Good afternoon, ladies and gentlemen, and welcome to AngloGold Ashanti's Q3 Market Update. All participants will be in listen-only mode. There will be an opportunity to ask questions at the end of today's presentation. [Operator Instructions] Please note that this conference is being recorded. I'd now hand the conference over to Mr. Stewart Bailey. Please go ahead, sir.

Thank you very much, Judith. And welcome, everybody. Thank you for making the time to join us on today's call. We will be talking through the highlights of our third quarter market update. You're joined on the call here in Johannesburg by members of our executive team. The presenters will be Kelvin Dushnisky, our Chief Executive Officer; Christine Ramon, our Chief Financial Officer; Chris Sheppard, our Chief Operating Officer, South Africa; and Ludwig Eybers, our Chief Operating Officer of our International Business. I would urge you please to look at the disclaimer, the safe harbor statements at the beginning of our presentation, which contains important information about forward-looking statements that may be made. It's important and I would ask you to refer to it. Without any further ado, I'll hand over to Kelvin.

Thanks, Stewart. And thank you everyone for joining us today. It's been an interesting time for me, moving up the learning curve and coming to understand the company. And I want to thank my new colleagues here at AngloGold Ashanti, who have been incredibly open and supportive. I'm just over two months in the role, but I can tell you that I've been impressed with the depth of talent I've encountered. And as I improve my familiarity both with the operations and the pipeline, I'm excited about the potential I see, and the culture and discipline that exist across the business. Before I get into the numbers, I'd like to thank my predecessor, Venkat, for his important contribution toward establishing the strong foundation that we have to build from. You'll be familiar with our common sense approach, which starts with a focus on safety and all other aspects of sustainability. We're active managers of the portfolio and we'll continue to tightly manage costs and capital to ensure our balance sheet stays fit for any market environment, this is particularly important to me. Ludwig will walk you through the fundamental improvements to our operations as well as the strong optionality in our pipeline. These pillars support our main objective of improving cash flow and returns on a sustainable basis. I've been working closely with Ludwig and Chris, in support of our operational excellence initiative, which will help us continue to progress down the cost curve. Christine will ensure we meet our investment needs, while keeping a sharp focus on the balance sheet. I've had the opportunity to spend a week in Ghana, where there is excellent work being done on margin improvement at Iduapriem, and steady progress by Graham Ehm and his project team to unlock the outstanding potential at Obuasi.…

Thanks, Kelvin. In South Africa, we've managed to sign a 3-year wage agreement with all our unions, which includes what has been taken as a fair wage increase by all parties involved, as well as the new shift arrangements agreement. The revision of shift arrangements is an important step towards improving productivity in the region. It is aimed at ensuring safe workplaces and safe work practices. And it's expected to result in increased operational efficiency through sufficient face time being available to complete the main elements of the production cycle in that time. To note, our production crews will be working an 11-hour shift for 5 days a week within a clear fatigue management framework. Looking at the restructuring work in South Africa, we managed to reach a balance between preserving local jobs, while rightsizing our overhead structures for now much smaller production base. Our focus is to responsibly create a South Africa region business that is profitable on a sustainable basis. We mitigated job losses, from 2,000 jobs initially anticipated in the most recent Section 189 downsizing process to a much lower number. This was done through offering voluntary severance packages and selling non-core assets such as healthcare facilities and rail networks in the Vaal River region, under the ambit of a job-loss avoidance agreement with the relevant unions. Turning to Slide 8, production for the group at 853,000 ounces during quarter 3 remains steady when compared to the previous year. In South Africa, a strong performance by Mponeng mine at 25% improved production year-on-year, mainly due to higher than anticipated in-situ grades and improved mining practices. Our Mine Waste Solutions faced challenges regarding volume and grade of a temporary nature, while the commissioning of the Aachen shear reactor technology is expected to provide gold recovery improvements going forward. I'll now hand over to Ludwig.

