA cent each

–

–

97

92

P

354

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

20 Share capital and premium (continued)

Share premium

Balance at beginning of year

40,572

38,158

Ordinary shares issued

(1)

5,766

2,436

E ordinary shares cancelled

(90)

(22)

Balance at end of year

46,248

40,572

Share capital and premium

46,345

40,664

(1)

The most significant movement was the equity offering which resulted in the issue

of 18,140,000 (2009: 7,624,162) ordinary shares at an issue price of R308.37

(2009: R288.32) per share. Total proceeds of R5.6bn (2009: R2.2bn) were received.

The rights and restrictions applicable to the A and B redeemable preference shares:

A redeemable preference shares are entitled to:

•

an annual dividend, after payment in full of the annual dividend on the B preference

shares, equivalent to the balance of after tax profits from mining the Moab Mining

Right Area; and

•

on redemption, the nominal value of the shares and a premium per share equal to

the balance of the net proceeds from disposal of assets relating to the Moab Mining

Right Area, after redemption in full of the B preference shares payments of the

nominal value of the A preference shares.

B redeemable preference shares are entitled to:

•

an annual dividend limited to a maximum of 5% of their issue price from the period

that profits are generated from the Moab Mining Right Area; and

•

on redemption, the nominal value of the shares and a premium of up to R249.99

per share provided by the net proceeds from disposal of the assets relating to the

Moab Mining Right Area.

The Moab Mining Right Area consists of the Moab Khotsong mine operations.

The B preference shares will only be redeemable from any net proceeds remaining after

the disposal of the Moab Mining Right Area following permanent cessation of mining

activities. The maximum redemption price will be R250 per share.

In the event of any surplus remaining after the redemption in full of the B preference

shares, the A preference shares will be redeemable at such value as would cover the

outstanding surplus.

21 Borrowings

Unsecured

FirstRand Bank Limited loan facility (R1.5bn)

701

–

Interest charged at JIBAR plus 0.95% per annum. Loan is repayable in May 2011 and

is SA rand-based, the loan is subject to debt covenant arrangements for which no

default event occurred.

Company – Notes to the financial statements

For the year ended 31 December

P

355

Company financial statements

Figures in million

2010

2009

SA Rands

21 Borrowings (continued)

Secured

Finance leases

Turbine Square Two (Pty) Limited

259

258

The leases are capitalised at an implied interest rate of 9.8% per annum. Lease

payments are due in monthly instalments terminating in March 2022 and are SA rand-

based. The buildings financed are used as security for these loans.

Total borrowings (note 30)

960

258

Current portion of borrowings included in current liabilities

(703)

(2)

Total long-term borrowings

257

256

Amounts falling due

Within one year

703

2

Between two and five years

24

15

After five years

233

241

(note 30)

960

258

Undrawn facility

Undrawn borrowing facility as at 31 December is as follows:

FirstRand Bank Limited – SA rand

800

–

22 Environmental rehabilitation provisions

Provision for decommissioning

Balance at beginning of year

383

457

Change in estimates

(1)

192

(86)

Transfer to assets held for sale

(1)

(21)

Unwinding of decommissioning obligation (note 5)

36

33

Balance at end of year

610

383

Provision for restoration

Balance at beginning of year

386

440

Charge to income statement

130

13

Change in estimates

(1)

58

(61)

Transfer to assets held for sale

(1)

(13)

Unwinding of restoration obligation (note 5)

(2)

36

22

Utilised during the year

(14)

(15)

Balance at end of year

595

386

Total environmental rehabilitation provisions

1,205

769

(1)

The change in estimates relates to changes in laws and regulations governing the

protection of the environment and factors relating to rehabilitation estimates and a

change in the quantities of material in reserves and a corresponding change in the life

of mine plan. These provisions are expected to unwind beyond the end of the life

of mine.

(2)

Included in unwinding of restoration obligation is R13m (2009: nil) which is recoverable

from a third party. The asset is included in non-current debtors.

P

356

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

23 Provision for pension and post-retirement benefits

Defined benefit plans

The company has made provision for pension, provident and medical schemes covering

substantially all employees. The retirement schemes consist of the following:

AngloGold Ashanti Limited Pension Fund asset (group note 28)

(1)

(38)

Post-retirement medical scheme for AngloGold Ashanti Limited South African employees

(group note 28)

1,161

1,095

1,160

1,057

Transferred to other non-current assets (note 16):

– AngloGold Ashanti Limited Pension Fund

1

38

1,161

1,095

24 Deferred taxation

Deferred taxation relating to temporary differences is made up as follows:

Liabilities

Tangible assets

4,947

5,044

Inventories

–

47

Other

5

5

4,952

5,096

Assets

Provisions

963

738

Derivatives

–

2,451

Tax losses

1,113

11

Other

55

78

2,131

3,278

Net deferred taxation liability

2,821

1,818

The movement on the deferred tax balance is as follows:

Balance at beginning of year

1,818

2,624

Income statement movement (note 8)

930

(1,073)

Taxation on items included in other comprehensive income

50

248

Taxation on cost of ESOP Share Trust establishment

23

19

Balance at end of year

2,821

1,818

Company – Notes to the financial statements

For the year ended 31 December

P

357

Company financial statements

Figures in million

2010

2009

SA Rands

25 Trade and other payables

Trade payables

636

630

Accruals

3,333

1,107

3,969

1,737

Trade and other payables are non-interest bearing and are normally settled within 60 days.

26 Taxation

Balance at beginning of year

699

629

Payments during the year

(277)

(148)

Provision during the year (note 8)

(586)

218

Balance at end of year

(164)

699

Taxation asset included in trade and other receivables (note 17).

164

–

27 Cash generated from operations

Profit (loss) before taxation

6,619

(1,277)

Adjusted for:

Movement on non-hedge derivatives and other commodity contracts

527

4,146

Amortisation of tangible assets (notes 2, 6 and 9)

2,450

2,217

Finance costs and unwinding of obligations (note 5)

107

89

Environmental, rehabilitation and other expenditure

101

(85)

Special items

749

385

Impairment of investment in subsidiaries (note 11)

13,788

–

Impairment of investment in Margaret Water Company (note 10)

6

4

Interest received (note 1)

(127)

(158)

Dividends received from subsidiaries (note 1)

(18,304)

(543)

Foreign currency translation on intergroup loans

(93)

(221)

Other non-cash movements

26

123

Movements in working capital

(59)

19

5,790

4,699

Movements in working capital:

Decrease (increase) in inventories

5

(30)

(Increase) decrease in trade and other receivables

(357)

20

Increase in trade and other payables

293

29

(59)

19

P

358

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

28 Related parties

Material related party transactions were as follows:

Sales and services rendered to related parties

Joint ventures

137

155

Associates

(5)

(1)

Subsidiaries

369

397

Purchases and services acquired from related parties

Associates

20

16

Subsidiaries

361

290

Outstanding balances arising from sale of goods and services and other loans due by

related parties

Joint ventures

21

34

Associates

17

34

Subsidiaries

707

681

Outstanding balances arising from purchases of goods and services and other loans

owed to related parties

Subsidiaries

1,316

1,448

Amounts owed to/due by related parties are unsecured and non-interest bearing. Terms relating to associate and joint venture

related parties are detailed in note 10.

Management fees, royalties, interest and net dividends from subsidiaries amounts to R17,794m (2009: R40m). Dividends of

R17,693m were received in specie and R611m were received in cash (2009: in cash R1m).

The company has refining arrangements with various refineries around the world including Rand Refinery Limited (Rand

Refinery) in which it holds a 53% interest. Rand Refinery refines all of the group’s South African gold production and some of

the group’s African (excluding South Africa) gold production. Rand Refinery charges AngloGold Ashanti Limited a refining fee.

The company did not receive any claims from its insurance subsidiary, AGRe Insurance Company Limited (2009: R68m).

Doubtful debts expensed during the year amounted to R11m (2009: R13m).

Details of guarantees to related parties are included in note 29.

Shareholders

The top 20 shareholders of the company are detailed on page 385.

Refer to page 371 for the list of principal subsidiaries and operating entities.

Company – Notes to the financial statements

For the year ended 31 December

P

359

Company financial statements

Figures in million

2010

2009

SA Rands

28 Related parties (continued)

Directors and other key management personnel

Details relating to directors’ emoluments and shareholdings in the company are

disclosed in the Remuneration and Directors’ reports. (Detailed from page 214).

Compensation to key management personnel included the following:

– short-term employee benefits

97

92

– post-employment benefits

12

13

– share-based payments

9

23

118

128

29 Contractual commitments and contingencies

Operating leases

At 31 December 2010, the company was committed to making the following payments

in respect of operating leases for amongst others, the hire of plant and equipment and

land and buildings. Certain contracts contain renewal options and escalation clauses for

various periods of time.

Expiry:

– within one year

41

18

– between one and two years

42

–

83

18

Finance leases

The company has finance leases for buildings and motor vehicles. The building leases have terms of renewal but no purchase

options and escalation clauses. The motor vehicle leases have no purchase option and have escalation clauses. Renewals are

at the option of the lessee. Future minimum lease payments under finance lease contracts together with the present value of

the net minimum lease payments are as follows:

Present

Present

Minimum

value of

Minimum

value of

Figures in million

payments

payments

payments

payments

SA Rands

2010

2009

Within one year

25

–

25 –

After one year but not more than five years

127

31

117 18

More than five years

314

228

349 240

Total minimum lease payments

466

259

491 258

Amounts representing finance charges

(207)

–

(233)

–

Present value of minimum lease payments

259

259

258 258

P

360

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

Figures in million

2010

2009

SA Rands

29 Contractual commitments and contingencies (continued)

Capital commitments

Acquisition of tangible assets

Contracted for

177

506

Not contracted for

2,554

4,676

Authorised by the directors

2,731

5,182

Allocated to:

Project capital

– within one year

632

244

– thereafter

608

1,082

1,240

1,326

Stay-in-business capital

– within one year

1,491

3,284

– thereafter

–

572

1,491

3,856

Purchase obligations

Contracted for

– within one year

244

95

– thereafter

45

–

289

95

Purchase obligations represent contractual obligations for the purchase of mining contract services, supplies, consumables,

inventories, explosives and activated carbon.

