DIVERSIFIED, DECISIVE, SUSTAINABLE

Transcription

1 26 FEBRUARY 2018 DIVERSIFIED, DECISIVE, SUSTAINABLE 2018 BMO METALS & MINING CONFERENCE

2 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 s 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 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

3 POSITIONED TO CREATE VALUE THROUGH THE CYCLE Responding decisively and proactively to create sustainable value through the cycle Focus on sustainable improvements to margins and cash flow Consistent delivery on targets; improving cost management on key metrics Decisive action on operations, and improving balance sheet flexibility Maintaining optionality to deliver value-adding growth Supporting our strategy for sustainable cash flow improvements and returns Ongoing portfolio improvements and rationalisation Working towards zero harm through the elimination of high consequence events Focus on people, safety and sustainability 3

4 SAFETY PERFORMANCE International Operations set a record of 495 days without a fatality; South African ultra-deep mines posted 349 consecutive fatality-free days All-Injury Frequency Rate Injuries/million hours worked Injury rates have more than halved over Fatalities down 80% since 2017 Strong, integrated safety strategy AIFR 4

5 ANGLOGOLD ASHANTI: QUALITY, BALANCED GOLD PORTFOLIO 2018 Guidance Production 3.325Moz 3.450Moz AISC: $990/oz - $1,060/oz Americas c.25% of 2018 production Continental Africa c.42% of 2018 production South Africa c.15% of 2018 production Australia 18% of 2018 production 5

6 DELIVERING ON OUR COMMITMENTS Significant progress has been made as we restructure South African Operations and move forward with the redevelopment of Obuasi Further improved safety and sustainability performance Continue investment to enhance margins and cash flow Maintain balance sheet flexibility Revisit Obuasi feasibility study; assess all options Advance low capital, high return brownfields opportunities Extend asset lives through focused exploration Advance SA Operational turnaround and restructuring Move Colombia projects up value curve; reduce holding cost 6

7 MEETING OR BEATING TARGETS PRODUCTION Five years meeting or beating output guidance while restructuring the portfolio Original FY Guidance Range Actual Result AISC Five years meeting or beating guidance on costs and capital despite inflation and volatile local currencies 2200 CAPEX

8 FIVE YEARS SELF-FUNDING MAINTAINS GOLD PRICE LEVERAGE: Strong operating cash flow, servicing and reducing a legacy debt position Reinvestment Tax & Royalties Paid Net Interest & Financing Dividends -$1.5bn $1bn** $0.2bn -$5.8bn* Asset Sales/Purchases $0.4bn Maintaining discipline Balancing competing funding needs *Sustaining capital $4bn, Growth Capital $1.8bn. Includes Tropicana & Kibali ** $900m interest paid, $100m premium to settle HY bond *** $100m shareholder and $100m to minorities 8

9 PROJECT VERSUS SUSTAINING CAPITAL ($M) Capex remains at appropriate levels balancing inward investment and focus on improving FCF Kibali Mponeng Siguiri Mponeng Kibali Siguiri Obuasi A 2015A 2016A 2017A 2018E Sustaining Capex Growth Capex 9

10 REGIONAL OPERATING STRATEGIES Maintain stable performance and deliver strong returns from exploration and brownfield opportunities International Operations Target costs through operational excellence Extend lives of core assets Low capital, high return opportunities Move greenfield options up value curve - prudently - Long-life assets - Upgrade quality - Maintain optionality - Optimise payback South Africa Optimise scale Progress restructuring, improve stability Ramp up Mponeng B120 Evaluate further Mponeng life extension 10

11 DELIVERING ADDITIONAL OUNCES AND VALUE International Operations Cerro Vanguardia Serra Grande Geita Brownfield life extension options largely supported by current levels of sustaining capital AGA Mineração Sunrise Dam Mine lives extend well beyond current reserves Siguiri Iduapriem Tropicana Obuasi In most cases further potential exists beyond current scenarios Focus areas: Resource conversion Operational Excellence Expansion/mine optimisation Kibali Reserve implied LOM, years Current preferred Scenario LOM Years 11

12 MARGIN FOCUS CRITICAL TO EXECUTING STRATEGY 1600 Portfolio continues to preserve a competitive margin despite significant planned inward investment A 2014A 2015A 2016A 2017A 2018E AISC AIC Avg Gold Price *All-in Sustaining Costs a World Gold Council standard excluding stockpile write-offs 12

