Page 1
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As filed with the Securities and Exchange Commission on March 19, 2004
United States Securities and Exchange Commission
Washington D.C. 20549
Form 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2003
Commission file number: 0-29874
AngloGold Limited
(Exact Name of Registrant as Specified in its Charter)
Republic of South Africa
(Jurisdiction of Incorporation or Organization)
11 Diagonal Street
Johannesburg, 2001
(P.O. Box 62117, Marshalltown, 2107)
South Africa
(Address of Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
American Depositary Shares
New York Stock Exchange
Ordinary Shares
New York Stock Exchange*
*
Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the
Securities and Exchange Commission
Securities registered pursuant to Section 12 (g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15 (d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period
covered by the annual report:
Ordinary Shares of 25 ZAR cents each
223,136,342
A Redeemable Preference Shares of 50 ZAR cents each
2,000,000
B Redeemable Preference Shares of 1 ZAR cent each
778,896
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes
No
Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17
Item 18
X
X
X
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2
Table of contents
Page
Presentation of information
4
Certain forward-looking statements
5
Glossary of selected mining terms
6
Part I:
Item 1:
Identity of directors, senior management and advisors
10
Item 2:
Offer statistics and expected timetable
10
Item 3:
Key information
10
3A. Selected financial data
10
3B. Capitalization and indebtedness
14
3C. Reasons for the offer and the use of proceeds
14
3D. Risk factors
15
Item 4:
Information on the company
26
4A. History and development of the company
26
4B. Business overview
33
4C. Organizational structure
95
4D. Property, plants and equipment
95
Item 5:
Operating and financial review and prospects
102
5A. Operating results
102
5B. Liquidity and capital resources
128
5C. Research and development, patents and licenses, etc
143
5D. Trend information
144
5E. Off-balance sheet items
144
5F. Tabular disclosure of contractual obligations
145
Item 6:
Directors, senior management and employees
146
6A. Directors and senior management
146
6B. Compensation
151
6C. Board practices
155
6D. Employees
159
6E. Share ownership
161
Item 7:
Major shareholders and related party transactions
165
7A. Major shareholders
166
7B. Related party transactions
167
7C. Interests of experts and counsel
167
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Item 8:
Financial information
168
8A. Consolidated financial statements and other financial information
168
Legal proceedings
168
Dividend policy
168
8B. Significant changes
168
Item 9:
The offer and listing
169
9A. Offer and listing details
169
9B. Plan of distribution
169
9C. Markets
169
9D. Selling shareholders
170
9E. Dilution
170
9F. Expenses of the issue
170
Item 10:   Additional information
171
10A. Share capital
171
10B. Memorandum and articles of association
173
10C. Material contracts
185
10D. Exchange controls
185
10E. Taxation
187
10F. Dividends and paying agents
190
10G. Statement by experts
190
10H. Documents on display
190
10I. Subsidiary information
190
Item 11:   Quantitative and qualitative disclosures about market risk
191
Item 12:   Description of securities other than equity securities
197
Part II:
Item 13:   Defaults, dividend arrearages and delinquencies
197
Item 14:   Material modifications to the rights of security holders and use of proceeds
197
Item 15:   Controls and procedures
197
Item 16:   Corporate governance
197
16A. Audit committee financial expert
197
16B. Code of ethics
197
16C. Principal accountant fees and services
198
16D. Exemptions for the listing standards for audit committees
198
16E. Purchases of equity securities by the issuer and affiliated purchasers
198
Part III:
Item 17: Financial statements
199
Item 18: Financial statements
F- pages
Item 19: Exhibits
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4
Presentation of information
AngloGold Limited
In this annual report on Form 20-F, references to AngloGold, the company and the group, are references to AngloGold Limited or, as appropriate, subsidiaries and associate companies. 

On May 16, 2003, AngloGold and Ashanti confirmed that they were in discussions regarding a proposed business combination of the two companies and on August 4, 2003, the companies announced that they had agreed on the terms of a recommended business combination (the "Business Combination"), the combined entity to be named AngloGold Ashanti Limited. For a detailed discussion of AngloGold's Business Combination with Ashanti, including a description of the contractual arrangements in connection with the Business Combination and overview of Ashanti's business, see Item "4A.: History and development of the company-Overview of the AngloGold-Ashanti Business Combination".

US GAAP financial statements
The audited consolidated financial statements contained in this annual report on Form 20-F for the years ended December 31, 2003, 2002 and 2001 and as at December 31, 2003 and 2002 have been prepared in accordance with Generally Accepted Accounting Principles in the United States (US GAAP).
IFRS financial statements
As a company incorporated in the Republic of South Africa, AngloGold also prepares annual audited consolidated financial statements and unaudited consolidated quarterly financial statements in accordance with International Financial Reporting Standards (IFRS) and South African Statements of Generally Accepted Accounting Practice (SA GAAP). These financial statements (referred to as IFRS statements) are distributed to shareholders and are submitted to the JSE Securities Exchange South Africa (JSE), as well as the London, New York and Australian stock exchanges and Paris and Brussels bourses and are submitted to the US Securities and Exchange Commission (SEC) on Form 6-K.
Currency
AngloGold presents its consolidated financial statements in United States dollars. In 2001, the group changed its presentation currency from South African rands to United States dollars because the majority of its revenues are realized in US dollars. 

The selected financial information for the year ended December 31, 2000 and for previous years under "Item 3A.: Selected financial data" have been translated from South African rands into United States dollars in accordance with the provisions of Statements of Financial Accounting Standards No. 52 "Foreign Currency Translation" (SFAS52) as issued by the Financial Accounting Standards Board of the United States (FASB). 

In this annual report, references to rands, ZAR and R are to the lawful currency of the Republic of South Africa, references to US dollars or $ are to the lawful currency of the United States and references to AUD dollars and A$ are to the lawful currency of Australia. 

See "Item 3A.: Selected financial data - Exchange rate information" for historical information regarding the noon buying rate in the City of New York for cable transfers in rands as certified for customs purposes by the Federal Reserve Bank of New York. On March 15, 2004, the noon buying rate was R6.6925 = $1.00.

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Non-GAAP financial measures
In this annual report on Form 20-F, AngloGold presents the financial items "total cash costs", "total cash costs per ounce", "total production costs" and "total production costs per ounce" which have been determined using industry standards promulgated by the Gold Institute and are not US GAAP measures. An investor should not consider these items in isolation or as alternatives to production costs, net income/(loss) applicable to common shareholders, income/(loss) before income tax provision, net cash provided by operating activities or any other measure of financial performance presented in accordance with US GAAP. While the Gold Institute has provided definitions for the calculation of total cash costs and total production costs, the calculation of total cash costs, total cash costs per ounce, total production costs and total production costs per ounce may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies. See "Glossary of selected mining terms - Total cash costs (total cash costs per ounce)" and - "Total production costs (total production costs per ounce)" and "Item 5A.: Operating results - Total cash costs and total production costs".
Shares and shareholders
In this annual report, references to ordinary shares, ordinary shareholders and shareholders/members, should be read as common stock, common stockholders and stockholders, respectively, and vice versa.
Certain forward-looking statements
This annual report includes "forward-looking information" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including without limitation, those concerning: the economic outlook for the gold mining industry; expectations regarding gold prices and production; growth prospects and outlook of AngloGold's operations, individually or in the aggregate, including the completion and commencement of commercial operations at AngloGold's exploration and production projects; AngloGold's liquidity and capital resources and expenditure; the outcome and consequences of any pending litigation proceedings; the timing, fulfillment of conditions, tax treatment and completion of the Business Combination; expectations regarding production and costs savings at AngloGold's operations, its operating and financial performance and synergies and other benefits anticipated from the Business Combination. These forward-looking statements are not based on historical facts, but rather reflect AngloGold's current expectations concerning future results and events and generally may be identified by the use of forward- looking words or phrases such as "believe", "aim", "expect", "anticipate", "intend", "foresee", "forecast", "likely", "should", "planned", "may", "estimated", "potential" or other similar words and phrases. Similarly, statements that describe AngloGold's objectives, plans or goals are or may be forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause AngloGold's actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Although AngloGold believes that the expectations reflected in these forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct.
The risk factors described in Item 3D. beginning on page 15 could affect AngloGold's future results, causing these results to differ materially from those expressed in any forward-looking statements. These factors are not necessarily all of the important factors that could cause AngloGold'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.
You should review carefully all information, including the financial statements and the notes to the financial statements, included in this annual report. The forward-looking statements included in this annual report are made only as of the date of this annual report. AngloGold undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report on Form 20-F or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to AngloGold or any person acting on its behalf are qualified by the cautionary statements in this section.
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Glossary of selected mining terms
The following explanations are not intended as technical definitions but should assist the reader in understanding terminology used in this annual report. Unless expressly stated otherwise, all explanations are applicable to both underground and surface mining operations.
Acid treatment:
Acid treatment is the process of soaking activated carbon granules in a dilute hydrochloric acid solution to dissolve calcium carbonate and other impurities that have become absorbed in the carbon and that thereby reduce the ability to adsorb gold.
Below collar:
The distance below the surface elevation of a shaft.
BIF:
Banded Ironstone Formation. A chemically formed iron-rich sedimentary rock.
By-products:
Any products that emanate from the core process of producing gold, including silver, uranium and sulphuric acid.
Calc-silicate rock:
A metamorphic rock consisting mainly of calcium-bearing silicates such as diopside and wollastonite, and formed by metamorphism of impure limestone or dolomite.
Carbon columns:
Any vertical cylindrical vessels used to contain granules of activated carbon for processes such as the extraction of gold from solution, elution or acid treatment.
Carbon-in-leach (CIL):
Gold is leached from a slurry of gold ore with cyanide in agitated tanks and adsorbed onto carbon granules in the same circuit. The carbon granules are separated from the slurry and treated in an elution circuit to remove the gold.
Carbon-in-pulp (CIP):
Gold is leached conventionally from a slurry of gold ore with cyanide in agitated tanks. The leached slurry then passes into the CIP circuit where carbon granules are mixed with the slurry and gold is adsorbed onto the carbon. The granules are separated from the slurry and treated in an elution circuit to remove the gold.
Channel width:
The total thickness of all reef bands, including internal waste mined as one unit.
Comminution:
Comminution is the breaking up of ore to make gold available for treatment.
Contained gold:
The total gold content of the orebody (tons multiplied by grade), irrespective of economic potential and without deduction for mining and processing losses prior to recovery.
Depletion:
The decrease in quantity of ore in a deposit or property resulting from extraction or production.
Development:
The process of accessing an orebody through tunnelling in underground mining operations.
Diorite:
An igneous rock formed by the solidification of molten material.
Electro-winning:
A process of recovering gold from solution by means of electrolytic chemical reaction into a form that can be smelted easily into gold bars.
Elution:
Recovery of the gold from the activated carbon into solution before zinc precipitation or electro-winning.
Grade:
The quantity of gold contained within a unit weight of gold-bearing material generally expressed in ounces per short ton of ore (oz/t), or grams per metric tonne (g/t).
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Greenschist:
A schistose metamorphic rock whose green color is due to the presence of chlorite, epidote or actinolite.
In situ deposit:
Reserves still in the ground.
Intrusive event:
The intrusion of an igneous body into older rocks.
Leaching:
Dissolution of gold from crushed or milled material, including reclaimed slime, prior to adsorption onto activated carbon.
Metallurgical plant:
A processing plant erected to treat ore and extract gold.
Mine call factor:
The ratio, expressed as a percentage, of the total quantity of recovered and unrecovered mineral product after processing with the amount estimated in the ore based on sampling.
Mineral deposit:
A mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metal. This material or deposit does not qualify as a reserve until a comprehensive evaluation, based on costs, grade, recoveries and other factors, demonstrates economic feasibility. Consequently, although the potential exists, there is no assurance that this mineral deposit will ever become an ore reserve.
Ounce:
Used in imperial statistics. A troy ounce is equal to 31.1035 grams.
Pay limit:
The grade of a unit of ore at which the revenue from the recovered mineral content of the ore is equal to the total cash cost of recovering the precious metal content. This grade is expressed as an in-situ value in grams per tonne or ounces per short ton (before dilution and mineral losses).
Precipitate:
The solid product of chemical reaction by fluids such as the zinc precipitation referred to below.
Probable (Indicated) reserves:
Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are further apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
Productivity:
An expression of labor productivity based either on the ratio of grams of gold produced to the total number of employees or area mined (in square meters) to the total number of employees in underground mining operations.
Proven (Measured) reserves:
Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geological character is so well-defined that size, shape, depth and mineral content of reserves are well established.
Pyrite flotation:
This is the addition of a suite of chemicals to a mixture of ground ore and solution in such a way that a froth rich in pyrite, which also contains gold, floats to the surface for collection.
Reclamation:
Reclaiming, monitoring or pumping of slimes using high-pressure water cannons from the dumps to the metallurgical plants for processing.
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Recovered grade:
The recovered mineral content per unit of ore treated.
Reef:
A gold-bearing sedimentary horizon, normally a conglomerate band, that may contain economic levels of gold.
Refining:
The final purification process of a metal or mineral.
Rehabilitation:
The process of reclaiming mined land to allow an appropriate post-mining use. Rehabilitation standards are determined among others by the South African Department of Minerals and Energy, the US Bureau of Land Management, the US Forest Service, and the relevant Australian mining authorities, and address ground and surface water, topsoil, final slope gradient, waste handling and re-vegetation issues.
Reserves (Ore reserves):
That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
Rod and tube mills:
These are types of circular grinding mills used to break the ore down into fine particles in preparation for dissolving out the gold by means of cyanide.
Secondary gold recovery:
Any scavenging process for gold following initial primary gold recovery.
Seismic event:
A sudden inelastic deformation within a given volume of rock that radiates detectable seismic waves (energy), which results from mining activities.
Shaft:
A vertical or subvertical excavation used for accessing an underground mine; for transporting personnel, equipment and supplies; for hoisting ore and waste; for ventilation and utilities; and/or as an auxiliary exit.
Skarn:
A rock of complex mineralogical composition, formed by contact metamorphism and metasomatism of carbonate rocks.
Sliping:
The widening of an existing excavation, either by mechanical or explosive means so as to increase its overall dimensions.
Smelting:
A pyro-metallurgical operation in which gold is further separated from impurities.
Stope:
Underground excavation where the orebody is extracted.
Stoping:
The process of excavating ore.
Stoping width:
The sum of the channel width and external waste widths.
Stripping ratio:
The ratio of waste tons to ore tons mined calculated as total tonnes mined less ore tonnes mined divided by ore tonnes mined.
Syngenetic:
Formed contemporaneously with the deposition of the sediment.
Tailings:
Finely ground rock of low residual value from which valuable minerals have been extracted.
Tailings dam (slimes dam):
Dams or dumps created from tailings.
Thermal regeneration:
The process of heating activated carbon granules typically to 750 degrees Celsius to restore the properties of carbon for the next gold extraction cycle.
Thrusting event:
A period of structural compression in geological time with the generation of low-angle thrust faults.
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Tonne:
Used in metric statistics. Equal to 1,000 kilograms.
Ton:
Used in imperial statistics. Equal to 2,000 pounds. Referred to as a short ton.
Tonnage:
Quantities where the ton or tonne is an appropriate unit of measure. Typically used to measure resources and reserves of gold-bearing material in situ or quantities of ore and waste material mined, transported or milled.
Total cash costs (total cash costs
A measure of the average cost of producing an ounce of gold, calculated by dividing
per ounce):
attributable total cash costs in a period by attributable total gold production (in ounces) over the same period. Total cash costs include site costs for all mining, processing, administration, royalties and production taxes, as well as contributions from by- products but are exclusive of depreciation, depletion and amortization, rehabilitation, employment severance costs, corporate administration costs, capital costs and exploration costs. Total cash costs per ounce amounts do not represent, and should not be considered substitutes for or measures of costs and expenses reported by AngloGold in accordance with US GAAP.
Total production costs (total
A measure of the average cost of producing an ounce of gold, calculated by dividing
production costs per ounce):
attributable total production costs in a period by attributable total gold production (in ounces) over the same period. Total production costs represent total cash costs, plus depreciation, depletion and amortization, employee severance costs and rehabilitation and other non-cash costs. Total production costs per ounce amounts do not represent, and should not be considered substitutes for or measures of costs and expenses reported by AngloGold in accordance with US GAAP.
Tribute agreement:
A legal agreement between two parties in which one party makes a portion of its mining rights available to the other party for exploitation, in consideration for a share in the revenue and costs derived from such mining rights.
Vibroseis survey (3D survey):
Geophysical technique used to generate seismic waves of controlled frequencies. These waves reflect from rock interfaces and are analyzed to produce three- dimensional images of the sub-surface geological structure with a resolution of around 25 meters. This process facilitates accurate long-term mine planning.
Waste:
Material that contains insufficient mineralization for consideration for future treatment and, as such, is discarded.
Yield:
The amount of valuable mineral or metal recovered from each unit mass of ore expressed as ounces per short ton or grams per metric tonne.
Zinc precipitation:
Zinc precipitation is the chemical reaction using zinc dust that converts gold solution to a solid form for smelting into unrefined gold bars.
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PART I
Item 1: Identity of directors, senior management and advisors
Not applicable.
Item 2: Offer statistics and expected timetable
Not applicable.
Item 3: Key information
3A.
Selected financial data
The selected financial information set forth below for the years ended December 31, 2001, 2002 and 2003 has been derived from, and should be read in conjunction with, the US GAAP financial statements included under Item 18 of this annual report. The selected financial information for the years ended December 31, 1999 and 2000 and as at December 31, 1999, 2000 and 2001 has been derived from the US GAAP financial statements not included in this annual report. 

The Minorco, Acacia, Morila, Geita and the Cerro Vanguardia acquisitions have each been accounted for as a purchase business combination under US GAAP, and the US GAAP financial statements only reflect the acquired entities and assets from the effective date of their acquisition. Accordingly, the operations and financial condition of the companies and assets acquired from Minorco are included in the US GAAP financial statements from April 1, 1999, and the financial condition of the companies and assets acquired from Acacia are reflected in the US GAAP balance sheet as at December 31, 1999 and their operations and financial condition are included in the US GAAP financial statements from 2000. The operations and financial condition of the interests in the companies and assets acquired in Geita are only reflected in the US GAAP balance sheet as at December 31, 2000 and are included for the whole year in the US GAAP financial statements for the year ended and as at December 31, 2001. The operations and financial condition of the interests in the companies and assets acquired in Morila are included in the US GAAP financial statements from October 18, 2000. In addition, the operations and financial condition of AngloGold's interests in the Deelkraal and Elandsrand mines that were sold during 2001 are reflected in the US GAAP financial statements only through January 31, 2001, the effective date of the sale. The operations and financial condition of AngloGold's interests in the Free State mines that were sold effective January 1, 2002 are reflected in the US GAAP financial statements only through December 31, 2001. The operations and financial condition of the additional 46.25 percent interest acquired in Cerro Vanguardia are included in the US GAAP financial statements from July 1, 2002. The operations and financial condition of AngloGold's interests in its wholly-owned subsidiary, Stone and Allied Industries, that were sold effective October 1, 2002 are reflected in the US GAAP financial statements only through September 30, 2002. The financial condition of AngloGold's interests in its wholly-owned Amapari Project, that were sold effective May 19, 2003 are reflected in the US GAAP financial statements only through May 18, 2003. The financial condition of AngloGold's 49 percent stake in the Gawler Craton Joint Venture that was sold effective June 6, 2003 are reflected in the US GAAP financial statements only through June 5, 2003. The operations and financial condition of AngloGold's interest in the Jerritt Canyon Joint Venture that was sold effective June 30, 2003, are reflected in the US GAAP financial statements only through June 29, 2003. Therefore such financial statements are not necessarily indicative of AngloGold's financial condition or results of operations for any future periods. For a discussion of the acquisitions mentioned above, see "Item 4A.: History and development of the company" and "Item 4B.: Business Overview - Products, operations and geographic locations".

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11
Year ended December 31,
1999
(1)(2)
2000
(1)(4)
2001
(6)
2002
(7)(8)(9)
2003
(12)
$
$
$
$
$
(in millions, except share and per share amounts)
Consolidated statement of income
Sales and other income
2,233
2,264
2,066
1,799
2,062
Product sales
(13)
2,121
2,208
2,041
1,761
2,026
Interest, dividends and other
112
56
25
38
36
Costs and expenses
2,099
2,508
2,059
1,369
1,651
Operating costs
(14)
1,574
1,604
1,391
1,029
1,348
Royalties
-
9
16
25
27
Depreciation, depletion and amortization
288
439
371
333
321
Impairment of assets
-
387
173
-
78
Goodwill amortized
11
18
27
-
-
Interest expense
69
72
72
44
49
Accretion expense
-
-
-
-
2
Loss on sale of mining assets
-
-
4
-
-
Loss/(profit) on sale of assets
-
-
-
11
(55)
Non-hedge derivative loss/(gain)
157
(21)
5
(73)
(119)
Income/(loss) before equity income and income tax
134
(244)
7
430
411
Equity income in affiliates
7
4
1
4
2
Income/(loss) before income tax provision
141
(240)
8
434
413
Deferred income and mining tax benefit/(expense)
74
(9)
(163)
(62)
(146)
Income/(loss) before minority interest
215
(249)
(155)
372
267
Minority interest
(2)
(13)
(8)
(16)
(17)
Income/(loss) before cumulative effect of accounting change
213
(262)
(163)
356
250
Cumulative effect of accounting change
-
-
(10)
-
(3)
Net income/(loss) applicable to common stockholders
213
(262)
(173)
356
247
Other financial data
Income/(loss) from continuing operations
213
(262)
(163)
356
250
Income/(loss) per common share from continuing operations 
(in $)
1.08
(1.22)
(0.76)
1.60
1.12
Basic earnings/(loss) per common share (in $)
(15) (16)
Before cumulative effect of accounting change
1.08
(1.22)
(0.76)
1.60
1.12
Cumulative effect of accounting change
-
-
(0.05)
-
(0.01)
Net income/(loss) - applicable to common stockholders
1.08
(1.22)
(0.81)
1.60
1.11
Diluted earnings/(loss) per common share (in $)
(15)(16)
Before cumulative effect of accounting change
1.08
(1.22)
(0.76)
1.60
1.12
Cumulative effect of accounting change
-
-
(0.05)
-
(0.01)
Net income/(loss) - applicable to common stockholders
1.08
(1.22)
(0.81)
1.60
1.11
Dividend per common share (cents)
(16)
143
135
84
113
133
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12
Year ended December 31,
1999
(1)(2)
2000
(1)(4)
2001
(6)
2002
(7)(8)(9)
2003
(10)(11)(12)
$
$
$
$
$
(in millions, except share and per share amounts)
Consolidated balance sheet data (as at period 
end)
(3)
(5)
Cash and cash equivalents
493
195
191
413
505
Other current assets
402
411
409
625
905
Property, plant and equipment, and acquired 
properties, net
4,831
3,851
2,599
2,917
3,491
Goodwill
213
383
333
345
410
Materials on the leach pad
27
31
47
79
7
Other long-term assets, and derivatives
128
129
209
198
261
Total assets
6,094
5,000
3,788
4,577
5,579
Current liabilities
642
845
1,210
799
1,202
Provision for environmental rehabilitation
241
181
132
140
134
Deferred income and mining tax
1,025
802
440
561
845
Other long-term liabilities, and derivatives
826
838
624
1,217
1,278
Minority interest
25
27
28
40
52
Stockholders' equity
3,335
2,307
1,354
1,820
2,068
Total liabilities and stockholders' equity
6,094
5,000
3,788
4,577
5,579
Capital stock (exclusive of long-term debt and 
redeemable preferred stock)
9
9
9
9
9
Number of common shares as adjusted to reflect 
changes in capital stock
213,229,356
214,024,174
215,268,116
222,622,022
223,136,342
Net assets
3,360
2,334
1,382
1,860
2,120
(1)
Translated into US dollars in accordance with the provisions of Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation" (SFAS52).
(2)
Includes the results of operations and financial condition of the assets acquired from Minorco with effect from April 1, 1999, the effective date of the Minorco acquisition. See "Item 4A.: History and development of the company".
(3)
Includes the financial position of Acacia as of December 31, 1999. See "Item 4A.: History and development of the company".
(4)
Includes the results of operations and financial condition of Morila as of October 18, 2000. See "Item 4A.: History and development of the company".
(5)
Includes the financial position of Geita as of December 31, 2000. See "Item 4A.: History and development of the company".
(6)
Excludes the results of operations and financial condition of the Deelkraal and Elandsrand mines sold with effect from February 1, 2001. See "Item 4A.: History and development of the company".
(7)
Excludes the results of operations and financial condition of the Free State mines sold with effect from January 1, 2002. See "Item 4A.: History and development of the company".
(8)
Includes the results of operations and financial condition of an additional 46.25 percent interest acquired in the Cerro Vanguardia mine located in Argentina from July 1, 2002. See "Item 4A.: History and development of the company".
(9)
Excludes the results of operations and financial condition of Stone and Allied Industries sold with effect from October 1, 2002. See "Item 4A.: History and development of the company".
(10)
Excludes the financial condition of the Amapari Project sold with effect from May 19, 2003. See "Item 4A.: History and development of the company".
(11)
Excludes the financial condition of the Gawler Craton Joint Venture sold with effect from June 6, 2003. See "Item 4A.: History and development of the company".
(12)
Excludes the results of operations and financial condition of the Jerritt Canyon Joint Venture sold with effect from June 30, 2003. See "Item 4A.: History and development of the company".
(13)
Product sales represents revenue from the sale of gold.
(14)
Operating costs include production costs, exploration costs, related party transactions, general and administrative, market development costs, research and development, employment severance costs and other.
(15)
The calculations of basic and diluted earnings/(loss) per common share are described in note 7 to the consolidated financial statements "earnings/(loss) per common share".
(16)
Per share information gives effect to the December 2002 two-for-one stock split and the issuance of a total of 278,196 ordinary shares under AngloGold's odd-lot offer. For further information on the stock split and the odd-lot offer, see note 29 to the consolidated financial statements "stock split".
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Annual dividends
The table below sets forth the amounts of interim, final and total dividends paid in respect of the past five years in cents per ordinary share. AngloGold's board of directors declared an interim dividend of 375 South African cents per ordinary share in respect of 2003 on July 30, 2003 with a record date of August 22, 2003 and a payment date of August 29, 2003 and a final dividend of 335 South African cents per ordinary share on January 29, 2004, with a record date of February 20, 2004 and a payment date of February 27, 2004. See "Item 10E.: Taxation - Taxation of dividends".
Interim
Final
Total
Interim
Final
Total
Year ended December 31,
(US cents per ordinary share
(1)
)
(South African cents per ordinary share)
1999
74.07
83.43
157.50
450
550
1,000
2000
51.06
39.88
90.94
375
325
700
2001
38.21
49.06
87.27
350
550
900
2002
63.81
82.12
145.93
675
675
1,350
2003
50.73
49.82
100.55
375
335
710
(1)
US dollar cents per share figures have been calculated based on exchange rates prevailing on each of the respective payment dates.
Future dividends will be dependent on AngloGold's cash flow, earnings, financial condition and other factors. AngloGold does not currently intend substantially changing its past practice of paying out dividends from funds available after providing for long-term growth. Under South African law, AngloGold may declare and pay dividends from any reserves included in total shareholders' equity calculated in accordance with SA GAAP, subject to its solvency and liquidity. As at December 31, 2003 AngloGold's total shareholders' equity as calculated under SA GAAP amounted to ZAR8,409 million ($1,261 million). Dividends are payable to shareholders registered at a record date that is after the date of declaration.  

Under the terms of AngloGold's new articles of association adopted on December 5, 2002, dividends may be declared in any currency at the discretion of the AngloGold Board or AngloGold shareholders at a general meeting. Currently, dividends are declared in South African rands and paid in Australian dollars, South African rands and United Kingdom pounds. Dividends paid to registered holders of AngloGold ADSs are paid in US dollars converted from South African rands by The Bank of New York, as depositary, in accordance with the deposit agreement. For details on exchange controls applicable to holders of ordinary shares or ADSs, see "Item 10D.: Exchange controls". 

Exchange rate information 

The following table sets forth for the periods and dates indicated certain information concerning the noon buying rate in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York expressed in rands per $1.00. On March 15, 2004, the noon buying rate between rands and US dollars was R6.6925 = $1.00. 

Year ended December 31

High
Low
Year end
Average
(1)
1999
6.27
5.68
6.16
6.13
2000
7.84
6.06
7.57
6.98
2001
13.60
7.50
12.00
8.76
2002
12.47
8.59
8.59
10.34
2003
9.05
6.26
6.70
7.42
(1)
The average of the noon buying rates on the last business day of each month during the year.
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Exchange rate information for the months of
High
Low
September 2003
7.55
6.96
October 2003
7.21
6.85
November 2003
7.00
6.40
December 2003
6.94
6.26
January 2004
7.31
6.36
February 2004
7.05
6.57
March 2004
(1)
6.92
6.66
(1)
Through March 15, 2004
Under the terms of AngloGold's memorandum and articles of association, dividends and distributions may be declared at the discretion of its board of directors or shareholders at a general meeting.
AngloGold historically has declared all dividends in South African rand and, as a result, exchange rate movements may have affected the Australian dollar, the United Kingdom pound and the US dollar value of these dividends, as well as that of any other distributions paid by the relevant depositary to investors holding AngloGold's securities, which may have reduced their value to investors. At the general meeting of AngloGold's shareholders held on December 5, 2002, AngloGold shareholders approved a special resolution adopting a new Memorandum and Articles of Association, which, among other things, allows for dividends and distributions to be declared in any currency at the discretion of the AngloGold Board or AngloGold shareholders at a general meeting. If, and to the extent that AngloGold declares dividends and distributions in US dollars, exchange rate movements will not affect the US dollar value of any dividends or distributions. Nevertheless, the Australian dollar and United Kingdom pound value of any dividend or distribution will continue to be affected and the South African rand value of any dividend or distribution will also be affected. If, and to the extent that dividends and distributions are declared in South African rand, exchange rate movements will continue to affect the Australian dollar, United Kingdom pound and US dollar value of such distributions and the Australian dollar, United Kingdom pound and US dollar market value of AngloGold's securities will continue to fluctuate with exchange rate movements.
Moreover, fluctuations in the exchange rates of the pound sterling and the US dollar may have affected and are likely to affect the US dollar price of the ADSs on the NYSE and the US dollar equivalents of the United Kingdom pound price of the ordinary shares on the London Stock Exchange (LSE).
3B.
Capitalization and indebtedness
Not applicable.
3C.
Reasons for the offer and use of proceeds
Not applicable.
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3D.
Risk factors
In this section, as well as elsewhere in this Offering Circular, references to AngloGold or AngloGold Limited are to AngloGold, or as appropriate, AngloGold and its consolidated subsidiaries and associate companies and, in respect of the period following the completion of the Business Combination (assuming the Business Combination is completed), to AngloGold Ashanti and its consolidated subsidiaries and associate companies, unless otherwise specified. 

The risk factors set forth in this document have been organized into three categories:

·
risks related to the gold mining industry generally;
·
risks related to AngloGold's operations; and
·
risks related to AngloGold's ordinary shares and ADSs.
Risks related to the gold mining industry generally
The profitability of AngloGold's operations, and the cash flows generated by these operations, are significantly affected by changes in the market price for gold. 

The market price for gold can fluctuate widely. These fluctuations are caused by numerous factors beyond AngloGold's control, including:

·
speculative positions taken by investors or traders in gold;
·
changes in the demand for gold used in jewellery, for industrial uses and for investment;
·
changes in the supply of gold from production, disinvestment, scrap and hedging;
·
financial market expectations regarding the rate of inflation;
·
the strength of the US dollar (the currency in which the gold price trades internationally) relative to other currencies;
·
changes in interest rates;
·
actual or expected gold sales by central banks;
·
gold sales by gold producers in forward transactions;
·
global or regional political or economic events; and
·
costs of gold production in major gold-producing nations, such as South Africa, the United States and Australia.
The price of gold is often subject to sharp, short-term changes resulting from speculative activities. While the overall supply of and demand for gold can affect its market price, because of the considerable size of above-ground stocks of the metal in comparison to other commodities, these factors typically do not affect the price in the same manner or degree as the supply of and demand for other commodities tend to affect their market price. 

The following table presents the annual high, low and average afternoon fixing prices over the past 10 years, expressed in US dollars, for gold per ounce, on the London Bullion Market:

Year
High
Low
Average
1994
396
370
384
1995
396
372
384
1996
415
367
388
1997
367
283
331
1998
314
273
287
1999
340
252
278
2000
317
262
279
2001
298
253
271
2002
347
278
310
2003
417
320
364
Source of Data: Metals Week, Reuters and London Bullion Market Association
On March 15, 2004 the afternoon fixing price of gold on the London Bullion Market was $398.10 per ounce.
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If revenue from gold sales falls below the cost of production for an extended period, AngloGold may experience losses and be forced to curtail or suspend some or all of its capital projects and/or operations and change its past dividend payment policies. In addition, it would have to assess the economic impact of low gold prices on its ability to recover any losses it may incur during that period and on its ability to maintain adequate cash and accounting reserves. The current price of gold is significantly in excess of AngloGold total cost of production. However, AngloGold's current average total cash costs and total production costs are well below prevailing market prices. 

For further information on this and other non-GAAP measures, see Item "5A.: Operating Results-Total cash costs and total production costs". 

Gold companies face many risks related to their operations (including their exploration and development activities) that may affect their cash flows and overall profitability. 

Uncertainty and cost of mineral exploration and acquisitions. Exploration activities are speculative and are often unproductive. These activities also often require substantial expenditure to:

·
establish Ore Reserves through drilling and metallurgical and other testing techniques;
·
determine metal content and metallurgical recovery processes to extract metal from the ore; and
·
construct, renovate or expand mining and process facilities.
Once gold mineralization is discovered it can take several years to determine whether Ore Reserves exist. During this time the economic feasibility of production may change. 

AngloGold considers from time to time the acquisition of Ore Reserves, development properties and operating mines, either as stand-alone assets or as part of companies. Its decisions to acquire these properties have historically been based on a variety of factors including historical operating results, estimates of and assumptions about future reserves, cash and other operating costs, metal prices and projected economic returns and evaluations of existing or potential liabilities associated with the property and its operations. Other than historical operating results, all of these parameters may differ significantly from its estimates and assumptions. In addition, there is intense competition for attractive properties. 

As a result of these uncertainties, the exploration programs and acquisitions engaged in by AngloGold may not result in the expansion or replacement of the current production with new Ore Reserves or operations. This could adversely affect its ongoing business and financial position. 

Development risks. AngloGold's profitability depends, in part, on the actual economic returns and the actual costs of developing mines, which may differ significantly from its current estimates. The development of its mining projects may be subject to unexpected problems and delays. 

AngloGold's decision to develop a mineral property is typically based, in the case of an extension or, in the case of a new development, on the results of a feasibility study. Feasibility studies estimate the expected or anticipated project economic returns. These estimates are based on assumptions about:

·
future gold and other metal prices;
·
anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;
·
anticipated recovery rates of gold and other metals from the ore;
·
anticipated capital expenditure and cash operating costs; and
·
the required return on investment.
Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such studies and estimates. There are a number of uncertainties inherent in the development and construction of an extension to an existing mine, or in the development and construction of any new mine. These uncertainties include, in addition to those discussed immediately above:
·
the timing and cost, which can be considerable, of the construction of mining and processing facilities;
·
the availability and cost of skilled labor, power, water and transportation facilities;
·
the availability and cost of appropriate smelting and refining arrangements;
·
the need to obtain necessary environmental and other governmental permits and the timing of those permits; and
·
the availability of funds to finance construction and development activities.
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The costs, timing and complexities of mine development and construction can increase because of the remote location of many mining properties. New mining operations could experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production could occur. Accordingly, AngloGold's future development activities may not result in the expansion or replacement of current production with new production, or one or more of these new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all. 

Ore Reserve estimation risks. AngloGold's Ore Reserves described in this document are the best estimates of AngloGold's current management as of the dates stated and are reported in accordance with the requirements of the SEC's Industry Guide 7. In Australia and South Africa, AngloGold is legally required to publicly report Ore Reserves and Mineral Resources in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves ("JORC Code") and the South African Code for Reporting of Mineral Resources and Ore Reserves ("SAMREC Code"), respectively. SEC's Industry Guide 7 does not recognize mineral resources. Accordingly, AngoGold does not report estimates of mineral resources in this annual report on Form 20-F. 

Both AngloGold and Ashanti undertake annual revisions to their respective Mineral Resource and Ore Reserve estimates based upon actual exploration and production results, depletion, new information and fluctuations in production and economic parameters. These factors may result in reductions in its Ore Reserve estimates, which could adversely impact upon the life of mine plans and consequently the total value of AngloGold's mining asset base and, as a result, have a negative impact upon the market price of AngloGold's ordinary shares and ADSs. 

Mining industry risks. Gold mining is susceptible to numerous events that may have an adverse impact on a gold mining business. These events include, but are not limited to:

·
environmental hazards, including discharge of metals, pollutants or hazardous chemicals;
·
industrial accidents;
·
underground fires;
·
labor disputes;
·
unexpected geological formations;
·
unanticipated ground and water conditions;
·
fall of ground accidents;
·
failure of mining pit slopes and tailings dam walls;
·
legal and regulatory restrictions and changes to such restrictions;
·
seismic activity; and
·
other natural phenomena, such as floods or inclement weather conditions.
The occurrence of one or more of these events may result in the death of, or personal injury to, miners, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays in production, environmental damage and potential legal liabilities. As a result, AngloGold's operations could be affected and, if such effects were material, its financial position could be adversely impacted to a significant extent.
Seismic activity is of particular concern to the gold mining industry in South Africa, in part because of the large percentage of deep-level gold mines. To understand and manage this risk, AngloGold uses sophisticated seismic and rock mechanics technologies. AngloGold has had some success with these technologies in identifying the possible location of future seismic activity and in the development of mine layouts, support layouts and technologies and mining methods to ameliorate seismic risk. Despite these programs and their success to date, seismic events have in the past and may in the future cause employee injury and death and may cause substantial damage to AngloGold's operations both within South Africa and elsewhere, which could have an adverse impact on the future results of its operations and, consequently, its financial condition. 

Gold mining operations are subject to extensive health and safety laws and regulations.

Gold mining operations are subject to a variety of mine health and safety laws and regulations depending upon the jurisdiction in which they are located. These laws and regulations are formulated to improve and to protect the safety and health of employees.
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In complying with the mine health and safety laws and regulations to which its operations are subject, AngloGold has dedicated resources in an attempt to achieve and to ensure the application of international best practice in the management of health across its operations, including medical surveillance systems. These systems and policies have resulted in improvements in its safety performance. AngloGold intends to implement such systems and policies, where required, across Ashanti's operations, since the countries in which Ashanti operates do not currently have fully developed systems of health and safety laws and regulations. 

If these laws and regulations were to change and, if as a result, material additional expenditure was required to comply with such new laws and regulations, it could adversely affect AngloGold's financial position. For a discussion of the mine health and safety laws and regulations to which AngloGold's operations are subject, see Item "4B.: Business overview-Safety and health". 

Gold mining companies are subject to extensive environmental laws and regulations. 

Gold mining companies are subject to extensive environmental laws and regulations in the various jurisdictions in which they operate. These regulations establish limits and conditions on gold producers' ability to conduct their operations. The cost of AngloGold's compliance with environmental laws and regulations has been significant in the past. 

Pursuant to environmental laws and regulations, gold mining companies are also obligated to close their operations and rehabilitate the lands that they mine in accordance with these laws and regulations. Estimates of the total ultimate closure and rehabilitation costs for gold mining operations are significant and based principally on current legal and regulatory requirements that may change materially. Environmental liabilities are accrued when they are known, probable and can be reasonably estimated. AngloGold intends to adhere to this policy following the Business Combination. AngloGold also intends to introduce its environmental controls and procedures, where required, across Ashanti's operations in order to align Ashanti's environmental controls and procedures with its own. 

Environmental laws and regulations are continually changing and are generally becoming more restrictive. Moreover, the countries in which Ashanti operates do not currently have fully developed systems of environmental regulation. If AngloGold's environmental compliance obligations were to change as a result of changes in the laws and regulations (including, following the Business Combination, as a result of changes in the laws and regulations in the countries in which Ashanti operates) or in certain assumptions it makes to estimate liabilities, or if unanticipated conditions were to arise in its operations, its expenses and provisions would increase to reflect these changes. If material, these expenses and provisions could adversely affect its results of operations and financial position. For a discussion of the estimated cost of the future environmental rehabilitation obligations with respect thereto, see note 16 to the consolidated financial statements "Provision for environmental rehabilitation". Additionally, for a discussion of the effects of the Mineral and Petroleum Resources Development Act with respect to the additional responsibilities imposed on mining companies in South Africa in respect of the environment and rehabilitation, see "Changes to mineral rights ownership regimes in South Africa, where a significant portion of AngloGold's mineral reserves and deposits are located, could have a material impact on its financial position" below. 