To service these capital commitments, purchase obligations and other operational requirements, the company is dependent on

existing cash resources, cash generated from operations and borrowing facilities.

Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject

to foreign investment, exchange control laws and regulations and the quantity of foreign exchange available in offshore

countries. In addition, distributions from joint ventures are subject to the relevant board approval.

The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent

that external borrowings are required, the company’s covenant performance indicates that existing financing facilities will be

available to meet the commitments detailed above. To the extent that any of the financing facilities mature in the near future,

the company believes that sufficient measures are in place to ensure that these facilities can be refinanced.

Summary of contracted uranium sales as at 31 December 2010

Refer to group note 34 for a summary of contracted uranium sales.

Company – Notes to the financial statements

For the year ended 31 December

P

361

Company financial statements

29 Contractual commitments and contingencies (continued)

Liabilities

Liabilities

included

included

Guarantees

in the

Guarantees

in the

and

statement

and

statement

contin-

of financial contin-

of financial

Figures in million

gencies

position

gencies position

SA Rands

2010

2009

Contingent liabilities

Groundwater pollution – South Africa

(1)

–

–

–

–

Deep groundwater pollution – South Africa

(2)

–

–

–

–

ODMWA litigation

(3)

–

–

–

–

Contingent asset

Royalty – Tau Lekoa Gold Mine

(4)

–

–

–

–

Guarantees

Financial guarantees

Convertible bonds

(5)

4,813

309

5,446 400

Syndicated loan facility

(6)

6,570

363

8,550 30

Term facility

(7)

–

–

1,859 24

Rated bonds

(8)

6,570

1,704

–

–

Mandatory convertible bonds

(9)

5,184

227

–

–

Oro Group (Pty) Limited

(10)

100

–

100 –

Hedging guarantees

Ashanti Treasury Services

(11) (14)

–

–

3,293 –

Geita Management Company

(12) (14)

–

–

3,213 –

AngloGold South America

(13) (14)

–

–

1,071 –

AngloGold USA Trading Company

(13) (14)

–

–

1,679 –

Cerro Vanguardia S.A.

(13) (14)

–

–

–

–

23,237

2,603

25,211 454

Contingent liabilities

(1)

The company has identified groundwater contamination plumes at its Vaal River and West Wits operations in South Africa,

which have occurred primarily as a result of seepage from mine residue stockpiles. Numerous scientific, technical and legal

studies have been undertaken to assist in determining the magnitude of the contamination and to find sustainable

remediation solutions. The company has instituted processes to reduce future potential seepage and it has been

demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvement in some

instances. Furthermore, literature reviews, field trials and base line modelling techniques suggest, but are not yet proven,

that the use of phyto-technologies can address the soil and groundwater contamination at all South African operations.

Subject to the completion of trials and the technology being a proven remediation technique, no reliable estimate can be

made for the obligation.

(2)

The company has identified a flooding and future pollution risk posed by deep groundwater in the Klerksdorp and Far West

Rand goldfields. Various studies have been undertaken by AngloGold Ashanti Limited since 1999. Due to the

interconnected nature of mining operations, any proposed solution needs to be a combined one supported by all the mines

located in these gold fields. As a result, the Department of Mineral Resources and affected mining companies are involved

in the development of a “Regional Mine Closure Strategy”. In view of the limitation of current information for the accurate

estimation of a liability, no reliable estimate can be made for the obligation.

P

362

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

29 Contractual commitments and contingencies (continued)

Contingent asset

(3)

The case of Mr Thembekile Mankayi was heard in the High Court of South Africa in June 2008, and an appeal heard in the
Supreme Court of Appeals in 2010. In both instances judgement was awarded in favour of AngloGold Ashanti Limited. A
further appeal that was lodged by Mr Mankayi was heard in the Constitutional Court in 2010. Judgement in the
Constitutional Court was handed down on 3 March 2011.

Following the judgement, Mr Mankayi’s executor may proceed with his case in the High Court. This will comprise, amongst
others, providing evidence showing that Mr Mankayi contracted silicosis as a result of negligent conduct on the part of
AngloGold Ashanti.

The company is still studying the details of the Constitutional Court judgement and will defend the case and any subsequent
claims on their merits. Should other individuals or groups lodge similar claims, these too would be defended by the
company and adjudicated by the Courts on their merits. In view of the limitation of current information for the accurate
estimation of a possible liability, no reliable estimate can be made for this possible obligation.

(4)

As a result of the sale of the interest in the Tau Lekoa Gold Mine during 2010, the company is entitled to receive a royalty
on the production of a total 1.5Moz by the Tau Lekoa Gold Mine and in the event that the average monthly rand price of
gold exceeds R180,000/kg (subject to inflation adjustment). Where the average monthly rand price of gold does not exceed
R180,000/kg (subject to inflation adjustment), the ounces produced in that quarter do not count towards the total 1.5Moz
upon which the royalty is payable. The royalty will be determined at 3% of the net revenue (being gross revenue less state
royalties) generated by the Tau Lekoa assets. Royalties of R21m were received during the year.

Guarantees

(5)

The company has guaranteed all payments and other obligations of AngloGold Ashanti Holdings Finance plc regarding the
convertible bonds amounting to R5,446m issued during 2009, with a maturity date of 22 May 2014 and a fixed coupon of
3.5% payable semi-annually. The company's obligations regarding the guarantees will be direct, unconditional and
unsubordinated.

(6)

The company, together with AngloGold Ashanti Holdings plc and AngloGold Ashanti USA Incorporated, has provided
guarantees for all payments and other obligations of the borrowers and the other guarantors under the $1bn four-year
syndicated loan facility. The company also guaranteed all payments and other obligations of the wholly owned subsidiaries
AngloGold Ashanti Holdings plc, AngloGold Ashanti Australia Limited and AngloGold Ashanti USA Incorporated regarding
the $1,150m syndicated loan facility which was repaid and cancelled during April 2010.

(7)

The company has guaranteed all payments and other obligations of the wholly owned subsidiary AngloGold Ashanti
Holdings plc regarding the $250m term facility which was repaid and cancelled during April 2010.

(8)

The company has fully and unconditionally guaranteed all payments and other obligations of AngloGold Ashanti Holdings
plc regarding the issued $700m 5.375% rated bonds due 15 April 2020 and the issued $300m 6.5% rated bonds due
15 April 2040.

(9)

The company has fully and unconditionally guaranteed on a subordinated basis all payments and other obligations of
AngloGold Ashanti Holdings Finance plc regarding the $789m 6% mandatory convertible bonds issued during 2010, with
a maturity date of 15 September 2013.

(10)

The company has provided sureties in favour of a lender on a gold loan facility with its affiliate Oro Group (Pty) Limited and
one of its subsidiaries to a maximum value of R100m (2009: R100m). The suretyship agreements have a termination notice
period of 90 days.

(11)

The company, together with its wholly owned subsidiary, AngloGold Ashanti Holdings plc, has provided guarantees to
several counterparty banks for the hedging commitment of its wholly owned subsidiary Ashanti Treasury Services
Limited (ATS).

(12)

The company together with its wholly owned subsidiary, AngloGold Ashanti Holdings plc have issued hedging guarantees
to several counterparty banks in which they have guaranteed the due performance by the Geita Management Company
Limited (GMC) of its obligations under or pursuant to the hedging arrangements entered into by GMC, and to the payment
of all money owing or incurred by GMC as and when due.

(13)

The company has issued gold delivery guarantees to several counterparty banks in which it guarantees the due
performance of its subsidiaries AngloGold USA Trading Company, AngloGold South America Limited and Cerro Vanguardia
S.A. under their respective gold hedging agreements.

(14)

At 31 December 2010, the group had no open gold hedge contracts.

Company – Notes to the financial statements

For the year ended 31 December

P

363

Company financial statements

30 Financial risk management activities

In the normal course of its operations, the company is exposed to gold price, other commodity price, foreign exchange, interest

rate, liquidity, equity price and credit risks. In order to manage these risks, the company may enter into transactions which make

use of both on- and off-balance sheet derivatives. The company does not acquire, hold or issue derivatives for speculative

purposes. The company has developed a comprehensive risk management process to facilitate, control and monitor these

risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies,

counterparty limits and controlling and reporting structures.

Managing risk in the company
Risk management activities within the company are the ultimate responsibility of the board of directors. The chief executive
officer is responsible to the board of directors for the design, implementation and monitoring of the risk management plan. The
newly formed Risk and Information Integrity Committee is responsible for overseeing risk management plans and systems and
the Audit and Corporate Governance Committee oversees financial risks which include a review of treasury activities and the
company’s counterparties.

The financial risk management objectives of the company are defined as follows:

•

safeguarding the company's core earnings stream from its major assets through the effective control and management of

gold price risk, other commodity risk, foreign exchange risk and interest rate risk;

•

effective and efficient usage of credit facilities in both the short and long term through the adoption of reliable liquidity

management planning and procedures;

•

ensuring that investment and hedging transactions are undertaken with creditworthy counterparties; and

•

ensuring that all contracts and agreements related to risk management activities are co-ordinated, consistent throughout

the company and that they comply where necessary with all relevant regulatory and statutory requirements.

Gold price and foreign exchange risk

Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of

gold. The gold market is predominately priced in US dollars which exposes the company to the risk that fluctuations in the

SA rand/US dollar exchange rate may also have an adverse effect on current or future earnings. The company is also exposed

to certain by-product commodity price risk.

