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Executives

Charles Carter - Investor Relations

Mark Cutifani - Chief Executive Officer

Neville Nicolau - Chief Operating Officer

Venkat Venkatakrishnan - Executive Director, Finance

Robbie Lazare - Executive Officer of Africa

Richard Duffy - Executive Officer of Business Development

Analysts

Victor Flores - HSBC

Oscar Cabrera - Goldman Sachs

Amanda Lagrange - Nomura

Victoria Roberts - Plat Metal

Barry Cooper - CIBC World Markets

Justin Brown - Business Report

Anglogold Ashanti Ltd. (AU) Q3 2007 Earnings Call November 1, 2007 8:30 AM ET

Operator

Good afternoon, and welcome to the Anglogold Ashanti third quarter earnings results. (Operator Instructions) Please note that this conference is being recorded.

I would now like to turn the conference over to Charles Carter. Please go ahead, sir.

Charles Carter

Thank you, Dylan. And welcome to this presentation by the Anglogold Ashanti executive team of our results for the third quarter ended 30 September 2007. The format of the presentation will be as follows. Mark Cutifani, our Chief Executive Officer will review the company's financial and operating results for the quarter and provide his first impressions following his first full month in the role.

Venkat, our Financial Director will discuss the financial results in more detail, and the presentation will conclude with Neville Nicolau, our COO who will cover our operational performance. We will then have discussion.

Before we begin, it is necessary for me to read a declaration regarding forward-looking statements that may be made during this presentation. Certain statements made during this presentation, including and without limitation, those concerning the economic outlook for the gold mining industry, expectations regarding gold prices, production, cash costs and other operating results, growth prospects and the outlook of Anglogold Ashanti's operations, including the completion or commencement of commercial operations of certain of our exploration and production projects, the company's liquidity, capital resources and expenditure contain certain forward-looking statements regarding Anglogold Ashanti's operations, economic performance, and financial condition.

Although, the company believes that the expectations reflected in such forward looking statements 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 statement as a result of, among other factors, changes in economic and market conditions, the success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in gold prices and exchange rates, and business and operational risk management.

For a discussion of such factors, refer to Anglogold Ashanti's annual report for the year ended 31 December 2006, which was distributed to shareholders on 29 March 2007 and filed with the SEC. Anglogold Ashanti undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflects or circumstances after today's date, or to reflect the occurrence of unanticipated events.

With that, let me hand over to Mark Cutifani.

Mark Cutifani

Thanks very much, Charles. I am very pleased to be here with everyone today. I must say from the outset, that if I sound a little stressed, it's because I'm sitting with ten South Africans who are all wearing green rugby jerseys reflecting South Africa's recent win in the World Cup, and for an Aussie, that's a traumatic and difficult experience to go through, so if you'll bear with me.

Ladies and gentlemen, it's been about 45 days since I've joined Anglogold Ashanti. I was in my third week on the job when we executed the Anglo-American placement, so from the outset, I'd like to express my appreciation to existing shareholders who stepped up to make this placement a success.

And I'd like to welcome new shareholders who came into the stock through the book deal. We are delighted with the spread and the quality of this expanded investor base. In our future conversations, I will and we will focus on our undertakings to both our loyal holders and our new owners.

This is a significant milestone for both Anglo-American, who have now achieved their goal of accounting for Anglogold Ashanti as an investment and for us at Anglogold Ashanti. It is a major step towards independence and full strategic flexibility.

Following the successful placement of shares, the directors representing Anglo-American on our board have resigned, and I would like to thank them for their contribution and support over the years, as well as through the placement process.

Today is a new day. We will start that new day talking about the commitment to creating value for shareholders and all of our business partners. To deliver value to our shareholders, we have recognized the nature of gold and its unique place in an investor's portfolio. At the same time, we understand the need to create and deliver sustainable value from our assets.

We must deliver cash and cash flow; we must deliver growth, meaning more cash flow, based on generating competitive returns. We must deliver on our commitments so that investors can rely on the value that we are promising, and more importantly, the delivery of these promises in the future.

To deliver a sustainable future, we also need to deliver the value to our business partners. We must ensure that our employees be safe in our keep. Our communities will be safeguarded in their environment and we will add value in that context in the communities in which we operate by creating employment, new opportunities for business associates, and a better future for their children.

And most importantly to our employees, we acknowledge people are the business; our business is people. And starting with our people first, I will start with our most important issue, the pursuit of the safe operations for all of our employees.

During the third quarter, we lost seven colleagues to mine accidents. And on behalf of the Anglogold Ashanti team, we offer our deepest condolences to their families and friends. We assure you that as a company, we regard safety as the most important value to our success.

As CEO, I take full responsibility for safety management, and together, with every employee of the company, we will strengthen our partnerships in creating a new standard upon which we will manage together and for each other.