Risks related to AngloGold's operations 

AngloGold faces many risks related to its operations that may affect its cash flows and overall profitability. 

AngloGold's use of hedging instruments to protect against low gold prices and exchange rate movements may prevent it from realizing all potential gains resulting from subsequent gold price increases in the future. 

AngloGold currently uses hedging instruments to fix the selling price of a portion of its respective anticipated gold production and to protect revenues against unfavorable gold price and exchange rate movements. While the use of these instruments may protect against a drop in gold prices and exchange rate movements, it will only do so for a limited period of time and only to the extent that the hedge remains in place. The use of these instruments may also prevent AngloGold from realizing the positive impact on income from any subsequent favorable increase in the price of gold on the portion of production covered by the hedge and of any subsequent favorable exchange rate movements. Ashanti also uses similar hedging instruments. As at December 31, 2003, AngloGold's and Ashanti's hedge books had a net delta of 8.6 million and 5.9 million ounces, respectively. As at December 31, 2003, AngloGold's and Ashanti's hedge books had negative marked-to-market valuations of $663.7 million and $609.6 million, respectively, including in each case, AngloGold's and Ashanti's respective 50 percent interests in the $154.9 million negative marked-to-market value of the Geita hedge book. For a discussion of AngloGold's hedging instruments, see Item "11.: Quantitative and qualitative disclosures about market risk".

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If the negative marked-to-market value of the Geita hedgebook exceeds a specified level, AngloGold will not be able to receive any cash from the Geita joint venture. 

The Geita joint venture engages in hedging transactions with respect to production from the Geita mine. This hedging is carried out on a margin-free basis. However, if at any time the aggregate respective marked-to-market value of the Geita hedge book exceeds negative $165.38 million, AngloGold and Ashanti will be restricted from receiving cash from the joint venture until the marked-to-market negative value reduces below that threshold. The hedging arrangements also provide for events of default and termination that could result in early close-outs or a default of Geita's $66.25 million project finance facility. The threshold of $165.38 million will increase during the life of the Geita project finance facility as principal repayments under the facility are made and additional coverage becomes available under AngloGold's political risk insurance.

There is a risk that the Business Combination with Ashanti may not be implemented

The Business Combination of AngloGold with Ashanti is subject to a number of conditions including the approval by the requisite majority of Ashanti shareholders of the Ghanaian Scheme of Arrangement and the relevant special resolution proposed at Ashanti's extraordinary general meeting, the confirmation of the Scheme by the High Court of Ghana, the receipt of certain regulatory approvals and third party consents and the absence of any material adverse change to the business, financial condition, results of operations, assets or liabilities of Ashanti since December 31, 2002 (other than as publicly disclosed or announced by Ashanti prior to the date of the Transaction Agreement). If the conditions to the Business Combination are not satisfied or, if permissible, waived on or before May 31, 2004 or such later date as may be agreed by AngloGold or Ashanti, AngloGold and Ashanti may terminate the Transaction Agreement, in which case the Scheme of Arrangement will not become effective and the Business Combination will not be completed. AngloGold and Ashanti are not obliged to extend the period for the satisfaction or, if permissible, waiver of the conditions to the Business Combination beyond May 31, 2004. Should the Business Combination not be completed, the anticipated benefits of the Business Combination will not be realized. Consequently, at this stage there is no guarantee that the conditions to the Business Combination will be satisfied and that the Business Combination will be completed. 

If the development of the deep-level ore deposits at Obuasi mine is not economically feasible, there may be a material negative impact on AngloGold's operations and financial performance in the long-term. 

A key aspect of AngloGold's rationale for the Business Combination is the development of the deep-level ore deposits at the Obuasi mine, which ore deposits are currently referred to as Obuasi Deeps. This development could potentially extend the life of this mine to well beyond 2040. In furtherance of this goal, AngloGold plans to invest approximately $44 million over the next five years on further exploration and necessary feasibility studies. Depending upon these results, the full development of Obuasi Deeps may proceed towards the end of this five year period, but could take several years to complete. Initial scoping studies have indicated that the development of Obuasi Deeps will require an estimated capital expenditure of $570 million in real terms over the anticipated life of the mine.

In the event that, as a result of this further exploration and upon the completion of these feasibility studies, AngloGold determines that the development of Obuasi Deeps is not economically feasible, such determination may have a material negative impact on its operations and financial performance in the long-term. The funding of the development of Obuasi Deeps will only proceed, if it is determined to be economically feasible. 

In addition, if the feasibility study indicates that the development of Obuasi Deeps is economically feasible, the actual economic returns and the actual costs of development may differ significantly from the assumptions and estimates used in preliminary scoping studies completed to date, as well as in the feasibility studies completed following further exploration. This could have a negative impact on AngloGold's return on its investment in Obuasi Deeps and, as a result, AngloGold's long-term profitability following the Business Combination. 

Benefits from integration of Ashanti's operations with AngloGold's may not be achieved to the extent or within the time period that is currently anticipated, and AngloGold may encounter costs and difficulties in integrating its operations with Ashanti's operations, which would reduce or delay the realization of increased revenues, cost savings and operational benefits

Following the Business Combination, AngloGold intends to integrate its operations with those of Ashanti. Its goal in integrating these operations is to increase revenues and earnings and achieve cost savings through enhanced growth opportunities and synergies. AngloGold may encounter unanticipated costs and difficulties integrating its operations with Ashanti's operations and fail to achieve the cost savings, synergies and enhanced growth opportunities that it expects.

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AngloGold expects to incur costs, for example, in the introduction of its environmental and health and safety controls and procedures at Ashanti's mining operations to align these with its own. Other possible costs include the need to implement, integrate and harmonise various business-specific operating procedures and systems, as well as company-wide financial, accounting, information and other systems. These costs may be higher than AngloGold currently anticipates. 

In addition, the need to deal with integration issues could also divert management's attention from day-to-day business. 

Foreign exchange fluctuations could have a material impact on AngloGold's operating results and financial position

Since June 2002, the weakening of the US dollar against the South African rand, and, to a lesser extent, the Brazilian real, the Argentinean peso and the Australian dollar has negatively impacted AngloGold's profitability. Conversely, in certain prior years, the devaluation of these local currencies against the US dollar has had a significant positive effect on the profitability of its operations. Typically, revenues are derived in US dollars and production costs are largely incurred in the relevant local currency. In 2003 and 2002, AngloGold derived approximately 77 and 73 percent, respectively, of its revenues from these countries and approximately 80 and 76 percent, respectively, of production costs in these local currencies. In 2003, the weakening of the US dollar against these local currencies accounted for nearly $47 per ounce, or 69 percent of the total increase in total cash costs compared with a decrease in 2002 of $24 per ounce. In addition, production costs in South African rand, Brazilian real, Argentinean peso and Australian dollar were only modestly offset by the effect of exchange rate movements on the price of imports denominated in US dollars, as imported products comprise a small proportion of production costs in each of these countries. AngloGold's product, gold, is principally a US dollar-priced commodity, and most of its revenues are realized in US dollars. The weakening of the US dollar, without a corresponding increase in the US dollar price of gold against these local currencies results in lower revenues and higher production costs in US dollar terms. Conversely, the strengthening of the US dollar, without a corresponding decrease in the US dollar price of gold, against these local currencies yields significantly higher revenues and lower production costs in US dollar terms. If material, these exchange rate movements may have an adverse impact on AngloGold's operating results. For example, due to the strengthening of the South African rand against the US dollar, production costs at AngloGold's South African operations increased in US dollar terms during the second half of 2002 compared with the first half. This trend continued in 2003 due to the continued weakening of the US dollar relative to currencies in many of the countries in which AngloGold operates. These impacts have been partially offset in 2003 by the increase in the US dollar price of gold, which increase has been partially a function of US dollar weakness. For a discussion of trends expected for 2003, see "Item 5D.: Trend information". 

To a lesser extent, mainly as a result of its hedging instruments, a small proportion of AngloGold's revenues are denominated in South African rand and Australian dollar, which may partially offset the effect of the US dollar's strength or weakness on AngloGold's profitability. This benefit may, however, be diluted following completion of the Business Combination, as a greater proportion of Ashanti's revenues and costs are US dollar denominated. 

In addition, due to its global operations and local foreign exchange regulations, some of AngloGold's funds are held in local currencies, such as the South African rand and Australian dollar. The US dollar value of these currencies may be affected by exchange rate fluctuations. If material, exchange rate movements may affect AngloGold's overall financial position. See "Item 5B.: Liquidity and capital resources - Liquidity". 

Inflation may have a negative impact on AngloGold's results of operations

Most of AngloGold's operations are located in countries that have historically experienced high rates of inflation. AngloGold's operations have not been materially adversely affected by inflation in recent years. However, because it is unable to control the market price at which it sells the gold it produces (except to the extent that it enters into forward sales and other derivative contracts), it is possible that significantly higher future inflation in the countries in which AngloGold operates may result in a consequent increase in future operational costs in local currencies, without a concurrent devaluation of the local currency of operations against the US dollar or an increase in the US dollar price of gold, could have a material adverse effect upon its results of operations and financial condition. 

While none of AngloGold's specific operations are currently materially adversely affected by inflation, significantly higher and sustained inflation in the future, with a consequent increase in operational costs, could result in operations being discontinued or reduced or rationalised at higher cost mines. See "Item 4B.: Business overview - Products, operations and geographic locations".

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Changes to mineral rights ownership regimes in South Africa, where a significant portion of AngloGold's mineral reserves and deposits are located, could have a material impact on its financial position.
AngloGold's rights to own and exploit mineral reserves and deposits are governed by the laws and regulations of the jurisdictions in which the mineral properties are located. Currently, a significant portion of its mineral reserves and deposits are located in South Africa.
In October 2002, the President of South Africa assented to the Mineral and Petroleum Resources Development Act ("MPRDA"), which was passed by the parliament of South Africa in June 2002. It will take effect on a date to be proclaimed by the President, which is expected to be during 2004. Until then the existing regulatory regime for mineral rights will remain in place whereby the holder of mineral rights is entitled to mine on obtaining a mining authorization. AngloGold owns substantially all the mineral rights for which it holds mining authorizations.
The MPRDA vests custodianship of South Africa's mineral rights in the State, which will issue prospecting rights or mining rights to applicants in the future. The existing common law prospecting, mining and mineral rights will cease to exist, but transitional arrangements are provided in order to give holders of existing rights the opportunity to convert their current rights into new rights.
Where AngloGold holds mineral rights and mining authorizations and is conducting mining operations on the date on which the MPRDA comes into effect, it will be able, within five years from the date of effectiveness of the MPRDA to submit the old rights and authorizations for conversion to new mining rights. AngloGold will need to submit a mining work program and thereby substantiate the area and period of the new rights and also to comply with the requirements of the Charter as described below. A similar procedure applies where it holds prospecting rights and a prospecting permit and is conducting prospecting operations, but AngloGold must apply for conversion to new prospecting rights within two years from the date of effectiveness of the MPRDA for which purpose a prospecting work program must be submitted. Where it holds unused rights, however, AngloGold will have one year to apply for new prospecting rights or mining rights, the requirements in regard to which are more stringent than for conversion, requiring, for example, non-concentration of resources, fair competition, non- exclusionary effects and proof of financial and technical ability.
Even where new rights are obtained under the MPRDA, these rights will not be equivalent to the existing rights. The area covered by the new rights may be reduced by the State if it finds that the prospecting or mining work program submitted by an applicant does not substantiate the need to retain the area covered by the old rights. The duration of the new rights will no longer be perpetual but rather, in the case of new mining rights, for a maximum of 30 years with renewals of up to 30 years each and, in the case of prospecting rights, up to five years with one renewal of up to three years. The MPRDA provides for a retention period after prospecting of up to three years with one renewal of up to two years, subject to certain conditions, such as non-concentration of resources, fair competition, and non-exclusion of others. In addition, the new rights will only be transferable subject to the approval of the Minister of Minerals and Energy. Mining or prospecting must commence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must be conducted continuously and actively thereafter.
The new rights can be suspended or cancelled by the Minister of Minerals and Energy on breach or, in the case of a mining right, on non-optimal mining in accordance with the mining work program.
The new rights will be subject to a State royalty calculated on gross revenue as proposed in the draft Mineral and Petroleum Royalty Bill, 2003, which was released in March 2003 for comment and which proposes a royalty payment of three percent of gross revenue per annum, payable quarterly, in the case of gold. As proposed, royalty payments will commence upon the conversion and granting of a new mining right. AngloGold and other members of the South African mining community have submitted comments on the draft bill to the relevant authorities. These comments included recommendations for a profit based, rather than a revenue based, royalty and in order not to delay the conversion of mineral rights from old to new order mining rights, that the proposed royalty should only become payable from a fixed date being five years after the MPRDA takes effect, which date is the final date for the conversion of old order to new order mining rights under the MPRDA. In addition, a reduction in the royalty rate from that proposed in the draft Mineral and Petroleum Royalty Bill has been proposed. On February 18, 2004, in the Budget Speech for the 2004 fiscal year, the South African Minister of Finance proposed several refinements to the draft Mineral and Petroleum Royalty Bill. These include a delay in the introduction of the royalty to five years after the introduction of the MPRDA and confirmation of the South African Government's preference for a revenue based royalty. It was further indicated that the royalty regime would take cognisance of the mining sector's diverse production and profitability dynamics with differential rates to apply to marginal mining operations. The introduction of the proposed royalty, will have an adverse impact upon AngloGold's profitability, as currently no royalty is payable.
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The MPRDA calls for a Charter to be developed by the Minister of Minerals and Energy within six months of commencement of the Act, the content of which has largely been agreed with mining industry representatives (including AngloGold), and with representatives of other stakeholders. The Charter's stated objectives include the:
·
expansion of opportunities for persons disadvantaged by unfair discrimination under the previous political dispensation;
·
expansion of the skills base of such persons;
·
promotion of employment and advancement of the social and economic welfare of mining communities; and
·
promotion of beneficiation, or the crushing and separation of ore into valuable substances or waste within South Africa.
The Charter requires that each mining company achieve 15 percent ownership by historically disadvantaged South Africans of its South African mining assets within five years, and 26 percent ownership within ten years. It contemplates that this will be achieved by, among other things, disposals of assets by mining companies to historically disadvantaged persons on a willing seller - willing buyer basis at fair market value. In addition, the Charter requires mining companies to formulate plans for achieving employment equity at management level with a view to achieving 40 percent participation by historically disadvantaged persons in management and 10 percent participation by women in the mining industry, each within five years. When considering applications for the conversion of existing rights, the State will take a "scorecard" approach, evaluating the commitments of each company to the different facets of promoting the objectives of the Charter. The draft scorecard was published by the South African Government in February 2003.
AngloGold fully supports the principle that the mining industry and the wider South African economy have to find ways of dealing with the legacy of the country's history in a manner that promotes economic development and growth. AngloGold has made progress in adjusting the ownership structure of its South African mining assets and the composition of its management consistent with the Charter's spirit. It believes that it is well placed to meet the Charter's targets in accordance with the scorecard.
AngloGold has completed a number of asset sales to companies owned by historically disadvantaged persons in the past four years, which meet the requirements of the Charter and the scorecard. According to AngloGold's estimates based on operating data for the twelve months ended September 30, 2003, these transactions transfer 22.4 percent of its attributable units of production in South Africa to historically disadvantaged persons. However, AngloGold would expect the State to conduct its own assessment of these transfers when AngloGold submits its conversions or applications for acquisition of new rights to replace its existing rights. In addition, it is continuing to evaluate alternative ways in which to achieve the objectives of the Charter through, for example, forms of broad-based equity ownership by historically disadvantaged entities, groups or individuals, including employee share ownership and empowerment unit trusts.
AngloGold believes that it has made significant progress towards meeting the requirements of the Charter and the scorecard in human resource development, employment equity, mine community and rural development, housing and living conditions, procurement and beneficiation. It will also reflect these results when it lodges its conversions or applications for acquisition of new rights to replace its existing rights. Its performance under the criteria set by the Charter and the scorecard will be assessed by the State upon the occurrence of such lodgements or applications. Details of the State's methodology for calculating performance in regard to beneficiation have, however, not yet been made public. Failure on the part of AngloGold to comply with the requirements of the Charter and the scorecard could subject it to negative consequences.
AngloGold may also incur expenses in giving additional effect to the Charter and the scorecard, including costs which it may incur in facilitating the financing of initiatives towards ownership by historically disadvantaged persons as part of the industry- wide commitment to assist such persons in securing ZAR100 billion of financing during the first five years of the Charter's life. There is furthermore no guarantee that any steps AngloGold might take to comply with the Charter would ensure that it could successfully acquire new mining rights in place of its existing rights. In addition, the terms of such new rights may not be as favorable to AngloGold as the terms applicable to its existing rights. Based on present indications, however, AngloGold believes that it should be able to successfully acquire new rights on reasonable terms.
The MPRDA also imposes on mining companies additional responsibilities relating to environmental management and to environmental damage, degradation or pollution resulting from their prospecting or mining activities. AngloGold has a policy of evaluating, minimizing and addressing the environmental consequences of its activities and, consistent with this policy and the MPRDA, has undertaken a review of the environmental costs and liabilities associated with its South African operations in light of the new, as well as the existing, environmental requirements. While this examination could result in an increase in its compliance costs and accruals for environmental remediation, it is not certain at this stage whether these costs or liabilities will have a material adverse effect on its financial condition or results of operations.
For discussion of mineral rights ownership of AngloGold, see Note 27 to the consolidated financial statements "Mineral and Petroleum Resources Development Act, 2002" and "Item 4B.: Business overview - Rights to mine and title to properties".
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A majority of AngloGold's mineral reserves and deposits and mining operations are located in countries that face political and economic risks. 

The mineral deposits and mining operations of AngloGold are located mainly in African and, to a lesser extent, South American countries. Countries in these regions, to a greater or lesser extent, have experienced political instability and economic uncertainty in the past. More recently, certain of the countries in which AngloGold operates, in particular South Africa, have achieved greater political and economic stability. Nevertheless, in some of the countries where AngloGold operates, government policy may be unpredictable, and the institutions of government and market economy may be unstable and subject to rapid and unpredictable change. 

Any existing and new mining operations and projects AngloGold carries out in these countries are and will be subject to various national and local laws, policies and regulations governing the prospecting, developing and mining of mineral reserves, taxation, exchange controls, investment approvals, employee relations and other matters. If, in one or more of these countries, AngloGold could not obtain or maintain necessary permits, authorizations or agreements to implement planned projects or continue its operations under conditions or within time frames that make such plans and operations economic, or if legal or fiscal regimes or the governing political authorities change materially, its financial position could be adversely affected. 

In South Africa, on February 18, 2004, in the Budget Speech for the 2004 fiscal year, the Minister of Finance announced that due to the new regulatory system for the mining rights in terms of the MPRDA and accompanying royalty dispensation under the draft Mineral and Petroleum Royalty Bill, it has become imperative to holistically reassess the current fiscal regime as applicable to the mining and petroleum industries in South Africa, including tax, depreciation, rate differentiation for mining sectors, allowable deductions and exemptions from Secondary Tax on Companies in terms of South Africa's income tax regime. Also due for review is the gold mining tax formula, which provides income tax exemption and relief from Secondary Tax on Companies for gold mines, despite the existence of profit. The impact of these proposed reviews is unknown at this stage and any material adverse change arising therefrom could have an adverse impact upon the financial position of AngloGold. 

In certain circumstances, AngloGold is required to seek the consent of regulators and other governmental authorities before it can undertake significant transactions, such as dispositions of assets. It may not be able to obtain these consents expeditiously or at all.

Labor disruptions in South Africa and other countries could have an adverse effect on AngloGold's operating results and financial condition

As at December 31, 2003, approximately 87 percent (2002: 88 percent) of AngloGold's workforce was located in South Africa. 

Approximately 86 percent of the workforce on its South African operations is unionized, with the National Union of Mineworkers ("NUM") representing the majority of unionized workers. AngloGold's employees in some South American countries are also highly unionized. In the past, trade unions have had a significant impact on AngloGold's collective bargaining process, as well as on social and political reforms, most notably in South Africa. In 1987, the NUM embarked on a three-week strike in support of a wage demand. Since then AngloGold and the industry have not experienced any work stoppages due to wage negotiations. It has become practice to negotiate wages and conditions of employment with the unions every two years, through the Chamber of Mines of South Africa. The most recent settlement negotiation was completed in July 2003, when the parties reached an agreement covering the period from July 1, 2003 to June 30, 2005. Furthermore, AngloGold has instituted a number of processes at both mine and at company level, whereby management and unions interact regularly and address areas of difference as they arise. 

Ashanti and its mining contractors also rely to a large degree on a unionized workforce. In 1999, Ashanti experienced strikes at the Obuasi mine in Ghana, and in 2000 at the Freda-Rebecca mine in Zimbabwe, and there is a risk that strikes or other types of conflict with unions or employees may occur in the future. 

It is uncertain whether labor disruptions will be used to advocate labor, political or social causes in the future. Should any labor disruptions occur, if material, they could have an adverse effect on AngloGold's results of operations and financial condition. For a discussion of AngloGold's employees and labor relations, see "Item 6D.: Employees".

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AngloGold face certain risks in dealing with HIV/AIDS which may have an adverse effect on its operations. 

AIDS and tuberculosis (which is exacerbated in the presence of HIV/AIDS) remain the major health care challenges faced by AngloGold's South African operations. A significant portion, approximately 30 percent, of its South African workforce is believed to be infected with the HIV virus. The exact extent to which Ashanti's workforce is infected is not known. Recently, however, certain members of Ashanti's workforce at the Freda-Rebecca mine agreed to undergo voluntary testing for HIV. Of the persons who participated in this voluntary test, 20 percent tested positive for HIV. AngloGold is continuing to develop and implement various programs aimed at helping those who have been infected with HIV and preventing new infections. On November 14, 2002, AngloGold announced that it had begun implementing a monitored pilot anti-retroviral therapy program for volunteer employees in South Africa who are infected with HIV. The pilot program involved offering a triple combination drug regimen, known as a drug cocktail, to 200 Wellness Clinic patients that met the medical eligibility criteria for starting treatment. From April 2003, it commenced a roll out of the treatment to all eligible employees desiring it. 

At this stage, the drug cocktail alone costs approximately $70 per participating employee per month. It is not yet possible to develop an accurate cost estimate of the program in its entirety, given uncertainties such as drug prices and the ultimate rate of employee participation. Based on its estimates, AngloGold believes that the cost of managing and treating the impact of the HIV/AIDS epidemic would be significantly lower than the cost of ignoring it and failing to take measures to manage and treat it. 

AngloGold does not expect the cost that it will incur related to the prevention of HIV infection and the treatment of AIDS to materially and adversely affect its operations and profitability. Nevertheless, it is not possible to determine with certainty the costs that it may incur in the future in addressing this issue, and consequently, its operations and profitability could be adversely affected. For a more detailed discussion, see Item "4B.: Business overview - Safety and health - South Africa region". 

Ashanti's power supplies are unreliable and have on occasion forced Ashanti to halt or curtail activities at its mines. Power fluctuations and power cost increases may have a negative impact on AngloGold's profitability. 

Substantial portions of Ashanti's mining operations in Ghana are dependent for their electricity supply on hydro-electric power supplied by the Volta River Authority, or VRA, an entity controlled by the Government of Ghana, although Ashanti also has access to VRA electricity supply from a recently constructed smaller thermal plant. The VRA's principal electricity generating facility is the Akosombo Dam and during periods of below average inflows from the Volta reservoir, electricity supplies from the Akosombo Dam may be curtailed, as occurred in 1998. In addition, this electricity supply has been subject to voltage fluctuations, which can damage Ashanti's equipment. Other than short-term stand-by generators, which are not sufficient to allow Ashanti to continue mining operations, Ashanti has no means of obtaining alternative power in the event of a supply shortage from the VRA. The VRA also obtains power from neighbouring Cote d'Ivoire, which has recently experienced some political instability and civil unrest. These factors may cause interruptions in Ashanti's power supply or result in increases in the cost of power even if they do not interrupt supply. Ashanti's original agreement with the VRA expired in May 2003 and negotiations with the VRA have been concluded resulting in an increase of 11 percent in the applicable tariff upon renewal of that agreement. 

Ashanti's mining operations in Guinea and Tanzania and AngloGold's mining operations in Mali are dependent on power supplied by outside contractors and supplies of fuel being delivered by road. Ashanti's power supply has been disrupted in the past and Ashanti has suffered resulting production losses as a result of equipment failure. 

The occurrence of events for which AngloGold is not insured or for which its insurance is inadequate may affect its cash flows and overall profitability. 

AngloGold maintains insurance to protect only against catastrophic events which could have a significant adverse impact on its operations and profitability. This insurance is maintained in amounts that are believed to be reasonable depending upon the circumstances surrounding each identified risk. However, AngloGold's insurance does not cover all potential risks associated with its business. In addition, AngloGold may elect not to have insurance for certain risks, due to the high premiums associated with insuring those risks or for various other reasons, including an assessment that the risks are remote. Furthermore, AngloGold may not be able to obtain insurance coverage at acceptable premiums. AngloGold has a captive insurance company, namely AGRe Insurance Company Limited, which participates at various levels in certain of the insurances maintained by AngloGold. The occurrence of events for which it is not insured may adversely affect AngloGold's cash flows and overall profitability.

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If currently pending securities litigation in the United States is resolved against Ashanti, and the Business Combination is completed, AngloGold's business may be harmed if it is required to pay substantial sums in damages. 

Ashanti is currently subject to litigation, including a consolidated class action lawsuit pending in the United States alleging misstatements and non-disclosures in connection with SEC filings and other public statements made in 1999 concerning Ashanti's hedging program. The damages sought by the plaintiffs have not yet been specified, as is common practice in US litigation at the current stage of the proceedings. The outcome of this litigation may not be known for some time. These matters may adversely affect AngloGold's business and financial condition if the Business Combination is completed and Ashanti is required to pay substantial amounts in respect thereof. 

Risks related to AngloGold's ordinary shares and ADSs 

Sales of large amounts of AngloGold's ordinary shares and ADSs or the perception that these sales may occur, could adversely affect the prevailing market price of such securities. 

The market price of AngloGold's ordinary shares or ADSs could fall if large amounts of ordinary shares or ADSs are sold in the public market, or there is the perception in the marketplace that such sales could occur. Current holders of ordinary shares or ADSs may decide to sell them at any time. Ashanti shareholders who will receive ordinary shares or ADSs as a result of the Business Combination may not wish to hold such ordinary shares or ADSs following the Business Combination. Lonmin, which currently holds 27.6 percent of Ashanti's issued share capital, will receive 10,440,000 ordinary shares in the Business Combination. AngloGold has entered into a registration rights agreement with Lonmin pursuant to which Lonmin will be entitled to sell its ordinary shares in the public market immediately following the effectiveness of the Business Combination. The Government of Ghana, which currently holds 16.8 percent of Ashanti's issued share capital, will receive, in its capacity as a shareholder of Ashanti, 6,373,650 ordinary shares in the Business Combination. In addition to these ordinary shares, the Government of Ghana will also receive 2,658,000 ordinary shares upon the completion of the Business Combination under the terms of a fiscal and regulatory stability agreement between the Government and AngloGold. The ordinary shares that the Government of Ghana will receive under the stability agreement and the ordinary shares issued in the Business Combination to Lonmin and the Government of Ghana, will in the aggregate represent approximately 7.4 percent of AngloGold's total issued ordinary share capital upon the completion of the Business Combination. Sales of ordinary shares or ADSs, if substantial, or the perception that these sales may occur and be substantial, could exert downward pressure on the prevailing market prices for the ordinary shares or ADSs, causing their market prices to decline. 

Fluctuations in the exchange rate of different currencies may reduce the market value of AngloGold's securities, as well as the market value of any dividends or distributions paid by AngloGold. 

AngloGold has historically declared all dividends in South African rand. As a result, exchange rate movements may have affected and, following the completion of the Business Combination, may continue to affect, respectively, the Australian dollar, the British pound and the US dollar value of these dividends, as well as of any other distributions paid by the relevant depositary to investors that hold AngloGold's securities. This may reduce the value of these securities to investors. At the general meeting of AngloGold's shareholders held on December 5, 2002, a majority of its shareholders passed a special resolution adopting a new Memorandum and Articles of Association, which, among other things, allows for dividends and distributions to be declared in any currency at the discretion of AngloGold's Board, or its shareholders at a general meeting. If, and to the extent AngloGold declares dividends and distributions in US dollars, exchange rate movements will not affect the US dollar value of any dividends or distributions. Nevertheless, the Australian dollar and British pound value of any dividend or distribution will continue to be affected and the South African rand value of any dividend or distribution will also be affected. If and to the extent dividends and distributions are declared in South African rand, exchange rate movements will continue to affect the Australian dollar, British pound and US dollar value of these dividends and the Australian dollar, British pound and US dollar market value of AngloGold's securities will continue to fluctuate with exchange rate movements.

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Item 4: Information on the company
AngloGold, formerly Vaal Reefs Exploration and Mining Company Limited, was incorporated in South Africa in 1944.
4A. History and development of the company
The company, headquartered in Johannesburg, South Africa, has a global presence with 19 operations comprising open-pit and underground mines and surface reclamation plants in eight countries (Argentina, Australia, Brazil, Mali, Namibia, South Africa, Tanzania and the United States of America), supported by extensive yet focused exploration activities in 11 countries. 

AngloGold is listed on the following securities exchanges under the respective trading symbols: Johannesburg (ANG), New York (AU) and Australia (AGG), as well as the London Stock Exchange (ANG), Euronext Paris (VA FP) and Euronext Brussels (ANG BB).

AngloGold Limited (Registration number 1944/017354/06) was incorporated in the Republic of South Africa in 1944 under the name of Vaal Reefs Exploration and Mining Company Limited and operates under the South African Companies Act 61 of 1973, as amended. Its principal executive office is located at 11 Diagonal Street, Johannesburg, 2001 (P.O. Box 62117, Marshalltown, 2107) South Africa (Telephone +27 11 637-6000). AngloGold's US office is located at 509 Madison Avenue, Suite 1914, New York, NY 10022, USA (Tel. +1 212 750 5626)). 

AngloGold, as it conducts business today, was formed in June 1998 through the consolidation of the gold interests of Anglo American Corporation of South Africa Limited (AAC) and its associated companies into a single, focused, independent, global gold company. Vaal Reefs Exploration and Mining Company Limited (Vaal Reefs), the vehicle for the consolidation, changed its name to AngloGold Limited and increased its authorized share capital, effective March 30, 1998. AngloGold then acquired, in share-for-share exchanges in terms of South African schemes of arrangement and following shareholder approval, all of the issued share capital of the following participating companies: 

· East Rand Gold and Uranium Company Limited (Ergo); 
· Eastvaal Gold Holdings Limited (Eastvaal); 
· Southvaal Holdings Limited (Southvaal); 
· Free State Consolidated Gold Mines Limited (Freegold); 
· Elandsrand Gold Mining Company Limited (Elandsrand); 
· H.J. Joel Gold Mining Company Limited (HJ Joel); and 
· Western Deep Levels Limited (Western Deep Levels) 

(collectively the "participating companies"). A total of 51,038,968 ordinary shares were issued to AAC and 66,010,118 ordinary shares to other shareholders in exchange for their shares in these companies. 

In addition, AngloGold acquired in private transactions with AAC and minority shareholders certain share interests in gold mining companies, including: 

· approximately 17 percent of Driefontein Consolidated Limited (Driefontein); 
· 100 percent of Anmercosa Mining (West Africa) Limited (Anmin West Africa); 
· approximately 89 percent of Western Ultra Deep Levels Limited (Western Ultra Deep); 
· approximately 52 percent of Eastern Gold Holdings Limited (Eastern Gold); 
· 100 percent of Erongo Mining and Exploration Company Limited (Erongo); and 
· other sundry share interests 

(collectively the "share interests companies"). A total of 25,734,446 ordinary shares were issued to AAC and 957,920 ordinary shares to minority shareholders in exchange for their shares in these companies. 

AngloGold also acquired certain gold exploration and mining rights from AAC and other companies in exchange for which 1,623,080 ordinary shares were issued to AAC and 4,210,412 ordinary shares to other companies.