During the year the company had utilised derivatives as part of its hedging of these risks. In order to provide financial exposure

to the rising spot price of gold and the potential for enhanced cash-flow generation the company completed its final tranche

of the hedge buy-back programme and settled all forward gold and foreign exchange contracts that had been used by the

company in the past to manage those risks. At year-end, there were no net forward sales contracts (2009: 1,189kg), net call

options sold (2009: 44,742kg) and net put options sold (2009: 15,381kg) outstanding.

Cash flow hedges

The company's cash flow hedges consist of commodity forward contracts that are used to protect against exposures to

variability in future commodity cash flows. The amounts and timing of future cash flows are projected for each portfolio of

financial assets and liabilities on the basis of their contractual terms and other relevant factors, including estimates of

prepayments and defaults. The contractual cash flows across all portfolios over time form the basis for identifying gains and

losses on the effective portions of derivatives designated as cash flow hedges of forecast transactions. Gains and losses are

initially recognised directly in other comprehensive income and are transferred to earnings as gold income when the forecast

transactions affect the income statement.

The company does not have any cash flow hedge contracts relating to product sales as at 31 December 2010.

The gains and losses on ineffective portions of such derivatives are recognised in the income statement. During the year to

31 December 2010, a loss of nil (2009: R22m) was recognised on non-hedge derivatives and other commodity contracts in

the income statement due to hedge ineffectiveness.

P

364

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

30 Financial risk management activities (continued)

Non-hedge derivatives

Loss on non-hedge derivatives and other commodity contracts is summarised as follows:

Figures in million

2010

2009

SA Rands

Loss on hedge buy-back costs

(7,631)

–

(Loss) gain on realised non-hedge derivatives and other commodity contracts

(932)

58

Gain (loss) on unrealised non-hedge derivatives and other commodity contracts

7,080

(4,148)

Loss on non-hedge derivatives and other commodity contracts per the income statement

(1,483)

(4,090)

The loss on non-hedge derivatives and other commodity contracts was R1,483m (2009: R4,090m). This was as a result of the

accelerated hedge book settlement, normal realised losses on non-hedge derivatives and the revaluation of non-hedge

derivatives resulting from changes in the prevailing spot gold price, exchange rates, interest rates, volatilities and credit risk

compared to the previous year. The realised loss as a result of accelerated settlement of non-hedge derivatives was R7,631m

(2009: nil) and was due to the hedge book elimination that was effected during the current year.

Net open hedge position as at 31 December 2010

As at 31 December 2010, the company had no outstanding commitments against future production as a result of the

elimination of the hedge book. At 31 December 2009, the marked-to-market value of all derivatives, irrespective of accounting

designation, making up the hedge position was negative R6.98bn based on a gold price of $1,102 per ounce, an exchange

rate of $1 = R7.4350 and the market interest rates and volatilities prevailing at that date.

The table below reflects the hedge position as at 31 December 2010.

Summary: All open contracts in the company’s commodity hedge position as at 31 December 2010

Year

2010

2009

US Dollar/Gold

Forward contracts

Amount (kg)

–

2,433

(1)

$/oz

–

$532

(1)

Put options sold

Amount (kg)

–

14,137

$/oz

–

$665

Call options sold

Amount (kg)

–

43,498

$/oz

–

$522

(1)

Represents a net short gold position and net short US dollars position, resulting from both forward sales and purchases for

the period.

Company – Notes to the financial statements

For the year ended 31 December

P

365

Company financial statements

30 Financial risk management activities (continued)

Net open hedge position as at 31 December 2010 (continued)

Summary: All open contracts in the company’s commodity hedge position as at 31 December 2010 (continued)

Year

2010

2009

SA Rand/Gold

Forward contracts

Amount (kg)

–

(1,244)

(2)

R/kg

–

R232,225

(2)

Put options sold

Amount (kg)

–

1,244

R/kg

–

R240,326

Call options sold

Amount (kg)

–

1,244

R/kg

–

R262,832

Total net gold

Delta (kg)

–

(41,235)

(3)

Delta (oz)

–

(1,325,722)

(3)

The open delta hedge position of the company at 31 December 2010 was nil (31 December 2009: 1.33Moz or 41t).

(2)

Represents a net long gold position and net short US dollars/rands position, resulting from both forward sales and

purchases for the period.

(3)

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 December 2009.

As at 31 December 2010, the company had no open forward exchange or option contracts in its currency and gold

hedge position.

The mix of hedging instruments, the volume of production hedged and the tenor of the hedge book is continually reviewed in

the light of changes in operational forecasts, market conditions and the company's hedging policy.

Forward sales contracts require the future delivery of the underlying at a specified price.

A put option gives the put buyer the right, but not the obligation, to sell the underlying to the put seller at a predetermined price

on a predetermined date.

A call option gives the call buyer the right, but not the obligation, to buy the underlying from the call seller at a predetermined

price on a predetermined date.

P

366

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

30 Financial risk management activities (continued)

Interest rate and liquidity risk

Refer note 35 in the group financial statements.

The following are the contractual maturities of financial liabilities, including interest payments.

Non-derivative financial liabilities

Between one

Between two

Within one year

and two years

and five years

After five years

Effective

Effective

Effective

Effective

rate

rate

rate

rate

a

Million

%

Million

%

Million

%

Million

%

2010 ZAR

Financial guarantees

(4)

100

–

16,567

3.7

6,570

5.7

Borrowings

745

7.3

28

9.8

99

9.8

314

9.8

Trade and other payables

3,969

–

–

–

2009 ZAR

Financial guarantees

(4)

10,409 1.6

–

5,446

3.5

100

Borrowings

26 9.8

26 9.8

91 9.8

350 9.8

Trade and other payables

1,420

–

–

–

(4)

Not included in the statement of financial position.

Derivative financial assets and (liabilities)

At 31 December 2010, the company had no open hedge and non-hedge contracts as a result of the hedge book elimination.

The following were the undiscounted forecast principal cash flows arising from all derivative contracts included in the statement

of financial position (cash flow hedges and non-hedges) as at 31 December 2009 based on scheduled maturity dates:

Between

Between

Within

one and

two and

After

Figures in million

one year

two years

five years

five years

Total

SA Rands

At 31 December 2009

Cash inflows from assets

658

217

93

–

968

Cash outflows from liabilities

(2,172)

(2,694)

(3,746)

–

(8,612)

Net cash outflows

(1,514)

(2,477)

(3,653)

–

(7,644)

Company – Notes to the financial statements

For the year ended 31 December

P

367

Company financial statements

30 Financial risk management activities (continued)

Credit risk
Refer note 35 in the group financial statements.

The combined maximum credit risk exposure of the company is as follows:

Figures in million

2010

2009

SA Rands

Forward sale commodity contracts

–

944

Total derivatives

–

944

Other investments (note 12)

14

14

Other non-current assets

4

7

Trade and other receivables

413

302

Cash restricted for use

9

8

Cash and cash equivalents (note 18)

1,000

1,720

Total financial assets

1,440

2,995

Financial guarantees

23,237

15,955

Hedging guarantees

–

9,256

Total

24,677

28,206

The company has trade and other receivables that are past due totalling R58m (2009: R153m) and an impairment totalling
R44m (2009: R67m). Trade and other receivables arise mainly due to intergroup transactions. The principal receivables
continue to be in a sound financial position. No other financial assets are past due but not impaired.

Fair value of financial instruments
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market
information. The estimated fair value of the company’s financial instruments as at 31 December are as follows:

Type of instrument

Carrying

Fair

Carrying

Fair

Figures in million

amount

value

amount

value

SA Rands

2010

2009

Financial assets
Other investments (note 12)

44 43 16 14

Other non-current assets

4 4

7 8

Trade and other receivables

413 413 302 302

Cash restricted for use

9 9 8 8

Cash and cash equivalents (note 18)

1,000 1,000 1,720 1,720

Derivatives

–

–

944 944

Financial liabilities
Borrowings (note 21)

960 960

258 258

Trade and other payables

3,969 3,969

1,737 1,737

Derivatives

–

–

7,948 7,948

The amounts in the tables above do not necessarily agree with the totals in the notes as only financial assets and liabilities are
shown.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash restricted for use, cash and cash equivalents and trade and other payables
The carrying amounts approximate fair value because of the short-term duration of these instruments.

P

368

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

30 Financial risk management activities (continued)

Fair value of financial instruments (continued)
Trade and other receivables
The fair value of the non-current portion of trade and other receivables has been calculated using market interest rates.

Investments and other non-current assets
Listed equity investments classified as available-for-sale are carried at fair value while fixed income investments and other non-
current assets are carried at amortised cost. The fair value of fixed income investments and other non-current assets has been
calculated using market interest rates. The unlisted equity investment is carried at cost. There is no active market for the
unlisted equity investment and fair value cannot be reliably measured.

Borrowings
The interest rate on the borrowings is reset on a short-term floating rate basis, and accordingly the carrying amount is
considered to approximate fair value.

Derivatives
The fair value of derivatives are estimated based on ruling market prices, volatilities, interest rates and credit risk as at
31 December and includes all derivatives carried in the statement of financial position.

The company uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the
level of volatility. These volatility levels are themselves not exchange traded. The company uses volatility inputs supplied by
leading market participants (international banks).

There are no open hedge positions as a result of the hedge book elimination during 2010.

Derivative assets (liabilities) comprise the following:

Assets

Liabilities

Cash flow

Non-

Cash flow

Non-

hedge

hedge

hedge

hedge

Figures in million

accounted

accounted

Total

accounted

accounted

Total

SA Rands

2009

2009

Commodity option contracts

–

–

–

–

(6,127)

(6,127)

Forward sale commodity
contracts

–

944 944 (276)

(1,545)

(1,821)

Total derivatives

–

944

944

(276)

(7,672)

(7,948)

At 31 December 2010, the company had no open derivative positions in the hedge book. The impact of credit risk
adjustment totalled R393m at 31 December 2009.