As people may be aware, I have had responsibility for many operations across five continents. I have had direct operating responsibility in some of the deepest mines in the world, in particular, base metals and coalmines.

So if you'll allow me one of my first observations, there is no one that knows deep underground mining better in South Africa than the South Africans. I've been impressed with the progress on technical developments and improvements on safety.

Every manager I've met in our operations is striving to achieve a safer working environment. Today, we are still losing our colleagues and this has to change. My job is to work with the team, to support the team, to lead the team towards finding that next step to improvement within our business. I have no doubt we will find it, and we will be successful together.

We also had to build on the work we are doing with our partners in the union movement and in government, so that collectively, we will find solutions to improve safety that counts. The dialogue should not be about blame. But rather that we rather take the industry forward together.

The industry has made progress, together; to be successful in the future, we have to go forward together. On that note, let me say that we've already introduced a number of internally led interventions within South African operations and we have supplemented this work with some external eyes to help us look and see all possibilities.

And as a final comment to those that are concerned that we may impact our long-term viability, let me make one point perfectly clear, no one can deliver sustainable productivity improvements without delivering safety. We will deliver both.

On a more positive note, this quarter saw our lost time injury rating improve 13% to 7.9 per million hours worked. Twelve of our 20 operations have shown improvements against the previous quarter, and an additional 2 operations have had only one injury, while Iduapriem remained injury-free for the second consecutive quarter.

In South Africa, we have seen a 7-day improvement, quarter on quarter, in lost time injuries. As mentioned in the previous quarter, Johannes Viljoen, who has running Mponeng mine so successfully, is heading our safety initiative for our underground operations.

We believe that any paradigm shift required in our safety performance can only be achieved through leadership and an integrative approach that focuses on changes with practices, and that change starts with us as leaders. In turning to production, we are introducing a new term in our business Safe Operations.

Consistent with that term, we reported 1.43 million ounces for the third quarter, 6% higher than that of the previous quarter. Total cash costs, however, have increased 7% to $357 an ounce, due to annual wage increases, winter power tariffs, high consumable costs, and higher royalty payments.

Venkat will elaborate on these cost increases in more detail a little later. Our adjusted headline earnings of $81 million was compared to the previous quarter despite the impact of the higher cash costs and once-off compensation costs.

Our third quarter price reserves of $621 an ounce was 9% below spot, but within market guidance, and 3% higher than the previous quarter, as the gold price continues to rally. Over the period, the hedge book delta has increased by 1.83 million ounces due to a $96/oz higher price, bringing the total hedge book delta to 10.58 million ounces.

It remains our intention to continue to actively manage our hedge book in a value accretive manner, while seeking to reduce our overall hedge position. In that context I should make the observation that I'm not a great fan of hedging, and we will be considering ways to effectively improve our position in ways that are sensitive to the value for our shareholders.

The South African operations, with the exception of Great Noligwa reported strong production increases against the previous quarter, while Great Noligwa was affected by lower recovered grades due to the mining mix.

There were significant production improvements at several of our African operations, with Morila up 49%, Geita 33%, and Iduapriem 21% Obuasi was 9% lower, due to a planned shutdown, while seasonal rain affected Siguiri and Yatela, which were 5% and 9% lower, respectively.

Our international assets continue to perform solidly, with Sunrise Dam and Anglogold Ashanti Brazil posting stronger production results, while CC&V in the U.S. was 13% lower, due to a delayed prime action from leach pen-stacking levels. Neville will take you through the operation performance in more detail.

During October, Anglogold Ashanti acquired the minority shareholding of Iduapriem from the International Refining Corporation, at 10% and the Government of Ghana's 5% shareholding, for a total purchase consideration of $25 million with effect from the first of September 2007.

This positive step indicates our ability to capitalize on opportunities within our current business, adding an additional 390,000 ounces to reserves, and some 620,000 ounces to our resources based on the 2006 reserve statement. And we will provide further upside when completing the issued reserves and resources analysis.

I will now hand over to Venkat to provide a brief financial overview for the quarter. Thanks, Venkat.

Venkat Venkatakrishnan

Thank you, Mark. I would like to now cover in some detail our adjusted headline earnings, hedging, total cash costs, and fourth quarter outlook.

As Mark has mentioned, our adjusted headline earnings for the third quarter were broadly similar to the prior quarter at about $81 million. The benefits from our 6% higher gold production and a 3% improvement in the lead price were eroded by higher total cash costs, increased depreciation and amortization charges, and once off compensation and improvement expenditure, all of which were line with our most recent guidance.

In respect of the hedge book, our lead price of $621 an ounce was 9% lower than the average spot price for the quarter, and within our previous guidance. The hedge delta increased by 1.18 million ounces to 10.58 million ounces, primarily due to a significant price increase of $96 per ounce between two-quarter ends, one of the highest we have seen.

