• South Africa
• Namibia

South Africa

AngloGold Ashanti’s South African operations comprise seven deep-level mines and one surface operation. They are Great Noligwa, Kopanang, Tau Lekoa, Moab Khotsong and the surface operation, which make up the Vaal River region, and Mponeng, Savuka and TauTona, which make up the West Wits region. Together, these operations contributed 39% to group production in 2009.

For information on the regulatory environment and licence to operate in South Africa, refer to the section entitled Regulatory environment enabling AngloGold Ashanti to mine.

Safety

Tragically, there were 13 fatalities (2008: 11 fatalities) at the South African operations during the year in 938 accidents. The FIFR for 2009 was 0.14 per million hours worked (2008: 0.12 and 2007: 0.29), while the LTIFR was 10.40 per million hours worked (2008: 11.24 and 2007:12.72). We remain focused on eliminating all workplace injuries across the operations and are encouraged by the improvement in the LTIFR, which has fallen for the third consecutive year to the lowest level ever recorded by the group. In all, 95 full production shifts and 73 partial production shifts were lost at the South African operations due to safety related stoppages.

A number of initiatives were implemented in 2009 to help achieve the company’s aim of eliminating safety incidents. With “Safety is our First Value” as the cornerstone of this effort, the South Africa operations continued to push the “White Flag Day” initiative to signify injury-free days at each operation. The company also initiated the “It’s OK to Stop!” programme to encourage employees at all levels to call work to a halt in unsafe conditions. The “5-TEEN” process was developed to focus on analysing the activities of the crews in the worst 15% of safety performers, and providing support to effect rapid improvement. An analysis of those teams was conducted in three phases during August and December 2009 and January 2010.

In addition, a three-tier approach to investigation and recovery from fatal accidents was adopted in South Africa, starting with the mandatory on-site inspection and followed by a peer review by an independent team and a technical review which included representation from both the company’s executive and the state’s mine inspectorate. This new structure is designed to adapt and change safety processes and policies where necessary.

These initiatives were underpinned by the use of a new risk management system software application which was installed during the course of the year and is expected to be fully functional during the first quarter of 2010. The South African operations successfully passed their OHSAS 18001: 2007, First Advance Part 2 assessments, a crucial step toward both strengthening existing protocols and establishing common Health and Safety Management systems. Taken together, these programmes form part of AngloGold Ashanti’s Safety Transformation.

Safety Transformation is an ongoing programme designed to deliver on AngloGold Ashanti‘s safety values. It addresses the company’s approach to managing risk through the development of an organisational culture based on engagement and learning, facilitated by effective leadership and underpinned by enabling and sustaining systems. Rollout will begin at three global pilot sites during April 2010, following a global launch on 20 April in South Africa.

Operating performance

Gold production for South Africa totalled 55,908kg (1.797Moz) in 2009, a decline of 14% on the previous year. This decline was mainly a result of a 10% reduction in underground recovered grade and decreased volume due to:

• More rigorous policing of safety regulations by company management and state mine inspectors which caused longer and more frequent stoppages, both following accidents and as a pre-emptive safety measure.
• A seismic event in May that caused significant damage to the underground infrastructure at Savuka, requiring mining activity to be suspended while repairs were made.
• An eight-week suspension of mining at TauTona to conduct a thorough inspection and repair of all shaft steelwork following an incident in October when a length of steel dislodged from the shaft wall.
• An underground fire in March 2009, as well as complex geological structures encountered at Great Noligwa.

Total cash costs rose by 30% in South Africa to R123,401/kg ($466/oz) in 2009 from R95,144/kg ($362/oz) in 2008. The increase is as a result of a decline in production and increased costs driven largely by annual wage increases, higher power tariffs and inflation on input costs. The uranium contribution is offset against cash costs and in 2009 resulted in a reduction in cash costs of R54m ($6m).

Bi-annual South African wage negotiations were successfully concluded in the third quarter, with AngloGold Ashanti and its partners in local trade unions agreeing to an increase that had a 9.7% impact on payroll costs for the South African operations in the first year starting 1 July 2009. In the second year, the impact will be 1% above inflation, with a guaranteed minimum of 7.5%. This settlement, which AngloGold Ashanti believes is fair to all parties, was concluded after a constructive, three-month interaction.