The company uses the following hierarchy for determining and disclosing the fair value of financial instruments:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Company – Notes to the financial statements

For the year ended 31 December

P

369

Company financial statements

30 Financial risk management activities (continued)

Fair value of financial instruments (continued)

The following table sets out the company's financial assets and liabilities measured at fair value by level within the fair value
hierachy as at 31 December.

Type of instrument

Figures in million

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

SA Rands

2010

2009

Assets measured at fair

value

Financial assets at fair value

through profit or loss

Forward sale commodity

contracts – non-hedged

–

–

–

–

–

944 –

944

Available-for-sale financial assets

Equity securities

29

–

–

29

–

–

–

–

Liabilities measured at

fair value

Financial liabilities at

fair value through profit or

loss

Commodity option contracts

– non-hedged

–

–

–

–

–

6,127 –

6,127

Forward sale commodity

contracts – non-hedged

–

–

–

–

–

1,545 –

1,545

Cash flow hedges

Forward sale commodity

contracts – cash flow

hedged

–

–

–

–

–

276 –

276

The amounts in the tables above do not necessarily agree with the totals in the notes as only financial assets and liabilities

are shown.

P

370

AngloGold Ashanti Annual Financial Statements 2010

Company financial statements

30 Financial risk management activities (continued)

Sensitivity analysis

Derivatives

A principal part of the company's management of risk is to monitor the sensitivity of derivative positions in the hedge book to

changes in the underlying factors,viz. commodity price, foreign exchange rate and interest rates under varying scenarios.

The following table discloses the approximate sensitivities of the US dollar’s marked-to-market value of the hedge book to key

underlying factors at 31 December 2009 (actual changes in the timing and amount of the following variables may differ from

the assumed changes below). There are no open hedge positions as a result of the hedge book elimination during 2010.

Cash flow

Total

Change in

hedge

Non-hedge

change in

underlying

accounted

accounted

fair value

factor (+)

million

million

million

SA Rands

2009

Currency (R/$)

Spot(+R1)

–

12

12

Gold price ($/oz)

Spot(+$250)

(93)

(2,492)

(2,585)

ZAR interest rate (%)

IR(+1.5%)

1

–

1

Cash flow

Total

Change in

hedge

Non-hedge

change in

underlying

accounted

accounted

fair value

factor (-)

million

million

million

SA Rands

2009

Currency (R/$)

Spot(-R1)

–

(42)

(42)

Gold price ($/oz)

Spot(-$250)

93

2,170

2,263

ZAR interest rate (%)

IR(-1.5%)

(1)

–

(1)

IR represents interest rate.

Interest rate risk on other financial assets and liabilities (excluding derivatives)

Refer note 35 in the group financial statements.

31 Capital management

Capital is managed on a group basis only and not on a company basis. Refer to note 36 in the group financial statements.

Company – Notes to the financial statements

For the year ended 31 December

P

371

Principal subsidiaries and operating entities

For the year ended 31 December

Principal subsidiaries are those subsidiaries that hold material contracts and/or act as borrowers and/or guarantors of such material
contracts.

Country of

incorporation

Shares held

Percentage held

2010

2009

2010

2009

Principal subsidiaries
AngloGold Ashanti Australia Limited

2

257,462,077

257,462,077

100

100

AngloGold Ashanti Holdings plc

7

4,095,658,550

3,785,771,334

100

100

*723,254,927

*1,304,730,736

AngloGold Ashanti Holdings Finance plc

7

100

100

100

100

AngloGold Offshore Investments Limited

4

1,000

5,000,000

100

100

AngloGold Ashanti USA Incorporated

11

234

234

100

100

*500

*500

Operating entities

(1)

AngloGold Ashanti Córrego do Sitío Mineração S.A.

3

4,167,085,000

833,417,000

100

100

AngloGold Ashanti (Ghana) Limited

(2)

5

132,419,585

132,419,585

100

100

AngloGold Ashanti (Iduapriem) Limited

5

66,270

66,270

100

100

AngloGold Australia (Sunrise Dam) Pty Limited

2

2

2

100

100

AngloGold Namibia (Pty) Limited

9

10,000

10,000

100

100

Cerro Vanguardia S.A.

1

13,875,000

13,875,000

92.50

92.50

AngloGold Ashanti (Colorado) Corp

(3)

11

1,250

1,250

100

100

Geita Gold Mining Limited

10

2

2

100

100

Mineração Serra Grande S.A.

3

499,999,996

499,999,996

50

50

Societé Ashanti Goldfields de Guinée S.A.

6

3,486,134

3,486,134

85

85

Société des Mines de Morila S.A.

(4)

8

400

400

40

40

Société d'Exploitation des Mines d'Or de Sadiola S.A.

(4)

8

38,000

38,000

41

41

Société d'Exploitation des Mines d'Or de Yatela S.A.

(4)

8

400

400

40

40

Teberebie Goldfields Limited

5

2,066,667

2,066,667

100

100

* Indicates preference shares

(1)

All the operating mines in South Africa, namely, Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka, Tau Lekoa (sold
1 August 2010) and TauTona are all held by the parent company, AngloGold Ashanti Limited.

(2)

Operates the Obuasi mine in Ghana, a wholly owned operation.

(3)

Operates the Cripple Creek & Victor gold mine, a wholly owned operation.

(4)

Represents a joint venture entity.

Country of incorporation – key
1

Argentina

7

Isle of Man

2

Australia

8

Mali

3

Brazil

9

Namibia

4

British Virgin Islands (BVI)

10 Tanzania

5

Ghana

11 United States of America

6

Republic of Guinea

The aggregate interest in the net profits and losses in subsidiaries is as follows:

US Dollars millions

2010

2009

Net profits

63

1,090

Net losses

(963)

(1,449)

(900)

(359)

SA Rands millions

2010

2009

Net profits

460

9,099

Net losses

(7,033)

(12,253)

(6,573)

(3,154)

}

}

P

372

AngloGold Ashanti Annual Financial Statements 2010

Non-GAAP disclosure

Non-GAAP disclosure

For the year ended 31 December

From time to time, AngloGold Ashanti Limited may publicly disclose certain ‘Non-GAAP financial measures’ in the course of its

financial presentations, earnings releases, earnings conference calls and otherwise.

The group uses certain Non-GAAP performance measures and ratios in managing the business and may provide users of this

financial information with additional meaningful comparisons between current results and results in prior operating periods. The Non-

GAAP financial measures (headline earnings and gross profit) are used to adjust for fair value movements on the convertible and

mandatory bonds as well as the highly volatile marked-to-market movements on unrealised non-hedge derivatives and other

commodity contracts which can only be measured with certainty on settlement of the contracts. Non-GAAP financial measures

should be viewed in addition to, and not as an alternative to, the reported operating results or cash flow from operations or any other

measure of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable

to similarly titled measures that other companies use.

2009

2010

Figures in million

2010

2009

SA Rands

US Dollars

1

Headline loss adjusted for unrealised non-
hedge derivatives, other commodity
contracts and fair value adjustment on the
convertible and mandatory bonds

(1)

(adjusted headline loss)

(6,790)

962

Headline earnings (loss) (group note 13)

122

(852)

(Gain) loss on unrealised non-hedge derivatives and other

8,095

(15,891)

commodity contracts

(2,273)

990

Deferred tax on unrealised non-hedge derivatives and

(1,765)

2,376

other commodity contracts (group note 12)

337

(221)

Fair value adjustment on option component of convertible

249

(39)

bonds

1

33

–

382

Fair value loss on mandatory convertible bonds

55

–

(211)

(12,210)

Adjusted headline loss

(1)

(1,758)

(50)

6,006

17,862

Hedge buy-back and related costs net of taxation

2,545

758

Adjusted headline earnings excluding hedge buy-back

5,795

5,652

costs

787

708

(1)

Loss (gain) on unrealised non-hedge derivatives and other commodity contracts in the income statement comprises the change
in fair value of all non-hedge derivatives and other commodity contracts, from the previous reporting date or date of recognition
(if later) through to the current reporting date.

Headline loss adjusted for the effect of unrealised non-hedge derivatives, other commodity contracts and fair value adjustment
on convertible and mandatory bonds, is intended to illustrate earnings after adjusting for:

– the unrealised fair value change in contracts that were 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;

– the unrealised fair value change in the option component of the convertible bonds amounted to $1m, R39m (2009: $33m,

R249m);

– the unrealised fair value change on the the mandatory bonds amounted to $55m, R382m (2009: nil)

– the unrealised fair value change in the onerous uranium contracts; and

– the unrealised fair value change of warrants on shares and the embedded derivative.

Management considers this an important measure for investors as it is used to assess the performance of the operations after the

removal of certain accounting volatility that does not directly impact the operations.

P

373

2009

2010

Figures in million                                                                                          2010

2009

SA Rands

US Dollars

1

Headline earnings adjusted for unrealised
non-hedge derivatives, other commodity
contracts and fair value adjustment on the
convertible and mandatory bonds

(1)

(adjusted headline earnings) (continued)

(58)

(3,283)

Cents per share

(473)

(14)

This calculation is based on adjusted headline loss of
$1,758m, R12,210m (2009: $50m, R211m) and
371,870,821 (2009: 361,228,295) shares being the
weighted average number of ordinary shares in issue
during the financial year.

2

Gross profit (loss) adjusted for unrealised
non-hedge derivatives and other commodity
contracts (adjusted gross (loss) profit)

Reconciliation of gross profit (loss) to gross (loss) profit
adjusted for unrealised non-hedge derivatives and other
commodity contracts

(4,409)

7,864

Gross profit (loss)

1,082

(578)

(Gain) loss on unrealised non-hedge derivatives and

8,095

(15,891)

other commodity contracts

(2,273)

990

Gross (loss) profit adjusted for unrealised non-hedge

3,686

(8,027)

derivatives and other commodity contracts

(1)

(1,191)

412

Gross (loss) profit adjusted for unrealised non-hedge
derivatives and other commodity contracts is intended to
illustrate earnings after adjusting for:

– The unrealised fair value change in contracts that were

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;

– The unrealised fair value change on the onerous

uranium contracts; and

– The unrealised fair value change of warrants on shares

and the embedded derivative.

