AngloGold Ashanti Plc (AU) Q3 2013 Earnings Report, Transcript and Summary

All right, good morning, everybody. And welcome to our presentation of our Q3 results, which is for the 3 months to the end of September. Before we get started, just as usual, as we always do, just to start with our safety procedures, in the unlikely event of an emergency, sirens will sound, move to our nearest exit points, which are clearly marked in the room and our safety wardens will take over after -- immediately after that. Just moving on to our normal Safe Harbor statement, which I'll run through very briefly, certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning economic outlook for the gold mining industry, expectations regarding gold prices, production, cash cost, cost savings and other operating results, return on the equity, productivity improvements, growth prospects and outlook of AngloGold Ashanti's operations, individually or in the aggregate, including the achievement of project milestones, commencement and completion of commercial operations of certain of AngloGold Ashanti's exploration and production projects and the completion of acquisitions and dispositions, AngloGold Ashanti's liquidity and capital resources and capital expenditures and outcome and consequences of any potential or pending litigation or regulatory proceedings or environmental issues are forward-looking statements regarding our operations, economic performance and financial condition. These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cost AngloGold Ashanti's actual results, performance or achievements to differ materially from those anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements and forecast are reasonable, no insurance -- no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, amongst others -- amongst other factors changes in economic, social and political and market conditions, the success of business and operating initiatives, changes in the regulatory environment and other government actions, including environmental approvals, fluctuations in gold price and exchange rates, outcome of pending or future litigation, and business and operational risk management. For a discussion of these risk factors, refer to the prospectus -- supplement to our prospectus dated 17 July 2012, filed with the SEC on the 26th of July 2013. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could have a material adverse effect on future results. Consequently, readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly or release any revisions to forward-looking statements or reflect events or circumstances after the date hereof and to reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti or any person acting on its behalf are qualified by these cautionary statements. The communication may contain certain non-GAAP financial measures. We use these non-GAAP performance measures and ratios in managing the business. Non-GAAP financial measures should be used in addition to and not as an alternative for the reported operating results or cash flow from operations, or any other measures of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures other companies use. AngloGold Ashanti posts information that is important to investors under the main tab of the website, at anglogoldashanti.com under the Investors tab on the main page. We update it regularly, and you should look at it. Before we carry on, just a run-through, we do have a lot to get through today. It's a detailed set of results that we'll unpack. Venkat's going to kick off with an introduction; Richard Duffy, our CFO, is going to run through the financials and just reconciliation of our earnings; and over to the operators, Mike O'hare, our COO of our South African operations, we'll talk through those; Ron Largent, who looks at everything else, will talk through the international portfolio; Graham Ehm, who heads our projects and planning, will then run through quite a lot this happened this quarter too; and then Venkat will just wrap-up with a quick concluding slide. Without further ado, Venkat?

