MINING INDABA 2019 Investing in Africa - DECISIVE. RESPONSIBLE. SUSTAINABLE - The Vault
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Investing in Africa
MINING INDABA 2019
DECISIVE. RESPONSIBLE. SUSTAINABLE.
February 2019
DISCLAIMER
Certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning the economic
outlook for the gold mining industry, expectations regarding gold prices, production, total cash costs, all-in sustaining costs, all-in costs, cost savings and
other operating results, productivity improvements, growth prospects and outlook of AngloGold Ashanti Limited’s (AngloGold Ashanti) operations,
individually or in the aggregate, including the achievement of project milestones, commencement and completion of commercial operations of certain of
AngloGold Ashanti’s exploration and production projects and the completion of acquisitions, dispositions or joint venture transactions, AngloGold
Ashanti’s liquidity and capital resources and capital expenditures and the outcome and consequence of any potential or pending litigation or regulatory
proceedings or environmental health and safety issues, are forward-looking statements regarding AngloGold Ashanti’s operations, economic
performance and financial condition.
These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause AngloGold Ashanti’s
actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these
forward-looking statements. Although AngloGold Ashanti believes that the expectations reflected in such forward-looking statements and forecasts are
reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set
out in the forward-looking statements as a result of, among other factors, changes in economic, social and political and market conditions, the success of
business and operating initiatives, changes in the regulatory environment and other government actions, including environmental approvals, fluctuations
in gold prices and exchange rates, the outcome of pending or future litigation proceedings, and business and operational risk management.
For a discussion of such risk factors, refer to AngloGold Ashanti’s annual report on Form 20-F, which was filed with the United States Securities and
Exchange Commission (“SEC”). These factors are not necessarily all of the important factors that could cause AngloGold Ashanti’s actual results to differ
materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on
future results. Consequently, readers are cautioned not to place undue reliance on forward-looking statements. AngloGold Ashanti undertakes no
obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements
attributable to AngloGold Ashanti or any person acting on its behalf are qualified by the cautionary statements herein.
The financial information contained in this market update presentation has not been reviewed or reported on by the Company's external auditors.
This communication may contain certain “Non-GAAP” financial measures. AngloGold Ashanti utilises certain Non-GAAP performance measures and
ratios in managing its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the reported operating
results or cash flow from operations or any other measures of performance prepared in accordance with IFRS. In addition, the presentation of these
measures may not be comparable to similarly titled measures other companies may use. AngloGold Ashanti posts information that is important to
investors on the main page of its website at www.anglogoldashanti.com and under the “Investors” tab on the main page. This information is updated
regularly. Investors should visit this website to obtain important information about AngloGold Ashanti.
2
STRATEGICALLY POSITIONED TO CREATE VALUE THROUGH THE CYCLE
Decisive, deliberate action to create sustainable, long-term value through the cycle
• Shift into lower half of cost curve
