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Directors’ report

Nature of business

AngloGold Ashanti conducts mining operations in Africa, North and South America and Australia, and undertakes exploration activities worldwide. In addition, the company is involved in the manufacturing, marketing and selling of gold products, as well as the development of markets for gold.

In addition, at certain of its operations, AngloGold Ashanti produces uranium, silver and sulphuric acid as by-products in the course of producing gold.

A review of the unaudited performance of the various operations is available under Review of operations.

Shareholders holding 10% or more of AngloGold Ashanti’s issued share capital

As at 31 December 2011, there were no shareholders holding 10% or more of the company’s share capital. This does not take cognisance of the shares held by the Bank of New York Mellon as depositary for the AngloGold Ashanti ADR programme.

Share capital

Authorised

The authorised share capital of AngloGold Ashanti as at 31 December 2011 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 31 January 2012:

Issued

Ordinary shares
  Number of shares Rand Number of shares Rand
2011 2010
At 1 January 381,204,080 95,301,020 362,240,669 90,560,167
Issued during year:        
– Equity raising – proceeds used to part fund the hedge
   elimination
18,140,000 4,535,000
– Conversion of E ordinary shares        
– Bokamoso ESOP 60,695 15,174
– Izingwe 39,052 9,763
– BEE transaction (as approved by shareholders on
   11 May 2011) Bokamoso ESOP
48,923 12,230
– Exercise of options by participants in the AngloGold        
Share Incentive Scheme 889,593 222,398 823,411 205,853
At 31 December 382,242,343 95,560,585 381,204,080 95,301,020
Issued subsequent to year-end        
– Exercise of options by participants in the AngloGold
   Share Incentive Scheme
10,706 2,676    
– Bokamoso ESOP on conversion of E ordinary shares 1,098 275    
At 31 January 2012 382,254,147 95,563,536    

E ordinary shares

On 11 December 2006, shareholders in general meeting authorised the creation of a maximum of 4,280,000 E ordinary shares to be issued pursuant to an Employee Share Ownership Plan (ESOP) and a black economic empowerment transaction with Izingwe Holdings (Pty) Limited (Izingwe) – (collectively, the BEE transaction).

At a general meeting held on 11 May 2011, shareholders approved an amendment to the BEE transaction authorising an additional issue of 48,923 ordinary shares to be made to the ESOP and the reinstatement of lapsed E ordinary shares to be made to the ESOP (to a maximum of 810,634 E ordinary shares) and to Izingwe (560,000 E ordinary shares). The amendment also took cognisance of changes to the vesting criteria and duration of the scheme.

On 9 June 2011, a total of 1,329,164 E ordinary shares were reinstated, of which 769,164 E ordinary shares were reinstated in respect of the ESOP and 560,000 E ordinary shares were reinstated in respect of Izingwe.

  Number of shares Rand Number of shares Rand
2011 2010
At 1 January 2,806,126 701,531 3,794,998 948,749
Reinstated 1,329,164 332,291    
Cancelled in exchange for ordinary shares in terms of the cancellation formula        
– Bokamoso ESOP (922,328) (230,582) (708,872) (177,218)
– Izingwe (630,000) (157,500) (280,000) (70,000)
At 31 December 2,582,962 645,740 2,806,126 701,531
Cancelled subsequent to year-end        
– Cancelled and exchanged for ordinary shares issued in
   terms of the cancellation formula – Bokamoso ESOP
(8,728) (2,182)    
At 31 January 2012 2,574,234 643,558    

In terms of the original authority granted by shareholders in 2006, on vesting, E ordinary shares were cancelled in exchange for ordinary shares in accordance with the cancellation formula.

E ordinary share capital amounting to R51,842,313 in respect of 688,332 vested, unconverted and cancelled E ordinary shares, was transferred to ordinary share premium during 2011. Prior to the amendment of the BEE transaction, E ordinary shares did not convert into ordinary shares where the market price of an AngloGold Ashanti ordinary share was less than the strike price of the E ordinary share as calculated in accordance with the cancellation formula.