Power tariffs levied by Eskom, the state-owned power utility, increased by 31.3% in 2009, placing additional pressure on cash costs.

Uranium is a by-product of gold mining at South Africa’s Vaal River operations. In 2009, total uranium production was 1.4 million pounds, 8% more than the previous year’s 1.3 million pounds, due to improved recoveries.

Capital expenditure for the South African operations in 2009 totalled R3,228m ($385m), 16% up on 2008. Stay-in-business expenditure accounted for 20% of total expenditure and included shaft rehabilitation at TauTona and Savuka. Ore Reserve development accounted for another 62% of the capital budget and projects the remaining 18%. The bulk of the project expenditure was on the Mponeng VCR decline R419m ($50m) and Mponeng below 120 R85m ($10m).

Growth projects

The major projects currently being undertaken in South Africa are:

• Mponeng Carbon Leader Reef project
• Moab Zaaiplaats project.

Outlook

Gold production from the South African operations is expected to be between 1.72Moz and 1.80Moz in 2010 at a cash cost of between $553/oz and $571/oz. The latter includes a $16/oz impact of royalties to be paid under the terms of the Mineral and Petroleum Resources Royalty Act, which comes into effect in March 2010 and higher power costs in 2010.

Capital expenditure of R3,008m ($391m) is planned, to be spent primarily on:

• Mponeng VCR Below 120 project R415m ($54m);
• Ore Reserve development R1,740m ($226m);
• Stay-in-business capital R761m ($99m); and
• Other projects R92m ($12m).

Community and environment

The South African operations manage community and environmental matters within integrated programmes that ensure compliance with legislation and also fulfilment of all obligations to stakeholders, including host communities and the Department of Mineral Resources (DMR).

Both the Vaal River and West Wits operations have a detailed Social and Labour Plan (SLP) and Environmental Management Plan (EMP), developed in accordance with relevant legislation. SLP reports, which detail progress made against firm targets, are submitted to the DMR annually along with EMP audits. Both plans are drawn up after interactions with both host communities and government agencies.

No significant issues were raised by either communities or government on sustainability issues during the year. The EMPs are certified to the ISO 14001 environmental management system standard.

All of the South African operations are fully compliant with the International Cyanide Management Code (Cyanide Code).

For further information see the Sustainability Review 2009 and both the West Wits and Vaal River SLP reports, which are available at www.anglogoldashanti.com.

Vaal River

The Great Noligwa, Kopanang, Moab Khotsong and Tau Lekoa mines are situated near the towns of Klerksdorp and Orkney on the border of North West Province and the Free State. The Vaal River operations have among them four gold plants, one uranium plant and one sulphuric acid plant. Combined, the Vaal River operations, which include the surface division, produced 32.025kg (1,029,000oz) of gold, which is 55% of the South African division’s production and 22% of group production.

Great Noligwa

Description

Great Noligwa adjoins Kopanang and Moab Khotsong and is located close to the town of Orkney on the Free State side of the Vaal River. The Vaal Reef, the primary reef, and the Crystalkop Reef, a secondary reef, are mined here. This mining operation consists of a twin-shaft system and operates over eight main levels at an average depth of 2,400 metres below surface.

Given the geological complexity of the orebody at Great Noligwa, a scattered mining method is employed. The mine shares a milling and treatment circuit with Moab Khotsong and Kopanang Mine, which applies conventional crushing, screening, SAG grinding and carbon-in-leach (CIL) processes to treat the ore and extract gold.

Key statistics

Safety

The mine achieved its first ever two million fatality-free shifts on 16 July 2009 while the vertical transport and SV3 sections received one million fatality-free shift awards during the year.

Safety, as measured by the LTIFR, improved significantly with 10.90 per million hours worked recorded for the year (2008: 14.66). The mine achieved the benchmarks for all safety indices in 2009. There was one fatality in 2009, caused by a fall of ground
(2008: 1).

The “White Flag Day Every Day” and “It’s OK to Stop” campaigns were the two major contributors to improved safety. Other safety initiatives include daily shaft-based communication and visibility tours by both management and union leadership. Management-initiated safety stoppages also had a positive impact on physical conditions underground and on the improved safety performance.