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Prior to the consolidation, Vaal Reefs was a client company of AAC under a service agreement and HJ Joel was a client company of Johannesburg Consolidated Investments Limited (JCI) under another service agreement. Under these agreements, AAC and JCI provided certain technical, administrative, secretarial and purchasing services. In connection with the above transaction, AngloGold acquired from AAC and JCI all the rights under these service agreements relating to the participating companies listed above. AngloGold now provides these services. The rights under the service agreements were acquired from AAC in exchange for 6,834,872 ordinary shares of AngloGold, and the rights under the service agreement from JCI were acquired for cash of R62.5 million.
The consolidation was approved by the required majorities of the shareholders of AngloGold and the participating companies and became effective on June 29, 1998 for accounting purposes. The participating companies and the 50 percent or more owned share interests companies became subsidiaries, and the less than 50 percent owned share interests companies became associate companies.
In December 1998, AngloGold agreed to purchase Minorco's gold interests located primarily in North and South America. This transaction became effective March 31, 1999. See "Item 4B.: Business overview - Products, operations and geographic locations - North American operations" and " - South American operations".
With effect from December 31, 1999 AngloGold acquired Acacia Resources in Australia, including all or part of new mining operations and exploration activities. See "Item 4B.: Business overview - Products, operations and geographic locations - Australian operations".
With effect from July 3, 2000, AngloGold acquired a 40 percent interest in the Morila mine located in Mali from Randgold Resources. See "Item 4B.: Business overview - Products, operations and geographic locations - East and West African operations - Morila".
With effect from December 15, 2000, AngloGold acquired a 50 percent interest in the Geita mine located in northern Tanzania from Ashanti Goldfields Limited. See "Item 4B.: Business overview - Products, operations and geographic locations - East and West African operations - Geita".
In 2000, in support of its market development initiatives, AngloGold acquired a 25 percent interest in OroAfrica, South Africa's largest manufacturer of gold jewellery and a 33 percent holding in GoldAvenue, an e-commerce business in gold, created jointly with JP Morgan and Produits Artistiques de Metaux Precieux (PAMP). As at December 31, 2003 AngloGold had increased its stake in OroAfrica to 26.6 percent.
In December 2000, agreement was reached with Harmony Gold Mining Company Limited, whereby Harmony agreed to purchase AngloGold's Elandsrand and Deelkraal mines with effect from February 1, 2001 for an amount of $109 million. All conditions precedent relative to the sale were fulfilled on April 9, 2001 on which date the agreement of sale became unconditional. See note 24 to the consolidated financial statements "Sales of shafts".
In terms of an agreement signed with African Rainbow Minerals Gold Limited (currently Harmony Gold Mining Company Limited) ("ARM") in January 1998, the No. 2 Shaft Vaal River Operations was tributed to ARM on the basis that 40 percent of all revenue, costs and capital expenditure would be attributable to ARM, with the balance to AngloGold. With effect from July 1, 2001, AngloGold announced that it had disposed of its interests in No. 2 Shaft Vaal River Operations to ARM for the sum of $1 million. See note 24 to the consolidated financial statements "Sales of shafts".
On September 5, 2001, AngloGold announced that it was to make a takeover offer for Normandy Mining Limited (Normandy), Australia's largest listed gold mining company. The offer was to be settled in AngloGold ordinary shares in the ratio of 4.30 AngloGold ordinary shares for every 100 Normandy shares. The final offer to Normandy shareholders comprised 4.30 AngloGold ordinary shares plus a cash consideration of A$30 for every 100 Normandy shares. At the close of the offer on January 18, 2002, AngloGold had received acceptances totaling 159,703,481 Normandy shares (7.16 percent of the Normandy issued share capital). Arising out of the offer, a total of 6,869,602 AngloGold ordinary shares were issued. This excludes 143,630 AngloGold ordinary shares issued under the top-up facility to Normandy shareholders. The Normandy shares acquired were sold on the market on January 21, 2002 realizing a total of $158 million. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
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On April 11, 2002 AngloGold announced that the final condition precedent for the sale of its Free State assets to African Rainbow Minerals Gold Limited (currently Harmony Gold Mining Company Limited) and Harmony Gold Mining Company Limited, through a jointly-owned company ("Free Gold"), had been fulfilled for a net consideration of $229 million including tax payable by AngloGold and net of contractual obligations pursuant to the sale. The sale was effective from January 1, 2002. See note 24 to the consolidated financial statements "Sales of shafts".
During July 2002 AngloGold acquired an additional 46.25 percent of the equity, as well as the total loan assignment, of Cerro Vanguardia SA, a company conducting gold mining operations in Argentina, from Perez Companc International SA, for a net consideration of $97 million, thereby increasing its interest in Cerro Vanguardia to 92.5 percent. For a detailed discussion see note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
AngloGold disposed of its wholly-owned subsidiary, Stone and Allied Industries (O.F.S.) Limited, a stone crushing company, to a joint venture of that company's existing management and a group of black entrepreneurs, with effect from October 1, 2002, for a consideration of R5 million, comprising R1.4 million in respect of the equity interest and R3.6 million, a loan claim. In respect of the equity interest, R450,000 in cash and the outstanding balance of R950,000 together with the loan of R3.6 million is payable in five equal annual installments, together with interest, commencing October 1, 2003. The agreement of sale provides for a 10 percent interest in Stone and Allied Industries (O.F.S.) Limited to be held by Masakhisane Investment Limited, a wholly-owned subsidiary established by AngloGold in terms of its Small and Medium Enterprises Development Initiative, which company will render technical and administrative assistance to the purchasers until the total amount of the consideration has been settled. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
On April 8, 2003 AngloGold announced that it had reached agreement with Helix Resources Limited for the sale of its interest in the Gawler Craton and Tarcoola Joint Ventures in South Australia. As announced on June 6, 2003 the sale of AngloGold's 49 percent stake in the Gawler Craton Joint Venture, including the Tunkillia project was finalized, for a consideration comprising cash of $500,000 (A$750,000), 1.25 million fully-paid Helix shares issued at A$0.20 per share and 1.25 million Helix options exercisable at A$0.25 per option before November 30, 2003, with an additional payment of $335,000 (A$500,000) deferred to the delineation of 350,000 ounces. Helix's proposed acquisition of AngloGold's rights to the Tarcoola Project, 60 kilometers to the south, was excluded from the final agreement. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
On May 23, 2003 AngloGold announced that it had signed an agreement to sell its wholly-owned Amapari Project to Mineracao Pedra Breanca do Amapari, for the total consideration of $18.2 million. The effective date of the transaction was May 19, 2003. The Amapari project is located in the State of Amapa, North Brazil. Since acquiring the property from Minorco, AngloGold has sought to improve up additional reserve ounces in order to get it to a size and life that would justify the management resources needed to run it effectively. This was not achieved and AngloGold, on receiving an offer from a purchaser who could constructively turn this orebody to account, agreed to sell. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
On July 2, 2003, AngloGold announced that it had concluded the sale of its interest in the Jerritt Canyon Joint Venture to Queenstake Resources USA Inc., effective June 30, 2003. This follows negotiations originally announced on February 27, 2003. Queenstake paid the Jerritt Canyon Joint Venture partners, AngloGold and Meridian Gold, $1.5 million in cash and 32 million shares issued by a subsidiary, Queenstake Resources Limited, with $6 million in deferred payments and $4 million in future royalties. Queenstake accepted full closure and reclamation liabilities. The shares acquired by AngloGold in this transaction, were sold in November 2003. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
On July 8, 2003 AngloGold disposed of its entire investment of 8,348,600 shares held in East African Gold Mines Limited and in the second half of 2003 AngloGold disposed of 952,481 shares in Randgold Resources Limited. See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
On September 18, 2003 AngloGold and Gold Fields Limited jointly announced that agreement had been reached on the sale by Gold Fields of a portion of the Driefontein mining area to AngloGold for a cash consideration of R315 million ($48 million). See note 2 to the consolidated financial statements "Acquisitions and disposals of businesses and assets".
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On November 14, 2003 AngloGold announced that it had entered into an agreement with Greater Pacific Gold Limited, for the sale of its Union Reefs Gold Mine at Pine Creek, which closed in October 2003, together with the associated assets and tenements. The agreed staged purchase consideration for these assets is A$6 million ($5 million). The effective date of the sale has not yet been finalized. See note 30 to the consolidated financial statements "Subsequent events".
On November 24, 2003 AngloGold announced the terms and conditions for the sale of the Western Tanami Project to Tanami Gold NL for a staged payment of A$9 million ($6 million), the receipt of 25 million Tanami Gold NL shares and the payment of a royalty, based on production. The sales agreement was concluded on January 20, 2004. See note 30 to the consolidated financial statements "Subsequent events".
Overview of the AngloGold-Ashanti Business Combination
On May 16, 2003, AngloGold and Ashanti confirmed that they were in discussions regarding a proposed Business Combination of the two companies and on August 4, 2003 the companies announced that they had agreed the terms of a recommended Business Combination at an exchange ratio of 0.26 ordinary shares for every Ashanti share. On the same date, AngloGold entered into the Lonmin Support Deed, pursuant to which Lonmin, which currently holds 27.6 percent of Ashanti's issued share capital, agreed, among other things, to vote its Ashanti shares in favor of the Business Combination. After further discussions with AngloGold and detailed, careful consideration of a competitive proposal, and following the increase by AngloGold in the offer consideration from 0.26 to 0.29 ordinary shares, the Ashanti Board announced on October 14, 2003 that it was recommending the improved final offer from AngloGold.
On October 28, 2003, the Government of Ghana, which currently holds 16.8 percent of Ashanti's issued share capital, announced its support for the AngloGold offer, as well as the principal terms of a stability undertaking which the Government of Ghana intended to enter into with AngloGold. On December 12, 2003, AngloGold and the Government of Ghana entered into the Government Support Deed, pursuant to which the Government of Ghana agreed, among other things, to vote its Ashanti shares in favor of the Business Combination. Following the approval by the Parliament of Ghana of the terms of the Stability Agreement on February 18, 2004, AngloGold and the Government of Ghana executed the Stability Agreement.
The Business Combination is to be effected by means of a scheme of arrangement under Ghanaian law which requires the approval of not less than three-fourths of the votes cast by Ashanti shareholders present and entitled to vote either in person or by proxy, and the confirmation of the High Court of Ghana. The extraordinary meeting of Ashanti's shareholders required to approve the scheme of arrangement is set to take place on April 7, 2004. Under the terms of the Business Combination, holders of Ashanti securities will receive for every Ashanti share or Ashanti GDS, 0.29 ordinary shares or 0.29 ADSs of AngloGold.
Following the Business Combination, Ashanti will become a private company and a wholly-owned subsidiary of AngloGold. AngloGold has agreed to convene a general meeting of its shareholders to consider a special resolution to change its name to AngloGold Ashanti Limited as of completion of the Business Combination. This special resolution will need to be passed at a general meeting of AngloGold at which shareholders representing no less than one-fourth of the total votes of all of the shareholders entitled to vote thereat are present in person or by proxy, and the resolution will need to be approved, on a show of hands, by no less than three-fourths of AngloGold's shareholders present in person or by proxy or, where a poll has been demanded, by no less than three-fourths of the total votes that shareholders present in person or by proxy are entitled to cast. The board of directors of AngloGold has recommended that its shareholders vote in favor of this special resolution. AngloGold has received an undertaking from its largest shareholder, AA plc, which currently holds approximately 56 percent of AngloGold's issued share capital, to vote its shares in favor of this special resolution.
The Business Combination is subject to a number of conditions including the approval by the requisite majority of Ashanti shareholders of the Ghanaian Scheme of Arrangement and the relevant special resolution proposed at its extraordinary general meeting, the confirmation of the Scheme by the High Court of Ghana, the receipt of certain regulatory approvals and third party consents and the absence of any material adverse change to the business, financial condition, results of operations, assets or liabilities of Ashanti since December 31, 2002 (other than as publicly disclosed or announced by Ashanti prior to the date of the Transaction Agreement). If the conditions to the Business Combination are not satisfied or (if permissible) waived on or before May 31, 2004 or such later date as may be agreed by AngloGold or Ashanti, AngloGold and Ashanti may terminate the Transaction Agreement, in which case the Ghanaian Scheme of Arrangement will not become effective and the Business Combination will not be completed.
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AngloGold and Ashanti are not obliged to extend the period for the satisfaction or (if permissible) waiver of the conditions to the Business Combination beyond May 31, 2004. At this stage there is no guarantee that the conditions to the Business Combination will be satisfied and that the Business Combination will be completed.
Following the completion of the Business Combination, AngloGold will continue to be a growth focused, leading global gold producer. It will have one of the largest gold Ore Reserves bases in the industry, a significant and well diversified production base and the financial and technical resources to maximise organic growth from the existing asset base as well as to capitalize on further acquisition opportunities.
AngloGold expects that following completion of the Business Combination, a dedicated project team will undertake a feasibility study regarding Obuasi Deeps with anticipated expenditure for exploration and feasibility studies of $44 million over the next five years. Including this amount, the total capital expenditure for Obuasi Deeps is estimated to be $570 million in real terms over the expected life of mine. For the Existing Obuasi Mine, AngloGold intends to invest $110 million in real terms over the next five years on underground equipment, infrastructure and environmental and planning systems. This amount will be in addition to capital expenditure already planned by Ashanti and is in addition to the $44 million to be spent upon exploration of Obuasi Deeps, as referred to above. Under the Stability Agreement, AngloGold proposes to spend $220 million on the Existing Obuasi Mine over the next five years, which amount includes the $110 million referred to immediately above. AngloGold management anticipates that these initiatives will improve underground working conditions and mine planning, thereby increasing efficiencies with the objective of reducing anticipated cash operating costs at Obuasi by an estimated $20 per ounce in real terms over the next five years.
Following completion of the Business Combination, AngloGold intends to accelerate its exploration programs, particularly at Obuasi and at Siguiri. AngloGold also expects that its stronger balance sheet, combined with its proved capital raising capability, will support the funding of the above development projects at Obuasi and, in 2004, the CIP installation at Siguiri.
With respect to Ore Reserves, upon completion of the Business Combination AngloGold will have 83.8 million ounces of attributable Proven and Probable Ore Reserves based on AngloGold's and Ashanti's Proven and Probable Ore Reserves as at December 31, 2003 (which Ore Reserves were already adjusted for the sale by AngloGold of Amapari, the Western Tanami assets and its 70 percent interest in the Jerritt Canyon Joint Venture during 2003, as well as the closure in 2003 of Union Reefs). This represents approximately a 33 percent pro forma increase in AngloGold's Proven and Probable Ore Reserves as at December 31, 2003.
In terms of production, AngloGold expects the Business Combination to reinforce its position as one of the world's largest gold producers with a combined gold production of 6.9 million ounces. Based upon AngloGold's and Ashanti's individual attributable production for 2003 (adjusted for the sale during 2003 by AngloGold of its 70 percent interest in the Jerritt Canyon Joint Venture as well as the closure of Union Reefs in 2003). This represents a 28 percent increase in AngloGold's attributable production level for the year ended December 31, 2003, similarly adjusted for the sale of Jerritt Canyon and the closure of Union Reefs.
Following completion of the Business Combination, AngloGold will have a portfolio of long-life, low-cost assets and different orebody types in key gold producing regions. Six operations in five countries will have combined Proven and Probable Ore Reserves of 41.2 million ounces with current life of mine plans of 15 years or longer. Finally, AngloGold's asset portfolio will be well diversified, comprising a balance of open-pit and underground production from a total of 24 operations (following the sale during 2003 by AngloGold of its interests in the Jerritt Canyon Joint Venture, as well as the closure in 2003 of Union Reefs) distributed across 11 countries in the principal gold producing regions of the world.
Description of Agreements related to the Business Combination
Transaction Agreement. The Transaction Agreement sets out the terms and conditions subject to which the Business Combination is to be effected and contains customary undertakings, representations, covenants, conditions and termination provisions.
Shareholder Support Deeds. AngloGold has entered into the support deeds with Lonmin and the Government of Ghana, respectively, the two major shareholders of Ashanti who together own 44.4 percent of Ashanti's issued ordinary share capital, pursuant to which Lonmin and the Government of Ghana have, among other things, agreed to vote their Ashanti Shares in favor of the Business Combination.
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In connection with the Business Combination, AngloGold has, pursuant to a registration rights agreement, granted registration rights to Lonmin in order to allow Lonmin to sell publicly in the United States the new AngloGold ordinary shares that it receives in the Business Combination in an orderly manner following the completion of the Business Combination. Without these registration rights, the sale of new AngloGold ordinary shares by Lonmin in the United States would be subject to certain resale restrictions.
Stability Agreement. AngloGold and the Government of Ghana have also agreed the terms of a stability agreement (the "Stability Agreement") to govern certain aspects of the fiscal and regulatory framework under which AngloGold will operate in Ghana upon the implementation of the Business Combination. The Stability Agreement was executed by AngloGold and the Government of Ghana, following the approval of its terms by the Parliament of Ghana on February 18, 2004.
Under the Stability Agreement, the Government of Ghana has agreed to:
·
extend the term of the mining lease relating to the Obuasi mine until 2054 on its existing terms;
·
maintain for a period of 15 years the royalties payable by Ashanti with respect to its mining operations in Ghana at a rate of 3 percent per annum of the total revenue from minerals obtained by Ashanti from such mining operations;
·
maintain the corporate tax rate for Ashanti and to fix it for each of its subsidiaries in Ghana at a rate of 30 percent for a period of 15 years;
·
confirm that the rights of the Government of Ghana with respect to the Golden Share apply solely to Ashanti's assets and operations in Ghana; and
·
authorize Ashanti and any or all of its subsidiaries in Ghana to retain up to 80 percent of their exportation proceeds in foreign currencies offshore, or if such foreign currency is held in Ghana to guarantee the availability of such foreign currency.
The Government of Ghana has also agreed that Ashanti's Ghanaian operations will not be adversely affected by any new enactments or orders or by changes to the level of payments of any customs or other duties relating to mining operations, taxes, fees and other fiscal imports or laws relating to exchange control, transfer of capital and dividend remittance for a period of 15 years after the completion of the Business Combination.
In consideration of these agreements and undertakings, AngloGold has agreed to issue to the Government of Ghana 2,658,000 new AngloGold ordinary shares and to pay to the Government of Ghana $5 million in cash, promptly after the implementation of the Business Combination. AngloGold has also agreed to pay to the Government of Ghana, on the date of the completion of the Business Combination, an additional $5 million in cash towards the transaction costs incurred by the Government of Ghana in its role as regulator of Ashanti and has committed to certain undertakings in relation to Ashanti. AngloGold's obligations to issue to the Government of Ghana 2,658,000 new AngloGold ordinary shares and to make the above payments are conditional upon the Ghanaian Scheme of Arrangement being approved by Ashanti's shareholders meeting and confirmed by the High Court of Ghana.
In consideration of the agreements and undertakings contained in the Stability Agreement, AngloGold will also commit to the recapitalization of the Existing Obuasi Mine as well as to undertake further exploration with regard to Obuasi Deeps. AngloGold proposes to spend $220 million on the Existing Obuasi Mine over the five year period commencing January 1, 2004. This amount of $220 million includes an amount of $110 million in real terms which AngloGold intends to spend over the next five years on underground equipment, infrastructure and environmental and planning systems for the Existing Obuasi Mine as referred to below. With regard to Obuasi Deeps, by December 31, 2008, AngloGold will conclude the required exploration program and feasibility studies at an estimated cost of $44 million. AngloGold will also, for a period of two years, not implement any new retrenchment program in Ghana (excluding individual dismissals made from time to time) and continue to apply Ashanti's existing and approved retrenchment programs; establish and/or maintain a community trust in Ghana to which AngloGold will contribute a total amount of 1 percent of its profits generated in Ghana; and implement programs pertaining to training, malaria control and improvement of health, safety and working conditions.
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Overview of Ashanti
Ashanti is engaged in the mining and processing of gold ores and the exploration and development of gold properties in Africa and in hedging activities in connection with its gold production. Ashanti has interests in major gold mines in Ghana, Guinea, Tanzania and Zimbabwe. In 2003, Ashanti's attributable gold production was 1.53 million ounces. Ashanti reported as of December 31, 2003 Proven and Probable Ore Reserves of approximately 20.7 million ounces on an attributable basis. Ashanti reports its Ore Reserves based on a number of assumptions including a gold price of $350 per ounce.
The gold mining operations of Ashanti are located at Obuasi, Bibiani and Iduapriem in Ghana, Siguiri in Guinea, Geita in Tanzania and Freda-Rebecca in Zimbabwe.
Obuasi. Ashanti's oldest mine and largest Ore Reserve is located at Obuasi in the Ashanti region of Ghana. Ashanti has a 100% interest in the Obuasi mine. Gold mining has been conducted at this site for over 100 years and during that period, records show that Obuasi has to date produced approximately 28 million ounces of gold. Most production at Obuasi is from its underground mine, but there is also production from open-pit and tailings retreatment operations. The Obuasi mine site has separate sulphide, oxide and tailings treatment plants. Obuasi produced 513,163 ounces of gold, principally from underground operations, in the year ended December 31, 2003, compared to 537,219 ounces for the year ended December 31, 2002.
Bibiani. The Bibiani open-pit mine is located in the Western Region of Ghana, 90 kilometers west of Kumasi. Ashanti acquired Bibiani in 1996 when it acquired International Gold Resources Corporation ("IGR"), a Canadian-listed company, and Ghana Libyan Arab Mining Company Limited ("GLAMCO"). Ashanti has a 100% interest in the Bibiani mine. Gold production for the year ended December 31, 2003 was 212,716 ounces compared to 242,432 ounces for the year ended December 31, 2002. The main open-pit operations are scheduled to be completed in 2004, once the remaining open-pit ore reserve is completely mined out. Development of a decline ramp system for the exploration and possible development of an underground mining operation at Bibiani has commenced.
Iduapriem/Teberebie (attributable 80/90%). The Iduapriem open-pit mine, which is owned by Ghanaian Australian Goldfields Limited ("GAG"), is located in the Western Region of Ghana some 70 kilometers north of the coastal city of Takoradi, and 10 kilometers south west of Tarkwa. Ashanti acquired an 80% interest in the Iduapriem mine in 1996 when it acquired GAG's holding company. In June 2000, Ashanti acquired the entire issued share capital of Pioneer Goldfields Limited, which owns 90% of Teberebie Goldfields Limited (being the company which owns the mining lease to the Teberebie open-pit mine located adjacent to Iduapriem). The acquisition of the Teberebie reserves should extend the Iduapriem mine's life to approximately 2012. Ore is treated at these mines by heap leach or CIL methods. In the year ended December 31, 2003, Iduapriem/Teberebie produced 243,533 ounces of gold compared to 185,199 ounces of gold for the year ended December 31, 2002. The higher gold production was due to the increased mill throughput resulting from the upgrade of the processing plant during 2003. Installation of an additional ball mill and a new crusher is anticipated to commence during 2004, which will further increase mill capacity.
Ayanfuri. Ashanti acquired the Ayanfuri mine, located in the Central Region of Ghana, in 1996. Ayanfuri had exhausted substantially all of its gold reserves by December 31, 2000. Ashanti is currently implementing a mine closure plan under Obuasi mine management control.
Siguiri (attributable 85%). The Siguiri open-pit gold mine is located in the Siguiri District in the northeast of the Republic of Guinea, West Africa, approximately 850 kilometers from the capital city of Conakry. The nearest important town is Siguiri (approximately 50,000 inhabitants), located on the banks of the Niger River. Ashanti owns 85% of the Siguiri gold mine and the Government of Guinea owns the remaining 15%. Ashanti acquired its interest in Siguiri in 1996. The mine commenced operations in the first quarter of 1998. Production for the year ended December 31, 2003 was 252,795 ounces of gold compared to 269,292 ounces of gold for the year ended December 31, 2002. Between 2000 and 2002, production and cash operating costs were impacted by lower than expected metallurgical recovery from the material stacked during that time as well as by higher haulage and rehandling unit costs as a result of a decision to mine higher grade than planned material further from the mine. Construction of the CIP expansion project, which was suspended during 2003 due to irreconcilable differences with the engineering and construction contractor, was recommenced in the fourth quarter of 2003, following the appointment of a new contractor and the approval of the Ashanti Board in October 2003. This project, at a capital cost currently estimated to be approximately $75 to $80 million, is anticipated to be commissioned in the fourth quarter of 2004 to the first quarter of 2005.
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Geita (attributable 50% prior to the combination, 100% following implementation of the combination). The Geita open-pit mine is situated in north-western Tanzania approximately 90 kilometers from the regional capital of Mwanza and 20 kilometers south of Lake Victoria in an area known as the Lake Victoria Goldfields. The operation is currently owned and operated by Ashanti and AngloGold in a joint venture following AngloGold's purchase of a 50% interest in December 2000. The mine was commissioned in June 2000 and produced a total of 176,836 ounces of gold during the year 2000. In 2003, the Geita mine produced a total of 661,045 ounces of gold compared to 579,043 ounces for the year ended December 31, 2002. Upon and following the implementation of the Business Combination, Geita will be wholly-owned by AngloGold. The Geita mine comprises a crusher, SAG and ball mill grinding circuit, a gravity circuit and a 14-tonne stripping plant.
Freda-Rebecca. Ashanti acquired the Freda-Rebecca mine in 1996. The mine is located at Bindura in Zimbabwe. Ashanti now conducts underground mining operations at Freda-Rebecca as the open-pits were mined out in 1998. The life of mine plan currently projects mining until approximately 2007 at current production rates. In 2003, Freda-Rebecca produced 51,091 ounces of gold compared to 98,255 ounces in 2002.
4B.
Business overview
Gold market
The gold market is relatively liquid compared with many other commodity markets, with the price of gold generally quoted in US dollars. Physical demand for gold is primarily for fabrication purposes, and gold is traded on a world-wide basis. Fabricated gold has a variety of uses, including jewellery (which accounts for almost 80 percent of fabricated demand), electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial institutions and private individuals buy, sell and hold gold bullion as an investment and as a store of value.
The use of gold as a store of value (the tendency of gold to retain its value in relative terms against basic goods and in times of inflation and monetary crisis) and the large quantities of gold held for this purpose in relation to annual mine production have meant that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and demand play some part in determining the price of gold, this does not occur to the same extent as for other commodities.
Instead, the gold price has from time to time been significantly affected by macro-economic factors such as expectations of inflation, interest rates, exchange rates, changes in reserve policy by central banks, and global or regional political and economic crises. In times of inflation and currency devaluation, gold is often seen as a refuge, leading to increased purchases of gold and a support for the price of gold.
Interest rates affect the price of gold on several levels. High real interest rates increase the cost of holding gold and discourage physical buying in developed economies. High US dollar interest rates would also make hedging or forward selling of gold attractive because of the higher contango premiums available in the forward prices. Increased forward selling in turn has an impact on the spot price at the time of such sales. At a secondary level, changes to interest rates are viewed by market participants as indicators of other economic changes (including expectations of inflation), and have been used historically by market participants to motivate decisions to buy or sell gold.
Changes in exchange rates against the US dollar affect levels of demand for gold in non-US economies. In South East Asia, for example, during the mid-1990s strong local currencies encouraged robust gold demand due to low real gold prices in local currencies. In contrast, when South East Asian currencies fell sharply against the US dollar in 1997, the local currency values of gold increased proportionally, and wholesale selling of metal ensued in the region. Recoveries in Asian currencies since 1999 have seen a resumption in earlier levels of gold demand in the region as local prices of gold declined with stronger local currencies. In the investment market, a strong dollar during the 1990's had a negative effect on investment demand for gold in developed economies. The weakness in the US currency since 2001 has seen that influence reversed, and dollar weakness has been seen as a signal to buy gold.
Whilst political and economic crises can affect the gold price both positively and negatively, neither effect is inevitable. As a recent illustration of this uncertain effect, in 1998, despite negative sentiments caused by the Russian financial crisis, and ensuing corrections in the capital markets world-wide, the price of gold remained stable. By contrast, in 2002 political events have helped to drive the gold price higher, particularly in respect of the current war in Iraq.
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The spot price for gold reached over $417 per ounce during December 2003 and $430 per ounce in early 2004, although the market has since retraced to around $410 per ounce. The average gold price of $363 per ounce for 2003 was $53, or 17 percent above the average price for 2002. The gold price again mirrored moves in the currency markets, particularly the US dollar exchange rate against the Euro, which decreased steadily during the fourth quarter to reach a low of $1.29 to the Euro in January 2004. This reflects a loss in value of approximately 20 percent during 2003. The rand proved similarly volatile and the currency moved in a range of almost 20 percent, between R6.07 and R7.28 to the US dollar.
AngloGold believes that the primary mover in gold continues to be stong speculator and investor interest in the metal, driven by a number of fundamental economic circumstances. Among these circumstances, is the anticipated further decline of the US dollar. These same circumstances have also pushed up the prices of base metals and other commodities. The last quarter of the year again saw higher levels of derivatives in gold open positions on the New York Commodity Exchange ("Comex"), reaching a high of 19 million ounces, or almost 600 tons, net long in futures and options contracts combined.
Investor and speculator interest in gold kept increasing throughout most of 2003, reflected particularly in the buying on Comex. Overall open interest and the net open position on that exchange are both at all-time high levels since the exchange commenced trading gold over 20 years ago. In the last quarter of 2003, the World Gold Council ("WGC") launched the Gold Bullion Securities ("GBS") product on the London Stock Exchange in the last quarter of 2003. The GBS is a gold-backed fund enabling institutional and private investors to invest directly in gold through a traded instrument. This product followed the launch of a similar fund in Australia earlier in 2003. The WGC continues to work on similar products to offer to investors in other important financial markets elsewhere. The GBS attracted purchases amounting to 25 tons of bullion, and has since established two-way liquidity in the London market.
Physical demand for gold continues to suffer in the face of a rising gold price. Whilst gold offtake in jewellery was lower by 7 percent year-on-year, in the second half of 2003 alone, demand fell by over 11 percent compared with 2002. India responded immediately to higher prices and much of the expected seasonal demand in that region was negated by the Indian trade's unwillingness to buy gold in a rising market. With the spot price retracing in mid-January 2004, some recovery in seasonal buying might still occur in that market. However, many other gold jewellery markets also declined in this period.
Lower levels of producer de-hedging added to the lower demand. After six quarters of material levels of de-hedging, the second half of 2003 saw significantly less activity in this area, nothwithstanding the announcement late in 2003 by Barrick Gold Corporation of its intention to cease new hedges and to reduce its hedge book. However, a substantial increase in implied net investment demand helped to balance the physical market.
On the supply side, mine production in 2003 was slightly higher than in 2002. However, scrap sales increased again and, at a little less than 1,000 tons for 2003, constitute almost a quarter of the supply of gold to the current market. Central bank sales of 591 tons in 2003 reached their highest level in a decade, but there was little negative reaction in the markets to this level of selling.
The physical market remains important as it provides a floor of support when investment interest weakens and prices soften. Whilst making every effort to encourage investor demand for gold in the current market, attention should also be paid to the health of the wider physical market in the medium and longer term.
The Washington Agreement on sale of gold by European central banks expires in less than nine months' time. Public statement by a number of senior European central bank officers at the Dubai meeting of the International Monetary Fund in 2003 indicate that there is little doubt that the Agreement will be renewed, and good reason to expect that the signatories to this Agreement will follow the precendent of the behaviour of these banks over the past four years.
Mining process
The mining process can be divided into four main phases:
·
finding the orebody;
·
creating access to the orebody;
·
removing the ore by mining or breaking the orebody; and
·
transporting the broken material from the mining face to the plants for treatment.
This basic process applies to both underground and surface operations.
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Orebody discovery
Identification of orebodies is the output of the geological search for new reserves. The search is extended once access to the orebody has been obtained to enable clearer identification of the portions to be mined.
Access to the orebody
In underground mines, shafts are sunk to gain access to the orebody. Once the shaft has been sunk and equipped, horizontal development at various intervals extends access to the location of the reef to be mined. On-reef development then provides specific mining access.
In open-pit mining, access is gained through overburden stripping, which removes the covering layers of topsoil or rock.
Ore removal
Ore removal from the host rock begins with drilling and blasting of the accessible ore. The blasted faces are then cleaned and the ore is made available to the ore transport system.
In open-pit mines, gold-bearing material may require drilling and blasting and is usually loaded by excavators to make it available to the ore transport system.
Ore transport
Underground train systems collect broken ore and remove it to a series of ore passes to convey it to the bottom of the shaft from where it is hoisted to the surface. Conveyor belts or surface railway systems are used to transport the ore to treatment plants. The accompanying waste rock is then placed on waste rock dumps.
Open-pit mines usually transport ore to treatment facilities in large-capacity haultrucks.
Services
Mining activities require extensive services, both on the surface and underground, including:
· mining engineering services; 
· mine planning; 
· ventilation; 
· provision of consumable resources; 
· engineering services; 
· financial, administration and human resource services; and 
· environmental/permitting services.
Processing
Extracting gold from ore is a critical component of the overall economic success of the mining process. Extensive research and development has resulted in: a special elution process; linear screening to remove tramp materials; and the pump cell (for pumping pulp between stages in the carbon-in-pulp section). Processes are also constantly re-engineered in order to improve productivity and security. Consequently, modern plants are characterized by a high degree of automation and a relatively low headcount.
A typical gold plant circuit consists of the following:
·    Delivery from the shafts and mining operations
Delivery from the shafts and mining operations is either direct, by means of conveyor systems, or by road or rail via both public and private networks. Systems operated by AngloGold conform to operating standards utilized in the mining industry.
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·    Comminution
Comminution is the breaking up of ore to make gold available for treatment. Conventionally, this process occurs in multi- stage crushing and milling circuits. Modern technology is based on large mills fed directly with run-of-mine material.
·    Treatment
Gold in the milled ore is dissolved by leaching in agitated tanks using cyanide with oxygen enhancement. This more cost- effective carbon-in-pulp (CIP) process has largely superceded the use of rotary drum filtration. For refractory gold ores, as often found in North and South America, the ore treatment is more complex and among other processes requires whole- ore roasting (as practiced at Jerritt Canyon, which was sold effective June 30, 2003) or flotation and subsequent concentrate roasting (as at Morro Velho's Cuiaba circuit) where gold is extracted by leaching with cyanide.
·    Recovery
Filtrate produced in rotary filter plants is contacted with zinc powder to produce a gold precipitate. With the CIP process, the gold adsorbed on carbon is eluted to produce a concentrated gold-bearing solution from which the gold can be recovered either by zinc precipitation or by electro-winning. The precipitate is then smelted to produce gold bullion, or dore bars, which are transported to a refinery for refining to a good delivery status. Good delivery status refers to a bar that is accepted to contain the quantity and purity of gold as stamped on the bar, without further weighing or assaying.
·    Secondary processes
In order to increase recovery of gold from various tailings arising from extraction processes, secondary gold recovery processes are used. These include pyrite flotation and sulphuric acid production, followed by gold recovery.
·    Uranium plants
The only uranium plant still operating in South Africa is at the Vaal River operations. The plant employs the NIMCIX ion exchange process, followed by solvent extraction. The NIMCIX ion exchange process is the adsorption of uranium in solution onto resin beds, which are then eluted to introduce the uranium into a concentrated purified form in solution. Uranium plants are completely separate from the plants built to recover secondary gold from tailings.
·    Sulphuric acid plants
In addition to gold and uranium production, a number of other processes have been or are being used to enhance gold recoveries. One of these processes is pyrite flotation, where the resultant pyrite concentrate is used to feed a sulphuric acid plant roaster, as at Ergo, Vaal River and Morro Velho. By employing this process, AngloGold benefits from acid sales as well as recovering gold from the roaster calcine.
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Summary of metallurgical operations
South African operations
West Wits
Vaal River
Ergo
Mponeng
Savuka
(previously
(previously
No. 1 plant)
No. 3 plant)
No. 1 plant
No. 2 plant
No. 8 plant
No. 9 plant
Gold plants
Capacity (000 tonnes/month)
180
280
180
240
240
420
4,420
Technology
ROM mills
crushers,
ROM mills
cyanide,
crushers,
ROM mills
retreatment
(3),
tube mills,
(2),
CIP,
tube mills,
(6),
cyanide,
cyanide,
ball mills,
ball mills,
elution,
ball mills,
cyanide,
CIL,
CIP,
cyanide,
cyanide,
electro-
cyanide,
CIP,
zinc-
elution,
CIP
CIP,
winning
CIP,
electro-
precipitation
electro-
elution,
electro-
winning
winning
electro-
winning
winning
Uranium plants
Capacity (000 tonnes/month)
250
Pyrite flotation plants
Capacity (000 tonnes/month)
250
145
250
800
Sulphuric acid plants
Production (tonnes/month)
7,500
6,300
15,000
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Summary of metallurgical operations
East and West African operations
Geita
Morila
Yatela
Sadiola
Navachab
Gold plants
Capacity (000 tonnes/month)
490
350
250
435
110
Technology
crushing,
crushing,
mineral sizing,
mineral sizing,
crushing,
SAG milling,
SAG milling,
agglomeration,
SAG mills (2),
SAG milling,
ball mill,
ball mill,
heap leaching,
ball mill,
cyanide leach,
gravity concentration
gravity concentration
carbon adsorption
cyanide leach,
CIP,
cyanide leach,
cyanide leach,
CIP,
elution,
CIP,
CIP,
elution,
electro-winning
elution,
elution,
electro-winning
electro-winning
electro-winning
For detailed discussion on Geita, Morila and Yatela acquisitions, see "Item 4B: business overview - Products, operations and geographic locations".
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Summary of metallurgical operations
North American operations
South American operations
Colorado
(1)
Jerritt Canyon
(2)
Cerro Vanguardia    Morro Velho Cuiaba
Morro Velho
Raposos
Serra Grande
Gold plants
Capacity (000 tonnes/month)
113
82
64
30
62
- crushed ore production
1,512
- total ore production
1,512
- solution processed
2,235
Technology
crushers,
crushers,
crushers,
crushers,
crushers,
crushers,
valley heap leach,
dry ball mill,  ball mill in cyanide,
ball mill,
ball mill,
ball mill,
gold adsorption by
roasting,
CCD  gravity concentration,  gravity concentration,    gravity concentration,
carbon in solution,
cyanide,
leach,
flotation,
cyanide,
cyanide,
elution,
CIP,
CIL,
acid plant,
CIP,
rotary filters,
electro-winning
elution,
elution,
calcine leach,
zinc precipitation,
zinc precipitation
electro-winning
zinc precipitation,
rotary filters,
electro-winning
cyanide recovery
CIP,
elution,
zinc precipitation,
electro-winning
Pyrite flotation plants
Capacity (000 tonnes/month)
63
Sulphuric acid plants
Production (tonnes/month)
10,800
(1)
At the Colorado plant capacity increased from 1999 as a third carbon column (gold recovery from solution) was commissioned.
(2)
AngloGold's full interest in the Jerritt Canyon Joint Venture was sold, effective from June 30, 2003.
39
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Summary of metallurgical operations
Australian operations
Sunrise Dam
Boddington
(1)
Union Reefs
(3)
Tanami
(2)
Basement
Leach plant
Gold plants
Closed
Closed
Capacity (000 tonnes/month)
290
45
683
233
125
Technology
crushers,
crushers,
crushers,
crushers,
crushers,
ball mills,
mills,
mills,
mills,
mills,
gravity concentrate,
gravity concentrate,
CIL,
gravity concentrate,
gravity concentrate ,
CIL,
flotation,
elution,
CIL,
CIL ,
elution,
CIL,
electro-winning
elution,
elution ,
electro-winning
elution,
electro-winning
electro-winning
electro-winning
(1)
The Boddington plant is on care and maintenance, pending commencement of the expansion project;
(2)
The Tanami process plant is leased to Newmont North Flinders.
(3)
The Union Reefs plant is on care and maintenance pending finalization of its sale.
40
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41
Products, operations and geographic locations
AngloGold's main product is gold. An insignificant portion of its revenue is derived from the sales of silver, uranium oxide and sulphuric acid. AngloGold sells its products on world markets.
Operating performance and outlook
Overall gold production for 2003 declined to 5.62 million ounces, representing a decrease of 5 percent compared with 2002 largely as a result of lower grades in some operating regions, a trend which is not expected to continue in 2004. This, combined with the effect of the stronger currencies in the countries in which AngloGold operates against the US dollar, resulted in total cash costs increasing substantially by $68 per ounce to $229 per ounce.
AngloGold's drive for geographic and orebody diversity will be boosted in the coming year should the Business Combination with Ashanti be concluded. AngloGold in its current form has nonetheless continued to make good progress in meeting this objective, with gold production outside of South Africa - principally from low-cost surface and shallow mines - rising to 42 percent.
Overall, total cash costs rose by 42 percent to $229 per ounce, as the performance of the South African rand against the US dollar offset the effects of cost control initiatives at the South African operations. Total cash costs in US dollar terms rose by 60 percent to $253 per ounce, while in South African rand terms, this increase was held to 15 percent at R61,011 per kilogram.
Capital expenditure for the year rose to $363 million from $271 million in 2002. Of this, 59 percent was for maintenance capital expenditure and 41 percent for expansion projects, mainly at Moab Khotsong, Mponeng and TauTona in South Africa, at CC&V in North America and at Sunrise Dam in Australia.
AngloGold expects production in 2004 to decrease to around 5.3 million ounces following the closure in 2003 of Union Reefs and the sale of its interest in the Jerritt Canyon Joint Venture, while in 2003, Union Reefs and Jerritt Canyon collectively contributed 180,000 ounces towards AngloGold's total production of 5.6 million ounces. Production from the combined group (assuming the successful completion of the Business Combination with Ashanti) is expected to be approximately 6.9 million ounces.
Capital expenditure for 2004 is forecast to be $477 million (combined group: $596 million), which includes Moab Khotsong ($60 million), Mponeng ($58 million), TauTona ($63 million) and Sunrise Dam ($29 million).
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42
The operations and geographical areas in which AngloGold currently operates are shown in Diagram 1.
South African operations 

AngloGold's South Africa region includes seven underground operations located in two geographic areas on the Witwatersrand Basin:

·
the West Wits area, near Carletonville, straddling the North West and Gauteng provinces (comprising Mponeng, Savuka and TauTona); and
·
the Vaal River area, near Orkney, in the North West Province and Free State Province (comprising Great Noligwa, Kopanang, Tau Lekoa and Moab Khotsong, and
a surface metallurgical reclamation operation, Ergo, located near Johannesburg in Gauteng Province.
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43
AngloGold sold its operations in the Free State with the effective date of January 1, 2002. These operations comprised the Bambanani, Joel, Tshepong and Mathjabeng mines and related surface operations. For a detailed discussion of the sale, see "Item 4A.: History and development of the company" and Note 24 to the consolidated financial statements "Sales of shafts".
Geology: The Witwatersrand Basin comprises a six-kilometer thick sequence of interbedded argillaceous and arenaceous sediments that extends laterally for some 300 kilometers north-east south-west and 100 kilometers north-west south-east on the Kaapvaal Craton. The upper portion of the basin, which contains the orebodies, crops out at its northern extent near Johannesburg. Further west, south and east the Witwatersrand Basin is overlain by up to four kilometers of Archaean, Proterozoic and Mesozoic volcanic and sedimentary rocks. The Witwatersrand Basin is late Archaean in age and is considered to be in the order of 2.7 to 2.8 billion years old.
In the Witwatersrand Basin, gold occurs in laterally extensive quartz pebble conglomerate horizons termed reefs that are generally less than two meters thick and are widely considered to represent laterally extensive braided fluvial deposits. Separate fan systems were developed at different entry points and these are preserved as distinct goldfields. There is still much debate about the origin of the gold mineralization in the Witwatersrand Basin. Gold was generally considered to have been deposited syngenetically with the conglomerates but there has been a swing to an epigenetic origin theory. However, the most fundamental control to the gold distribution in the Basin remains the sedimentary features, such as facies variations and channel directions. Gold generally occurs in native form often associated with pyrite and carbon, with quartz being the main gangue mineral.
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44
Operating performance of the South Africa region  

Overall, production fell by 4 percent to 3.281 million ounces with increased volumes mined being offset by planned reductions in yield of 3 percent. Cash costs rose by 60 percent to $253 per ounce, mainly because of the stronger South African rand (45 percent) and the inflationary pressures of the two-year wage agreement which came into effect from July 2003 and resulted in a 9 percent increase in the wages of the majority of employees. 

Capital expenditure for the year was $242 million, primarily at Moab Khotsong ($67 million), which remains under development, the Mponeng shaft deepening project ($55 million), Kopanang ($12 million) and TauTona ($65 million). 

·      West Wits operations
General description: The West Wits operations comprise Mponeng, Savuka and TauTona mines. Savuka and TauTona share a processing plant, whereas Mponeng has its own individual processing plant. These operations comprise crushers, mills, CIP and zinc precipitation and smelting facilities. 

Geology: Two reef horizons are exploited at the West Wits operations, the Ventersdorp Contact Reef (VCR) located at the top of the Central Rand Group and the Carbon Leader Reef (CLR) near the base. The separation between the two reefs increases from east to west from 400 to 900 meters due to the VCR unconformity. TauTona and Savuka mine both reefs whereas Mponeng only mines the VCR. The structure is relatively simple; faults of greater than 70 meters are rare. The CLR consists of one or more conglomerate units and varies from several centimeters to more than three meters in thickness. Regionally, the VCR dips at approximately 21 degrees but may vary between 5 and 50 degrees, accompanied by changes in thickness of the conglomerate units. Where the conglomerate has the attitude of the regional dip, it tends to be thick, well-developed and accompanied by higher gold accumulations. Where the attitude departs significantly from the regional dip, the reef is thin. 