In addition to the reinstatement of cancelled E ordinary shares, shareholders approved an amendment to the cancellation formula through the resetting of the strike price. Participants to the ESOP and Izingwe are now guaranteed a minimum conversion price of R40 per E ordinary share with a maximum of R90 per E ordinary share for the ESOP and R70 per E ordinary share for Izingwe from a base price of R320 and R330 per share, respectively.

E ordinary shareholders are entitled to vote at all ordinary shareholder meetings. However, they do not hold a veto right.

Dividends are payable on E ordinary shares, in an amount equal to 50% of dividends payable to ordinary shareholders. The residual 50% of the dividend payable is taken into account in determining the cancellation formula.

E ordinary shares which vest and are exchanged for ordinary shares are cancelled and may not be re-issued. Therefore, they do not form part of the unissued share capital of the company.

Redeemable preference shares

The A and B redeemable preference shares, all of which are held by the 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

  Number of ordinary shares
2011 2010
At 1 January 218,795,920 237,759,331
Authorised during the year
Issued during year (1,038,263) (18,963,411)
At 31 December 217,757,657 218,795,920
Issues subsequent to year-end (11,804)  
At 31 January 2012 217,745,853  

Ordinary shares under the control of directors

Pursuant to the authority granted by shareholders at the annual general meeting held on 11 May 2011, 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 the directors, in their discretion, may determine. At 31 December 2011, the total number of shares placed under the control of the directors was 19,112,117. No shares were issued during 2011 by the directors in terms of this authority. This authority expires, unless renewed, at the annual general meeting to be held on 10 May 2012.

At the annual general meeting to be held on 10 May 2012, shareholders will be asked to renew this authority, by placing 5% of the number of shares in issue, from time to time, under the control of the directors to allot and issue, for such purposes and on such terms as the directors, at their discretion, may determine.

In terms of the Listings Requirements of the JSE Limited , 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 10 May 2012.

At the annual general meeting to be held on 10 May 2012, 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 for certain specific housekeeping reasons.

Depositary interests

American Depositary Shares

At 31 December 2011, the company had in issue, through The Bank of New York Mellon as Depositary and listed on the New York Stock Exchange (NYSE), 164,886,294 American Depositary Shares (ADSs). Each ADS is equal to one ordinary share. At 31 January 2012, there were 161,963,851 ADSs in issue and listed on the NYSE.

CHESS Depositary Interests

At 31 December 2011 and 31 January 2012, the company had in issue through the Clearing House Electronic Sub-register System (CHESS), and listed on the Australian Securities Exchange (ASX), 90,452,100 CHESS Depositary Interests (CDI). Every five CDIs has one underlying AngloGold Ashanti ordinary share and carries the right to one vote.

Ghanaian Depositary Shares

At 31 December 2011 and 31 January 2012, the company had in issue, through NTHC Limited as Depositary and listed on the Ghana Stock Exchange (GhSE), 16,610,500 and 16,599,800 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, and other 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 to participate in the share incentive scheme.

The maximum number of shares attributable to the scheme is 17,000,000 shares. 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 in aggregate could be issued per employee (2010: 850,000).

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 of grant, 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 awards have so far been granted.

The type and vesting criteria of the options or awards 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. All time-related options granted have either lapsed, vested and have been exercised 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. A performance-related option granted will terminate on 1 November 2014, being the date on which the last options granted hereunder 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 awards 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 of the vesting period. Executive directors, executive 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 thereafter, 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 awards in terms of the LTIP was approved by shareholders at the annual general meeting held on 29 April 2005. Executive directors 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 the date of grant, to the extent that the stated company performance targets, under which the awards were made, are met and provided that the participant is still in the employ of the company at the date of vesting, or unless an event, such as death, occurs which may result in an earlier vesting date.