Great Noligwa maintained its OHSAS 18001:2007 and ISO 14001 certification in 2009.

Operating performance

Gold production fell by 52% to 4,914kg (158,000oz). The decline in output was due mainly to the transfer of the high-grade SV4 section of the mine to the Moab Khotsong upper mine from July 2008, as well as an underground fire in March and various safety-related stoppages including those requested by both the DMR and mine management.

In addition, about 33 panels were affected by the intersection of complex, unexpected geological structures, which limited mining flexibility and development. Yield declined by 22%, mainly because of the transfer of the high-grade SV4 section to Moab Khotsong and the lower grades mined due to the limited flexibility.

Unit cash costs for the year rose by 77% to R211,048/kg ($794/oz). This increase was mainly the result of lower production volumes and inflationary pressures on wages and power tariffs.

Capital expenditure of R205m ($24m) was spent mainly on Ore Reserve development and stay-in-business projects which covered upgrades to both horizontal and vertical transport, accessing old pillar areas and the upgrade of plant infrastructure.

Growth prospects

Given that Great Noligwa is a mature operation, it is in the process of converting from conventional scattered mining to pillar and/or remnant mining for the remainder of its operational life. The Vaal Reef, which has been the most economically viable reef at Great Noligwa, is being depleted and the less economical Crystalkop Reef is increasingly being exploited together with the economically viable pillars and remnants containing the Vaal Reef. Growth opportunities are therefore limited to the possible inclusion of a few Vaal and Crystalkop Reef safety haulage pillars that are not currently part of the reserve. A feasibility study is currently being conducted to determine the viability of establishing alternate routes for men, material, ore and ventilation, to replace these haulages. Should that prove to be successful, these pillars may be mined and will then be included in the 2011 Business Plan.

Outlook

Areas mined in the past 12 months exposed and encountered extremely complex geological structures, resulting in the need for additional development to re-establish access to areas for further mining. However, mining has progressed close to the boundary limits, explaining the increased dependency on pillars to sustain a reasonable level of production.

Production in 2010 is projected to be between 3,950kg (127,000oz) and 4,106kg (132,000oz). To ensure longer term viability, a rationalisation exercise was conducted resulting in lower volumes, a smaller underground footprint and reduced resources. These initiatives are expected to return the mine to profitability.

Despite lower production and the impact of inflation, total unit cash costs are expected to remain largely unchanged between $804/oz and $829/oz.

Capital expenditure of R166m ($22m) will be spent mostly on Ore Reserve development, with the remainder earmarked for stay-in-business projects.

Kopanang

Description

Kopanang adjoins Great Noligwa and is located close to the town of Orkney on the Free State side of the Vaal River. The major reef mined at Kopanang is the Vaal Reef, while the secondary Crystalkop Reef is mined on a smaller scale. Mining operations are conducted at depths ranging from 1,280m to 2,240m.

The Kopanang operation comprises a single shaft system. Given the geologically complex orebody occurring at Kopanang, a scattered mining method is used with the orebody being accessed mainly by footwall tunnelling raised on the dip of the reef and stoped on-strike. Kopanang has a gold processing plant employing both conventional semi-autogenous grinding and carbon-in-pulp (CIP) technology. There are two streams of ore into the plant, one of which is mainly Vaal Reef ore while the other is fed exclusively by Ventersdorp Contact Reef ore from Tau Lekoa.

As the ore mined at Kopanang also contains uranium as a by-product, about 40% of the Vaal Reef ore mined here is sent to the gold plant at Great Noligwa for uranium extraction.

Key statistics

Safety

There was one fatality at Kopanang in 2009, the result of a fall of ground related accident (2008: 2). The overall safety performance improved during the year with an LTIFR of 11.46 per million hours worked (2008: 12.86), and a FIFR of 0.07 per million hours worked (2008: 0.14). The mine achieved two significant safety milestones in 2009: 1.5 million fatality-free shifts in March 2009 and 750,000 fatality-free shifts in November 2009. Kopanang ended the year at 954,410 fatality-free shifts.

Mitigation strategies were implemented to improve safety performance, to ameliorate risks associated with falls of ground and to improve support standards used in development, horizontal transport and cooling of the work environment.