13 BALANCE SHEET FLEXIBILITY Strong liquidity, no near-dated maturities, ample covenant headroom Net debt and Net debt to Adjusted EBITDA Undrawn facilities* at 31 December 2017 Net debt to Adjusted EBITDA Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Net debt $m US$205m Cash US$1,050m USD RCF A$290m AUD RCF $1.720bn R2.95bn ZAR RCF Net debt to Adjusted EBITDA Net debt Last-12-months adjusted EBITDA ratio *Total calculated with ZAR facility at R /$ (excluding DMTNP), AUD facility at $ to A$ 13

14 PROJECT PIPELINE: AN ABUNDANT PORTFOLIO 2018 Deliverables New quality ounces Lower costs profile Extended LOM Siguiri Hard Rock Project Extends LOM, Enhances NAV E Average: c.355k AISC $910/oz Mponeng Phase 1 Access higher grades E Average: c.268k AISC $1,105/oz Kibali U/G Development Extends LOM, Improves cost E Average: c.340k AISC $700/oz 2019 Deliverables New production Enhanced margins Reserve additions Obuasi Start Redevelopment 20+ year LOM, Attractive Returns E Average: AISC $800/oz Tropicana Long Island Enhance Margins, Extend LOM E Average: c.330k AISC $950/oz Gramalote Development Attractive Returns in a New Area Feasibility study underway Maiden Reserve Declaration Options beyond 2020 Expansion opportunities Potential for new development Value creating exploration Sadiola Sulphides High Return, LOM extension Certain government agreements required Quebradona Development PFS by early 2019 Mponeng Phase ll Mine life extension *Attributable 14

15 OBUASI A NEW, TIER ONE ASSET Large, high-grade ore body - 8.8g/t avg. from 5.9Moz reserve, 36Moz resource Long life 20 years, with life extension potential Low capital intensity - $450m - $500m investment for c.400koz a year mine High margins average AISC over life of $750/oz - $850/oz Technical risk new geological model, simple metallurgy, fully mechanised Labour risk managed new labour model, smaller workforce Political risk managed full suite of stability, security agreements signed Execution team Experienced Ghana team plus Tropicana project leadership Balance sheet flexible balance sheet provides financing ability High return returns of 16%-23% at $1,100/oz-$1,240/oz 15

16 ORE RESERVE BY BLOCK KRS KMS CVS ADANSI SANSU 7.8g/t BLOCK g/t BLOCK g/t BLOCK g/t BLOCK g/t C'DOR 16.47g/t 3200 LEVEL ADANSI 16.6g/t BLOCK g/t 5000 LEVEL Obuasi orebodies located within Ashanti regional sheer over a 13km strike length KRS Shaft Two styles of mineralisation Disseminated Sulphides (arsenopyrite is the main sulphide responsible for gold content) Quartz veins in shear zones associated with free gold, responsible for highest grades 16

17 OBUASI INFRASTRUCTURE Full mine redesign incorporating existing and some new infrastructure GC Vent Shaft KRS ODD Portal KM Vent Shaft KMS Vent Shaft C'DOR Portal ADANSI SANSU BLOCK 8 ODD C'DOR ADANSI BLOCK 10 BLOCK 1 BLOCK LEVEL LEGEND ODD existing ODD planned Lateral dev existing Lateral dev planned Rehab planned Existing shafts Planned shafts BSVS BLOCK LEVEL 1000m 1000m 0 Mining progresses from the southern shallower Sansu, B8 and B10 lodes to the deeper Block 11 lode 17

18 OBUASI PROCESS PLANT REFURBISHMENT AND CONSTRUCTION Existing biox plant will be extensively refurbished and re-built. REGRIND MILL REFURBISH CONSTRUCT NEW BUILT IN 2014 Throughput rates and recoveries were validated during 6 week plant trial. 18