Options and awards

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 awards granted and the ordinary shares issued as a result of the exercise of options and awards during the period 1 January 2011 to 31 January 2012 is as follows:

  Time-related Performance related Bonus share plan (1) Long-term incentive plan (1) Total share incentive scheme Total shares issued
At 1 January 2011 641 391,932 1,552,493 1,599,690 3,544,756 6,923,831
Movement during year            
– Granted 820,847 686,305 1,507,152  
– Exercised (641) (220,788) (466,849) (201,315) (889,593) 889,593
– Lapsed – terminations (81,113) (102,620) (183,733)  
At 31 December 2011 171,144 1,825,378 1,982,060 3,978,582 7,813,424
Average exercise/issue price per share outstanding R231.98 R306.43 R302.69 R301.36  
Subsequent to year-end            
– Granted  
– Exercised (3,740) (4,963) (2,003) (10,706) 10,706
– Lapsed – terminations  
At 31 January 2012 167,404 1,820,415 1,980,057 3,967,876 7,824,130

(1) BSP and LTIP awards granted at nil cost to participants.

Effective 15 October 2008, the JSE Limited amended Schedule 14 (Requirements for share incentive schemes) of the Listings Requirements. As a result, AngloGold Ashanti amended 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 a three-year period, 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 in the scheme is 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 in terms of the share incentive scheme, as affected by this Listings Requirements rule change:

Details Options/Awards
Total number of options/awards attributable to the scheme at 31 December 2011 17,000,000
Less:  
– Total number of options/awards granted and outstanding at 31 December 2011 (3,978,582)
– 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)
– During the period 1 January to 31 December 2011 (889,593)
Total options/awards available but unissued at 31 December 2011 10,075,485

Dividend policy

Dividends are proposed by, and approved by the board of directors of AngloGold Ashanti, based on the company’s financial performance. Dividends are recognised when declared by the board of directors. During the third quarter of 2011, the Company changed its timing of dividend payments to quarterly, rather than half-yearly. 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 payment 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, compliance with the solvency and liquidity requirements of the Companies Act of 2008, the amount of reserves available for a dividend based on the going-concern assessment, and restrictions placed by the conditions of the convertible bonds, other debt facilities, protection of the investment grade credit rating and other factors.

Dividends declared since 1 January 2011:

Ordinary shares Final dividend Number 109 Interim dividend Number 110 Third quarter dividend Number 111 Fourth quarter dividend Number 112
Declaration date 15 February 2011 2 August 2011 7 November 2011 14 February 2012
Last date to trade ordinary shares        
cum dividend 4 March 2011 26 August 2011 25 November 2011 2 March 2012
Record date 11 March 2011 2 September 2011 2 December 2011 9 March 2012
Amount paid per ordinary share        
– South African currency (cents) 80 90 90 200
– United Kingdom currency (pence) 7.118 7.618 6.832 16.776
– Ghanaian currency (cedis) 17.384 19.188 16.659 45.100
Amount per CDI(1) – Australian currency (cents) 2.275 2.337 2.176 4.972
Payment date 18 March 2011 9 September 2011 9 December 2011 16 March 2012
Amount per GhDS(2) – Ghanaian currency (cedis) 0.17384 0.19188 0.16659 0.451
Payment date 21 March 2011 12 September 2011 12December 2011 March 2012
Amount per ADS(3)        
– United States currency (cents) 11.2599 12.0812 10.8747 27.50 (4)
Payment date 28 March 2011 19 September 2011 19 December 2011 26 March 2012 (4)
E ordinary share        
South African currency (cents) per share 40 45 45 100
Payment date 18 March 2011 9 September 2011 9 December 2011 16 March 2012
  1. (1) Each CDI (CHESS Depositary Interest) is equal to one-fifth of one ordinary share.
  2. (2) Each GhDS (Ghanaian Depositary Share) is equal to one-hundredth of one ordinary share.
  3. (3) Each ADS (American Depositary Share) is equal to one ordinary share.
  4. (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 that a 10% withholding tax on dividends and other distributions payable to shareholders would be implemented. In his budget speech on 22 February 2012, the South African Minister of Finance announced that the withholding tax on dividends and other distributions payable to shareholders will be increased from 10% to 15% effective 1 April 2012.