Operating and production data for West Wits operations

Mponeng
Elandsrand
(1)
TauTona
Savuka
Deelkraal
(1)
2001
Pay limit (oz/t)
0.26
0.31
0.51
0.35
0.51
Pay limit (g/t)
8.80
10.6
17.40
11.92
17.5
Recovered grade (oz/t)
0.225
0.179
0.348
0.232
0.220
Recovered grade (g/t)
7.71
6.13
11.94
7.97
7.55
Gold production (000 oz)
366
20
622
240
13
Total cash costs ($/oz)
(2)
223
362
154
248
331
Total production costs ($/oz)
(2)
281
362
180
354
385
Capital expenditure ($ million)
29.4
1.5
7.2
0.4
-
Employees
(3)
5,260
-
5,047
3,645
-
Outside contractors
(3)
486
-
285
337
-
2002
Pay limit (oz/t)
0.24
-
0.47
0.38
-
Pay limit (g/t)
7.54
-
14.54
11.90
-
Recovered grade (oz/t)
0.252
-
0.340
0.206
-
Recovered grade (g/t)
8.63
-
11.66
7.07
-
Gold production (000 oz)
466
-
643
236
-
Total cash costs ($/oz)
(2)
178
-
132
245
-
Total production costs ($/oz)
(2)
240
-
154
301
-
Capital expenditure ($ million)
31.7
-
10.9
5.7
-
Employees
(3)
5,237
-
5,397
4,396
-
Outside contractors
(3)
456
-
318
514
-
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45
Mponeng
Elandsrand
(1)
TauTona
Savuka
Deelkraal
(1)
2003
-
-
Pay limit (oz/t)
0.29
-
0.45
0.45
-
Pay limit (g/t)
10.08
-
15.48
15.28
-
Recovered grade (oz/t)
0.26
-
0.35
0.17
-
Recovered grade (g/t)
8.96
-
12.09
5.81
-
Gold production (000 oz)
499
-
646
187
-
Total cash costs ($/oz)
(2)
247
-
194
448
-
Total production costs ($/oz)
(2)
293
-
218
503
-
Capital expenditure ($ million)
55
-
65
14
-
Employees
(3)
5,374
-
4,794
4,122
-
Outside contractors
(3)
795
-
663
407
-
(1)
Elandsrand and Deelkraal operations were sold effective February 1, 2001 to Harmony Gold Mining Company Limited.
(2)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(3)
Average for the year.
On July 30, 2003, AngloGold's Board approved three organic growth projects, which will extend the life of TauTona. These projects, having a total capital expenditure of ZAR1.2 billion, are anticipated to yield 2.1 million ounces over the next ten years and are expected to be funded from AngloGold's existing resources and from the financing facilities of AngloGold from time to time. These projects supplement the ZAR432 million TauTona expansion project that was approved in April 2001 and is anticipated to yield 2.3 million ounces between 2004 and 2015. Another project in the West Wits operations is the ZAR1.3 billion Mponeng deepening project that is anticipated to yield 4.2 million ounces between 2004 and 2016. Currently under consideration is the Mponeng VCR 120 to 125 level project, which at a projected capital cost of ZAR805 million is anticipated to yield 1.9 million ounces from 2009.
On September 18, 2003, AngloGold announced that agreement had been reached with Gold Fields Limited regarding the acquisition by AngloGold of a portion of the mining area of Gold Fields' Driefontein mine adjacent to TauTona, known as 1C11, for a cash consideration of ZAR315 million ($48 million). This acquisition will extend and allow for the further optimisation of TauTona's remaining life of mine plan.
Operating review
Volumes mined at Mponeng increased by 9 percent as a result of additional stope crews, extra equipped face lengths and improved face advance. Recovered grade rose to 8.96 g/t during 2003. This, together with the higher than planned face values, resulted in gold production rising by 7 percent to 499,000 ounces from 466,000 ounces in 2002. Total cash costs rose marginally in R/kg terms but increased by 39 percent to $247 per ounce compared with $178 per ounce in 2002, mainly as a result of the stronger South African rand.
During 2002, volumes mined increased 21 percent and recovered grade rose to 8.63 g/t compared with 2001. Although newly equipped raise lines at Mponeng had an impact on costs, the flexibility afforded by these had a favorable impact on production from mid-2002. As a result, gold production increased by 27 percent to 466,000 ounces from 366,00 ounces in 2001, while total cash costs decreased by 20 percent to $178 per ounce compared with $223 per ounce in 2001. In rand terms, total cash costs decreased by 3 percent during the same period.
At TauTona, volume mined decreased as production delays were experienced following two significant seismic incidents in the second quarter and a fire in the third quarter. There was a release of high grade locked-up gold in the stopes which led to a 4 percent improvement in grade. Gold production increased by 1 percent to 646,000 ounces from 643,000 in 2002. Total cash costs rose to $194 per ounce, a 47 percent increase from the 2002 total cash cost of $132 per ounce.
In 2002, production rose by 3 percent to 643,000 ounces from 622,000 in 2001 while total cash costs decreased to $132 per ounce, a 14 percent reduction from the 2001 total cash cost of $154 per ounce. In rand terms, total cash costs increased by 5 percent during the same period
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46
At Savuka, safety-related concerns continued to require the replanning of areas available for mining, which led to a 15 percent decrease in volumes mined. This was also affected by a decision to stop mining uneconomic Ventersdorp Contact Reef ("VCR") panels. At the same time cost-saving initiatives began to show results, as both the number of people employed and the number of contractors were reduced in line with the level of production. Grade decreased by 18 percent to 5.81g/t, relative to the high grades achieved in 2002 as a result of the mining of a high-grade pillar. Gold production decreased by 21 percent to 187,000 ounces, while total cash cost rose by 83 percent as a result of the lower gold production and the stronger South African rand to $448 per ounce compared with 2002 when gold production was 236,000 ounces at a total cash cost of $245 per ounce. The continued operating difficulties at Savuka have led to a review of the mine. As a result, the mine has been put into closure mode. AngloGold has impaired the assets and has, as result, charged profits with an amount of $35 million in respect of this impairment, net of tax. 

Increased seismicity in the VCR during 2002 had a negative impact on the volumes mined, although improvements in the rate of face advance countered this to some extent. After having mined a pillar in the first half of 2002, the grade dropped on the depletion of the pillar. Consequently, gold produced decreased by 2 percent to 236,000 ounces, while total cash cost decreased by 1 percent to $245 per ounce compared with 2001 when gold production was 240,000 ounces at a total cash cost of $248 per ounce. In rand terms, however, total cash costs increased by 20 percent as a result of the accelerated development plan to match the new life of mines profiles. 

Growth prospects 

Mponeng Shaft Deepening Project: The scope of the project is to deepen the sub-shaft system and provide access tunnels to the VCR horizon on 113, 116 and 120 levels (ranging fromm 3,172 meters to 3,372 meters below surface). AngloGold expects the project to produce 4.2 million ounces of gold over a period of five years. The total capital expenditure for the project is $200 million (at 2003's closing exchange rate), with some $19 million (at 2003's closing exchange rate) remaining. The average project cash cost over the life-of-mine is expected to be approximately $270 per ounce. Progress continued to be made on this project during 2003, with the in-circle development being completed in February 2003 and access development on 113 level being completed ahead of schedule. Work on 116 level was completed in November 2003 and it is anticipated that development on 120 level will be completed by February 2004. Stoping operatings are due to commence in April 2004. 

The scope of the TauTona Extension Project is to access the Carbon Leader Reef ("CLR") shaft pillar to allow for stoping operations up to the infrastructural zone of influence, as well accessing a mining area east of the Bank Dyke (previously part of the Mponeng mine plan) on 100, 104, 107 and 109 levels. AngloGold expects the project to produce 2.3 million ounces of gold over a period of ten years, at a capital cost of $65 million (converted at the closing exchange rate for 2003). Approximately $35 million (at 2003's closing exchange rate) has been spent to date. AngloGold expects the average project cash cost to be of the order of $187 per ounce. The proposed mining of the Bank Dyke is under review owing to seismicity experienced in the development in this area, the amount of water that could be encountered and the added flexibility that the purchase of the block of ground from Driefontein allows. Changes will be implemented if they improve the overall value of TauTona. 

The scope of the TauTona VCR Development Project is to access two distinct reserve blocks on the VCR horizon. One reserve block is situated north-east of the shaft complex, while the VCR pillar area of interest consists of two mining blocks situated outside the zone of influence. The project will add some 0.33 million ounces to production, with a project capital cost of $29 million at 2003's closing exchange rate. Progress on both the VCR reserve blocks is ahead of schedule, with production due to start in January 2005. 

The CLR reserve block below 120 level, known as TauTona below 120 level Project, will be accessed by sinking a twin decline system into its geographical center, down to 125 level. The project is expected to produce 1.8 million ounces of gold over a period of seven years, with a project capital cost of $147 million (at 2003's closing exchange rate). The average project cash cost is expected to be of the order of $203 per ounce. Progress is on schedule and production is due to start in January 2007.

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47
Outlook 

Production at Mponeng in 2004 is expected to decrease to 442,000 ounces at a total cash cost of $309 per ounce, with capital expenditure of $58 million. 

Looking forward to 2004, production at Savuka is expected to decrease to 172,000 ounces, at a total cash cost of $407 per ounce. Capital expenditure is forecast at $7 million. Savuka has strategic synergies with TauTona. 

Gold production at TauTona is expected to decrease to 620,000 ounces in 2004 while total cash cost will rise to $218 per ounce. Capital expenditure should amount to $63 million. 

·      Vaal River operations 

Description: AngloGold's Vaal River operations are located in the original Vaal Reefs mining area of the Witwatersrand Basin and comprise three operating mines, Great Noligwa, Kopanang and Tau Lekoa and a developing mine, Moab Khotsong. 

The Vaal River complex also has four gold plants, one uranium plant and one sulphuric acid plant. The Vaal River processing plants include crushers, mills, CIP and electro-winning facilities and are able to treat between 180,000 and 420,000 tonnes of ore per month. Although the Vaal River operations produce uranium oxide as a by-product of the production of gold, the value is not significant relative to the value of gold produced. 

Geology: In order of importance, the reefs mined at the Vaal River operations are the Vaal Reef, the VCR and the "C" Reef. The Vaal Reef contains approximately 85 percent of the reserve tonnage with mining grades between 10 and 20 grams per tonne. It comprises a series of oligomictic conglomerates and quartzite packages developed on successive unconformities. Several distinct facies have been identified, each with its unique gold distribution and grade characteristic. The VCR has a lower grade than the Vaal Reef, and contains approximately 15 percent of the estimated reserves. The economic portion is mainly concentrated in the western part of the lease area. It can take the form of a massive conglomerate, a pyritic sand unit with intermittent pebble layers or a thin conglomerate horizon. The reef is located at the contact between the overlying Kliprivierberg Lavas of the Ventersdorp SuperGroup and the underlying sediments of the Witwatersrand SuperGroup which creates a distinctive seismic reflector. The VCR is located up to one kilometer above the Vaal Reef. The "C" Reef is a thin, small pebble conglomerate with a carbon-rich basal contact, located approximately 270 meters above the Vaal Reef. It has less than 1 percent of the estimated reserves with grades similar to the Vaal Reef, but more erratic. The most significant structural features are the north-east striking normal faults which dip to the north-west and south-east, resulting in zones of fault loss. 

Operating and production data for Vaal River operations

Great Noligwa
(1)
Kopanang
Tau Lekoa Moab Khotsong
(1)
2001
Pay limit (oz/t)
0.29
0.36
0.14
-
Pay limit (g/t)
9.91
12.28
4.78
-
Recovered grade (oz/t)
0.360
0.216
0.129
-
Recovered grade (g/t)
12.34
7.40
4.42
-
Gold production (000 oz)
1,004
494
286
-
Total cash costs ($/oz)
(2)
122
178
203
-
Total production costs ($/oz)
(2)
135
204
248
-
Capital expenditure ($ million)
1.2
2.8
2.2
43.2
Employees
(3)
7,185
6,371
3,200
803
Outside contractors
(3)
806
632
716
1,425
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48
Great Noligwa
(1)
Kopanang
Tau Lekoa     Moab Khotsong
(1)
2002
Pay limit (oz/t)
0.32
0.35
0.14
-
Pay limit (g/t)
9.96
10.78
4.30
-
Recovered grade (oz/t)
0.321
0.211
0.130
-
Recovered grade (g/t)
11.02
7.23
4.45
-
Gold production (000 oz)
880
511
311
-
Total cash costs ($/oz)
(2)
124
165
192
-
Total production costs ($/oz)
(2)
142
194
248
-
Capital expenditure ($ million)
11.5
8.5
1.5
35.8
Employees
(3)
8,356
6,953
3,890
968
Outside contractors
(3)
913
685
732
1,011
2003
Pay limit (oz/t)
0.34
0.32
0.14
-
Pay limit (g/t)
11.53
10.96
4.90
-
Recovered grade (oz/t)
0.31
0.21
0.12
-
Recovered grade (g/t)
10.57
7.07
4.24
-
Gold production (000 oz)
812
497
322
-
Total cash costs ($/oz)
(2)
218
266
294
-
Total production costs ($/oz)
(2)
244
296
348
-
Capital expenditure ($ million)
22
12
7
67
Employees
(3)
6,819
6,131
3,450
1,020
Outside contractors
(3)
1,002
835
689
772
(1)
In 2002, 2001 and 2000, Moab Khotsong was mined from Great Noligwa. Operating data for Great Noligwa includes Moab Khotsong operating data for these periods.
(2)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(3)
Average for the year.
Operating review
Volume mined at Great Noligwa in 2003 increased by 1 percent despite difficulties experienced in the SV4 section. Grade fell by 4 percent to 10.57g/t compared with 11.02g/t in 2002, following the lower face values experienced during the year, resulting in an 8 percent reduction in gold output to 812,000 ounces from 880,000 ounces in 2002. Reduced gold production, increased wages and the effect of the strong South African rand contributed to a significant rise in total cash costs to $218 per ounce from $124 per ounce in 2002.
In 2002, there was a lack of available production mining facesas a result of the cumulative effects of a number of damaging seismic events during the second quarter, which continued to be felt into the third and fourth quarters of 2002. At the same time, steps to further improve workplace safety were taken and changes were made to the mining plan which resulted in a temporary slowdown in mining production. Consequently, gold production decreased by 12 percent to 880,000 ounces in 2002 from 1,004,000 ounces in 2001. Total cash costs rose by 2 percent to $124 per ounce in 2002 compared to $122 per ounce in 2001, largely as a result of the decrease in gold production and costs incurred following the seismic events. In rand terms, total cash costs increased by 26 percent over the same period.
At Kopanang, the 5 percent improvement in volumes mined can be attributed to the impact of the "power team" training initiatives that were undertaken during the year as productivity (measure in terms of m2/employee) rose by 8 percent. However, generally lower grades were encountered in the first half of 2003 which resulted in a 3 percent reduction in gold production to 497,000 ounces, compared with 511,000 ounces in 2002. Total cash costs rose by 61 percent from $165 per ounce in 2002 to $266 per ounce in 2003.
Gold production increased by 3 percent to 511,000 ounces in 2002 (2001: 494,000 ounces), mainly as a result of improved labor efficiencies resulting in increased volumes mined. Total cash costs decreased by 7 percent from $178 per ounce in 2001 to $165 per ounce in 2002. In rand terms, however, total cash costs increased by 14 percent, mainly as a result of increased cementatious support for safety reasons and lower by-product contributions due to the lower exchange rate.
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Gold production at Tau Lekoa increased by 4 percent to 322,000 ounces from 311,000 ounces in 2002, as volumes mined increased. This was offset by lower grades that were impacted by the mining mix. Total cash costs were $294 per ounce, 53 percent higher than the $192 per ounce in 2002.
An increase in gold production of 9 percent from 286,000 ounces in 2001 to 311,000 ounces in 2002 resulted in total cash costs decreasing by 6 percent to $192 per ounce in 2002 from $203 per ounce in 2001. In rand terms, however, total cash costs increased by 16 percent during the same period
At Moab Khotsong development is continuing as planned, with excavation of the 101 level (10,100 feet below the surface) in progress.
Growth prospects
The largest of the current South African projects is the development of the Moab Khotsong mine, located in the Vaal River area. The scope of the project is to sink, construct and equip the shaft systems to a depth of 3,130 meters below surface, provide access tunnels to the reef horizon on 85, 95 and 101 levels, and develop the necessary Ore Reserves. The project is expected to produce 4.1 million ounces of gold over 12 years from 7.75 million tonnes of milled ore. The project capital cost is estimated at $629 million (at 2003's closing exchange rate), of which $495 million (at 2003's closing exchange rate) has been spent to date. The main shaft extension has been completed and the shaft was commissioned in March 2003. Access development is progressing to plan. The first raiseline has been established and stoping operations commenced in November 2003. Moab Khotsong is forecast to reach commercial production in 2006 and full production, at an average of 15.6 tonnes (502,000 ounces) per annum, is expected by 2008.
Outlook
Production at Great Noligwa is expected to increase marginally to 821,000 ounces in 2004, at a total cash costs of $216 per ounce. Capital expenditure during 2004 is expected to be approximately $29 million.
In 2004, gold production at Kopanang is expected to decrease to 468,000 ounces at a total cash cost of $288 per ounce. Capital expenditure for the year ahead will be in the region of $31 million.
Total cash costs at Tau Lekoa are expected to rise to $310 per ounce, for a production of 326,000 ounces in 2004, while capital expenditure is expected to be approximately $23 million.
·    Ergo operations
Description: AngloGold's Ergo operations re-treat tailings dams and sand to recover gold and produce sulphuric acid using a secondary process. These tailings dams are located on the East Rand of the Witwatersrand. Since 1987, material has been treated through two CIL plants, which AngloGold believes to be two of the largest of their kind in the world. Ergo can only profitably treat tailings dams if they exceed a certain grade and, as a result of the expected rate of depletion of the higher grade material available, the operation is not expected to continue past its current estimated life of early 2005.
Operating and production data for Ergo operations
2001
2002
2003
Pay limit (oz/t)
0.01
0.01
0.01
Pay limit (g/t)
0.19
0.29
0.44
Recovered grade (oz/t)
0.007
0.007
0.006
Recovered grade (g/t)
0.25
0.25
0.20
Gold production (000 oz)
332
264
203
Total cash costs ($/oz)
(1)
215
184
349
Total production costs ($/oz)
(1)
259
277
463
Capital expenditure ($ million)
0.1
0.2
-
Employees
(2)
942
904
829
Outside contractors
(2)
199
218
1,104
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see
"Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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50
Operating review
During the year, tonnes treated were 6 percent lower at 30.9 million tonnes, as a result of an increased proportion of "clean- up" tonnes which restricted incoming tonnages and the ability to recover from down-time events, as well as the large number of water and slurry pipeline failures. As a result, gold production at Ergo decreased to 203,000 ounces from 264,000 ounces in 2002. The grade, although 20 percent lower, was in line with planned levels as accessibility to higher grade dams diminished. An increased loss on acid by-products from the lower-than-planned sulphur grades and the impact of the decreased production as the operation enters its final years, led to total cash costs rising to $349 per ounce from $184 per ounce in 2002.
As anticipated by AngloGold, gold production decreased by 20 percent from 332,000 ounces in 2001 to 264,000 ounces in 2002 following the closure of the Daggafontein plant in December 2001. During the year, the operation was affected by higher than expected rainfall, environmental clean-up activities and power failures, which were offset by improved headgrades and increased metallurgical efficiency. Total cash costs decreased by 15 percent to $184 per ounce from $215 per ounce in 2001.
Growth prospects
Although the operation is due to close in early 2005, discussions are being held with prospective buyers with a view to selling the operation.
Outlook
Production in 2004 is expected to be 168,000 ounces, at a total cash cost of $452 per ounce.
Free State operations
Description: The mines in the Free State Province (comprising Bambanani, Joel, Tshepong and Matjhabeng) were sold to African Rainbow Minerals Gold Limited (formerly African Rainbow Minerals (Proprietary) Limited) (currently Harmony Gold Mining Company Limited) ("ARM") and Harmony Gold Mining Company Limited through a jointly-owned company ("Free Gold") with effect from January 1, 2002 (for a detailed discussion, see "Item 4A.: History and development of the company" and note 24 to the consolidated financial statements "Sales of shafts").
Operating and production data for Free State operations
Bambanani
Tshepong
Matjhabeng
Joel
2001
Pay limit (oz/t)
0.39
0.23
0.31
0.16
Pay limit (g/t)
13.26
8.05
10.56
5.50
Recovered grade (oz/t)
0.229
0.239
0.226
0.104
Recovered grade (g/t)
7.86
8.20
7.75
3.56
Gold production (000 oz)
412
383
188
127
Total cash costs ($/oz)
(1)
230
178
236
345
Total production costs ($/oz)
(1)
269
219
447
441
Capital expenditure ($ million)
3.0
0.1
-
4.5
Employees
(2)
5,228
3,756
2,204
2,073
Outside contractors
(2)
345
152
16
179
2002
Pay limit (oz/t)
-
-
-
-
Pay limit (g/t)
-
-
-
-
Recovered grade (oz/t)
-
-
-
-
Recovered grade (g/t)
-
-
-
-
Gold production (000 oz)
-
-
-
-
Total cash costs ($/oz)
(1)
-
-
-
-
Total production costs ($/oz)
(1)
-
-
-
-
Capital expenditure ($ million)
-
-
-
-
Employees
(2)
-
-
-
-
Outside contractors
(2)
-
-
-
-
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Bambanani
Tshepong
Matjhabeng
Joel
2003
Pay limit (oz/t)
-
-
-
-
Pay limit (g/t)
-
-
-
-
Recovered grade (oz/t)
-
-
-
-
Recovered grade (g/t)
-
-
-
-
Gold production (000 oz)
-
-
-
-
Total cash costs ($/oz)
(1)
-
-
-
-
Total production costs ($/oz)
(1)
-
-
-
-
Capital expenditure ($ million)
-
-
-
-
Employees
(2)
-
-
-
-
Outside contractors
(2)
-
-
-
-
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
East and West African operations
AngloGold's East and West Africa region comprises five operations, located in three African countries other than South Africa. These are the Morila, Sadiola Hill and Yatela mines in Mali in West Africa, the Navachab mine in Namibia on the south- western coast of Africa and the Geita mine in Tanzania.
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Operating performance of the East and West Africa region
In 2003, overall production decreased by 10 percent to 981,000 ounces, while total cash costs rose by 36 percent to $171 per ounce. Capital expenditure for the region decreased marginally to $26 million.
· Sadiola (attributable 38 percent)
Description: AngloGold has a 38 percent interest in, and manages, the Sadiola mine within the Sadiola exploitation area in Western Mali. The joint venture partners are IAMGOLD, a Canadian listed company (38 percent), the Government of Mali (18 percent), and the International Finance Corporation (IFC) (6 percent). The mine is situated 77 kilometers south of Kayes. Construction commenced at the Sadiola open-pit operations in 1994 and full production was achieved by June 1997, with 380,000 ounces of low cost gold being produced in the first year.
Geology: The Sadiola deposit occurs within an inlier of greenschist facies metamorphosed Birimian rocks known as the Kenieba Window. The specific rocks which host the mineralization are argillaceous carbonates and greywackes which have been intensely weathered to a maximum depth of 200 meters.
A series of north-south trending faults occur within the inlier, the most prominent of which, the Senegalo-Malian Shear (SM), passes through the Sadiola lease area. The mineralization occurs in the immediate vicinity of a parallel structure to the SM.
The Sadiola Hill deposit generally consists of two zones, an upper oxidized cap and an underlying sulphide zone. From 1996 until 2002 shallow, saprolite oxide ore from the Sadiola Hill pit was the primary ore source. Since 2002, the deeper saprolitic sulphide ore has been mined and in future will progressively replace the depleting oxide reserves.
Operating and production data for Sadiola
2001
2002
2003
Pay limit (oz/t)
0.04
0.05
0.05
Pay limit (g/t)
1.46
1.71
1.68
Recovered grade (oz/t)
0.091
0.086
0.081
Recovered grade (g/t)
3.13
2.96
2.77
Gold production (000 oz) 100 %
536
480
452
Gold production (000 oz) 38 %
204
182
172
Total cash costs ($/oz)
(1)
131
163
210
Total production costs ($/oz)
(1)
211
247
297
Capital expenditure ($ million) 100 %
16.0
16.5
10.3
Capital expenditure ($ million) 38 %
6.0
6.3
3.9
Employees
(2)
361
399
492
Outside contractors
(2)
472
454
549
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review
In 2003, tonnage throughput at Sadiola was adversely affected by plant downtime, largely in the milling circuit. Gold production of 172,000 attributable ounces was 5 percent lower than the 182,000 attributable ounces produced in 2002. Total cash costs increased by 29 percent from $163 per ounce in 2002 to $210 per ounce in 2003, as a result of the lower recovered grade, higher landed cost of diesel fuel, high detoxification cost of plant tailings, higher mining cost due to hard material encountered in the pit and the impact of the weaker US dollar on expenditure. A cyanide destruction plant was designed and commissioned in the third quarter of 2002 and was fully optimized by the end of January 2003. This allowed for increased treatment of sulphide material.
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In 2002, tonnage throughput at Sadiola was adversely affected by mineral sizer downtime in the first quarter, the low availability of high-grade oxide ore during the year and problems with the treatment of higher grade soft sulphide ore. Gold production of 182,000 attributable ounces in 2002 was 10 percent lower than the 204,000 attributable ounces produced in 2001. Total cash costs increased by 25 percent from $131 per ounce in 2001 to $163 per ounce in 2002, as a result of lower production and treatment of sulphide ores. The plant conversion project to improve gold recovery from the treatment of soft sulphide ore was completed on schedule at the end of February 2002. High cyanide values in the final residue prevented the treatment of soft sulphide ore, which required high cyanide addition to maintain acceptable recoveries. A cyanide destruction plant was designed and commissioned in the third quarter of 2002 and was fully operational at year end. The system was fully optimized by the end of January 2003. The final installment on the project finance loans for the development of Sadiola was paid during the second quarter in 2002. The total repayments for the five-year period of the facility amounted to $288 million. 

Outlook

During 2004, AngloGold expects attributable production to increase by 5 percent to 177,000 ouncesand total cash costs to increase by 2 percent to $214 per ounce. Capital expenditure attributable to AngloGold of $4 million is planned for 2004.
· Navachab (attributable 100 percent)
Description: After having obtained an additional 30 percent interest in 1999, AngloGold holds a 100 percent interest in the Navachab open-pit gold mine near Karibib in Namibia, which has been in production since 1990.
Geology: The Navachab deposit is hosted by Damaran greenschist-amphibolite facies, calc-silicates, marbles and volcanoclastics. The rocks have been intruded by granites, pegmatites and quartz porphyry dykes and have also been deformed into a series of alternating dome and basin structures. The mineralized zone forms a sheet-like body which plunges at an angle of approximately 25 degrees to the north-west. The mineralization is predominantly hosted in a sheeted vein set (60 percent) and a replacement skarn body (40 percent). The gold is very fine-grained and associated with pyrrhotite, pyrite, chalcopyrite, scheelite and sphalerite. Approximately 80 percent of the gold is free milling.
Operating and production data for Navachab
2001
2002
2003
Pay limit (oz/t)
0.04
0.03
0.04
Pay limit (g/t)
1.36
1.02
1.38
Recovered grade (oz/t)
0.060
0.056
0.050
Recovered grade (g/t)
2.04
1.93
1.73
Gold production (000 oz) 100 %
87
85
73
Total cash costs ($/oz)
(1)
164
147
274
Total production costs ($/oz)
(1)
241
212
329
Capital expenditure ($ million) 100 %
0.5
2.1
2.2
Employees
(2)
168
171
180
Outside contractors
(2)
178
182
209
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review 

During 2003, gold production at Navachab was 14 percent lower than in 2002, at 73,000 ounces from 85,000 ounces, due to a 10 percent decrease in recovered grade and a 4 percent decrease in tonnage throughput. Tonnage throughput was adversely affected by a mill motor and power transformer failure and breakdown of a mill girth gear during the year. Total cash costs increased by 86 percent to $274 per ounce in 2003 from $147 per ounce in 2002. The increase in unit cash cost is due to an increased stripping ratio associated with the Eastern Pushback project, the lower recovered grade and the impact of the weaker US dollar on expenditure expressed in dollar terms.

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During 2002, gold production at Navachab was 2 percent lower than in 2001 at 85,000 ounces from 87,000 ounces, mainly due to a 5 percent decrease in recovered grade. Total cash costs declined by 10 percent from $164 per ounce in 2001 to $147 per ounce in 2002.
Growth prospects
A decision to proceed with a pushback towards the east to extend the life of mine by eight years to 2013 was taken by the AngloGold board in July 2002 and this project is ongoing. A pre-feasibility study to evaluate the economic viability of a mine expansion project at Navachab was finalized in February 2004, the results of which will be made to management in due course. Due to rising contractor costs a decision was taken in 2003 to terminate the mining contract and proceed with owner mining which will be implemented in 2004. Capital expenditure of $17 million has been approved for this project and implementation will take place during the first six months of 2004.
An early application for the renewal of the mining license has been approved, extending the license to 2018.
Outlook
Looking ahead to 2004, AngloGold expects attributable production to decrease by 11 percent to 66,000 ounces due to an anticipated reduction of 13 percent in recovered grade. During the first half of the year, no mining will take place due to the changeover to owner mining and total plant feed will be from stockpiles. It is anticipated that total cash costs will increase by 8 percent to $295 per ounce due to the lower recovered grade. Capital expenditure is expected to rise from $2m in 2003 to $18m in 2004 due to the expenditure required for the owner mining project.
· Geita (attributable 50 percent)
Description: On December 15, 2000, AngloGold acquired a 50 percent interest in the Geita project in Tanzania from Ashanti Goldfields Company Limited. Under the joint venture agreement, the Geita Joint Venture is governed by a committee (the "Joint Venture Committee") on which both partners have equal representation with equal voting rights and neither side has a casting vote. The Joint Venture Committee is chaired on a rotating basis by representatives of Ashanti Goldfields Company Limited and AngloGold. A purchase price of $205 million was paid for the Geita Joint Venture, with $35 million funded through AngloGold's own resources and the balance of $170 million funded through debt, with a project finance provision of $67 million at acquisition.
AngloGold contributed its Nyamulilima Hill property (some 14 kilometers from the Geita processing plant) to the Geita Joint Venture. In addition, AngloGold and Ashanti have entered into a broad strategic alliance to seek opportunities throughout Africa.
Geology: Geita is an Archaean mesothermal mainly BIF-hosted deposit. Mineralization is located where auriferous fluids, which moved along shears often on BIF-diorite contacts, reacted with the BIF. Some lower-grade mineralization can occur in the diorite as well (usually in association with BIF-hosted mineralization), and approximately 20 percent of the gold is hosted in the diorite.
Operating and production data for Geita
2001
2002
2003
Pay limit (oz/t)
0.06
0.07
0.06
Pay limit (g/t)
1.96
2.13
2.16
Recovered grade (oz/t)
0.108
0.106
0.105
Recovered grade (g/t)
3.70
3.62
3.60
Gold production (000 oz) 100 %
546
579
661
Gold production (000 oz) 50 %
273
290
331
Total cash costs ($/oz) (1)
147
175
183
Total production costs ($/oz) (1)
198
228
230
Capital expenditure ($ million) 100 %
15.8
17.4
20.1
Capital expenditure ($ million) 50 %
7.9
8.7
10.0
Employees (2)
472
580
643
Outside contractors (2)
540
1,139
1,437
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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Operating review
In 2003, production at Geita increased by 14 percent to 331,000 attributable ounces from 290,000 attributable ounces in 2002, due to a 15 percent increase in tonnage throughput which was the result of the succesful implementation of the plant expansion project which increased plant capacity to 5.6 million tonnes per annum. The grade improved from 2.70g/t in the first half of the year to 4.53g/t during the second half. Total cash costs increased by 5 percent from $175 per ounce in 2002 to $183 per ounce in 2003, as a result of increased diesel fuel prices and mining contractor rates.
During 2003 Geita process plant phase 1 upgrade throughput was 5.7 million tonnes. Mining volume increased to 59.9 million tonnes in 2003.
In 2002, production at Geita rose by 6 percent to 290,000 attributable ounces from 273,000 attributable ounces in 2001, despite a decline in the average grade for the year. Total cash costs increased by 19 percent from $147 per ounce in 2001 (to $175 per ounce in 2002, as a result of increased stripping requirements, increased mining from the Kukuluma pit and greater haulage distances between the mined areas and the Geita plant.
Outlook 

During 2004, AngloGold expects attributable production to increase by 4 percent to 345,000 ounces. Total cash costs should increase by 9 percent to $199 per ounce due to anticipated increases in mining contractor rates and plant maintenance requirements. Capital expenditure attributable to AngloGold of $10 million is planned in 2004.

· Morila (attributable 40 percent)
Description: On July 3, 2000, AngloGold acquired a 40 percent interest in the Morila project in Mali, from Randgold Resources Limited. The transaction involved the purchase by AngloGold from Randgold Resources (Morila) Limited of half of Randgold's 80 percent interest in Societe des Mines de Morila S.A. (Morila). As a result, AngloGold and Randgold Resources Limited each hold a 40 percent indirect interest in the Morila Joint Venture, with 20 percent being held by the Malian Government. Under the joint venture agreement, AngloGold is the operator of the mine. AngloGold paid a purchase price of $132 million for its stake in the Morila Joint Venture, with $72 million funded through AngloGold's own resources and the balance of $60 million funded through debt, with a project finance provision of $36 million at acquisition. This mine is situated some 180 kilometers by road, south east of Bamako, the capital city of Mali (600 kilometers south east of Sadiola).
Geology: Morila is a Birimian mesothermal sediment-hosted deposit. The mineralization model is still being developed, but indications are that mineralization is related to a compressive event. Original mineralization relationships are largely obscured by an intrusive event. 

Operating and production data for Morila

2001
2002
2003
Pay limit (oz/t)
0.08
0.08
0.06
Pay limit (g/t)
2.79
2.46
2.14
Recovered grade (oz/t)
0.200
0.349
0.221
Recovered grade (g/t)
6.87
11.96
7.56
Gold production (000 oz) 100 %
631
1,052
794
Gold production (000 oz) 40 %
252
421
318
Total cash costs ($/oz)
(1)
103
74
108
Total production costs ($/oz)
(1)
190
147
192
Capital expenditure ($ million) 100 %
28.5
17.0
11.6
Capital expenditure ($ million) 40 %
11.4
6.8
4.6
Employees
(2)
383
442
453
Outside contractors
(2)
550
469
874
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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Operating review
In 2003, gold production at Morila decreased by 24 percent to 318,000 attributable ounces from 421,000 attributable ounces in 2002, largely as a result of the exceptionally high-grades achieved during July to October 2002 not being sustained. Total cash costs for the year increased by 46 percent to $108 per ounce in 2003 from $74 per ounce in 2002 due to the lower grade, higher diesel costs and the impact of the weaker United States dollar on expenditure expressed in dollar terms.
In 2002, gold production at Morila increased by 67 percent to 421,000 attributable ounces from 252,000 attributable ounces in 2001, largely as a result of the interception of exceptionally high-grade zones of ore during July to October 2002. As a result, total cash costs for the year improved by 28 percent to $74 per ounce in 2002 from $103 per ounce in 2001.
Outlook
AngloGold expects attributable production at Morila to decrease by 28 percent to 228,000 ounces for 2004 due to a 47 percent decline in recovered grade. Total cash costs are expected to increase by 64 percent to $177 per ounce due to the lower grade, increased mining contractor costs and the end of the exoneration period on import duties and taxes. Capital expenditure attributable to AngloGold of $3 million is anticipated in 2004.
· Yatela (attributable 40 percent)
Description: As part of the consolidation of Anglo American Corporation's gold mining interests, AngloGold acquired a 50 percent interest in Sadiola Exploration Limited, the company which held the prospecting rights in the Sadiola region. Together with joint owner, IAMGOLD, exploration was performed and a feasibility study conducted at the Yatela deposit site, located some 25 kilometers north of Sadiola and approximately 50 kilometers south-south-west of the town of Kayes. The success of the feasibility study led to the formation of a company, Societe d'Exploitation des Mines d'Or de Yatela S.A., in which AngloGold and IAMGOLD each hold an effective 40 percent interest, with the Government of Mali holding 20 percent.
Geology: Yatela mineralization occurs as a keel-shaped body in Birimian metacarbonates. The keel is centered on a fault which was the feeder for the original mesothermal mineralization, with an associated weakly mineralized diorite intrusion. Mineralization occurs as a layer along the flanks and in the bottom of the keel. The ore dips almost vertically on the west limb and more gently towards the west on the east limb, with tight closure to the south.
Operating and production data for Yatela
2001
(1)
2002
2003
Pay limit (oz/t)
0.07
0.07
0.06
Pay limit (g/t)
2.30
2.09
2.04
Recovered grade (oz/t)
0.097
0.086
0.083
Recovered grade (g/t)
3.33
2.95
2.84
Gold production (000 oz) 100 %
131
269
218
Gold production (000 oz) 40 %
52
107
87
Total cash costs ($/oz)
(2)
149
175
235
Total production costs ($/oz)
(2)
231
252
379
Capital expenditure ($ million) 100 %
18.3
8.9
13.8
Capital expenditure ($ million) 40 %
7.3
3.6
5.5
Employees
(3)
144
157
190
Outside contractors
(3)
327
391
736
(1)
The first gold was produced on May 9, 2001 and attributable production, total cash costs and total production costs reflect the third and fourth quarters of 2001 only.
(2)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(3)
Average for the year.
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Operating review 

Attributable gold production at Yatela decreased by 19 percent to 87,000 ounces in 2003 compared to 107,000 ounces in 2002 due to a reduction in recovered grade and lower tonnage stacked. Tonnage was negatively affected in the second half of the year by bottlenecks in the new crushing circuit. Following excessive wear and high maintenance costs on the mineral sizer caused by hard ore, the mineral sizer was replaced in June 2003 by a primary jaw crusher and secondary cone crusher. Total cash costs increased by 34 percent to $235 per ounce, largely as a result of the lower grade, higher landed diesel fuel prices, increased mining contractor costs and the impact of the weaker United States dollar on expenditure expressed in dollar terms. 

2002 was the first full year of operation at Yatela. Attributable gold production increased by 105 percent to 107,000 ounces compared to 2001, while total cash costs increased by 18 percent to $175 per ounce, largely as a result of higher maintenance costs on the mineral sizers as a result of harder materials being treated, and increased reagent -- mainly cement -- usage. Cement is used for leach pad stability. 

Growth prospects 

In 2003 approval was granted to proceed with the development and mining of the Alamoutala deposit. Construction of the 10 kilometer road between Yatela and Alamoutala was completed during the third quarter of 2003. The mining fleet was ordered in the second quarter; stripping began in the third quarter and the first ore was delivered in the fourth quarter, with the hauling of the higher grade ore exceeding the original plan. Mining of the Alamoutala pit started in July 2003, 10 days ahead of schedule. 

Outlook 

During 2004, attributable production is expected to increase by 27 percent to 111,000 ounces due to planned increases in tonnage and grade stacked. Higher grade Alamoutala ore will replace low grade Yatela ore feed, and is expected to improve recovered grade. Total cash costs should decrease by 8 percent to $217 per ounce. Capital expenditure attributable to AngloGold of $1 million is planned in 2004.

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North American operations
AngloGold completed the acquisition of its North American operations from Minorco effective March 31, 1999. AngloGold's North American gold assets comprise the wholly-owned AngloGold (Colorado) Corp. (formerly Pikes Peak Mining Company), which holds a 67 percent interest in the Cripple Creek & Victor Gold Mining Company (CC&V) in Colorado with a 100 percent interest in gold produced. AngloGold's stake in the Jerritt Canyon Joint Venture was sold to Queenstake Resources USA Inc., with effect from June 30, 2003.
Operating performance of the North America region  

Production decreased to 390,000 ounces, primarily as a result of the sale of AngloGold's 70 percent interest in the Jerritt Canyon Joint Venture to Queenstake Resources, following an unsolicited offer received from Queenstake. Total cash costs were $223 per ounce. Capital expenditure decreased to $27 million from $74 million in 2002, as the Cresson expansion project was completed. 

· Cripple Creek & Victor (attributable 67 percent with 100 percent interest in production) 

Description: AngloGold (Colorado) Corp., a subsidiary of AngloGold North America Inc., owns 67 percent of Cripple Creek & Victor Gold Mining Company (CC&V), in the Cripple Creek mining district, south-west of Colorado Springs in Colorado. The remaining 33 percent of CC&V is held by Golden Cycle Gold Corporation (Golden Cycle). AngloGold is the manager of the operation. AngloGold is currently entitled to receive 100 percent of the cash flow from the operation until a loan, extended to the joint venture by AngloGold North America Inc., is repaid. CC&V is a low-cost, low-grade open-pit operation. AngloGold believes that good potential exists for the discovery of future mineral deposits and the establishment of these deposits as reserves.

