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Annual report suite 2012

Review of projects

AngloGold Ashanti’s future relies on new projects, the most advanced of which are located in Continental Africa, Australasia and the Americas regions.

Location of projects [graph]

Projects

In addition to the Mponeng Below 120 project, CC&V’s MLE2 extension, and the Zaaiplaats project at Moab Khotsong, other growth projects are:

Continental Africa: Democratic Republic of the Congo (DRC)
  1. Kibali
  2. Mongbwalu
Americas: Colombia
  1. Gramalote
  2. La Colosa
Australasia: Australia
  1. Tropicana

Continental africa: KIBALI, DRC

Description:
The Kibali greenfields project is currently in the development and construction phase, after receiving board approval in May 2012. Pre-development work began in early 2011 and first gold production is anticipated in late 2013. The Kibali mine 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 thermal power during low rainfall periods and as back-up. The core capital programme is scheduled to run over the next four years. The development and construction of Kibali has been divided into two phases:
  • Phase 1 includes the initial open-pit operations, metallurgical plant, the first phase of the tailings storage facility, the first of the hydropower stations, the back-up power plant and all shared infrastructure.
  • Phase 2 extends over the entire four-year period, and focuses mainly on the development of the underground mine, including a twin decline and vertical shaft system.
Location:
Kibali lies in the northeastern area of the DRC, adjacent to the town of Doko, a staging point for the project and some 9km from the town of Watsa and 180km by road from Arua, on the Ugandan border.
Ownership structure:
Joint venture between AngloGold Ashanti (45%), Randgold Resources (45%) with Société des Mines d’Or de Kilo-Moto (SOKIMO), a state-owned gold company owning the balance. Randgold Resources is the operator and project manager.
Salient features
Board approval May 2012
Estimated annual gold production 600,000oz (8.7Moz over mine life)
Estimated life of project 18 years
Average operating cost $763/oz
Estimated capital expenditure – project $1,963m over mine life
Metallurgical plant first gold pour – oxide Q4 2013
Metallurgical plant first gold pour – sulphide 2014

Kibali – performance in 2012

Safety and health
Lost-time injuries are receiving continued focus with continuous safety training and awareness initiatives in place driving the required high safety standards throughout the project. A transport management plan has been implemented to address vehicle safety, speeding and dust suppression. The Congolese Safety Officers will be utilised to help monitor and enforce vehicle safety.

Malaria incidence remains high, with 2,951 cases reported during the year and for the project to date. The Malaria Vector Control programme has been updated to include bush clearing and bi-monthly spraying of all accommodation and work sites. A medical outpost facility has been established and is operating at the remote Nzoro camp.
Mining and processing developments
Financial year 2012 was key in the development of Kibali, and was marked by a significant rampup in construction activity. Mining in the open-pit began in July 2012 and the boxcut for the project’s underground twin-decline section is nearing completion. The mill and hydro-turbine manufacture is complete. The development of twin-declines and the sinking of the vertical shaft for the underground mine is tracking behind schedule, while the additional open-cut satellite ore source potential could offset the risk of delays. Two 7MW mills were delivered to the Kibali mine in November 2012 and are expected to be set on their foundations during the first quarter of 2013. In parallel with the construction of the metallurgical plant which began in August 2012, construction of the steelwork for the CIL plant and the primary crusher and conveyor facilities is progressing. Additional earthwork capability has been mobilised to address delays in site establishment. Capital expenditure was $265m (45% attributable) during the year and increased significantly in the fourth quarter with the start of decline activities and mobilisation of the shaft and metallurgical infrastructure.
Exploration developments
Grade control drilling programme continued during the year at the KCD deposit, with 91,734m completed. Drilling results confirmed areas of high grade shoots.
Community engagement
In order to secure the mining area, a total of 1,208 families were successfully relocated to the Kokiza village during 2012. In total, approximately 1,600 families from eight villages will be relocated to the Kokiza village and resettled in approximately 4,000 company houses which are being built.
Security incidents
While the security situation in the east of the country has not fundamentally affected the project, the security of our people and assets remains of concern and is closely monitored.
Plans and prospects for the year ahead
It is planned to commission the plant in the latter half of 2013.


