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- Income statement
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Notes to the financial statements (PDF – 108KB)

Company financial statements

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Notes to the financial statements (17-31)

For the year ended 31 December

SA Rands

Figures in million

2007

2006

Non-current assets held-for-sale

Effective 30 June 2005, the investment in the Weltevreden mining rights of R100m (2006: R100m) was classified as held for sale. This investment was previously recognised as a tangible asset. Weltevreden's rights were sold to Aflease Gold and Uranium Resource Limited on 15 June 2005. On 19 December 2005, Aflease was acquired by sxr Uranium One (formerly Southern Cross Inc.) and the sale agreement was amended to recognise this change. The conditions precedent to the agreement were not fulfilled before the expiry date of 31 December 2007. Consequently the agreement lapsed and a new agreement is being negotiated with Aflease Gold Limited. In terms of the draft agreement, the purchase price will be paid in the form of Aflease shares to be issued to AngloGold Ashanti.

The draft agreement currently contains conditions precedent including that the Minister must approve of the cession of the Weltevreden mining right from AngloGold Ashanti to Aflease, unconditional approval of the transaction by the Competition Commission and approval by the JSE of issue and allotment of the Aflease shares.

100

100

Share capital and premium

Share capital

Authorised

400,000,000 ordinary shares of 25 SA cents each

100

100

4,280,000 E ordinary shares of 25 SA cents each

2,000,000 A redeemable preference shares of 50 SA cents each

5,000,000 B redeemable preference shares of 1 SA cent each

–

102

102

Issued and fully paid

277,457,471 (2006: 276,236,153) ordinary shares of 25 SA cents each

4,140,230 (2006: 4,185,770) E ordinary shares of 25 SA cents each

2,000,000 (2006: 2,000,000) A redeemable preference shares of 50 SA cents each

778,896 (2006: 778,896) B redeemable preference shares of 1 SA cent each

–

Share premium

Balance at beginning of year

22,976

19,293

Ordinary shares issued

283

3,330

E ordinary shares (cancelled) issued

(6)

353

Balance at end of year

23,253

22,976

Share capital and premium

23,324

23,047

The rights and restrictions applicable to the A and B redeemable preference shares.

A redeemable preference shares are entitled to:

an annual dividend, after payment in full of the annual dividend on the B preference shares, equivalent to the balance of after tax profits from mining the Moab Lease Area; and
on redemption, the nominal value of the shares and a premium per share equal to the balance of the net proceeds from disposal of assets relating to the Moab Lease Area, after redemption in full of the B preference shares payments of the nominal value of the A preference shares.

B redeemable preference shares are entitled to:

an annual dividend limited to a maximum of 5% of their issue price from the period that profits are generated from the Moab Lease Area; and
on redemption, the nominal value of the shares and a premium of up to R249.99 per share provided by the net proceeds from disposal of the assets relating to the Moab Lease Area.

The Moab Lease Area consists of the Moab Khotsong mine operations.

Retained earnings and other reserves

				Other
		Non-	Actuarial	compre-
	Retained	distributable	gains	hensive
Figures in million	earnings	reserves ⁽¹⁾	(losses)	income ⁽²⁾	Total
SA Rands
Balance at December 2005	(2,732)	141	(232)	(569)	(3,392)
Actuarial gain recognised			283		283
Deferred taxation thereon (note 23)			(102)		(102)
Loss for the year	(88)				(88)
Dividends (group note 15)	(742)				(742)
Preference dividends	(48)				(48)
Net loss on cash flow hedges removed from
equity and reported in gold sales				553	553
Net loss on cash flow hedges				(969)	(969)
Deferred taxation on cash flow hedges (note 23)				165	165
Share-based payment for share awards and BEE transaction				319	319
Deferred issuance costs from ESOP Share
Trust establishment				(630)	(630)
Deferred taxation on cost from ESOP
Share Trust (note 23)				117	117
Balance at December 2006	(3,610)	141	(51)	(1,014)	(4,534)
Actuarial loss recognised			(95)		(95)
Deferred taxation thereon (note 23)			35		35
Profit for the year	413				413
Dividends (group note 15)	(919)				(919)
Preference dividends	(31)				(31)
Net loss on cash flow hedges removed from
equity and reported in gold sales				649	649
Net loss on cash flow hedges				(695)	(695)
Hedge ineffectiveness				31	31
Deferred taxation on cash flow hedges and
hedge ineffectiveness (note 23)				5	5
Share-based payment for share awards				222	222
Deferred issuance cost from ESOP Share
Trust establishment				(22)	(22)
Deferred taxation on cost from ESOP
Share Trust (note 23)				(6)	(6)
Balance at December 2007	(4,147)	141	(111)	(830)	(4,947)

