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Strategy & business model

To fulfil our purpose and mission, we have in place an integrated, robust business model and a strategy which aims to sustain value creation in the longer term. We endeavour to maintain flexibility in strategic decision making to respond to a dynamic operating environment and unpredictable economic and commodity cycles.

Our five key strategic focus areas

AngloGold Ashanti’s core strategic focus is to generate sustainable cash flow improvements and returns over the long term by focusing on five key areas:

  • Focus on people, safety and sustainability: people are the foundation of our business. To remain sustainable in the long term, we must clearly exhibit our values in the conduct of our business. This encompasses being accountable for our actions and decisions, and respecting all stakeholders and the environment. ESG principles are integrated into every aspect of our business.
  • Ensure financial flexibility: we must ensure our balance sheet always remains able to meet our core funding needs.
  • Optimise overhead, costs and capital expenditure: all spending decisions must be thoroughly scrutinised to ensure they are optimally structured and necessary to fulfil our core business objective.
  • Improve portfolio quality: we have a portfolio of assets that must be actively managed to improve the overall mix of our production base as we strive for a competitive valuation as a business.
  • Maintain long-term optionality: while we are focused on ensuring the most efficient day-to-day operation of our business, we must keep a close eye on creating a competitive pipeline of long-term opportunities.

These strategic areas, which guide decision-making, are aimed at generating increased cash flows; extending mine lives; creating an organic pipeline of economically viable orebodies; and enhancing our license to operate. The overall aim is creating and preserving value for all our stakeholders.

Strategy diagram

Business model

Our ability to create value depends on the use of and access to various capital inputs – this includes access to financial capital and economically viable orebodies, as well as to the necessary mining infrastructure, including utilities, plant and equipment, and a skilled and experienced workforce. Creating value entails optimising and balancing the use of these inputs, enhancing positive outcomes and impacts, minimising those that are negative, and delivering on our strategy.

For further information on this, refer to the 2020 <IR>: Our business model

Natural capital

Natural capital

Our primary business activity is the exploration for, development and operation of gold orebodies to transform these into economic and social value. To do this, we need:

  • Pipeline of economically viable Mineral Resource and Ore Reserve
  • Access to various natural resources – land, water and energy, among others
How we optimise value and prevent erosion
  • We work to mitigate direct environmental impacts of our activities and to offset these where possible.
  • The South Africa and Mali asset sales streamlined our portfolio to help ensure value creation in the longer term.
  • Initiated a focused Ore Reserve programme
  • $162m invested in brownfields and greenfields exploration to develop the Ore Reserve pipeline.
  • Feasibility studies on our two Colombia projects were advanced, bringing closer the introduction of new production sources that will be mostly hydropowered
  • About $24m invested in the project to convert our Brazil TSFs to dry stacking, and another $72m planned for this work in 2021
  • Initial, bottom-up work done in preparation for the update of our climate change strategy and the setting of emission targets, including physical risk assessments at each site

Financial capital

Financial capital

Access to cost-efficient capital is vital to fund our business, sustain operations, ensure future growth, and to pay for the use of other capital inputs necessary to our business. Our main sources of funding are operational cash flow, debt and credit facilities, and equity.

How we optimise value and prevent erosion
  • Streamlined the portfolio through the sale of assets in South Africa and Mali, generating cash proceeds of $239m including dividends and loan payments
  • Most of these funds were used to reduce debt
  • Free cash flow generation was the highest since 2011
  • A doubling in the dividend payout ratio contributed to a more than fivefold increase in the annual dividend payment

Human capital

Human capital

The conduct of our business and delivery on our strategy depend on the skills and knowledge, productivity, behaviour and well-being of employees. Effective talent management enables AngloGold Ashanti to better navigate a volatile macro-economic environment and to achieve our strategic objectives.

How we optimise value and prevent erosion

We invest in technology systems and procedures to ensure workplaces are safe, employees are healthy, motivated, and equipped to do their jobs. We provide training and development, ensure fair labour practice, promote local employment and diversity and inclusivity.

  • Our safety strategy aims to minimise harm and injury in the workplace.
  • Our COVID-19 response saw all employees receive salaries and wages during periods of enforced lockdown and the suspension of operations.
  • Our internal talent pipeline is strengthened through our established talent review and succession plan.
  • Diversity, inclusion and localisation, especially in the Africa region, are important focus areas

Manufactured capital

Manufucatured capital

Efficient conduct of our business relies on the development and maintenance of our mining operations and related infrastructure and equipment.

How we optimise value and prevent erosion
  • Our actions here aim to ensure our mines operate efficiently and their operating lives are optimised.
  • Two projects in Colombia are progressing – their feasibility studies are underway and the results are expected by end June 2021
  • The first phase of the Obuasi Redevelopment Project was completed. The overall project was 90% complete by end 2020

Social capital

Social capital

Stakeholders include communities, governments, NGOs, and investors, among others.

Relationships with many of our stakeholders support our license to operate, and must be based on trust and transparency. These relationships also help protect our reputation, and enable us to deliver on our strategy.

How we optimise value and prevent erosion
  • Our activities here are aimed at ensuring constructive stakeholder relations, which are vital to maintaining our regulatory and social licences to operate
  • As a responsible corporate citizen, we aim to share the socio-economic benefits of our mining activities and support resilient, self-sustaining communities
  • Regular and constructive engagement with local, regional and national governments
  • Our socio-economic activities are aligned with local development targets
  • Focus on human rights and human rights awareness training
  • Concerted effort to ensure and maintain positive community relations

Intellectual capital

Intellectual capital

An ethical, performance-based culture, solid governance framework and efficient management systems, including enterprise risk management, are vital in facilitating delivery on our business strategy. Underpinning these is innovation and technology to enhance and optimise efficiencies and outcomes.

How we optimise value and prevent erosion

A detailed digital transformation roadmap has been developed that has defined usability for various areas with the potential to improve operating and safety performance, and ensure reliable delivery and compliance with strategic and business plans.

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