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Annual report suite 2012

Directors’ report

For the year ended 31 December


Nature of business

AngloGold Ashanti conducts mining operations in Africa, North and South America and Australia, and undertakes exploration activities in some of these jurisdictions and in other parts of the world. In addition, the company is involved in the manufacturing, marketing and selling of gold products, as well as the development of markets for gold. 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 in the operational profiles.

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

As at 31 December 2012, there were no shareholders holding 10% or more of the company’s issued 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 2012 was made up as follows:

  SA rands
• 600,000,000 ordinary shares of 25 South African cents each 150,000,000
• 4,280,000 E ordinary shares of 25 South African cents each 1,070,000
• 2,000,000 A redeemable preference shares of 50 South African cents each 1,000,000
• 5,000,000 B redeemable preference shares of 1 South African cent each 50,000

The following are the movements in the issued and unissued share capital from 1 January 2012 to 28 February 2013:

Issued
Ordinary shares Number of shares Value SA rands Number of shares Value SA rands
2012 2011
At 1 January 382,242,343 95,560,586 381,204,080 95,301,020
Issued during year:
Conversion of E ordinary shares
– Bokamoso ESOP 84,446 21,112 60,695 15,174
– Izingwe 48,532 12,133 39,052 9,763
BEE transaction (as approved by shareholders on 11 May 2011) Bokamoso ESOP 48,923 12,231
Exercise of options by participants in the AngloGold Ashanti Share Incentive Scheme 945,641 236,410 889,593 222,398
At 31 December (1) 383,320,962 95,830,241 382,242,343 95,560,586
Issued subsequent to year-end
– Exercise of options by participants in the AngloGold Ashanti Share Incentive Scheme 123,048 30,762
– Bokamoso ESOP on conversion of E ordinary shares 819 205
At 28 February 2013 383,444,829 95,861,208
  1. (1) Share capital of $16m (2011: $16m) is translated at historical rates of exchange at the reporting dates. Refer to group note 25.
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).

  Number of shares Value SA rands Number of shares Value SA rands
2012 2011
At 1 January 2,582,962 645,741 2,806,126 701,532
Reinstated 1,329,164 332,291
Cancelled in exchange for ordinary shares in terms of the cancellation formula:
– Bokamoso ESOP (615,210) (153,803) (922,328) (230,582)
– Izingwe (350,000) (87,500) (630,000) (157,500)
At 31 December 1,617,752 404,438 2,582,962 645,741
Cancelled subsequent to year-end
Cancelled and exchanged for ordinary shares issued in terms of the cancellation formula:
– Bokamoso ESOP (5,234) (1,309)
At 28 February 2013 1,612,518 403,129

Share capital is translated at historical rates of exchange at the reporting dates. Refer to group note 25.

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

However, in November 2011, in addition to reinstating the 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 shareholder meetings, but do not hold veto rights.

Dividends payable on E ordinary shares are equivalent to 50% of dividends payable to ordinary shareholders.

E ordinary shares, on vesting, are exchanged for ordinary shares and 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
2012 2011
At 1 January 217,757,657 218,795,920
Authorised during the year - -
Issued during the year (1,078,619) (1,038,263)
At 31 December 216,679,038 217,757,657
Issues subsequent to year-end (123,867)
At 28 February 2013 216,555,171
Ordinary shares under the control of the directors

Pursuant to the authority granted by shareholders at the annual general meeting held on 10 May 2012, 5% of the 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 2012, the total number of shares placed under the control of the directors was 19,166,048. No shares were issued during 2012 by the directors in terms of this authority, which will expire at the close of the next annual general meeting, unless renewed.

Shareholders will therefore be asked at the annual general meeting to be held on 13 May 2013, 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, 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 13 May 2013.

Shareholders will also 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 2012, the company had in issue, through The Bank of New York Mellon as Depositary and listed on the New York Stock Exchange (NYSE), 153,711,993 (2011: 164,886,294), American Depositary Shares (ADSs). Each ADS is equal to one ordinary share. At 28 February 2013, there were 150,951,640 ADSs in issue and listed on the NYSE.

CHESS Depositary Interests

At 31 December 2012, the company had in issue, through the Clearing House Electronic Sub-register System (CHESS), and listed on the Australian Securities Exchange (ASX), 89,780,845 (2011: 90,452,100) CHESS Depositary Interests (CDI). The number of CDIs remained unchanged at 28 February 2013. Every five CDIs is equivalent to one AngloGold Ashanti ordinary share and carries the right to one vote.