⁽¹⁾	Non-distributable reserves comprise a surplus on disposal of company shares of R141m (2006: R141m).
⁽²⁾	Other comprehensive income represents the effective portion of fair value gains or losses in respect of cash flow hedges until the underlying transaction occurs, upon which the gains or losses are recognised in earnings and the equity item for share-based payments.

SA Rands

Figures in million

2007

2006

Borrowings

Unsecured

Corporate Bond ⁽¹⁾

2,070

2,066

Semi-annual coupons are paid at 10.5% per annum. The bond is repayable on 28 August 2008 and is rand-based.

Secured

Finance leases

Turbine Square Two (Proprietary) Limited

249

–

The leases are capitalised at an implied interest rate of 9.8% per annum. Lease payments are due in monthly instalments terminating in March 2022 and are rand-based. The buildings financed are used as security for these loans.

Vehicle leases

–

Interest charged at a rate of 15.5% per annum. Loans are repayable in monthly instalments terminating in February 2011 and are rand-based. The vehicles financed are used as security for these loans.

Total borrowings (note 29)

2,320

2,066

Current portion of borrowings included in current liabilities

(2,072)

(73)

Total long-term borrowings

248

1,993

Amounts falling due

Within one year

2,072

Between two and five years

1,993

After five years

165

–

(note 29)

2,320

2,066

Undrawn facilities

There were no undrawn borrowing facilities as at 31 December 2007 (2006: nil).

⁽¹⁾ Corporate bond

Senior unsecured fixed-rate bond

2,000

2,000

Unamortised discount and bond issue costs

(3)

(7)

1,997

1,993

Accrued interest

2,070

2,066

Environmental rehabilitation provisions

Provision for decommissioning

Balance at beginning of year

642

498

Change in estimates ⁽¹⁾

(198)

107

Unwinding of decommissioning obligation (note 5)

Utilised during the year

(3)

(1)

Balance at end of year

493

642

Provision for restoration

Balance at beginning of year

445

424

Charge to income statement

(12)

Change in estimates ⁽¹⁾

(17)

Unwinding of restoration obligation (note 5)

Utilised during the year

(78)

(34)

Balance at end of year

389

445

Total environmental rehabilitation provisions

882

1,087

⁽¹⁾

The change in estimates relates to changes in laws and regulations governing the protection of the environment and factors relative to rehabilitation estimates and a change in the quantities of material in reserves and a corresponding change in the life of mine plan. These provisions are anticipated to unwind beyond the end of the life of mine.

Provision for pension and post-retirement benefits

Defined benefit plans

The company has made provision for pension, provident and medical schemes covering substantially all employees. The retirement schemes consist of the following:

AngloGold Ashanti Limited Pension Fund (asset) (group note 32)

(244)

(267)

Post-retirement medical scheme for AngloGold Ashanti Limited’s South African employees (group note 32)

1,121

1,094

Transferred to other non-current assets (note 14)

877

827

AngloGold Ashanti Limited Pension Fund

244

267

1,121

1,094

Deferred taxation

Deferred taxation relating to temporary differences is made up as follows:

Liabilities

Tangible assets

4,940

4,625

Inventories

Derivatives

Other

5,042

4,808

Assets

Provisions

671

620

Derivatives

2,359

1,813

Tax losses

Other

111

141

3,154

2,611

Net deferred taxation liability

1,888

2,197

The movement on the net deferred tax balance is as follows:

Balance at beginning of year

2,197

2,185

Income statement charge (note 8)

(296)

210

Discontinued operations (group note 13)

(18)

Taxation on cash flow hedges and hedge ineffectiveness (note 19)

(5)

(165)

Taxation on actuarial (gain) loss (note 19)

(35)

102

Taxation on cost from ESOP Share Trust establishment (note 19)

(117)

Balance at end of year

1,888

2,197

Trade and other payables

Trade creditors

588

405

Accruals

647

651

Amounts due to related parties

Unearned premiums on normal sale exempted contracts

225

289

1,460

1,354

Trade and other payables are non-interest bearing and are normally settled within 60 days.