Thanks, Chris. Good day, all. We're still on Slide 8. In Continental Africa, we saw strong performances from Kibali and Iduapriem, with production up 55% and 11% respectively. Those improvements came on the back of higher throughputs and grades. This more than offset lower grades and teething issues at Siguiri, where we completed the CIL commissioning. In Australia, upgrades are taking place at both Sunrise Dam and Tropicana to improve cost, efficiencies and margins. Tropicana recorded another solid quarter with increased head grade and mill throughput. And its second 6 megawatt ball mill is on track for commissioning by year-end. At Sunrise Dam, production was impacted by teething problems with the new floatation circuit, aggravated by extraordinary arsenic pyrite material mined during the quarter. This material is associated with lower recoveries and is temporary of nature as we mine through the orebody and during plant feeds. We've seen better blends over the last couple of weeks as well as the new floatation plant starting to stabilize to design performance. In Americas, Serra Grande production increased 13% year-on-year, while across the region improved significantly as part of the operations excellence program and with the help of weaker currencies. As reported previously, production is weighted towards the fourth quarter for the group. Year-to-date portfolio has produced nearly 2.5 million ounces. And if properly pieced together that we're expecting a significant increase in production during quarter 4, to level at the top-end of our guidance range. The increase will come from Australia, Brazil and Geita. Moving along to our costs on Slide 9, the mines produced an all-in sustaining cost of an average of $920 per ounce, with mines falling closer to the median of the global cost curve. Importantly, about 4/5 of our production generates a margin of 20% or more. The…

Thanks, Ludwig. Moving on to Slide 12, which talks the comparison of the key metrics. As you've heard from Kelvin, we delivered an overall funded operating performance in Q3, reflecting good cost control and capital discipline. Production from retained operations, after stripping out the SA asset sales remains steady compared to last year. Cash costs, all-in sustaining costs and all-in costs continued trending lower in the right direction, despite inflationary pressures, which was more than offset by weaker currencies, operational excellence savings and lower capital expenditures. Our consistent focus on improving margins and focusing on the controllable factors in our business has resulted in sustaining a healthy all-in sustaining costs margin at 23%, which is significantly higher than the prior year. Sustaining capital expenditure of $140 million in Q3, reduced by 36% compared to last year due to the peak of our inward investment program last year and capital reduction on the back of operational excellence. In addition to favorable currency effects and the impact of the now closed and sold SA region operations. The 5% lower gold price and lower sales volume had a direct impact on the 11% lower adjusted EBITDA of $355 million against the prior year quarter. Free cash flow improved from $19 million in Q2 to $34 million in Q3, despite a lower received gold price and was favorably impacted by higher gold sales and lower costs. Free cash flow for Q3 was adversely impacted by working capital changes mainly comprising of the timing of gold sales, Obuasi fleet pre-payments and dividends received, all of which are timing issues and are expected to positively impact free cash flow in Q4. Overall, free cash flow for Q3 excluding the SA region retrenchment costs of $9 million, is $43 million. It is encouraging to see that the…

Thanks, Christine. In closing, we have a sound strategy to drive value from a compelling side of assets, and this strategy is being executed. The quality of our portfolio is improving, and the value is being unlocked, while preserving our balance sheet. At the end of the day, the clearest measure of our success will be our ability to generate free cash flow and better returns through the cycle. It's still early days for me, but as my learning process unfolds, my confidence in our potential surface value continues to grow. I am very enthusiastic about our prospects. And with that, we're happy to open up for questions.

Thank you very much, sir. [Operator Instructions]

Judith?

Yes, sir, I'm here.

Judith?

Hello, can you hear me? Can you hear me, sir?

Operator, we're ready to take questions.

Are you hearing me? Hello?

Sorry, everyone, if you'd just bear with us. It looks like we're having a small technical issue at the moment.

One, two, three. Ladies and gentlemen, please remain on line. I think the technical error is from the speakers' line. Please remain on line. Thank you.

Hello.

Hello, Stewart?

Yes.

Can you hear me?

I can hear you.

Now, you can hear me. Thank you very much. Sorry, sir. [Operator Instructions] The first question comes from Chris Nicholson of RMB Morgan Stanley.

Hi, good afternoon, everyone. Thank you for the call. Kelvin, I know you've made some initial comments around the portfolio of assets, the 14 potentially looking a little bit too heavy and maybe you're trying to build a greater critical mass around some regions. Could you maybe…

Judith, we're losing this - Judith?

Hello, can you hear me?

We can hear you now, but we keep breaking up.

All right, I'm going to suggest that the line - if you drop the line and call back in. Chris Nicholson, can you please remain on line and then we'll be responding to you shortly. Thank you.

Everyone, on the call, just bear with us. We'll be back in a moment.