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The prospective geological environment could result in extensions to the life of mine plan, potentially from underground mining below the ultimate pit bottom.
CC&V began the establishment of the Cresson orebody in May 1994. Establishment was completed by December 1994 and production from the Cresson mine commenced in the first quarter of 1995.
Geology: The Cripple Creek District is centered on a Tertiary-aged diatreme-intrusive complex, approximately circular in shape covering 18.4 square kilometers, surrounded by older Precambrian rocks. The Precambrian rocks consist of biotite gneiss and granodiorite which occur within a larger quartz monzonite intrusion which is in turn intruded by granite. The intersection of these four units and major faults formed an area of weakness which subsequently facilitated the formation of the Tertiary complex. The Tertiary intrusives range from syenite to phonolit/phonotephrite to lamprophyre. Fault structures are generally near vertical and strike north-northwest to northeast. These structures are commonly intruded by phonolite dykes and appear to have acted as primary conduits for the mineralizing solutions. The north-east structures are more subtle, but appear to control the locations of higher-grade pods of mineralization which occur at their intersection with the north-north- west system. High-grade gold mineralization is primarily associated with potassic and pyritic alteration and occurs adjacent to the major structural zones. The broader zones of disseminated mineralization occur primarily as halos around the stronger alteration in permeable wall rocks. The average depth of oxidation is 120 meters and is best developed along major structural zones. Individual orebodies can be tabular, irregular or massive. Individual gold particles are generally less than 20 microns in size and occur as native gold with pyrite or hydrous iron and manganese oxides and as gold-silver tellurides, often in quartz-fluorite veins. Silver is present but is economically unimportant.
Operating and production data for Cripple Creek & Victor operations
2001
2002
2003
Pay limit (oz/t)
0.01
0.01
0.01
Pay limit (g/t)
0.34
0.34
0.34
Recovered grade (oz/t)
0.017
0.016
0.020
Recovered grade (g/t)
0.59
0.57
0.67
Gold production (000 oz)
214
225
283
Total cash costs ($/oz)
(1)
187
187
199
Total production costs ($/oz)
(1)
332
391
389
Capital expenditure ($ million)
82.2
66.2
23.9
Employees
(2)
278
314
326
Outside contractors
(2)
243
258
121
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review and prospects
Production at CC&V improved towards the year-end to reach 283,000 ounces for 2003, compared with 225,000 ounces in 2002. Leach solution chemistry problems and lower irrigation flows (caused by drought) improved during the second half of 2003. Total cash costs rose to $199 per ounce (2002: $187 per ounce) due to higher reagent consumption to correct leach pad chemistry. Processing facility and haulage fleet production achieved budgeted levels by year-end, while Phase 4B of the leach pad construction was completed ahead of schedule with stacking having commenced in the second quarter of 2003.
`
In 2002, production at CC&V increased by 5 percent to 225,000 ounces from 214,000 ounces in 2001. Although gold production was negatively affected by technical problems associated with the leach system pH, improved metallurgy and higher leach solution volumes were processed during the latter part of 2002. These factors, combined with the near completion of the bulk of the $194 million expansion in the third quarter, served to enhance operational efficiencies. The expansion project increased the average annual gold production by 40 percent and extended the life of mine from 2008 to at least 2013, thereby yielding an additional total of 2.8 million ounces of production over the life of mine. Current indications are that the average life of mine cash costs will reduce from $227 per ounce to $170 per ounce. The new crushing facility was commissioned in July 2002, while additional leach pad and solution handling equipment were brought into production in September and December 2002, respectively. Total cash costs remained at $187 per ounce, as higher reagent costs were offset by continued cost-cutting efforts. Mined tonnage and metal production improved towards the latter part of 2002, as full benefit of the expansion project was realized.
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60
Outlook
In 2004, AngloGold expencts North American production decrease to 349,000 ounces with the sale of Jerritt Canyon. However, total cash costs are also expected to decline to $211 per ounce. Capital expenditure of $17 million is planned for 2004.
· Jerritt Canyon Joint Venture (attributable 70 percent)
Description: AngloGold (Jerritt Canyon) Corp., a subsidiary of AngloGold North America Inc., had a 70 percent ownership interest in, and was the operator and manager of, the AngloGold - Meridian Jerritt Canyon Joint Venture. (Jerritt Canyon Joint Venture). The remaining 30 percent was held by Meridian Jerritt Canyon Corp. The Jerritt Canyon operations were located north west of the town of Elko, Nevada. The joint venture land position (or tenements) covered approximately 360 square kilometers. On February 27, 2003, AngloGold announced that it had entered into a purchase and sale agreement with Queenstake Resources USA Inc. (Queenstake) for its interest in the Jerritt Canyon Joint Venture. Under this agreement, Queenstake paid the Jerritt Canyon Joint Venture partners, AngloGold and Meridian Gold, $1.5 million in cash and 32 million shares issued by a subsidiary, Queenstake Resources Limited, with $6 million in deferred payments and $4 million in future royalties. Queenstake accepted full closure and reclamation and other liabilities. The sale was effective from June 30, 2003.
Ore production was drawn from four underground mines, Murray, SSX, Smith and MCE. Murray commenced production in 1994, SSX commenced commercial production in mid-1998, and MCE commenced production in 2000. Development of the Smith underground mine was completed and production commenced in 2001.
Geology: The Jerritt Canyon district is located in the north central Independence Mountains north-west of Elko, Nevada. The gold deposits of the district are Carlin-type replacement deposits hosted by calcareous, carbonaceous Palaeozoic marine sediments. West-north-west trending faults and associated thrust fault and high-angle fault control the mineralization. This complex faulting has resulted in the repetition of favorable host rocks and structural traps for localization of gold mineralization.
Gold mineralization is found where favorable strata, contacts and juxtapositions of strata exist adjacent to the controlling structures, and the district, therefore, consists of many discrete orebodies with separate ore pods. Carbonaceous and pyritic, laminated, calcareous siltstones and argillaceous dolomitic limestones are the most favorable host rocks. The total gold content of individual ore pods varies from a few thousand ounces to several hundred thousand ounces.
The depth of the mineralized bodies varies widely from near surface to depths of several hundred meters and is largely controlled by the depth at which the favorable stratigraphic horizons occur. Historically, the bulk of gold production has come from open-pit operations, but with the exhaustion of near-surface deposits production emphasis has moved to underground deposits.
The gold associated with ore grades was principally precipitated with pyrite formed from the sulphidation of available reactive iron resident in the host rock. Significant amounts of carbon occur in the host rocks, which is problematic for processing and necessitated the installation of a roaster in 1989 to treat the high-carbon ores.
Operating and production data for Jerritt Canyon operations
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
On June 30, 2003, AngloGold sold its interest in Jerritt Canyon to Queenstake Resources USA Inc. ("Queenstake").
(3)
Average for 2001 and 2002. For 2003, average for the six months ended June 30, 2003.
2001
2002 ThroughJune 30, 2003
(2)
Pay limit (oz/t) (open-pit)
Depleted
Depleted
Depleted
Pay limit (g/t) (open-pit)
Depleted
Depleted
Depleted
Pay limit (oz/t) (underground) - average
0.24
0.22
0.22
Pay limit (g/t) (underground) - average
8.23
7.55
7.55
Recovered grade (oz/t) - milled
0.280
0.231
0.209
Recovered grade (g/t) - milled
9.74
7.91
7.15
Gold production (000 oz) 100 %
403
338
153
Gold production (000 oz) 70 %
282
237
107
Total cash costs ($/oz)
(1)
223
249
270
Total production costs ($/oz)
(1)
298
346
364
Capital expenditure ($ million) 100 %
15.1
10.8
3.5
Capital expenditure ($ million) 70 %
10.6
7.6
2.4
Employees (70 %)
(3)
288
291
291
Outside contractors
(3)
-
6
4
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61
Operating review
As expected, production at this operation continued to decline during the first six months of the year to 107,000 ounces, while total cash costs rose to $270 per ounce.
In 2002, a reorganization of labor in the underground mines resulted in reduced productivity in the first quarter, but the resultant improvements were felt from the second quarter of 2002 onwards. Attributable production decreased by 16 percent to 237,000 ounces in 2002, primarily due to lower first quarter mill tonnages, lower grades mined and completion of the Cortez tolling agreement. Total cash costs in 2002 increased by 12 percent to $249 per ounce compared with 2001, where 0.6 million tonnes of ore were mined, producing 282,275 attributable ounces of gold at a total cash cost of $223 per ounce. Development of the Smith underground mine was completed and production commenced in 2001.
South American operations
AngloGold's South American operations and joint ventures were acquired as part of the Minorco transaction effective March 31, 1999 and are located in Brazil and Argentina.
Operations in Brazil comprise the wholly-owned Mineracao Morro Velho (MMV) mines and a 50 percent interest in the Mineracao Serra Grande (MSG) mines. The company has a 92.5 percent interest in the Cerro Vanguardia mine in Argentina, as a result of the acquisition of an additional 46.25 percent stake which took place in July 2002.
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Operating performance of the South America region
Attributable production in the region increased by 11 percent to 532,000 ounces, as a result of the increased stake held in Cerro Vanguardia, as well as a rise in production at Morro Velho and Serra Grande. The recovered grade decreased by 10 percent to 7.0g/t mainly due to operational problems at Cerro Vanguardia, where total cash costs increased by 17 percent to $147 per ounce, owing largely to the appreciation of both the Real and the Peso against the US dollar.
Capital expenditure rose by 63 percent to $39 million, $8 million at Morro Velho on the Cuiaba expension project and improvements to the mine ventilation and backfill systems, and $8 million at Cerro Vanguardia on projects and exploration.
Attributable production is expected to decrease by 3 percent to 517,000 ounces in 2004, primarily due to the closing of Mina Velho in 2003 and Engenho d'Agua in mid-2004. This will be partially offset by higher production at both the Cuiaba and Corrego do Sitio mines. Total cash costs are expected to increase by 5 percent to $155 per ounce due to inflation, lower production and higher stripping ratio at Cerro Vanguardia.
· Cerro Vanguardia (attributable 92.5 percent)
Description: The Cerro Vanguardia (CVSA) operation is located to the north-west of Puerto San Julian in the Province of Santa Cruz, Argentina. AngloGold has a 92.5 percent interest in CVSA while the Santa Cruz Province has a 7.5 percent interest. The company owns the right to exploit the deposit for 40 years based on the Usufruct Agreement signed in December 1996. The operation, which was constructed at a total cost of $270 million, was commissioned in the fourth quarter of 1998.
Geology: The oldest rocks in this part of Patagonia are metamorphics of the Precambrian-Cambrian age. These are overlain by Permian and Triassic continental clastic rocks which have been faulted into a series of horsts and grabens. These are associated with both limited basaltic sills and dykes and with calc-alkaline granite and granodiorite intrusions. Thick andesite flows of Lower Jurassic age occur above these sedimentary units. A large volume of rhyolitic ignimbrites was emplaced during the Middle and Upper Jurassic age over an area of approximately 100,000 square kilometers. These volcanic rocks include the Chon Aike formation ignimbrite units that host the gold bearing veins at CVSA. Post-mineral units include Cretaceous and Tertiary rocks of both marine and continental origin, the Quaternary La Avenida formation, the Patagonia gravel and the overlying La Angelita basalt flows. These flows do not cover the area of the CVSA veins. Gold and silver mineralization at CVSA occurs within a vertical range of about 150 to 200 meters in a series of narrow, banded quartz veins that occupy structures within the Chon Aike ignimbrites. These veins form a typical structural pattern related to major north- south (Concepcion) and east-west (Vanguardia) shears. Two sets of veins have formed in response to this shearing. One set strikes about N40W and generally dips 65 to 90 degrees to the east; the other set strikes about N75W and the veins dip 60 to 80 degrees to the south. The veins are typical of epithermal low-temperature, adularia-sericite character. They consist primarily of quartz in several forms: as massive quartz, banded chalcedonic quartz, and quartz-cemented breccias. Dark bands in the quartz are due to finely disseminated pyrite, now oxidized to limonite. Other minerals include minor adularia, sericite, clay, and quartz pseudomorphs after barite. The veins show sharp contacts with the surrounding ignimbrite which hosts narrow stockwork zones that are weakly mineralized. The veins appear to have been cut by a sequence of north-east- trending faults that have southerly movement with no appreciable lateral displacement.
Operating and production data for Cerro Vanguardia
2001
2002
2003
Pay limit (oz/t)
0.25
0.18
0.23
Pay limit (g/t)
8.60
6.21
7.81
Recovered grade (oz/t)
0.307
0.277
0.208
Recovered grade (g/t)
10.51
9.49
7.15
Gold production (000 oz) 100 %
292
261
226
Gold production (000 oz) 92.50 %
136
179
209
Total cash costs ($/oz)
(1)
133
104
143
Total production costs ($/oz)
(1)
235
218
273
Capital expenditure ($ million) 100 %
9.9
3.0
10.3
Capital expenditure ($ million) 92.50 %
4.6
2.0
9.5
Employees
(2)
304
316
339
Outside contractors
(2)
162
224
351
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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63
Operating review
During 2003, attributable gold production at Cerro Vanguardia rose by 17 percent from 179,000 ounces in 2002 to 209,000 ounces in 2003 principally as a result of the acquisition of an additional 46.25 percent stake from Perez Companc in July 2002. Excluding the additional production arising from the acquisition, production declined by 13 percent due to problems caused by excess water in the pits that restricted the amount of high-grade material delivered to the plant for processing. As a result, the plant was fed by lower-grade dry ore (grades 25 percent lower than in 2002) from a contingency stockpile, which affected production levels. A full range material scrubber was commissioned in late September enabling the treatment of wet, higher-grade material. Total cash cost increased by 38 percent to $143 per ounce in 2003, compared with $104 per ounce in 2002, largely due to Peso appreciation and operational problems that led to lower production and higher costs. These were partially offset by a 68 percent higher silver by-product credit.
During 2002, attributable gold production rose by 32 percent to 179,000 ounces, principally as a result of the acquisition of an additional 46.25 percent stake from Perez Companc in July 2002. Total cash costs decreased by 22 percent to $104 per ounce as a result of better cost management and the Peso devaluation compared with 2001, when 0.4 million tonnes of ore were treated, producing 136,000 attributable ounces of gold at a total cash cost of $133 per ounce.
Growth prospects
Pre-feasibility studies to expand Cerro Vanguardia's plant capacity and to develop underground mining started in 2002, and led to the need of intensifying exploration until year 2005 in order to improve reserves and grades.
Outlook
In 2004, AngloGold expects attributable production at Cerro Vanguardia of 207,000 ounces, slightly lower than in 2003, at a cash cost of $166 per ounce. Capital expenditure attributable to AngloGold amounted to $9.5 million in 2003 and is expected to increase to $11.2 million in 2004.
· Morro Velho (attributable 100 percent)
Description: Through its wholly-owned subsidiary, Morro Velho, AngloGold has mining rights over 29,500 hectares in the state of Minas Gerais, in south-eastern Brazil. The Morro Velho complex is located in the Municipalities of Nova Lima, Sabara and Santa Barbara, near the city of Belo Horizonte.
With the closing of Mina Velha in 2003, ore is currently sourced from Cuiaba underground and Engenho D'Agua open pit mines, both treated at the Queiroz mine, and from Corrego do Sitio mine (heap leach).
Geology: The Morro Velho mining complex is situated in the Municipalities of Nova Lima, Sabara and Santa Barbara, south- east of Belo Horizonte in the Minas Gerais State of south-central Brazil. The area is host to historic and current gold mining operations. In addition to producing limestone and iron ore from a number of open-pit operations and is known as the Iron Quadrangle. The geology of Iron Quadrangle is composed of Proterozoic and Archaean volcano-sedimentary sequences and Pre-Cambrian granitic complexes. The host to the gold mineralization is the volcano-sedimentary Nova Lima Group (NLG) that occurs at the base of the Rio das Velhas SuperGroup (RDVS). The upper sequence of the RDVS is the meta- sedimentary Maquine Group.
Cuiaba Mine, located at Sabara Municipality, has gold mineralization associated with sulphides and quartz veins in Banded Ironstone Formation (BIF) and volcanic sequences.
At this mine, structural control and fluids flow ascension are the most important factors for gold mineralization with a common association between large-scale shear zones and their associated structures. Where BIF is mineralized, such as at Morro Velho, the ore appears strongly stratiform due to the selective sulphidation of the iron rich layers. Steeply plunging shear zones tend to control the ore shoots, which commonly plunge parallel to intersections between the shears and other structures. At Morro Velho the controlling mineralization structures are the apparent intersection of thrust faults with tight isoclinal folds in a ductile environment.
The host rocks at Morro Velho are BIF, Lapa Seca and mafic volcanics (principally basaltic). Mineralization is due to the interaction of low salinity CO2 rich fluids with the high iron BIF and basalts and the carbonaceous graphitic schists. Sulphide mineralization consists of pyrrhotite and arsenopyrite with subordinate pyrite and chalcopyrite, the latter tends to occur as a late stage fracture fill and is not associated with gold mineralization. Wallrock alteration is typically carbonate, potassic and silicic.
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Operating and production data for Morro Velho
2001
2002
2003
Pay limit (oz/t)
0.12
0.13
0.13
Pay limit (g/t)
4.17
4.49
4.49
Recovered grade (oz/t)
0.193
0.196
0.190
Recovered grade (g/t)
6.63
6.71
6.66
Gold production (000 oz)
209
205
228
Total cash costs ($/oz)
(1)
127
131
141
Total production costs ($/oz)
(1)
206
205
206
Capital expenditure ($ million)
9.9
17
25,4
Employees
(2)
1,296
1,257
1,286
Outside contractors
(2)
320
394
950
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review
In 2003, production for Morro Velho rose by 11 percent to 228,000 ounces from 205,000 ounces in 2002, basically due to increased contribution from the Cuiaba mine. The mine engaged a fourth team of employees early in the year, enabling operations to move to a seven-hour shift to improve efficiency. Increased contributions were achieved from Corrego do Sitio (in its first full year of production) and Morro do Galo, a dump that is being treated. This offset the closure of Mina Velha at the end of October 2003 and the lower production from Engenho D'Agua. The recovered grade decreased by 1 percent to 6.66g/t as a result of the addition of ore from the Corrego do Sitio open-pit mine. Total cash costs increased by 8 percent to $141 per ounce in 2003 from $131 per ounce in 2002, primarily due to Brazilian real appreciation, higher inflation levels, the annual wage agreement reached with the unions in August, as well as higher energy costs and contractor costs at the Corrego do Sitio mine associated with the higher stripping ratio. Capital expenditure increased to $25 million.
Production declined at Morro Velho marginally in 2002 from 209,000 ounces in 2001 to 205,000 ounces in 2002 because of lower tonnages treated. This was exacerbated by rock mechanic problems experienced at Cuiaba mine in the first quarter of 2002 that have since been resolved. Total cash costs increased by 3 percent from $127 per ounce in 2001 to $131 per ounce in 2002.
Growth prospects
The feasibility study for the Cuiaba Expansion project started in 2003 and is expected to be concluded by the second half of 2004 when the findings will be submitted to the AngloGold board for approval. The project aims at expanding current capacity from 2,400 tonnes per day to 4,000 tonnes per day at an estimated capital cost of $110 million. Additional production is due to start in early 2006. The scoping study of the Lamego project, in the vicinity of Cuiaba mine, was completed in 2003 and led to an exploration program to develop a conceptual study within the Cuiaba Expansion scenario. At Corrego do Sitio, the access ramp was completed in 2003, confirming sulphide ore with higher than expected grade. A drilling campaign was intensified and a scoping study initiated which is due to be concluded during the first quarter of 2004.
Outlook
Looking to 2004, AngloGold expects attributable production to decrease to 222,000 ounces resulting from the closure of Mina Velha in late 2003 and the expected closure of Engenho D'Agua mine in 2004. This decrease is expected to be partially offset by higher production from the Cuiaba and Corrego do Sitio mines. Total cash cost is forecast at $150 per ounce. Capital expenditure is expected to increase to $72 million during 2004, which includes expenditure on the Cuiaba expansion (due to start in the second half of 2004) and the Lamego and Corrego do Sitio sulphide projects.
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· Serra Grande (attributable 50 percent)
Description: AngloGold owns a 50 percent interest in, and manages, the Serra Grande joint venture. Kinross Gold Corporation owns the other 50 percent. Under the terms of the Serra Grande joint venture agreement, AngloGold has the right to appoint some of the management of the Serra Grande joint venture and has the right to a maximum of 50 percent of the earnings accrued and dividends paid by Serra Grande. Serra Grande controls, or has an interest in approximately 15,300 hectares in and around the Crixas mining district in the north-western areas of the Goias State, located in the central part of Brazil. The property includes two operating mines.
Geology: The Serra Grande operations are located 5 kilometers from the Crixas city (Goias State). They constitute two currently operating mines, Mina III and Mina Nova. The deposits occur in the Rio Vermelho and Ribeirao das Antes Formations of the Archaean Pilar de Goia's Group which together account for a large proportion of the Crixas Greenstone Belt in central Brazil. The stratigraphy of the belt is dominated by basics and ultrabasics in the lower sequences with volcano- sedimentary units forming the upper successions. The gold deposits are hosted by a sequence of schists, volcanics and carbonates occuring in a typical greenstone belt structural setting. The host rocks are of the Pilar de Goias Group of the Upper Archaean. Gold mineralization is associated with massive sulphides and vein quartz material associated with graphitic and sericitic schists and dolomites. The oreshoots plunge to the north-west with dips between 6 degrees and 35 degrees. The stratigraphy is overturned and thrust towards the east.
The greenstone belt lithologies are surrounded by Archaean tonalitic gneiss and granodiorite. The metamorphosed sediments are primarily composed of quartz, chlorite, sericite, graphitic and garnetiferous schists. The carbonates have been metamorphosed to ferroan dolomite marble with development of siderite and ankerite veining in the surrounding wallrock, usually associated with quartz veining. The basalts are relatively unaltered but do show pronounced stretching with elongation of pillow structures evident. The ultrabasics form the western edge of the belt and the basic volcanics and sediments form the core of the unit. The northern edge of the belt is in contact with a series of laminated quartzites and quartz sericite schists of the Lower Proterozoic Araxa Group and a narrow band of graphitic schists and intermediate to ultrabasic volcanics. This latter group is known as the Allocthon Mina Dos Ingleses (AMDI) and is host to a series of garimperos workings north of the town of Crixas where they are mining the talc schists. The general stratigraphy of this unit is similar to that seen in the main greenstone belt although at a smaller scale. However, the mineralization in the northern area exhibits a higher level of base metal mineralization with sphalerite and galena present.
Operating and production data for Serra Grande
2001
2002
2003
Pay limit (oz/t)
0.15
0.13
0.12
Pay limit (g/t)
5.04
4.55
4.15
Recovered grade (oz/t)
0.236
0.229
0.230
Recovered grade (g/t)
8.08
7.84
7.88
Gold production (000 oz) 100 %
192
187
190
Gold production (000 oz) 50 %
96
94
95
Total cash costs ($/oz)
(1)
107
100
109
Total production costs ($/oz)
(1)
198
191
200
Capital expenditure ($ million) 100 %
5.7
5.9
6.6
Capital expenditure ($ million) 50 %
2.9
3.0
3.3
Employees
(2)
515
511
519
Outside contractors
(2)
137
119
123
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review
At Serra Grande, attributable production during 2003 rose by 1 percent to 95,000 ounces compared with 94,000 ounces in 2002. This increase is a result of both higher grade and volumes treated. Total cash cost increased 9 percent to $109 per ounce mainly due to the appreciation of the Real, higher inflation, the annual wage agreement reached with the union in November of 2003 and increased services and materials costs. Capital expenditure was maintained at $3 million.
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Attributable production during 2002 decreased by 3 percent to 94,000 ounces from 96,000 ounces in 2001 as a result of a 3 percent fall in grade owing to depletion of the sulphide orebodies. Total cash costs decreased by 7 per cent to $100 per ounce in 2002 from $107 per ounce in 2001 which was mainly due to the devaluation of the Real.
Growth prospects
Exploration work continues at Serra Grande, with the aim of increasing reserves. During 2003, ground geophysical surveys were conducted to follow-up anomalies defined in the 2002 aerial geophysical survey, and a number of key targets were drill- tested. No significant mineralization has been located to date and drill testing is continuing.
Outlook
AngloGold expects production at Serra Grande to decrease by 7 percent to 88,000 ounces in 2004 owing to lower grades and an expected decrease in throughput. A total cash cost of $131 per ounce is forecast. Capital expenditure attributable to AngloGold is expected to be maintained at $3 million during 2004.
Australian operations
Acquired at the end of 1999, the Australian operations (formerly Acacia Resources Ltd) comprise two operations: Sunrise Dam Gold Mine in Western Australia, (AngloGold's interest is 100 percent), and Union Reefs Gold Mine in the Northern Territory, (AngloGold's interest is 100 percent), which completed processing ore in 2003 and at year end was subject to sale. The Tanami mine (AngloGold's interest is 40 percent), was leased for third party ore processing, while the Boddington Gold Mine (AngloGold's interest is 33.33 percent), is currently on care and maintenance, pending a decision to proceed with the Boddington expansion project.
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Operating performance of the Australia region
Production in the Australia region decreased by 14 percent to 432,000 ounces, while total cash costs rose to $243 per ounce and capital expenditure decreased by 32 percent to $21 million.
· Sunrise Dam (attributable 100 percent)
Description: Sunrise Dam gold mine lies some 220 kilometers north-northeast of Kalgoorlie and 55 kilometers south of Laverton in Western Australia. Gold production began in March 1997 at the Cleo deposit. Ore is mined by open-pit methods using contract mining and treated in a conventional gravity and leach process plant. In December 2002 AngloGold acquired the adjacent Sunrise mining lease from Placer Dome. The lease covers the completed Sunrise open-pit and its purchase has enabled full optimization of the Cleo MegaPit, and the opportunity for early underground access from the base of the Sunrise pit.
Geology: Following the purchase of the Sunrise lease, AngloGold now has control of the entire mineralized system at Sunrise Dam. In addition to the Cleo/Sunrise resource, the Golden Delicious resource has been identified seven kilometers north-east of Cleo. Gold ore at Sunrise Dam is structurally and lithologically controlled within gently dipping high strain shear zones (eg Sunrise Shear) and steeply dipping brittle-ductile low strain shear zones (eg Western Shear). Host rocks include andesitic volcanic rocks, volcanogenic sediments and magnetic shales.
Operating and production data for Sunrise Dam
2001
2002
2003
Pay limit (oz/t)
0.06
0.08
0.07
Pay limit (g/t)
2.15
2.37
2.26
Recovered grade (oz/t)
0.111
0.102
0.091
Recovered grade (g/t)
3.81
3.49
3.12
Gold production (000 oz)
295
382
358
Total cash costs ($/oz)
(1)
153
177
228
Total production costs ($/oz)
(1)
210
230
299
Capital expenditure ($ million)
37.9
25.7
19.6
Employees
(2)
115
112
94
Outside contractors
(2)
360
253
222
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
Operating review  

During 2003, gold production at Sunrise Dam decreased by 6 percent from 382,000 ounces in 2002 to 358,000 ounces as a result of mining progressing through lower grade areas of the orebody. Total cash costs increased by 29 percent to $228 per ounce in 2003 compared with $177 per ounce in 2002. In Australian dollar terms, total cash costs increased by 8 percent during the same period commensurate with the lower gold production. Capital expenditure for the year amounted to $20 million, down from $26 million in 2002. In the second half of 2003, the underground mine was commissioned as part of a 3-year feasibility study into the viability of a large underground operation. First ore from underground is expected in mid-2004.

During 2002, gold production at Sunrise Dam increased by 30 percent from 295,000 ounces in 2001 to 382,000 ounces, as plant throughput rose by 41 percent to an annual rate of 3.4 million tonnes per annum following the capital expansions undertaken in 2001. Total cash costs increased by 15 percent from $153 per ounce in 2001 to $177 per ounce in 2002. In Australian dollar terms, total cash costs increased by 9 percent during the same period. After completion of a major cutback at the end of 2001, mining in the new Mega Pit reached full capacity in the first half of 2002.
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Growth prospects 

Following a scoping study that was completed in the first half of 2003, underground development commenced in the fourth quarter. The three-year underground project, involving the development of two declines and 125,000 meter of drilling from surface and underground, will enable the underground potential of the Sunrise Dam orebody to be fully explored. Declines are being developed in the vicinity of defined underground reserves, which will be mined through the course of the project. Deep drilling to date has indicated that the sub-vertical, high-grade zones that have been a feature of open-cut mining at Sunrise Dam continue at depth. It is expected that the project will add significantly to underground reserves and a decision on whether to proceed to full-scale underground mining will be made in early 2007. 

Outlook 

With the first ore being produced from underground reserves during the second quarter, AngloGold expects gold production at Sunrise Dam to increase to approximately 405,000 ounces in 2004 at an expected total cash cost of $237 per ounce. Capital expenditure was $20 million in 2003 and should be in the order of $29 million in 2004, the majority of which will be on the Sunrise Dam underground feasibility study. 

· Boddington (attributable 33.33 percent) 

Description: Boddington gold mine, which closed at the end of 2001, was an open-pit operation approximately 100 kilometers south east of Perth. Formerly operated by Worsley Alumina, since September 2002 it has been operated by the Boddington Gold Mine Management Company under the direction of the Boddington joint venture partners, namely AngloGold (33.33 percent), Newmont Boddington (44.44 percent) and Newcrest Operations (22.22 percent). 

Geology: Boddington is located in the Archaean Saddleback greenstone belt in south-west Western Australia. The main zone of gold mineralization occurs reasonably continuously over a strike length of over five kilometers and a width of about one kilometer. The oxide gold mineralization forms a semi-continuous blanket within the upper iron-rich laterite, with more erratic gold distribution in the lower zones. 

The basement rocks below the oxide zone host gold mineralization with a variety of geological styles, predominantly in andesitic volcanics and diorite dikes. 

Operating and production data for Boddington

2001
2002
2003
Pay limit (oz/t)
0.02
-
-
Pay limit (g/t)
0.63
-
-
Recovered grade (oz/t)
0.027
-
-
Recovered grade (g/t)
0.92
-
-
Gold production (000 oz) 100 %
234
6
-
Gold production (000 oz) 33.33 %
78
2
-
Total cash costs ($/oz)
(1)
190
-
-
Total production costs ($/oz)
(1)
231
-
-
Capital expenditure ($ million) 100 %
1.8
-
3.6
Capital expenditure ($ million) 33.33 %
0.6
-
1.2
Employees
(2)
16
12
10
Outside contractors
(2)
10
29
-
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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Operating review 

In 2003, the plant was on care and maintenance pending commencement of the Boddington expansion project. A complete review and update to the feasibility study for the Boddington expansion, or Wandoo project, was commissioned by the joint venture partners. During 2003, site activities included minor rehabilitation, plant preservation, exploration and assistance with testwork for the feasibility study update. 

During 2002, the mine produced 2,000 attributable ounces of gold from clean-up of the plant. The plant was then placed on care and maintenance pending commencement of the Boddington expansion project from a production of 78,000 attributable ounces of gold at a total cash cost of $190 per ounce in 2001. 

Growth prospects 

A decision to proceed with the Boddington Expansion Project is expected by the second half of 2005. AngloGold owns 33.33 percent of the Boddington Gold Mine, along with Newmont Boddington (44.44 percent) and Newcrest Operations (22.22 percent). A feasibility study completed in 2000 was based on an operation with a throughput of 25 million tonnes per annum, producing an average of 600,000 ounces of gold and 22,500 tonnes of copper per annum over a life of mine of 15 years, at an estimated attributable capital cost of $192 million. Further work has been undertaken by the respective joint venture partners during 2003 to further test the feasibility study, evaluate the project risk and identify opportunities for enhancing returns. This work is likely to continue into the second quarter of 2004 after which a full update of the feasibility study is anticipated. Environmental approvals associated with the expansion were received in June 2002 and will remain valid for a period of five years. 

· Union Reefs (attributable 100 percent) 

Description: Union Reefs open-pit gold operations lie some 160 kilometers south-east of Darwin between the townships of Pine Creek and Adelaide River in the Northern Territory. 

Geology: The project areas lie in the central portion of the Pine Creek geosyncline, an Early Proterozoic sequence of deformed sediments which were intruded by a series of granitoids. Gold mineralization at Union Reefs lies within the Pine Creek Shear Zone and is indicated by numerous historic gold workings centered on two north-west trending lines of mineralization which extend over a strike length of 4.5 kilometers. Economic mineralization has been outlined over a strike length of 2.5 kilometers between Crosscourse and Union North and is typically subvertical and associated with quartz-sulphide veining. 

Operating and production data for Union Reefs

2001
2002
2003
Pay limit (oz/t)
0.03
0.03
0.05
Pay limit (g/t)
1.11
1.05
1.61
Recovered grade (oz/t)
0.040
0.040
0.033
Recovered grade (g/t)
1.36
1.36
1.12
Gold production (000 oz)
114
118
74
Total cash costs ($/oz)
(1)
230
224
272
Total production costs ($/oz)
(1)
386
364
365
Capital expenditure ($ million)
0.3
0.1
-
Employees
(2)
70
62
50
Outside contractors
(2)
170
125
72
(1)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(2)
Average for the year.
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Operating review and prospects
Mining continued in its final stages for the first half of 2003, with small, dispersed resources being mined and processed, along with low-grade stockpiles. Mining ceased in the third quarter and the milling operations shut down in October 2003. In 2003, gold production at Union Reefs decreased by 37 percent to 74,000 ounces from 118,000 ounces in 2002, as the mine completed its mining and processing operations. Total cash costs increased by 21 percent to $272 per ounce as a result of production of lower grade material and an increase in the Australian dollar to US dollar exchange rate. In Australian dollar terms, total cash costs increased by 5 percent during the same period. The mine is now in care and maintenance mode, pending the sale of the operation in the first half of 2004 following an announcement by AngloGold in November 2003, that it had reached a conditional agreement with Greater Pacific Gold Limited to sell the Union Reefs mine, associated assets and tenements for a consideraton of A$6 million.
In 2002, gold production at Union Reefs increased by 4 percent to 118,000 ounces from 114,000 ounces in 2001, despite disruptions to mining in the main Crossourse pit during the wet season at the beginning of 2002, and an increased focus on mining smaller, satellite resources. Furthermore, total cash costs fell by 3 percent to $224 per ounce as a result of the higher production and tight cost control. In Australian dollars, total cash costs decreased by 3 percent during the same period.
· Tanami (attributable 40 percent)
Description: The Tanami open-pit gold operations are located in the Tanami desert, 650 kilometers north-west of Alice Springs in the Northern Territory.
Geology: The majority of known gold mineralization in the district is hosted by the Mount Charles Beds which consist of Early Proterozoic sediments and volcanic rocks which are metamorphosed, and generally steeply dipping, complexly folded and magnetic. A complex and variable regolith is well developed to depths of up to 70 meters. The exploration tenements are extensively covered by sand, clay, silicrete and calcrete. The dominant mineralization control is structural although there is some stratigraphic control, with basaltic units the preferred host.
Operating and production data for Tanami operations
2001
2002
(1)
2003
(1)
Pay limit (oz/t)
0.05
-
-
Pay limit (g/t)
1.8
-
-
Recovered grade (oz/t)
0.053
-
-
Recovered grade (g/t)
1.81
-
-
Gold production (000 oz) 100 %
32
-
-
Gold production (000 oz) 40 %
22
-
-
Total cash costs ($/oz)
(2)
278
-
-
Total production costs ($/oz)
(2)
545
-
-
Capital expenditure ($ million) 100 %
1.0
-
-
Capital expenditure ($ million) 40 %
0.4
-
-
Employees
(3)
-
-
-
Outside contractors
(3)
-
-
-
(1)
There was no production attributable to AngloGold in 2002 or 2003.
(2)
Total cash costs and total production costs are non-GAAP measures. For further information on these non-GAAP measures, see "Item 5A.: Operating results - Total cash costs and total production costs".
(3)
Average for the year.
Operating review
During 2002 and 2003, there was no production from the mine attributable to AngloGold. The process plant is leased to Newmont Mining Corporation to treat ore from its Groundrush deposit, some 65 kilometers from the Tanami plant.
Operations ceased during the third quarter of 2001 when the remaining stockpiles were exhausted. The ore was processed at the Tanami processing plant, about 23 kilometers north of the open pits. The operation produced 21,500 attributable ounces in 2001, with total cash costs of $278 per ounce. By year end, the process plant had been leased to Newmont North Flinders (NFM) to treat ore from the Groundrush deposit.
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Rights to mine and title to properties
AngloGold's rights to own and exploit mineral reserves and deposits are governed by the laws and regulations of the jurisdictions in which the mineral properties are located.
South Africa
Currently, South African property law provides for the ownership of mineral rights by private individuals, including companies. It is possible for one person to own the surface of a property and for another to own the mineral rights. Mineral rights can be divided into the different minerals, each capable of separate ownership so that, for example, one person can own the coal rights, another the precious metals rights and a third the diamond rights. An owner of mineral rights can lease them, mortgage them or dispose of them at will. The government is also an owner of mineral rights and is treated in the same manner as a private individual. Currently, AngloGold owns the surface rights of areas deemed to be critical to its operations in South Africa as well as the mineral rights to all of its mining areas and possesses all required mining authorizations to conduct its operations.
Rights to mine in South Africa are derived from mining authorizations granted by the State over mineral rights in the name of the holder of those rights pursuant to the Minerals Act No. 50 of 1991. To obtain a mining authorization, the miner must first show that it has the capacity to mine, and the ability to rehabilitate the environment and comply with safety and other requirements. An environmental rehabilitation plan must be filed and approved by various government departments covering the restoration of the surface areas of the mine, the prevention of water and dust pollution and the removal of structures not required for other purposes. Previously, mining rights were held under leases issued by the State under the terms of which a mining lease payment was made to the State as an effective resource tax. Lease payments are now made only where the State owns the mineral rights. All South African operations have indefinite mining licenses under the current legislation (for a more detailed discussion see below as well as note 27 to the consolidated financial statements, "Minerals and Petroleum Resources Development Act").
AngloGold has submitted all required environmental rehabilitation plans relating to its operations to the South African authorities. All these plans have been approved.
Mineral and Petroleum Resources Development Act
In October 2002, the President of South Africa assented to the Mineral and Petroleum Resources Development Act ("MPRDA"), which was passed by the parliament of South Africa in June 2002. It will take effect on a date to be proclaimed by the President, which is expected to be during 2004. Until then the existing regulatory regime for mineral rights will remain in place whereby the holder of mineral rights is entitled to mine on obtaining a mining authorization. AngloGold owns substantially all the mineral rights for which it holds mining authorizations.
The MPRDA vests custodianship of South Africa's mineral rights in the State, which will issue prospecting rights or mining rights to applicants in the future. The existing common law prospecting, mining and mineral rights will cease to exist, but transitional arrangements are provided in order to give holders of existing rights the opportunity to convert their current rights into new rights.
Where AngloGold holds mineral rights and mining authorizations and is conducting mining operations on the date on which the MPRDA comes into effect, it will be able, within five years from the date of effectiveness of the MPRDA, to submit the old rights and authorizations for conversion to new mining rights. AngloGold will need to submit a mining work program and thereby substantiate the area and period of the new rights and also to comply with the requirements of the Charter as described below. A similar procedure applies where it holds prospecting rights and a prospecting permit and is conducting prospecting operations, but AngloGold must apply for conversion to new prospecting rights within two years from the date of effectiveness of the MPRDA for which purpose a prospecting work program must be submitted. Where it holds unused rights, however, AngloGold will have one year to apply for new prospecting rights or mining rights, the requirements in regard to which are more stringent than for conversion, requiring, for example, non-concentration of resources, fair competition, non- exclusionary effects and proof of financial and technical ability.
Even where new rights are obtained under the MPRDA, these rights will not be equivalent to the existing rights. The area covered by the new rights may be reduced by the State if it finds that the prospecting or mining work program submitted by an applicant does not substantiate the need to retain the area covered by the old rights. The duration of the new rights will no longer be perpetual but rather, in the case of new mining rights, for a maximum of 30 years with renewals of up to 30 years each and, in the case of prospecting rights, up to five years with one renewal of up to three years. The MPRDA provides for a retention period after prospecting of up to three years with one renewal of up to two years, subject to certain conditions, such as non-concentration of resources, fair competition, and non-exclusion of others. In addition, the new rights will only be transferable subject to the approval of the Minister of Minerals and Energy. Mining or prospecting must commence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must be conducted continuously and actively thereafter.
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The new rights can be suspended or cancelled by the Minister of Minerals and Energy on breach or, in the case of a mining right, on non-optimal mining in accordance with the mining work program.
The new rights will be subject to a State royalty calculated on gross revenue as proposed in the draft Mineral and Petroleum Royalty Bill, 2003, which was released in March 2003 for comment and which proposes a royalty payment of three percent of gross revenue per annum, payable quarterly, in the case of gold. As proposed, royalty payments will commence upon the conversion and granting of a new mining right. AngloGold and other members of the South African mining community have submitted comments on the draft bill to the relevant authorities. These comments included recommendations for a profit based, rather than a revenue based, royalty and in order not to delay the conversion of mineral rights from old to new order mining rights, that the proposed royalty should only become payable from a fixed date being five years after the MPRDA takes effect, which date is the final date for the conversion of old order to new order mining rights under the MPRDA. In addition, a reduction in the royalty rate from that proposed in the draft Mineral and Petroleum Royalty Bill has been proposed. On February 18, 2004, in the Budget Speech for the 2004 fiscal year, the South African Minister of Finance proposed several refinements to the draft Mineral and Petroleum Royalty Bill. These include a delay in the introduction of the royalty to five years after the introduction of the MPRDA and confirmation of the South African Government's preference for a revenue based royalty. It was further indicated that the royalty regime would take cognisance of the mining sector's diverse production and profitability dynamics with differential rates to apply to marginal mining operations. The introduction of the proposed royalty will have an adverse impact upon AngloGold's profitability, as currently no royalty is payable.
The MPRDA calls for a Charter to be developed by the Minister of Minerals and Energy within six months of commencement of the Act, the content of which has largely been agreed with mining industry representatives (including AngloGold), and with representatives of other stakeholders. The Charter's stated objectives include the:
·
expansion of opportunities for persons disadvantaged by unfair discrimination under the previous political dispensation;
·
expansion of the skills base of such persons;
·
promotion of employment and advancement of the social and economic welfare of mining communities; and
·
promotion of beneficiation, or the crushing and separation of ore into valuable substances or waste within South Africa.
The Charter requires that each mining company achieve 15 percent ownership by historically disadvantaged South Africans of its South African mining assets within five years, and 26 percent ownership within ten years. It contemplates that this will be achieved by, among other things, disposals of assets by mining companies to historically disadvantaged persons on a willing seller - willing buyer basis at fair market value. In addition, the Charter requires mining companies to formulate plans for achieving employment equity at management level with a view to achieving 40 percent participation by historically disadvantaged persons in management and 10 percent participation by women in the mining industry, each within five years. When considering applications for the conversion of existing rights, the State will take a "scorecard" approach, evaluating the commitments of each company to the different facets of promoting the objectives of the Charter. The draft scorecard was published by the South African Government in February 2003.
AngloGold fully supports the principle that the mining industry and the wider South African economy have to find ways of dealing with the legacy of the country's history in a manner that promotes economic development and growth. AngloGold has made progress in adjusting the ownership structure of its South African mining assets and the composition of its management consistent with the Charter's spirit. It believes that it is well placed to meet the Charter's targets in accordance with the scorecard.
AngloGold has completed a number of asset sales to companies owned by historically disadvantaged persons in the past four years, which meet the requirements of the Charter and the scorecard. According to AngloGold's estimates based on operating data for the twelve months ended September 30, 2003, these transactions have transferred 22.4 percent of its attributable units of production in South Africa to historically disadvantaged persons. However, AngloGold would expect the State to conduct its own assessment of these transfers when AngloGold submits its conversions or applications for acquisition of new rights to replace its existing rights. In addition, it is continuing to evaluate alternative ways in which to achieve the objectives of the Charter through, for example, forms of broad-based equity ownership by historically disadvantaged entities, groups or individuals, including employee share ownership and empowerment unit trusts.
AngloGold believes that it has made significant progress towards meeting the requirements of the Charter and the scorecard in human resource development, employment equity, mine community and rural development, housing and living conditions, procurement and beneficiation. It will also reflect these results when it lodges its conversions or applications for acquisition of new rights to replace its existing rights. Its performance under the criteria set by the Charter and the scorecard will be assessed by the State upon the occurrence of such lodgements or applications. Details of the State's methodology for calculating performance in regard to beneficiation have, however, not yet been made public. Failure on the part of AngloGold to comply with the requirements of the Charter and the scorecard could subject it to negative consequences.
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AngloGold may also incur expenses in giving additional effect to the Charter and the scorecard, including costs which it may incur in facilitating the financing of initiatives towards ownership by historically disadvantaged persons as part of the industry- wide commitment to assist such persons in securing ZAR100 billion of financing during the first five years of the Charter's life. There is furthermore no guarantee that any steps AngloGold might take to comply with the Charter would ensure that it could successfully acquire new mining rights in place of its existing rights. In addition, the terms of such new rights may not be as favorable to AngloGold as the terms applicable to its existing rights. Based on present indications, however, AngloGold believes that it should be able to successfully acquire new rights on reasonable terms.
The MPRDA also imposes on mining companies additional responsibilities relating to environmental management and to environmental damage, degradation or pollution resulting from their prospecting or mining activities. AngloGold has a policy of evaluating, minimizing and addressing the environmental consequences of its activities and, consistent with this policy and the MPRDA, has undertaken a review of the environmental costs and liabilities associated with its South African operations in light of the new, as well as the existing, environmental requirements. While this examination could result in an increase in its compliance costs and accruals for environmental remediation, it is not certain at this stage whether these costs or liabilities will have a material adverse effect on its financial condition or results of operations.
See "Item 3D.: Risk Factors - Changes to mineral rights ownership regimes in South Africa, where a significant portion of AngloGold's mineral reserves and deposits are located could have a material impact on AngloGold's financial position".
Mali
Mineral rights in Mali are governed by the Mining Act and Regulations promulgated in 1991. Exploration is carried out under permits granted by Ministerial Decree following application to the National Director of Geology and Mines from the Ministry of Mines, Energy and Water conveying exclusive title to conduct exploration. The permit is valid for a three-year period and renewable twice. The company applying (in a randomly selected area) for such a permit must provide proof of technical and financial capabilities.
An exploitation permit is required in order to mine a deposit located within the exploration area. This permit grants exclusive title to mine for a maximum period of 30 years (inclusive of renewals) and is granted by the head of State following application to the national director of mines.
Both permits referred to above include a Mining Convention (convention d'etablissement) covering exploration, mining, treatment and marketing in a comprehensive document. This outlines the general conditions with regard to exploration (work program, fiscal and customs regime) and exploitation (formation of a local limited liability company and mining company, State shareholdings, the fiscal and customs regime during construction and exploitation phases, exchange controls, marketing of the product, accounting regime, training programs for local labor, protection of the environment, reclamation, safety, hygiene, and settlement of disputes).
Application for an exploration permit is submitted to the national director of mines based on various documents, including applicant identification, locations, receipts for payment of fixed rights and surface fees and articles of association, together with a draft mining convention. An inter-ministerial committee examines the applications and one company is retained to do the exploration. This company then negotiates a draft of the Mining Convention and the minister of mines grants the exploration permit by an in-house decree published in the Malian Gazette.
Once an economically viable deposit has been identified, an application for an exploitation permit is submitted to the national director of mines. This application must be made prior to the expiry of the exploration permit. The application document also contains a map and coordinates, a receipt for payment of fixed rights and surface fees and a summary of technical and financial capabilities. The exploitation title is granted following a thorough investigation. AngloGold has complied with all applicable requirements and the relevant permits have been issued.
Morila, Sadiola and Yatela have 30-year permits which expire in 2029, 2024 and 2030, respectively.
Namibia
Mineral rights in Namibia vest in the State. In order to prospect or mine, the Ministry of Minerals and Energy initially grants a prospecting license and on presentation of a feasibility study, a mining license is then granted taking into account the abilities of the company, including mining, financial and technical capabilities, rehabilitation programs and payment of royalties. The relevant license has been granted to AngloGold in respect of its mining and prospecting activities in Namibia. The current 15- year license which was to expire in 2003 has been renewed and extended for another 15 years to 2018.
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Tanzania
Mineral rights in the United Republic of Tanzania are governed by the Mining Act of 1998 (the "Act") and property in and control over minerals are vested in the State of Tanzania. Prospecting for the mining of minerals, except petroleum, may only be conducted under authority of a mineral right granted by the Minister of Mines and Energy under the Act. The three types of mineral rights most often encountered, which are also those applicable to AngloGold, are:
· prospecting licenses; 
· retention licenses; and 
· mining licenses.
A prospecting license grants the holder thereof the exclusive right to prospect in the area covered by the license for minerals to which the license applies for a period of three years. Thereafter, the license is renewable for two further periods of two years each. A company applying for a prospecting license must, inter alia, state the financial and technical resources available to it. On each renewal of a prospecting license, 50 percent of the area covered by the license must be relinquished. Mining is carried out through either a mining license or a special mining license, both of which confer on the holder thereof the exclusive right to conduct mining operations in or on the area covered by the license. A mining license is granted for a period of ten years and is renewable for a further period of ten years. A special mining license is granted for a period of 25 years and is renewable for a further period of 25 years. If the holder of a prospecting license has identified a mineral deposit within the prospecting area which is potentially of commercial significance, but it cannot be developed immediately by reason of technical constraints, adverse market conditions or other economic factors of a temporary character, it can apply for a retention license which will entitle the holder thereof to apply for a special mining license when it sees fit to proceed with mining operations. A retention license is valid for a period of five years and is thereafter renewable for a single period of five years. A mineral right may be freely assigned by the holder thereof to another person, except for a mining license, which must have the approval of the Ministry to be assigned. However, this approval requirement for the assignment of a mining license will not apply if the mining license is assigned to an affiliate company of the holder or to a financial institution or bank as security for any loan or guarantee in respect of mining operations. A holder of a mineral right may enter into a development agreement with the Ministry to guarantee the fiscal stability of a long-term mining project and make special provision for the payment of royalties, taxes, fees and other fiscal imposts. AngloGold has complied with all applicable requirements and the relevant licenses have been issued for 25 years and expire in 2024.
United States of America
Mineral rights, as well as surface rights, in the United States of America are owned by private parties, State governments and the federal government. Most lands prospective for precious metals exploration, development and mining are owned by the federal government and are obtained through a system of self-initiated mining claim location pursuant to the Federal Mining Law of 1872, as amended. Individual states typically follow a lease system for state-owned minerals. Private parties have the right to sell, lease or enter into other agreements, such as joint ventures, with respect to minerals that they own or control. All mining activities, regardless of whether they are situated on privately- or publicly-owned lands, are regulated by a myriad of federal, state and local laws, regulations, rules and ordinances, which address matters including environmental protection, mitigation and reclamation. Authorizations and permits setting forth the activities and restrictions pertaining thereto are issued by the responsible governmental agencies at all phases of mining activities.
The Jerritt Canyon joint venture property control consists of owned or leased unpatented mining claims covering 58,000 acres of public lands, and owned or leased property covering 21,000 acres of private lands. Ownership of unpatented mining claims for public lands and ownership of private lands provide the joint venture with the right to mine for an indefinite tenure. Leases of public or private property rights to the joint venture also convey full mining rights and have terms, which are indefinitely extended so long as operations continue. All life of mine reserves are within these property controls. The mining and reclamation permits issued by the State of Nevada and the US Forest Service are life of mine permits. As announced on February 27, 2003, AngloGold entered into a purchase and sale agreement with Queenstake Resources USA Inc. (Queenstake) for its interest in the Jerritt Canyon Joint Venture. The agreement includes inter alia that Queenstake accept full closure and reclamation and other liabilities. This transaction was concluded with effect from June 30, 2003. 