Taxation

Balance at beginning of year

561

553

Payments during the year

(565)

(435)

Provisions during the year (note 8)

593

426

Discontinued operations (group note 13)

Balance at end of year

591

561

Cash generated from operations

Profit before taxation

703

560

Adjusted for:

Movement on non-hedge derivatives and other commodity contracts

1,616

2,126

Amortisation of tangible assets (notes 2, 6 and 9)

1,806

1,634

Finance costs and unwinding of obligations (note 5)

257

255

Interest receivable (note 1)

(146)

(52)

Dividends receivable from other investments and subsidiaries (note 1)

(392)

(52)

Operating special items

(72)

241

Environmental rehabilitation and other expenditure

(29)

(39)

Other non-cash movements

191

172

Movements in working capital

199

3,988

5,044

Movements in working capital:

Increase in inventories

(68)

(64)

(Increase) decrease in trade and other receivables

(65)

110

Increase in trade and other payables

187

153

199

Related parties

Material related party transactions were as follows:

Sales and services rendered to related parties

Joint ventures

104

Associates

–

Subsidiaries

264

–

Purchases from related parties

Third parties

Subsidiaries

277

284

Outstanding balances arising from sale of goods and services and other loans due by related parties

Joint ventures

Associates

Subsidiaries

491

654

Outstanding balances arising from purchases of goods and services and other loans owed to related parties

Joint ventures

Subsidiaries

1,490

1,585

Amounts owed to related parties are unsecured non-interest bearing and under terms that are no less favourable than those with third parties.

Management fees, royalties, interest and net dividends from subsidiaries amounts to R342m (2006: R4m). This consists mainly of dividends received from AngloGold Ashanti Holdings plc of R326m (2006: Nil).

Doubtful debts expensed during the year amounted to R4m (2006: nil).

Details of guarantees to associates are included in note 28.

Directors and other key management personnel

Details relating to directors' emoluments and shareholdings in the company are disclosed in the Remuneration and Directors' reports.

Compensation to key management personnel included the following:

– short-term employee benefits

133

– post-employment benefits

–

– share-based payments

195

121

Contractual commitments and contingencies

Operating leases

At 31 December 2007, the company was committed to making the following payments in

respect of operating leases for among others, the hire of plant and equipment and land and

buildings. Certain contracts contain renewal options and escalation clauses for various periods

of time.

Expiry within

– One year

Finance leases

The company has finance leases for buildings and motor vehicles. The building leases have terms of renewal but no purchase options. The motor vehicle leases have no purchase option. Renewals are at the option of the lessee. Future minimum lease payments under finance lease contracts together with the present value of the net minimum lease payments are as follows:

	Minimum payments	Present value of payments
	2007
Within one year	20	2
Within one year but not more than five years	101	4
More than five years	411	244
Total minimum lease payments	532	250
Amounts representing finance charges	(282)
Present value of minimum lease payments	250	250

	2006
Within one year	–	–
Within one year but not more than five years	–	–
More than five years	–	–
Total minimum lease payments	–	–
Amounts representing finance charges	–	–
Present value of minimum lease payments	–	–

SA Rands

2007

2006

Capital commitments

Acquisition of tangible assets

Contracted for

428

473

Not contracted for

4,916

3,127

Authorised by the directors

5,344

3,600

Allocated to:

Project expenditure

– within one year

667

398

– thereafter

2,120

674

2,787

1,072

Stay-in-business expenditure

– within one year

2,279

2,285

– thereafter

278

243

2,557

2,528

Purchase obligations

Contracted for

367

360

– within one year

523

–

– thereafter

890

360

Purchase obligations represent contractual obligations for the purchase of mining contract services, supplies, consumables, inventories, explosives and activated carbon.

