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Notes to company financial statements (continued)
for the year ended 31 December 2000
   

28	Risk management activities
	In the normal course of its operations, the company is exposed to gold price, currency, interest rate, liquidity and credit risks. In order to manage these risks, the company may enter into transactions which make use of both on- and off-balance sheet financial instruments. The company does not acquire, hold or issue derivative instruments for trading purposes. The company has developed a comprehensive risk management process to facilitate, control and to monitor these risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterpart limits, controlling and reporting structures. Controlling risk in the company The executive committee and the treasury committee are responsible for risk management activities within the company. The treasury committee, chaired by an independent member of the AngloGold audit committee, comprising executive members and treasury executives, reviews and recommends to the executive committee all treasury counterparts, limits, instruments and hedge strategies. The treasurer is responsible for managing investment, gold price, currency and liquidity risk. Within the treasury function, there is an independent risk function, which monitors adherence to treasury risk management policy, counterpart and dealer limits and provides regular and detailed management reports. Gold price and currency risk Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The gold market is predominately priced in US dollars which exposes the company to the risk that fluctuations in the SA rand/US dollar exchange rate may also have an adverse effect on current or future earnings. A number of products, including derivative instruments are used to manage well-defined gold price and foreign exchange risks, that arise out of the company's core business activities. Fixed and spot-deferred forward-sales contracts and call and put options are used by the company to protect itself from downward fluctuations in the gold price. These instruments establish a minimum price for a portion of future production while maintaining the ability to benefit from increases in the gold price for the majority of future gold production. Net delta open hedge position as at 31 December 2000 The company had the following net forward-pricing commitments outstanding against future production. A portion of these sales consists of US dollar-priced contracts which have been converted to rand prices at average annual forward rand exchange rates/values based on a spot rand/dollar rate of R7.57 available on 31 December 2000.
28	Risk management activities (continued)
	Table A: Summary: Net delta open hedge position as at 31 December 2000
	12 Months ending	Kilograms	Forward price	Forward price	Ounces
	31 December	sold	R/kg	US$/oz	sold (000)
	2001	96,137	R74,841	$302	3,091
	2002	65,167	R80,652	$309	2,095
	2003	37,990	R88,854	$321	1,221
	2004	27,270	R94,625	$321	877
	2005	22,832	R112,842	$358	734
	January 2006 - December 2010	39,079	R127,668	$351	1,257
		288,475	R90,033	$319	9,275

	Table B: Summary: All open contracts in the company's gold hedge position as at 31 December 2000
		Year 2001	2002	2003	2004	2005	2006-2010	Total
	Dollar/Gold
	Forward contracts
	Amount (kg)	39,564	15,707	14,308	10,420	8,242	18,818	107,059
	US$/oz	$306	$315	$326	$324	$336	$359	$323
	Put options purchased
	Amount (kg)	10,109	3,110	4,977	1,866			20,062
	US$/oz	$313	$407	$362	$433			$351
	*Delta (kg)	5,858	3,020	3,799	1,643			14,320
	Call options purchased
	Amount (kg)	1,555						1,555
	US$/oz	$350						$350
	*Delta (kg)	75						75
	Call options sold
	Amount (kg)	16,485	10,731	8,864	1,866	1,244	622	39,812
	US$/oz	$319	$375	$379	$347	$374	$385	$351
	*Delta (kg)	4,763	1,176	1,610	739	445	227	8,960
	Rand/Gold
	Forward contracts
	Amount (kg)	41,009	41,381	16,706	13,311	12,700	18,433	143,540
	R/kg	R73,955	R78,433	R83,670	R89,500	R115,704	R127,526	R88,391
	Put options purchased
	Amount (kg)	2,644						2,644
	R/kg	R71,668						R71,668
	*Delta (kg)	1,457						1,457
	Call options sold
	Amount (kg)	18,214	14,357	4,519	1,875	3,119	1,874	43,958
	R/kg	R78,116	R87,003	R93,766	R93,603	R125,774	R93,603	87,330
	*Delta (kg)	3,561	3,883	1,567	1,157	1,445	1,602	13,215