Thank you, Stewart. Good morning, ladies and gentlemen. As Stewart mentioned, we have our full executive committee here, team and members of management as well. And welcome to everyone. Before we go into the quarterly results, if we can start off with the 5 key messages, which we have been laying as a foundation since the start of the year, the 5 key messages being during these tough times in industry, we have a dedicated management team and the people to drive the results whilst we will remain focused on safety and our social license to operate. Message #2, we have proactively and decisively moved to address any fears around our financial flexibility and our balance sheet. And our newly appointed Chief Financial Officer, Mr. Duffy, will walk you through what has actually transpired during the quarter. The third key message is we are tackling head-on optimizing all aspects of our cost, nothing is sacrosanct, whether it's operating cost overheads, capital spend, to improve our sustainable long-term cash flow. The fourth key pillar is, during the quarter, we saw 2 new mines, as we call them, twins, going into production roughly at the same time 2 days apart, Tropicana and Kibali in different parts of the world. We will keep improving the quality of the portfolio whilst we start to strip marginal ounces slowly from the asset mix. Finally, it is not about the short-term, it is not about the long-term, it is both about the short, medium and the long-term. We are keeping our long-term optionality intact, using lower-cost options and a very focused exploration portfolio. What do these 5 pillars do for AngloGold Ashanti? One, it will help us ride through any gold price shocks, which we would see, it'll improve our cash generation as we go into 2014, and importantly, preserves a long-term future. So should the gold price surprise us on the upside, anytime from now over the next couple of years, we will simply clean that extra cash flow for our shareholders. Moving on to the third quarter overview. The third quarter was very eventful quarter for all the correct reasons. If I can start with safety first, we had a record safety performance and we'll cover that in more detail as we go on to a detailed slide which is there in respect of safety. But importantly, our South African region was fatality-free in the third quarter and Vaal River region had a 14-month run without a fatality, it was our best-ever safety record for the group. And you'll remember, the Minister of Mines yesterday at the Chamber of Mines complimented the mining industry in terms of the progress that has been made and requested mines to be more vigilant and improve the safety records. So we are committed in that regard. Second key message, Tropicana and Kibali came onstream, on time and on budget. It's a rare phenomenon. As someone who we were speaking to the other day said it seems to be a miracle, and the ramp up is currently underway. Then, the balance sheet has been strengthened. We removed the noise around the financial inflexibility by issuing a 7-year bond. It improved our liquidity antenna, and there was quite a lot of speculation in terms of covenant breaches. And as we said, we have a very supportive bank group, and we have relaxed our covenants. And based on performance to date, it just reconfirms that we didn't need the covenant waiver but we have it in the back pocket if needed. Turning onto production and our cost performance, it's been a very strong quarter in this regard. Whether you look at production, whether you look at total cash cost, overheads, capital spend, all in sustaining cost or cash flow, and we'll come back to that later when we look at a key slide. But importantly, the production and cost guidance for the year is maintained and Richard will walk you through the deal of what are the moving parts there in terms of -- from quarter 3 moving on to quarter 4. I think the next slide is quite an important slide, Slide #8, from these -- in terms of performance update, I think if you leave everything else behind, please take that slide. It says it all. What you saw during the third quarter is gold price fell against us. It dropped from $1,421 to $1,327, but we saw nearly $100 come off the gold price, a 7% drop and that translates to a pretax blow to our bottom line of over $100 million. That's not within management's control. But we have worked extremely hard and full compliments to the executive team, the management team and every one of our 60,000 employees and contractors at AngloGold Ashanti to help us see through this quarter and make that change quickly. Our gold production was up 12% as compared to the previous quarter. Production quarter-on-quarter has improved against all of the competitors. It's up 12% on previous quarter. We significantly exceeded the top end of our guidance. But importantly, it was higher than the same quarter last year, and one has to bear in mind that the third quarter 2013 didn't have the strike impact we saw this quarter in a 4-day stoppage and a fire in one of our critical areas at Kopanang. And also, the third quarter of 2013 just gone didn't have any meaningful production from either Kibali or Tropicana, that is coming in the fourth quarter and subsequent quarters into 2014. Importantly, breaking it down by regions first, all 4 regions went up quarter-on-quarter. South Africa was up 7%, Continental Africa was up 12%, Americas up 15%, and Australia was up 24%. And if you recall, when we gave you the outlook and there was question asked and saying, you're expecting a big step up in Q3 and Q4, we did say yes, and lo and behold, that is exactly what has transpired. 9 out of 10 countries showed quarter-on-quarter improvement here. And a particular mention to be made of Iduapriem which delivered its record ever production since the merger. And 9 out of 10 countries showed quarter-on-quarter improvement, the exception being Mali, which is going through its grade profile at present. Then turning onto costs, our cash cost were 10% better than the second quarter of this year, it dropped by around $89 an ounce, but importantly, it was 3% better than the same quarter last year. When asked to bear in mind that this quarter would include, the third quarter would've included wage increases and power tariffs, notwithstanding that given better operating performance and currency weakness, we delivered a very good cash cost performance. We also committed that we will be looking very closely at our corporate and marketing spend and our exploration and evaluation spend, and if you recall, Q2 was lower than Q1, we made savings quarter-on-quarter and the third quarter, explorations and marketing spend and corporate spent have dropped by between 26% to 30% quarter-on-quarter. Capital expenditure, following the profile of $1.95 billion for the year has dropped 19% quarter-on-quarter, reflecting Tropicana going into production and only a tail of capital being left in Tropicana. Importantly, all-in sustaining cost. For those of you who may not be familiar with all-in sustaining cost, we certainly, along with Gold Fields, used to report total cash costs and NCE, notional cash expenditure. We have been working with the World Gold Council to come up with a measure which indicates business as usual cost, which is the all-in sustaining cost, which is not a profit-and-loss measure. It's a proxy to the cash flow measure. It takes into account total cash cost. It takes into account all of your sustaining capital. It takes into account your corporate cost, your exploration expenses and certain other items of spend. It excludes your taxation and finance charges. And that dropped from $1,302 an ounce to $1,155 an ounce, an improvement of 11%. Please bear in mind that the $1,155 an ounce includes $40 an ounce of redundancy cost include -- which were incurred, but may not have been paid that quarter, incurred that quarter, and if you strip that out and normalize, the reduction is around $200 an ounce. We have just been conservative, and we have included that in the all-in sustaining cost. Ultimately, it has to translate to cash flow. Our cash inflow from operating activities improved by 1.28%, largely as a result of the above measures, but importantly, our working capital lockup was lower than the previous quarter. And the free cash outflow has dropped significantly. In other words, the cash flow has improved by around 60%, and the outflow net is around $205 million, so our net debt levels came out better than what we expected, notwithstanding the fall in the gold price. And bear in mind that the $205 million should be compared against our project capital spend in the third quarter of $216 million and $29 million of refinancing and acceleration of some finance cost. So $250 million of effective capital expenditure and financing cost compared with an outflow of $205 million. If we didn't have them, then we would have actually generated some cash. Moving onto safety. Safety remains our first value. And it's our focus and it's even greater at these times. And the efforts over the last several years, are starting to pay off. And as you look at that Slide, our fatalities have come down significantly, bearing in mind 1 fatality is 1 fatality too many. We have reduced fatalities from around 14 fatalities as compared to last year to 6 of our colleagues who unfortunately lost their lives during this year. Regrettably, we had 1 accident in the third quarter, and that involved a contractor at Iduapriem using a water truck, and we have taken corrective actions to ensure that, that type of accidents do not occur and disciplinary action has been taken against the contractor involved and the individuals who should've been supervising the site. Our fatal injury frequency rate improved by 60%, and it is an all-time record. South Africa region, thanks to Mike and the work which his team has put in, has had a fatality-free third quarter, and importantly, that would -- they've had 150 consecutive fatality-free days. Vaal River region has been with 14 months without a fatality. We've had our best ever all injury frequency rate and long term injury, a lost time injury frequency performance on record at 665 and 466, respectively. Importantly, we're not complacent. There are still, what we would regard, high potential incidents happening in a number of sites. We are monitoring those, investigating those in detail so that we learn from those high-potential incidents and ensure that the improvement we have seen in fatalities, injuries are also translated into high potential incidents. And thereby, we are addressing the underlying cause in terms of these accidents. With those introductory comments, I'll hand you over to Richard.