Kopanang won the Safety Shield; Horizontal Transport and Vertical Transport competitions.

The mine retained its OHSAS 18001:2007 certification.

Operating performance

Gold production fell to 10,481kg (336,000oz) in 2009, 7% less than the previous year. An 8% decline in volumes mined was the major contributor to the decline. Safety-related work stoppages, complex geological structures and insufficient available face length all contributed to the lower volumes.

Unit total cash costs increased to R107,580/kg ($406/oz). This was as a result of lower production as well as inflationary pressures on wages and power tariffs.

The capital expenditure totalled R486m ($58m) for the year compared to R391m ($47m) in 2008. This expenditure related mainly to Ore Reserve development and stay-in-business capital for infrastructure upgrades.

Growth prospects

Four brownfield projects have been identified which could extend the life of Kopanang: Gencor 1 East extension, Crystalkop Reef, the shaft fault area and the ground below current infrastructure on 68 Level.

Outlook

Gold production outlook for 2010 is forecast at between 11,041kg (355,000oz) and 11,539kg (371,000oz) with total cash costs estimated to be between $466/oz and $481/oz. The higher production output relates to an overall increase in yield which is expected to average 6.9g/t.

Capital expenditure of R460m ($60m) will be spent on Ore Reserve development to improve and create mining flexibility, as well as stay-in-business capital related to the Kopanang plant.

Moab Khotsong

Description

Moab Khotsong, which began commercial production in January 2006, is located south and south-east of Great Noligwa and Kopanang in the Free State province. The mine was developed principally to exploit the Vaal Reef. The first phase of this operation included development of a main shaft system, a subsidiary ventilation shaft and three main production levels between 2,600m and 3,054m below surface. The SV4 section transferred from Great Noligwa in 2008 and renamed Top Mine, was included in Moab Khotsong’s 2009 results.

Given the known geological complexity of the Vaal Reef, a scattered mining method is employed with haulages, cross cuts and raises pre-developed in a grid system.

Key statistics

Safety

The safety performance at Moab Khotsong deteriorated in 2009. Consequently, four fatalities were recorded during the year, three as a result of falls-of-ground and the other a backfill accident. The LTIFR was 14.16 per million hours worked (2008: 11.98) and the FIFR per million hours worked, 0.29 (2008: 0.08). A safety audit of the entire operation was conducted by external and internal auditors to measure compliance with stoping, and development support standards, as well as the operation of trucks, tramming and explosive controls. The results of these audits were applied to make improvements.

Encouragingly, the mine achieved 500,000 fatality free shifts in September 2009, 750,000 fatality-free shifts in November 2009 and ended the year with 907,376 fatality free shifts.

The 5-TEEN process was implemented to monitor the worst 15% of safety performers. Additional training was provided to refocus attention on the prevention of accidents and the importance of working to established safety standards. Quarterly safety presentations were also held to reinforce overall compliance with group-wide safety protocols. By year-end, all employees had received risk assessment training.

Moab Khotsong received eight Section 54 directives from the Department of Mineral Resources during the course of the year, resulting in the loss of 26 production shifts. The mine successfully completed part one of the OHSAS first advance assessment in January 2009 with the second part conducted in July 2009. The mine also successfully maintained its ISO 14001 certification after a re-assessment audit was conducted by DQS during July 2009.

Operating performance

Great Noligwa’s SV4 section was incorporated into Moab Khotsong as the Top Mine from July 2008 and combined with a ramp-up in Middle Mine production resulted in a 29% increase in production to 7,686kg (247,000oz).

The grades mined increased by 1% to 9.36g/t and volumes treated increased by 28%, due mainly to the Top Mine’s inclusion as well as ramp-up activities in the Middle Mine. Production was, however, hampered by safety and mining related stoppages and unexpected geological occurrences which affected production at the Middle Mine. The latest geological modelling indicates that more Ore Reserve development will be necessary to access the orebody.

Total unit cash costs increased by 9% to R111,662/kg ($424/oz) due to higher labour and power costs, partially offset by higher production.

Capital expenditure for the year totalled R874m ($104m), mainly spent on Ore Reserve development with the balance being stay-in-business capital and project Zaaiplaats.