Our net hedging commitments, as of the quarter end, stood at 11.7 million ounces, equivalent to around two years' worth of production. Looking ahead to the fourth quarter, we estimate that the deficit between the lead price and the spot price is likely to be between 10% to 12%, for spot gold prices in the range of $700 to $760 an ounce.

In the backdrop of rising operating costs, we are looking at ways to create greater leverage to a rising gold price going forward. In this sense, you heard today our new CEO's position on hedging.

Turning to our total unit cash costs, these increased by $24 an ounce, or 7%, to $357 an ounce in the third quarter. This increase can be primarily attributed to South African and Ghanaian wage settlements amounting to $7 an ounce; higher power costs amounting to $8 an ounce, this includes the higher winter tariff in South Africa, at a cost of $5 an ounce; higher fuel, consumable, and maintenance costs at an additional $6 an ounce, royalties on the back of higher stock prices of about $2 an ounce, and the impact of stronger local currencies around $2 an ounce.

In this month, i.e. the month of October, we utilized the opportunity of the recent dip in uranium prices to purchase 300,000 pounds of uranium at a cost of $75 a pound to meet contractual commitments maturing in 2008.

Given the impact of this uranium purchase, which would add approximately $15 an ounce in the fourth quarter, rising fuel prices, inflation and stronger operating currencies, we are guiding our total cash costs for the fourth quarter at around $364 an ounce, and production for the fourth quarter is estimated at around 1.5 million ounces.

These are based on average exchange rates of R$6.90 to $1, Aussi $ exchange rate of R$0.87, the real at R$1.90, and the peso at R$3.15. It is, however, worth noting, that we have seen a lot of volatility recently on both exchange rates and fuel prices, which could impact this guidance.

As mentioned earlier, you would have noticed that our depreciation and amortization charge is higher quarter-on-quarter. However, for the simply reflective of the quarterly profile of our annual charge, we have still estimated that around $600 million, in accordance with our previous market guidance for 2007. Accordingly, the residual charge for the fourth quarter is estimated to be around $172 million.

Earnings for the fourth quarter, are expected to be significantly distorted by, amongst other things, due to annual accounting adjustments following our business planning process, such as rehabilitation, investing, current and deferred tax provisions.

I will now hand you over to Neville, to take you through the performance of our operations in more detail.

Neville Nicolau

Thank you, Venkat. The South African operations had a solid performance, with only Great Noligwa mine not improving on their previous performance. Overall, the South African assets boosted a 6% improvement, despite losing 11 shifts due to safety stoppages.

Total cash costs increased 8% to R77,247 per kilogram, due to the annual wage increases, higher winter tariffs, and higher by-product losses, which were partially offset by improved production.

Despite the higher cash costs, the adjusted gross profit for the south African region increased by 8% to R$802 million from R$741 million in the previous quarter.

Looking in more detail at these operation, Mponeng reported another strong performance, with production marginally higher than the previous quarter, but total cash costs rose by 3% on the back of annual wage and winter power tariffs. The adjusted gross profit contribution for the quarter was 10% higher, at R$323 million or $46 million.

Kopanang posted a 15% increase in production, as higher grade material was totaled in the previous quarter was accessed, and had a total cash cost rise of 4% due to annual wage increases, winter power tariffs, and higher timber costs due to an improved flow of ground management system. The adjusted gross profit rose 25% to R$201 million or $28 million.

At TauTona, improved facelinks and face-advance resulted in a 15% improvement in crude mining volume, and combined with a 6% higher yield, resulted in gold production being 19% higher. As you will recall, TauTona mining plan was adjusted after seismicity stopped mining in several high-grade panels in the last quarter of 2006. And it is encouraging to note that TauTona has beaten its restated plan for the quarter.

Total cash costs increased 3% to R$72,802 per kilogram, while adjusted gross profits rose 38% to R$145 million or $21 million. At TauLekoa, further mining and increased ramping resulted in gold production improving 10%, and total cash costs increased 3%. Moab Khutsong continued to build up, with volume treated and value of the mine increasing, and gold production was 33% higher, while total cash costs were marginally lower.

Savuka had a good quarter, with gold production 12% higher, due to improved mining volume due to higher face link availability, despite yield being lower. Despite the inflationary pressures, total cash costs were 6% lower for the quarter, and the adjusted gross profit increased significantly to R$15 million or $2 million.

As you will recall, both Savuka and TauLekoa faced short operating lives not so long ago, and it is extremely positive to note that they have become steady contributors and provide further potential in exceeding the life through reserve growth, which will be disclosed soon with our reserve and resource statement.