This withholding tax replaces the Secondary Tax on Companies and although this may reduce the tax payable by AngloGold Ashanti’s South African operations, thereby potentially increasing distributable earnings, the withholding tax on dividends and other distributions will generally reduce the amount of dividends or other distributions received by AngloGold Ashanti shareholders, subject to certain exceptions.

The method for collection of this withholding tax will be communicated to shareholders in due course.

Dematerialised shareholders on the South African share register will receive payment of their dividends electronically, as provided for by STRATE. Certificated shareholders, who have elected to receive their dividends electronically, will be paid via the company’s electronic funds transmission service. Certificated shareholders who have not yet elected to receive dividend payments electronically, are encouraged to mandate this method of payment for all future dividends.

Borrowings

The company’s borrowing powers are unlimited pursuant to the company’s memorandum of incorporation. As at 31 December 2011, the group’s gross borrowings (including the mandatory convertible bonds) totalled $2,488m, R20,006m (2010: $2,704m, R17,763m).

Significant events during the year under review and subsequent to year-end

Retirement from the board of directors: on 17 February 2011, Dr James Motlatsi retired from the board.

Sunrise Dam, Australia: On 15 March 2011, AngloGold Ashanti announced that its Sunrise Dam Gold Mine, situated 55km south of Laverton Australia, had been impacted by unprecedented heavy rains over the prior month.

Modification of the black economic empowerment share ownership transaction: On 11 May 2011, shareholders in general meeting approved the amendment to the company’s black economic empowerment (BEE) share ownership transaction, which was first announced in 2006, to ensure that the intended benefits accrued to its recipients, namely its South African employees, through the Bokamoso ESOP trust and the BEE partner, Izingwe Holdings (Proprietary) Limited (Izingwe) (an investment company controlled by black investors).

Acquisition of an interest in First Uranium: On 22 July 2011, AngloGold Ashanti announced that it had entered into an agreement to acquire 47,065,916 shares (or approximately 19.79%) in First Uranium Corporation (First Uranium), a Canadian-incorporated company, from Village Main Reef Limited (Village), a South African-incorporated company, at a price of CAD0.60 per share.

Appointment to the board of directors: On 31 August 2011, AngloGold Ashanti announced the appointment of Ms Nozipho January-Bardill to the board with effect from 1 October 2011.

Tropicana Gold Project Mineral Resource increases: On 29 November 2011, AngloGold Ashanti announced that the Mineral Resource estimate for the Tropicana Gold Project, situated in Western Australia, had increased by 1.05Moz of contained gold.

Appointment to the board of directors: On 9 December 2011, AngloGold Ashanti announced the appointment of Mr Rodney Ruston to the board with effect from 1 January 2012.

Delisting from stock exchanges: AngloGold Ashanti delisted from Euronext Paris with effect from 23 December 2011 and from Euronext Brussels, effective 30 December 2011.

A$600m loan facility: Following shareholders approval granted on 16 November 2011, AngloGold Ashanti entered into a four-year unsecured syndicated revolving credit facility.

Disposal: On 8 February 2012, the disposal of the group’s interest in AGA-Polymetal Strategic Alliance Management Company Holdings Limited, Amikan Holding Limited, AS APK Holdings Limited, Imitzoloto Holdings Limited and Yeniseiskaya Holdings Limited to Polyholding Limited was completed for a consideration of $20m.