Gross (loss) profit adjusted for unrealised non-hedge
derivatives and other commodity contracts is analysed by
origin as follows:

2,371

(3,900)

South Africa

(574)

263

486

(1,896)

Continental Africa

(287)

52

(112)

(1,528)

Australasia

(216)

(17)

2,006

44

Americas

(13)

242

Other, including corporate and non-gold producing

244

171

subsidiaries

24

28

4,995

(7,109)

(1,066)

568

(1,309)

(918)

Less equity accounted investments

(125)

(156)

3,686

(8,027)

(1,191)

412

P

374

AngloGold Ashanti Annual Financial Statements 2010

Non-GAAP disclosure

Non-GAAP disclosure

For the year ended 31 December

2009

2010

Figures in million                                                                                          2010

2009

SA Rands

US Dollars

3

Loss on non-hedge derivatives and other
commodity contracts is summarised as
follows:

Group:

2,476

(2,073)

(Loss) gain on realised non-hedge derivatives

(277)

254

(6,315)

(18,954)

Hedge buy-back costs

(2,698)

(797)

(8,095)

15,891

Gain (loss) on unrealised non-hedge derivatives

2,273

(990)

Loss on non-hedge derivatives and other commodity

(11,934)

(5,136)

contracts per the income statement

(702)

(1,533)

Company:

58

(932)

(Loss) gain on realised non-hedge derivatives

(125)

7

–

(7,631)

Hedge buy-back costs

(1,082)

–

(4,148)

7,080

Gain (loss) on unrealised non-hedge derivatives

1,003

(495)

Loss on non-hedge derivatives and other commodity

(4,090)

(1,483)

contracts per the income statement

(204)

(488)

4

Price received

30,745

38,833

Gold income per income statement

5,334

3,768

(1,056)

(1,173)

Adjusted for non-controlling interests

(161)

(132)

29,689

37,660

5,173

3,636

2,476

(2,073)

(Loss) gain on realised non-hedge derivatives

(277)

254

(6,315)

(18,954)

Hedge buy-back costs

(2,698)

(797)

Associates and equity accounted joint ventures’

shares of gold income including realised non-hedge

2,975

2,420

derivatives

330

357

Attributable gold income including realised non-hedge

28,825

19,053

derivatives

2,528

3,450

142,837

140,240

Attributable gold sold – kg and oz (000)

4,509

4,592

201,805

135,862

Revenue price per unit – R/kg and $/oz

561

751

P

375

2009

2010

Figures in million                                                                                        2010

2009

SA Rands

US Dollars

5

Total costs

18,905

20,238

Total cash costs (group note 4)

2,778

2,283

Adjusted for non-controlling interests and non-gold

(777)

(642)

producing companies

(90)

(91)

Associates and equity accounted joint ventures’

1,412

1,407

share of total cash costs

193

171

Total cash costs adjusted for non-controlling interests

19,540

21,003

and non-gold producing companies

2,881

2,363

110

166

Retrenchment costs (group note 4)

23

14

182

756

Rehabilitation and other non-cash costs (group note 4)

109

22

4,615

5,022

Amortisation of tangible assets (group note 4)

690

555

18

18

Amortisation of intangible assets (group note 4)

2

2

Adjusted for non-controlling interests and non-gold

(108)

(266)

producing companies

(37)

(12)

Associates and equity accounted joint ventures’

218

105

share of production costs

15

26

Total production costs adjusted for non-controlling

24,575

26,804

interests and non-gold producing companies

3,683

2,970

143,049

140,418

Gold produced – kg and oz (000)

4,515

4,599

136,595

149,577

Total cash cost per unit – R/kg and $/oz

638

514

171,795

190,889

Total production cost per unit – R/kg and $/oz

816

646

6

EBITDA

(1,859)

3,786

Operating profit (loss) per the income statement

518

(209)

4,615

5,022

Amortisation of tangible assets (group note 4)

690

555

18

18

Amortisation of intangible assets (group note 4)

2

2

Net impairments (reversals) of tangible assets (group

(5,115)

634

notes 6, 13, 15 and 24)

91

(683)

–

16

Impairment of investment (group notes 6, 13 and 18)

2

–

(Gain) loss on unrealised non-hedge derivatives and

8,095

(15,891)

other commodity contracts (note 3)

(2,273)

990

6,315

18,954

Hedge buy-back costs (note 3)

2,698

797

Mandatory convertible bond issue discount, underwriting

–

396

and professional fees

56

–

–

21

Exchange effects of equity raising

3

–

728

–

RMB derivative contract buy-back costs

–

94

Loss (profit) on disposal and abandonment of assets (group

(420)

191

note 6)

25

(49)

–

(314)

Profit on disposal of investments (group note 6)

(43)

–

1,394

936

Share of associates’ EBITDA

128

166

13,771

13,769

1,897

1,663

Management considers EBITDA to be an important measure to investors as it is used by the suppliers of funding as a requirement

for the calculation of compliance with debt covenants being net debt to EBITDA (covenant threshold 3:1). Net debt to EBITDA for

2010 is 0.68:1 (2009: 0.52:1).

P

376

AngloGold Ashanti Annual Financial Statements 2010

Non-GAAP disclosure

Non-GAAP disclosure

For the year ended 31 December

2009

2010

Figures in million                                                                                         2010

2009

SA Rands

US Dollars

7

Interest cover

13,771

13,769

EBITDA (note 6)

1,897

1,663

835

834

Finance costs (group note 7)

115

101

135

–

Capitalised finance costs (group notes 7 and 15)

–

15

970

834

115

116

14

17

Interest cover – times

16

14

8

Equity

22,524

27,023

Total equity per statement of financial position

4,113

3,030

–

5,739

Mandatory convertible bonds (group note 26)

(1)

874

–

22,524

32,762

Equity

4,987

3,030

9

Net debt

4,862

11,148

Borrowings – long-term portion

(1)

(group note 26)

1,697

654

9,493

876

Borrowings – short-term portion

(1)

(group note 26)

133

1,277

14,355

12,024

Total borrowings

1,830

1,931

(258)

(259)

Corporate office lease (group note 26)

(39)

(35)

1,019

757

Unamortised portion of the convertible and rated bonds

115

137

(481)

(283)

Cash restricted for use (group note 22)

(43)

(65)

(8,176)

(3,776)

Cash and cash equivalents (group note 23)

(575)

(1,100)

6,459

8,463

Net debt (group note 36)

1,288

868

(1)

The mandatory convertible bonds of $874m, R5,739m are treated as equity and excluded from borrowings.

P

377

2009

2010

Figures in million                                                                                       2010

2009

SA Rands

US Dollars

10 Net asset value – cents per share

22,524

27,023

Total equity per statement of financial position

4,113

3,030

–

5,739

Mandatory convertible bonds (group note 26)

874

–

22,524

32,762

Total equity

4,987

3,030

Number of ordinary shares in issue (millions) (group

366

384

note 25)

384

366

6,153

8,532

Net asset value – cents per share

1,299

828

Number of ordinary shares in issue consists of:

381,204,080 (2009: 362,240,669) ordinary shares (group

note 25) and 2,806,126 (2009: 3,794,998) E ordinary

shares (group note 25).

11 Net tangible asset value – cents per share

22,524

27,023

Total equity per statement of financial position

4,113

3,030

–

5,739

Mandatory convertible bonds (group note 26)

874

–

(1,316)

(1,277)

Intangible assets (group note 16)

(194)

(177)

21,208

31,485

4,793

2,853

Number of ordinary shares in issue (millions) (group

366

384

note 25)

384

366

5,794

8,199

Net tangible asset value – cents per share

1,248

779

12 Return on equity

Headline loss adjusted for unrealised non-hedge

derivatives, other commodity contracts and fair value

(211)

(12,210)

adjustment on the convertible and mandatory bonds (note 1)

(1,758)

(50)

Finance costs on the mandatory convertible bonds (group

–

72

note 7)

10

–

6,006

17,862

Cost of hedge buy-back net of taxation

2,545

758

Adjusted headline earnings excluding finance costs on

5,795

5,724

mandatory bonds and hedge buy-back costs

797

708

22,524

32,762

Equity (note 8)

4,987

3,030

23,135

27,643

Average equity

4,009

2,771

Note – Equity for 2008 amounted to $2,511m, R23,746m

25

21

Return on equity – %

20

26

Management has stated that it is targeting a return on

capital of 15% and this measure provides investors with

the calculation of management’s performance.

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378

AngloGold Ashanti Annual Financial Statements 2010

Non-GAAP disclosure

Non-GAAP disclosure

For the year ended 31 December

2009

2010

Figures in million                                                                                         2010

2009

SA Rands

US Dollars

13 Operating cash flow

Net cash (outflow) inflow from operating activities per

3,781

(5,730)

statement of cash flows

(942)

502

Stay-in-business capital expenditure per statement of

(5,078)

(5,279)

cash flows

(723)

(606)

(1,297)

(11,009)

(1,665)

(104)

14 Cash (utilised) generated to cash invested

Net cash (outflow) inflow from operating activities per

3,781

(5,730)

statement of cash flows

(942)

502

(474)

(846)

Dividends paid

(117)

(56)

3,307

(6,576)

Net cash (utilised) generated

(1,059)

446

(2,000)

(6,362)

Net cash outflow from investing activities

(871)

(195)

1.7

1.0

1.2

2.3

15 Market capitalisation

Number of listed ordinary shares in issue at year-end

362

381

(millions) (group note 25)

381

362

Closing share price as quoted on the JSE and New

306.29

326.90

York Stock Exchange

49.23

40.18

110,951

124,616

Market capitalisation

18,767

14,555

16 Average number of employees

South Africa

35,660

37,425

Continental Africa

15,761

15,267

Australasia

494

1,776

Americas

6,582

5,884

Other, including corporate and non-gold producing

subsidiaries

3,549

3,012

62,046

63,364

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379

Glossary of terms and Non-GAAP metrics

Adjusted gross margin:Adjusted gross profit (loss) divided by gold sales including realised non-hedge derivatives, expressed as
a percentage.

