AngloGold Annual Financial Statements 2003

Overall gold production for 2003 declined by 5% to 5.62Moz, 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 operating currencies against the US Dollar, resulted in total cash costs increasing substantially by $68/oz to $229/oz. Adjusted operating profit decreased by 12% to $559 million.

Detailed discussions relating to safety, health, HIV/AIDS and sustainable development may be found in AngloGold’s Report to Society 2003. This report is a fully-interactive web-based report and 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, the Global Reporting Initiative Guidelines, and on a regional basis. Sections of this report may be downloaded and printed. A summarised overview on safety is presented below, while a summarised discussion on health issues in the South African region (in terms of the reporting required by the South African Mine Health and Safety Act) is reported under the discussion on that region.

The safety and health of employees has remained a key area of focus for AngloGold. Performance in 2003 was, however, 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, although the year-on-year figure has increased 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% to 0.29 per million man hours worked.

Regrettably, 43 employees lost their lives in the course of work during the year: 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 excellent safety performances:

Serra Grande in Brazil was recognised by NOSA, an organisation specialising in safety, health and environment auditing, as the winner in the Underground Hard Rock Deep Mine category in its world-wide auditing programme.

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 recognised the Cripple Creek & Victor mine (CC&V) 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 recognised Navachab as the safest mine in Namibia, based on the number of fatality-free employee hours worked in 2002.

Ergo, the surface retreatment operation in South Africa, achieved one million fatality-free shifts on 22 June 2003, while Moab Khotsong mine – which is currently under development – also achieved a million fatality-free shifts on 18 November 2003.

The Sunrise Dam Gold Mine was recognised 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% in its serious injury frequency rate compared with its best performance over the previous four years.

Further details on performance and the strategies and programmes that have been and are being put in place to address safety at work can be found in the AngloGold Report to Society 2003.

Production for the year was 5.62Moz, a decrease of 5% from the previous year, mainly a result of lower grades achieved at several of the operating regions. The East and West Africa region, now contributes some 17% in terms of gold produced and 21% of cash operating profit in Dollar terms.

AngloGold’s drive for geographic and orebody diversity will be boosted in the coming year should the merger of AngloGold-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%, and contributing 43% to adjusted operating profit and 52% to cash operating profit.

Overall, total cash costs rose by 42% to $229/oz, as the performance of the Rand against the Dollar undermined the good cost control initiatives at the South African operations. By way of example, total cash costs in Dollar terms rose by 60% to $253/oz, while in Rand terms this increase was held to 15% at R61,011/kg. Consequently, adjusted operating profit decreased by 12% to $559 million.

Capital expenditure for the year rose to $363 million from $271 million in the previous year. Of this, 58% was for maintenance capital expenditure and 42% on expansion – mainly at Moab Khotsong, Mponeng and TauTona in South Africa.

AngloGold expects production in 2004 to decrease to around 5.32Moz following the closure in 2003 of Union Reefs and the sale of its interest in the Jerritt Canyon Joint Venture. (In 2003, Union Reefs and Jerritt Canyon collectively contributed 180,000oz towards AngloGold’s total production of 5.62Moz.) The merged group’s⁽¹⁾ production is expected to be in the region of 6.47Moz.

Capital expenditure is forecast to be $477 million (merged group⁽¹⁾: $596 million), which includes Moab Khotsong ($60 million), Mponeng ($58 million), TauTona ($63 million) and Sunrise Dam ($29 million).