Thank you, Venkat. Total earnings attributable to ordinary shareholders were $1 million for the quarter, which compares to our June quarter loss of USD 2.2 billion. As you may recall, the June quarter was impacted by asset and stock filing payments of $2.4 billion after-tax. Adjusted headline earnings for this quarter were $576 million, which includes a realized fair value gain of $567 million on the mandatory bond conversion into AGA equity. This compares to the adjusted headline earning loss of $135 million last quarter. In order to remove the noise around the Q2 impairment in our quarter 3 fair value gain on the $789 million mandatory convertible bond, early settlement of our $733 million, May 2014 convertible bond and the new issue of our $1.25 billion, 7-year bond, we have normalized our adjusted headline earnings as set up in the table on the slide. In addition to these adjustments, we have also stripped out our corporate retrenchment and termination charges, and operational redundancy costs, resulting in normalized adjusted headline earnings of $110 million. For comparative purposes, we have also normalized our adjusted headline earnings for quarter 2, if we can go to the next slide please? Showing a profit of $9 million. The waterfall graph on the slide shows the negative impact of the 7% lower gold price at $57 million, $15 million associated with higher wages and winter power tariffs in South Africa, as Venkat mentioned, together with an additional $30 million in incremental finance charges associated with our $1.25 billion new bond. These are more than offset by the $27 million savings on our corporate and exploration costs, a $25 million favorable impact on the back of weaker local currencies and just under $150 million in improved operational performance, resulting in an underlying quarter-on-quarter improvement of over $100 million. The operational performance was driven by grade and volume improvements with better grades delivering around 75% of this benefit. Improved grades were delivered at a number of operations, including Moab Khotsong in South Africa, Iduapriem and Obuasi in Ghana, Siguiri in Guinea, Sunrise Dam in Australia, Cerro Vanguardia in Argentina, and AGAM [ph] in Brazil. Mine volumes improved at Moab, Mponeng and TauTona, largely as a result of better production performance. Geita's plant throughput improved as a result of less downtime as compared to quarter 2. In quarter 3, we continued our prudent and proactive management of our balance sheet to provide sufficient liquidity and flexibility as we restructure the business. Part of the proceeds from our $1.25 billion bond were applied to early settled in May 2014, $733 million convertible bond, and cancel the $750 million backstop bridge facility, thereby eliminating any refinancing risks, providing additional liquidity and improving our debt maturity profile. Our net debt to EBITDA ratio was 2.02x for the quarter as compared to 1.55X at the end of quarter 2 and remains significantly below our temporarily increased bank facility covenant level of 4.5x, and well within the nameplate covenant level of 3x that will again apply as of June 2014. Our next debt maturity is only at the end of 2015 in the form of our AUD 600 million revolving credit facility, currently drawn at AUD 560 million, which will start to be repaid from the cash generated by our new Tropicana operation as it ramps up. Turning now to the outlook. As Venkat mentioned earlier in his presentation, we're maintaining our production and cost guidance for the year. In the last quarter, we expect our production to be between 1.13 million and 1.17 million ounces at around $800 an ounce cash cost, as we start to see ounces delivered through the ramp up at our new Tropicana and Kibali operations with additional ounces from accessing the high-grade crumpler [ph] at Sunrise Dam. The assumptions for our Q4 outlook are set out in the Slide. Please note, as in prior years, our fourth quarter earnings may be distorted by year-end accounting adjustments such as reassessment of useful lives, reset of environment and rehabilitation provisions, direct and indirect tax, and inventory provisions. We will continue to pull down our corporate and exploration costs, but bear in mind that our Q4 costs are typically lumpier around our seasonal spend profile. So notwithstanding potential challenges that we still see throughout the industry, we have maintained our annual gold production guidance at between 4 million to 4.1 million ounces at a cash cost of between $815 to $845 an ounce. Assumptions for the full year are also detailed in the Slide. With that, I'll now hand over to Mike O'hare to take you through our SA operations. Mike?