28	Risk management activities (continued)
	Table B: Summary: All open contracts in the company's gold hedge position as at 31 December 2000 (continued)
		Year 2001	2002	2003	2004	2005	2006-2010	Total
	Rand/Dollar (000)
	Forward contracts
	Amount (US$)	150,172	20,000					170,172
	ZAR per US$	R7.32	R6.48					7.22
	Put options purchased
	Amount (US$)	190,000						190,000
	ZAR per US$	R7.33						R7.33
	*Delta (US$)	41,726						41,726
	Put options sold
	Amount (US$)	90,000						90,000
	ZAR per US$	R7.25						R7.25
	*Delta (US$)	17,341						17,341
	Call options purchased
	Amount (US$)	30,470	5,450					35,920
	ZAR per US$	R7.30	R6.48					R7.17
	*Delta (US$)	20,127	5,170					25,297
	Call options sold
	Amount (US$)	264,170	33,450	8,000				305,620
	ZAR per US$	R7.82	R7.06	R6.94				R7.71
	*Delta (US$)	141,676	27,644	7,297				176,617
*	The delta position indicated above reflects the nominal amount of the option multiplied by the mathematical probability of the option being exercised. This is calculated using the Black and Scholes option formula with the ruling market prices, together with interest rates and volatilities as at 31 December 2000. The mix of hedging instruments, the volume of production hedged and the tenor of the hedging book is continually reviewed in the light of changes in operational forecasts, market conditions and the company's hedging policy. Forward sales contracts require the future delivery of gold at a specified price. A number of these contracts are spot-deferred to be used by the company for delivery against production in a future period. A put option gives the put buyer the right, but not the obligation, to sell gold to the put seller at a predetermined price on a predetermined date. A call option gives the call buyer the right, but not the obligation, to buy gold from the call seller at a predetermined price on a predetermined date. Net cash receipts received under the option hedging strategies for the year were R262 million (1999: R246 million). Interest rate and liquidity risk Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risk. In the ordinary course of business, the company receives cash from the proceeds of its gold sales and is required to fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market related returns while minimising risks. The company is able to actively source financing at competitive rates. The company has sufficient undrawn borrowing facilities available to fund any working capital requirements.
28	Risk management activities (continued)
	Investment maturity profile

			Fixed rate		Floating rate
			investment		investment
		Currency	(borrowings)	Effective	(borrowings)	Effective
	Maturity date	millions	amount	rate %	amount	rate %
	Less than one year	US$	28	6.6	3	5.1
	Credit risk Credit risk arises from the risk that a counterpart may default or not meet its obligations timeously. The company minimises credit risk by ensuring that credit risk is spread over a number of counterparts. These counterparts are financial and banking institutions of the highest quality. Where possible, management tries to ensure that netting agreements are in place. No provision for doubtful debts was made as the principal debtors continue to be in a sound financial position. The company does not generally obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of counterparts. The company believes that no concentration of credit exists. Fair value The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the company's financial instruments as at 31 December are as follows:

		2000			1999
	SA Rand	Carrying	Fair	Carrying	Fair
	Type of instrument	amount	value	amount	value
	Trade and other receivables	694	694	810	810
	Cash and cash equivalents	234	234	2,215	2,215
	- Cash and deposits on call	76	76	1,715	1,715
	- Money market instruments	158	158	500	500
	Borrowings	2,569	2,569	934	934
	Trade and other payables	1,309	1,309	1,478	1,478
	Forward sale contracts	-	666	-	976
	Option contracts	-	197	-	101
	Foreign exchange contracts	-	(83)	-	(25)
	Foreign exchange option contracts	-	(91)	-	(25)
	The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Trade and other receivables, cash and cash equivalents and trade and other payables The carrying amounts approximate fair value because of the short-term duration of these instruments. Borrowings The existing debt re-prices on a short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value. Derivative instruments The fair values of forward sales contracts and derivative instruments are estimated based on the ruling market prices, volatilities and interest rates at 31 December 2000.
29	Comparative figures
	Where appropriate, comparative figures have been restated to facilitate improved disclosure. Dividends to shareholders are now accounted for on the date of declaration as a result of the adoption of IAS10. As a result, the retained earnings have been restated as disclosed in the statement of changes in shareholders' equity.

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