Acquisition: On 2 March 2012, AngloGold Ashanti agreed to acquire First Uranium (Pty) Ltd (South Africa) (FUSA), a wholly owned subsidiary of Toronto-based First Uranium Corporation (FIUC) and the owner of Mine Waste Solutions (MWS) and Chemwes (Pty) Limited (Chemwes), a recently commissioned tailings retreatment operation located in South Africa’s Vaal River region and in the immediate proximity of AngloGold Ashanti’s own tailings facilities, for a cash consideration of US$335 million. The transaction will be funded from cash reserves and debt facilities. The transaction is subject to the fulfilment of various conditions and is expected to be completed by end of the second quarter of 2012. In compliance with section 45(5) of the Companies Act, 2008 (the Companies Act), notice is hereby given to the shareholders of the company that, in connection with the acquisition of FUSA, a resolution of the board of directors of the company was passed, in accordance with section 45(3) of the Companies Act, in terms of which, the company is authorised to provide indirect financial assistance to Chemwes, by way of a performance guarantee to be issued in favour of Franco Nevada (Barbados) Corporation (Franco Nevada) for the obligations of Chemwes to Franco Nevada under a Gold Stream Purchase agreement entered into by Chemwes and Franco Nevada. The guarantee will only become effective once the acquisition of FUSA becomes effective.

Credit rating: On 15 March 2012, Moody’s Investors Service announced that it has upgraded AngloGold Ashanti Limited’s cedit rating from Baa3 to Baa2 with a stable outlook.

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 suite of Annual Reports 2011, a material effect on the group’s financial position, other than those disclosed in the following paragraphs and those disclosed in group note 34 of the financial statements.

Colombia

La Colosa class action lawsuits: The following six class action lawsuits are currently pending before different Colombian state and federal courts in relation to AngloGold Ashanti Colombia S.A. (AGAC)'s La Colosa project, which is currently in its pre-feasibility phase and consists of three core concession contracts:

  • Ivonne Prada v. Federal Department of the Environment, Housing and Territorial Development (October 2009);
  • Usocoello, Cortolima, Procuraduria Regional Tolima, Universidad de Ibagué, Estudiantes de la Universidad del Rosario, Federarroz v. AGAC, Federal Department of Mines, Federal Department of the Environment, Housing and Territorial Development and Ingeominas (September 2010);
  • Maria del Pilar Gonzalez v. Federal Department of Mines, Ingeominas and AGAC (May 2011);
  • Maria del Pilar Gonzalez v. Federal Department of Mines, Ingeominas and AGAC (July 2011);
  • Personero de Ibagué v. Federal Department of the Environment, Housing and Territorial Development, Ingeominas, AGAC, Continental Gold Ltda., Oro Barracuda Ltda., Fernando Montoya, Alberto Murillo and Eugenio Gomez (December 2011); and
  • Juan Ceballos v. Federal Department of the Environment, Housing and Territorial Development, Ingeominas, Cortolima and AGAC (February 2012).

All but one of these lawsuits name AGAC as a defendant. Each lawsuit aims to stop exploration and mining in certain restricted areas affected by the La Colosa project due to environmental concerns or alleged breaches of environmental laws. Under Colombian law, restricted areas are State-protected land on which economic activities are restricted. AGAC has opposed, and has sought the dismissal of most of, the class action lawsuits that have been filed against it.

The class action lawsuit that has progressed the most was filed in the Third Administrative Court of the District of Ibagué on 9 September 2010. It named each of Ingeominas (the Colombian regulatory agency for mining activities), the Federal Department of the Environment, Housing and Territorial Development, as well as the Federal Department of Mines as defendants. AGAC was subsequently joined to the lawsuit as an additional defendant. The plaintiffs are the User Association of the Land Adequation District of Coello and Cucuana Rivers (Usocoello), which is a co-operative representing local farmers, the Autonomous Regional Corporation of Tolima (Cortolima), which is the government of the State of Tolima, the Office of the Attorney General of the State of Tolima (Procurador Judicial Ambiental y Agrario para el Tolima), the University of Ibagué, a student association of the University of El Rosario (Estudiantes de la Universidad del Rosario) and Fedearroz, which is the Colombian association of rice growers.