Thanks, Richard. And good morning to everybody. As Venkat has mentioned, the region's performance in terms of gold improved by 7% quarter-on-quarter. What I find pleasing in these results is that underground production actually increased 10% quarter-on-quarter. And if you remember, last quarter, I said we would be focusing on some of those basic mining practices that improved your gold production. And it's pleasing to note that the first area that we decided to concentrate on, which is phase utilization, in other words, how often do we blast, improved 12% quarter-on-quarter. We've been tackling the dilution problem from the stock width [ph] angle, and we've managed to improve the dilution. In other words, we have less dilution by 4% quarter-on-quarter. In the West Wits area, which is the first slide, our production improved by 10% with both increases in production both in Mponeng and TauTona. The mining volumes improved by 10% at Mponeng and this, together with a 6% reduction in stock width [ph] offset a slight grade decrease and allowed us to improve the production there. However, grade management at Mponeng remains one of our biggest focus areas as far as the underground production is concerned. Despite the cost headwinds during the quarter, we've been able to keep our costs stable in rand terms on a unit basis across the region. If we move to the Vaal River area, again, I think Venkat has talked about the safety performance in the Vaal River region. But I'm very proud of the results that the guys have produced during the last quarter. From a production point of view, a stellar performance from Moab Khotsong during the quarter saw them increase their gold production by over 40%. 2 factors caused this to happen, an increased rate of blasting, in other words, blasting frequency, allowed us to produce more tons, which meant that we move 17% more tonnage than the previous quarter and the focus on dilution, cross-training and grade management and an increase in mining grade, allowed us to increase the yield by 20% at Moab Khotsong. If I move now to the surface source operations, which show a slight decrease quarter-on-quarter, largely driven by a tonnage shortfall at Mine Waste Solutions against what we expected and against what we produced last quarter. This happened as result of a late commissioning of a pipeline in a pump station between the Vaal River TSF [ph], which we're now putting into the Mine Waste Solutions complex. Their problem has now been sorted, and we're now seeing record tonnages at higher grades from Mine Waste Solutions. So I expect to see quite a bit of performance from Mine Waste Solutions in Q4. Unfortunately, during the quarter, we had an environmental incident. One of our residue lines carrying residue from the plant to our tailings facility, the bolts -- an attempted theft of the bolts on one of the phalanges resulted in the phalange pulling apart and spilling that residue under pressure. Prompt action created paddocks to ensure that the spill was contained and not allowed to get into the local river courses and the risk was therefore averted. We're working closely with the regulators and environmental experts to ensure that the long-term remediation of that spool [ph] is carried out properly. Let's move now to our technology slide. And the reason I put this slide in, this slide was taken during a directors visit fairly recently. I think it shows fairly nicely our mantra of safety mining all of the gold, but only the gold, all of the time. Now what you're looking at over our shoulders is a hole which is 13 meters long at a 27-degree dip. And if you look at the 2 lines, the 2 yellow lines, they indicate to you where the reef package is. And you'll see the hole perfectly takes out all of the gold. Every drop of water and every grain of rock that comes out of that hole is properly captured, so we should not be talking to a mine core [ph] factor issue with this kind of mining. What's interesting to note, if you look at the white block, the white block defines what you would've taken out there in the conventional mining method. And you can see the amount of dilution that we add to the rock with our current mining methods. So I think we can tick 2 of those boxes. The third box is around getting this process to operate 24 hours a day, 365 days a year, and that certainly remains our intent. The next slide, our progress on the technology. We've just completed hole #15, and the reason I am talking about this specific hole is that it's fairly significant in that it's -- was drilled with a purpose design bit, with 1 pass. In other words, we don't draw a guide hole first, and then wring [ph] the rock out. We blind bore it with a 660-millimeter diameter. But we managed to do this hole in 3.2 days, which is a new record for us. Our target is to get to 2 days and then we certainly are competitive for the conventional mining system. The quality over that distance was what we were trying to measure. And we did experience a slight deviation on reef, but it was within the limits that we designed to. Our next key focus areas now are drilling these holes ever closer together to ensure that -- or to test whether the backfill theory that we have of putting in backfill that's as strong as the rock we've taken out actually works. We're now down to holes that are less than a meter apart. And our measurements from the systems that we have within the backfill show that it appears that we have the right mixture in that backfill. Just to note, year-to-date or since this project started, we've actually mined 35 kilograms of gold out of the Shaft Puller [ph] area, which is an area we abandoned due to the dangerous -- the danger we were experiencing whilst we were mining it in a conventional way. Thanks, I'd like to now hand over to Ron, I think. Ron?

Thanks, Mike. Good morning to everyone. I'd like to spend a few minutes on discussing the performance of the Continental Africa region and the Americas region. I won't comment on safety as Venkat took us through the safety performance of the operations. And I'd like to go directly into the Continental Africa region. Quarter-on-quarter, had good increases of 40,000 ounces for the Continental Africa region. I think we can talk about volume and grade and I have to go into each operation to tear that 40,000 ounces apart. And probably to me, the most exciting piece was the drop of about $80 per ounce in operating cost. This doesn't necessarily have foreign-exchange included because of the currency we work under, so it's either cost redemptions and/or volume ranges [ph] that will drive that cost down. In Geita, I think we've seen improvement, it was 12% in production. We must remember that quarter 2, we were impacted by the signal replacement. So there's -- there was a volume variance in Geita. But we did see the improvement in tonnage going through the Geita plant. Siguiri increased by 11% to 69,000 ounces. And really, that was sustaining the good production volume that went through the mill in quarter 2, but we're able to improve on some great profiles in the Siguiri mine. Iduapriem, I think the big -- it was an improvement, and we had like an all-time production record, but we've seen cost come down considerably. One volume, but then there was some cost management at Iduapriem. At Obuasi, continuing to show improvements in the trajectory. I would go -- I won't comment here. I would go to the next slide on Obuasi. And we've included the Slide with 4 major metrics. And I think -- not that we -- they're all in arrears, if you want to look at it. They're not where we manage the operation from. But last quarter, I said we will watch the outcome gate of the quarterly results at Obuasi through some metrics. And the first one being mechanized development. It's key because we started the decline work in second quarter, kicked it off, and now last quarter we're up over we're almost to 900 meters of development in the third quarter with considerable more plan for fourth quarter. That's key because that's part of our plan to get to take this mine through a mechanized operation and start reducing the amount of handheld work that's going on. Second one is staffing, another key to get into our objective is how do we go through and rationalize and remove -- as we're implementing the mechanized mining, we also have to remove certain numbers of our employees. And this is being done through a complete plan, government, labor unions, socially. But it's key because that is a big driver in our operating cost. And the production is just a -- it's a number. I mean, ultimately, this asset has a breakeven volume there. And I think the key here is we've -- through this implementation of the mechanized side, we've been able to come up about 12% to 15% quarter-on-quarter over the past 3 quarters. With that, drives the cash cost. And I believe, ultimately, that this is based on labor, based on production and based on mechanization, this cost will continue to be worked down. So I think a good quarter by Mark and the team. We have a long ways to go, and I -- that was one of my comments last quarter was we'll keep showing you our quarter results. We have a plan, we're meeting the plan and the objectives are to turn this into a mechanized operation. Next, going to the Americas. Americas had a decent quarter, up 35,000 an ounce quarter-on-quarter, 10% improvement. This -- it was sort of across-the-board and cost have come up by about $70 an ounce. There is a foreign-exchange component there but there's also a volume-added cost component that go into that $70. Cripple Creek had decent quarter, up 15%. We're not here saying we don't have enough water at Cripple Creek; it's one of the few times we've had plenty of water, and the water balance has an impact in our operation at Cripple Creek due to the meteoric rainfalls. In Brazil, we had some better grades out of Cuiaba that have impacted us, and we've also had some higher tonnages at the Corrego do Sitio mine. So with those 2 and the slight uptick in production at the heap leach operation, the supplemental heap leach operation at Cerro Vanguardia we've seen the production come up, and hopefully, maintain. Next? One job or big project we have in the America site is the -- we call it the Mine Life Extension, which is inclusive of extension of the heap leaching capacity and then putting in a 2 million ton a year milling facility that will come into production quarter 4 of '14. And then in the picture you can see that we're able to set the mill shelves [ph] just last week, it's critical that we got the concrete in the ground before the winter time, so now we we're able to continue working this -- the mill project throughout the winter in North America. The key here is this adds to the production profile that CC&V takes you from 250,000-ounce per year operation to a 350,000- to 400,000 ounce per year operation. With that said, that's the operations in Continental Africa and Americas. I did comment last quarter on the work we're doing on trying to control or optimize, rationalize our cost within our business, and I think it was referred to as P500, a project where we're trying to remove the $500 million. And to fill up the waterfall chart, because I think it's these are the facts, you can look at them however you want to take it, but the objective is we have to get down, Our objective is to put pressure on that $1,100, all in, all-inclusive cost, and we were able -- we're seeing in our reduction of overheads across the operating and the corporate group, and we address the stay in business in capital cost, so the big push now is how do you rationalize operating cost. And I think there's a volume variance in there, but on a cost of sales, you see the $53 an ounce coming up and we'll continue to bring this forward in and show you where we set. Examples of work include debottlenecking the new heap leach operation and consumption at Cerro Vanguardia. There's a reagent consumption work going on, there's shut down optimization at Siguiri mine, Moab, there was a -- remove some -- improve some efficiencies and remove some locomotives at Moab and doing some mining, basically mine changes, practice -- mining practices changes at Cuiaba leading to reduction in dilution. There's many, many more of them, continue to work on those and will report back on a quarterly basis on how our cost containment is going. So with that said, I'll give it over to Graham to talk Australian projects.