To service the above capital commitments, purchase obligations and other operational requirements, the company is dependent on existing cash resources, cash generated from operations and borrowing facilities.

Cash generated from operations is subject to operational, market and other risks. Distributions from operations may be subject to foreign investment, exchange control laws and regulations and the quantity of foreign exchange available in offshore countries. In addition, distributions from joint ventures are subject to the relevant board approval.

The credit facilities and other finance arrangements contain financial covenants and other similar undertakings. To the extent that external borrowings are required, the company's covenant performance indicates that existing financing facilities will be available to meet the commitments detailed above. To the extent that any of the financing facilities mature in the near future, the company believes that these facilities can be refinanced on terms similar to those currently in place.

	Contingency or guarantee	Liabilities included on balance sheet	Contingency or guarantee	Liabilities included on balance sheet
Figures in million	2007		2006
SA Rands
Contingent liabilities
Groundwater pollution – South Africa ⁽¹⁾			–	–

Guarantees
Financial guarantees
Convertible bond ⁽²⁾	6,810		7,001	–
Syndicated loan facility ⁽³⁾	3,556	92	1,271	–
Oro Africa ⁽⁴⁾	100		100
Hedging guarantees ⁽⁵⁾
Geita Management Company ⁽⁶⁾	3,539		2,032	–
Ashanti Treasury Services ⁽⁷⁾	10,176		7,334	–
AngloGold South America ⁽⁸⁾	1,501		959	–
AngloGold (USA) Trading Company ⁽⁸⁾	2,610		1,576	–
Cerro Vanguardia S.A. ⁽⁸⁾	542		584	–
	28,834	92	20,857	–

⁽¹⁾	AngloGold Ashanti Limited has identified a number of groundwater pollution sites at its current operations in South Africa. The company has investigated a number of different technologies and methodologies that could possibly be used to remediate the groundwater pollution. The geology of the area is typified by a dolomite rock formation that is prone to solution cavities. Polluted process water from the operations has percolated from pollution sources to this rock formation and has been transported three dimensionally, creating pollution plumes in the dolomite aquifer. Numerous scientific, technical and legal reports have been produced and the remedying of the polluted soil and groundwater is the subject of a continued research programme between the University of the Witwatersrand and AngloGold Ashanti. Subject to the technology being developed as a proven remediation technique, no reliable estimate can be made for the obligation.
⁽²⁾	The company has guaranteed all payments and other obligations of AngloGold Ashanti Holdings plc regarding the convertible bonds issued during 2004, with a maturity date of 27 February 2009, and a fixed coupon of 2.375% payable semi-annually. The bonds issued amounted to $1,000m, R6,810m. The company obligations regarding the guarantee will be direct, unconditional and unsubordinated.
⁽³⁾	The company has guaranteed all payments and other obligations of the wholly owned subsidiaries AngloGold Ashanti Holdings plc, AngloGold Ashanti Australia Limited and AngloGold Ashanti USA Inc. regarding the $1,150m syndicated loan facility. The prior year figure relates to the $700m, R4,901m syndicated loan facility that was repaid during 2007.
⁽⁴⁾	The company has provided surety in favour of the lender in respect of gold loan facilities with two wholly owned subsidiaries of Oro Group (Proprietary) Limited, an associate of the company. The company has a total maximum liability, in terms of the suretyships, of R100m. The suretyship agreements have a termination notice period of 90 days.
⁽⁵⁾	Included in the amounts stated are NPSE accounted contracts fair valued at R7,857m (2006: R6,695m).
⁽⁶⁾	The company, together with AngloGold Ashanti Holdings plc, has issued hedging guarantees to several counterparty banks in which they have guaranteed the due performance of the Geita Management Company Limited of its obligations under or pursuant to hedging arrangements entered into. Refer group note 38.
⁽⁷⁾	The company, together with AngloGold Ashanti Holdings plc, has provided guarantees to several counterparty banks for the hedging commitment of Ashanti Treasury Services Limited. Refer group note 38.
⁽⁸⁾	The group has issued gold delivery guarantees to several counterparty banks in which it guarantees the due performance of its subsidiaries AngloGold USA Trading Company, AngloGold South America Limited and Cerro Vanguardia S.A. under their respective gold hedging agreements.