Great Noligwa, had a difficult quarter. Despite improved face advance and face link availability, production was adversely affected by mining mix, as increased mining took place in the lower grade SV3 section of the mine, and gold production reduced 5%. Consequently, total cash costs rose 24% due to annual wage increases, winter power tariffs, and higher by-product losses.

At Obuasi, our other African underground mine production was 9% lower at 84,000 ounces, due to an 11 day plant shutdown for both maintenance and the testing and development of processes to reduce environmental impact of ore treatment which was completed in line with the directive of the Ghanaian Environmental Protection Agency. As a result of the lower production, total cash costs increased 13% to $513 per ounce.

At our other Ghanaian operation, Iduapriem, despite high rainfall, production rose 21% to 52,000 ounces, with tonnage throughput increasing 14% and yield was 4% higher, as mining continues from the high-grade Block 8 pit. The total cash costs increased 23% to $359 per ounce, due to the non-occurrence of the once-off credits received in the previous quarter.

In Namibia, Navachab mine reported a 5% increase in production on the back of recovered grade, but due to the higher winter power tariffs and the plant mill realigning maintenance, total cash costs increased 23% to $431 per ounce.

Production at Siguiri in Guinea was adversely affected by seasonal rain, with the grade being affected by 8%. And as a result, production was 5% lower; consequently, total cash costs rose 4% to $518 per ounce.

The Malian sites had a mixed quarter. Production at Morila was 49% higher due to improved grade and total cash costs decreased by 26% to $305 per ounce. Sadiola was also 3% higher on the back of higher recovered grade, which was partially offset by the lower throughput that was affected by the higher percentage of sulfide ores treated and the total cash costs were 1% lower.

Yatela, in anticipation of the rainy season was planned down during the quarter to proceed with the pushback and as a result production was 9% lower and consequently, total cash costs were 65% higher at $383 per ounce.

Turning to East Africa, after the slope failure in the Nyanganga pit, we significantly reduced the production outlook for the year guided (ph). Production for the third quarter was 33% higher at 109,000 ounces, due to a 16% increase in tonnage and a 15% higher recovered grade.

In Australia, our Sunrise Dam reported yet another yet again strong results for the quarter with mining continuing in the high grade areas as planned and yielding a 3% increase in production to 153,000 ounces. Total cash costs were 7% lower at A$329, due primarily to higher production.

Also in Australia, as our Boddington project, where we have a third shareholding, it is expected to come online late 2008, early 2009 and is currently in the development phase. We are in the process of completing a definitive estimate to update our capital cost and schedule.

This will include determining the adverse impact of the strong Australian dollar and the definitive estimate is expected to be completed by the beginning of 2008.

At our North American operations, CC&V in Colorado, gold production was 13% lower at 60,000 ounces and consequently total cash costs were 24% higher at $308 per ounce, due to delayed production of the leach pad stacking levels and high fuel costs.

Looking across to South America, our volume in Argentina saw production remain steady at 50,000 ounces due to a higher feed grade, offsetting lower tonnages treated. Total cash costs deteriorated by 14% to $291 per ounce, mainly as a result of high inflation on materials and contractor costs, partially offset by a higher silver by-product credit.

Finally, in Brazil, Anglogold Ashanti, Brazil Mineração increased production by 19% to 87,000 ounces, with higher volumes and values mined. On the back of the higher production, total cash costs reduced 12% to $220 per ounce.

Production at Serra Grande was 4% lower quarter-on-quarter at 23,000 ounces, due to a lower feed grade. And combined with local currency appreciation, total cash costs rose 2% to $268 per ounce.

Looking ahead to the next quarter, production is expected to be similar to Q3 levels for the South African operations. At our Ghanaian operations, Obuasi is expected to be higher following an 11-day plant shutdown, which has now been resolved.

Production at Morila is expected to increase again, as higher-grade material is accessed, which has been confirmed from gate-controlled drilling tests. Siguiri is expected to improve in the fourth quarter with the rainy season behind us and as access is made to mine higher-grade material from Kantina and Simpukka [ph] pits.

Production at Yatela, on the other hand, is expected to decline, as current pit pushbacks is mined out to the pit bottom and the next and final pushback continues. But Geita and Iduapriem are expected to maintain their production levels.

CC&V is expected to return back to normal output levels and the balance of the international assets are expected to maintain their solid performance.

I will now hand back to Charles.

Charles Carter

Thank you, Neville. And with that, we'd be delighted to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Victor Flores of the HSBC. Please go ahead, sir.

Victor Flores - HSBC

Yeah, thank you, good morning. I have a few questions. First of all, going back to the safety issue, which has, I guess, been in the news a bit not only with Anglogold, but with the platinum mines and with the other gold producers

It seems that the DME has taken a slightly harder line with the mining industry, and is now asking for mines to be shut down, when there are fatalities. Can you give us a sense, as to what you think the DME's change of position represents and how you're doing to deal with it?