Thank you very much, sir. Ladies and gentlemen, please remain on line. We will be retrieving the main speakers shortly. Thank you. Ladies and gentlemen, apologies for the delay. Please remain on line. Thank you. Ladies and gentlemen, thank you for your patience. We've been rejoined by the main speakers. Thank you.

Would you go ahead with your question again, please?

Yeah, this is Chris here. Can you guys hear me this time?

Crystal clear. Thanks.

Perfect. Okay. Just to talk through, Kelvin, I know you have made some initial comments around potentially the portfolio of 14 assets maybe being a little bit heavy, and looking to refocus kind of around some regions where you have greater critical mass. I see also in this release you talked to potentially looking for some buyers for Sadiola. Could I just ask, with net debt to EBITDA now well below your kind of long-term gearing target, should shareholders be expecting to see maybe some of the benefits of this portfolio optimization to increase dividends over and above your stated policy? Or do you see, I guess, attractive reserve life replacement options that's having first call on cash? Thanks.

Well, thank you, Chris, and apologies again for the complication on the call. I think the starting point is, while indicated that first observations are 14 mines feels a little heavy, really what I'm looking to do in that context is that I think there is opportunity just to tighten up the portfolio to some extent. And you're correct, you'll see that our partner, IAMGOLD, and ourselves have elected to consider options in regards to Sadiola. Now, Sadiola has been a - as you know, has been a very productive mine for the company. And our view is that it could very likely continue to be a very productive mine in someone else's portfolio. And our thinking around that is that, if we are to divest, take proceeds from it, reinvest back into the business, now, the net debt to EBITDA ratio coming down to the 1.1 level, it is very positive. And as you know, our target is to be 1.5 or less, or nicely below that. In terms of proceeds from divestments, again, starting point there is that, we don't have to do anything. And so, there will be no fire-sales if we don't see full value or else we're perfectly happy to keep the portfolio as it is and keep working to drive down costs. And you see the benefits of that through the operational excellence work that's underway. As far as deciding between dividends, reinvesting back into the business and so forth, the dividend policy is something that board will review and does on a quarterly basis. Certainly on a going forward basis, I'd like to see us being in a position where we can continue to progressively increase dividends over time. But first things first, I mean, there is the potential to reinvest back in the business. We see great optionality around the existing assets. And that would probably be the near-term priority. So hopefully, that addresses your question.

It does indeed. Could you - if I can maybe just ask a quick follow-up question, the regions which you talk around - which might be attractive to build some greater critical mass, are you in a position yet to maybe comment on where those might be?

Chris, if you allow us, I am kind of - its early days, and as we're working our thought process through, and I'm doing that together with the team. We'd be better positioned to do that with our Q1 and year-end results if you'll be patient with us in that respect.

Sure, great. Thanks. Thanks for your time today. Thanks a lot, guys.

Thanks. Thanks for the question.

Thank you. The next question comes from David Haughton of CIBC.

Good morning, Kelvin and team. Thank you very much for providing an update. Listening to your previous comments, Kelvin, I know that you've spent quite a bit of time on the road, visiting most of the assets. And I wonder if you could just give us your snapshot beyond your introductory remarks as to what surprises you've encountered on the road.

David, thanks. First of all, thanks for dialing in. When I joined the company my impressions were positive coming in. And I have to say, they've only been reaffirmed and probably increased in terms of what I see throughout the company, talent deep throughout the organization, from an operation perspective, really across the board. I was able to spend time at Obuasi not long ago. And I left there very impressed, and as I indicated at the start of my call, both at the team on the ground, the relationships that I've seen in terms of stakeholder engagement. And that's something I've seen consistently across the company as well, which was, I don't want to say it was a positive surprise. I didn't expect anything less. But it was very nice for me to have that reaffirmed. One thing I wasn't aware of before I joined the company was the exploration potential. I had a sense of it. But for example, what Ludwig described earlier in his comments in relation to Nevada, the potential we're seeing at the new prospects in Minnesota, I mean, those were all new to me. And I just think that, when I look at the pipeline and the exploration potential around the existing assets and generative work that's been underway, I came away from those discussions very enthusiastic. And you should expect to see more detail around that as we go from quarter to quarter. And so, those are some initial observations, all very, very positive.