Financial risk management activities

In the normal course of its operations, the company is exposed to gold price, other commodity price, foreign exchange, interest rate, liquidity, equity price and credit risks. In order to manage these risks, the company may enter into transactions which make use of both on- and off-balance sheet derivatives. The company does not acquire, hold or issue derivatives for trading purposes. The company has developed a comprehensive risk management process to facilitate, control and monitor these risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies, counterpart limits and controlling and reporting structures.

Controlling risk in the company

The Executive Committee and the Treasury Committee are responsible for risk management activities within the company. The Treasury Committee, chaired by the independent chairman of the AngloGold Ashanti Audit and Corporate Governance Committee, comprising executive members and treasury executives, reviews and recommends to the Executive Committee treasury counterparts, limits, instruments and hedge strategies. The treasurer is responsible for managing gold price, other commodity price, foreign exchange, interest rate, liquidity and credit risks. Within the treasury function, there is an independent risk function, which monitors adherence to treasury risk management policy and counterpart limits and provides regular and detailed management reports.

The financial risk management objectives of the company are defined as follows:

safeguarding the company’s core earnings stream from its major assets through the effective control and management of gold price risk, other commodity risk, foreign exchange risk and interest rate risk;
effective and efficient usage of credit facilities in both the short and long term through the adoption of reliable liquidity management planning and procedures;
ensuring that investment and hedging transactions are undertaken with creditworthy counterparts; and
ensuring that all contracts and agreements related to risk management activities are coordinated, consistent throughout the company and comply where necessary with all relevant regulatory and statutory requirements.

Gold price, foreign exchange risk and cash flow hedging

Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The gold market is predominately priced in US dollars which exposes the company to the risk that fluctuations in the SA rand/US dollar exchange rate may also have an adverse effect on current or future earnings. The company is also exposed to certain byproduct commodity price risk.

A number of products, including derivatives, are used to manage the gold price and foreign exchange risks that arise out of the company's core business activities. Forward sales contracts and call and put options are used by the company to manage these risks. At year-end, the volume of outstanding forward sales contracts was 4,520kg (2006: 7,362kg).

As the company does not enter into financial instruments for trading purposes, the risks inherent to financial instruments are always offset by the underlying risk being hedged. The company further manages such risks by ensuring that the level of hedge cover does not exceed the company life of mine and that no basis risk exists.

Cash flow hedges

The company's cash flow hedges consist of commodity and foreign exchange forward contracts that are used to protect against exposures to variability in future commodity and foreign exchange cash flows. The amounts and timing of future cash flows are projected for each portfolio of financial assets and liabilities on the basis of their contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate principal cash flows across all portfolios over time form the basis for identifying gains and losses on the effective portions of derivatives designated as cash flow hedges of forecast transactions. Gains and losses are initially recognised directly in equity and other comprehensive income, and are transferred to earnings when the forecast cash flows affect the income statement.

The cash flow hedge forecast transactions are expected to occur over the next 3 years, in line with the maturity dates of the hedging instruments and will affect profit and loss simultaneously in an equal and opposite way.

The gains and losses on ineffective portions of such derivatives are recognised immediately in the income statement. During the year to 31 December 2007, a loss of R31m (2006: Nil) was recognised due to hedge ineffectiveness.

Non-hedge derivatives

SA Rands
Figures in million	2007	2006
Loss on non-hedge derivatives and other commodity contracts is summarised as follows:
Loss on non-hedge derivatives	(1,308)	(826)
Unrealised gain (loss) on other commodity physical borrowings	23	(9)
Provision reversed (raised) for loss on future deliveries and other commodities	80	(101)
Loss on non-hedge derivatives and other commodity contracts per the income statement	(1,205)	(936)
Loss on non-hedge derivatives and other commodity contracts was R1,205m in 2007 compared to a loss of R936m in the previous year. The loss is primarily the result of the revaluation of non-hedge derivatives resulting from changes in the prevailing spot gold price, exchange rates, interest rates and greater volatilities compared to the previous year.