Ghanaian Depositary Shares

At 31 December 2012, the company had in issue, through NTHC Limited as Depositary and listed on the Ghana Stock Exchange (GhSE), 16,551,255 Ghanaian Depositary Shares (GhDSs) (2011: 16,610,500). The register remained unchanged as at 28 February 2013. Every 100 GhDSs has one underlying AngloGold Ashanti ordinary share and carries the right to one vote.

CREST Depositary Interests

To facilitate trading on the London Stock Exchange (LSE) and settlement in CREST, AngloGold Ashanti has established a Depositary Interest (DI) facility which is administered by Computershare Investor Services Plc. The DI facility became effective on 17 September 2012, via a change of trading platform. Shareholders wishing to trade their AngloGold Ashanti shares on the London Stock Exchange will be able to do so by converting their ordinary shares into dematerialised DIs on a one-for-one basis. At 31 December 2012, a total of 19,364 DIs had been issued in exchange for ordinary shares and were listed on the LSE. At 28 February 2013, there were 162,160 DIs in issue.

AngloGold Share Incentive Scheme

AngloGold Ashanti operates a share incentive scheme through which executive directors, members of the executive committee 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, support its continued growth, and to promote the retention of such employees.

Non-executive directors are not eligible to participate in the share incentive scheme.

Following a change in Schedule 14 of the JSE Listings Requirements (Share Incentive Schemes) on 15 October 2008 the maximum number of shares attributable to the scheme was changed from 2.75% of issued share capital from time to time to a fixed figure of 17,000,000. 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, being 850,000 ordinary shares in aggregate.

Also as a result of the change to the JSE Listings Requirements, as aforementioned, 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 a result of this rule change:

Details Options/Awards
Total number of options/awards attributable to the scheme at 31 December 2012 17,000,000
Less:  
– Total number of options/awards granted and outstanding at 31 December 2012 (4,580,329)
– 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)
– During the period 1 January to 31 December 2012 (945,641)
Total options/awards available but unissued at 31 December 2012 8,528,097

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:

Performance-related options

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. Performance-related options granted will terminate on 1 November 2014, being the date on which the last options granted hereunder may be exercised or they will expire.

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, executives 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 remains in the employ of the company at the date of vesting unless an event, such as death, retirement or redundancy 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 two years, with 40% of awards granted vesting in year one and 60% in year two from the date of grant or, in the event that a participant exercises his awards in year three, then 120% of awards granted will be available to such participant.

The following changes were approved at the extraordinary general meeting of shareholders on 11 March 2013. The 20% uplift for the retention of shares for 36 months will fall away and will now be added to the initial 100% resulting in an allocation of 120% share matching for all management. The Executive Committee members will receive an increased allocation from 120% to 150%. The vesting period has therefore been shortened to two years with 50% vesting 12 months after the date of issue and the remaining 50% vesting 24 months after the date of issue.

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 set company performance targets, under which the awards were made, are met, and provided that the participant remains in the employ of the company at the date of vesting, unless an event, such as death, retirement or redundancy occurs, which may result in an earlier vesting date.

The Remuneration Committee (Remco) has approved a new retention bonus scheme comprising both cash (40% of 2013 total base pay) and shares (60% of base pay) which was implemented on 1 March 2013 for Executive Committee members. This will be implemented over the short term to support a strategy of retaining the top management for a minimum period of 18 months to ensure delivery on key business imperatives while a new Chief Executive Officer is identified and inducted. The share award will be a performance-based share (LTIP) granted in March 2013. Subject to the performance conditions, these shares will vest at the end of August 2014. In line with the LTIP vesting, the cash portion will be delivered at the end of August 2014, based on the achievement of the performance conditions.

The allocation to the Chief Financial Officer will be 80% cash and 60% shares.

Options and awards

In accordance with the JSE Listings Requirements and the rules of the AngloGold Share Incentive Scheme, the changes in options and awards granted and the ordinary shares issued as a result of the exercise of options and awards during the period 1 January 2012 to 28 February 2013 are disclosed below:

  Performance related Bonus share plan (1) Long-term incentive plan (1) Total share incentive scheme
At 1 January 2012 171,144 1,825,378 1,982,060 3,978,582
Movement during year        
– Granted 993,146 983,554 1,976,700
– Exercised (47,107) (558,042) (340,492) (945,641)
– Lapsed – terminations (31,070) (104,026) (294,216) (429,312)
At 31 December 2012 92,967 2,156,456 2,330,906 4,580,329
Average exercise/issue price per share outstanding 220.09 317.88 316.28 315.08
Subsequent to year-end        
– Granted 61,436 61,436
– Exercised (370) (97,027) (25,651) (123,048)
– Lapsed – terminations (10,493) (323,203) (333,696)
At 28 February 2013 92,597 2,110,372 1,982,052 4,185,021
  1. (1) BSP and LTIP awards are granted at nil cost to participants.

