Cancelation of Uranium Contracts
AngloGold Ashanti has also cancelled 1.0 million pounds of its outstanding uranium contracts,
which together with the deliveries effected since the start of the year, represents a reduction
of 30% of uranium contracts that were outstanding as at 1 January 2008. This cancellation,
which will result in a one-off pre-tax charge of US$32 million against second quarter’s
adjusted headline earnings, will result in the company beginning to participate in the uranium
spot market from 2009.
Corporate activity and asset review update
On 1 July 2008 the company also announced that shareholders of Golden Cycle Gold
Corporation approved the merger with a wholly owned subsidiary of AngloGold Ashanti at a
special meeting of shareholders. As a result of the transaction the company now owns 100%
of Cripple Creek & Victor Gold Mining Company, thereby allowing AngloGold Ashanti to
simplify the ownership structure of this long-life North American gold asset.
AngloGold Ashanti announced on 16 May 2008 that the sale of various exploration interests in
Colombia to B2Gold Corporation (“B2Gold”) had been completed. As a result of the
transaction the company received 25 million common shares of B2 Gold and 21.4 million
share purchase warrants in B2Gold with an exercise price of Cdn$3.34 with respect to
11 million warrants and C$4.25 with respect to the balance of 10.4 million warrants, which
would result in a fully diluted interest in B2Gold of approximately 26%. The transaction allows
AngloGold Ashanti to build on its strategy in Colombia of continuing to leverage its first-mover
advantage and developing its exploration portfolio in the most efficient and cost effective
manner, which includes AngloGold Ashanti’s 100% owned La Colosa project, where the
company declared an Inferred Mineral Resource of 12.9 million ounces on 6 May 2008.
AngloGold Ashanti has sold its 50% interest in Nufcor International Limited to Constellation
Energy Commodities Group for net proceeds of US$50 million. The sale of this London-based
uranium marketing, trading and advisory business enables AngloGold Ashanti to better focus
on its core gold and uranium mining business. AngloGold Ashanti retains its 100% interest in
Nuclear Fuels Corporation of South Africa (Proprietary) Limited (“Nufcor SA”), its local
uranium calcining business.
The profit on disposal of assets will not form part of Adjusted Headline Earnings.
Second quarter production and cash costs
For the second quarter gold production was some 3% above previous guidance at 1.25 million
ounces at a total cash cost of around US$434 per ounce, US$30 per ounce or 6.5% better
than previous guidance.
Commenting on the latest developments, Mark Cutifani said: “I am delighted with our
achievements across a number of our core strategic objectives. The completion of our
landmark rights issue has given us the flexibility to restructure our forward commitments in
gold and facilitate much greater spot price participation going forward. The accelerated
execution of a 39% reduction in our gold hedge book is particularly significant in allowing us
to benefit from a strong gold price environment going forward. By cancelling 1.0 million
pounds of contracted uranium sales we are also opening up earlier access to the uranium
spot market. Similarly, our corporate transactions involving Golden Cycle, B2Gold and the
disposal of Nufcor International demonstrate our commitment to maintaining focus and
efficiency across our portfolio. Meanwhile the actions that we have taken elsewhere across
the asset base have helped us to deliver ahead of our production and cash cost guidance and
I am confident that we now have the team in place to deliver on our long term commitments.”