Okay. Just going a little bit deeper, just looking at your new CapEx numbers, I know that you've revised them down, but it does seem as though what we've seen year to date that you still got quite a bit of room on your CapEx. And I'm wondering whether there is potential for further CapEx savings, given some of the commentary that we've seen on FX and whether there is any potential for deferral into next year, in particular the sustaining CapEx year-to-date looks relatively light in comparison to year-end guidance.

Maybe I'll ask Christine to respond to that, David.

Yes, thank you.

Hi, David. I think specifically respect of the capital guidance we've given you the total capital guidance range, which was only revised down for the Obuasi rescheduling. I think typically in Q4, it is a peak capital quarter. And I think we are expecting to spend that across our portfolio. But like you said, it is subject to the currency assumptions that we've given you. So if we see further currency weakness, it could actually impact those numbers. And like we say, CapEx is also constantly subject to review. When Ludwig has got his operational excellence initiative, which has already given us savings in the year-to-date numbers, so if that comes through, then I think that would be a positive as well.

Okay. I've just got another operational question here, if that's okay. Hearing metallurgical kind of issues for Sunrise Dam, I'm wondering if there is a resolution that you can see for that.

Thanks, David. This is Ludwig. Look, it's - with most of these projects, you normally go through a bit of teething problems. I think it wasn't so much the metallurgical issues. It's more of the arsenic pyrite that we actually saw quite an extraordinary arsenic pyrite that came through this quarter. And this is just - it's actually a bit of an anomaly. You will find it every now and then. As you mine through this orebody, you will find these high levels of arsenic pyrite. And typically, if you compare it to quarter one of this mine, the mine had a really good quarter, we actually saw a very little of that. So it was just the learning curve, we had to go up. And at this moment, it seems quite stable. We've actually got a lot of - especially all hands on deck and we've got even outside help to monitor this. So I can - going to the future, I think, it will stabilize and we'll see the five to six and even higher upgrade on the Sig [ph] plant or the flotation. So I think, we've gone through that by now, and going forward, it will stabilize.

Okay. I'll leave it there for now. Thank you.

The next question comes from James Bell of RBC Capital Markets.

Hey, good afternoon and thanks for making time for the call. The first was just on cost. Obviously, the big step-down in cash cost was from the closure and sale of operations, but there was also a small move downwards from the efficiencies of around $11. Do you think that's a sort of run rate that the operational efficiency program can continue to achieve looking into next year? Or do you think a lot of the low-hanging fruit has been achieved on that front?

Yeah, James. It's Ludwig again. Look, part of our operational excellence program is to look at sustaining costs saving. So most of the savings, we're getting at this moment, we've actually really started to build into our numbers next year, and we track that on the regular basis. Like I said, most of our savings came from the operational efficiencies, and obviously with the exchange rate. But I can see these costs, like I said, I can see it sustaining and actually we will see a lot of these cost saving going to next year and the year after that.

Okay, good. And then just one on Obuasi. You've got a relatively short time line to production in Q4 next year. What are the big-ticket items or risks we should be looking out for, say, Q1, Q2 next year that are sort of need to be checked off for you to hit your time line to production?

Thanks, James. Graham, if you are on the call, if you could respond to that one.

Okay. Thanks, James. I think the first ticket - or first thing to watch was mining contract. That contract was awarded at the end of October, and equipment deliveries, we took the initiative to kick those off in June. So from a mining ramp-up point of view, we are in good shape. And the critical thing would be mobilizing the operating team. We got an operating team in place. A few key positions are still to be put in place, but we're handling that with existing people and support from the rest of the organization that would be the next thing to watch. And probably more critical is the refurbishment of the process plant to enable the 2,000 tonnes a day. We'll be using an existing milling circuit, the SAG 2 circuit, which we got capacity for 2,000 tonnes. But we do need to refurbish other elements of the plant against that capability. So refurbishment is really a critical part. The planning for all event is all on track and quite well. It's going to be a challenging schedule. But from the rework of the schedule over the last few months, I think, we've got it under control. But that's the area where we will be actually focused on.

Okay, great. Thanks for that.

Thanks, James.

The next question comes from Dominic O'Kane of JPMorgan.