Adjusted gross profit (loss): Gross profit (loss) excluding unrealised non-hedge derivatives and other commodity contracts.

Adjusted headline earnings (loss): Headline earnings (loss) excluding unrealised non-hedge derivatives, fair value adjustments
on the mandatory convertible bonds and the option component of the convertible bonds, fair value gain (loss) on interest rate swap,
adjustments to other commodity contracts and deferred tax thereon.

All injury frequency rate: The total number of injuries and fatalities that occurs per million hours worked.

Available-for-sale financial asset: A financial asset that has been designated as available-for-sale or a financial asset other than
those classified as loans and receivables, held-to-maturity investments or derivative instruments.

Average number of employees: The monthly average number of production and non-production employees and contractors
employed during the year, where contractors are defined as individuals who have entered into a fixed-term contract of employment
with a group company or subsidiary. Employee numbers of joint ventures represents the group’s attributable share.

BIF: Banded Ironstone Formation. A chemically formed iron-rich sedimentary rock.

By-products: Any products that emanate from the core process of producing gold, including silver, uranium and sulphuric acid.

Calc-silicate rock: A metamorphic rock consisting mainly of calcium-bearing silicates such as diopside and wollastonite, and
formed by metamorphism of impure limestone or dolomite.

Capital expenditure: Total capital expenditure on tangible assets which includes stay-in-business and project capital.

Carbon-in-leach (CIL): Gold is leached from a slurry of gold ore with cyanide in agitated tanks and adsorbed on to carbon
granules in the same circuit. The carbon granules are separated from the slurry and treated in an elution circuit to remove the gold.

Carbon-in-pulp (CIP): Gold is leached conventionally from a slurry of gold ore with cyanide in agitated tanks. The leached slurry
then passes into the CIP circuit where carbon granules are mixed with the slurry and gold is adsorbed on to the carbon. The granules
are separated from the slurry and treated in an elution circuit to remove the gold.

Cash flow hedge: A hedge of exposure to variability in cash flows, that is attributable to a particular risk associated with a
recognised asset or liability or a forecasted transaction.

Comminution: Comminution is the crushing and grinding of ore to make gold available for treatment. (See also “Milling”).

Contained gold: The total gold content (tons multiplied by grade) of the material being described.

Cut-off grade (surface mines): The minimum grade at which a unit of ore will be mined to achieve the desired economic
outcome.

Depletion: The decrease in the quantity of ore in a deposit or property resulting from extraction or production.

Development: The process of accessing an orebody through shafts and/or tunnelling in underground mining operations.

Discontinued operation: A component of an entity that, pursuant to a single plan, has been disposed of or abandoned or is
classified as held for sale until conditions precedent to the sale have been fulfilled.

Doré: Impure alloy of gold and silver produced at a mine to be refined to a higher purity, usually consisting of 85% gold on average.

Electro-winning: A process of recovering gold from solution by means of electrolytic chemical reaction into a form that can be
smelted easily into gold bars.

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AngloGold Ashanti Annual Financial Statements 2010

Glossary of terms and Non-GAAP metrics

Elution: of the gold from the activated carbon into solution before zinc precipitation or electro-winning.

EBITDA: Operating profit (loss) before amortisation of tangible and intangible assets, impairment of tangible and intangible assets,
profit (loss) on disposal of assets and investments and unrealised non-hedge derivatives, hedge buy-back and restructuring costs
plus the share of associates’ EBITDA, less profit (loss) from discontinued operations.

Effective tax rate: Current and deferred taxation as a percentage of profit before taxation.

Equity: Total equity plus the mandatory convertible bonds. Where average equity is referred to, this is calculated by averaging the
figures at the beginning and the end of the financial year.

Feasibility study: A comprehensive design and costing study of the selected option for the development of a mineral project in
which appropriate assessments have been made of realistically assumed geological, mining, metallurgical, economic, marketing,
legal, environmental, social, governmental, engineering, operational and all other modifying factors, which are considered in sufficient
detail to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable) and the factors reasonably
serve as the basis for a final decision to proceed with the development of the project. The overall confidence of the study should
be stated.

Financial asset: Cash or cash equivalents, an equity instrument, a contractual right to receive cash, or a contractual right to
exchange a financial instrument under favourable conditions.

Financial liability: A contractual obligation to pay cash, deliver equity or transfer other benefits or a contractual obligation to
exchange a financial instrument under unfavourable conditions. This includes debt.

Gain (loss) on non-hedge derivatives and other commodity contracts: Fair value changes on derivatives that are neither
designated as meeting the normal sale exemption under IAS 39, nor designated as cash flow hedges and other commodity contracts.

Gain (loss) on realised non-hedge derivatives: Represents the cash inflow or outflow impact on the income statement of non-
hedge derivatives that were settled during the current year.

Gain (loss) on unrealised non-hedge derivatives and other commodity contracts: This represents the change in fair
value, including translation differences, of all open non-hedge derivative positions and adjustments to other commodity contracts from
the previous reporting date or date of recognition (if later) through to the current reporting date.

Gold produced: Refined gold in a saleable form derived from the mining process.

Grade: The quantity of gold contained within a unit weight of gold-bearing material generally expressed in ounces per short ton of
ore (oz/t), or grams per metric tonne (g/t).

Held-to-maturity investment: A financial asset with a fixed maturity and fixed or determinable future payments, that management
has the positive intent and ability to hold to maturity. The financial asset is classified as a non-current asset, except when it has a
maturity within twelve months from the reporting date, in which case it is classified as a current asset.

Indicated Mineral Resource: An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities,
shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but
are spaced closely enough for continuity to be assumed.

Inferred Mineral Resource: An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which tonnage, grade and
mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified
geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

Interest cover: EBITDA divided by finance costs.

Glossary of terms and Non-GAAP metrics

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381

Leaching: Dissolution of gold from crushed or milled material, including reclaimed slime, prior to adsorption on to activated carbon.

Life of mine (LOM): Number of years for which an operation is planning to mine and treat ore, and is taken from the current
mine plan.

Loans and receivables: A financial asset with fixed or determinable repayments that are not quoted in an active market, other
than, a derivative instrument, or a financial asset classified as available-for-sale.

Marked-to market: The fair value change of all financial instruments since initial recognition, net of premiums.

Measured Mineral Resource: A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities,
shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed
and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.

Metallurgical plant: A processing plant constructed to treat ore and extract gold.

Milling: A process of reducing broken ore to a size at which concentrating can be undertaken. (See also “Comminution”).

Mine call factor: The ratio, expressed as a percentage, of the total quantity of recovered and unrecovered mineral product after
processing with the amount estimated in the ore based on sampling. The ratio of contained gold delivered to the metallurgical plant
divided by the estimated contained gold of ore mined based on sampling.

Mineral deposit: A mineral deposit is a concentration (or occurrence) of material of possible economic interest in or on the earth’s crust.

Mineral Resource: A ‘Mineral Resource’ is a concentration or occurrence of material of intrinsic economic interest in or on the
earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location,
quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific
geological evidence and knowledge. A Mineral Resource is subdivided, in order of increasing geological confidence, into Inferred,
Indicated and Measured categories.

Monetary asset: An asset which will be settled in a fixed or easily determinable amount of money.

Net asset value per share: Total equity per the statement of financial position plus the mandatory convertible bonds divided by
shares in issue.

Net debt: Borrowings (excluding the Turbine Square Two (Proprietary) Limited lease and the mandatory convertible bonds, adjusted
for the unamortised portion of the convertible and rated bonds) less cash.

Net operating assets: Tangible assets, current and non-current portion of inventories, current and non-current trade and other
receivables (excluding recoverable tax, rebates, levies and duties), less current and non-current trade, other payables and deferred
income (excluding unearned premiums on normal sale extended contracts).

Net tangible asset value per share: Total equity as per the statement of financial position plus the mandatory convertible bonds
less intangible assets, divided by the number of ordinary shares in issue.

Normal purchase normal sale exemption (NPSE): Hedge contracts designated as meeting the exemption criteria under
IAS 39.

Operating cash flow: Net cash inflow from operating activities less stay-in-business capital expenditure.

Ore Reserve: An ‘Ore Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes
diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have
been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors. These assessments demonstrate that at the time of reporting, extraction could
reasonably be justified. An Ore Reserve is subdivided in order of increasing confidence into Probable Ore Reserve and Proved
Ore Reserve.

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AngloGold Ashanti Annual Financial Statements 2010

Glossary of terms and Non-GAAP metrics

Ounce (oz) (troy): Used in imperial statistics. A kilogram is equal to 32.1507 ounces. A troy ounce is equal to 31.1035 grams.

Pay limit: The grade of a unit of ore at which the revenue from the recovered mineral content of the ore is equal to the sum of total
cash costs, closure costs, Ore Reserve development and stay-in-business capital. This grade is expressed as an in situ value in
grams per tonne or ounces per short ton (before dilution and mineral losses).

Precipitate: The solid product of chemical reaction by fluids such as the zinc precipitation referred to below.

Prefeasibility study: A comprehensive study of the viability of a range of options for a mineral project that has advanced to a stage
at which the preferred mining method in the case of underground mining or the pit configuration in the case of an open pit has been
established, and an effective method of mineral processing has been determined. It includes a financial analysis based on realistic
assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors that are sufficient for
a competent person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
The overall confidence of the study should be stated. A prefeasibility study is at a lower confidence level than a feasibility study.