Thanks, Ron. I'll cover Australia but Australia was -- I'll talk initially about Sunrise Dam, and then move onto Kibali. And then onto Tropicana. Now this slide really talks to Sunrise Dam; from next quarter we will start to include production coming from Tropicana. At Sunrise Dam, we saw a 24% increase in grade. The grade came from the Crown Pillar which is a high-grade area at the bottom of the pit. We're into final mining of the Crown Pillar and then we'll see the completion of open pit mining at Sunrise Dam afterwards. It's been a very successful 16 years from that open pit. Costs were down commensurately, mostly due to grade, but also due to quite a lot of work underground in driving productivity and cost. So the end of this year, we'll see the end of the open pit at Sunrise Dam, and Sunrise Dam has been transitioning to an underground mine over the last few years. And from the beginning of next year, it will be an underground operation only supplemented with the surface stockpiles. We've prepared -- we've been preparing for this change for quite a number of years, understanding the underground oil body and dealing with mining methods and mining productivity. Since 2012, we've seen a -- we've increased the underground production rate from 1.4 million. We're now starting to push to 2 million tons per annum underground. The plant has a capacity there's about 3.6 million, so the balance of that will come from existing surface stockpiles. Now moving onto Kibali. Kibali is a joint venture, as I'm sure you're aware, between AngloGold and Randgold, based at 45%, and Sakima. Randgold is the manager, but my comments in regard to Kibali will be in regard to 100% terms. With a really big push from the team on-site, the team poured first gold in September. I did visit the site, just prior to that with Venkat and Sorah[ph], a very focused and energetic group, pushing to get this project into operation. The first gold productions come from the oxide circuit and from the KCD pit. That doesn't complete the Kibali project; there's still major work going on and construction now focuses on the sulphide circuit in the process plant. And that will come into production and start to ramp up from quarter 2 '14. The Insuro[ph] hydropower station is well advanced now and will come into power generation in quarter 2 '14. Development of the underground mine, that will take a couple of years, but the twin declines are going very well. And the first underground oil will be produced by these 2 declines in quarter 4 '14. The shaft, headframe and winders, a very impressive piece of work, that's gone very well. And the headframes in place, miners in place, the shafts sinking miners in place, and the main sink commenced in early November. An impressive piece of work by the Randgold team and the managers on-site has been the relocation action program where 15,000 people have been relocated from the more active mine area and have been settled into over 4,000 new homes. That program's gone very well. I'll move on to Tropicana. [Presentation] Well, hope you can share in some of the excitement from that video. There is clearly a very happy team up at the Tropicana when that first gold bar was poured. Fantastic effort by the team, by all of the AngloGold Ashanti organization in getting this project delivered. Tropicana's construction is now completed and the remaining activities are just closed out and has built winding up the final details on construction contracts. All commissioning commenced in early September and that first gold pour was in 26th of September. So our focus now is on a smooth ramp-up. On the next slide, you can see the ramp-up curve that we have predicted based on industry experience and our assessment of how things would come together. After 5 weeks, we are progressing well. And we are on the planned ramp-up curve. We're dealing with the usual range of issues that you get during startup, we're seeing no major problems that would call into question the integrity of the plant design. Designs throughputs, in tonne for our terms, have been achieved, including through the high-pressure grinding roll circuit. So the focus now is on dealing with these various commissioning issues and pushing run-time after the targeted planned availability. Now we expect, in this quarter, if we continue on that ramp-up curve, that our production will be in the order of 110,000 to 130,000 ounces in 100% terms in quarter 4. The other important thing to note on the next slide is how we're progressing in terms of the ore body. Mining has now been running for about 12 months, and we mobilized the third fleet in the third quarter. Resource reconciliations are tracking as shown in this chart, and the grades were variable in the upper part of the oxide ventures with fairly small tons. But as we progressed through into the lower saprolite and now into the hard rock, we're seeing grave and tonnage reconciliation slightly positive, which augments for first being able to deliver the sort of production forecast that we've spoken to over the last couple of years. So in summary, Tropicana is now onstream and AngloGold really is delivering the project that we promised to build some 3 years ago. And with that, I'll hand back to Venkat. Thanks very much.

