AngloGold Ashanti is committed to maximising long-term shareholder value and returns and so must ensure that our balance sheet remains able to meet our core funding needs. We achieve this by applying our clear and robust capital allocation framework.

The capital allocation framework prioritises investment in our asset base, to support the health and sustainability of the business. The sustaining free cash flow that comes as a result is earmarked to:

• Return cash to shareholders through our defined dividend pay-out ratio focused on dividend returns based on free cash flow before growth capital expenditure
• Self-fund growth capital expenditure, with a disciplined focus on risk-adjusted returns
• Maintain a solid balance sheet, giving us strategic flexibility through the cycle

We ensure sufficient flexibility at all times to reinvest continuously in our asset base, supporting the long-term sustainability of our business. Maintaining a strong balance sheet and reducing debt, remains important in the current operating environment where the COVID-19 pandemic presents added complexity and risk to the mining industry in general, and more so for a producer of a single, volatile commodity.

While our ability to generate free cash flow improves markedly as the gold price increases, we nonetheless maintain our focus on ensuring a strong balance sheet through all stages of the commodity cycle.

Disciplined, shareholder-focused capital allocation

Transparent allocation hierarchy to maximise long-term shareholder value and returns

• Reinvesting in our asset base to support the long-term sustainability of our business
• Commitment to cash returns to shareholders
• Solid balance sheet underpins flexibility and optionality through the cycle • Growth focused on risk-adjusted returns
• Allocation of excess cash tested against shareholder returns

One measure of the success of our capital allocation strategy is our One measure of the success of our capital allocation strategy is our ability to generate sustainable free cash flow through the cycle, and also our share price performance. Other metrics monitored include: adjusted net debt to adjusted EBITDA ratio (as defined in the Revolving Credit Agreements); and cash and cash equivalents.

Key metrics and related targets 2021

(35% of DSP performance award)

Measure	Target Weighting	Threshold measures	Target measures	Stretch measures	Actual achievement	2021 achievement %
Relative total shareholder return (TSR)	10.00%	Median TSR of Comparators	Halfway between median and upper quartile	Upper quartile TSR of Comparators	124.25%	15.00%
Absolute TSR	10.00%	$ COE (1)	$ COE + 2%	$ COE + 6%	124.25%	15.00%
Normalised cash return on equity (nCROE)	15.00%	$ COE	$ COE + 9%	$ COE + 18%	25.90%	15.00%

⁽¹⁾ Cost of equity

Performance outcomes

• The relative and absolute TSRs are based on a three-year trailing average using the average share price achieved in 2018 as the base and comparing it to the average share price achieved in 2021. The average share price in 2018 ($9.38/ share) grew by 124.25% over this period, inclusive of dividends paid ($0.72/share) from January 2019 through to the end of December 2021
• Absolute TSR growth exceeded the stretch target set, while the Relative TSR performance is compared to a comparator peer group. The median TSR of the comparator peer group was 70.50% at 31 December 2021
• A three-year trailing average nCROE of 25.9% was achieved on the back of strong free cash flow generation over the same period, notwithstanding an annualised increase in shareholders’ equity of 9%
• Improved balance sheet flexibility was achieved with the issuance of a $750m, seven-year bond at a record low coupon for AngloGold Ashanti of 3.375% p.a., following the issue of a $700m, ten-year bond, issued at a coupon of 3.75% p.a. in 2020. Both bonds’ coupons were substantially below those of the debt they replaced, helping to maintain balance sheet flexibility while significantly reducing finance costs
• The adjusted net debt to adjusted EBITDA ratio ended the year at 0.42 times, some 58% below our target of 1 times, through the cycle
• Liquidity remains strong, providing good financial flexibility. Our cash balance of $1.15bn excludes our $499m share of the Kibali joint venture cash balance. The $1.4bn, multi-currency revolving credit facility (RCF), was largely undrawn at year end, while the $365m Corvus acquisition concluded in January 2022, post year end, was settled from cash on hand
• A total dividend for the year of 20 US cents was declared, based on the dividend pay-out ratio under the policy of 20% of free cash flow before growth capital expenditure
• Credit ratings remained unchanged at investment grade from Moody’s (Baa3) and Fitch (BBB-), with negative and stable outlooks, respectively. The Standards & Poor rating remained one notch below investment grade (BB+), with a positive outlook

For further detail on our performance in relation to this strategic pillar, see the CFO’s report and the <AFS>.