Total shares issued on the exercise of options and awards from the inception of the scheme:

  Total number of shares issued
At 1 January 2012 7,813,424
– Exercised 2012 945,641
At 31 December 2012 8,759,065
Subsequent to year-end  
– Exercised February 2013 123,048
At 28 February 2013 8,882,113

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 2012:

  Final dividend Number 112 Interim dividend Number 113 Interim dividend Number 114 Interim dividend Number 115
Ordinary shares        
Declaration date 14 February 2012 8 May 2012 3 August 2012 6 November 2012
Amount paid per ordinary share        
– South African currency (cents) 200 100 100 50
– United Kingdom currency (pence) 16.776 7.638 7.611 3.503
– Ghanaian currency (cedis) 45.100 22.290 23.580 10.585
Amount per CDI (1) – Australian currency (cents) 4.972 2.452 2.306 1.077
Amount per GhDS (2) – Ghanaian currency (cedis) 0.451000 0.222900 0.235800 0.105850
Amount per ADS (3)        
– United States currency (cents) 26.40 11.81 12.10 5.76
E ordinary share        
South African currency (cents) per share 100 50 50 25
  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.
Withholding tax

On 1 April 2012, the South African government imposed a 15% withholding tax on dividends and other distributions payable to shareholders.

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 quantum of dividends or other distributions received by AngloGold Ashanti shareholders, subject to certain exceptions.

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 2012, the group’s gross borrowings (including the mandatory convertible bonds) totalled $3,583m (2011: $2,488m).

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

Moody’s upgrade of AngloGold Ashanti’s ratings: On 15 March 2012, AngloGold Ashanti acknowledged that Moody’s Investors Service upgraded the issuer rating of AngloGold Ashanti Limited to Baa2.

Appointment to the board of directors: On 9 December 2011, AngloGold Ashanti announced the appointment of Rodney John Ruston to its board of directors, with effect from 1 January 2012 and on 17 May 2012, AngloGold Ashanti announced the appointment of Michael James Kirkwood to its board of directors, with effect from 1 June 2012.

AngloGold Ashanti acquires Kinross’s 50% stake in Serra Grande: On 29 May 2012, AngloGold Ashanti, which held, through a subsidiary, a 50% interest in the Serra Grande mine in Brazil, agreed to acquire the remaining 50% stake in the mine from Kinross Gold Corporation for $220m in cash. The transaction which was funded from existing cash reserves and debt facilities, closed on 28 June 2012.

AngloGold Ashanti acquired First Uranium: On 20 July 2012, AngloGold Ashanti acquired First Uranium (Pty) Limited, the owner of Mine Waste Solutions in South Africa, for a cash consideration of $335m.

AngloGold Ashanti signed a new $1bn RCF: On 23 July 2012, AngloGold Ashanti signed a new $1.0bn, five-year unsecured revolving credit facility (RCF) maturing in July 2017 with a banking syndicate to replace the existing four-year, $1.0bn unsecured RCF maturing in April 2014.

AngloGold Ashanti announced the pricing of a bond offering: On 25 July 2012, AngloGold Ashanti announced the pricing of an offering of $750m aggregate principal amount of 5.125% notes due 2022 to be issued by AngloGold Ashanti Holdings plc, a wholly owned subsidiary of the company, at an issue price of 99.398%.

AngloGold Ashanti announces change of company secretary: On 14 August 2012, AngloGold Ashanti announced the appointment of Maria Esperanza Sanz Perez, Group General Counsel, as company secretary with effect from 1 September 2012 following the retirement of Lynda Eatwell from the company.

Unprotected strike: On 1 October 2012, AngloGold Ashanti announced that its mines in South Africa remained at a standstill as a result of the unprotected strike which began on 20 September 2012 at the Kopanang operation and spread to the remaining five operations on 25 September 2012. On 24 October 2012, AngloGold Ashanti announced that the unprotected strike at its Vaal River region had come to an end. On 2 November 2012, AngloGold Ashanti announced that employees at the Mponeng and TauTona mines did not resumed work due to illegal sit-ins. On 14 November 2012, following another sit-in, AngloGold Ashanti announced that normal operations resumed at its Mponeng mine following successful engagement with employee and trade union representatives.