19 PROJECT RAMP-UP 2,000tpd Year 2 (18 months after construction starts enables early production start): SAG Mill #02 in close circuit Refurbish 2 BIOX Modules & replace Cooling Tower Upgrade existing Gold-room Utilise existing South TSF (two years co-disposal from start of production) 4,000tpd - Years 3-4: New drive trains on SAG#1 and cyclone/gravity circuits Refurbish 3rd BIOX Module Construct & Commission BIOX CIL Tails TSF Construct & Commission Arsenic Trioxide Treatment Facility 5,000tpd - Year 5 onward: Construct & Commission Flotation Tails TSF Construct & Commission Dirty-Clean Water Separation Ponds 19

20 OBUASI GOLD MINE PROJECT - KEY METRICS AngloGold Ashanti Ghana Board Technical Committee Support, Monitor and Review Graham Ehm Executive Vice President: Group Planning & Technical Massoud Massoudi Project Direct: Implementation Eric Asubonteng Managing Director: Operations Project Owners Team EPCM Contractor Sub Contractors/Vendors Operational Readiness Team 20

21 OBUASI ONE OF THE LARGEST MINES IN AFRICA WITH LOW COST POSITION 10 lowest capex intensity gold projects (US$/oz) (a)(b) Low capital intensity US$/oz 1,096 1,423 1,188 1,245 1,326 1,375 1,556 1,602 2,000 2,297 2,338 Tasiast Phase I and II Obuasi Amaruq Gruyere Project Quecher Main Merian Coffee Goldrush Natalka Meliadine Top 10 African mines by 2017A production (koz) expected to become one of the 10 largest mines by production in Africa post ramp-up koz 730 Loulo- Gounkoto (c) Kibali Tarkwa Sukari Geita Kloof Driefontein Essakane Obuasi Siguiri 2017A AISC of 10 largest African mines by production (US$/oz) (d)(e) and one of the lowest cost African mines $/oz (c) ,007 1,090 1,141 Sukari Siguiri Obuasi North Mara Tarkwa Geita Essakane Kloof Kibali Driefontein (a) Capex intensity = project capex / run-rate production (b) Classification includes top 10 gold producers projects with forecast avg. LoM production >200koz and capex information available; companies include: Agnico Eagle, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont, Polyus, Polymetal, Randgold (c) LoM average production and AISC (d) 2017A AISC of the top 10 gold mines in Africa by production (e) Excludes Randgold since not reporting AISC Source: Company information 21

22 OBUASI GOLD MINE PROJECT - KEY METRICS Gold Produced (Economic footprint) Moz 8.59 over 21 years Annual gold production (Steady state) First 10 years Koz Annual Gold production Second 10 years Koz Average Annual tonnage treated (Steady state) Mt Average head grade g/t 8.8 Gold price assumption (Real) US$/oz 1,240 Cash cost per ounce (money terms at approval) US$/oz All-in-Sustaining Costs (money terms at approval) US$/oz Initial Project Capex (3yrs) US$M % % % 20 Extended Project Capex over six yrs (Inc. initial project capital) US$M Capitalised Operating Cost US$M 64 IRR ($1,100 $1,240/oz) % Payback Period years 6.5 All-in Sustaining Cost margin % 38% C&M costs for project period (Jan 2018 Jul 2019) estimated at $57m 22

23 COMPARISON OF KEY METRICS 2017 VS OUTLOOK E Guidance midpoint** Production 000'oz 3,279* 3,390 AISC* $/oz 1,054 1,025 Total Capex $m Exploration $m Corporate Cost $m Notes 3,755 from all operations in 2017; Outlook includes three months production from Moab Khotsong, Kopanang at c30koz/month Strong cost control despite inflation, outlook for stronger currencies and higher oil prices; lower total capex, despite launching Obuasi project Includes growth capital of $200m $250m, of which about 130 is allocated to Obuasi Focus on optimising exploration spending Includes inflation and stronger currencies All guidance metrics met for five years Improving outlook across most metrics Moving forward on strong Obuasi project to provide near-term growth SA restructuring substantially done; contribution to production now <15%; focus on FCF generation by H Proceeds from asset sales to further improve balance sheet flexibility Asset Sale Proceeds $m Anticipated in H1, following closure of Kopanang and Moab Khotsong sales. To be applied to reduce debt. World-class exploration plus strong suite of options to extend asset lives *from continuing operations excluding TauTona, Kopanang and Moab Khotsong **Guidance midpoint is provided for illustrative purposes only 23