Price received ($/oz and R/kg): Attributable gold income including realised non-hedge derivatives divided by attributable ounces
or kilograms sold.

Probable Ore Reserve: A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated, and in some circumstances,
a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined.
Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate
at the time of reporting that extraction could reasonably be justified.

Productivity: An expression of labour productivity based on the ratio of grams of gold produced per month to the total number of
employees in mining operations.

Proved Ore Reserve: A ‘Proved Ore Reserve’ is the economically mineable part of a Measured Mineral Resource. It includes
diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have
been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could
reasonably be justified.

Project capital: Capital expenditure to either bring a new operation into production; to materially increase production capacity; or
to materially extend the productive life of an asset.

Reclamation: In the South African context, reclamation describes the process of reclaiming slimes (tailings) dumps using high-
pressure water cannons to form a slurry which is pumped back to the metallurgical plants for processing.

Recovered grade: The recovered mineral content per unit of ore treated.

Reef: A gold-bearing sedimentary horizon, normally a conglomerate band that may contain economic levels of gold.

Refining: The final purification process of a metal or mineral.

Region: Defines the operational management divisions within AngloGold Ashanti Limited, namely South Africa, Continental Africa
(Ghana, Guinea, Mali, Namibia and Tanzania), Australasia, and the Americas (Argentina, Brazil and United States of America).

Rehabilitation: The process of reclaiming land disturbed by mining to allow an appropriate post-mining use. Rehabilitation
standards are defined by country-specific laws, including but not limited to the South African Department of Mineral Resources, the
US Bureau of Land Management, the US Forest Service, and the relevant Australian mining authorities, and address among other
issues, ground and surface water, topsoil, final slope gradient, waste handling and re-vegetation issues.

Related party: Parties are considered related if one party has the ability to control the other party or exercise significant influence
over the other party in making financial and operating decisions.

Glossary of terms and Non-GAAP metrics

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383

Return on equity: headline earnings before finance costs on the mandatory convertible bonds and hedge buy-back costs
expressed as a percentage of average equity.

Seismic event: A sudden inelastic deformation within a given volume of rock that radiates detectable seismic energy.

Shaft: A vertical or subvertical excavation used for accessing an underground mine; for transporting personnel, equipment and
supplies; for hoisting ore and waste; for ventilation and utilities; and/or as an auxiliary exit.

Significant influence: The ability, directly or indirectly, to participate in, but not exercise control over, the financial and operating
policy decision of an entity so as to obtain economic benefit from its activities.

Smelting: A pyro-metallurgical operation in which gold is further separated from impurities.

Stay-in-business capital: Capital expenditure to extend useful lives of existing production assets. This includes replacement of
vehicles, plant and machinery, Ore Reserve development and capital expenditure related to safety, health and the environment.

Stope: Underground excavation where the orebody is extracted.

Stoping: The process of excavating ore underground.

Stripping ratio: The ratio of waste tonnes to ore tonnes mined calculated as total tonnes mined less ore tonnes mined divided by
ore tonnes mined.

Tailings: Finely ground rock of low residual value from which valuable minerals have been extracted.

Tailings dam (slimes dam): Dam facilities designed to store discarded tailings.

Tonne: Used in metric statistics. Equal to 1,000 kilograms.

Ton: Used in imperial statistics. Equal to 2,000 pounds. Referred to as a short ton.

Tonnage: Quantity of material measured in tonnes or tons.

Total cash costs: Total cash costs include site costs for all mining, processing and administration, reduced by contributions from
by-products and are inclusive of royalties and production taxes. Amortisation, rehabilitation, corporate administration, retrenchment,
capital and exploration costs are excluded.

Total cash costs per ounce are the attributable total cash costs divided by the attributable ounces of gold produced.

Total production costs: Total cash costs plus amortisation, retrenchment, rehabilitation and other non-cash costs. Corporate
administration and exploration costs are excluded.

Total production costs per ounce are the attributable total production costs divided by the attributable ounces of gold produced.

Waste: Material that contains insufficient mineralisation for consideration for future treatment and, as such, is discarded.

Weighted average number of ordinary shares: The number of ordinary shares in issue at the beginning of the year, increased
by shares issued during the year, weighted on a time basis for the period during which they have participated in the income of the
group, and increased by share options that are virtually certain to be exercised.

Yield: The amount of valuable mineral or metal recovered from each unit mass of ore expressed as ounces per short ton or grams
per metric tonne.

Zinc precipitation: Zinc precipitation is the chemical reaction using zinc dust that converts gold in solution to a solid form for
smelting into unrefined gold bars.

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AngloGold Ashanti Annual Financial Statements 2010

Glossary of terms and Non-GAAP metrics

Abbreviations

$

United States dollars

A$ or AUD

Australian dollars

ADS

American Depositary Share

ADR

American Depositary Receipt

AIFR

All injury frequency rate

ARS

Argentinean peso

ASX

Australian Securities Exchange

Au

Contained gold

BCM

Bank cubic metres, i.e. ore in the ground

BRL

Brazilian real

bn

Billion

C$ or CAD

Canadian dollars

capex

Capital expenditure

CDI

Chess Depositary Interests

CHF

Swiss francs

CLR

Carbon Leader Reef

FCFA

Franc Communauté Financiére Africaine

FIFR

Fatal injury frequency rate

g

Grams

g/t

Grams per tonne

g/TEC

Grams per total employee costed

GHC, cedi or ¢

Ghanaian cedi

GhDS

Ghanaian Depositary Share

GhSE

Ghana Stock Exchange

HKD

Hong Kong dollar

JORC

Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves

JIBAR

Johannesburg Interbank Agreed Rate

JSE

JSE Limited

King Code

South African King Code on Corporate Governance, 2009 (King III)

kg

Kilograms

LSE

London Stock Exchange

LIBOR

London Interbank Offer Rate

LOM

Life of mine

m

2

/TEC

Square metres per total employee costed

M or m

Metre or million, depending on the context

Moz

Million ounces

Mt

Million tonnes or tons

Mtpa

Million tonnes/tons per annum

N$ or NAD

Namibian dollars

NOSA

National Occupational Safety Association

NYSE

New York Stock Exchange

oz

Ounces (troy)

oz/t

Ounces per ton

R, ZAR or Rand

South African rands

SAMREC

South African Code for the Reporting of Mineral Resources and Mineral Reserves 2007 Edition

SEC

United States Securities and Exchange Commission

SRP

South African Securities Regulation Panel

SOX

Sarbanes-Oxley Act of 2002

t

Tons (short) or tonnes (metric)

tpm

Tonnes/tons per month

tpa

Tonnes/tons per annum

tpd

Tonnes/tons per day

US/USA/United States

United States of America

VCR

Ventersdorp Contact Reef

VCT

Voluntary counselling and testing

Glossary of terms and Non-GAAP metrics

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385

Shareholders at 31 December

According to information available to the directors, the following are the only shareholders holding, directly or indirectly, in excess of

5% of the ordinary issued share capital of the company:

Ordinary shares held

31 December 2010

31 December 2009

Number %

Number %

The Bank of New York Mellon*

167,587,981

43.96

176,762,305

48.79

Paulson & Co., Inc

41,000,000

10.76

42,849,864

11.83

Allan Gray Unit Trust Management Limited

31,668,339

8.31

36,689,809

10.13

Fidelity Management & Research

28,383,749

7.45

–

–

*

Shares held through various custodians in respect of ADSs issued by the Bank, as AngloGold Ashanti’s ADS custodian.

Top 20 shareholders

The 20 largest holders of the ordinary share capital of the company as at 31 December 2010 were:

Ordinary shares held

Number

%

1. Paulson & Co., Inc.

41,000,000

10.76

2. Allan Gray Unit Trust Management Limited

31,668,339

8.31

3

Fidelity Management & Research

28,383,749

7.45

4. Public Investment Corp. of South Africa

15,593,017

4.09

5. NWQ Investment Management Co. LLC

12,640,631

3.32

6. Tradewinds Global Investors LLC

11,705,520

3.07

7. Government of Ghana

11,257,076

2.95

8. Van Eck Global

11,182,828

2.93

9. Wellington Management Co. LLP

10,509,892

2.76

10. Blackrock Investment Management (UK) Limited

9,822,590

2.58

11. First State Investments International (UK) Limited

9,321,479

2.45

12. Vanguard Group, Inc.

8,055,711

2.11

13. Blackrock Fund Advisors

8,023,092

2.10

14. Franklin Advisers, Inc.

6,966,175

1.83

15. Investec Asset Management (Pty) Limited (South Africa)

6,793,209

1.78

16. Comgest SA

6,741,104

1.77

17. Government of Singapore Investment Corp. Pte Limited

6,061,592

1.59

18. Old Mutual Investment Group South Africa (Pty) Limited

5,489,024

1.44

19. Capital International Research & Management

4,535,237

1.19

20. Northern Cross LLC

4,458,584

1.17

The above list of shareholders may not necessarily reflect the beneficial shareholders.

Shareholder information

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386

AngloGold Ashanti Annual Financial Statements 2010

Shareholder information

Shareholder information

Analysis of ordinary shareholdings as at 31 December 2010

Number of

% of total

Number of

% of

Size of shareholding

shareholders

shareholders

shares issued   shares issued

1

–

100

2,649

29.27

143,122

0.04

101

–

500

3,841

42.45

868,124

0.23

501

–

1,000

728

8.05

545,931

0.14

1,001

–

5,000

851

9.40

1,926,182

0.51

5,001

–

10,000

192

2.12

1,387,139

0.36

10,001

–

100,000

581

6.42

20,825,694

5.46

Over

100,000

207

2.29

355,507,888

93.26

Total

9,049

100.00

381,204,080

100.00

Shareholder spread at 31 December 2010

Pursuant to the Listings Requirements of the JSE, with the best knowledge of the directors and after reasonable enquiry, the spread

of shareholders was as follows:

% of

Number

shares

Number

% of

Class

of shares

issued

of holders

shareholders

Ordinary shares

Non-public shareholders:

– Directors

26,135

0.007

4

0.04

– Strategic holdings

11,257,076

2.95

1

0.01

Public shareholders

369,920,869

97.04

9,044

99.95

Total

381,204,080

100.00

9,049

100.00

A redeemable preference shares

B redeemable preference shares

All shares are held by a wholly owned subsidiary company

}

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Stock exchange listings

The primary listing of the company’s ordinary shares is on the JSE Limited (JSE). Its ordinary shares are also listed on stock exchanges
in London, Paris and Ghana, as well as being quoted in Brussels in the form of International Depositary Receipts (IDRs), in New York
in the form of American Depositary Shares (ADSs), in Australia, in the form of CHESS Depositary Interests

(1)

(CDIs) and in Ghana, in

the form of Ghanaian Depositary Shares (GhDSs).