AngloGold Ashanti announces termination of contract with an underground development contractor: On 13 October 2012, AngloGold Ashanti announced its decision to terminate its relationship with Mining and Building Contractors Ltd, the underground development contractor at the company’s Obuasi mine in Ghana.

Listing of senior unsecured fixed rate notes and floating rate notes: AngloGold Ashanti announced on 16 October 2012, that the JSE Limited granted the company the listing of its ANG01 senior unsecured fixed rate notes and ANG02 senior unsecured floating rate notes under its R10bn DMTNP dated 29 June 2012.

AngloGold Ashanti announces an increased Mineral Resource estimate for Tropicana: On 4 December 2012, AngloGold Ashanti announced that the Mineral Resource estimate for the Tropicana Gold Project had increased by a further 1.48Moz to 7.89Moz of contained gold. The increase was the result of drilling completed in 2012 and greater confidence in the viability of a larger pit at Havana.

AngloGold Ashanti maintains its investment grade rating: On 10 December 2012, AngloGold Ashanti announced that, following an extensive review, Standard & Poor’s had affirmed the investment grade rating, with a negative outlook, on the company’s publicly traded debt.

Subsequent to year-end

AngloGold Ashanti announces the resignation of its Chief Executive Officer: On 8 January 2013, the board of AngloGold Ashanti announced the resignation of the Chief Executive Officer, Mark Cutifani, with effect from 1 April 2013. The board further announced the appointment of the current Chief Financial Officer, Srinivasan Venkatakrishnan and Executive Vice President: Business & Technical Development, Anthony O’Neill as joint interim Chief Executive Officers with Srinivasan Venkatakrishnan responsible for all finance and corporate functions and Anthony O’Neill responsible for all operations, projects (including the company’s enterprise resource planning programme and procurement) and technical functions. Tony O’Neill was appointed an executive director on 20 February 2013.

Material change

There has been no material change in the financial results or trading position of the AngloGold Ashanti group since the publication of its results for the year ended 31 December 2012 on 20 February 2013. These results were audited by Ernst & Young Inc. who issued an unqualified audit report on 19 March 2013.

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 JSE Listings Requirements, are as follows:

  Number of resolution Effective date
  Passed at the annual general meeting held on 10 May 2012:  
AngloGold Ashanti Limited Approval for the company or any of its subsidiaries to acquire ordinary shares
issued by the company.
10 May 2012

Annual general meetings

At the 68th annual general meeting held on Thursday, 10 May 2012, shareholders passed resolutions relating to the:

  • re-appointment of Ernst & Young Inc. as auditors of the company;
  • election of NP January-Bardill as a director;
  • election of RJ Ruston as a director;
  • re-election of WA Nairn as a director;
  • re-election of Prof LW Nkuhlu as a director;
  • appointment of Prof LW Nkuhlu as a member of the Audit and Corporate Governance Committee of the company;
  • appointment of FB Arisman as a member of the Audit and Corporate Governance Committee of the company;
  • appointment of R Gasant as a member of the Audit and Corporate Governance Committee of the company;
  • appointment of NP January-Bardill as a member of the Audit and Corporate Governance Committee of the company;
  • renewal of the 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 directors to issue for cash those ordinary shares which the directors are authorised to allot and issue, subject to certain limitations of the Listings Requirements of the JSE;
  • advisory endorsement of the AngloGold Ashanti remuneration policy and notice of 2012 LTIP awards;
  • increase in non-executive directors’ remuneration for their service as directors;
  • approved as a special resolution, increase in non-executive directors’ fees for board and statutory committee meetings; and
  • approved, as a special resolution, acquisition of the company and its subsidiaries ordinary shares issued by the company.

Notice of the 69th annual general meeting to be held in the Auditorium, 76 Jeppe Street, Newtown, Johannesburg at 11:00 (South African time) on 13 May 2013, will be printed as a separate document and distributed to shareholders in accordance with the Companies Act No. 71 of 2008.

Directorate and secretary

The following changes to the board of directors took place during the period from 1 January 2012 to 31 December 2012 and subsequent to year-end.

Executive directors

There were no changes to the executive directors during the year under review. Subsequent to year end, the board of AngloGold Ashanti announced the resignation of Chief Executive Officer, Mark Cutifani, effective 1 April 2013. The board further announced the appointment of current Chief Financial Officer, Srinivasan Venkatakrishnan, and Executive Vice President: Business & Technical Development, Anthony O’Neill, as joint interim Chief Executive Officers until a successor to Mark Cutifani is appointed.

On 18 February 2013, the board announced the appointment of Anthony O’Neill as an executive director of the company with effect from 20 February 2013.