Growth prospects

The feasibility study for the optimal extraction of the orebody within the lower mine area of Moab Khotsong, beneath the farm Zaaiplaats, is complete. The project extends the mine’s life and involves its deepening from 101 to 115 level. This project is estimated to access 160,000kg (5.14Moz) with an estimated capital expenditure of R8bn and is expected to go to the board for approval during 2010 and a development start date in 2011.

Outlook

Production in 2010 is projected to be between 8,398kg (270,000oz) and 8,771kg (282,000oz), at a total cash cost of between $577/oz and $595/oz. The major reason for the increased cost relates to the further build up of labour in anticipation of higher production levels, increases in power tariffs and the payment of royalties due to begin in 2010.

Capital expenditure of R864m ($112m) is planned to be spent mostly on Ore Reserve development with the remainder designated for stay-in-business expenditure and exploration drilling.

Tau Lekoa

Description

Tau Lekoa is one of four mining operations in the Vaal River area. It is close to the town of Orkney on the North West Province side of the Vaal River. Unlike the other Vaal River operations, the major reef mined at Tau Lekoa is the Ventersdorp Contact Reef. Mining operations are conducted at depths ranging from 800m to 1,743m, making this one of the shallower AngloGold Ashanti mines in South Africa.

The Tau Lekoa operation comprises a twin-shaft system. Because of its geologically complex orebody, a scattered mining method is used at Tau Lekoa with the orebody being accessed via footwall tunnelling. Stoping takes place on strike. There are currently seven shaft levels with an average of 70 panels in operation. Tau Lekoa employs hydro-power as its primary source of energy.

Ore mined at Tau Lekoa is processed and treated in preparation for gold extraction at the Kopanang gold plant.

On 17 February 2009, AngloGold Ashanti announced that it had agreed to sell, with effect from 1 January 2010, the Tau Lekoa mine, together with the adjacent Weltevreden, Jonkerskraal and Goedgenoeg project areas, to Simmer & Jack Mines Limited (Simmers). On 25 November 2009, AngloGold Ashanti announced that the closing of the sale may be delayed pending approval by the South African Department of Mineral Resources (DMR) of the transfer of the applicable mining rights, the only remaining condition to the sale. AngloGold Ashanti and Simmers have subsequently agreed to extend the deadline for the completion of the transaction from 31 March 2010 to 30 September 2010, to allow for a further possible delay in closing pending the approval of the DMR. Closing of the transaction is anticipated to occur before 30 September 2010.

Key statistics

Safety

There were two fatalities at Tau Lekoa (2008: 0), one caused by a locomotive accident and the other a seismic fall of ground. Consequently, the FIFR per million hours worked deteriorated to 0.25 while the LTIFR improved to 15.68 per million hours worked (2008: 16.57). The mine achieved a million fatality-free shifts on 3 February 2009 for the first time ever in its 24-year history.

Tau Lekoa continued with its “Pathway to Success” campaign to enhance safety performance with an emphasis on AngloGold Ashanti’s four key strategic safety areas.

Seven Section 54 directives were issued by the DMR, each lasting two days. Section 54 of South Africa’s Mine Health and Safety Amendment Act 2008 orders the closure of a shaft or mining area deemed unsafe. These stoppages related to various factors including appropriate entry examinations for miners, temporary and permanent support standards, signalling devices and geological features.

Tau Lekoa retained its OHSAS 18001 and ISO 14001 certification.

Operating performance

Gold production declined by 13% to 3,852kg (124,000oz) in 2009. This was largely attributable to grade recovery which decreased to 3.32 g/t, a consequence of mining activities being focused towards the lower grade boundary.

Total cash costs rose by 36% to R191,184/kg ($718/oz). This was mainly attributable to the lower production as well as inflationary pressures on wages and consumables.

Capital expenditure for the year totalled R142m ($17m), primarily spent on Ore Reserve development with the balance on stay-in-business projects, such as dyke access, to stabilise and support development.

Outlook

Tau Lekoa is an asset held for sale. The AngloGold Ashanti one year forecast does not include an outlook for Tau Lekoa.

Vaal River Surface

Description

The resources of AngloGold Ashanti South Africa’s surface operation include the waste rock dumps and tailings storage facilities.