Mark Cutifani

Victor, it's Mark Cutifani. Let me just pick that up and then I'll ask Neville or Rob if they want to say anything. Just first question, what impact it's had for us, around 20,000 ounces in the quarter, as a consequence of stopping operations where we've had fatal incidents? It's a complex discussion in South Africa, the one thing I'd say and the one thing that I'd pointed out to people this morning.

The industry has come a long way in 10 years. And I think, the first thing we need to do is make sure that we all reflect on the positives that have been achieved and make sure we understand the learning’s and that's the government, the unions, and the companies. So that was the first point we made.

The second point is that the skills and expertise here in South Africa are quite unique and in my view better than anyone in the world in terms of understanding the issues and understanding where to take the business. At the same time, the government, the unions have constituencies that they need to manage and so we understand their concerns and the positions they're taking.

But at the same time, we've actually stopped operations and done remedial works and reviews of our operations, and so quite frankly, I'd say three-quarters of the time or the output that we've lost has been a consequence of the actions that we've taken to stop the operations to do checks and reviews and peer reviews.

We've brought people from other operations to look at any issues we've had to get different sets of eyes in there to make sure that we're not missing anything or to bring forward ideas in terms of how to take the positions forward.

So I think, firstly, it's been a little overstated, the DME actions, because I would say at least 70% to 75% of that is been a consequence of the steps that we would normally take to address the issues. Having said that, what we're doing is we're engaging in a very constructive conversation, a very mature conversation with the Department, the unions, in terms of how we take this forward together.

And so for us it's very important; we've got to do it collaboratively. We've had a good response from both the unions, in fact, we've been with the unions this morning and had a very constructive conversation and we're looking at how we're doing to do this together and we're also reuniting constructive conversations with the Department as well.

So I think, we're looking for the right things to do and we're going to this together. And certainly, from an individual point of view, my personal perspective, it's important that I provide 1) leadership and 2) support to the people who know how to take this forward.

And certainly, I've been very encouraged by what I've seen in the one-on-one conversations, we've had over the last three or four days in relation to the safety issue. And I've seen this in other jurisdictions, in other places obviously, it's a bigger issue for us in terms of the statistics, But certainly, I'd say the opportunity is there and the will to take this forward together.

Neville or Robbie, do you want to add to that?

Robbie Lazare

There isn't much to add, we have a common objective in this thing, and it is an issue, which we need to sort out together. I think there is a great deal of cooperation, and I don't think that there's any problem in terms of the relationships between the union, the state or the management of the mines.

Victor Flores - HSBC

Great. Thank you.

Now if I could just turn to another subject, Mark, you were just quoted as saying, “I'm not a great fan of hedging”, which is fine. How do you weigh the decision of spending a dollar buying a portion of a hedge book back versus spending a dollar building new mines, which is what the business is about, and which actually gives you more reserves and production to dilute the impact of the hedging that exists now?

Mark Cutifani

I might have put a little bit of context in my statement about hedging there, Victor. One, in a rising gold price, I'm not a great fan of hedging. It has is place, and from our point of view, we've probably got more than we'd like. And so I would like to see us with less hedging. So that was the context of the statement.

In terms of thinking about what we do with the hedge book going forward, the conversation that we are in as an executive leadership group is about capital deployment and the effectiveness of that capital deployment. And I see the hedge book as part of that conversation. And in many ways, if the price stays the same, you're deploying a dollar to make a dollar.

And so, a lot of conversation about where we think the gold price is going. We're positive on the gold price, but at the same time, recognizing what whatever you do with the hedge book, you're taking a position.

What we're doing is looking at the whole portfolio, we're looking at how to better deploy our capital within the portfolio, and I have talked about the possibility of maybe asset sales because of the 21 operations, 10 countries, four continents.

I don't think all of the operations are adding or are going to add material value to the portfolio; therefore we should look at releasing that capital and deploying it in a better place. But quite frankly, it's a bad return, and if we see a better opportunity in putting it into an asset, that is where the capital will go.

We assess the issue with putting money into the hedge book along with the other capital deployment options we have, and the comment I'd make is that we will probably look at deploying our capital in a range of areas, and the hedge book will be as part of that conversation. But we would like a little more exposure to a rising gold price, and that's how we factor that issue into the conversation.

The other thing, when we talk about the hedge book, is we're very focused on creating reserves. And again, when we look at the hedge book, if it's more effective to deploy money in brownfields exploration or capital developments that actually provides us with increases in reserves, that's also consistent with the hedge book discussion in terms of diluting the hedge book against a bigger reserve base.

In fact, we were quite successful last year, we created 4 million new ounces even after taking into account production, and we'll get that again this year. And so I think they're the types of things to consider, and that's the type of discussion that we're in at the moment when we talk about the hedge book.