The plaintiffs have petitioned the court to order the defendant governmental entities not to declare the La Colosa mining project feasible on the grounds that the project threatens a healthy environment, public health and food safety for Usocoello members and local residents. Such order by the court would result in the revocation of AGAC's permit to temporarily use for its exploration activities 515.75 hectares of forest reserve that are otherwise designated as restricted areas.

In addition, as each of AGAC's three core mining concession contracts governing the La Colosa project provides that Ingeominas has the discretion to declare the underlying concession void if AGAC breaches applicable environmental laws or regulations, the plaintiffs have petitioned the court to direct Ingeominas to cancel such concession contracts on the ground that AGAC has violated the Code of Natural Resources. If plaintiffs prevail and Ingeominas is ordered to cancel AGAC's three core concession contracts, the company would be required to abandon the La Colosa project and all of AGAC's other existing mining concession contracts and pending proposals for new mining concession contracts would also be cancelled. In addition, AGAC would be banned from doing business with the Colombian government for a period of five years. As a result, AGAC would be unable to conduct any mining exploration or development activities during such period. However, this would not affect other AngloGold Ashanti subsidiaries operating in Colombia, which hold singularly or in concert with joint venture partners the majority of AngloGold Ashanti's concession contracts in Colombia.

As no settlement was reached at a special conciliation hearing (Pacto de Cumplimiento) held on 27 April 2011, the trial has continued and the court is gathering evidence from the parties in preparation for its ruling.

In addition, in connection with the class action lawsuit filed by the Ombudsman of Ibagué (Personero de Ibagué) in September 2011, the Superior Court of the District of Ibagué granted the plaintiff a preliminary injunction that resulted in the suspension of AGAC's mining concession contracts relating to certain greenfield exploration activities in the Toche Anaima Belt. These contracts do not include AGAC's core concession contracts relating to the La Colosa project. AGAC has appealed against this preliminary injunction and its appeal is still pending.

Department of the Environment, Housing and Territorial Development (DoE) v. AGAC: In Resolution No. 785 of 29 April 2009, the DoE opened an investigation against AGAC and brought a list of charges against it for carrying out exploratory activities at the La Colosa project without having obtained the applicable permit to partially or temporarily use the soil of a forest reserve that was designated as a restricted area. In particular, the DoE alleged that AGAC violated Article 210 of the Code of Natural Resources (Code), which requires a company to obtain such a permit when it plans on carrying out an economic activity that will involve the cutting down of trees. In 2010, while conducting its investigation the DoE also proceeded to update the existing mining terms of reference, which set forth the environmental studies and other environmental activities that each mining company is required to conduct in connection with the exploration phase of its respective mining project. As reflected in Article 34 of the Code, the new terms of reference specify that exploration may not be carried out in restricted areas without a permit sanctioning such exploration. The DoE then resolved that AGAC was in breach of the 2010 terms of reference and issued a fine against AGAC.

As the parties were unable to reach an agreement at a conciliation meeting held on 30 May 2011, on such same date AGAC filed an action against the DoE in the Administrative Superior Court of the Cundinamarca District to annul the penalties. Should the DoE's fine ultimately be upheld by the courts, the Ingeominas would then have the discretion to terminate AGAC's three core mining concession contracts relating to the La Colosa project. In the event of such termination, the company would be required to abandon the La Colosa project and all of AGAC's other existing mining concession contracts and pending proposals for new mining concession contracts would also be canceled. In addition, AGAC would be banned from doing business with the Colombian government for a period of five years. As a result, AGAC would be unable to conduct any mining exploration or development activities during such period. However, this would not affect other AngloGold Ashanti subsidiaries operating in Colombia, which hold singularly or in concert with joint venture partners the majority of AngloGold Ashanti's concession contracts in Colombia.