The Cripple Creek & Victor Gold Mining Company joint venture is almost entirely comprised of company owned patented mining claims for public lands, with a small percentage of private and State lands being leased and the balance owned. The total area of control is approximately 7,100 acres. Patented claims vest ownership in the holder, including the right to mine for an indefinite tenure. All life of mine reserves are within these property controls. The mining and reclamation permits issued by the State of Colorado are life of mine permits.

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South America 

In Brazil, Mine Manifests (mining titles granted in 1936) and Mining Decrees (mining titles presently granted via a decree signed by the Minister of Mines and Energy) are valid for an undetermined period - until depletion of reserves - provided that the mining title holder complies with present Brazilian mining legislation, as well as with those requirements set out by the DNPM who acts as inspecting entity for mining activities. The difference between a Mine Manifest and a Mining Decree consists in the legal nature of these two mining titles, since it is much more difficult and complicated for the Public Administration to extinct a Mine Manifest than a Mining Decree, although, in practice, it is possible to cancel or become extinct if the abandonment of the mining practices is formally proven. All of AngloGold's operations in Brazil have indefinite mining licenses. 

According to Argentinean Mining Legislation, mines are private property of the Nation or a Province depending where they are located. Individuals are empowered to search, operate and dispose of mines as owners by means of a legal license granted by competent authority under the provisions of the Mining Code. The usual ways used in Argentina to transfer rights over mining licenses are: to sell the license; to lease it; or to assign the rights under such a license by a beneficial interest or Usufruct Agreement. The current license expires in 2036. 

Australia 

In Australia, with few exceptions, all onshore mineral rights are reserved to the government of the relevant State or Territory. Exploration for, and mining of, minerals is regulated by the general mining legislation of each respective State or Territory and controlled by the relevant State or Territory mining ministry. Where native title has not been extinguished, native title legislation may apply to the grant of tenure and some subsequent administrative processes. Federal and State Aboriginal heritage legislation also operate to protect special sites and areas from disturbance, to date there has not been any adverse impact on any of AngloGold's operating properties. 

AngloGold's operating properties are located in the State of Western Australia and the Northern Territory. The most common forms of tenure are exploration and prospecting licenses, mining leases and general purpose leases. In most Australian states, if the holder of an exploration license establishes indications of an economic mineral deposit and complies with the conditions of the grant, the holder of the exploration license has a priority right against all others to apply for a mining lease which gives the holder exclusive mining rights with respect to minerals on the property. It is possible for one person to own the surface of the property and for another to own the mineral rights. Typically the maximum initial term of a mining lease is 21 years, and the holder has the right to renew the lease for a further period of 21 years. Subsequent renewals are subject to the discretion of the respective State or Territory's minister responsible for mining rights. Mining leases can only be assigned with the consent of the relevant minister. Government royalties are payable as specified in the relevant legislation in each State or Territory. A general purpose lease may also be granted for one or more of a number of permitted purposes. These purposes include erecting, placing and operating machinery and plant in connection with mining operations, depositing or treating minerals or tailings and using the land for any other specified purpose directly connected with mining operations. 

AngloGold owns the mineral rights and has 21-year term mining leases with rights of renewal to all of its mining areas in Australia, including its proportionate share of joint venture operations, and both it and its joint venture partners are fully authorized to conduct operations in accordance with relevant laws and regulations. The mining leases cover the current life of mines at AngloGold's operations in Australia. 

Ore Reserves 

The tables below set out the group's Proven and Probable Ore Reserves as of December 31, 2002 and 2003, in both imperial and metric units. 

Ore reserve estimates in this annual report on Form 20-F are reported in accordance with the requirements of the SEC's Industry Guide 7. Accordingly, as of the date of reporting, all reserves are planned to be mined out under the life of mine plans within the period of AngloGold's existing rights to mine, or within the time period of assured renewal periods of AngloGold's rights to mine. In addition, as of the date of reporting, all reserves are covered by required permits and governmental approvals. See "Item 4B.: Business overview -- Rights to mine and title to properties", "-- Safety and Health", and "Item 4D.: Property, plants and equipment".

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AngloGold has standard procedures for the estimation of Ore Reserves. These standard procedures are performed by technical personnel at the mining operations and reviewed by regional and corporate competent persons. In the case of its underground mines, the procedure is as follows: Firstly, gold content and tonnage are estimated for in-situ mineralized material at a mining operation. This mineralized material is not necessarily economically viable. Exclusions on the grounds of safety (for example, stability pillars, shaft pillars) are then defined. Grade and tonnage curves specific for each of the deposits, in conjunction with the cost structure, yield, Mine Call Factor and Ore Reserves of the operation and gold price estimates are used to determine an optimal mining mix. This process facilitates the determination of the average grade to be mined by each operation. This grade is then applied to the grade-tonnage curves, which in turn facilitates the determination of the cut-off grade and Ore Reserve tonnage for the operation. A full mine design is carried out on the blocks of mineralized material, excluding large mining areas that do not meet the cut-off grade criterion. This mining plan is reviewed to ensure that it satisfies the economic criterion and practical limitations of access and timing. If the review process is positive then the mineralized material (with dilution) included in the mining plan is declared and published as the Ore Reserve for that operation. 

In the case of surface, open-pit mines the procedure is as follows: Revenue and costs are calculated for each mining block within a three-dimensional model of the orebody using assumed values for gold price, operating costs, metallurgical recoveries and slope angles. An optimisation process is then applied to determine all the blocks combined within the model that make a positive contribution under these assumptions. Within this process, a cut-off grade is applied which determines the ore blocks to be treated and included in the Ore Reserves. These blocks are scheduled with consideration being given to practical mining considerations and limitations. Scheduled ore blocks that are classified as Proven or Probable constitute the Ore Reserve. 

For 2003, in respect of AngloGold's South African assets, Ore Reserves were determined assuming a gold price of $350 per ounce and an exchange rate of ZAR7.00 = $1. This compares with a gold price of $325 per ounce and an exchange rate of ZAR10.50 = $1 as at December 31, 2002. 

In respect of assets in East and West Africa, Ore Reserves were determined assuming a gold price of $350 per ounce. 

In respect of assets in South America, Ore Reserves were determined assuming a gold price of $350 per ounce, with the exceptions of Cerro Vanguardia, as well as certain parts of Morro Velho, namely Engenho D'Agua and Corrego do Sitio. The Ore Reserves for Cerro Vanguardia, Engenho D'Agua and Corrego do Sitio were determined at $325 per ounce. 

Ore Reserves for Cripple Creek & Victor in North America were determined assuming a gold price of $325 per ounce. Ore Reserves at AngloGold's Australian assets were determined assuming a gold price of $234 per ounce and at an exchange rate of A$1 = $0.55 for Boddington (based upon the gold price and exchange rate assumed for the 2000 feasibility study) and at $350 per ounce and an exchange rate of A$1 = $0.63 for Sunrise Dam. 

Sensitivities, conducted using the three-year historical average gold price in local currencies, where applicable, indicate that there is no material difference to the ore reserves as stated below. These prices are ZAR90,000 per kilogram in South Africa, A$550 per ounce in Australia and $325 per ounce elsewhere. 

The Ore Reserve estimates in this document include Ore Reserves below current infrastructure in the case of certain South African mines. However, these Ore Reserves have been determined based upon completed feasibility studies. 

It should be noted that in Australia and South Africa, AngloGold is legally required to publicly report Ore Reserves and Mineral Resources according to the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code) and the South African Code for Reporting of Mineral Resources and Ore Reserves (SAMREC Code). The SEC's Industry Guide 7 does not recognize Mineral Resources. Accordingly, AngloGold does not report estimates of Mineral Resources in this annual report on Form 20-F. 

As with the 2002 report, tonnage and grades are reflected on a delivered-to-mill basis. The gold content estimate will be affected by losses (and gains) in three main areas: differences arising out of statistical and sampling variation; dilution in the mining and transport processes and metallurgical recovery process losses. These factors operate independently of one another.

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77
The Ore Reserves as at December 31, 2003 show a year-on-year decrease of some 9.2 million ounces from 72.3 million ounces as at December 31, 2002 to 63.1 million ounces as at December 31, 2003. The reduction in Ore Reserves is after depletion of 6.3 million ounces (being the amount of ore delivered to the relevant metallurgical plants at each mine during 2003 and the corresponding reduction in applicable Ore Reserves). 

The principal changes in AngloGold's Ore Reserves as at December 31, 2003 compared with those published as at December 31, 2002, for reasons other than depletion, are as follows:

·
an increase of 1 million ounces at Sunrise Dam mine due to new modelling techniques, additional drilling and new underground design;
·
an increase of 0.9 million ounces at TauTona mine partially as a result of the purchase of an area of Gold Fields Limited's Driefontein Gold Mine;
·
an increase of 0.6 million ounces of the Vaal River Surface Ore Reserves, due to the inclusion of the Mitzpah plant and the South Tailings facility;
·
an increase of 0.3 million ounces at Tau Lekoa mine due to the assumption of a higher Mine Call Factor ("MCF"), as well as extensions of the Ore Reserve due to exploration in new mining areas;
·
a decrease of 2.2 million ounces at the Savuka mine owing to updates to the geological model which resulted in lower gold values as well as due to changes in economic factors which has resulted in a considerable proportion of the Mineral Resource being considered no longer feasible to be mined economically;
·
a decrease of 1.7 million ounces at Mponeng mine due to the exclusion of the Carbon Leader Reef ("CLR") below 120 Level project. The curtailment of this project resulted in a shorter life, which also reduced the Ore Reserves in the VCR below 120 Level project. The lower ZAR per kilogram gold price resulted in the CLR below 120 Level project no longer being feasible and it has now been excluded from the Ore Reserves as at December 31, 2003. The project is currently the subject of a revised feasibility study. A weakening ZAR relative to the US dollar will also result in these Ore Reserves being included and as a result of the revised feasibility study, possibly being further amended.
·
a decrease of 0.7 million ounces due to the sale of the Amapari project in Brazil during May 2003;
·
a decrease of 0.5 million ounces at the Great Noligwa mine due to the assumption of a lower MCF and due to updates to the geological model which resulted in lower gold values;
·
a decrease of 1.4 million ounces at the Moab Khotsong mine due to updates to the geological model which resulted in lower gold values;
·
a decrease of 0.3 million ounces due to the sale of AngloGold's interest in the Jerritt Canyon Joint Venture during 2003; and
·
a decrease of 0.2 million ounces at Cerro Vanguardia mine due to changes in the pit designs resulting from higher waste mining costs.
AngloGold will continue to pursue a strategy of increasing value-adding reserves through expansion projects, brownfields and greenfields exploration and the acquisition of new assets. 

AngloGold's ore reserve statements have been prepared by the competent persons who manage AngloGold's ore reserves. See "Item 6.: Directors, senior management and employees". Independent parties have not reviewed the majority of the ore reserves during the last three years.

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78
Ore Reserves: Imperial
At December 31, 2003
Proven Ore Reserves
(1)
Probable Ore Reserves
(1)
Metallurgical
Gold
Gold
Recovery
Tons
Grade
Content
(1)
Tons
Grade
content
(1)
Factor
(mill)
(oz/ton)
(mill oz)
(mill)
(oz/ton)
(mill oz)
%
South African operations
West Wits
Mponeng
(9)
3.1
0.255
0.8
25.1
0.263
6.6
98.2%
Savuka
0.4
0.198
0.1
1.2
0.197
0.3
97.7%
TauTona
(9)
1.8
0.382
0.7
18.0
0.327
5.9
97.8%
Vaal River
Great Noligwa
4.4
0.276
1.2
16.4
0.267
4.4
96.5%
Kopanang
3.7
0.202
0.8
21.8
0.210
4.6
96.9%
Moab Khotsong
(4) (9)
-
0.455
-
17.2
0.438
7.5
97.7%
Tau Lekoa
8.2
0.147
1.2
22.7
0.116
2.6
96.4%
Surface
Surface sources (including Ergo)
38.7
0.012
0.5
169.3
0.016
2.8
53.2-74.3%
(7)
East and West African operations
Geita (50%)
(2)
15.7
0.096
1.5
23.3
0.122
2.8
47.1-95.3%
(8)
Morila (40%)
(2)
4.9
0.104
0.5
6.5
0.113
0.7
92%
Navachab
1.4
0.040
0.1
11.1
0.053
0.6
87-92%
(8)
Sadiola (38%)
(2)
2.8
0.056
0.2
8.5
0.103
0.9
82 - 95%
(8)
Yatela (40%)
(2)
1.0
0.033
-
3.7
0.112
0.4
75-85%
(8)
South American operations
Amapari
(6)
-
-
-
-
-
-
-
Cerro Vanguardia (92.5%)
(2)
7.4
0.214
1.6
0.6
0.296
0.2
95.8%
Morro Velho
2.5
0.229
0.6
5.7
0.205
1.2
92.8%
Serra Grande (50%)
(2)
1.8
0.180
0.3
0.7
0.221
0.1
93.2 - 96.6%
(8)
North American operations
Cripple Creek & Victor
59.4
0.037
2.2
71.3
0.025
1.8
64%
Jerritt Canyon (70%)
(2) (10)
-
-
-
-
-
-
-
Australian operations
Boddington (33.33%)
(2)
45.7
0.027
1.3
97.4
0.024
2.4
83-92%
(8)
Sunrise Dam
6.0
0.121
0.7
18.6
0.126
2.3
80 - 85%
(8)
Tanami (40%)
(5)
-
-
-
-
-
-
-
Union Reefs
(3) (11)
-
-
-
-
-
-
-
Total
208.9
0.067
14.1
542.8
0.090
49.0
(1)
Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining.
(2)
Ore Reserves attributable to AngloGold's percentage interest shown.
(3)
Formerly reported as Pine Creek.
(4)
Negligible Proven Ore Reserves as the mine is still in the development stage. Moab Extension has been excluded pending approval of a mining license.
(5)
No Ore Reserves as the mine has been closed.
(6)
No Ore Reserves as the project was sold in May 2003.
(7)
Varies between Ergo (53 percent) and other surface sources (74 percent).
(8)
Recovery factor varies according to ore type
(9)
Probable Ore Reserves include reserves below infrastructure. See table below.
(10)
No Ore Reserves as the mine was sold in June 2003.
(11)
No Ore Reserves as the mine has been closed and is to be sold. Sale and purchase agreements are under negotiation.
The 2003 Probable Ore Reserves include reserves below infrastructure in the case of the following South African mines:
Mine
Tons (millions)
Grade (ounces/ton)
Gold (million ounces)
Mponeng
8.0
0.275
2.2
TauTona
4.9
0.306
1.5
Moab Khotsong
8.8
0.394
3.5
Total
21.7
0.328
7.2
The Ore Reserves in respect of the remaining AngloGold mines do not include any undeveloped Ore Reserves.
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79
Ore Reserves: Imperial
At December 31, 2002
Proven Ore Reserves
(1)
Probable Ore Reserves
(1)
Metallurgical
Gold
Gold
Recovery
Tons
Grade
Content
Tons
Grade
Content
Factor
(mill)
(oz/ton)
(mill oz)
(mill)
(oz/ton)
(mill oz)
%
South African operations
West Wits
Mponeng
(9)
5.2
0.234
1.2
34.1
0.244
8.3
97.4%
Savuka
0.9
0.219
0.2
13.1
0.191
2.5
97.5%
TauTona
(9)
3.3
0.330
1.1
17.2
0.304
5.2
97.6%
Vaal River
Great Noligwa
5.3
0.267
1.4
17.1
0.323
5.5
96.7%
Kopanang
4.4
0.229
1.0
21.2
0.235
5.0
96.2%
Moab Khotsong
(4) (9)
-
-
-
22.8
0.392
9.0
96.0%
Tau Lekoa
7.4
0.127
0.9
26.1
0.113
3.0
95.5%
Surface
Surface sources (including Ergo)
77.9
0.012
0.9
119.9
0.019
2.3
52-73%
(7)
East and West African operations
Geita (50%)
(2)
17.0
0.107
1.8
21.8
0.133
2.9
81-95%
(8)
Morila (40%)
(2)
2.1
0.182
0.4
10.1
0.129
1.3
91%
Navachab
1.3
0.041
0.1
10.6
0.055
0.6
87-92%
(8)
Sadiola (38%)
(2)
2.6
0.053
0.1
10.7
0.094
1.0
76.95%
(8)
Yatela (40%)
(2)
0.7
0.043
-
4.4
0.110
0.5
75-85%
(8)
South American operations
Amapari
(6)
3.6
0.063
0.2
7.2
0.062
0.4
90%
Cerro Vanguardia (46.25%)
(2)
8.9
0.218
2.0
0.8
0.296
0.2
96%
Morro Velho
2.6
0.201
0.5
5.5
0.219
1.2
2%
Serra Grande (50%)
(2)
1.5
0.218
0.3
0.6
0.234
0.1
92-96%
(8)
North American operations
Cripple Creek & Victor
63.3
0.037
2.3
75.3
0.026
2.0
64%
Jerritt Canyon (70%)
(2)
0.5
0.375
0.2
1.3
0.184
0.2
88%
Australian operations
Boddington (33.33%)
(2)
45.7
0.027
1.3
97.4
0.024
2.4
83-92%
(8)
Sunrise Dam
7.6
0.126
1.0
11.1
0.146
1. 6
82-95%
(8)
Tanami (40%)
(2) (5)
-
-
-
-
-
-
-
Union Reefs
(3)
0.7
0.048
-
2.1
0.026
0.1
94%
Total
262.7
0.065
17.0
530.4
0.104
55.3
(1)
Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining.
(2)
Ore Reserves attributable to AngloGold's percentage interest shown.
(3)
Formerly reported as Pine Creek. Operations in Brocks Creek ceased in 2000. Figures reflect only Union Reefs.
(4)
No Proven Ore Reserves as the mine is still in the development stage.
(5)
No Ore Reserves as the mine is planned to be closed down and thus is not in the life of mine plan.
(6)
No Ore Reserves as the mine is still in the feasibility stage and thus is not in the life of mine plan.
(7)
Varies between Ergo (52 percent) and other surface sources (72 percent).
(8)
Recovery factor varies according to ore type.
(9)
Probable Ore Reserves include Ore Reserves below infrastructre. See table below.
The 2002 Probable Ore Reserves include reserves below infrastructure in the case of the following South African mines:
Mine
Tons (millions)
Grade (ounces/ton)
Gold (million ounces)
Mponeng
17.264
0.256
4.423
TauTona
7.666
0.252
1.928
Moab Khotsong
12.083
0.380
4.589
Total
37.013
0.296
10.940
The reserves in respect of the remaining AngloGold mines do not include any undeveloped reserves.
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80
Ore Reserves: Metric
At December 31, 2003
Proven Ore Reserves
(1)
Probable Ore Reserves
(1)
Metallurgical
Gold
Gold
Recovery
Tonnes
Grade
Content
Tonnes
Grade
Content
Factor
(mill)
(g/t)
(tonnes)
(mill)
(g/t)
(tonnes)
%
South African operations
West Wits
Mponeng
(9)
2.8
8.74
24.5
22.8
9.01
205.3
98.2%
Savuka
0.4
6.79
2.7
1.1
6.76
7.8
97.7%
TauTona
(9)
1.6
13.11
21.3
16.3
11.21
182.3
97.8%
Vaal River
Great Noligwa
4.0
9.46
37.6
14.9
9.16
136.1
96.5%
Kopanang
3.4
6.94
23.8
19.8
7.19
142.3
96.9%
Moab Khotsong
(4) (9)
-
15.59
0.4
15.6
15.03
234.5
97.7%
Tau Lekoa
7.4
5.05
37.2
20.6
3.99
82.2
96.4%
Surface
Surface sources (including Ergo)
35.1
0.41
14.5
153.6
0.56
86.0
53.2-74.3%
(7)
East and West African operations
Geita (50%)
(2)
14.2
3.30
46.8
21.1
4.17
88.1
47.1-95.3%
(8)
Morila (40%)
(2)
4.4
3.55
15.6
5.9
3.88
22.9
92%
Navachab
1.3
1.38
1.8
10.1
1.81
18.2
87-92%
(8)
Sadiola (38%)
(2)
2.5
1.93
4.8
7.7
3.53
27.3
82-95%
(8)
Yatela (40%)
(2)
0.9
1.12
1.0
3.4
3.84
12.9
75-85%
(8)
South American operations
Amapari
(6)
-
-
-
-
-
-
-
Cerro Vanguardia (92.5%)
(2)
6.7
7.34
49.1
0.5
10.16
5.6
95.8%
Morro Velho
2.3
7.84
18.1
5.2
7.01
36.2
87-92.8%
Serra Grande (50%)
(2)
1.6
6.17
10.2
0.6
7.59
4.6
93.2-96.6%
(8)
North American operations
Cripple Creek & Victor
53.9
1.26
67.7
64.7
0.87
56.1
64%
Jerritt Canyon (70%)
(2) (10)
-
-
-
-
-
-
-
Australian operations
-
Boddington (33.33%)
(2)
41.5
0.94
39.0
88.4
0.84
74.3
83-92%
(8)
Sunrise Dam
5.4
4.16
22.3
16.9
4.33
72.9
80-85%
(8)
Tanami
(5)
-
-
-
-
-
-
-
Union Reefs
(3) (11)
-
-
-
-
-
-
-
Total
189.5
2.31
438.5
492.4
3.09
1,523.5
(1)
Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining.
(2)
Ore Reserves attributable to AngloGold's percentage interest shown.
(3)
Formerly reported as Pine Creek.
(4)
Negligible Proven Ore reserves as the mine is still in the development stage. Moab Extension has been excluded pending approval of a mining
license.
(5)
No Ore Reserves as this mine has been closed.
(6)
No Ore Reserve as the project was sold in May 2003.
(7)
Varies between Ergo (53 percent) and other surface sources (74 percent)
(8)
Recovery factor varies according to ore type
(9)
Probable Ore Reserves include reserves below infrastructure. See table below
(10)
No Ore Reserves as this mine was sold in June 2003..
(11)
No Ore Reserves as the mine has been closed and is to be sold. Sale and purchase agreements are under negotiation.
The 2003 Probable Ore Reserves include reserves below infrastructure in the case of the following South African mines:
Mine
Tonnes (millions)
Grade (grams/tonne)
Gold content (tonnes million)
Mponeng
7.3
9.21
67.2
TauTona
4.4
10.61
46.7
Moab Khotsong
8.0
13.50
107.4
Total
19.7
11.25
221.3
The reserves in respect of the remaining AngloGold mines do not include any undeveloped reserves.
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81
Ore Reserves: Metric
At December 31, 2002
Proven Ore Reserves
(1)
Probable Ore Reserves
(1)
Metallurgical
Gold
Gold
Recovery
Tonnes
Grade
Content
Tonnes
Grade
Content
Factor
(mill)
(g/t)
(tonnes)
(mill)
(g/t)
(tonnes)
%
South African operations
West Wits
Mponeng
(9)
4.7
8.03
37.8
30.9
8.37
259.0
97.4%
Savuka
0.8
7.50
5.9
11.9
6.55
78.0
97.5%
TauTona
(9)
3.0
11.31
33.6
15.6
10.43
162.8
97.6%
Vaal River
Great Noligwa
4.8
9.15
44.0
15.5
11.06
171.2
96.7%
Kopanang
4.0
7.85
31.5
19.2
8.07
154.6
96.2%
Moab Khotsong
(4)
(9)
-
--
-
20.7
13.45
278.8
96.0%
Tau Lekoa
6.7
4.36
29.2
23.7
3.89
92.1
95.5%
Surface
Surface sources (including Ergo)
70.7
0.40
28.5
108.8
0.65
70.7
52-73%
(7)
East and West African operations
Geita (50%)
(2)
15.4
3.67
56.5
19.8
4.55
90.2
81-95%
(8)
Morila (40%)
(2)
1.9
6.23
11.6
9.2
4.42
40.8
91%
(8)
Navachab
1.2
1.40
1.7
9.6
1.87
17.9
87-92%
(8)
Sadiola (38%)
(2)
2.4
1.82
4.4
9.7
3.23
31.3
76-95%
(8)
Yatela (40%)
(2)
0.6
1.49
0.9
4.0
3.77
15.1
75-85 %
(8)
South American operations
Amapari
(6)
3.3
2.15
7.2
6.5
2.12
13.8
90%
Cerro Vanguardia (92.5%)
(2)
8.1
7.48
60.8
0.7
10.15
6.8
96%
Morro Velho
2.4
6.91
16.7
5.0
7.52
37.5
92%
Serra Grande (50%)
(2)
1.4
7.46
10.7
0.5
8.01
4.2
92-96%
(8)
North American operations
Cripple Creek & Victor
57.4
1.26
72.2
68.3
0.90
61.6
64%
Jerritt Canyon (70%)
(2)
0.4
12.84
5.5
1.1
6.31
7.2
88%
Australian operations
Boddington (33.33%)
(2)
41.5
0.94
39.0
88.4
0.84
74.3
83-92%
(8)
Sunrise Dam
6.9
4.31
29.8
10.1
4.99
50.4
82-95%
(8)
Tanami (40%)
(2) (5)
-
-
-
-
-
-
-
Union Reefs
(3)
0.6
1.64
0.9
1.9
0.90
1.7
94%
Total
238.3
2.22
528.3
481.2
3.57
1,720.0
(1)
Ore Reserves include marginally economic and diluting materials delivered for treatment and allow for losses that may occur during mining.
(2)
Ore Reserves attributable to AngloGold's percentage interest shown.
(3)
Formerly reported as Pine Creek. Operations in Brocks Creek ceased in 2000. Figures reflect only Union Reefs.
(4)
No Proven Ore Reserves as the mine is still in the development stage.
(5)
No Ore Reserves as the mine is planned to be closed down and thus is not in the life of mine plan.
(6)
No Ore Reserves as the mine is still in the feasibility stage and thus is not in the life of mine plan.
(7)
Varies between Ergo (52 percent) and other surface sources (72 percent)
(8)
Recovery factor varies according to ore type
(9)
Probable Ore Reserves include reserves below infrastructure. See table below.
The 2002 Probable Ore Reserves include reserves below infrastructure in the case of the following South African mines:
Mine
Tonnes (millions)
Grade (grams/tonne)
Gold content (tonnes million)
Mponeng
15.662
8.78
137.556
TauTona
6.954
8.62
59.979
Moab Khotsong
10.962
13.02
142.727
Total
33.578
10.13
240.262
The Ore Reserves in respect of the remaining AngloGold mines do not include any undeveloped reserves.
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82
Stockpiles: Imperial
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include
the following stockpile material:
Stockpiles
(1)
At December 31, 2003
Tons (million)
Grade (ounces/ton)
Gold content (million
ounces)
South African operations
West Wits
Mponeng
0.000
-
0.000
Savuka
0.000
-
0.000
TauTona
0.000
-
0.000
West Wits Surface
(2)
0.000
-
0.000
Vaal River
Great Noligwa
0.000
-
0.000
Kopanang
0.000
-
0.000
Moab Khotsong
0.000
-
0.000
Tau Lekoa
0.000
-
0.000
Vaal River Surface
(2)
175.641
0.016
2.875
ERGO
(2)
32.384
0.011
0.358
East and West African operations
Geita
0.600
0.060
0.036
Morila
1.182
0.059
0.070
Navachab
1.450
0.040
0.058
Sadiola
2.728
0.056
0.153
Yatela
1.014
0.033
0.033
North American operations
Cripple Creek & Victor
0.000
-
0.000
Jerritt Canyon
(3)
-
-
-
South American operations
Amapari
(4)
-
-
-
Cerro Vanguardia
0.054
0.167
0.009
Morro Velho
0.000
-
0.000
Serra Grande
0.025
0.284
0.007
Australian operations
Boddington
-
-
-
Sunrise Dam
0.667
0.056
0.038
Tanami
(5)
-
-
-
Union Reefs
(6)
-
-
-
Note: The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
(1)
Attributable to AngloGold.
(2)
Centralized operations treating material on surface that was previously generated by several underground operations.
(3)
Sold June 2003.
(4)
Sold May 2003.
(5)
This mine has been closed.
(6)
This mine has been closed and is to be sold. Sale and purchase agreements are under negotiation.
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83
Stockpiles: Imperial
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include
the following stockpile material:
Stockpiles
(1)
At December 31, 2002
Tons (million)
Grade (ounces/ton)
Gold content (million
ounces)
South African operations
West Wits
Mponeng
0.000
-
0.000
Savuka
0.000
-
0.000
TauTona
0.000
-
0.000
West Wits Surface
(2)
0.000
-
0.000
Vaal River
Great Noligwa
0.000
-
0.000
Kopanang
0.000
-
0.000
Moab Khotsong
0.000
-
0.000
Tau Lekoa
0.000
-
0.000
Vaal River Surface
(2)
125.400
19
2.400
ERGO
(2)
72.400
0.011
0.800
East and West African operations
Geita
0.750
0.080
0.060
Morila
2.436
0.050
0.130
Navachab
6.956
0.020
0.150
Sadiola
11.919
0.030
0.420
Yatela
2.249
0.050
0.120
North American operations
Cripple Creek & Victor
0.000
-
0.000
Jerritt Canyon
0.777
0.090
0.070
South American operations
Amapari
0.000
-
0.000
Cerro Vanguardia
0.140
0.260
0.030
Morro Velho
0.000
-
0.000
Serra Grande
0.056
0.240
0.010
Australian operations
Boddington
2.276
0.010
0.030
Sunrise Dam
4.839
0.020
0.120
Tanami
1.676
0.022
0.030
Union Reefs
1.768
0.010
0.030
Note: The rounding of figures and converting from metric to imperial units may result in minor computational discrepancies.
(1)
Attributable to AngloGold.
(2)
Centralized operations treating material on surface that was previously generated by several underground operations.
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84
Stockpiles: Metric
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include
the following stockpile material:
Stockpiles
(1)
At December 31, 2003
Tonnes (million)
Grade (grams/tonne) Gold content (tonnes)
South African operations
West Wits
Mponeng
0.000
-
0.000
Savuka
0.000
-
0.000
TauTona
0.000
-
0.000
West Wits Surface
(2)
0.000
-
0.000
Vaal River
Great Noligwa
0.000
-
0.000
Kopanang
0.000
-
0.000
Moab Khotsong
0.000
-
0.000
Tau Lekoa
0.000
-
0.000
Vaal River Surface
(2)
159.339
0.56
89.423
ERGO
(2)
29.378
0.38
11.134
East and West African operations
Geita
0.544
2.06
1.121
Morila
1.072
2.03
2.175
Navachab
1.315
1.38
1.810
Sadiola
2.475
1.93
4.773
Yatela
0.920
1.12
1.026
North American operations
Cripple Creek & Victor
0.000
-
0.000
Jerritt Canyon
(3)
-
-
-
South American operations
Amapari
(4)
-
-
-
Cerro Vanguardia
0.049
5.73
0.281
Morro Velho
0.000
-
0.000
Serra Grande
0.023
9.75
0.224
Australian operations
Boddington
0.000
-
0.000
Sunrise Dam
0.605
1.93
1.170
Tanami
(5)
-
-
-
Union Reefs
(6)
-
-
-
(1)
Attributable to AngloGold.
(2)
Centralized operations treating material on surface that was previously generated by several underground operations.
(3)
Sold June 2003.
(4)
Sold May 2003.
(5)
This mine has been closed.
(6)
This mine has been closed and is to be sold. Sale and purchase agreements are under negotiation.
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85
Stockpiles: Metric
Stockpiles are previously mined ore scheduled for future process plant feed. The Proven and Probable Ore Reserves include
the following stockpile material:
Stockpiles
(1)
At December 31, 2002
Tonnes (million)
Grade (grams/tonne) Gold content (tonnes)
South African operations
West Wits
Mponeng
0.000
-
0.000
Savuka
0.000
-
0.000
TauTona
0.000
-
0.000
West Wits Surface
(2)
0.000
-
0.000
Vaal River
Great Noligwa
0.000
-
0.000
Kopanang
0.000
-
0.000
Moab Khotsong
0.000
-
0.000
Tau Lekoa
0.000
-
0.000
Vaal River Surface
(2)
113.830
0.66
74.611
ERGO
(2)
67.745
0.37
24.597
East and West African operations
Geita
0.000
-
0.000
Morila
0.843
2.92
2.462
Navachab
1.222
1.40
1.711
Sadiola
2.401
1.82
4.367
Yatela
0.573
1.49
0.853
North American operations
Cripple Creek & Victor
0.000
-
0.000
Jerritt Canyon
0.544
2.93
1.596
South American operations
Amapari
0.000
-
0.000
Cerro Vanguardia
0.120
7.27
0.872
Morro Velho
0.000
-
0.000
Serra Grande
0.023
11.20
0.258
Australian operations
Boddington
0.000
-
0.000
Sunrise Dam
0.569
2.70
1.536
Tanami
0.000
-
0.000
Union Reefs
1.965
0.78
1.526
(1)
Attributable to AngloGold.
(2)
Centralized operations treating material on surface that was previously generated by several underground operations.
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Drill hole spacing: Imperial 