Net open hedge position as at 31 December 2007

The company had the following net forward pricing commitments outstanding against future production.

The marked-to-market value of all derivatives, irrespective of accounting designation, making up the hedge position was R10.57bn as at 31 December 2007 (as at 31 December 2006: R7.82bn). These values were based on a gold price of $836.30 per ounce, an exchange rate of $1 = R6.8104 and the prevailing market interest rates and volatilities at 31 December 2007. The values as at 31 December 2006 were based on a gold price of $636.30 per ounce, an exchange rate of $1 = R7.0010 and the market interest rates and volatilities prevailing at that date.

Summary: All open contracts in the company's commodity hedge position as at 31 December 2007.

Year	2008	2009	2010	2011	2012	2013- 2015	Total
US Dollar/Gold
Forward contracts
Amount (kg)	(6,925) ⁽¹⁾	1,414	1,571	1,882	1,882	3,764	3,588
$/oz	$816	($343) ⁽²⁾	$142	$490	$500	$515	($588) ⁽²⁾
Put options sold
Amount (kg)	8,009	3,748	1,882	1,882	1,882	3,764	21,167
$/oz	$642	$530	$410	$420	$430	$445	$528
Call options sold
Amount (kg)	18,614	20,147	18,833	20,202	4,899	12,784	95,479
$/oz	$408	$404	$409	$437	$536	$552	$439

Rand/Gold
Forward contracts
Amount (kg)		933					933
R/kg		R116,335					R116,335
Call options sold
Amount (kg)		2,986	2,986	2,986			8,958
R/kg		R202,054	R216,522	R230,990			R216,522
Total net gold
Delta (kg) ⁽³⁾	(10,737)	(24,020)	(22,007)	(23,322)	(6,366)	(15,364)	(101,816)
Delta (oz) ⁽³⁾	(345,193)	(772,250)	(707,534)	(749,805)	(204,675)	(493,963)	(3,273,420)
The open delta hedge position of the company at 31 December 2006 was 3.61Moz or 112t.

⁽¹⁾	Indicates a long position resulting from forward purchase contracts.
⁽²⁾	Indicates a net short position where the contractual value of the total short position is less than the contractual value of the total long position.
⁽³⁾	The delta of the hedge position indicated above, is the equivalent gold position that would have the same marked-to-market sensitivity for a small change in the gold price. This is calculated using the Black-Scholes option formula with the ruling market prices, interest rates and volatilities as at 31 December 2007.

Year	2008	Total
US Dollar/Gold
Rand/US Dollar (000)
Forward contracts
Amount ($)	35,000	35,000
R per $	R6.94	R6.94

Put options purchased
Amount ($)	120,000	120,000
R per $	R6.98	R6.98

Put options sold
Amount ($)	120,000	120,000
R per $	R6.65	R6.65

Call options sold
Amount ($)	135,000	135,000
R per $	R7.35	R7.35

The mix of hedging instruments, the volume of production hedged and the tenor of the hedging book is continually reviewed in the light of changes in operational forecasts, market conditions and the company's hedging policy.

Forward sales contracts require the future delivery of the underlying at a specified price.

A put option gives the put buyer the right, but not the obligation, to sell the underlying to the put seller at a predetermined price on a predetermined date.

A call option gives the call buyer the right, but not the obligation, to buy the underlying from the call seller at a predetermined price on a predetermined date.

Sensitivity analysis

Derivatives

A principal part of the company’s management of risk is to monitor the sensitivity of derivative positions in the hedge book to changes in the underlying factors, viz. commodity price, foreign exchange rate and interest rates under varying scenarios.

The following table discloses the approximate sensitivities of the US dollars marked-to-market value of the hedge book to key underlying factors at 31 December 2007 (actual changes in the timing and amount of the following variables may differ from the assumed changes below).