IMPROVE
COSTS • Drive implementation of Operational Excellence
• Preserve balance sheet flexibility
CAPITAL • Maintain Net Debt/EBITDA at or below target
DISCIPLINE
• Ensure disciplined capital allocation
Supporting our
strategy for
sustainable cash
• Maintain strong exploration track record
flow
improvements
MAINTAIN
and returns OPTIONALITY • Sustain highly generative gold pipeline
• Deliver asset return target of >15%
IMPROVE
QUALITY • Rationalise higher cost, shorter life assets
Focus on people, safety and
sustainability
• Continue improving integration of ESG into
FOCUS ON business
PEOPLE,
SAFETY • Build on and develop existing talent
3
CEO - EARLY IMPRESSIONS
• Strong team, deep bench of skills
• Values-based culture – focused on the right things
Supporting our
strategy for
• Strong balance sheet - provides strategic flexibility
sustainable
cash flow
improvements
and returns
• Discipline in capital allocation and cost management
Focus on people, safety and
• Under-appreciated, high-quality exploration programme
sustainability
• Excellent asset portfolio and project pipeline
Excellent opportunity, with this team, to sharpen our focus
and build a world-class portfolio
4
A BALANCED GLOBAL PORTFOLIO
RESPONSIBLE INDUSTRY PLAYER WITH STRONG FUNDAMENTALS
Production Split
Based on last reported quarter
Continental Africa Americas Australia
46% 23%
17%
Q3 2018 Q3 2018 Q3 2018
Production 391koz Production 192koz Production 148koz
AISC $834/oz AISC $817/oz AISC $1,082/oz
South Africa
14%
Q3 2018
Production 120koz
AISC $1,026/oz
Operations Projects Sale Process
5
TARGETING ZERO HARM Constituent of
the FTSE All
LONG-TERM IMPROVEMENTS CONTINUE World Index
Fatalities
20
Working towards zero harm,
16
-83% excellence in environmental
stewardship and community
12
development
8
• Injury rates have more than halved
4
• Fatalities down 80% since 2017
0 • Strong, integrated safety strategy
2012
2013
2014
2015
2016
2017
2018
AIFR per million hours worked Reportable environmental incidents
8
20
7 16
-88%
12
6
8
-39%
5
4
4 0
2012
2013
2014
2015
2016
2017
2018
2012
2013
2014
2015
2016
2017
2018
6
DELIVERING IMPROVED FUNDAMENTALS
WIDENING MARGINS, INVESTING FOR THE FUTURE
AISC* Avg Gold Price
1,300
1,100
900
700
2013 2014 2015 2016 2017 2018 E
Continuous
Restructuring Reinvestment
Improvement
*World Gold Council standard, excludes stockpiles write-off
7
BALANCE SHEET FLEXIBILITY
STRONG LIQUIDITY, AMPLE COVENANT HEADROOM
Net Debt $/m Undrawn facilities¹ at 30 September 2018
4000
Self-funded development of Tropicana, Kibali
3000
-44% A$310m
AUD RCF
US$336m
2000 Cash
R4.983bn
1000 ZAR Facilities
2012 2013 2014 2015 2016 2017 2018*
c.$2bn
Net Debt to Adjusted EBITDA
Covenant 3.5X
3
US$1,092m
USD RCFs
2
Target 1.5X
1
1.13X
0 ¹Total calculated with ZAR facility at R14.1398/$ (excluding DMTNP), and AUD
2013 2014 2015 2016 2017 2018* facility at 0.7228$ to A$
*Last-12-months Net debt to adjusted EBITDA ratio; at 30 September 2018
8
ON TRACK TO MEET FULL YEAR GUIDANCE
Top-half of guidance range
3,325koz 3,450koz
Gold Production
$990oz $1,060m
All-in Sustaining Costs*
Bottom-half of guidance range
$600m $670m
Sustaining Capex
$170m $190m
Project Capex
Both production and cost estimates assume neither operational, labour interruptions or power disruptions, nor further changes to asset portfolio and/or operating mines and have not been reviewed by our external
auditors. Other unknown or unpredictable factors could also have material adverse effects on our future results and no assurance can be given that any expectations expressed by AngloGold Ashanti will prove to
have been correct. Please refer to the Risk Factors section in AngloGold Ashanti’s annual report on Form 20-F for the year ended 31 December 2017, filed with the United States Securities and Exchange
Commission (SEC).