Thanks, Graham. Just to summarize, realizing that I'm the only one between you and question time. Certainly, what we've been able to show is what a team when it comes together can do, we're a strong believer that when you look at AngloGold Ashanti, you're not looking at one individual, you're looking at a team, whether it's David, on the sustainability side or Italia in the help she has given in terms of reorganizing the entire organizational design; Charles, on the corporate finance and the strategy side; Rihad, group general counsel who has got her teeth into the indirect spend with the team; Yedwah, on the government relations; Richard Duffy, on finance, and then to our 3 key operators, Mike O'hare, who has had all the challenges thrown at him in South Africa, but delivered a spectacular result; Ron, who originally was just managing the Americas, had to transition to pick up the Continental Africas; and Graham, who managed to deliver our first greenfield operation outside of South Africa, plus their respective teams and every one of our employees and contractors have pulled together, with an element of luck from God Almighty, we have actually managed to do -- deliver a pretty good quarter. Just if you recall -- if you look at this particular site, over the last 2 quarters, we been articulating our messages and direction, it's very simple in what we are trying to do, and we have started to score some runs on the board, ahead of 2014, if you remember, most of the changes were going to come through in 2014. And the real debate was how many runs we can get on the board ahead of that. Importantly, on the revenue announcement piece, we have delivered Tropicana and through our partner Rangold, Goldborak, Kibali, we are focusing on quantity ounces at good margin. So you've seen the production go up, but the cost comes down as well. We are still doing targeted expansion plans and removing unprofitable ounces from the mix here the closure of Yatela, the progress in terms of the sale at Navachab in Namibia, which is ongoing, and what organize -- reorganization Mike is doing in South Africa in terms of combining some of the adjacent mine, he has pulled Savuka under TauTona's management and the like. On the cost reduction side, we're coming it at from all angles, whether it's capital expenditure, whether it's corporate cost exploration and direct cost and if you even annualized the expenditures in terms of our corporate cost, our exploration and our direct cost based on the third quarter results, you will see how reasonably close we are to our 2014 target, which we outlined in the previous quarter. Importantly, we are keeping our optionality intact whether it's the SA technology project or the exploration potential on the non-south African assets, all of which point to improving shareholder returns in terms of cash flow as we go into 2014. So the message is simple, the message is the same, we will continue to deliver on each of those KPIs. With that, happy to take questions.

Just a quick one. Given the expectation of improved cash flows into next year and beyond, what's your current thinking on dividends?

If you recall, we did pay a dividend in the -- at the end of the first quarter of 2013. What we did say in the results call in the last quarter that hasn't changed, the board will be meeting in February and will review our financial performance for the year, look at where the debt levels will be, in addition to look at our business plans and the gold price outlook, and we'll make a firm decision in terms of the dividends, but certainly, the cash flows are improving as we go into 2014.

Allan? Allan J. Cooke - JP Morgan Chase & Co, Research Division: I have 2 questions, the 1 question that I have is perhaps in 2 parts, when we look at the cuts and stain business CapEx, and a higher grades coming through from some of your mines and perhaps like [indiscernible] all of your mines, but at your key mines in particular, are you cutting back on development or have there been deferrals of any stripping projects, of any of the pits, underground development, Mike O'hare, are you developing less than you were previously with these cuts in staying business CapEx? And then on the grade, as we look at higher grades, I guess, the first fear that comes to mind is are you high-grading anywhere? Is that sustainable, the higher grades that we see coming through at the mines that you mentioned, Ron, so because obviously, longer-term, you cut back your dividend now, you high-grade now, these are twin evils that will have consequences in the future in terms of your lack of mine plants.

Thanks. Allan, I remember I had a boss many years ago, Ken Dix, who cut ORD and 2 years later is a general manager at Southeby because of that. At certain areas, I realize what happens when you cut ORD in the wrong places. So the ORD we're cutting is being to the East and the West of [indiscernible] mine. Both of which we believe we've reached the boundary of where the grade, the cutoff grade, in other words, so we legitimately can't stop that ORD. At Moab Khotsong we looked really carefully because that was the mine that was bleeding a lot of cash, we looked really carefully at what development we've done, and on 2 of the levels, we're at least 1 year ahead of where the mining plan needs to be. So and it's an area I watched really, really carefully. As far as grade is concerned, the great kick at Moab, I think. Dave and I were talking this morning, and I had been promising to get to that averages of the grade and we eventually mining in some of those sweeter spots at Moab in the lower mine. It probably will normalize, it will come down again over time with 2 really high-grade raise lines. But it is part of the mine plan. It's difficult to high-grade in the left go. Your mind isn't really in front of you.

