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Review of operations and projects

PROJECTS

The following is a summary of the status and progress of AngloGold Ashanti’s primary development projects. For a detailed discussion, see Annual Financial Statements 2011Project review.

Colombia

Gramalote

Ownership and management: joint venture between AngloGold Ashanti (51%) and Vancouver-based B2Gold (49%). Managed by AngloGold Ashanti.

Location: Located 110km northeast of Medellin in the municipality of San Roque, in the department of Antioquia, Colombia.

Current status: AngloGold Ashanti returned as operator and project manager in 2010, after assuming a controlling stake from B2Gold, to undertake the pre-feasibility and feasibility analysis. The drilling programme was accelerated to improve knowledge of the orebody and increased the project’s resource.

Key statistics: During 2011, a total of 30,683m of drilling was undertaken and the resource increased by 83% to 4Moz. Almost $30m was spent on the pre-feasibility study in 2011, which included exploration on only about 10% of the 30,000ha concession area. This study will be completed during 2012, followed by a full feasibility study, to be completed in 2013. Construction is planned to start in 2014 and first production in 2016.

Progress during the year: The project is expected to be AngloGold Ashanti’s first operating gold mine in Colombia.

Gramalote has several inherent advantages, most notably good infrastructure and access to water and power. The area’s topography presents opportunities for tailings storage. Gramalote enjoys a high level of community support. This stems from concerted efforts to engage with local stakeholders, including artisanal miners in the project area. Gramalote has the potential to bring significant economic development to a low income area.

La Colosa

Ownership and management: Exploration rights are wholly-held by AngloGold Ashanti.

Location: Located 14km from the town of Cajamarca, in the department of Tolima, Colombia. La Colosa lies less than 6km from a national highway, close to Colombia’s main power grid.

Current status: This is the largest greenfields discovery made by AngloGold Ashanti, with a current resource of 16Moz. Exploration drilling at the site resumed in mid-2010 after a two-year hiatus, while the permitting process was progressed.

Key statistics: The prefeasibility and feasibility studies are expected to be completed ahead of construction scheduled to start at the end of 2015. First production is targeted in late 2019. The concession is of the order of 600km2.

Progress during the year: A team has been assembled to develop the appropriate sustainability model for La Colosa, build the technical case for the project, execute its development and to work closely with all stakeholders to secure the necessary permits and approvals. La Colosa lies in an area designated under Colombian law as a ‘forest reserve,’ a legal term for a tract of land designated for forestry use. Permits are required to reclassify the land needed for mining development which follow a revised permitting process.

A prefeasibility study is currently under way and scheduled for completion in 2014. This will define the extent and size of the resource, conduct metallurgical testwork, weigh the alternatives for mining and processing infrastructure, purchase land necessary for access and infrastructure development, and conduct the necessary social and environmental baseline and impact studies. The International Geotechnical and Tailings Review Panel, comprising of independent experts, was established in 2009 to ensure design, construction, operation and closure plans use industry best-practice and technology.

The challenge at La Colosa is related to securing an unequivocal social licence to operate. This can be achieved, in part, by demonstrating the economic benefits the project can bring to the local community, for example, contributions to improving the quality of local agriculture and in helping to promote local commerce. AngloGold Ashanti will be sensitive to the needs of local communities, especially as they pertain to security of water supply and minimising environmental impact. While water use is of concern in this mostly agricultural region, infrastructure location will be analysed to minimise water use and reduce impacts on critical water sources. In addition, preliminary figures demonstrate that there would be no material impact on agricultural or domestic use of water by the project.

Australia

Tropicana

Ownership and management: joint venture between AngloGold Ashanti Australia Ltd (70%) and Independence Group NL (30%). Managed by AngloGold Ashanti on behalf of the Joint Venture Partners.

Location: 330km east-north-east of Kalgoorlie in Western Australia.

Current status: Project development approval was obtained in November 2010. At 31 December 2011, the project had progressed to schedule and within the approved budget, with all regulatory approvals obtained.

Key statistics: A total attributable capitalised development cost of A$530m is planned to establish a new 6Mtpa gold mine with a life of about a decade. Ongoing exploration success is expected to add to the operation’s life. First gold production is anticipated in late 2013. Elevated production from higher grade zones is expected for about the first five years. The average total cash cost of the life of the project is A$590-A$710/oz.

Progress during the year: A contract for engineering, procurement and construction management (EPCM) services to develop the infrastructure and processing plant, was awarded in early 2011, and the mining contract for design and establishment of the infrastructure required to support mining operations has also been awarded.

The necessary infrastructure, including access road, airstrip, accommodation village and telecommunications services were in advanced stages of development. Full transportation access to site had been achieved. Engineering and design for processing plant and infrastructure was approximately 75% complete at the end of the year. Procurement of all equipment was 90% complete and the delivery of the equipment was in line with the project schedule.