I hope that answers the question.

Victor Flores - HSBC

It does. Thank you. In fact, you've sort of opened the door for my last question. Which is, you mentioned asset sales, I was going to ask you what the position is on the various joint ventures the Group has? Are you've just bought out the minorities in Iduapriem, what are you thinking about the rest of the joint venture portfolio?

Mark Cutifani

It will be opportunistic. Obviously, the Iduapriem purchase was a no-brainer from our perspective, and so we're very happy with that. In looking at the other joint ventures, we'll look at the assets, we'll look at what the value we see in being able to contribute to the business going forward, and we'll look at taking up a position or selling a position.

And at the moment, we've got Richard Duffy leading a full portfolio review over the next two months, and that's the question I'm asking him: show me the money, show me the value, show us the value. And we'll make a decision about how we manage the portfolio.

The one thing I would say is that we're going to be more aggressive about the way we manage the portfolio, and we're going to be more aggressive about the way we deploy our capital and try to make our capital work harder and more effectively for our shareholders.

Victor Flores - HSBC

Thanks a lot. Thank you very much.

Operator

Thank you sir. Our next question comes from Oscar Cabrera of Goldman Sachs. Please go ahead.

Oscar Cabrera - Goldman Sachs

Good morning, everybody. Mark, welcome. To steer you in a different context here, just following up with the line of questioning in terms of your reserves, can you give us an update of your exploration and what you're seeing specifically in the DRC and Australia? And then I'll follow up with another one.

Mark Cutifani

Hell, Oscar, how are you? It's good to hear your voice.

Oscar Cabrera - Goldman Sachs

Great, thanks, Mark.

Mark Cutifani

Oscar, I might just make two comments, and then I will hand across to Richard Duffy, because he's the minister in charge of excitement. Firstly, the one thing that has impressed me is the portfolio of exploration activities Tropicana in Australia, the Colombian position we have, I think is exceptional.

Obviously, DRC, and questions on DRC are always about risk and return and I'm sure that Richard will have some good thoughts on that, but I'll hand that across to Richard. But certainly from my point of view, I'm very excited in terms of the exploration portfolio we have. Richard?

Richard Duffy

Oscar, on picking up on what Mark said, and trying to give you a sense on what we hope to deliver in terms of nuances from greenfields exploration this year in the areas Mark mentioned, Tropicana is obviously our most advanced project. We're in pre-feasibility, we're accelerating feasibility, and we hope to conclude the pre-feasibility stage by the middle of next year.

In terms of ounces for this year, we're targeting a minimum of 2 million ounces from drilling at Tropicana; we're hoping to get more than that in the rest of the pre-feasibility, but for this year the target is 2 million ounces.

In Colombia, we are also targeting a similar resource figure of 2 million ounces. We are currently doing extensive drilling on two projects. One is at Gramalote, and that is a joint venture that we have the rights to own up to 75% in that particular project.

The other is La Colosa, which is 100% Anglogold Ashanti. We are unlikely to drill any resources out of La Colosa simply because of the stage of the project. It is a very exciting project, and we hope to tell you more about that, possibly at our next quarterly discussion. But from Colombia we’re targeting 2 million ounces.

And then in Congo, at Adidi-Kanga, which is where we've been drilling out our resource, we also expect around 2 million ounces from Adidi-Kanga. But our focus on our concession footing in the Congo has shifted, particularly to looking at regional potential. We're flown airborne physics, we've got a number of interesting targets, and there's no doubt that the Congo is elephant country. We have to pick up the return risk debate, as Mark has referred to.

So, on the Greenfields front, 6 million ounces of inferred resource by the end of this year as part of our resource statement is the target. Perhaps, just to give you a sense of spend in terms of output for the year, we have increased our spend and our outlook for total exploration spend in 2007 is $122 million. And that is $97 million on Greenfields and $25 million on brownfields.

I hope that answers your question, Oscar.

Oscar Cabrera - Goldman Sachs

Thanks, Richard. I was looking forward to seeing that new title on the business cards.

In following up with the thought up core assets, in and taking into consideration that you guys are going through the process here, what regions of the world granted, that there are some parts of the world that have the resources and then you have to be there, but what regions of the world are more attractive at the moment for you? Would that be, also taking into consideration, as you look at your portfolio of assets.

Mark Cutifani

Oscar, if I could pick up the key points there, your backyard looks attractive to us. Colombia, South America, I think the position we have in Brazil with Minas Gerais, and in Argentina we've got a very good asset and I think a very good reputation.

So I think in South America, I think it's a great place to be, and the position we have in Brazil with Minas Gerais, and in Argentina we've got a very good asset and I think a very good reputation. So I think in South America, I think it's a great place to be, and the positions that we have are very exciting.

