CEO’s review and outlook

Zero harm Delivering on our strategic objectives and creating value

Kelvin Dushnisky Chief Executive Officer
Fellow shareholders,

Last year, AngloGold Ashanti undertook several meaningful measures to improve the quality of its portfolio, and the focus of its management team. I’m proud to say that we’ve successfully made progress in doing so. We demonstrated our ability to balance the competing capital needs of the business while continuing to deliver value to our shareholders. We delivered on a key development project, reinvested in the portfolio, strengthened our balance sheet and grew our reserves and dividends, all while managing our operating asset base through which was our safest year on record.


The health and wellbeing of all employees is of utmost importance and we have been steadily improving safety, recording our best-ever performance last year. We’ve lowered injury rates by almost 60% since 2012, and in 2019, for the first time in our history, we passed a calendar year without a fatality in the workplace. The group all-injury frequency rate (AIFR), which is the broadest measure of workplace safety, improved 31% to a record 3.3 injuries per million hours worked, from a rate of 4.8 injuries per million hours worked in 2018. While these are important milestones, there will be no complacency with respect to safety and our goal to achieve zero-harm remains a priority. Our safe production strategy continues, and is being implemented successfully at all our operations, with a focus on proactively addressing risks.

Regrettably, after reaching nearly 700 fatality-free days, a seismic event at Mponeng in South Africa on 5 March 2020 took the lives of three of our colleagues. They were Lucas Maapea, 41, Xolani Ngqwemese, 31, and Mokhetha Radebe, 47. Their loss is heart-breaking, and a humbling reminder that even when we do everything right, there’s always the risk of an uncontrollable event. This was sadly followed by another fatality on 16 March 2020, when Thabo Rakometsi 29 was fatally injured while he was coupling a mechanical loader to a caboose. At this time, I wish to reiterate our absolute commitment to safety. Even at this difficult time, we should not lose sight of the great strides we have made over many years in improving safety – reaching milestones that would have been thought unimaginable only a short time ago – as we redouble our efforts to make zero-harm a reality.


We also have a strong commitment to operating a sustainable business, and that requires maintaining and strengthening our social licence to operate, while mitigating our contribution to climate change to the best of our ability. While we continue to investigate ways to strengthen our partnerships with our local communities and host governments, we take pride in our progress in this area. We have been working hard across several fronts – from safety and community development to reducing our impact on the environment.

In 2008, AngloGold Ashanti announced that a target had been set to reduce greenhouse gas (GHG) emissions by 30% by 2022. In fact, we surpassed this target in 2018, when we achieved a 43% reduction from our current asset base. This has been achieved through divestments, efficiency improvements and adopting cleaner energy sources. The achievement is mostly attributed to energy efficiency gains in the South Africa region, where coal-fired electricity meant that on-site energy savings translated directly into indirect GHG savings. In Australia, we switched Sunrise Dam’s generators from diesel to liquified natural gas and both of our operations in Australia have moved from diesel to piped natural gas.

Our mines operate using a sizeable proportion of renewable energy: predominantly in Brazil where hydropower is used, including our own Rio do Peixe hydro facility; a local power grid largely supplied by hydropower is used in Ghana; and locally-generated hydroelectricity is used at Kibali in the DRC. Furthermore, as we plan for the future of our Quebradona project, we have an opportunity to significantly raise the bar by identifying innovative ways to incorporate ESG principles into the totality of our mining practices.

We recognise that our ability to create value is only as good as our ability to evolve in our practices, from a technical, social and environmental perspective.


In December, we delivered on the most significant project milestone for the business by pouring the first gold at Obuasi in Ghana, which was the culmination of Phase 1 of the redevelopment project. The start of gold production on time and on budget was a significant achievement for us, the community at Obuasi and for Ghana as a whole. It’s also testament to the focused execution by our team on the ground and, importantly, it reflects the clear investment framework and supportive environment created by the Government of Ghana.

An opening ceremony for the mine on 29 January 2020 brought together 3,500 employees and local community members to celebrate this momentous occasion. In his keynote address, President Nana Akuffo-Addo delivered a strong endorsement of our steadfastness in the reopening of the mine and our commitment to localisation. He pledged his government’s support for the mine. I am pleased to say, overall project completion was at 77% at year end. Phase 2 is confidently on schedule and on budget, as we target the mine to reach its 4,000 tonnes-per-day capacity by the end of 2020.

Financial performance

The year ended with a strong balance sheet, protected by the disciplined approach to capital allocation adopted by management. The ratio of adjusted net debt to adjusted EBITDA was 0.91 times, well below our targeted level of 1 times through the cycle. We have paid and will continue to pay down debt, improving on our ability to generate free cash through the commodity cycle. As free cash flow improves, we remain intent on balancing the application of capital by reinvesting in our core asset base to sustain our business in the longer term, and by paying 10% of free cash flow to shareholders before we consider investing in growth. This is at the discretion of the board and ensures a level-headed approach to managing our business.