Non-executive directors

Rodney Ruston and Michael Kirkwood were appointed to the board with effect from 1 January 2012 and 1 June 2012 respectively. Rodney Ruston offered himself and was elected as a director by shareholders at the Annual General Meeting held on 10 May 2012. Michael Kirkwood will retire at the annual general meeting and will offer himself for election by shareholders at the annual general meeting to be held on 13 May 2013.

The directors retiring by rotation at the forthcoming annual general meeting in terms of the Memorandum of Incorporation are Bill Nairn, Ferdinand Ohene-Kena, Frank Arisman and Srinivasan Venkatakrishnan. Bill Nairn, Ferdinand Ohene-Kena and Frank Arisman will not offer themselves for re-election.

IR The names and biographies of the directors of the company are listed under Board and executive management.

Company Secretary

Lynda Eatwell retired as Company Secretary on 31 August 2012 and Maria Sanz Perez was appointed as Company Secretary with effect from 1 September 2012. The name, business and postal address of the Company Secretary are set out under Administrative information.

Directors’ and prescribed officers’ interests in AngloGold Ashanti shares

The interests of directors, prescribed officers and their associates 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:

  31 December 2012
Beneficial holding
31 December 2011
Beneficial holding
  Direct Indirect Direct Indirect
Non-executive directors        
FB Arisman 4,984 4,984
LW Nkuhlu 800 800
Total 5,784 5,784
Executive directors        
M Cutifani 61,692 10,000
S Venkatakrishnan 52,508 10,351
Total 114,200 20,351
Prescribed officers        
AM O’Neill 7,000 7,000
CE Carter 25,078 7,037
Total 25,078 7,000 7,037 7,000
Grand total 139,278 12,784 27,388 12,784

SM Pityana, 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 2012, Izingwe Holdings held 700,000 E ordinary shares in the issued capital of the company (31 December 2011: 1,050,000 E ordinary shares). This holding is unchanged at the date of this report.

Changes in directors’ and prescribed officers’ interests in AngloGold Ashanti shares
  Date of transaction Type of transaction Number
of shares
Direct/indirect beneficial
holding
Non-executive director
LW Nkuhlu 22 February 2013 On-market purchase of AngloGold Ashanti ordinary shares 2,200 Indirect
Executive directors
S Venkatakrishnan 27 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 3,429 Direct
M Cutifani 1 March 2013 On market sale of shares 35,580 Direct
  1 March 2013 On market purchase of shares 53,014 Direct
Company Secretary
ME Sanz Perez 1 March 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,135 Direct
Prescribed officers
GJ Ehm 22 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,256 Direct
MP O’Hare 27 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 927 Direct
I Boninelli 27 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,284 Direct
CE Carter 27 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,716 Direct
DC Noko 27 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 615 Direct
RW Largent 28 February 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,881 Direct
RN Duffy 1 March 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 1,180 Direct
MD Macfarlane 6 March 2013 On-market purchase of ordinary shares pursuant to the AngloGold Ashanti Co-Investment Plan 452 Direct
Details of service contracts of directors and prescribed officers

In accordance with Section 30(4)(e) of the Companies Act, 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 2012.

The directors of AngloGold Ashanti 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 affairs of the company, in conformity with the Companies Act and in terms of the JSE Listings 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, the group has complied with International Financial Reporting Standards (IFRS) and used appropriate accounting policies supported by pragmatic judgements and estimates.

Effective 1 January 2012, the group changed the presentation currency of its results from reporting in US dollars and South African rands to reporting only in US dollars. Management has concluded that the change in presentation currency will result in more reliable and relevant information than the prior position of reporting in two currencies. Management considered the following factors: the majority of AngloGold Ashanti’s operating mines use US dollars as their functional currency; the majority of AngloGold Ashanti’s annual production and reserves are derived from non-South African rand denominated countries; the majority of AngloGold Ashanti shareholders are not domiciled in a South African rand denominated jurisdiction; management prepare investor presentations and analysis in US dollars only; and the management accounts, except for South Africa which is reported in dual currency, are reported to the Chief Operating Decision Maker in US dollars. The change in presentation currency has no effect on comparative information.

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 2012 amounted to $892m (2011: $1,112m), and together with cash budgeted to be generated from operations in 2013 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 2012, 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 2012, 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 2012 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. Their unqualified report on these financial statements appears in the independent auditor’s report.

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 2013. 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 in the section Administrative information.

Investments

Particulars of the group’s principal subsidiaries and operating entities are presented in this report.