In determining the Proven and Probable Ore Reserves, AngloGold applied the following drill hole spacings:

Drill Hole Spacings
Proven Ore Reserves
Probable Ore Reserves
South African 
operations
Underground sources
Ore body opened up, developed and sampled on a 7 
- 10 feet spacing on raise lines and on a 16 x 16 grid 
thereafter
From a 130 x 130 foot spacing up to 
3200 x 3200 feet spacing
Surface sources
Variable sampling strategies: Belt samplers, cross 
stream residue samplers and bulk sampling campaigns
Variable sampling strategies: Belt 
samplers, cross stream residue 
samplers
East and West African 
operations
Geita
66 x 66 feet
66 x 131 feet
Morila
33 x 33 feet
115 x 197 feet
Navachab
33 x 33 feet
98 x 98 feet
Sadiola
33 x 33 feet
82 x 164 feet
Yatela
39 x 82 feet
82 x 148 feet
North American 
operations
Cripple Creek & Victor
150 x 150 feet
150 x 150 feet
Jerritt Canyon
10 x 30 feet
< 50 feet
South American 
operations
Amapari
66 x 164 feet
141 x 164 feet
Cerro Vanguardia
131 x 131 feet
131 x 262 feet
Morro Velho
Two adjacent levels of ore body opened up, developed 
and sampled on a 217 x 7 feet interval. Drilling pattern of 
196 x 65 feet for Cuiaba Expansion Project.
Two adjacent levels of ore body opened up, developed and sampled on a 217 x 7 feet interval. Drilling pattern of 196 x 65 feet for Cuiaba Expansion Project.
Serra Grande
33 x 85 feet
164 x 328 feet
Australian operations
Boddington
Must lie within the A$425 shell and have a borehole 
within 56 feet of block centroid
Must lie within the A$425 shell and have 
a borehole within 110 feet of block 
centroid
Sunrise Dam
82 x 82 feet
141 x 141 feet
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87
Drill hole spacing: Metric 

In determining the Proven and Probable Ore Reserves, AngloGold applied the following drill hole spacings:

Drill Hole Spacings
Proven Ore Reserves
Probable Ore Reserves
South African operations
Underground sources
Ore body opened up, developed and sampled on a 2 - 3 
meter spacing on raise lines and on a 5 x 5 grid 
thereafter
From a 40 x 40 meter spacing up to 1000 x 1000 meter spacing
Surface sources
Variable sampling strategies: Belt samplers, cross 
stream residue samplers and bulk sampling campaigns
Variable sampling strategies: Belt samplers, cross stream residue samplers
East and West African 
operations
Geita
20 x 20 meter
20 x 40 meter
Morila
10 x 10 meter
35 x 60 meter
Navachab
10 x 10 meter
30 x 30 meter
Sadiola
10 x 10 meter
25 x 50 meter
Yatela
12 x 25 meter
25 x 45 meter
North American 
operations
Cripple Creek & Victor
45 x 45 meter
45 x 45 meter
Jerritt Canyon
3 x 9 meter
< 15 meter
South American 
operations
Amapari
20 x 50 meter
40 x 50 meter
Cerro Vanguardia
40 x 40 meter
40 x 80 meter
Morro Velho
Two adjacent levels of ore body opened up, developed 
and sampled on a 66 x 2 meter interval. Drilling pattern 
of 60 x 20 for Cuiaba Expansion Project.
Two adjacent levels of ore body opened up, developed and sampled on a 66 x 2 meter interval
Serra Grande
10 x 25 meter
50 x 100 meter
Australian operations
Boddington
Must lie within the A$425 shell and have a borehole 
within 17 meter of block centroid
Must lie within the A$425 shell and have a borehole within 34 meter of block centroid
Sunrise Dam
25 x 25 meter
40 x 40 meter
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Research and development
AngloGold remains committed to research and development of new mining techniques, metallurgical processes and engineering systems, in line with its strategic objective of operational excellence. This objective encompasses improved safety and productivity, and focuses on keeping the company at the leading edge of best practice in deep-level gold mining. The selection of projects is informed by these objectives, and involves both technology initiatives as well as modern human engineering practices. These projects, to varying degrees, make use of independent research institutions (Council for Scientific and Industrial Research, Miningtek, Mintek and Centre for Mining, Technologies and Equipment (CMTE)), tertiary education institutions, consultants and suppliers of equipment, to gain benefit from the best skills available. AngloGold is well advanced with testing incremental new production technologies, all of which are expected to contribute to lower costs, improved safety and better margins, thereby growing earnings. To this end, AngloGold's Technical Development Services was restructured to concentrate on technology transfer, and is now known as AngloGold Mining Technologies (AMT). Research and development expenditure amounted to $nil million, $1 million and $2 million during 2003, 2002 and 2001, respectively. A number of major programs continued in 2003 ranging from exploration, mining and metallurgy to developing new industrial applications for gold. Technology transfer is a priority, with workshops held in-house to capitalize on the depth and spread of technical expertise.
Projek Katleho, aimed at combining contemporary work practices with new technologies, was discontinued during 2003, largely as a result of the artificial environment in which it sought to function. Notwithstanding, a number of technologies implemented by Projek Katleho are being pursued by some operations through their Project Technology initiatives. An example of Project Technology can be seen at TauTona mine, where the innovative combination of appropriate technologies and work practices is aiming at a 25% improvement in the monthly face advance rate.
AMT continues to focus on mining methods and equipment within the South African operations. Phase 2 testing of electric drills was concluded during 2003 and indicated that further development will be necessary to move the tool beyond specific niche applications. A further phase is due to commence at TauTona during 2004.
Groundbreaking work on the Blast Optimization project was carried out in 2003. The role of primary rock-breaking techniques in liberating micron-sized particles of gold in carbonaceous ores was quantified. Work is now focusing on optimizing both explosive and initiation systems to minimize potential gold loss through improving initial fragmentation. In a joint venture with FutureMine, work was started on improving the understanding of product degradation during underground transportation using optical size monitoring.
Laboratory work on the Product-in-a-pipe Project successfully developed five concrete based support products capable of performances well in excess of the recognized mining industry norms and AngloGold criteria, which can be selectively placed through pipeline transport to varying sites underground. Work during 2004 will focus on finalizing in-situ performance tests, as well as optimizing the system in line with existing infrastructure on the mines. Engineering thrusts continued to focus on horizontal transport initiatives where significant breakthroughs have been made with New Era locomotives and Double-headed trains.
AngloGold and Mintek, South Africa's national metallurgical research organization, launched Project AuTEK in 2000 to research and develop industrial applications for gold. In 2001, the project team was instrumental in staging in South Africa the first conference ever held to stimulate interest in the use of gold as a catalyst. Attended by 85 delegates from 15 countries, the event has led to the establishment of an international community of researchers interested in gold catalysis. The Gold2003 conference staged in September/October 2003 in Vancouver/Canada attracted over 200 delegates worldwide, presenting over 120 papers covering chemistry, catalysis, materials and nanotechnology. This highlights the growing interest of researchers in the field of new industrial applications for gold.
AngloGold continued its involvement with the FutureMine collaborative Project during 2003. This finite term Project concludes activities in March, 2004. Future collaborative work will be needs driven.
AngloGold's wholly owned subsidiary, ISS International Limited (ISSI), is a world leader in seismic monitoring for mines, engineering structures and earthquakes. ISSI provides seismic technical services and equipment to AngloGold's operations, as well as to other South African deep-level mines, in addition to being active on a global scale.
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89
Global exploration 

AngloGold's global exploration strategy seeks both to extend the life of existing operations (through brownfields exploration) and to establish new mines (through greenfields exploration). This strategy is achieved through cost-effective, focused exploration in geological terrains most likely to host significant gold deposits. The more isolated the prospect is from existing operations, the less existing infrastructure development or the higher the country and other risks associated with the project, the more significant the deposit must be to meet AngloGold's investment criteria. 

AngloGold's exploration activities in 2003 continued to support the group's growth strategy, while its brownfields exploration continued with variable success at all the existing operations. Greenfields exploration activities continued in the traditional areas such as Australia, Mali, Canada, Alaska, Peru and Brazil, and exploration commenced within the "frontier" area of Mongolia. In line with AngloGold's strategy to commit itself to definitive "walk-away criteria", greenfields exploration was terminated in Nevada and Tanzania and curtailed in Australia, where further exploration expenditure is considered to have reached the point of diminishing returns. 

Exploration expensed by region ($ million)

2001
2002
2003
South Africa
2
-
2
East & West Africa
3
4
6
North America
4
6
8
South America
10
11
13
Australia
5
4
8
Corporate (includes target generation)
2
3
3
Total
26
28
40
Gold marketing 

AngloGold is committed to developing the market for gold and its marketing program aims to increase the desirability of its product, to sustain and grow demand for gold and to deregulate the market in key economies. As a company, AngloGold aims to extract value from gold wherever possible throughout its value chain.

During 2003, AngloGold spent some $19 million on gold marketing initiatives, of which 55 percent was spent through the World Gold Council (WGC). Gold marketing costs in 2002 and 2001 amounted to $17 million and $16 million, respectively. The WGC underwent a major restructuring during the year and has allocated increased resources to support the market for gold investment purposes 

Independently of its support for the WGC, AngloGold is active in a number of other marketing projects in support of gold, and AngloGold remains the only gold company in the world that has committed this level of resources to marketing the metal it produces. 

Among its downstream initiatives in 2003, GoldAvenue, an Intranet collaboration between AngloGold, JP Morgan Chase and Pamp MKS of Geneva, published two new gold jewellery catalogues focused on uniquely designed, high-value gold jewellery aimed at the US market. Both sales and market penetration improved. This business was developed in association with Vivre, a luxury goods catalogue business operation in which GoldAvenue has taken an equity interest. AngloGold has provided additional support to this venture through product development, sourcing and product selection. 

AngloGold holds a 26.6 percent stake in OroAfrica, the largest manufacturer of gold jewellery in South Africa, as an investment in the downstream gold value chain. AngloGold and OroAfrica have co-operated in a number of projects including OroAfrica's development and launch of an African gold jewellery brand. An important strategic step has been the establishment of a Jewellery Design Centre at OroAfrica at a cost of $250,000. The purpose of the center is to generate new gold jewellery designs, and to improve product standards through technology, design and innovation.

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90
In the area of design innovation, AngloGold's Riches of Africa Gold Jewellery Design Competition was established in 1998 to showcase South African jewellery designers, to enhance jewellery manufacturing technical skills in South Africa and to support the local gold jewellery industry. Training workshops for competition entrants are held each year, while the award- winning works are exhibited and used in fashion shows and other events both locally and abroad. 

A bi-annual gold jewellery design competition in Brazil, Designers Forum, was launched by AngloGold South America in 2002, and is the first such competition in that country. The competition generated unprecedented interest, with a high quality of design and craftsmanship. Some 42 finalists contributed towards a collection of 52 pieces of innovative, high quality gold jewellery. Some of these pieces are depicted in the GoldAvenue catalogue. 

The Gold of Africa Museum was inaugurated by AngloGold in 2001 in Cape Town with the permanent endowment of the Barbier Mueller collection of West African gold objects purchased by the company in 1998. The Museum also serves as a facility for training in the jewellery industry in Cape Town. 

AngloGold and Mintek, South Africa's national metallurgical research organization, launched Project AuTEK in 2002 to research and develop industrial applications for gold. In May 2002, the project unveiled the first working prototype of a room temperature air purification unit based on a gold catalyst. The new unit is expected to be considerably cheaper to manufacture than designs based on other types of catalysts and could be used in restaurants, hospitals, hotels and office blocks. A conference, Gold 2003, staged in September/October 2003 in Vancouver, Canada attracted over 200 delegates worldwide, presenting over 120 papers covering chemistry, catalysis, materials and nanotechnology. This highlights the growing interest of researchers in the field of new industrial applications for gold. 

An important feature in many of AngloGold's marketing projects has been the beneficiation of gold, particularly in South Africa. AngloGold's commitment to adding value to gold extends beyond mining and contributes towards the upliftment of people and the sustainability of communities. AngloGold remains a key sponsor of the Atteridgeville Jewellery Project, established in 2000 by the Vukani-Ubuntu Community Development Project to create opportunities in the jewellery industry in South Africa for the previously disadvantaged through training and development. During 2003, AngloGold sponsored a group of young jewellery designers from previously disadvantaged communities to exhibit their work at the Jewellex International Fair in Johannesburg and at International Jewellery London (IJL). Their work was well received and the venture provides a foundation for other initiatives aimed at developing this new breed of talent with its unique, African design idiom. 

The challenge for marketing gold today is bigger than it has ever been, given the sharp fall-off in physical demand for gold in the major developing markets resulting from the rise in price and volatility. The market for gold in jewellery has declined materially in the past four years as gold jewellery has had to compete with other luxury consumer goods. AngloGold will continue its work with the WGC but will continue also to work independently in other areas of the gold market where it can exercise strategic influence.

Marketing channels
Gold produced by AngloGold's mining operations is processed to saleable form at various precious metals refineries. Once refined to a saleable product - either a large bar weighing approximately 12.5 kilograms and containing 99.5 percent gold, or smaller bars, weighing 1.0 kilogram or less with a gold content of 99.99 percent - the metal is sold directly by the refineries to bullion banks and the proceeds are paid to the company. Bullion banks are registered commercial banks that deal in gold. They play a role in the gold market of buying and selling gold, and distribute physical gold bullion from the mining company/refinery into physical offtake markets worldwide. For example, bullion banks hold consignment stocks in major physical markets such as India or South East Asia, and finance such consignment stocks from the margins charged by them to physical buyers over and above the amounts paid by the bank to the mine for the bullion bars. 

Where forward sales contracts exist against which AngloGold elects to deliver physical product, the same channel is used, with the single exception that the finished gold bars are delivered to the specific bullion bank with which the forward contract is held. The physical delivery of the appropriate amount of gold meets AngloGold's obligations under contract, and AngloGold is paid by the relevant bullion bank the price as fixed under the forward contract, rather than the spot price of the day.

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91
Competition 

As gold mining is a mature and regulated industry, and very significant volumes of gold and gold derivatives trade in the world markets independent of gold mine supply, AngloGold does not consider that competition for sales plays any role in its operations as a gold producer. However, gold producers do compete against each other for acquisition and exploration opportunities. 

Intellectual property 

AngloGold and its subsidiary companies hold the right to use certain proprietary technology and intellectual property, including patented technology and other forms of protected intellectual property. These rights relate to various aspects of the company's business, from routine software and related computer technology in support of office operations, to intellectual property contained and/or used in the mining and mineral processing operations. AngloGold, as a group, is not dependent on these various forms of intellectual property for the conduct of its business as a whole. 

Safety and health 

The safety and health of employees remains fundamental to the sustainability of AngloGold's business. The company is committed to working with employees, trade unions and government bodies towards improving safety and health in the workplace. Considerable resources and effort are dedicated to identifying and implementing best practice across the company, as well as addressing specific problem areas as they arise. A core team of safety and health experts, located at the corporate office, reports to a board sub-committee on safety and health, and advises and assists the on-mine safety and health practitioners and mine management. Every fatal accident is subject to an executive review, over and above the region- specific regulatory and mine-based investigations, in an effort to identify the root causes of fatalities and to prevent a recurrence. 

Safety performance in 2003 was disappointing. While the gains made over the past five years have been maintained, there has not been the much-desired step-change in improving safety and health performance. The long-term downward trend in lost time injuries has been maintained and the year-on-year figure has decreased marginally to 8.83 per million man hours. There was more pleasing progress in respect of the fatal injury frequency rate ("FIFR") during the year - this decreased by 6 percent to 0.29 per million man hours worked in 2003 from 0.31 per million man hours worked in 2002. 

Regrettably, 43 employees lost their lives in the course of work during 2003 (2002: 44); 40 of these employees were employed in the South Africa region where the majority of AngloGold's workforce is employed. 

There were, however, a number of notable safety performances:

·
Serra Grande in Brazil was recognized by NOSA, an organization specializing in safety, health and environment auditing, as the winner in the Underground Hard Rock category in its world-wide auditing program;
·
Morila mine in Mali was nominated overall winner in the Dynamic Health and Safety Competition in May 2003. The competition is open to all industries in Mali and had 150 entrants. Sadiola mine achieved second place;
·
The Colorado Division of Minerals and Geology and the Colorado Mining Association jointly recognized the Cripple Creek & Victor mine and Safety, Health and Environment Manager, Larry Snyder, for the mine's continued exemplary safety record during the recent two-year Cresson expansion project;
·
In August 2003, the Namibian Chamber of Mines recognized Navachab as the safest mine in Namibia, based on the number of fatality-free employee hours worked in 2002;
·
Ergo, the surface re-treatment operation in South Africa, achieved one million fatality-free shifts on June 22, 2003, while Moab Khotsong mine - which is currently under development - also achieved a million fatality-free shifts on November 18, 2003;
·
The Sunrise Dam Gold Mine was recognized for excellence in safety when it was awarded AngloGold's Global Safety Award for 2003. Mponeng mine won the South Africa region Safety Shield competition for 2003, with an improvement of 13 percent in its serious injury frequency rate compared with its best performance over the previous four years.
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92
Extensive efforts at emphasizing and improving safety continue with the company's intranet and mine-based newsletters, as well as a monthly safety newsletter from the chief operating officer, used to communicate with all employees. Further details on performance and the strategies and programs that have been and are being put in place to address safety at work can be found in the AngloGold Report to Society 2003. 

AngloGold has published its Report to Society 2003, a copy of which was filed with the SEC on March 16, 2004 under Form 6-K. A fully-interactive web-based report can be found at the Company's website at www.anglogold.com. This report covers issues pertaining to social development in line with AngloGold's values and business principles and the Global Reporting Initiative Guidelines prepared on a regional basis. 

Lost time injury frequency rate (LTIFR) (per million man hours)

2001
2002
2003
South Africa
11.59
9.98
10.40
East & West Africa
1.30
2.93
1.77
North America
1.58
4.95
2.91
South America
8.16
4.21
4.48
Australia
13.47
11.22
5.54
Group
10.56
8.86
8.83
South Africa region
Safety in the mines in South Africa is governed by the Mine Health and Safety Act of 1996. AngloGold believes that it continues to comply with the provisions of this Act. 

Regrettably, 40 employees died in work-related accidents on the South African operations during 2003 in 31 separate accidents, compared to 39 employees who lost their lives in mine accidents during 2002. The most significant of these was a seismic-related fall of ground incident, in which five employees lost their lives at TauTona mine on April 1, 2003. A further four deaths were caused in a second seismic event at the mine on May 26, 2003. 

The primary cause of fatal accidents remains falls of ground, which caused 78 percent (2002: 62 percent) of fatal accidents during 2003, with seismically-induced falls of ground alone responsible for 43 percent of fatalities. Particular emphasis has been placed on preventing falls of ground, and a new Falls of Ground Management System has been initiated. 

Overall, the FIFR for the year on the South African operations was 0.34, unchanged from 2002, and the LTIFR was 10.40, up by 4 percent on the 2002 rate of 9.98. 

Safety performance

LTIFR
FIFR
2001
2002
2003
2001
2002
2003
Great Noligwa
9.61
11.06
9.83
0.19
0.47
0.32
Kopanang
11.12
12.91
14.08
-
0.22
0.41
Tau Lekoa
13.53
17.84
25.96
0.37
0.51
0.09
Ergo
3.86
1.53
1.75
0.20
-
-
TauTona
12.22
7.67
8.24
0.16
0.08
1.10
Savuka
21.00
17.12
17.57
1.30
1.06
0.47
Mponeng
13.97
10.91
9.81
0.48
0.47
0.33
Moab Khotsong
4.65
6.82
7.11
0.17
0.19
-
South Africa
11.59
9.98
10.40
0.28
0.34
0.34
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93
Safety statistics
1999
2000
2001
2002
2003
FIFR
0.34
0.24
0.28
0.34
0.34
LTIFR
14.35
11.98
11.58
9.98
10.40
The primary areas of focus in respect of occupational health within AngloGold's South African operations are noise-induced hearing loss (NIHL), occupational lung diseases (OLD) and tuberculosis (TB). AngloGold provides occupational health services to its employees at two fully-equipped regional occupational health centers that conduct risk-based medical surveillance programs. These are staffed by occupational medical practitioners, professional nurses, audiologists and other support staff. In addition, each mine has an occupational health nurse on site.
During 2003, these centers conducted 5,733 initial, 804 transfer, 38,528 periodical and 4,143 exit medical examinations (2002: 52,742 occupational medical surveillance examinations):
·
774 new cases of NIHL were reported during the year, a rate of 18 per 1,000 employees, compared with 26 per 1,000 employees in 2002;
·
167 cases of OLD were reported, four per 1,000 employees, the same as reported in 2002;
·
992 new cases of TB were treated during the year, a rate of 24 per 1,000 employees, which is unchanged from 2002; the relatively high rates of TB infection are a consequence of a high prevalence of HIV - 84 percent of new TB patients are HIV-positive.
Results of efforts made by AngloGold to silencing all machine drills over the past three years are starting to become evident in NIHL results as ambient noise levels have been significantly reduced.
AngloGold continues to make advances in the control of underground dust. New and more accurate measuring methods have been introduced; better engineering practices are evident; a more standard approach to respiratory protective equipment has been implemented and employees detected as having very early OLD are moved to lower risk areas.
TB remains an area of focus in the sphere of occupational health. More effective detection methods are resulting in earlier diagnosis and treatment, which is limiting the onward transmission of the disease. 

HIV is the major factor contributing to increased TB rates in South Africa. It is expected that the HIV Wellness Program and introduction of anti-retroviral therapy (ART) by AngloGold will have a positive impact on the TB problem and a project aimed at preventing transmission of TB, through mass prophylaxis, was implemented in 2003. 

The prevention of HIV/AIDS infections and the compassionate care of those afflicted with the disease remains a priority for the South Africa region. AngloGold's core intervention comprises four elements, namely:

·
restricting the disease through education, the provision of condoms and the effective treatment of sexually transmitted infections;
·
care for employees infected with the virus through comprehensive hospital benefits and the company's Wellness Clinics, including the provision of ART to employees where this is medically indicated;
·
support for those employees no longer able to fulfil their role in the company is provided through an ill-health retirement program linked to home-based care programs; and
·
fundamental research into the disease and its treatment conducted by Aurum Health, a world-class research facility.
More than 500 employees entered the ART program rolled out by AngloGold in South Africa in 2003. This represents 18 percent of AngloGold's employees for whom ART may be medically indicated.
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East and West Africa region
The East and West Africa region's safety performance continued to improve during 2003, with the overall LTIFR decreasing to 1.77, from 2.93 in 2002. One fatal accident occurred at Morila mine and one at Sadiola mine during the year, marring the latter's zero FIFR record. In 2003, the FIFR for the region was 0.11 compared with 0.26 in 2002. 

Safety performance

LTIFR
FIFR
2001
2002
2003
2001
2002
2003
Morila
1.68
6.27
3.78
-
0.33
0.31
Geita
0.65
2.11
0.79
-
0.49
-
Sadiola
-
1.54
0.31
-
-
0.31
Navachab
2.98
3.05
3.60
-
-
-
Yatela
2.52
2.07
2.92
-
-
-
East and West Africa
1.30
2.93
1.77
-
0.26
0.11
With the threat of malaria at most of the African operations, prevention and treatment programs are running effectively at the Malian and Tanzanian operations. In 2003, education, malaria vector control, the issuing of mosquito nets and early detection and treatment continue to be areas of focus for AngloGold. 

HIV/AIDS programs have been implemented in the region with the primary focus on prevention through education and awareness. Education programs are conducted on an on-going basis in the local communities and at the operations. Peer educators have been identified and have received professional training. Partnerships have been formed with NGOs and other stakeholders in the local communities. Awareness programs and condom distribution initiatives are ongoing.

North America region
Safety in the mines in the United States is governed by the Federal Mine Safety and Health Act, which is similar to the Mine Health and Safety Act in South Africa. 

In 2003, safety performance continued at levels experienced in previous years at the North American operations. The overall LTIFR decreased to 2.91 from 4.95 in 2002.

South America region
In 2003, safety performance in the region recorded an overall LTIFR - at 4.48 - below the Ontario benchmark of 6.5, but marginally higher than the 4.21 reported in 2002, while the FIFR decreased to 0.12 in 2003 from 0.16 in 2002. Regrettably, a fatal accident occurred at Morro Velho, Cuiaba mine, on September 1, 2003. 
Safety performance
LTIFR
FIFR
2001
2002
2003
2001
2002
2003
Morro Velho
9.07
5.73
4.04
0.58
-
0.20
Serra Grande
6.42
0.70
1.94
-
-
-
Cerro Vanguardia
7.54
3.72
7.95
-
0.93
-
South America
8.16
4.21
4.48
0.34
0.16
0.12
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Australia region
The Australia region (including Union Reefs, Sunrise Dam and Boddington) recorded an LTIR of 5.54 for the year, down some 50 percent on the previous year, combined with a 31 percent decrease in all injuries. Union Reefs completed 2003 with no serious injuries. 

Ongoing initiatives at Sunrise Dam such as ACTSAFE, which is a safety behavioral program, have been developed and implemented across the site. Other safety and people development initiatives will be introduced in 2004. 

Safety performance

LTIFR
FIFR
2001
2002
2003
2001
2002
2003
Sunrise Dam
11.56
11.00
6.05
-
-
-
Union Reefs
5.08
-
-
-
-
-
Australia
13.47
11.22
5.54
-
-
-
4C. Organizational structure
Head office structure and operations 

AngloGold's operations are organized on a geographical basis, and are controlled from its Johannesburg office. 

Management of AngloGold is entrusted to the executive committee, comprising the four executive directors. This executive committee is supported by the executive officers. See "Item 6: Directors, senior management and employees". Day-to-day management of the operations vests with executive teams based in South Africa (Johannesburg), North America (Denver), Brazil (Nova Lima) and Australia (Perth). 

Corporate activities 

Activities provided in the corporate area fall into three categories. First, support is provided to the executive officers in managing AngloGold as a whole. Second, certain activities are managed centrally, including strategic and business planning, marketing, corporate finance, treasury, exploration, technology and innovation, corporate secretarial and corporate affairs. Third, certain specialized services are directed from the center although they are managed by operations. These include mining, engineering, metallurgy, mineral resource management, safety and health, the environment and human resources. 

AngloGold has investments in numerous principal subsidiaries and joint venture interests, see "Item 19.: Exhibits" for details.

4D. Property, plants and equipment
For a discussion on AngloGold's mining properties, plants and equipment, see "Item 4B.: Business overview".
Sustainable development: Environment and social investment 

AngloGold's operations are subject to the applicable environmental laws, rules and regulations of the various countries and jurisdictions within which they are conducted. Except as set out elsewhere herein, AngloGold believes its operations are in substantial compliance with all material environmental laws, rules and regulations which are applicable to it. In some of the jurisdictions within which AngloGold operates, AngloGold is required to provide financial assurance in a form prescribed by law to cover the cost of some or all of the anticipated closure and final rehabilitation costs for its operations. The form, amount and other requirements associated with this financial assurance for each of the jurisdictions is set out in detail in each of the applicable laws, rules and regulations.

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AngloGold's board of directors approved an Environmental Policy on October 28, 1999, which provides that AngloGold will, at a minimum, comply with all applicable legal requirements. In addition, the policy commits AngloGold to operating in an environmentally responsible manner through effective communications, establishment of management systems, provision of adequate financial resources, training and awareness programs for employees and contractors, public participation processes, conducting environmental audits, and continually improving its environmental performance. 

Environmental audits of AngloGold's operations are performed periodically to evaluate performance of the operations against applicable requirements. 

AngloGold's estimated future environmental rehabilitation obligations as at December 31, 2003 are as follows:

2003
contribution to
Trust Fund
Balance in
Trust Fund
Total estimated
liability
Note
Balance in
provision
South African operations
10.1
(2)
52.7
97.6
(1)
48.7
East and West African operations
-
-
25.4
(3)
12.4
North American operations
-
-
55.0
(3) (4)
22.2
South American operations
-
-
38.9
(3)
25.7
Australian operations
-
-
31.7
(3)
24.8
Total
10.1
52.7
248.6
133.8
All figures are in $ millions.
(1)
All calculations are based on the 2004 business plan. Under South African law, AngloGold is required to estimate its environmental closure and final rehabilitation costs and to use this estimate to make periodic cash contributions to an environmental trust fund, created in accordance with rehabilitation obligations of those operations.
(2)
Includes growth in the Trust Fund of $4.2 million.
(3)
For East and West Africa, North America, South America and Australia, the obligations are based upon the company's net interest in millions of US dollars. The obligations will be funded from existing cash resources and future cash flows.
(4)
For North America, the total estimated liability is based on the amounts agreed with various federal and governmental agencies and AngloGold North America has posted reclamation bonds aggregating approximately $45 million to cover these potential environmental obligations. AngloGold has provided a guarantee for these obligations.
While the ultimate cost to be incurred in the future is uncertain, AngloGold has estimated that the total cost for mine rehabilitation and closure, in current monetary terms, will be $248.6 million. 

South African operations 

Environment: South African law requires that AngloGold calculate its estimated environmental closure and final rehabilitation costs for operations which are subject to the requirements of the law. The law also requires that this estimate be used by AngloGold to make periodic cash contributions to an environmental trust fund (or use some other approved funding mechanism), created in accordance with rehabilitation obligations of those operations. It is anticipated that these estimates are likely to change as additional, operation-specific information is gained and if, and as, closure and final rehabilitation requirements change. 

Certain amounts have been contributed to an irrevocable rehabilitation trust under AngloGold's control for rehabilitation of the mines and related facilities located in South Africa. The monies in this trust are invested primarily in interest-bearing debt securities. 

AngloGold intends to finance the ultimate rehabilitation costs from the monies invested with the rehabilitation trust fund, from the proceeds on sale of assets and gold from plant clean-up at the time of mine closure as well as from internally generated funds.

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Estimated rehabilitation liabilities for the South African operations at December 31, 2003 are:
2003 contribution
to trust fund
(1)
Balance in trust
fund
Total estimated
liability
Balance in
provision
Vaal River
3.6
22.8
54.2
23.3
West Wits
3.6
12.0
24.1
9.8
Ergo
2.9
17.9
19.3
15.6
Total
10.1
52.7
97.6
48.7
(1)
Includes growth in the trust fund of $4.2 million.
Under South African law, mining companies are required to submit Environmental Management Program Reports (EMPRs) to the Government Mining Engineer's office. EMPRs identify individual impacts, mitigation measures and rehabilitation requirements and must also be approved by other South African Government departments, including, but not restricted to, the Department of Water Affairs and Forestry. In response to changed legal requirements in respect of water management issues, AngloGold has applied for and received the required water permits. 

In order to maintain compliance with the EMPRs, AngloGold meets periodically with the relevant government departments to review its operations in the light of the provisions contained within the relevant EMPRs. 

Since the South Africa region employs by far the most people, and has the largest number of operations, its community and environmental impact is greater there than anywhere else. The aim of the South Africa region is to create a balance between the impact on the natural and social environments in which it operates while at the same time, ensuring that it delivers significant and lasting benefits to employees, their communities and other stakeholders, in partnership with government, international agencies, labor, health and non-governmental organizations. As a result of historical and current social- economic imperatives, the role played by the company in social issues is significant. 

An amended Environmental Management Program Report for the West Wits and Vaal River operations was submitted to the Department of Minerals and Energy in November 2002. A number of these reports were approved during 2003 with the outstanding ones still pending administrative processing. Water usage and management remains a key area of focus. 

Water balances were updated and redesigned to ensure a more user-friendly and comprehensive system. Water monitoring programs and procedures for ground and surface water were developed and implemented at the Vaal River and West Wits operations and a quarterly reporting and analysis system was rolled out across the region. Geotechnical assessment of rock dumps and tailings storage facilities, indicating pollution potential and associated time periods, were completed. This is the first time such an assessment has been undertaken in the South African gold mining industry. The main focus for 2004 will be the reduction in potable water usage and the treatment of mine water to reduce the contamination potential on water resources. 

During 2002, the region committed itself to the development of an internet-based electronic Environmental Management System. The system is based on ISO14001 principles. The first of five phases, involving policy development and planning, was completed in 2003. 

During 2003, the region's Environmental Incident Review system was also further refined, with the emphasis placed on implementation within the operations. 

Progress was made with rehabilitation trials at the Ergo Daggafontein tailings dam. The dam was decommissioned in December 2001 and will be rehabilitated to environmental closure standards in terms of the Minerals Act. The final closure plan was submitted to the Department Minerals and Energy for approval.

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Sustainable development and social investment: In South Africa, the company's corporate social investment initiatives are directed by the AngloGold Fund and the AngloGold Educational Trust Fund. During 2003, funds were committed to a range of initiatives, both large and small. The primary area of investment remains education, welfare and development, community health, health projects related to HIV/AIDS and skills and entrepreneurial development. Although the Funds support projects which have a national impact, the focus is on those regions and communities in which the company operates or has a major impact. 

East and West African operations 

Environment: Mine closure costs and their associated provisions are reviewed on an annual basis. The region is working towards standardizing the approach and assumptions used for closure provision estimation at the various operations. Estimates are revised as the understanding of site-based issues that influence closure provision evolves due to technical studies undertaken in the previous year (for example, techniques required for rehabilitating heap leach stacks at Yatela). The dynamic nature of the operations and ongoing rehabilitation means that closure costs can be revised either up or down. Increased closure provisions at a number of operations reflects the development of new infrastructure (for example, satellite pits at Geita). 

At the Navachab operation in Namibia, the final closure provision is currently estimated at is $1.38 million. Navachab is wholly-owned by AngloGold. 

At Sadiola in Mali, the mine closure provision has been revised to $12.0 million, which reflects the change in local currency exchange rate. AngloGold owns 38 percent of Sadiola and therefore, its share of mine closure liability is $4.56 million. Other shareholders include IAMGOLD, the IFC and the Malian Government. 

Construction of the Yatela project in Mali was completed and production commenced in 2001. Closure liability has been revised from $2.8 million to $8.6 million. AngloGold has a 40 percent interest in Yatela and therefore, its share of mine closure liability is $3.44 million. Other shareholders include IAMGOLD and the Malian Government. 

The Morila mine in Mali has revised its mine closure liability estimate from $8.4 million to $12.3 million. The Morila Board approved the new estimate of costs in August 2003. Morila has sent a letter to its financiers, N.M. Rothschild & Sons Limited, to confirm that Morila has fulfilled its obligations regarding the Mechanical Completion Certificate issuance, and that its technical advisors, SRK have indicated that the plan is acceptable. Morila's shareholders include AngloGold, RandGold and the Malian Government. AngloGold has a 40 percent interest in Morila and therefore, its share of mine closure liability is $4.92 million. 

The Geita mine in Tanzania is subject to six monthly surveillance audits to maintain its ISO4001 certification. The mine has increased its estimated closure liability from $12 million to $22.2 million. Ashanti is the other shareholder. 

Sustainable development and social investment: AngloGold's aim of ensuring sustainable development is particularly pertinent in these regions of Africa, where mining operations are frequently located in inaccessible areas, largely untouched by industrial and economic development. Responsible mining practices, with the full involvement of local communities and governments, can ensure that long-term benefits accrue to the regions, even after mining has ceased. 

Structures have been established at each of the operations to deal with the communities. These structures take the form of community committees or boards of executors of trusts with mine management participation. A key focus is the building of capacity within these structures and the creation of a greater sense of ownership which will ensure sustainability after mine closure. 

At Sadiola and Yatela Mines an intergrated development plan is being developed which entails the identification of sustainable community-driven projects. At Morila Mine the mine has pledged the $500,000 for the setting up of a community trust fund. 

At Geita Mine the Nyakabale agro project has been a remarkable success. It was established in June 2001 and to date 48 farmers from the local community have been trained and registered. Moringa seeds are being sold in Dar Es Salam and vegetables are sold to the mines contract catering company and the broader community. The project is now realizing a profit and is growing from strength to strength.

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At most of the operations micro lending schemes exist where entrepreneurs from the local community obtain loans from the operations to start up local businesses. 

At all operations, as a policy, preference is given to candidates from the local community when employment opportunities arise. Localization programs have been implemented at all operations with the main focus on the implementation of technical and managerial training programs to fast-track the career development of local employees. 

North American operations Environment: 

The US operations were subject to environmental inspections by major environmental federal and state regulatory authorities during 2003 and were in substantial compliance with permit requirements with the possible exception of a water quality matter at the CC&V operation, which is discussed more fully below. 

Activities continued at the CC&V operation in the State of Colorado under approvals previously obtained from various government entities to expand the operations at the Cresson Project. The approvals obtained in August 2000 included an assessment by the State of Colorado of rehabilitation costs for the expanded operation. This estimate requires CC&V to provide financial assurance in the amount of approximately $52.0 million to cover rehabilitation obligations associated with the full build-out of the expansion. The total financial assurance now posted under Colorado law for the CC&V operation is approximately $41.5 million to cover rehabilitation obligations, which amount has been posted with the State of Colorado in the form of surety bonds by AngloGold via major US insurance companies. 

Certain allegations were raised by the US Environmental Protection Agency (EPA) in 2001 related to self-reported excursions of CC&V's discharge permits in 1996 - 1999 and alleged discharges without necessary permits. EPA and the Colorado Water Quality Control Division (WQCD) evaluated significant information provided by CC&V relating to the allegations and after months of negotiations entered into two administrative settlements with CC&V and others in September 2002 to resolve EPA's allegations. Notwithstanding various available defenses, no in-stream exceedances and the last alleged excursion occurring nearly three years prior to entering into the settlements, CC&V and its joint venture partners made a conscious decision that attempting to settle the matter, rather than continuing with protracted and divisive litigation, was in the best interests of their employees and the communities where CC&V operates. The two settlement documents became final after public comment in the first quarter 2003 and CC&V has undertaken all required action under the documents.

Activities at the Jerritt Canyon Project in the State of Nevada were continued solely by underground mining at four mines. As noted previously, AngloGold sold its interest in Jerritt Canyon to Queenstake Resources USA Inc. (Queenstake) effective June 30, 2003. With the sale, AngloGold was released of all rehabilitation obligations at Jerritt Canyon due to the assumption of such obligation by Queenstake. As such, the State of Nevada and the United States Forest Service (USFS) released the surety bonds posted by AngloGold via major US insurance companies totalling approximately $33 million.
In Nevada, final rehabilitation activities continued at the Big Springs mine and mill. These rehabilitation activities have progressed to a stage that release of a majority of the posted financial assurance of approximately $3.0 million with the State of Nevada and the USFS can be pursued in 2004. 

Activist groups have again threatened to pursue anti-mining initiatives in the State of Colorado in 2004. In 2002 and 2003, anti-mining legislation that would eliminate the use of cyanide heap leaching technologies for gold and silver associated with silver mining was introduced but defeated. In 2000, a similar anti-mining ballot initiative was proposed but unsuccessful. New legislation was required to be filed with the Colorado Senate by January 23, 2004 and the Colorado House by January 28, 2004. No bill was introduced by these deadlines; however, other avenues still exist for introducing legislation by filing a late status bill or amending an existing bill. The legislative session ends on May 5, 2004. A ballot initiative can be filed with the State of Colorado until approximately August 7, 2004 for the November 2004 election. As at March 15, 2004, no ballot initiative has been filed.

