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Strategy

TO GROW AND CREATE WEALTH SUSTAINABLY

Striving to be the leading mining company

AngloGold Ashanti’s broad strategic direction is defined in its vision, mission and values and in its five core strategies, explained in more detail below and under Annual Integrated Report 2011Our strategy and strategic objectives.

These elements underpin Project ONE, the company’s business framework, which is a consistent operating model that reaches every corner of the organisation, bringing together people and technical systems to realise AngloGold Ashanti’s vision to be ‘the leading mining company’. This operating model defines the technical, commercial and social aspects of the business, and prescribes how they interact in order to ensure delivery on the company’s business goals. It sets the framework to ensure consistency and efficiency in all processes with the aim of enhancing operating performance and control.

AngloGold Ashanti’s five core strategies are:

  • People are the business – Providing the leadership and the supporting management processes to ensure that we have the right people, in the right roles, doing the right work to deliver against our goals;
  • Maximise margins – Managing revenues to ensure that full value is realised from our products by delivering a quality product and managing costs to protect margins and returns on capital employed;
  • Manage the business as an asset portfolio – Optimising asset and project portfolios to meet or exceed specified rates of return. To achieve this, each asset is regularly reviewed and ranked in both absolute terms and relative to its peer group;
  • Grow the business – Developing a range of options for growth, including greenfield and brownfield exploration, new opportunities for promoting organic growth, value-accretive merger and acquisition opportunities and maximising the value of commodities other than gold within our portfolio; and
  • Embrace sustainability principles – Developing business and social partnerships based on mutual value creation, while maintaining a focus on ensuring the safety and well-being of employees and managing environmental and other impacts.

AngloGold Ashanti’s business strategy is reviewed regularly to determine progress against the backdrop of a dynamic operating and regulatory environment.

The key components of each of the five core strategies are set out below:

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; and
  • Business Process Framework (BPF), a component of Project ONE, 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.
  • 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 maximise margins by actively managing revenues and costs.

Full value is realised from its products by:

  • offering exposure to spot prices;
  • delivering products of a consistent quality, and on time;
  • working to maintain cost inflation below the industry average; and
  • applying resource development strategies to maintain operating margins over the life cycle of an asset.

Project ONE has been implemented to standardise operating procedures and achieve key five-year goals.

The board reviewed these goals in late 2010 for the period 2011-2015 as follows:

  • Safety – the long-term goal is to operate without accident or injury. AngloGold Ashanti aims to reduce the all injury frequency rate to less than 9 per million hours worked;
  • Productivity – 20% improvement in oz/TEC;
  • Environment – the long-term target is to operate without environmental incidents. The group aims to achieve a 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 IFRS total cash costs per ounce (adjusted for mining inflation); and
  • Return on shareholders’ equity (%) – 15% through the five-year period.

AngloGold Ashanti may not be able to reach these goals.

Manage the business as an asset portfolio

Through this strategy, AngloGold Ashanti optimises capital deployment by investing only in assets and growth opportunities which offer superior returns. Each asset and project is ranked during the business planning process. Rankings are both absolute and relative to the peer group, with the aim of:

  • ensuring 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, at attractive valuations, those assets that no longer meet the company’s criteria.

Grow the business

AngloGold Ashanti seeks to enhance shareholder value through:

  • Greenfield exploration – leveraging its asset portfolio and landholdings to develop new projects, whilst continually reviewing and analysing potential opportunities;
  • Brownfield exploration and project development – promoting organic growth and leveraging the existing infrastructural base;
  • New projects – promoting organic growth and leveraging current positions;
  • Mergers and acquisitions – selectively pursuing valueaccretive merger and acquisition opportunities; and
  • Incremental growth – maximising the value of other commodities, including uranium, within an existing and developing asset portfolio.

Embrace sustainability principles

AngloGold Ashanti’s sustainable development framework addresses a number of interlinked issues which are critical to business sustainability:

  • In a climate of increased resource competition, this framework enables countries and communities in which the company operates to derive sustainable economic benefits from the extraction of resources. AngloGold Ashanti seeks to achieve this by developing mutually-beneficial partnerships with host governments and communities and participating in the co-design of projects which will achieve local development goals.
  • Environmental and natural resource management – among other inputs, mining requires energy, water and access to land. The company’s ability to manage these resources effectively impacts directly on community relationships and on production costs.
  • Improving the safety and health of employees. The longterm business goal is to operate without illness or injury.
  • The company’s commitment to respect human rights – reflected in the implementation of the voluntary principles on security and human rights (VPSHR) in security management strategies as well as through the development of a human rights framework for the business, based on the UN guidelines on business and human rights.
  • Effective stakeholder engagement is required to support management of the above priorities and the company is therefore working to implement a company-wide engagement standard to improve performance in this area.