Stock exchange information at 31 December

2010

2009

2008

2007

2006

JSE (Share code: ANG)
Rands per share:
Market price

– high

366.31

369.00

349.00

358.89

387.00

– low

266.40

232.06

150.11

254.00

247.00

– year end

326.90

306.29

252.00

293.00

329.99

Shares traded

– 000

270,652

376,590

306,655

216,717

131,476

London Stock Exchange (Share code: AGD)
Pounds per share:
Market price

– high

32.32

28.53

23.08

23.15

34.72

– low

23.15

16.64

9.93

18.43

17.50

– year end

31.79

27.06

16.66

21.25

20.55

Shares traded

– 000

2,359

643

5

648

421

Euronext Paris (Share code: VA)
Euros per share:
Market price

– high

38.50

31.40

34.79

37.95

52.15

– low

25.35

17.54

10.46

25.21

28.00

– year end

36.58

28.85

18.20

29.05

35.40

Shares traded

– 000

723

1,102

1,926

1,609

1,209

Ghana Stock Exchange (Share code: AGA)
(listing commenced 27 April 2004)
Ghana Cedis per share:

(2)

Market price

– high

34.00

30.00

30.00

30.00

30.00

– low

30.00

30.00

30.00

30.00

30.00

– year end

34.00

30.00

30.00

30.00

30.00

Shares traded

– 000

9

118

–

–

1

Euronext Brussels (Share code: ANG)
Euros per IDR:
Market price

– high

38.00

31.04

34.75

37.55

51.00

– low

25.23

16.83

10.58

25.90

28.10

– year end

36.10

27.85

19.05

30.00

36.00

IDRs traded

– 000

596

807

681

704

1,028

Each IDR is equal to one ordinary share

New York Stock Exchange (Share code: AU)
US dollars per ADS:
Market price

– high

52.86

47.52

51.35

49.88

62.20

– low

34.11

27.88

13.37

33.80

35.58

– year end

49.23

40.18

27.71

42.81

47.09

ADSs traded

– 000

504,186

706,541

588,403

352,041

348,040

Each ADS is equal to one ordinary share

P

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AngloGold Ashanti Annual Financial Statements 2010

Shareholder information

Stock exchange information at 31 December continued

2010

2009

2008

2007

2006

Australian Securities Exchange (Share code: AGG)

Australian dollars per CDI:

Market price

– high

10.50

11.50

11.31

12.37

16.40

– low

7.65

6.80

4.25

8.85

9.75

– year end

9.84

9.00

7.60

10.10

11.90

CDIs traded

– 000

6,023

6,574

5,854

14,993

5,424

Each CDI is equal to one-fifth of one ordinary share

Ghana Stock Exchange (Share code: AADS)

(listing commenced 27 April 2004)

Ghana Cedis per GhDS:

(2)

Market price

– high

0.60

0.35

0.35

0.30

0.31

– low

0.30

0.30

0.35

0.30

0.30

– year end

0.60

0.30

0.35

0.30

0.31

GhDSs traded

– 000

921

477

183

–

–

Each GhDS is equal to one-hundredth of one ordinary share

(1)

Clearing House Electronic Sub-register System.

(2)

Adjusted to address change in currency.

Shareholders’ diary

Financial year-end

31 December 2010

Annual financial statements

posting on or about

31 March 2011

Annual general meeting

11:00 SA time

11 May 2011

Quarterly reports

Released on or about

– Quarter ended 31 March 2011

11 May 2011

– Quarter ended 30 June 2011

1 August 2011

– Quarter ended 30 September 2011

1 November 2011

– Quarter ended 31 December 2011

*16 February 2012

*

Approximate dates.

Dividends

Last date

to trade

Date

ordinary

Payment

Payment

Dividend

shares cum

date to

date to

Dividend number

declared

dividend

shareholders

ADS holders

Interim – number 108

10 August 2010

27 August 2010

10 September 2010

20 September 2010

Final – number 109

15 February 2011

4 March 2011

18 March 2011

28 March 2011

Interim – number 110

*2 August 2011

*19 August 2011

*2 September 2011

*12 September 2011

*

Approximate dates.

Shareholder information

P

389

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 and cash/debt resources, the amount of reserves available for dividend using

going concern assessment and restrictions placed by the conditions of the convertible bonds and other debt facilities and other factors.

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. The date for the implementation of the withholding tax

on dividends has now been announced as 1 April 2012. Although this may reduce the tax payable by the South African operations

of the group, thereby increasing distributable earnings, the withholding tax on dividends will generally reduce the amount of dividends

or other distributions received by AngloGold Ashanti shareholders.

Annual general meeting

Shareholders on the South African register who have dematerialised their shares in the company (other than those shareholders

whose shareholding is recorded in their own names in the sub-register maintained by their CSDP) and who wish to attend the annual

general meeting in person, will need to request their CSDP or broker to provide them with the necessary authority in terms of the

custody agreement entered into between them and the CSDP or broker.

Voting rights

The articles of association provide that every member present at a meeting in person or, in the case of a body corporate, represented,

is entitled to one vote only on a show of hands. Upon a poll, members present or any duly appointed proxy shall have one vote for

every share held. There are no limitations on the right of non-South African shareholders to hold or exercise voting rights attaching

to any shares of the company. CDI holders are not entitled to vote in person at meetings, but may vote by way of proxy.

Options granted in terms of the share incentive scheme do not carry rights to vote.

Change of details

Shareholders are reminded that the onus is on them to keep the company, through its nominated share registrars, apprised of any

change in their postal address and personal particulars. Similarly, where shareholders received dividend payments electronically (EFT),

they should ensure that the banking details which the share registrars and/or CSDPs have on file are correct.

Annual financial statements

Should you wish to receive a printed copy of our 2010 annual financial statements, please request same from the contact persons

listed at the end of this report or on the company’s website.

P

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AngloGold Ashanti Annual Financial Statements 2010

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Notes

AngloGold Ashanti 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

GhSE (Shares):

AGA

GhSE (GhDS):

AAD

Euronext Paris:

VA

Euronext Brussels:

ANG

JSE Sponsor:

UBS

Auditors:

Ernst & Young Inc.

Offices

Registered and corporate

76 Jeppe Street

Newtown 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 4602

Fax: +61 8 9425 4662

Ghana

Gold House

Patrice Lumumba Road

(PO 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

E-mail: jane.kirton@corpserv.co.uk

Directors

Executive

M Cutifani** (Chief Executive Officer)

S Venkatakrishnan* (Chief Financial Officer)

Non-executive

TT Mboweni

†

(Chairman)

R Gasant

†

FB Arisman

#

WA Nairn

†

Prof LW Nkuhlu

†

F Ohene-Kena

+

SM Pityana

†

†

South African

* British

# American

** Australian + Ghanaian

Officers

Company Secretary: Ms L Eatwell

Investor Relations

South Africa

Michael Bedford

Telephone: +27 11 637 6273

Mobile: +27 82 374 8820

Fax: +27 11 637 6400

E-mail: mbedford@AngloGoldAshanti.com

United States

Stewart Bailey

Telephone: +1-212-836-4303

Mobile: +1 646 717-3978

E-mail: sbailey@AngloGoldAshanti.com

Share Registrars

South Africa

Computershare Investor Services (Pty) Limited

Ground Floor, 70 Marshall Street

Johannesburg 2001

(PO Box 61051, Marshalltown 2107)

South Africa

Telephone: 0861 100 950 (in SA)

Fax: +27 11 688 5218

web.queries@computershare.co.za

United Kingdom

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 7NH

England

Telephone: +44 870 702 0000

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 2949 (in Australia)

Fax: +61 8 9323 2033

Ghana

NTHC Limited

Martco House

Off Kwame Nkrumah Avenue

PO Box K1A 9563 Airport

Accra

Ghana

Telephone: +233 302 229664

Fax: +233 302 229975

ADR Depositary

The Bank of New York Mellon (BoNY)

BNY Shareowner Services

PO Box 358016

Pittsburgh, PA 15252-8016

United States

Telephone: +1 800 522 6645 (Toll free in USA)

or +1 201 680 6578 (outside USA)

E-mail: shrrelations@mellon.com

Website:

www.bnymellon.com.com\shareowner

Global BuyDIRECTSM

BoNY maintains a direct share purchase

and dividend reinvestment plan for

AngloGold Ashanti.

Telephone: +1-888-BNY-ADRS

General e-mail enquiries

investors@AngloGoldAshanti.com

AngloGold Ashanti website

http://www.AngloGoldAshanti.com

Company secretarial E-mail

Companysecretary@AngloGoldAshanti.com

AngloGold Ashanti posts information that is

important to investors on the main page of its

website at www.AngloGoldAshanti.com and

under the “Investors” tab on the main page.

This information is updated regularly. Investors

should visit this website to obtain important

information about AngloGold Ashanti.

Administrative information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AngloGold Ashanti Limited

Date: March 31, 2011

By:

/s/ L Eatwell

Name:  L EATWELL
Title:    Company Secretary