The table below sets out the impact on the marked-to-market value of the hedge book of an incremental parallel fall or rise in the respective yield curves at the beginning of each month, quarter or year (as is appropriate) from 1 January 2008. The yield curves match the maturity dates of the individual derivative positions in the hedge book. These figures incorporate the impact of any option features in the underlying exposures.

	Change in rate (+)	Normal sale exempted (million)	Cash flow hedge accounted (million)	Non- hedge accounted (million)	Total change in fair value (million)	Total change in fair value (million)
			2007			2006
Currency (R/$)	1.00	–	(68)	(163)	(231)	(119)
Gold price ($/oz)	200.00	(1,886)	(632)	(1,940)	(4,458)	(5,200)
ZAR interest rate (%)	1.50	–	(4)	(33)	(37)	(18)

	Change in rate (-)	Normal sale exempted (million)	Cash flow hedge accounted (million)	Non- hedge accounted (million)	Total change in fair value (million)	Total change in fair value (million)
			2007			2006
Currency (R/$)	1.00	–	95	102	197	77
Gold price ($/oz)	200.00	1,883	632	1,664	4,179	5,113
ZAR interest rate (%)	1.50	–	4	32	36	18

Interest rate risk on other financial assets and liabilities (excluding derivatives)

Refer note 39 in the group financial statements.

The following are the contractual maturities of financial liabilities, including interest payments

Non-derivative financial liabilities

		Within one year		Between one and two years		Between one and five years		Greater than five years
	Currency	Million	Effective rate %	Million	Effective rate %	Million	Effective rate %	Million	Effective rate %
2007
Borrowings	ZAR	2,229	10.5	22	9.9	78	9.9	411	9.8
Trade and other payables	ZAR	1,198	–			–		–
	USD in ZAR equivalent	37	–			–		–

2006
Borrowings	ZAR	282	10.5	2,204	10.5	–	–	–	–
Trade and other payables	ZAR	947		–		–		–
	USD in ZAR equivalent	118		–		–		–

Credit risk

Refer note 39 in the group financial statements.

The combined maximum credit risk exposure of the company is as follows:

SA Rands
Figures in million	2007	2006
Commodity option contracts		302
Foreign exchange option contracts	26	9
Forward sale commodity contracts	1,209	1,286
Forward foreign exchange contracts	1	–
Gold interest rate swaps	3	13
All derivatives	1,239	1,610
Other investments (note 11)	16	16
Other non-current assets	6	7
Trade and other receivables	96	110
Cash restricted for use	7	6
Cash and cash equivalents (note 16)	1,283	1,260
Total financial assets	2,647	3,009
Financial guarantees	10,466	8,372
Hedging guarantees	10,511	5,499
Total	23,624	16,880

No trade and other receivables are past due but not impaired. No other financial assets are past due but not impaired.

Fair value of financial instruments

The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the company's financial instruments as at 31 December 2007 are as follows:

Type of instrument

	Carrying		Fair	Carrying		Fair
	amount		value	Amount		Value
Figures in million		2007			2006
Financial assets
Other investments (note 11)	16		16	16		16
Other non-current assets	6		6	7		7
Trade and other receivables	96		96	110		107
Cash restricted for use	7		7	6		6
Cash and cash equivalents (note 16)	1,283		1,283	1,260		1,260
Derivatives	1,239		1,239	1,610		1,610
Financial liabilities
Borrowings (note 20)	2,320		2,308	2,066		2,097
Trade and other payables	1,235		1,235	1,065		1,065
Derivatives	7,277		12,099	5,849		9,820

The amounts in the tables above do not necessarily agree with the totals in the notes as only financial assets and financial liabilities are shown.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash restricted for use, cash and cash equivalents and trade and other payables

The carrying amounts approximate fair value because of the short-term duration of these instruments.

Trade and other receivables

The fair value of the non-current portion of trade and other receivables has been calculated using market interest rates.

Investments and other non-current assets

Listed equity investments classified as available-for-sale are carried at fair value while fixed income investments and other non-current assets are carried at amortised cost. The fair value of fixed income investments and other non-current assets has been calculated using market interest rates.

Borrowings

The fair value of listed fixed rate debt is shown at its closing market value as at 31 December 2007. The remainder of debt reprices on a short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value.