Just comment on the development in the international space, it hasn't been reduced at all, so there's every operation always wants more, right? So but we have not reduced off the 2013 plan and going into '14, actually there's more development meters planned in 2013. From a high-grade perspective, no, there is no high-grade going on, what I'll would say, just to touch on the couple of them, the Cuiaba grade increase was planned, we actually wanted to get into it in the second quarter. And we didn't get there. At Obuasi, the grade increase has been a reduction in dilution, which is part of the plan or the key to turning that asset around. And then at Iduapriem, the higher grades were from the open pit that we had been modeling where I guess the miners have extracted and we've seen some volume in and some grade variances that were very positive. So there absently, in my opinion, there is no high-grade, high-grading going on. But I think we can manage our mines optimally from a standpoint of understanding and getting our plans -- Cuiaba have higher grades in the fourth quarter also. Higher than the average resource grades. So I don't see any high-grading going on.

[indiscernible]

The reason for grade increase in Sunrise Dam was really to do with the mine schedule and the mining of the Crown Pillar at the bottom of the pit. So that's a benefit in quarter 3. You'll see the major benefit comes through in quarter 4, and after that, we're in the underground mines, so there's no elevation of cutoff grade since we didn't try to high grade at all..

Actually, if I can comment it directly. It's very [indiscernible] but to give on a humorous note an example. Frank, you're in a battle with your wife. When you're mining below the reserve grade, they say, "Hey, why don't you go to your reserve grade?" When you start to get to your grade, they say, "Hey, are you high grading?" It's not a battle you can win easily. But rest assured, couple of points. Firstly, the long-term optionalities is firmly intact, we will not take shortcuts, and we do realize that is a compromise you have to make in terms of what happens to your debt levels, et cetera. We would not take any terms of compromise, in terms of development or stay in businesses CapEx or asset integrity, that's the first aspect, and secondly, you got to remember, in Ashanti, if you take your memory back to 2001 when the banks were running the company, we have a force to effectively cut down development and look at grades, that has actually taught me, as a CFO at that stage, what could go wrong if you have to take shortcuts, so that's a mistake, which would never happen, even when I was a CFO at AGA, and least to say, particularly as CEO, so even as part of the budget, and business planning process, we are very, very careful, and all of them, that the 3 operators here, and in particular, Graham, is watching what development flexibility we have and where to stay in business capital has to go, and in terms of asset integrity. Where we have become smarter is how do we actually do more with less, and that's the real focus.

[indiscernible] never an issue, I think, mining above from an industry perspective, mining above reserve grade isn't a worry for many for some time. And then just lastly, if I may, Kibali, you talked to what you do fourth quarter at Tropicana, any color on what you're expecting in terms of Kibali's production as they ramp up through this quarter please?

The team expected they'll all hit 60,000 ounces, 100% terms for quarter 4 for or better. So far, on track for that, and they also have got a ramp-up period to go through, again, similar sorts of issues to what I've talked to at Sunrise Dam. But we'll go into that ramp up, that's the sort of numbers I should hit.

Derryn and then Adrian.

This is Derryn Maade from HSBC. I'd just like to ask a little bit more about the unprofitable ounces that you mentioned in the presentation, do you have an idea as to what operations in the portfolio you'd class now as non-core, and what are your plans around those operations?

I'll pick that up. We are not being specific intentionally at this stage because the only time we want to actually start categorizing them is when we have actually socialized what happens when the respective each [ph] of those operations with all of the stakeholders, But certainly, the one's we have identified are there in the public domain, Navachab was an example in terms of Namibia; we are quite advanced in terms of the sales process that are 3 potential bidders who have been shortlisted, and we are in discussions with the 3 of them, Yatela has gone into closure, along with our joint venture partner Irongold, we are managing the closure program in respect of Irongold, and Mike has already bought Saluka, under the management of TauTona, so we'll progressively be looking at it, but where we'll be careful is we won't be greedy in terms of waiting for the last dollar, in terms of value, but at the same time, we wouldn't be panicking and just to pick the box, dispose of an asset for a value less than what we can get if we were to mine it out. So it will be a careful trade-off, which we will do on a quarter-by-quarter basis.

Adrian?

Adrian, BNP, just to hear from Darren's question, can you cut production at existing operations rather than talking of selling assets? What is your ability to actually reduce marginal ounces there? Is that something you're looking at?

It is something we are looking at as part of our business planning process. In fact, Graham, Ron and Mike have been busy for the last month looking at each of those mine plants, re-engineering them, looking at some of the marginal loans and removing them. We're not fixated on a topline production target going into next year. It's a trade-off between your production, your cash cost and your capital expenditure and that trade-off is ongoing. And we hope to complete our budgets going into next year, early December, so we will actually announce those targets going into 2014 when we announced our 2013 results, and as always, we'll give you a breakdown by region.

And just one more question, your guidance for steady state cash costs at Kibali and Tropicana, are those still intact?

You want to pick it up?

Yes, we provided an update, I think about 6 months ago, in terms of operating costs, CapEx costs, so those production guidelines are still in place. And likewise, for Kibali, that was updated recently in AngloGold terms, in view on the final cost, our share was about 982 million ounces being around 270,000 ounces a year over those first few years and cash costs around 700 or less be so there's no change in that guidance.

Brendan?

Brendan Ryan, Business Day, couple of questions on the reef boring please. From the look at it, you would seem to need pretty uniform reef conditions for this to work. So question 1 is to what extent, do you have any idea at this stage of what extent you can roll this out through your mines and give me an idea of how much production could eventually come out of your saprolite mines using this technique out of the total, and then second of all, can give some idea of the cost of it? Cost of dollars per ounce, cost to produce a gold using the system?