Continental africa: MONGBWALU , DRC

Description:
Preparatory work at this greenfield project has been completed. 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 venture held 18 mining licences which was reduced to 15 licences totalling 3,784km2 after the retrocession to SOKIMO of a total of 1,823km2. The Akwé Exploration Licence (399km2) is being transferred to Ashanti Goldfields Kilo (AGK). 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. Further exploration was authorised in early 2013 along with a study to optimise the Mongbwalu project.
Location:
Located in northeastern DRC, near to the town of Bunia and to the southeast of the group’s Kibali joint venture project. The concession area is in the highly prospective Kilo gold belt.
Ownership structure:
Operated by AGK a joint venture between AngloGold Ashanti Limited (86.22%) and SOKIMO, a stateowned gold mining company.
Salient features
Board approval May 2012
Estimated annual gold production 105,000oz (1,05Moz over mine life)
Estimated annual silver production 16,000oz (164,000oz over mine life)
Estimated life of project 10 years
Average operating cost $1,302/oz
Approved capital expenditure $345m
Capital expenditure to date $77m

Mongbwalu – performance in 2012

Plans and prospects for the year ahead
Following board approval, the project was the subject of a technical review, with a view to optimising the plant and mine and improving the project economics.

Key targets for the year ahead include completion of the operation’s camp and continued exploration in Concession 40.
Safety and health
Safety remains an area of concern and the development of a safety culture is an important area of focus. Among the initiatives undertaken during the year were: daily toolbox talks; inspections; weekly focus topics; helicopter hoist training; hazard and risk management training; gap analysis of all company and contractor vehicles; intermediate incident investigation programme; vehicle driving training; and a fit-forwork medical examination process was put in place for all employees and all contractors.

It is with regret that we report the death of a contractor, following a heavy mobile equipment incident.

Indoor residual spraying to combat malaria was started in the camps in July 2012. The Malaria Vector Control programme has been updated to include bush clearing and bi-monthly spraying of all accommodation and work sites, and may be extended to communities within the project target area.
Mining and processing developments
A new concept study has been initiated and will focus on assessments of the Adidi portal and the potential mining of the Adidi study area; a hydropower study for Concession 40; continued brownfield drilling around the current mine; continued greenfield drilling for the remainder of Concession 40; and the financial modelling of Concession 40 options.
Exploration progress and developments
The drilling programme has confirmed the prospectivity in the region. Several intersections were encountered with gold grades of more than 7g/t and four deposits identified within two to three kilometres of the proposed mine. Further drilling is required to ascertain the extent of the orebody and the best means of accessing it. Common plant and infrastructure for a second operation could demonstrate the economies of scale which could precipitate a more profitable operation than was originally planned.

A novel development on site has been the application of portable drill rigs, transported across the concession by helicopter. In terms of environmental impact, this is a positive development, reducing the need for access roads and their rehabilitation, while also improving the effectiveness of the drill rigs, with more metres drilled per rig. Given the topography of the area, along with the dense vegetation, this practice has rendered the area far more accessible than conventional methods.
Environmental performance
A number of environmental milestones were achieved during the year, including approval of the Environmental Social and Health Impact Assessment (ESHIA) in March 2012; approval of the Environmental Adjustment Plan (EAP) in March 2012; and development of the Environmental Management Plan for construction and exploration activities. Discussions have also been held with regulators with regard to the transfer of environmental liabilities from previous artisanal mining activities to the state, as well as permit renewals and associated environmental studies.
Community engagement
ASM activities within the project area remain a challenge, but are being managed through dialogue and support from community leaders. AngloGold Ashanti is currently supporting a village-based co-operative for former artisanal miners to supply the mines with building materials such as sand and gravel. If successful, this initiative will be replicated on a larger scale to help artisanal miners to change to safer and more sustainable income-earning activities such as these mine support services, brick making and agricultural activities.
Security incidents
The security situation in the eastern part of the country, while not fundamentally affecting the project, remains of concern and is being closely monitored.

Australasia: Tropicana, Australia

Description:
The Tropicana project is at an advanced stage of construction and development, and remains on track to pour first gold in the fourth quarter of 2013. Mining operations will be conducted from open pit mining of the Tropicana and Havanna deposits while surface infrastructure includes a processing plant, accommodation facilities and telecommunications services. The group’s exploration programme in the area is vast, covering 13,500km2 along a strike length of 600km.
Location:
Situated in the highly prospective Western Australia, the Tropicana project lies some 330km north northeast of Kalgoorlie and is 200km east of Sunrise Dam.
Ownership structure:
70% owned by AngloGold Ashanti, with the balance held by joint venture partner in the project, Independence Group NL.
Salient features
Board approval November 2010
Estimated annual gold production (100%) 330,000oz -350,000oz/a over mine life
Estimated annual production rate (100%) 4.0Mt
Average operating cost $694/oz (A$710/oz – A$730/oz over mine life)
Estimated capital expenditure $849m (A$820m – A$845m)
Metallurgical plant first gold production Q4 2013
Estimated life of mine 11+ years