Hello, Kelvin, apologize if I missed the start of the call, but just wanted to maybe get a bit of an update on Tanzania and just wondered if you could maybe give a little bit of an update on what you're seeing in terms of timing of cash flows specifically VAT? And then leading on to that, as you come into the organization from a previous organization that had exposure to Tanzania, I just wondered if you could comment on some of the risks you see associated with Geita, or alternatively, some of the risks that you think are less directly comparable between Geita and your previous organization?

Sure. Dominic, well, thank you for the question. Maybe I'll start and I'll go in reverse order, if you don't mind, and I'll transfer over to Christine to talk a little bit more about the VAT. I guess, the starting the point is what I've observed coming into AngloGold Ashanti in respect of Geita is the - a few things. First of all, the relationships on the ground, starting the ground level up, very, very positive. Community engagement, I think, has been active, and I think very well managed, likewise with local officials and moving on up. Dialogue with the government has, I think, been open and constructive, and that's positive. And so from those perspectives, I think, that Geita is a little unique. The other thing with Geita is, over the course of its 20 years' operating. It's been a large tax payer in country, in fact, it's the largest tax payer in the sector. And I think round numbers, the economic split has been about 60-40, government-AngloGold Ashanti. So those things are really unique in the Geita context, and so I think that's positive. We'll just continue to operate the project as efficiently as we have been. In terms of the VAT, we slowly started to see some offsets take effect. And maybe with that, I'll turn it over to Christine, and she can comment a little bit more.

Yeah. Hi, Dominic. Just on the VAT, so we've seen a very, very marginal increase in the VAT in Geita. I think, what's quite positive and that's continue to trend from what we reported in Q2 is that we've been able to offset some of the historical VAT against tax payable and keeping the fine balance between taxes payable and what we are offsetting, and we expect to continue that going forward. So the VAT outstanding is about $88 million at the end of Q3.

And Kelvin, if I could just maybe just push a little bit on Tanzania. Do you - are you happy with the sort of medium- and long-term CapEx planning for Geita?

Yeah. I think that the level of capital investment this year and then for next year is right. I think, it's consistent with our need to maintain that as one of our key operation.

Okay. Thanks. Thanks, all. Bye.

Thank you.

[Operator Instructions] The next question comes from Johann Steyn of Citigroup.

Hi, there. Thank you very much. And then, I got dropped a couple of times, so apologies if I ask a question that has been asked before. Kelvin, a question for you. Having had a chance to look at the life of mine profile for each of your mines, and the current little of capital expenditure, how comfortable are you that you're spending the appropriate or sufficient amount of capital at your mines to at least sustain production over a five-year period?

Johann, thank you for the question, first of all. In fact, it's timely. We're just going through the budgeting process now and we're going to be presenting our budget to the board next week. We spend a lot of time on this specific question, and I'm quite comfortable actually that the capital - CapEx plan for next year is the right amount to ensure that we sustain that production going forward.

So you said, what, said about $800 million a year will be for you to sustain the 3.3 million ounces over a five-year period?

Less. It's more in the $600 million range.

That's interesting. That's very interesting. Okay. Thank you.

Yeah. I think the rule of thumb that Ludwig and others have shared with me is something in the $170 to $200 an ounce range.

So just to understand, you right. You would say that in five years' time, you would be at company level, obviously, ignoring now divestments or anything like that, 3.3 million ounces spending roughly, let's call it, $650 million a year of capital in total.

Yeah. We have to be careful. We don't guide five years out in terms of production or CapEx. So…

Yeah. No, but it's important for people to effectively to model to make up an assessment of the cash generating potential of this company, not just over the next 12 months, but over a five-year period.

So, I would say in that context, Johann, that number is a number that we'd be reasonably comfortable with, that $600 million to $650 million. And again, but don't hold me, we don't guide out that length of time. But I understand your question. And that's a number that we'd be generally comfortable with.

Okay. Thank you.

You're welcome.

[Operator Instructions]

Judith, we can end it there.

Thank you, sir. We have no further questions in the queue. Do you have any closing comments?

I just like to - it's Kelvin. I'd like to thank everybody for dialing in. We're really pleased with the quarter. And we look forward to reporting back with our next quarter results and our year-end for 2018. So thank you very much.

Thank you. Ladies and gentlemen, once again, thank you for your patience during the technical issues we had earlier. And on behalf of AngloGold Ashanti, that concludes this afternoon's conference. Thank you for joining us. You may now disconnect your lines.