Dedicated surface-source treatment plants together with spare capacity at the primary gold plants in the area are used to treat material from the waste rock dumps and tailings storage facilities. These dedicated surface plants are the Mispah Gold Plant, which treats material from the Great Noligwa waste rock dump, and the East Gold Acid & Float Plant which treats material from the sulphur pay dam.

As at 31 December 2009, surface Mineral Resource totalled 2.1Moz of gold and Ore Reserve 1.9Moz.

Key statistics

Safety

The LTIFR increased during the year from 1.18 per million hours worked in 2008 to 1.73 in 2009. OHSAS 18001 and ISO 14001 re-certifications were obtained during 2009.

A total of 307 “white flag days” was achieved during 2009. A white flag day signifies an injury-free, 24-hour period on an individual operation. Six plants achieved more that 200 consecutive white flag days. Ten plants have currently achieved more than the benchmark of 31 consecutive white flag days.

The principles of the “It’s OK to Stop” working in a workplace considered unsafe were communicated to all employees of the division during the year. Work was stopped 34 times.

Operating performance

Gold production increased by 78% to 5,092kg (164,000oz). Reduced reef deliveries from the mines, as well as the decision to operate the plant over public holidays, resulted in greater volumes of waste rock being treated.

Total cash costs decreased by 23% to R89,867/kg ($341/oz), mainly a result of the increased production. This was partially offset by inflationary pressures on labour, consumables and power.

Capital expenditure for the year at the surface operations totalled R21m ($3m), spent mostly on stay-in-business projects.

Outlook

Production at surface sources is projected to be between 4,541kg (146,000oz) and 4,852kg (156,000oz) at a total cash cost of between $524/oz and $540/oz.

Capital expenditure of R33m ($4m) is expected to be spent mainly on stay-in-business projects.

West Wits

The Mponeng, Savuka and TauTona mines are situated on the West Wits Line, near the town of Merafong (formerly Carletonville), straddling the border of Gauteng and North West Province. Mponeng has its own gold processing plant, while the Savuka and TauTona operations share a plant.

Together the West Wits operations produced 23,883kg (768,000oz) of gold, equivalent to 42% of the Southern Africa region’s production and 17% of group production.

Mponeng

Description

Mponeng is situated between the towns of Merafong and Fochville on the border between Gauteng and North West Province, southwest of Johannesburg. The mine exploits the Ventersdorp Contact Reef (VCR) at depths varying between 2,400m and 3,600m below surface, where a sequential grid mining method is employed. Access to the reef is from the main haulage and return airway development, with cross-cuts developed every 212m to the reef horizon. Raises are then developed on-reef to the level immediately above and the reef is stoped-out on strike.

The Mponeng lease area is constrained to the north by the TauTona and Savuka mines, to the east by Gold Fields Limited’s Driefontein mine and to the west by Harmony Gold Mining Company Limited’s Elandsrand mine. No mining takes place to the south.

Mponeng comprises a twin-shaft system housing two vertical shafts and two service shafts. Ore is treated and smelted at the mine’s gold plant which has a monthly capacity of 160,000t. The plant uses two semi-autogenous (SAG) mills to process the ore and the gold is extracted by means of carbon-in-pulp (CIP) technology.

Key statistics

Safety

There were three fatalities at Mponeng during the year (2008: 2), one caused by a locomotive accident, the second by a fall of ground and the third a snatch-block incident. The FIFR for the year was 0.20 per million hours worked (2008: 0.14) and the LTIFR 11.44 (2008: 11.44).

The mine embarked on a number of parallel safety initiatives in 2009, including “Goldsafe days”; team-based processes; mass open-air meetings; monthly miner, artisan, team leader and safety representative meetings; and the ongoing reinforcement of the “It’s OK to Stop” principle to all employees.

Mponeng was closed twice after the issue of Section 54 directives by the DMR. In both cases, the mine was re-opened after three days following close consultation between management and the DMR.

Occupational health and safety assessments for OHSAS 18001 certification were conducted in January and July 2009, with Mponeng retaining accreditation on both occasions.

Operating performance

Mponeng’s gold production decreased by 13% to 16,159kg (520,000oz) in 2009. A 14% decline in grade contributed to the lower output and resulted from the variability of VCR grade, changes to the mining mix and a 4% reduction in face length.