Tropicana – performance in 2012

Safety and health
The project’s construction safety record for the year was excellent with the AIFR further improving to 3.03 per million hours worked in 2012 from 5.55 in 2011. The high lost-time injury frequency rate (LTIFR) incidence in the production area remains a concern and an area of focus in spite of the improvement for the year, with the LTIFR reducing from 5.31 in 2011 to 1.01 in 2012. Further concerted effort is needed to achieve the group’s long-term safety target of zero occupational injuries. Continuous safety training and awareness initiatives are in place to drive the required high safety standards throughout the project.
Mining and processing developments
The Tropicana gold project progressed well during 2012, despite external challenges from the competitive construction sector in Western Australia and the pressure this placed on skills. The 220km-long site access road to site was completed in the first half of the year, as was the sealing and approval for the airstrip. This was followed later in the year by completion of the village. The power station contract was awarded, locking in committed costs. The mining contractor was mobilised on site and mining started early in the second half of the year. By the end of the year, all remaining tender contracts had been awarded, all within the capital forecast estimates.
Environmental performance
Considerable effort was made to ensure that the construction of Tropicana maintains high environmental standards as established and committed to in the permitting process. An increase in minor and moderate (non-reportable) environmental incidents is being addressed. The main cause is aviation fuel spills and measures have been introduced to ensure that incidents of this nature do not recur.

Baseline work in the form of fauna assessments have been completed in preparation for the implementation of the International Cyanide Management Code. Artificial ponds have been installed to monitor fauna interaction with fresh and saline water, with first monitoring scheduled to take place in April 2013.
Plans and prospects for the year ahead
Commissioning of the project is planned to start towards the middle of 2013.



Americas: Gramalote, Colombia

Description:
This advanced exploration project is expected to be the first major gold mine development in Colombia, and the group’s first operating gold mine there, establishing our operating credentials in that country.
Location:
110km northeast of Medellin in the municipality of San Roque, in the department of Antioquia.
Ownership structure:
Joint venture between AngloGold Ashanti (51%) and Vancouver-based B2Gold (49%).

Gramalote – performance in 2012

Safety and health
There was a significant improvement in safety performance at Gramalote with the implementation of an array of strategies focused on safe work practices. An AIFR was recorded of 5.65 per million hours worked, a dramatic improvement on the AIFR of 16.14 recorded in 2011. The development of occupational health surveillance systems in Colombia was undertaken in the fourth quarter of 2011.
Mining and processing developments
The project prefeasibility study was concluded in the fourth quarter of 2012. While the results of this work demonstrated the social, environment and technical viability of the project, several identified optimisations regarding capital and operating aspects of the project remain to be validated. Accordingly, the project team launched an enhanced engineering phase which continues to validate project enhancement opportunities and now envisions the Gramalote project as a 70Mtpa open-pit mine with a 20Mtpa process plant.
Exploration progress and developments
A total of 23,000m of drilling has been completed. This has focused on geotechnical, condemnation and resource conversion. The Mineral Resource increased from 2.0Moz to 2.6Moz. The exploration potential in the district is likely high, with a large tenement position that has only been explored over less than 10% of its area. CGL is advancing a comprehensive exploration programme led by geophysical and geochemical surveys to assist on defining exploration targets that is expected to confirm the mining district (and project) estimated endowment.
Environmental performance
Water use is a primary concern in this mostly agricultural region. Infrastructure location will be optimised to minimise the project’s use of water and reduce impacts on critical water sources. Preliminary investigations demonstrate that there will not be a material impact on agricultural or domestic water. However, the in-country team continues to work on a broad awareness and education campaign to show the benefits of responsible mining, and how impacts are mitigated and compensated for to achieve a net positive impact. An environmental impact assessment is being developed for submission during 2013.
Community engagement
Much of Gramalote’s support stems from the promise of economic development it will provide for a community where 35% of inhabitants live in poverty and 12% in extreme poverty. About 14% of San Roque’s inhabitants are unemployed. The project has established a community investment programme which includes supporting existing activities and social infrastructure. Successful negotiations with 153 artisanal miners were finalised in July 2012, with a formal agreement that involves recruitment of 60% to the company as well as the setting up of small businesses (assisted by Gramalote) to provide services to the community and potentially to the company. The successful development of Gramalote offers an opportunity for AngloGold Ashanti to establish its project development credentials to the host community and to the broader Colombian population.
Security incidents
There were no security incidents to report during 2012.
Plans and prospects for the year ahead
The focus in 2013 will be to advance the project in line with its development plan, concluding advanced technical studies and the environmental impact assessment submission in the second quarter of 2013. This will be followed by the start of the project feasibility study in the third quarter of the year.