24 PRIORITIES FOR 2018 Priorities Improve free cash flow Balance Sheet Flexibility Complete SA transactions, ensure cash generation Resolution on Tanzanian uncertainty Capital allocation and cost control Portfolio Improvement Optimisation Continue to unlock value from portfolio Advance Brownfield projects Continued safety gains Move Obuasi to construction phase 24

25 INVESTMENT CASE: VALUE CREATION AND LONGEVITY Decisive with delivery track record Global asset base with plenty of options Improving FCF through the cycle Capital discipline with focus on returns Shareholder returns are a priority 25

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27 OBUASI ONE OF THE LOWEST CAPEX INTENSITY PROJECTS WITH LOW EXECUTION RISK 10 lowest capex intensity gold projects (US$/oz) (a)(b) Low capex intensity US$/oz 1,096 1,423 1,188 1,245 1,326 1,375 1,556 1,602 2,000 2,297 2,338 Tasiast Phase I and II Obuasi Amaruq Gruyere Project Quecher Main Merian Coffee Goldrush Natalka Meliadine coupled with low execution risk Feasibility study completed; re-worked and revamped resource modelling along with independent audit Operational footprint at Obuasi simplified; proven metallurgy and capacity Supporting and engaging government; regulatory and fiscal agreements signed with the Government of Ghana Development Agreement ( DA ), Tax Concession Agreement ( TCA ), Security Arrangement and Reclamation Security Arrangement Government protection against illegal mining DA and TCA need to be ratified by Ghana s Parliament Environmental Impact Assessment completed; permits expected shortly Includes $94m for development of Obuasi deeps decline (a) Capex intensity = project capex / run-rate production (b) Classification includes top 10 gold producers projects with forecast avg. LoM production >200koz and capex information available; companies include: Agnico Eagle, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont, Polyus, Polymetal, Randgold Source: Company information 27

28 GUIDANCE FOR 2018 YEAR Guidance Production (000oz) 3,325 3,450 Includes three month production from Moab and Kopanang at ~30koz per month Costs Overheads Capex All-in sustaining costs ($/oz) 990 1,060 Total cash costs ($/oz) Corporate costs ($m) Expensed exploration and study costs ($m) Including equity accounted joint ventures Total ($m) Sustaining Capex ($m) Notes Non-sustaining Capex ($m) Obuasi, Kibali, Siguiri Hard Rock project, Mponeng Depreciation & Amortisation ($m) 775 Depreciation & Amortisation included in equity accounted earnings ($m) 150 Earnings of associates and joint ventures Interest and finance costs ($m) income statement and cash flow 140 Other operating expenses ($m) 90 Primarily related to the costs of care and maintenance SENSITIVITIES (based on $1,250/oz gold price and the same assumptions used for guidance) AISC ($/oz) Cash from operating activities before taxes for Y2018 ($m) 10% change in the oil price % change in local currency % change in the gold price koz change in production Currency and commodity assumptions $/R exchange rate A$/$ exchange rate 0.78 $/BRL exchange rate 3.20 $/ARS exchange rate Oil ($/bbl) 62 Both production and cost estimates assume neither 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 2016, filed with the United States Securities and Exchange Commission (SEC). 28

29 COMPARISON OF KEY METRICS H H Year 2017 Year 2016 Gold produced 000'oz 2,007 1,883 3,755 3,628 Price received $/oz 1,277 1,274 1,258 1,249 Total cash costs $/oz AISC* $/oz 1,038 1,058 1, AIC* $/oz 1,109 1,155 1,126 1,071 Adjusted EBITDA $m ,483 1,548 Net debt $m 2,001 1,916 2,001 1,916 Adjusted EBITDA last 12 months (LTM) $m 1,483 1,548 1,483 1,548 Net debt to EBITDA (rolling LTM) Times Cash flow from operating activities $m ,186 Free cash flow $m Capital expenditure $m *World Gold Council Standard, excluding stockpile write-offs 29

30 COST PERFORMANCE Inflation and exchange impacts offset by strong performance from International Operations H2 Cash Cost vs. Prior Year $/oz H Exchange Inflation Royalties Efficiency Volume & Grade By products Stockpiles & GIP Other H All-in sustaining cost $oz sold Excluding Stockpile NRV and other adjustments , ,038 H Cash costs Retrenchment costs Rehab & other non cash costs Corporate costs Exploration costs Sustaining capex Other H