Total cash costs rose by 33% to R86,928/kg ($329/oz) as a result of lower gold production and the impact of inflation on power, labour, support and stores. In addition, Mponeng utilised excess labour from Savuka for backlog equipping, following the seismic incident during May 2009.

Total capital expenditure for the year totalled R912m ($109m) and was primarily spent on the VCR below 120 project R502m ($60m). In addition, capital of R299m ($36m) was spent on Ore Reserve development and R111m ($13m) on stay-in-business activities.

Growth projects

Carbon Leader Reef Project below 120: This project involves accessing the Carbon Leader Reef (CLR) about 900m below the VCR which is currently being mined. It will also access the VCR below the current infrastructure on levels 126 to 141.

Further work on this project is ongoing and was not presented for formal approval to the board in July 2009 as previously reported, as additional geological drilling was required to upgrade the resource.

The estimated capital expenditure for this project has increased to R17bn and production forecasts increased to around 14Moz of gold with the inclusion of the VCR area below 126 level into this project. The project is to be presented to the board for approval in November 2010 and if approved, development could begin in June 2011.

Ventersdorp Contact Reef (VCR) below 120 Project: Development is ahead of schedule and in line with the project plan. Ongoing progress on this project resulted in Mponeng becoming the deepest mine in the world in January 2009. The estimated completion date for the project is 2013 with full production planned for 2015. The project is anticipated to recover 2.87Moz of gold at a cost of R2.03bn ($250m).

Outlook

Production at Mponeng is forecast to be between 16,081kg (517,000oz) and 16,734kg (538,000oz) at a total cash cost of between $400/oz and $413/oz.

Capital expenditure in 2010 is estimated at R864m ($112m), with R440m ($57m) designated for growth, including the VCR Below 120 project, and the balance for stay-in-business and Ore Reserve development activities.

Savuka

Description

Savuka is situated on the West Wits line in the province of Gauteng, approximately 70km southwest of Johannesburg, and lies close to the town of Merafong in North West Province. This operation currently extracts both the Carbon Leader Reef (CLR) at between 3,137m and 3,457m below surface and the Ventersdorp Contact Reef (VCR) at 1,808m below surface.

The Savuka lease area is constrained to the north and northwest by DRDGOLD Limited’s Blyvooruitzicht Mine, to the east by TauTona, to the west by Harmony’s Elandsrand mine and to the south by Mponeng.

Key statistics

Safety

There was one fatality during the year as a result of seismic activity (2008: 1). The FIFR increased year-on-year to 0.40 per million hours worked (2008: 0.33), while there was an encouraging improvement in the LTIFR to 7.62 per million hours worked in 2009 (2008: 15.20).

Following the fatal accident, the mine received one Section 54 directive which was lifted three days later.

The mine continued with the implementation of the parallel safety initiatives which commenced in 2008, including “Goldsafe” days; team-based processes; mass open air meetings; and monthly miner, artisan, team leader and safety representative meetings. Savuka also participated in the successful rollout of the “It’s OK to Stop” campaign. In addition, various internal safety audits were conducted to enable management to address and mitigate the risks identified in the process.

OHSAS 18001 assessments were conducted in January and July 2009, with Savuka retaining its certification on both occasions.

Operating performance

Savuka’s operations for the year were severely hampered by a seismic event in May 2009 which resulted in production being suspended for the remainder of the year. As a consequence, gold output declined by 55% to 924kg (30,000oz) in 2009.

Total cash costs rose by 177% to R295,800/kg ($1,115/oz), due primarily to the decrease in production and repairs to damaged underground infrastructure. An insurance claim, which includes normal business interruption and material damage, has been lodged and is expected to be processed in 2010. Savuka produced 432kg (14,000oz) at a total cash cost of R143,876/kg ($452/oz) during the first quarter of 2009, the last quarter of full production before the seismic event occurred.

Capital expenditure increased by 20% to R107m ($13m), with R61m ($7m) allocated to stay-in-business expenditure, including the seismic incident-related expenses of R35m ($4m) and R46m ($6m) to Ore Reserve development.