Asset sales

Steady progress has been made in simplifying our portfolio and improving our focus. In December 2019, we reached agreement on the sale of our interest in Sadiola for an attributable cash consideration of $52.5m. Subsequent to year end, in February 2020, we also reached agreement on the sale to Harmony of all our remaining South African producing assets, with expected proceeds of around $300m. The sale process for Cerro Vanguardia is at an advanced stage. All cash proceeds from these sales will be used primarily to reduce debt.

Ore Reserve

A total of 3.5Moz of Ore Reserve was added at our operating assets before depletion and other reductions, showing strong progress on efforts aimed at sustainably improving our mine lives. Impressively, the group’s Ore Reserve, outside South Africa, grew by approximately 1.1Moz.

In recent years, our focus has been mainly on repairing the balance sheet. This meant we have prioritised reducing debt, using entirely internally generated cash, over investment in brownfield drilling. With the balance sheet now in excellent shape and continuing to improve along with our cash flow, over the next two to three years we can focus more on Ore Reserve development and Ore Reserve conversion at our operations with high geological potential. Accordingly, sustaining capital for 2020 is expected to increase and include around $30/oz to facilitate additional exploration and development. This will improve our overall ore-body confidence and operating predictability, and extend mine lives. We believe this disciplined reinvestment in our assets will enhance shareholder value.


After a prolonged period of investment in Colombia, we are now advancing both Quebradona and Gramalote through feasibility studies and these are expected to be concluded by year-end 2020. To further sharpen the focus on capital and management resources, we announced an agreement in mid-September 2019 which saw B2Gold assume management of the Gramalote project on 1 January 2020. In 2020, B2Gold will fund an investment and exploration programme to the value of $13.9m to earn-in back a 50:50 partnership. The budget agreed by the joint venture partners for the feasibility study is $37m. Our exploration teams continue to add value to the business through the drill bit. Not only do we expect positive results from our brownfield projects, I am equally excited to see the results from our generative programme.


In an ever-changing landscape and against a backdrop of global uncertainty, which escalated at the start of 2020, it is critical that we remain rational in our decision-making and position the business to create value at virtually any gold price. We will keep working to focus AngloGold Ashanti as a solid, predictable business that enhances value for all stakeholders through the cycle. In saying that, while 2020 is expected to be another transitional year in our efforts to create a sustainable business with growing margins and free cash flow, the rapid spread of covid-19 across the world requires that we adapt to a fast-changing landscape. The health of our employees and communities throughout the world will shape many of our decisions as we navigate through this challenging, and incredibly fluid global pandemic. We recognise our role as a global citizen and our responsibility to people and our environment. We are committed to working in partnership with governments and remain agile in our approach to helping manage this crisis, while doing everything necessary to protect our people and our business.

We have been proactive in positioning ourselves to respond to the impact of the outbreak. We will respond quickly and work in deep partnership with stakeholders while doing our part in fighting this global pandemic.

On 21 March 2020, following the Argentinian government’s decision to impose a nationwide lockdown (quarantine) until 31 March 2020, including temporary travel restrictions, border closings and suspension of most industries, Cerro Vanguardia was required to temporarily suspend mining activities.

On 23 March 2020, the South African government announced a 21-day nationwide lockdown, effective from midnight on 26 March 2020, resulting in the temporary suspension of mining activities of the Company’s South African operations particularly Mponeng, and the partial suspension of mining activities at Mine Waste Solutions and Surface Operations.

On 26 March 2020, the State of Goiás, in Brazil, extended a set of restrictions on the operation of non-essential business to include mining. These restrictions are set to run through to 4 April 2020. Serra Grande operation will temporarily suspend operations.

The Company had a good start to the year, and – notwithstanding an anticipated impact of 30,000oz – 40,000oz from operations that are suspended at this stage (less than 2% of annual production) – AngloGold Ashanti currently remains on track to meet its annual guidance. Nonetheless, given the uncertainties with respect to future developments, including the duration, severity and scope of the covid-19 pandemic, and the necessary government responses to limiting its spread, AngloGold Ashanti has decided to withdraw its market guidance at this time.

It is my belief that AngloGold Ashanti will continue to distinguish itself as a responsible gold mining company in the way it conducts its business, and deals with all its stakeholders, as we persevere through this challenging time.


I would like to thank the board of directors for their leadership and tremendous support in my first full year at AngloGold Ashanti. My thanks also go to the executive team and all AngloGold Ashanti employees for the great work done in delivering on the Company’s strategy, in meeting our objectives for the year and in ensuring that we deliver value to our many stakeholders.

Kelvin Dushnisky
Chief Executive Officer

27 March 2020