*World Gold Council standard, excludes stockpiles written off
9
KEY INVESTMENTS ON THE CONTINENT
Obuasi
• Transformative asset for both AngloGold Ashanti & Ghana
• Local employment and procurement procedures in place to ensure the benefit to locals
• New production averaging ~350k oz per annum at AISC of $800/oz
• Largest gold producing mine in Africa, located near the north eastern border with South
Kibali
Sudan
• Relatively young open pit and underground mine, on a growing trajectory
• Average annual production of 340k oz¹ at AISC of $700/oz over next few years
Siguiri
• Open-pit gold mine 850km northeast of Conakry
• Combination plant enabling treatment of hard and soft ore, to improve life and margin
• 15% interest in Siguiri held in trust for the nation by the government
Mponeng
• Deepest gold mine in the world less than 100km west of Johannesburg
• A unique new shift arrangement aimed at improving face time and efficiency
• Significant investment in recent years to enhance life-of-mine and net asset value
• Located in north-western Tanzania, in the Lake Victoria goldfields
Geita
• New power plant supports underground development currently underway
• Geita has delivered more than $1bn in royalties and taxes to the government since 1999
¹ Attributable
² Obuasi’s first production in 2020 expected at rate of 150-200koz per annum
10EXPLORATION FOCUS AREAS
GENERATIVE OPPORTUNITIES IN AUSTRALIA AND THE US; BROWNFIELDS ACROSS THE PORTFOLIO
• Strong track record, focused on balancing cash flow, reserve replacement
• About one-fifth of exploration budget focused on target generation
• Balance in reserve replacement at mine sites/projects
• Strong focus on sites with shorter reserve lives
USA
West Africa
Colombia
Argentina Australia
Brazil
Legend
Generative Exploration
Generative – Target Generation
Brownfields Exploration
11EXPLORATION, DISCIPLINED CAPITAL ALLOCATION - DRIVES VALUE
Greenfields Exploration
Discovered 49Moz outside SA over 15 Years
• Clear leverage, return targets = flexible balance sheet
• c.20% of exploration Australia
budget • Balance sheet flexibility enables inward investment
• Americas, Australia, Africa
• Discovery cost $13/oz
Average 3.3Moz/year
Reserve Replacement
Examples:
Reinvestment
Deleveraging
- Geita u/g
Project - Obuasi Margin improvement
Dividends
hopper - Siguiri plant
- Tropicana Long Island Life Extension
Development Project
>15% returns
Board Decision
Brownfields Exploration Making Process
• Affordability focus to
• 80% of exploration budget protect balance sheet,
• Discovery cost $34/oz, improve returns to
with relatively low shareholders
development cost Optimise
• All options reviewed to
optimise risk & returns
Monetize
(partnerships, asset
sales etc.)
12OBUASI GOLD MINE – A TRANSFORMATIVE, HIGH-RETURN PROJECT
• Strong Government support – stability, security agreements ratified by parliament
• New labour model in place – more efficient contract workforce
• Experienced team to manage project - includes Tropicana project leadership
• Fully funded from internal sources – enabled by our strong balance sheet
• High return – Internal Rate of Return of 16%-25.4% at $1,100/oz and $1,300/oz
13OBUASI - INVESTING IN GHANA’S FUTURE
14OBUASI GOLD MINE – A LONG-LIFE, TIER ONE ASSET
8.6M OUNCES OVER 20 YEARS
350Koz 400Koz
Annual Production
Large First 10 years*
1.6mt 1.8mt
Mechanized Average Annual
High Grade tonnage treated* @8.8g/t average grade
$725/oz $825/oz
Low Cost AISC**
$495m $545m
Initial Project Capex
Capital Efficient 3 years
IRR
16% 25.3%
High Return ($1,100 – $1,300/oz)
0 6.5 20
Long-Life Initial Life & Payback
Quick Payback Years
*Steady state Payback
**money terms at approval
Initial project capital of $495-545m now includes additional mining fleet of around $45m to the project capital estimate. This is expected to have a
resultant favourable impact on contract rates and improve AISC by approximately $25/oz.
15STRATEGIC FOCUS AREAS
Continued Further embed Advance
focus on Operational Obuasi for
Supporting our
safety Excellence first production
strategy for
sustainable improvement Programme year-end 2019
cash flow
improvements
and returns
Focus on people, safety and Ensure consistent Sharper Advance
sustainability
Cash Operational focus high-return
Generation and Improved projects, move
from South Cash Colombia up the
Africa Conversion value curve
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