Growth projects

Once access to the CLR horizon has been re-established in the second quarter of 2010, exploration and drilling programmes will continue to determine the extent and accessibility of the extensive resource to the west of current mining activities and to identify potential mining prospects.

Outlook

Following the seismic incident, it is anticipated that normal production will resume by May 2010. While rehabilitation work is progressing according to plan, production and costs will continue to be affected for a large part of 2010. However, whilst production is expected to start increasing from the fourth quarter of 2010, the operation is expected to return to normal throughput levels in 2011.

Production at Savuka is forecast to be between 1,058kg (34,000oz) and 1,120kg (36,000oz) at a total cash cost of between $1,190/oz and $1,227/oz in 2010. Capital expenditure of R97m ($13m) is planned for Ore Reserve development and continuing rehabilitation.

TauTona

Description

TauTona lies on the West Wits line, just south of Merafong in North West Province and about 70km southwest of Johannesburg. Mining at TauTona takes place at depths ranging from 1,850m to 3,450m. The mine has a three-shaft system and is in the process of converting from longwall mining to scattered grid mining. TauTona consists of a main shaft system supported by secondary and tertiary shafts.

TauTona shares a processing plant with Savuka, which currently has a modularised monthly capacity of 180,000t. The plant uses conventional milling to crush the ore and a CIP plant to treat the ore. Once the carbon has been removed from the ore it is transported to the gold plant at Mponeng for elution electro-winning, smelting and the final recovery of the gold.

Key statistics

Safety

One fatality occurred at TauTona during the year (2008: 4), which was the result of a shaft accident. The FIFR per million hours worked decreased to 0.10 from 0.35 in 2008, while the LTIFR per million hours worked improved to 13.04 from 13.46 in 2008.

TauTona has implemented measures such as the “5-TEEN” campaign and adopted the Mining Industry Occupational Safety and Health (MOSH) system to enhance safety performance at the mine. Operationally, the mine upgraded infrastructure and changed from longwall mining to sequential grid mining to address safety considerations.

The mine continued with the implementation of the parallel safety initiatives begun in 2008, including, among others, the ongoing rollout of the “It’s OK to Stop” principle to all employees, the “White Flag Day” drive, the “Laduma for Safety” campaign and wellness days. During October, management completed a full risk assessment of the entire shaft system and emergency escape routes to neighbouring Mponeng and Savuka mines. All escape routes were declared safe and found to be in order. Emergency escape and refuge bay procedures were updated.

TauTona has demonstrated continued improvements regarding OHSAS 18001 and maintained its certification following audits conducted in January and September 2009.

TauTona also achieved one year free of fatalities caused by falls of ground and was the winner of the AngloGold Ashanti fall-of-ground competition.

Operating performance

Production at TauTona for 2009 was affected largely by closure of the shaft due to a risk assessment of the entire shaft system and emergency escape routes in October 2009. This resulted in the cessation of production activities until January 2010 while underground infrastructure was inspected and repaired where necessary. As a consequence, gold production declined by 30% to 6,800kg (218,000oz) compared with 9,769kg (314,000oz) in 2008. In addition, the decision to stop mining the Carbon Leader Reef shaft pillar before its scheduled conclusion and the suspension of mining at two longwalls, owing to the geological nature of the area, contributed further to the decline.

Total cash costs increased to R147,668/kg ($559/oz) from R97,483/kg ($374/oz) in 2008 as a result of reduced production and inflationary pressures on wages, power and consumable costs.

Capital expenditure for the year was R479m ($57m). Of this, R336m ($40m) was spent on Ore Reserve development and R143m ($17m) on stay-in-business activities which included shaft rehabilitation expenditure.

Growth prospects

CLR Below 120 level project: The project scope has been revised and now entails the development of a single decline to 123 level to access 250,000oz of gold. If approved by the board in November 2010, development will commence in 2011, with first production in 2015. The total estimated capital expenditure for the revised project is R600m.

Outlook

Production in 2010 is projected to be between 8,460kg (272,000oz) and 8,833kg (284,000oz), with the mine expected to be back to full production by the second quarter of 2010. Total cash costs of between $627/oz and $647/oz are forecast. Capital expenditure totalling R523m ($68m) is planned for 2010 and will be spent mainly on Ore Reserve development and stay-in-business projects.