Our first target is to take areas that we haven't got in our mine plan. So we're targeting high-grade areas like the sharp pillar at TauTona, and which is why the grades we mine in there are so high. We will be rolling the test out to some of the lower grade reefs at Great Noligwa, specifically, so for instance, we've a reef there called the Sea reef, which if we could mine it this way, we'd produce probably at about 50 to 60 grams a tonne, and we have over 6 million ounces of resource in that particular area. So those are the areas that we're targeting. We finished the budgeting process and we -- I think we should announce that when we finish the budget [indiscernible] is to what our ramp up plan is, in terms of how much gold we plan to produce per annum on the low side and on the up side, so we'll probably announce that when we announce the budgets next year. In terms of costs, really, the big thing is to be competitive with the conventional mining methods, so what we've done, we've tackled it from a different angle, and said if we -- if this is ground that we won't get out anyway, we need to make sure that we're mining high-grade to cover whatever costs. So we're making a good margin on the gold we're mining currently with this method. Remember, it's very difficult for us to say to you now, but cost per tonne given that we are in a testing phase. So I think March next year, we go operational on another site, and by June, July, we've got operational on the third site, so, I think, by then, we'll have a fair idea of what kind of cost per tonne. The major we're after at the moment is try and get the time it takes to -- for each hole down to about 2 days per hole, which is then competitive with our current conventional mining method.

I'm actually more interested in cost per ounce, I mean you put a lot of emphasis on your cost per ounce measures, I mean, do you have some idea of where -- what you might be able to produce gold at in those terms from the system?

If we've to finalize those numbers through the budget...

Really that issue here is, you've got to get -- if you were to say if you were only going to get 35 kilograms of gold from 16 holes, admittedly, given the CapEx involved, you won't be able to make the economics work. The key here is getting scaled. And that's what the team is working on at the moment. Where you can make it economical given the capital intensity is by eliminating dilution and getting scale. So that's where we want to pull it down, it would be capital-intensive, but the unit operating cost will come down, significantly. And we want to get the all-in sustaining cost coming down as well, and that's what we're working to. It's unfair to estimate what the operating cost would be when you're on a testing phase, on a steady production phase, looking years ahead.

It's Patrick Mann from Deutsche Bank. Just 2 quick questions, if I may. First of all, with the coming to the end of project CapEx on Kibali and Tropicana, are you seeing your net debt position coming down next year and can you give us a sense of how quickly that might happen. And secondly, do you foresee any tail risk of -- from a labor perspective in South Africa? Any chance of AMCU trying to call a strike at operations, so they've got a majority?

I'll pick up both questions, if I may. Firstly, the question on net debt, obviously, is linked to the gold price, and you know what our leverage is on the gold price, certainly, we will start to see a reduction in our project capital spend going into next year. We're not putting numbers out yet until we actually get our business plans completed to a high degree of confidence. But certainly, looking at 2 key projects, coming down and spend, bear in mind, Kibali will still have an element of spend going into next year as it continuous with the underground and the sulphide secured for the first 4 months of the following year. And we are doing the CC&V expansion. So certainly, the project capital expenditure would come down and the cash generation would start to improve. but we don't give estimates in terms of what the net debt position would be. But importantly, as you can see, with the EBITDA currently in place, without taking into account $0.01 of EBITDA coming from Tropicana and Kibali, we're still at about 2.22x, so you can imagine what it does when Tropicana and Kibali's EBITDA comes through. The secondary [indiscernible] with regard to AMCU is, we do have a wage agreement in place. The wage agreement was negotiated with everyone, including AMCU, yes, admittedly, AMCU, did not sign the wage agreement, but importantly, we have extended and we are implementing the wage agreement across all of the unions. In other words, AMCU employees are also getting -- AMCU members are also getting the benefit of the wage increases, we are also implementing other aspects of the wage agreement at this stage. Yes, there is comments we have noticed in the media, and references that AMCU reserves its rights. At the end of the day, we believe that the agreement is binding, and we have to leave it at that.

Andrew?

Andrew Byrne from Barclays. Two questions, potentially, to Richard. You mentioned just kind of you just cautioned look -- there's going to be distortions from accounting treatments in 4Q. Could you just maybe give us a heads-up of the main ones that we may have missed. And then also you said that budgets are due at the start of December, could you tell us what gold price you're using for those budgets going into 2014?

So on the first one, what we're saying is, as you know, in quarter 4, being the last quarter of the financial year, we do all of our yearend adjustments. So you typically do see some noise coming through. Also we have typically lumpy cost profiles in quarter 4. So there's no -- at this stage, we're not signaling anything specific, we just saying -- exercise some caution because it is typically, in the last quarter, a little bit choppy. Given that we did, obviously, have a significant impairment in quarter 2, and that the fact that we've take out and converted the mandatory convertible, and early redeemed the other $733 million bond, I think, a lot of that noise is also through the systems. So it's not -- we're not putting our hand up to say we're expecting anything significant, we're just saying exercise some caution, and don't project, for example, on the costs of linear improvement through quarter 4, because we expect a little bit of lumpiness. From the assumptions for the budget, in line with taking a prudent approach to managing the business, and align with the cost measures that Venkat has led. For next year, we have received gold price -- a gold price assumptions of $1,100 an ounce. And we then lift that in subsequent years back towards $1,300. So we continuing to keep the pressure on the business to ensure that we are optimizing all of our operations and we have the right cost structure in place around $1,100 gold and then we step it up beyond that. Yes, also to Venkat's point, having whispered in my ear, is around sensitivity next year, obviously, with the gold price where it is currently, we run sensitivities of $1,300 and higher to ensure that we optimizing value at the current gold price as well.

Anymore questions? All right. I think that should more or less do it. Thank you very much. We'll do this all again in 3 months. Thank you.