Americas: La Colosa, Colombia

Description:
La Colosa, which lies in steep terrain in Colombia’s central Cordillera region, is the largest greenfield discovery made by AngloGold Ashanti and has an Inferred Mineral Resource of 26.8Moz. The project is at the prefeasibility stage, currently evaluating alternative mining methods, plant locations and related infrastructure. The drilling programme is progressing to define the size and extent of the Mineral Resource that has not been constrained in the northwest and is partially open at depth.
Location:
14km west of the town of Cajamarca, in the department of Tolima.
Ownership structure:
Exploration rights wholly held by AngloGold Ashanti.

La Colosa – performance in 2012

Safety and health
There was a substantial improvement in safety performance, with the AIFR declining to 4.19 in 2012 from 19.33 in 2011. Continuous training and leadership involvement will be required to maintain and improve on this success. A health baseline study has been initiated to ensure that data is available to design and submit a solid health impact assessment to the authorities, within an environmental impact analysis.
Mining and processing developments
Technical work has been undertaken to collect and analyse the information required for pit optimisation, geotechnical and hydrogeological studies. The results are being used for pit design, pit slope stability, risk analysis, and capital and operational expenditure estimates. Trade-off studies of mining methods are in progress and extensive metallurgical test work was conducted in 2012. Comminution test work included tests for high pressure grinding rolls (HPGRs) and semi-autogenous (SAG) grinding. An economic evaluation of HPGR versus SAG milling was completed and indicated the favoured route to be conventional SAG/ball milling. Recovery test work included tests for gravity separation, whole ore leaching and flotation/ concentrate leaching. An economic trade-off study indicated the preferred flow sheet to be whole ore leaching, with limited benefits of gravity separation. Additional metallurgical test work has been planned to evaluate the variability of ore hardness and recovery in 2013. The process engineering phase started in the fourth quarter of 2012 and includes the capital and operating cost estimation for the process plant which is expected to be completed in 2013.
Developments during the year
Project efforts in 2012 continued to be driven by expansion of the Mineral Resource coupled with on-going efforts to address key social issues within the various stakeholder groups. Key decisions related to ore transportation and the relocation of infrastructure facilities out of the forest reserve area have dramatically changed the definition of the project’s direct and indirect area of influence, and the scope of the environmental and social studies. Additional trade-off studies were necessary to optimise estimates of capital and operating expenditure, resulting in a suite of alternatives that have enhanced the project profile and are expected to positively address the key social issues of project footprint and water consumption and quality.

Technical evaluations also continued with the collection and analysis of geotechnical and hydrogeological information required for mine definition, trade-off studies on mining methods and alternatives, metallurgical test work and process definition, and infrastructure design.
Environmental performance
A strict environmental plan has been developed to minimise the area disturbed by exploration. Buadua bamboo elevated platforms and eco-trails have been built. Three public universities are developing the biological and hydrogeological monitoring programmes for exploration stage activities so as to independently verify the effectiveness of control measures used. A watershed reforestation programme has been developed with communities around the project, with the trees from a plant/tree nursery programme developed by students from schools in Cajamarca. Social and environmental baseline studies are being conducted to comply with national and international standards. Permitting delays relating to drilling activities in the forest reserve resulted in project delays although these have now all largely been resolved.
Community engagement
Community relations in Cajamarca have been built on a social investment strategy, as well as on ongoing stakeholder engagement. The biggest challenge now lies with the extension of the project into new areas, as new infrastructure sites are being analysed. This has required corresponding stakeholder engagement and will necessitate a solid and consistent community risk analysis and investment strategy to mitigate impacts and allow for the work to be advanced without delays. Projects are being undertaken to benefit rural and local communities, to develop and strengthen relationships as well as improve living conditions (particularly health, education and infrastructure) and economic opportunity.
Security incidents
In the wake of peace negotiations between the Government and insurgent groups, security incidents in the area have increased. This has resulted in some incidents that have affected assets (storage facility, vehicles) of the company and its suppliers. However, a joint plan and procedures have been established with the Armed Forces to prevent such incidents and mitigate any impact. It should be noted that the size of the guerrilla groups in the area has substantially decreased over the past years limiting its ability to undertake large-scale offensive actions.
Plans and prospects for the year ahead
The prefeasibility study is scheduled for completion in 2014. We expect to evaluate the extent and size of the Mineral Resource, conduct metallurgical test work, weigh the alternatives for mining and processing infrastructure, purchase land necessary for access and infrastructure development and conduct the necessary social and environmental impact baseline studies. The Environmental Impact Statement (EIS) work packages will be initiated in 2013, as well as baseline studies at the influence area of the materials (ore/slurry) handling corridors and tailings storage facility. The team will continue working on the implementation of the sustainability, communications and government affairs strategy. Expenditure in 2013 is expected to be $135m.