Review of operations (PDF - 3.032 MB)

Review of operations

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Introduction

Products and geographic locations

AngloGold Ashanti's main product is gold. An insignificant portion of its revenue is derived from the sale of silver, uranium oxide and sulphuric acid. AngloGold Ashanti sells its products on world markets.

The company has 21 operations in 10 countries around the world (see map). While these operations are managed on a regional basis, they are reported on country-by-country.

Operating review

Overall gold production in 2005 rose to 6.2 million ounces, an increase of 6% on the previous year. No new operations came into production in 2005, while the Ergo facility in South Africa was closed and the Savuka mine, also in South Africa, is currently in closure mode.

Strong operating currencies against the dollar – particularly the South African rand and the Brazilan real – contributed to the rising cost of inputs, as well as inflationary pressures (including a new two-year wage settlement) in South Africa. This was mitigated by large-scale cost-saving initiatives, once again primarily in the South African region. Consequently, total cash costs rose by 6% to $281 per ounce.

Capital expenditure, at $722 million, rose by 23% from the previous year – of this, 63% was stay-in-business capital expenditure and the balance of 37% was for new projects. In January 2005, the board announced its approval of the Cuiab? expansion project, at AngloGold Ashanti Minera? ˜ao in Brazil, as reported below.

Gold production (000oz)

Total cash costs ($/oz)

Capital expenditure ($m)

Safety and health

Regrettably, 25 employees lost their lives in work-related accidents at AngloGold Ashanti in 2005 (2004: 31) in 22 separate accidents. Of the fatalities, 17 were at the South African operations, seven at Obuasi in Ghana and one at AngloGold Ashanti Minera?˜ao in Brazil. This performance, while short of the group’s stated objective of achieving a fatality-free work environment, reflects a continued improvement both year-on-year and in the longer term. The group's fatal injury frequency rate (FIFR) for 2005 was 0.14 per million man-hours worked, which is a 26% improvement on the 2004 rate of 0.19. This is an improvement of 64% on the FIFR of 0.39 achieved seven years ago in 1998.

It is cause for concern that the group's lost-time injury frequency rate (LTIFR) in 2005 rose by 3% to 6.75 per million man-hours from 6.56 the previous year. Efforts are being renewed to reverse this upward trend.

Nonetheless, the significant downward trend since 1998 (LTIFR of 14.52 in 1998) remains intact with a 54% improvement achieved over the seven-year period.

The Cripple Creek & Victor mine has operated without a lost-time injury since November 2003.

Comprehensive reporting on occupational safety and health, HIV/AIDS and malaria, the environment, corporate social investment and labour practices and other issues relating to sustainable development can be found in the company's Report to Society 2005, which will be published at the end of March 2006. While the Report to Society reports in terms of company values and business principles, it also reports in accordance with the Global Reporting Initiative (GRI). The Report to Society will be available on the company's website at www.AngloGoldAshanti.com from the end of March 2006, or from the contact persons listed at the end of the report.

Outlook

Gold production in 2006 is expected to decline marginally to within a range of 5.8 million ounces to 6.1 million ounces.

Capital expenditure is estimated to be between $786 million and $818 million in 2006, mainly at the South African, Brazilian and former Ashanti operations.

FIFR: 1998 to 2005 (per million hours worked) Group

LTIFR: 1998 to 2005 (per million man hours worked) Group