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 on 15 February 2012, which were reviewed by Ernst & Young Inc. and for which their unmodified review report was issued, for the year ended 31 December 2011.

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 Limited , are as follows:

  Nature of resolution Effective date
AngloGold Ashanti Limited Passed at the annual general meeting held on 11 May 2011: 11 May 2011
  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 11 May 2011: 11 May 2011
  Approval to amend the company memorandum of incorporation by replacing Article 147 of the company’s memorandum of incorporation with a new article.  
AngloGold Ashanti Limited Passed at the general meeting held on 16 November 2011: 16 November 2011
  Approval for the company to provide financial assistance to related parties in accordance with Sections 44 and 45 of the Companies Act No.71 of 2008.  

Annual general meetings

At the 67th annual general meeting held on 11 May 2011, shareholders passed ordinary resolutions relating to the:

  • adoption of the financial statements for the year ended 31 December 2010;
  • re-appointment of Ernst & Young Inc. as auditors of the company;
  • election of Mr TT Mboweni as a director and chairman;
  • election of Mr F Ohene-Kena as a director;
  • election of Mr R Gasant as a director;
  • re-election of Mr WA Nairn as a director;
  • re-election of Mr SM Pityana as a director;
  • appointment of Prof LW Nkuhlu as a member of the Audit and Corporate Governance Committee of the company;
  • appointment of Mr FB Arisman as a member of the Audit and Corporate Governance Committee of the company;
  • appointment of Mr R Gasant as a member of the Audit and Corporate Governance Committee of the company;
  • renewal of a general authority placing 5% of the number of ordinary shares of the company in issue from time to time 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 Limited ;
  • amendments to the AngloGold Ashanti Limited Long-Term Incentive Plan 2005 in respect of the revised proportionate vesting of awards in certain circumstances and noted the allocation of thresholds for executives for 2011;
  • approval of the AngloGold Ashanti remuneration policy;
  • increase in non-executive directors’ fees;
  • increase in non-executive directors’ fees for board committee meetings; and
  • approval for the company and its subsidiaries to acquire ordinary shares issued by the company.

Notice of the 68th annual general meeting to be held in the Auditorium, 76 Jeppe Street, Newtown, Johannesburg at 11:00 (South African time) on Thursday, 10 May 2012, will be printed as a separate document and distributed to shareholders in accordance with the Companies Act No. 71 of 2008. Additional copies of the notice of annual general meeting may be obtained from the company’s corporate contacts, share registrars or the company’s website.

Directorate and secretary

The following movements to the board of directors took place during the period from 1 January 2011 to 31 December 2011 and subsequent to year-end.

Executive directors

There were no changes to the executive directors during the year under review.

Non-executive directors

Dr TJ Motlatsi retired from the board on 17 February 2011.

Ms NP January-Bardill was appointed as a member of the board with effect from 1 October 2011 and as a member of the Audit and Corporate Governance Committee with effect from 2 November 2011.

Mr RJ Ruston was appointed as a member of the board with effect from 1 January 2012.

The directors retiring by rotation at the forthcoming annual general meeting in terms of the articles of association are, Prof LW Nkuhlu and Mr WA Nairn. Both Prof Nkuhlu and Mr Nairn have made themselves available for re-election at the annual general meeting to be held on 10 May 2012.

Ms NP January-Bardill and Mr RJ Ruston, who were appointed as directors on 1 October 2011 and 1 January 2012 respectively, will retire at the annual general meeting but offer themselves for election.

In terms of the company’s memorandum of incorporation, there is no mandatory retirement age for non-executive directors. Non-executive directors do not hold service contracts with the company.

The names and biographies of the directors of the company are listed under Annual Integrated Report 2011Board and executive management.

There was no change in the office of the Company Secretary. The name, business and postal address of the Company Secretary are set out at Administrative information.