Sustainable development and social investment: In North America, AngloGold's operations make a positive contribution to the communities in which they operate. AngloGold supports projects with potential social, economic or environmental benefits. Some examples of such projects include the development, in conjunction with other mining companies and state and federal government agencies, of a voluntary program to reduce mercury air emissions at Nevada mines, and continued support towards the construction of a regional medical center in a community near CC&V.
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South American operations
Environment: The South American operations were subjected to environmental inspections by state environmental authorities during 2003 and were found in compliance with local, state and federal environmental regulations.
At Morro Velho, work to evaluate the impact of old tailings was concluded and approved by the environmental regulatory authorities. Rehabilitation work is underway and is expected to last throughout the year. 

One of the Morro Velho underground mines, Mina Velha, was closed in October 2003. Dismantling and clean up is being undertaken. 

Morro Velho was audited during the first quarter and gained a NOSA (Integrated System of Occupational Health, Safety and Environment) 4-star rating. In late 2003, Cerro Vanguardia was re-audited and achieved a NOSA 4-star rating besides maintaining the ISO 14001 certification. Serra Grande was re-audited keeping its NOSA 5-star rating. Both Morro Velho and Serra Grande are seeking to be ISO 14001 certified.

The total anticipated environmental rehabilitation and closure costs for the South American operations is estimated at $42.2 million, of which AngloGold's attributable share is estimated at $38.9 million. 

Environmental and social issues continue to receive attention. There is an ongoing environmental program that includes an improved waste collection and recycling campaign during the year, significantly reducing the amount of waste generated by the company. 

At Serra Grande, an ongoing partnership project with the Federal Environmental Agency allows the Serra Grande Preservation Centre to house endangers species of birds. The Centre also comprises an indigenous botanical nursery with an annual production of 3,500 plants. 

Sustainable development and social investment: In line with AngloGold's policy of sustainable development, the South American operations are actively involved in forming partnerships with local municipalities, communities and other institutions towards the upliftment of communities in which its operations are located. Examples of these are the agreement with the National University of Southern Patagonia for the monitoring of the flora, fauna and soil in the region of Cerro Vanguardia mine, aimed at preserving animal and plant species and maintaining water and soil quality. In addition, 3,101 fourth grade students attended the environmental educational program at The Harry Oppenheimer Centre for Environmental Education in Nova Lima. 

Australian operations 

Environment: Environmental management and compliance, as well as the promotion of social development in the regions in which the company operates, continued as a matter of priority during 2003. AngloGold Australia reported nine Category 3 incidents during the year compared with two incidents in 2002. 

A Health, Safety, Environmental and Community Performance Report covering AngloGold's Australian operations was published. The publication is a requirement for signatories to the Australian Minerals Industry Code for Environmental Management (Code). AngloGold's Australian operations are signatories to the Code. The operations were in substantial compliance with material requirements of applicable Australian law. 

The Union Reefs operation closed in late 2003. A detailed closure plan, addressing environmental, stakeholder and community issues, was approved by the Northern Territory Government. Rehabilitation of worked out open-pits, waste rock dumps and tailings disposal areas was advanced during 2003. The Union Reefs mine is on care and maintenance. 

The Sunrise Dam operation maintained a strong focus on environmental management, with improvements to the Central Tailings Discharge area, internal auditing of cyanide management and continued compliance with license conditions. Statutory approvals were received for the development of an underground mine and the construction of associated infrastructure. Where possible at Sunrise Dam during 2003, disturbed land was progressively rehabilitated.

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The Boddington oxide operation closed during the final quarter of 2001. Rehabilitation of those parts of the operation that will not be affected by the future expansion operations was undertaken during 2002. Redundant plant and equipment were disposed of and progressively removed from site. 

The Tanami process plant and associated service and tailings disposal facilities were leased to a third party for processing third party ore for a period of up to four years from 2001. The Tanami joint venture partners are not liable for the impact of these third party activities. Those parts of the Tanami operation that were not subject to the lease agreement are progressively being rehabilitated. 

Estimated closure rehabilitation liabilities for the Australian operations at December 31, 2003 are: 

Mine

2002
$ 000
(1)
2003
$ 000
(1)
Boddington
9,898
13,327
Union Reefs
1,343
1,040
Tanami
2,518
3,390
Sunrise Dam
10,351
13,936
Other
-
-
Total
24,110
31,693
Total (A$ 000)
A$43,091
A$42,072
(1)
Figures shown in $ thousands converted from Australian dollars at an exchange rate of A$1.3275 = $1 (2002: A$1.7873 = $1).
Sustainable development and social investment: The company was involved in a number of community development and support initiatives during the year and maintained its commitment to training, employment and business support in indigenous communities. In recognition of its positive contribution to indigenous issues. AngloGold Australia and Carey Mining Ltd were awarded the Best New Sponsor Award for their partnership with the Art Gallery of Western Australia. AngloGold Australia and Carey Mining jointly sponsor the newly-created position of Trainee Indigenous Education Officer at the Gallery. 

For further discussions of AngloGold's property, plants and equipment, see "Item 4B.: Business overview" as well as note 16 to the consolidated financial statements "Provision for environmental rehabilitation".

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Item 5: Operating and financial review and prospects
The following operating and financial review and prospects are based on the US GAAP financial statements of AngloGold for the years ended and as at December 31, 2003, 2002 and 2001 which are included under Item 18 of this annual report. 

Overview

For the year ended December 31, 2003, AngloGold produced approximately 5.6 million ounces of gold. Headquartered in Johannesburg, South Africa, AngloGold has a global presence with 19 operations comprising open-pit and underground mines and surface metallurgical plants in eight countries (Argentina, Australia, Brazil, Mali, Namibia, South Africa, Tanzania and the United States of America), supported by extensive, yet focused exploration activities in 11 countries. As at December 31, 2003, AngloGold had Proven and Probable Ore Reserves of approximately 63.1 million ounces on an attributable basis.
AngloGold's main product is gold. An insignificant portion of its revenue is derived from the sales of silver, uranium oxide and sulphuric acid. AngloGold sells its products on world markets.
AngloGold divides its worldwide operations into five geographic regions: South Africa (which comprises eight operations), East and West Africa (which encompasses five operations), North America (which encompasses one operation), South America (which encompasses three operations) and Australia (which encompasses two operations). For more information on AngloGold's business and operations, see "Item 4B.: Business overview -- Products, operations and geographical locations". 

5A.

Operating results
Introduction
AngloGold's revenues are derived primarily from the sale of gold produced at its mines. An insignificant portion of its revenue is derived from the sales of silver, uranium oxide and sulphuric acid. As a result, AngloGold's operating results are directly related to the price of gold which can fluctuate widely and are affected by numerous factors beyond its control, including industrial and jewellery demand, expectations with respect to the rate of inflation, the strength of the US dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production and cost levels in major gold-producing regions such as South Africa. In addition, the price of gold sometimes is subject to rapid short-term changes because of speculative activities. The current demand for and supply of gold may affect gold prices, but not necessarily in the same manner as current supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new production from mining and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals.
As the amounts produced in any single year constitute a very small portion of the total potential supply of gold, normal variations in current production do not necessarily have a significant impact on the supply of gold or on its price. If revenue from gold sales falls for a substantial period below AngloGold's cost of production at its operations, AngloGold could determine that it is not economically feasible to continue commercial production at any or all of its operations or to continue the development of some or all of its projects. AngloGold's weighted average total cash costs per ounce of equity attributable production for its world-wide operations was $229 per ounce of gold produced in 2003, $161 in 2002 and $178 in 2001.
On March 15, 2004, the afternoon fixing price for gold on the London Bullion Market was $398.10 per ounce.
AngloGold's costs and expenses consist primarily of production costs, royalties and depreciation, depletion and amortization. Production costs are incurred on labor, consumable stores which include explosives, timber, other consumables and utilities incurred in the production of gold. Labor is the largest component of production costs as AngloGold's mining operations consists mainly of a combination of the use of both deep level underground mining methods as well as open-pit operations, which are labor intensive.
AngloGold is a global company, with operations in several regions on several continents, including South Africa, East and West Africa, North and South America and Australia, and is therefore exposed to a number of factors, which could impact on its profitability, resulting from exchange rate fluctuations, inflation and other risks relating to these specific countries. These factors are inherent in conducting mining operations on a global basis, and AngloGold applies measures, such as hedging instruments, intended to reduce its exposure to these factors.
In conducting mining operations, AngloGold recognizes the inherent risks and uncertainties of the industry, and the wasting nature of assets. The costs and expenses relating to the production of gold are either expensed or capitalized to mining assets. Recoverability of capitalized amounts is reviewed on a regular basis.
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Effect of exchange rate fluctuations
Currently, the majority of AngloGold's revenues are generated in South Africa, and to a lesser extent in South America and Australia, and most of its production costs, therefore, are denominated in local currencies, such as the South African rand, the Brazilian real, the Argentinean peso and the Australian dollar. In 2003, AngloGold derived 77 percent of its revenues from these countries and incurred 80 percent of its production costs in these local currencies. In 2003, the weakening of the US dollar against these local currencies accounted for nearly $47 per ounce, or 69 percent of the total increase in total cash costs per ounce from 2002. As the price of gold is denominated in US dollars and AngloGold realizes the majority of its revenues in US dollars, devaluation of these local currencies against the US dollar improves AngloGold's profitability in the short-term. Mainly as a result of its hedging instruments, a small portion of AngloGold's revenues are denominated in South African rand and Australian dollar, which partially offsets the effect of the US dollar's strength or weakness on AngloGold's profitability. Based upon average rates during the respective years, the rand and the real strengthened by 28 percent and 4 percent respectively, against the US dollar in 2003 compared to 2002. The Argentinean peso traded freely against the US dollar from January 1, 2002 and had devalued to 3:1 against the US dollar by January 31, 2004. The Australian dollar, based on the average rates during the respective years, strengthened by 16 percent against the US dollar in 2003 compared to 2002. 

In addition, to fund local operations and comply with South African exchange controls, AngloGold holds funds in local currencies, such as the rand and Australian dollar. The US dollar value of these currencies may be affected by exchange rate fluctuations and, as a result, AngloGold's cash and cash equivalents reported in US dollars could change. At December 31, 2003, approximately 63 percent of AngloGold's cash and cash equivalents were held in such currencies. 

Certain exchange controls are currently in force in South Africa. Although the exchange rate of the rand is primarily market determined, its value at any time may not be considered a true reflection of the underlying value of the rand while exchange controls exist. The government has indicated its intention to lift exchange controls over time. When this occurs, rand exchange rates will be more closely tied to market forces. It is not possible to predict when this will occur or the future value of the rand. For a detailed discussion of these exchange controls, see "Item 10D.: Exchange controls". 

Effect of inflation 

AngloGold's operations have not been materially adversely affected by inflation in recent years. However, AngloGold is unable to control the prices at which it sells its gold (except to the limited extent that it utilizes commodity instruments) and it is possible, therefore, that if, there is to be significant inflation in South Africa, and to a lesser extent in South America and Australia, without a concurrent devaluation of the local currency or an increase in the price of gold, there could be a material adverse effect upon AngloGold's results and financial condition. 

The rand/US dollar exchange rate, based upon average rates during the respective years, and the local annual inflation rate, as measured by the South African Producer Price Index (PPI), are set out in the table below:

Year ended December 31

2003
2002
2001
The average South African rand/US$ exchange rate 
(strengthened)/weakened by:
(28.0)
21.6
27.1
PPI (inflation rate) increase:
1.7
14.2
8.4
Net effect
(29.7)
(1)
7.4
18.7
(
1)
The decrease in the inflation rate from 2002, is outweighed by the impact of the strengthening of the rand relative to the US dollar over 2002
Effect of commodity instruments 

AngloGold has utilized commodity instruments to protect the selling price of some of its anticipated gold production. Although the use of these instruments may protect a company against low gold prices, it will only do so for a limited period and only to the extent the hedge book can be sustained. The use of such instruments may also prevent full participation in subsequent increases in the market price for gold with respect to covered production. For a discussion of AngloGold's commodity instruments, see "Item 11.: Quantitative and qualitative disclosures about market risk".

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Acquisitions and dispositions
The global gold mining industry has experienced active consolidation and rationalization activities in recent years. Accordingly, AngloGold has been, and expects to continue to be, involved in a number of acquisitions and dispositions as part of this global trend and to identify value-adding Business Combination and acquisition opportunities.
In February 2001, AngloGold sold its Deelkraal and Elandsrand mines at the West Wits operations in South Africa and in July 2001 sold its interest in No. 2 Shaft at the Vaal Reefs operations also in South Africa.
In November 2001, AngloGold announced the sale of its Free State operations in South Africa effective January 1, 2002. The sale closed in April 2002. AngloGold also announced the sale of its Normandy shares in January 2002 after its offer to purchase all of the outstanding share capital of Normandy Mining Limited in Australia expired without it obtaining control of Normandy.
During July 2002, AngloGold acquired an additional 46.25 percent interest in the Cerro Vanguardia mine in Argentina doubling its interest in this operation to 92.5 percent. The transaction was effective from July 1, 2002. With effect from October 1, 2002 AngloGold disposed of its wholly-owned subsidiary, Stone and Allied Industries, to a joint venture of that company's existing management and a group of black entrepreneurs.
On May 23, 2003, AngloGold announced that it had signed an agreement to sell its wholly-owned Amapari Project to Mineracao Pedra Branca do Amapari. The effective date of the transaction was May 19, 2003. The Amapari project is located in the State of Amapa, North Brazil. Since acquiring the property as part of the Minorco transaction, the Company has sought to prove up additional reserve ounces in order to get it to a size and life that would justify the management resources needed to run it effectively. This was not achieved and AngloGold, on receiving an offer from a purchaser who could constructively turn this orebody to account, agreed to sell.
On June 6, 2003, AngloGold announced that it had finalized the sale of its 49 percent stake in the Gawler Craton Joint Venture, including the Tunkillia project located in South Australia to Helix Resources Limited. Helix's proposed acquisition of AngloGold's rights to the Tarcoola Project, 60 kilometres to the south, was excluded from the final agreement. This resulted in a restructure of the original agreement terms, as announced on April 8, 2003.
On July 2, 2003, AngloGold announced that it had concluded the sale of its interest in the Jerritt Canyon Joint Venture to Queenstake Resources USA Inc. effective June 30, 2003. This followed negotiations originally announced on February 27, 2003. Queenstake accepted full closure and reclamation liabilities. The shares acquired by AngloGold in this transaction were issued by Queenstake Resources Limited, a subsidiary of Queenstake, and represents approximately 9.2 percent of that company's issued share capital. AngloGold disposed of its entire interest in Queenstake during November 2003.
On July 8, 2003 AngloGold disposed of its entire investment of 8,348,600 shares held in East African Gold Mines Limited and in the second half of 2003 AngloGold disposed of 952,481 shares in Randgold Resources Limited.
On September 18, 2003 AngloGold and Gold Fields Limited jointly announced that agreement had been reached on the sale by Gold Fields Limited of a portion of the Driefontein mining area in South Africa to AngloGold.
On November 14, 2003 AngloGold announced that it had entered into an agreement with Greater Pacific Gold Limited for the sale of its Union Reefs Gold Mine at Pine Creek, which closed in October 2003, together with associated assets and tenements. The sale is dependent upon Greater Pacific Gold Ltd meeting the staged payments schedule and various other related performance criteria. The effective date of the sale has not yet been finalized. The financial effects of this sale are not included in the consolidated financial statements as at and for the year ended December 31, 2003. See note 30 to the consolidated financial statements "Subsequent events". AngloGold does not expect that the sale will have a material impact on its earnings and financial position.
On November 24, 2003 AngloGold announced its agreement to sell its Western Tanami Project to Tanami Gold NL. The Western Tanami Project comprises an established exploration camp and associated equipment, a number of Exploration Licences in northern Western Australia and includes the Coyote gold project. The sales agreement was concluded on January 20, 2004. Except for a non-refundable deposit made on November 24, 2003 the financial effects of this sale are not included in the consolidated financial statements as at and for the year ended December 31, 2003. See note 30 to the consolidated financial statements "Subsequent events". AngloGold does not expect that the sale will have a material impact on its earnings and financial position.
Acquisitions have been accounted for as purchase business combinations under US GAAP. The consolidated financial statements reflect the operations and financial condition of AngloGold, assuming that acquisitions and dispositions took place on the effective date of these transactions. Therefore, the consolidated financial statements are not necessarily indicative of AngloGold's financial condition or results of operations for future periods. For a more detailed discussion of these transactions, see "Item 4A.: History and development of the company".
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105
Overview of the AngloGold-Ashanti Business Combination
On May 16, 2003, AngloGold and Ashanti confirmed that they were in discussions regarding a proposed Business Combination of the two companies and on August 4, 2003 the companies announced that they had agreed the terms of a recommended Business Combination at an exchange ratio of 0.26 ordinary shares for every Ashanti share. On the same date, AngloGold entered into the Lonmin Support Deed, pursuant to which Lonmin, which currently holds 27.6 percent of Ashanti's issued share capital, agreed, among other things, to vote its Ashanti shares in favor of the Business Combination. After further discussions with AngloGold and detailed, careful consideration of a competitive proposal, and following the increase by AngloGold in the offer consideration from 0.26 to 0.29 ordinary shares, the Ashanti Board announced on October 14, 2003 that it was recommending the improved final offer from AngloGold.
On October 28, 2003, the Government of Ghana, which currently holds 16.8 percent of Ashanti's issued share capital, announced its support for the AngloGold offer, as well as the principal terms of a stability undertaking which the Government of Ghana intended to enter into with AngloGold. On December 12, 2003, AngloGold and the Government of Ghana entered into the Government Support Deed, pursuant to which the Government of Ghana agreed, among other things, to vote its Ashanti shares in favor of the Business Combination. Following the approval by the Parliament of Ghana of the terms of the Stability Agreement on February 18, 2004, AngloGold and the Government of Ghana executed the Stability Agreement.
The Business Combination is to be effected by means of a scheme of arrangement under Ghanaian law which requires the approval of not less than three-fourths of the votes cast by Ashanti shareholders present and entitled to vote either in person or by proxy, and the confirmation of the High Court of Ghana. The extraordinary meeting of Ashanti's shareholders required to approve the scheme of arrangement is set to take place on April 7, 2004. Under the terms of the Business Combination, holders of Ashanti securities will receive for every Ashanti share or Ashanti GDS, 0.29 ordinary shares or 0.29 ADSs of AngloGold.
Following the Business Combination, Ashanti will become a private company and a wholly-owned subsidiary of AngloGold. AngloGold has agreed to convene a general meeting of its shareholders to consider a special resolution to change its name to AngloGold Ashanti Limited as of completion of the Business Combination. This special resolution will need to be passed at a general meeting of AngloGold at which shareholders representing no less than one-fourth of the total votes of all of the shareholders entitled to vote thereat are present in person or by proxy, and the resolution will need to be approved, on a show of hands, by no less than three-fourths of AngloGold's shareholders present in person or by proxy or, where a poll has been demanded, by no less than three-fourths of the total votes that shareholders present in person or by proxy are entitled to cast. The board of directors of AngloGold has recommended that its shareholders vote in favor of this special resolution. AngloGold has received an undertaking from its largest shareholder, AA plc, which currently holds approximately 56 percent of AngloGold's issued share capital, to vote its shares in favor of this special resolution.
The Business Combination is subject to a number of conditions including the approval by the requisite majority of Ashanti shareholders of the Ghanaian Scheme of Arrangement and the relevant special resolution proposed at its extraordinary general meeting, the confirmation of the Scheme by the High Court of Ghana, the receipt of certain regulatory approvals and third party consents and the absence of any material adverse change to the business, financial condition, results of operations, assets or liabilities of Ashanti since December 31, 2002 (other than as publicly disclosed or announced by Ashanti prior to the date of the Transaction Agreement). If the conditions to the Business Combination are not satisfied or (if permissible) waived on or before May 31, 2004 or such later date as may be agreed by AngloGold or Ashanti, AngloGold and Ashanti may terminate the Transaction Agreement, in which case the Ghanaian Scheme of Arrangement will not become effective and the Business Combination will not be completed. AngloGold and Ashanti are not obliged to extend the period for the satisfaction or (if permissible) waiver of the conditions to the Business Combination beyond May 31, 2004. At this stage there is no guarantee that the conditions to the Business Combination will be satisfied and that the Business Combination will be completed.
Following the completion of the Business Combination, AngloGold will continue to be a growth focused, leading global gold producer. It will have one of the largest gold Ore Reserves bases in the industry, a significant and well diversified production base and the financial and technical resources to maximise organic growth from the existing asset base as well as to capitalize on further acquisition opportunities.
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AngloGold expects that following completion of the Business Combination, a dedicated project team will undertake a feasibility study regarding Obuasi Deeps with anticipated expenditure for exploration and feasibility studies of $44 million over the next five years. Including this amount, the total capital expenditure for Obuasi Deeps is estimated to be $570 million in real terms over the expected life of mine. For the Existing Obuasi Mine, AngloGold intends to invest $110 million in real terms over the next five years on underground equipment, infrastructure and environmental and planning systems. This amount will be in addition to capital expenditure already planned by Ashanti and is in addition to the $44 million to be spent upon exploration of Obuasi Deeps, as referred to above. Under the Stability Agreement, AngloGold proposes to spend $220 million on the Existing Obuasi Mine over the next five years, which amount includes the $110 million referred to immediately above. AngloGold management anticipates that these initiatives will improve underground working conditions and mine planning, thereby increasing efficiencies with the objective of reducing anticipated cash operating costs at Obuasi by an estimated $20 per ounce in real terms over the next five years.
Following completion of the Business Combination, AngloGold intends to accelerate its exploration programs, particularly at Obuasi and at Siguiri. AngloGold also expects that its stronger balance sheet, combined with its proved capital raising capability, will support the funding of the above development projects at Obuasi and, in 2004, the CIP installation at Siguiri.
With respect to Ore Reserves, upon completion of the Business Combination AngloGold will have 83.8 million ounces of attributable Provenand Probable Ore Reserves based on AngloGold's and Ashanti's Proven and Probable Ore Reserves as at December 31, 2003 (which Ore Reserves were already adjusted for the sale by AngloGold of Amapari, the Western Tanami assets and its 70 percent interest in the Jerritt Canyon Joint Venture during 2003, as well as the closure in 2003 of Union Reefs). This represents approximately a 33 percent pro forma increase in AngloGold's Provenand Probable Ore Reserves as at December 31, 2003.
In terms of production, AngloGold expects the Business Combination to reinforce its position as one of the world's largest gold producers with a combined gold production of 6.9 million ounces. based upon AngloGold's and Ashanti's individual attributable production for 2003 (adjusted for the sale during 2003 by AngloGold of its 70 percent interest in the Jerritt Canyon Joint Venture as well as the closure of Union Reefs in 2003). This represents a 28 percent increase in AngloGold's attributable production level for the year ended December 31, 2003, similarly adjusted for the sale of Jerritt Canyon and the closure of Union Reefs.
Following completion of the Business Combination, AngloGold will have a portfolio of long-life, low-cost assets and different orebody types in key gold producing regions. Six operations in five countries will have combined Proven and Probable Ore Reserves of 41.2 million ounces with current life of mine plans of 15 years or longer. Finally, AngloGold's asset portfolio will be well diversified, comprising a balance of open-pit and underground production from a total of 24 operations (following the sale during 2003 by AngloGold of its interests in the Jerritt Canyon Joint Venture, as well as the closure in 2003 of Union Reefs) distributed across 11 countries in the principal gold producing regions of the world.
For a detailed discussion of AngloGold's Business Combination with Ashanti, including a description of the contractual arrangements in connection with the Business Combination and an overview of Ashanti's business, see Item "4A.: History and development of the company-Overview of the AngloGold-Ashanti Business Combination".
Projects and growth opportunities
In addition to continuously monitoring and evaluating prospective acquisitions including the Business Combination, AngloGold's management has identified a number of medium- to long-term organic growth opportunities for the company. For a discussion of these projects and opportunities, see "Item 5D.: Trend information - Growth opportunities".
South African political, economic and other factors
AngloGold is a South African company and a majority of its operations are in South Africa. As a result, AngloGold is subject to various economic, fiscal, monetary and political factors that affect South African companies generally.
South African companies are subject to exchange control regulations. Governmental officials have from time to time stated their intentions to lift South Africa's exchange control regulations when economic conditions permit such action. From 1998, certain aspects of exchange controls for financial institutions and individuals have been incrementally relaxed. It is, however, impossible to predict when the South African Government will remove exchange controls in their entirety. South African companies remain subject to restrictions on their ability to export and deploy capital outside of the Southern African Common Monetary Area, unless dispensation has been granted by the South African Reserve Bank. For a detailed discussion of exchange controls, see "Item 10D.: Exchange controls".
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107
In October 2002, the President of South Africa assented to the Mineral and Petroleum Resources Development Act ("MPRDA"), which was passed by the parliament of South Africa in June 2002 . It will take effect on a date to be proclaimed by the President, which is expected to be during 2004. The MPRDA vests custodianship of South Africa's mineral rights in the State, which will issue prospecting rights or mining rights to applicants in the future. The existing common law prospecting, mining and mineral rights will cease to exist, but transitional arrangements are provided in order to give holders of existing rights the opportunity to convert their current rights into new rights. The new rights will be subject to a State royalty calculated on gross revenue as proposed in the draft Mineral and Petroleum Royalty Bill, 2003, which was released in March 2003 for comment and which proposes a royalty payment of 3 percent of gross revenue per annum, payable quarterly, in the case of gold. The company is currently evaluating and have not yet established the impact of the MPRDA and the draft Mineral and Petroleum Royalty Bill, 2003 on its earnings and financial position. For a detailed discussion of the MPRDA see "Item 4B.: Business Overview - Rights to mine and titles to properties - Mineral and Petroleum Resources Development Act".
Gold market in 2003
In 2003, the spot price of gold opened at $346 per ounce in January and closed at $415 per ounce in December, an increase of 20 percent, compared with $279 per ounce in January 2002 and $348 per ounce in December 2002. At its lowest, the spot price was $319 per ounce in 2003, 15 percent higher than $277 per ounce, the lowest spot price of gold for 2002. During 2003, the highest spot price of gold was $417 per ounce compared to a high of $354 per ounce for 2002. The average spot price of gold was $363 per ounce during 2003, $53 per ounce, or 17 percent, higher than $310 per ounce, the average spot price in 2002.
AngloGold believes that the primary mover in gold continues to be strong speculator and investor interest in the metal, driven by a number of fundamental economic circumstances. Among these circumstances is the anticipated further decline in the value of the US dollar. These same influences have pushed up prices of base metals and other commodities, although the extent of investor interest in precious metals is relatively high compared with the rest of the metals sector. The fourth quarter of 2003 again saw higher levels of open positions on the New York Commodity Exchange (Comex), reaching a high of 19 million ounces, or almost 600 tonnes, net long in futures and options contracts combined.
During the final quarter of 2003, the spot gold price tracked the US dollar/euro exchange rate. AngloGold believes that this exchange rate is an indicator rather than a determinant of gold price direction, at least in part, because many of the same economic fundamental issues affect the dollar as they do the gold market.
Investor and speculator interest in gold kept increasing throughout most of 2003, reflected particularly in the recorded statistics of Comex. Overall open interest and the net open position on that exchange are both at all-time high levels since the exchange commenced trading gold over twenty years ago.
During the final quarter of 2003 the World Gold Council launched the Gold Bullion Securities (GBS) product on the London Stock Exchange, a gold-backed fund enabling institutional and private investors to invest directly in gold through a traded instrument. This product followed the launch of a similar fund in Australia earlier in 2003. This new product attracted purchases amounting to 25 tonnes of bullion, and has since established two-way liquidity in the London market.
Physical demand for gold continued to decrease in the face of a rising gold price. Whilst gold offtake in jewellery for 2003 was lower by 7 percent year-on-year, in the second half of 2003 alone, demand fell by over 11 percent compared with 2002. India responded immediately to higher prices, and much of the expected seasonal demand in that region was negated by the Indian trade's unwillingness to buy gold in a rising market. With the spot price retracement in mid-January 2004, some recovery in seasonal buying might still occur in that market.
However, many other gold jewellery markets have also declined in this period. Lower levels of producer de-hedging added to the reduced demand. After six quarters of material levels of de-hedging, the second half of 2003 saw significantly less activity in this area, notwithstanding the announcement late in 2003 by Barrick Gold Corporation of its intention to cease new hedges and to reduce its hedge book. However, a substantial increase in implied net investment demand helped to balance the physical market.
On the supply side, mine production in 2003 was slightly higher than in 2002. However, scrap sales increased again, and at a little less than 1,000 tonnes for 2003, constitute almost a quarter of the supply of gold to the current market. Central bank sales of 591 tonnes in 2003 reached their highest level in a decade, but there was little negative response in the markets to this level of selling.
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108
The physical market remains important as it provides a floor of support when investment interest weakens and prices soften. Whilst making every effort to encourage investor demand for gold in the current market, attention should also be paid to the health of the wider physical market in the medium and longer term. 

The Washington Agreement on sales of gold by European central banks expires in less than nine months' time. Public statements by a number of senior European central bank officials at the Dubai meeting of the International Monetary Fund in 2003 indicate that there is little doubt that the agreement will be renewed, and good reason to expect that the behaviour of the signatories to this agreement will follow the precedent of the behaviour of these banks over the past four years. 

Comparison of operating performance in 2003, 2002 and 2001 

The following table presents operating data for the AngloGold group for the three year period ended December 31, 2003: 

Operating data for AngloGold

Year ended December 31
2003
2002
2001
Gold production (thousand ounces)
5,616
5,939
6,983
Total cash costs ($/oz)
229
161
178
Total production costs ($/oz)
288
218
235
Production costs (million US dollars)
1,206
910
1,245
Capital expenditure (million US dollars)
363
271
298
'
Gold production
For the year ended December 31, 2003, AngloGold's total gold production decreased by 323,000 ounces or 5 percent, to 5.62 million ounces from 5.94 million ounces produced in 2002. Gold production from operations located in South Africa decreased by 4 percent from 3,412,000 ounces produced in 2002 to 3,281,000 ounces in 2003. This is attributable to lower stopping widths, lower reef developments, lower vamping and lower grades at Great Noligwa, lower volumes at Savuka, and at Ergo, a dwindling reserve tonnage base. Gold production in East and West Africa decreased by 10 percent from 1,085,000 ounces in 2002 to 981,000 ounces in 2003, mainly due to the reduction in gold grade primarily at Morila. Gold production in the North America region decreased by 16 percent from 462,000 ounces in 2002 to 390,000 ounces in 2003, primarily due to the disposal of AngloGold's 70 percent interest in the Jerritt Canyon Joint Venture with effect from June 30, 2003. Production at Cripple Creek & Victor increased by 58,000 ounces in 2003, due to additional product from expanded processing facilities, as a result of the completion of the expansion project at the Cresson Mine in the third quarter of 2002. South America's production increased from 478,000 ounces in 2002 to 532,000 ounces in 2003, due to the additional 46.25 percent interest acquired by AngloGold in Cerro Vanguardia in July 2002, as well as increased production at Morro Velho. The Australian operations produced 432,000 ounces of gold during 2003, compared with 502,000 ounces in 2002, as a result of the closure of Union Reefs and lower production at Sunrise Dam due to lower grades. 

For the year ended December 31, 2002, AngloGold's total gold production decreased by 1,044,000 ounces, or about 15 percent, to 5.94 million ounces from 6.98 million ounces produced in 2001. Gold production from operations located in South Africa decreased by 27 percent from 4,670,000 ounces produced in 2001 to 3,412,000 ounces in 2002. This was mainly the result of the disposal of the Free State assets, which produced 1,199,000 ounces in the year ended December 31, 2001, as well as the disposal of Deelkraal and Elandsrand, which produced 35,000 ounces in 2001. Excluding production from these operations, total gold production would have increased by 3 percent from 5,749,000 ounces produced in 2001 to 5,939,000 ounces produced in 2002 and South African gold production would have decreased by 1 percent from 3,436,000 ounces produced in 2001 to 3,412,000 ounces produced in 2002. Gold production in East and West Africa increased by 25 percent or 217,000 ounces from 868,000 ounces in 2001 to 1,085,000 ounces in 2002. The main contributors were Morila where gold production increased by 169,000 ounces due to an unusually high recovered grade during 2002; Geita, where gold production increased by 17,000 ounces in 2002; the Yatela project in Mali, where gold production increased by 55,000 ounces; and Sadiola where gold production decreased by 22,000 ounces during 2002. Gold production in the North America region decreased by 7 percent or 34,000 ounces from 496,000 ounces in 2001 to 462,000 ounces in 2002.

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109
This decrease in gold production was mainly due to Jerritt Canyon where gold production decreased by 45,000 ounces. Cripple Creek & Victor's gold production increased by 11,000 ounces in 2002 partially offsetting the decrease at Jerritt Canyon. South American operations recorded increasing gold production of 478,000 ounces in 2002, compared with 441,000 ounces in 2001, due mainly to the acquisition during the third quarter of 2002 of an additional 46.25 percent interest in the Cerro Vanguardia mine located in Argentina. The Australian operations produced 502,000 ounces of gold during 2002, compared with 508,000 ounces in 2001. This is mainly as a result of the closure of operations at Boddington and Tanami during 2001 and 2002, which produced a total of 100,000 ounces of gold in 2001 compared with 2,000 ounces of gold in 2002. The decrease in gold production was partially offset by an 87,000 ounce increase in gold produced at Sunrise Dam. 

A more detailed review of gold production at each of AngloGold's operations is provided under "Item 4B.: Business overview".

Total cash costs and total production costs
The total cash cost for the year ended December 31, 2003 was $229 per ounce, $68 per ounce, or 42 percent higher than cash costs of $161 per ounce recorded in 2002. This change was mainly due to a combination of stronger local currencies against the US dollar in most operating regions and lower ore grade in several of these regions. Stronger currencies increased total cash costs by $47 per ounce and lower ore grade by a further $17 per ounce. Total cash costs for the South African, Australian and East and West African regions increased by 60 percent, 26 percent and 36 percent, respectively, in 2003, compared to 2002. The increases in total cash costs at the South African and Australian operations were mainly due to the strengthening of the South African rand and the Australian dollar against the US dollar (based on the average exchange rates of the rand against the US dollar of R7.55 and R10.48 and the Australian dollar against the US dollar of A$1.54 and A$1.84, during the year ended December 31, 2003 and 2002, respectively). East and West African operations recorded higher total cash costs in 2003 mainly due to lower recovered grades achieved at all operations when compared with 2002. Total cash costs for the North American region in 2003 remained mostly unchanged from 2002 while the South American region recorded an increase in total cash costs of 17 percent from 2002 due to costs associated with wet ore at Cerro Vanguardia and higher maintenance costs for mining equipment at Morro Velho and Serra Grande. 

The total cash cost for the year ended December 31, 2002 was $161 per ounce, $17 per ounce, or 10 percent, lower than cash costs of $178 per ounce recorded in 2001. Of the $17 per ounce reduction in total cash costs over 2002, $24 per ounce related to the weakening of the South African rand against the US dollar. This change is mainly due to substantially lower cash cost recorded in the South African operations which decreased by 14 percent in 2002 when compared with 2001. Total cash costs at the South African operations decreased mainly for two reasons in 2002: firstly, due to the devaluation of the South African rand relative to the US dollar and, secondly, due to the disposal of relatively high cost producing operations, such as the disposal in February 2001 of Deelkraal and Elandsrand that recorded cash costs of $331 per ounce and $362 per ounce, respectively, in 2001, as well as the disposal of the Free State assets and Joel in January 2002. North America's total cash cost increased by 5 percent from 2001, mainly due to the higher usage and pricing of consumables and contract services focused on achieving higher production. East and West African, South American and the Australian regions recorded a decrease in total cash costs of 2 percent, 6 percent and 1 percent, respectively, in 2002 when compared with 2001. 

Total production costs per ounce increased from $218 per ounce to $288 per ounce over 2003 and decreased from $235 per ounce to $218 per ounce over 2002. 

A more detailed review of total cash costs and total production costs at each of AngloGold's operations is provided under "Item 4B.: Business overview".

Reconciliation of total cash costs and total production costs to financial statements
Total cash costs and total production costs are calculated in accordance with the guidelines of the Gold Institute industry standard and are not US GAAP measures. The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products, which has developed a uniform format for reporting total production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999.
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110
Total cash costs, as defined in the Gold Institute industry standard are production costs as recorded in the statement of operations, less offsite (i.e. central), general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees, refinery charges and social development costs) and rehabilitation costs, plus royalties and employee termination costs. 

Total cash costs as calculated and reported by AngloGold include costs for all mining, processing, administration, royalties and production taxes, as well as contributions from by-products, but exclusive of depreciation, depletion and amortization, rehabilitation, employment severance costs, corporate administration costs, capital costs and exploration costs. Total cash costs per ounce are calculated by dividing attributable total cash costs by attributable ounces of gold produced. Total cash costs have been calculated on a consistent basis for all periods presented. 

Total production costs, as defined in the Gold Institute industry standard are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. 

Total production costs as calculated and reported by AngloGold include total cash costs, plus depreciation, depletion and amortization, employee severance costs and rehabilitation and other non-cash costs. Total production costs per ounce are calculated by dividing attributable total production costs by attributable ounces of gold produced. Total production costs have been calculated on a consistent basis for all periods presented. 

Total cash costs and total production costs should not be considered by investors in isolation or as alternatives to production costs, net income/(loss) applicable to common stockholders, income/(loss) before income tax provision, net cash provided by operating activities or any other measure of financial performance presented in accordance with US GAAP or as an indicator of the company's performance. While the Gold Institute has provided definitions for the calculation of total cash costs and total production costs, the calculation of total cash costs, total cash costs per ounce, total production costs and total production costs per ounce may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, the company believes that total cash costs and total production costs in total by mine and per ounce by mine are useful indicators to investors and management of a mine's performance as they provide: 

an indication of a mine's profitability, efficiency and cash flows; 
the trend in costs as the mining operations mature over time on a consistent basis; and 
an internal benchmark of performance to allow for comparison against other mining companies. 

A reconciliation of production costs as included in the company's audited financial statements to total cash costs and to total production costs for each of the three years in the period ending December 31, 2003 is presented below. In addition the company has also provided below detail of the attributable ounces of gold produced by mine for each of those periods.

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For the year ended December 31, 2003 

South African operations

(6)
(in $ millions, except as otherwise noted)
Mponeng
Tau Tona
Savuka
Great
Noligwa
Ko panang
Tau Lekoa
ERGO
Surface
operations
Corporate
(5)
Production costs
118
122
85
168
130
91
73
22
(22)
Less:
Rehabilitation costs & other non-cash costs
-
(1)
(2)
(2)
(1)
-
(4)
-
-
Plus:
Inventory movement
-
(3)
(1)
2
(2)
-
-
-
-
Royalties
-
-
-
-
-
-
-
-
-
Related party transactions
(1)
5
7
2
9
5
4
2
1
-
Adjusted for:
Minority interests
(2)
-
-
-
-
-
-
-
-
-
Non-gold producing companies and adjustments
-
-
-
-
-
-
-
-
28
Total cash costs
123
125
84
177
132
95
71
23
6
Plus:
Depreciation, depletion and amortization
22
15
6
19
14
16
19
3
4
Employee severance costs
1
-
2
-
-
1
-
-
-
Rehabilitation and other non-cash costs
-
1
2
2
1
-
4
-
-
Adjusted for:
Minority interests
(2)
-
-
-
-
-
-
-
-
-
Non-gold producing companies and adjustments
-
-
-
-
-
-
-
-
(2)
Total production costs
146
141
94
198
147
112
94
26
8
Gold produced (000' ounces)
(3)
499
646
187
812
497
322
203
115
-
Total cash costs per ounce
(4)
247
194
448
218
266
294
349
200
-
Total production costs per ounce
(4)
293
218
503
244
296
348
463
226
-
111
background image
 
For the year ended December 31, 2003 
East and West African, North American, South American and Australian operations 
(in $ millions, except as otherwise noted)
EAST AND WEST AFRICA
NORTH
AMERICA
SOUTH AMERICA
AUSTRALIA
Sadiola
Navachab
Geita
Morila
Yatela
Cripple
Creek &
Victor
Jerritt
Canyon
(8)
Cerro
Vanguardia
Morro 
Velho
Serra
Grande
Sunrise
Dam
Boddington
(
9)
Union 
Reefs
T
anami
(9)
Production costs
31
20