Construction of the processing plant commenced in late 2011 with bulk earthworks for the plant site and internal access roads and concrete works scheduled to commence in early 2012.

A new Mineral Resource estimate was completed for Tropicana at year-end, with a 1.05Moz increase bringing the total resource to 6.41Moz (100% basis). The increase was attributable to drilling in the Havana Deeps area, between the site’s Tropicana and Havana pits. Exploration drilling has continued in the area.

DRC

Kibali

Ownership and management: joint venture between AngloGold Ashanti and Randgold Resources, which each owning a 45% stake, and Société des Mines d’Or de Kilo- Moto (Sokimo), a state-owned gold company, which owns the balance. Randgold is the operator and project manager.

Location: North-eastern DRC, 180km by road from Arua, on the Ugandan border.

Current status: The deposit, acquired with the purchase of Moto Goldmines in 2009, lies about 9km from the town of Watsa, a staging point for the project. Preparatory work has been completed at the project, where first gold production is scheduled for the beginning of 2014. The final feasibility study and integrated execution plan for the project is anticipated to be presented to AngloGold Ashanti’s board for approval in the first half of 2012. Until then, AngloGold Ashanti has agreed to continue to fund its share of critical path items needed to ensure the timeline for the project was not compromised.

Key statistics: Kibali will comprise an integrated open pit and underground mining operation, feeding a larger 6Mtpa processing plant which will include a full flotation section for treating sulphide ore. The complex will ultimately be supplied by four hydropower stations supported by a thermal power station for low rainfall periods and back-up. The core capital programme is scheduled to run over the next four years. Final capital, production and cost estimates will accompany the announcement of the project’s final approval.

Progress during the year: By the end of 2011, the construction crew had started mobilising on site, a process expected to be completed during the first quarter of 2012. Long-lead plant and equipment items were secured, key contractors selected and a development management team assembled. The relocation programme for nearby villages – a critical component of Kibali’s pre-development phase – progressed smoothly through the year, with two of the 14 affected villages already resettled in the new model village of Kokiza by December. Five local contractors are building houses at the rate of 300 per month, assisting with local economic development in the region.

The project’s community development plan also seeks to support food security initiatives with a view to reducing community dependence on ASM.

Phase 1 of the project, required to deliver the mine’s first gold production, will cover the metallurgical facility, one hydropower station and back-up thermal power facility, construction of the tailings storage facility, relocation of villages, open-pit mining and all shared infrastructure. This phase will run over a two-year period. Phase 2, which will run concurrently with Phase 1 but will extend over four years, is focused primarily on development of the underground mine and includes a twin decline and vertical shaft system, along with three hydropower stations. This is expected to bring the underground into first production by the end of 2014, with steady state production targeted for the end of 2015.

The project has an improved environment adjustment plan, which is the legal permit required before mining commences. An environmental and social impact assessment, however, has been undertaken to comply with new environmental legislation, and to provide guidance for the development of an integrated environmental management plan that allows the mine to be constructed and operated responsibly and minimises future liability for shareholders.

Mongbwalu

Ownership and management: is a venture between AngloGold Ashanti (86.22%) stake and Société des Mines d’Or de Kilo-Moto (Sokimo) (13.78%).

Location: About 48km from the town of Bunia, a staging point for the project, in north-eastern DRC.

Current status: Preparatory work has been completed at the project, where first gold production is scheduled for the beginning of 2014. Approval by the joint venture board is anticipated for March, 2012, when the final feasibility study and integrated execution schedule will be presented.

Key statistics: The initial project will be designed and built with a view to increasing its size as the aggressive regional exploration programme identifies new sources of ore. Capital and cost estimates for the project will be released along with the announcement of its approval.

Progress during the year: The area around Mongbwalu has historical gold production of about 2Moz of gold. Belgian mining companies operated on a relatively small scale in the area for about 50 years before leaving in 1961, while Sokimo began mining in 1966. The joint venture holds 18 tenements which, at the end of the year, covered an extensive area. About 600 people are presently employed on site.

The initial scoping work envisaged an initial underground mine in the Adidi area of the resource, with the necessary infrastructure designed to generate cash flow to fund further exploration and expansion activities within the demarcated area belonging to the joint venture. The feasibility study for the project was completed in March 2011, after which the business and technical development teams conducted the normal optimisation process through the balance of the year.

Upgrading of staff accommodation on site was undertaken during the year, substantial progress was made on the construction of the 60km road to Bunia and a hydropower plant was refurbished.

A concerted focus was placed on sustainability issues to support environmental and community development over the life of the project, which promises to be an important source of economic and social development both for the immediate region and for the DRC as a whole. Crucial to this process is the health and environmental baseline assessments, commissioned during the year to determine risks and benefits of developing and operating a new, modern mine in the area.