Directors’ and prescribed officers’ interests in shares

The interests of directors and prescribed officers in the ordinary shares of the company at 31 December, which did not individually exceed 1% of the company’s issued ordinary share capital, were:

  Beneficial Beneficial
  Direct Indirect Direct Indirect
  31 December 2011 31 December 2010
Non-executive directors        
FB Arisman 4,984 4,984
LW Nkuhlu 800 800
Total 5,784 5,784
Executive directors        
M Cutifani 10,000 10,000
S Venkatakrishnan 10,351 10,351
Total 20,351 20,351
Prescribed officers        
AM O’Neill 7,000 7,000
CE Carter 7,037 7,000
  7,037 7,000 7,000 7,000
Grand total 27,388 12,784 27,351 12,784

Other than CE Carter who sold 1,231 shares during December 2011, which settled in January 2012, there has been no further change in the above interests since 31 December 2011. A register detailing directors’ and prescribed officers’ interests in contracts is available for inspection at the company’s registered and corporate office.

SM Pityana, an independent non-executive director of AngloGold Ashanti, has an indirect beneficial holding in the company given that he is a Trustee and beneficiary of a trust which holds a 44% interest in Izingwe Holdings, the company’s BEE partner. As at 31 December 2011, Izingwe Holdings held 1,050,000 E ordinary shares in the issued capital of the company (31 December 2010: 1,120,000 E ordinary shares). This holding is unchanged at the date of this report.

Details of service contracts of directors and prescribed officers

In accordance with Section 30(4)(e) the salient features of the service contracts of directors and prescribed officers have been disclosed in the Remuneration report.

Annual financial statements

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 2011.

The directors of AngloGold Ashanti Limited are responsible for the maintenance of adequate accounting records and the preparation of the annual financial statements and related information in a manner that fairly presents the state of the affairs of the company, in conformity with the Companies Act, 71 of 2008, as amended and in terms of the JSE Limited Listing Requirements.

The directors are also responsible for the maintenance of effective systems of internal control which are based on established organisational structures and procedures. These systems are designed to provide reasonable assurance as to the reliability of the annual financial statements, and to prevent and detect material misstatement and loss.

In preparing the annual financial statements reflected in United States dollars and South African rands, the group has complied with International Financial Reporting Standards (IFRS) and used appropriate accounting policies supported by pragmatic judgements and estimates.

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 reviews these on a quarterly basis at its meetings.

Cash and cash equivalents at 31 December 2011 amounted to $1,112m (2010: $586m), and together with cash budgeted to be generated from operations in 2012 and the net incremental borrowing facilities available are, in management’s view, adequate to fund operating, mine development, capital expenditure and financing obligations as they fall due for at least the next 12 months.

Based on the results of a formal documented review of the company’s system of internal controls and risk management, covering both the adequacy in design and effectiveness in implementation, performed by the internal audit function during the year 2011, the board of directors has considered:

  • information and explanations provided by line management;
  • discussions held with the external auditors on the results of the year-end audit; and
  • the assessment by the Audit and Corporate Governance and the Risk and Information Integrity committees.

Nothing has come to the attention of the board that caused it to believe that the company’s system of internal controls and risk management are not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements.

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 2011, it is appropriate to prepare these financial statements on a going concern basis.

The directors are of the opinion that these financial statements fairly present the financial position of the company and group at 31 December 2011 and the results of their operations and cash flow information for the year then ended.

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 of South Africa. The unqualified report on these financial statements appears under Report of the independent auditors.

The company will prepare a set of financial statements in accordance with US Generally Accepted Accounting Principles (US GAAP) and this includes such financial statements in its annual report on Form 20-F as must be filed with the US Securities and Exchange Commission by no later than 30 April 2012. Copies of the annual report on Form 20-F will be made available once the filing has been made, on request, from the Bank of New York Mellon, or from the company’s corporate office detailed at Administrative information.

Investments

Particulars of the group’s principal subsidiaries and operating entities are presented under Principal subsidiaries and operating entities.