In Australia, it's a rather interesting one in Australia, we've got a couple of the guys finding the work there pretty heavy duty and are struggling a little bit.

We're very pleased with our Boddington position that we're building, we're building a mine in support with our partners, Newmont, we're very happy with that position. Obviously, Tropicana in the new range, and the guys have done a great job in picking that up and doing the work they've had.

And I think there may be more opportunities in Australia, as some people look at revising their portfolios. In Africa, we've got some very good positions; unfortunately we've not utilized those well, I think Geita and Obuasi, for us, have been a little problematic for us in contributing to some of our hedging.

I think part of the reason we've missed some of our goals, so I think we have got some hard work to do in getting those operations right and fixing, have Robbie focused on those two projects, and I think a couple of other positions in Africa are exciting.

But at the same time there are a couple of positions there that I don't think have got the potential to add longer-term value in our context. But we're looking hard at those assets as we speak, and that will be part of Richard's review.

But in South Africa, we've got around about a 2.5 million ounce production base, we know how to do business in Africa. We know how to improve our business in Africa.

So when you look at the portfolio, I think we've got good positions right across the Board, and Richard's got us looking in a few places in Asia, so we're heading up north from Australia and in China, very interesting places.

And in the context of the DRC, one thing we're saying to Richard is I'm not interested in an IRR discussion, I'm interested in quick cash turns, and I want to see cash in and cash out pretty quickly.

And then I get interested, and so, that's the nature of the conversation in terms of what we're looking at across the globe.

Oscar Cabrera - Goldman Sachs

Okay. Great, Mark. Thanks very much.

Operator

Our next question comes from Amanda Lagrange (ph) of Nomura. Please go ahead.

Amanda Lagrange - Nomura

Hello gentlemen. I'd just like to ask a short question regarding uranium. Could you please confirm the volume of uranium that you have hedged at the roughly $20 to $25 per pound level in 2008 and 2009?

And then secondly, I heard mentioned that once those contracts are rolled off, about in 2010, that you expect a $20 per ounce uranium by-products credit to your gold costs. Is that your total cash costs, or is that $20 per ounce credit to the actual mines that are producing the uranium?

Venkat Venkatakrishnan

If I can pick up on the contracts that's vacant here, our commitments are actually disclosed, to be precise, on page 262 of our annual report. Committed production for 2008 is just under ₤1.9 million, and we are intending to meet that as I said, by buying uranium, which we have done to the tune of ₤300,000, and we are also in the process of renegotiating some contracts.

But then, the committed production reduces dramatically, for 2009, it's only ₤919,000, and from 2010 to 2013, that's the four years, in total, we only have ₤2 million committed. That averages to about ₤500,000 a year. And hence, a large chunk of our production post-2008 could be sold at today's prices. Mark?

Mark Cutifani

Just to go to the second part of your question. I know where that number came from and I'll take 30 seconds to explain it. I was asked the question how quickly our contracts roll off, and I'll talk broadly to what Venkat was saying.

I do make the point that if you do look at uranium in our portfolio, it is somewhat of a hedge against energy prices, and I said that if you took today's prevailing spot price, and took the difference against our current contract prices, took those volumes in 2010, the value back to us as a net by-product credit was around $20 an ounce on gold.

So that's where that number came from in the context of that conversation. And that's at our current volumes, which is at about ₤1.3 million a year. I hope that answers the question.

Amanda Lagrange - Nomura

Yes, that's good. Thanks very much, gentlemen.

Operator

Our next question comes from Victoria Roberts from Plat Metal (ph). Please go ahead.

Victoria Roberts - Plat Metal

Hello?

Mark Cutifani

Yes?

Victoria Roberts - Plat Metal

I'm not certain that you can hear me. My question on the cash costs has been covered. I've been having a few technical issues on canceling questions, so my apologies for the interruption.

Mark Cutifani

No problem. Thank you.

Operator

(Operator Instructions) Our next question comes from Barry Cooper of CIBC World Markets. Please go ahead.

Barry Cooper - CIBC World Markets

Yes, good day, everyone. Just a bit of a follow-up on the uranium question there. What was the reason for your shortfall for the uranium production?

Venkat Venkatakrishnan

If I can pick it up, I think it was purely the maturity profile of the contract and at that point, the production profile showed, it was going to be, you couldn't actually generate using stock on hand, about ₤1.9 million. They are currently producing ₤1.4 million to ₤1.5 million.

So this was a legacy shortfall position. When the opportunity opened up, we decided to buy because the price was good, and also we had some tax advantages in making the purchase now.

Barry Cooper - CIBC World Markets

So it had nothing to do with the similar situation that Uranium One has vis-à-vis having access to assets or anything like that.

Venkat Venkatakrishnan

There was an element of it, but the reason for the purchase was not driven by that.