Derivatives

The fair values of derivatives are estimated based on the ruling market prices, volatilities and interest rates as at 31 December 2007. The fair value amounts for derivatives include off balance sheet normal sale exempted gold contracts, which are not carried on the balance sheet and excluded from the carrying amount. All other derivatives on balance sheet are carried at fair value.

The company uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the level of volatility. These volatility levels are themselves not exchange traded and are not observable generally in the market. The company uses volatility inputs supplied by leading market participants (international banks). The company believes that no other possible alternative would result in significantly different fair value estimations.

Derivative assets (liabilities) comprise the following:

	Assets				Liabilities
	Normal sale exempted	Cash flow hedge accounted	Non- hedge accounted	Total	Normal	Cash flow hedge accounted	Non- hedge accounted	Total
Figures in million	2007				2007
Commodity option contracts	–	–	–	–	(4,822)	–	(4,671)	(9,493)
Foreign exchange option contracts	–	–	26	26	–	–	(26)	(26)
Forward sale commodity contracts	–	21	1,188	1,209	–	(1,367)	(1,208)	(2,575)
Forward foreign exchange contracts	–	–	1	1	–	–	(1)	(1)
Gold interest rate swaps	–	–	3	3	–	–	(4)	(4)
All derivatives	–	21	1,218	1,239	(4,822)	(1,367)	(5,910)	(12,099)

		2006				2006
Commodity option contracts	–	–	302	302	(3,971)	–	(3,168)	(7,139)
Foreign exchange option contracts	–	–	9	9	–	–	(7)	(7)
Forward sale commodity contracts	–	240	1,046	1,286	–	(1,567)	(1,098)	(2,665)
Gold interest rate swaps	–	–	13	13	–	–	(9)	(9)
All derivatives	–	240	1,370	1,610	(3,971)	(1,567)	(4,282)	(9,820)

The schedule of undiscounted forecast principal cash flows arising from all on balance sheet derivative contracts (cash flow hedges and non-hedges) as at 31 December 2007 is as follows:

	Within one year	Between one and two years	Between two and five years	After five years	Total
SA Rands million
At 31 December 2007
Cash inflows from assets	811	354	98		1,263
Cash outflows from liabilities	(1,377)	(1,712)	(2,975)	(1,860)	(7,924)
Net cash outflows	(566)	(1,358)	(2,877)	(1,860)	(6,661)
At 31 December 2006
Cash inflows from assets	1,202	425	211	–	1,838
Cash outflows from liabilities	(1,337)	(917)	(2,581)	(1,713)	(6,548)
Net cash outflows	(135)	(492)	(2,370)	(1,713)	(4,710)

Capital management

Capital is managed on a group basis only and not on a company basis. Refer note 40 in the group financial statements.

Recent developments

Eskom power supply

Following the announcement made on 25 January 2008, in which AngloGold Ashanti advised that Eskom would be interrupting power supplies to the company’s South African operations, AngloGold Ashanti halted mining and gold recovery at these operations. Subsequently, AngloGold Ashanti announced on 29 January 2008, that it had begun the process to restart production at its South African operations following a meeting with Eskom and industrial electricity consumers at which Eskom had agreed to provide AngloGold Ashanti with 90% of its electricity demand prior to the shut down so as to return the operations to normal production. At this stage the company estimates the effect of the reduction in the available power supply to negatively affect production by approximately 400,000 ounces (12,440 kilograms). The estimated financial effect of a 400,000 ounce (12,440 kilograms) decrease in production is lower revenue of R2,501 million at an assumed average spot price of R201,000/kg. Total cash costs in South Africa, which includes the effect of lower uranium production, are likely to increase from approximately R77,000/kg to R100,000/kg.

Change in South African Income Taxation Rates

The Minister of Finance announced on 20 February 2008 a reduction to the gold mining taxation formula from Y = 45-225/X to Y = 43-215/X and a non-mining rate reduction from 37% to 36%. The impact of this is a net reduction to the deferred taxation liability of R117m and a lower income statement taxation charge of R138m. The financial impact of the rate changes are calculated based on the results for the year ended 31 December 2007.

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