Barry Cooper - CIBC World Markets

Okay. Good enough. Venkat, I was just wondering if you could maybe want to give us a broad general guidance on the variability that you're talking about for Q4 for a number of parameters there, I guess from the words.

I don't even know if it's going to be positive or negative, but could you just kind of give us some sort of a broad-brush guidance of what's going to be different in Q4, with all of these what you typically call unusual or irregular events?

Venkat Venkatakrishnan

No, actually, Barry, I think it's a function of the business planning process. Because as part of the business plan, we review life of mine, mine life extensions, that has an impact on what your rehabilitation provision is going to be, the impact of what you're going to do with existing stockpiles and inventory, and it also puts the tax rate changes, for example, in South Africa, how quickly you come out of the South African tax tunnel and so on.

The answer is I cannot provide you with an indication at this stage, simply because we haven't completed our planning process. That takes probably another month, month and a half to complete. Then we have got to do the number crunching.

In terms of whether it's positive or negative. I can't give you an indication as to what the impact will be. But historically, it has been negative. But having said that, we will complete the exercise, and we'll put that out as part of our Q4 announcement. But at this stage, unfortunately, we can't provide any more details.

Barry Cooper - CIBC World Markets

Okay, fair enough. We'll flounder about ourselves there, then a final question for Neville on Moab. I was just wondering, are you seeing anything, now that you've got a couple of years of development build, or production build, under your belt that suggests that these assets are not going to live up to your initial expectations?

Particularly on the costs front, because that, although the production's been building, the costs really haven't changed a heck of a lot since first starting up there.

Neville Nicolau

Barry, I think the costs at the moment are a sign that there is a very low level of production. Moab is in a very steep build-up phase over the next 18 months. The development results ahead of what we are stating at the moment have started to show very, very encouraging signs of very good grade.

And all of that will contribute towards the cost level. We will be in a better position at the end of the year to give proper long-term guidance to Moab, taking into account all of our current knowledge. It's difficult to say what the expectation of Moab was at the conception of the project.

But where we are in terms of business plan at the moment, our current expectation of the project is very, very close to the business plan that we have been working on over the last couple of years.

Barry Cooper - CIBC World Markets

Okay, thanks a lot. That's all the questions I had.

Operator

(Operator Instructions) Our next question comes from Justin Brown of Business Report. Please go ahead.

Justin Brown - Business Report

Question on, two questions please. Just regarding the potential for asset sales. I was just wondering what would be the priority in terms of the use of the money that comes out of any potential asset sales.

And then also, I just wanted to find out, the five to six mines that could face sale that aren't providing returns that Anglogold Ashanti is looking to achieve any chance of those being named?

Mark Cutifani

If I can gather your second question first, the answer is no. However, let me say that, my comment is that there are at least 5 or 6 mines that are not contributing in a material way there are some that I think have the potential to contribute and we have to get on our backs and really work hard to get them delivering. That's the first point I'd make.

There are some that will be, because of size or joint venture relationship or material impact on the business, things that we have to think of in a different context. And that's what Richard's been handed in terms of the portfolio to go and work through.

He's just starting that process and will come back with recommendations in February. In terms of priorities, I think I've probably dealt with that a little bit earlier. The issue will be where do we best deploy our capital And obviously our hedge book will be in the mix in terms of that conversation.

But I'm not going to preempt that discussion either until Richard comes back with the recommendations. The asset review does include our developing projects and our exploration prospects. So, it's right across the board, and that will be done where we best deploy our capital.

So what I'm saying is that there will be a shift in capital deployment, and that shift will be focused on creating long-term value for shareholders.

Justin Brown - Business Report

So could it be a matter of selling assets to reduce the hedge book? Is it that simple?

Mark Cutifani

It could potentially be as I said, if we decide to sell assets and there's some gold that goes with it I think it's always prudent to maybe lighten up the hedge book as a consequence, but I don't want to be locked into that, because we've got some great prospects as well. And so looking at capital deployment, I think it's an important part of the process we'll be going through.

Justin Brown - Business Report

And the small, if I can layoff let me please ask one more question? Just would you prioritize the sale of the mine that has the biggest amount of hedge positions in place?

Mark Cutifani

No, we look at the hedge book as one book across the entire portfolio we manages it as an entire portfolio.

Justin Brown - Business Report

Okay. Thank you very much.

Operator

Ladies and gentlemen, we have no further questions. Would you like to make some closing comments?

Charles Carter

Thank you, Dylan. We would just like to thank to our participants for joining us on the call.

Mark Cutifani

Thank you everyone.

Operator

On behalf of Anglogold Ashanti, that concludes this afternoon's conference. Thank you for joining us. You may now disconnect your lines.

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Source: Anglogold Ashanti Q3 2007 Earnings Call Transcript
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